State Ex Rel. Municipal Bond & Investment Co., Inc. v. Knott

• Decision Date: 02 March 1934
• Parties: STATE ex rel. MUNICIPAL BOND & INVESTMENT CO., Inc. v. KNOTT et al.
• Court: Florida Supreme Court

154 So. 143

114 Fla. 120

STATE ex rel. MUNICIPAL BOND & INVESTMENT CO., Inc. v. KNOTT et al.

Florida Supreme Court

March 2, 1934

Rehearing Denied March 20, 1934.

En Banc.

Original mandamus proceeding in the Supreme Court by the State of Florida, on the relation of the Municipal Bond & Investment Company, Incorporated, against W. V. Knott and others, as and constituting the Florida Securities Commission. On motion to quash the alternative writ.

Alternative writ quashed, and proceeding dismissed.

COUNSEL

Butt & Akeridge, of Cocoa, for relator.

Cary D Landis, Atty. Gen., and Robert J. Pleus, Asst. Atty. Gen for respondents.

OPINION

DAVIS Chief Justice.

Section 11 of chapter 14899, Laws of Florida, Acts of 1931, was modified by chapter 16174, Acts of 1933. The bond provision of said section 11 of the original act was held unconstitutional in Riley v. Sweat (Fla.) 149 So 48. The object of the 1933 statute was to cure the unconstitutional feature pointed out in the case just cited.

In this case relator is seeking a peremptory writ of mandamus requiring the respondents, W. V. Knott, State Treasurer, J. M. Lee, State Comptroller, and Cary D. Landis, Attorney General, as ex-officio members of the Florida Securities Commission, to register relator as a security dealer in that class of securities described in section 3 of chapter 16174, Acts of 1933. Relator has not given the bond required by section 11 of the act, and its contention is that the bond requirement the statute imposes, is unconstitutional as a condition precedent to registration. In this connection it is alleged that relator has made exhaustive and dilligent effort to secure the statutory bond, and having failed to secure said bond, is entitled to be registered as a dealer in securities, in that it is being denied registration at this time solely because of its failure to give the bond required by the 1933 law, and not for any other noncompliance with the act. The alternative writ has been met by the respondents by a motion to quash. Hence the question to be decided by the court is whether or not the 1933 act is subject to the same constitutional objection that this court has heretofore found to exist in the 1931 act.

Chapter 14899, Acts of 1931, required dealers in certain enumerated securities to post a bond in the sum of $5,000, conditioned upon the faithful compliance with the provisions of said act by the dealer, and all salesmen registered by him while acting for him. Said bond was required to be executed by an authorized surety company. No other method of giving security was provided for. In Riley v. Sweat, supra, this court held the bond requirement of the 1931 act unconstitutional but at the same time recognized the principle that it was within the state's police power to regulate the business of security dealers, and that in order to effectuate such regulations when made, that it was likewise within the power of the Legislature to require of security dealers a license and demonstration of good repute and qualification, together with an irrevocable consent to the service of process upon a designated official.

To take care of the objections found as to the bond requirement of the 1931 act, chapter 16174, Acts of 1933, enacted that the bond required of dealers in certain securities under section 11 of chapter 14899, supra, should be in a particularly designated form, the substantial provisions of which are: (1) A maximum penal sum and attendant liability limited to that sum which was fixed at $5,000; (2) provision that before there should be any right of action against the principal or surety, within the period of one year after termination of the bond, notice of claim must have been given to the principal and surety, same being prescribed to be a condition precedent; (3) liability of surety limited to cases of actual fraud or dishonesty in the sales of securities; (4) cancellation of bond at option of principal or surety upon giving of sixty days' notice to Securities Commission, after which cancellation no further obligation may be incurred on the bond; (5) bond to remain in force and effect for one year only unless sooner canceled; (6) bond to be executed by a surety company authorized to do business in this state.

Under section 2 of said chapter 16174, supra, in lieu of the bond, an applicant may, if he so desires, deposit with the Florida Securities Commission, United States government bonds, cash, or other securities satisfactory to the commission in the sum of $5,000, attended by the same liability as upon the bond.

The power, which in its various ramifications is known as the 'police power,' is an exercise of the sovereign right of the state to enact laws for the protection of the lives, health, morals, and comfort and general welfare of the people, and is paramount to the right of any person to engage in a particular business of calling. This is true although the business or calling engaged in be admittedly legitimate, and is not of such character that it may be entirely forbidden as a calling or business per se inimical to the general welfare.

The question whether or not a particular legislative act enacted under the police power for the purpose of regulating a business trade or profession is valid, depends almost entirely on whether or not the legislation is addressed to a legitimate end. If the measure of regulation attempted to be undertaken is reasonable and appropriate to a legitimate end for the protection of a basic interest of society, and is not a mere subterfuge in the form of a law designed to bring about some unjust advantage to particular individuals to the prejudice of the general rights of others in the same calling similarly situated, the courts are not authorized to declare the regulations prescribed invalid, although they may strongly disapprove of the wisdom and policy of the measures adopted, or may deem the regulations prescribed foolish or unwise.

The economic interests of a state may justify the exercise of its continuing and dominant protective police power for the promotion of the general welfare, notwithstanding interference with lawful callings and even contracts. Home Building & Loan Association v. Blaisdell, 54 S.Ct. 231, 78 L. Ed.--(opinion filed January 8, 1934). And this has been held to apply to the business of selling securities. Hall v. Geiger Jones Co., 242 U.S. 539 37 S.Ct. 217, 61 L.Ed. 480, L. R. A. 1917F, 514, Ann. Cas. 1917C. 643; Caldwell v. Sioux Falls Stock Yards Co., 242 U.S. 559, 37 S.Ct. 224, 61 L.Ed. 493; Merrick v. N.W. Halsey & Co., 242 U.S. 568, 37 S.Ct. 227, 61 L.Ed....