Snyder's Drug Stores, Inc. v. North Dakota State Bd. of Pharmacy

• Decision Date: 31 October 1972
• Docket Number: No. 8834,8834
• Citation: 202 N.W.2d 140
• Parties: SNYDER'S DRUG STORES, INC., Respondent, v. NORTH DAKOTA STATE BOARD OF PHARMACY, Appellant. Civ.
• Court: North Dakota Supreme Court

Page 140

202 N.W.2d 140

SNYDER'S DRUG STORES, INC., Respondent, v. NORTH DAKOTA STATE BOARD OF PHARMACY, Appellant.

Civ. No. 8834.

Supreme Court of North Dakota.

Oct. 31, 1972.

Rehearing Denied Nov. 29, 1972.

Syllabus by the Court

1. The police power may be exerted in the form of state legislation where otherwise

the effect may be to invade the rights guaranteed by the Fourteenth Amendment only when such legislation bears a real and substantial relation to the public health, safety, morals, or some other phase of the general welfare.

2. A state cannot, under the guise of protecting the public, arbitrarily interfere with private business or prohibit lawful occupations or impose unreasonable and unnecessary restrictions upon them.

3. Being bound by the decision of the United States Supreme Court in Liggett Co. v. Baldridge, 278 U.S. 105, 49 S.Ct. 57, 73 L.Ed. 204 (1928), and seeing insufficient basis for distinguishing that decision from the instant case, we sustain the trial court's conclusion that Section 43--15--35(5), N.D.C.C., violates the due-process clause of Section 1 of the Fourteenth Amendment to the United States Constitution.

4. Because no evidentiary hearing was held by the Board of Pharmacy on the application for a permit, we remand the case to the trial court with instructions to it to remand the case to the Board of Pharmacy for an administrative hearing on the application, sans the constitutional issue, pursuant to our Administrative Agencies Practice Act.

Conmy, Conmy, Rosenberg, Lucas & olson, Bismarck, for appellant.

Wattam, Vogel, Vogel & Peterson, Fargo, for respondent.

ERICKSTAD, Judge.

The North Dakota State Board of Pharmacy appeals from the summary judgment ordered by the district court of Burleigh County, which requires the Board to issue a permit to Snyder's Drug Stores, Inc., to operate a pharmacy in the Red Owl Family Center in Bismarck, North Dakota. The judgment is dated January 6, 1972.

An application for a permit to operate a pharmacy was filed on the 25th of January 1971 by Lloyd D. Berkus, as president of Snyder's Drug. As indicated by various documents filed with the application, Snyder's Drug was to lease an area in the store building operated by Red Owl in Bismarck, North Dakota. A part of the store building was to be remodeled to meet the requirements of the Pharmacy Board.

On receipt of the application, the secretary of the Pharmacy Board investigated the proposed site and subsequently filed a report with the Pharmacy Board.

Without complying with Section 28--32--07, N.D.C.C., and without a hearing, the Pharmacy Board denied the application. The denial is contained in the Pharmacy Board's findings of fact, conclusions of law, and order, dated March 22, 1971. Basically, the Board found that the existing facilities of the applicant did not meet the standards required by the Pharmacy Board and that the applicant failed to comply with Subsection 5 of Section 43--15--35, N.D.C.C. This subsection requires in the case of a corporate applicant that the majority of the stock be owned by registered pharmacists in good standing, who are actively and regularly employed in and responsible for the management, supervision, and operation of the pharmacy.

By notice of appeal dated April 12, 1971, Snyder's Drug appealed from the Board's order denying the application. In its specifications of error it asserted that Section 43--15--35(5), N.D.C.C., is unconstitutional, in that it violates the equal-protection and the due-process clauses of Section 1 of the Fourteenth Amendment to the United States Constitution, and Sections 11 and 20 of the North Dakota Constitution. It also asserted that the Board's findings that it failed to comply with the regulations of the Board were not supported by the evidence and were not in accordance with the law.

On appeal to the district court, a motion for summary judgment was made by Snyder's Drug. The trial court granted the motion upon the ground that Section 43--15--35(5), N.D.C.C., violates the previously described sections of the Constitutions of the United States and of North Dakota. It apparently further concluded that Snyder's Drug had satisfactorily complied with all reasonable regulations of the Board of Pharmacy entitling it to a permit to do business as a pharmacy.

Because the constitutional question is most crucial, we shall consider it first.

The case relied upon by the trial court in rendering its order and by Snyder's Drug in resistance to the appeal is Liggett Co. v. Baldridge, 278 U.S. 105, 49 S.Ct. 57, 73 L.Ed. 204 (1928).

In Baldridge, the United States Supreme Court was considering the constitutionality of a Pennsylvania statute enacted in 1927. That statute required in the case of corporations, associations, and co-partnerships that all the partners or members thereof should be licensed pharmacists, with the exception that such corporations which were already organized and existing and duly authorized and empowered to do business in the state and owned and conducted pharmacies in the state, and which at the time of the passage of the Act still owned and conducted pharmacies in the state, could continue to do so.

Liggett Company, which at the time of the passage of the Act was empowered to own and conduct, and did own and conduct, pharmacies in the state, purchased two additional pharmacies, and it was in conjunction with the operation of these two additional pharmacies that the company was threatened with prosecution. The company sought to enjoin the attorney general and the district attorney from prosecuting it. The lower court, composed of three judges, held that the statute was constitutional upon the ground that there was a substantial relation to the public interest in the ownership of the drugstore where prescriptions were compounded.

The majority of the United States Supreme Court, speaking through Justice Sutherland, found the Act to be unconstitutional, in contravention of the dueprocess clause of the Fourteenth Amendment to the United States Constitution.

A pertinent part of the Sutherland opinion follows:

'The police power may be exerted in the form of state legislation where otherwise the effect may be to invade rights guaranteed by the Fourteenth Amendment only when such legislation bears a real and substantial relation to the public health, safety, morals, or some other phase of the general welfare. Here the pertinent question is: What is the effect of mere ownership of a drug store in respect of the public health?

'A state undoubtedly may regulate the prescription, compounding of prescriptions, purchase and sale of medicines, by appropriate legislation to the extent reasonably necessary to protect the public health. And this the Pennsylvania Legislature sought to do by various statutory provisions in force long before the enactment of the statute under review. Briefly stated, these provisions are: No one but a licensed physician may practice medicine or prescribe remedies for sickness; no one but a registered pharmacist lawfully may have charge of a drug store; every drug store must itself be registered, and this can only be done where the management is in charge of a registered pharmacist; stringent provision is made to prevent the possession or sale of any impure drug or any below the standard, strength, quality and purity as determined by the recognized pharmacopoeia of the United States; none but a registered pharmacist is permitted to compound physician's prescriptions; and finally, the supervision of the foregoing matters and the enforcement of the laws in respect thereof are in the hands of the State Board of Pharmacy, which is given broad powers for these purposes.

'It therefore, will be seen that without violating laws, the validity of which is conceded, the owner of a drug store, whether a registered pharmacist or not cannot purchase or dispense impure or inferior medicines; he cannot,...