State ex rel. Reynolds v. Dinger

• Decision Date: 27 June 1961
• Citation: 109 N.W.2d 685,14 Wis.2d 193
• Parties: STATE ex rel. John W. REYNOLDS, Attorney General et al., Petitioners, v. Julius J. DINGER et al., as members of and constituting the Wisconsin Real Estate Brokers' Board, Respondents.
• Court: Wisconsin Supreme Court

Page 685

109 N.W.2d 685

14 Wis.2d 193

STATE ex rel. John W. REYNOLDS, Attorney General et al., Petitioners, v. Julius J. DINGER et al., as members of and constituting the

Wisconsin Real Estate Brokers' Board, Respondents.

Supreme Court of Wisconsin.

June 27, 1961.

John W. Reynolds, Atty. Gen., Warren H. Resh, Asst. Atty. Gen., F. Trowbridge vom Baur, Washington, D. C., of counsel, for plaintiffs.

Quarles, Herriott & Clemons, Milwaukee, Maxwell H. Herriott, L. S. Clemons, and David S. Ruder, Milwaukee, of counsel, for defendants, Wis. Real Estate Brokers' Board.

E. L. Wingert, Madison, for defendant Ass'n of Real Estate Brokers.

BROWN, Justice.

In 1919 the legislature created the Real Estate Brokers' Board and charged it, among other things, with the supervision, regulation and control of the business or occupation of real estate brokers. This agency has the rule-making power 'to effectuate the purpose of the statutes, but such rules are not valid if they exceed the bounds of correct interpretation.' Sec. 227.014, Stats.

Under the ostensible authority of that power the Wisconsin Real Estate Brokers' Board promulgated its Rule R.E.B. 5.04 of the administrative code for the guidance and government of licensed real estate brokers who by statute are subject to the Board's jurisdiction. Resting on the allegations of fact contained in the complaint, the plaintiff charges that the Rule is an invalid exercise of the Board's administrative rule-making power because the Rule 'purports to authorize its licensees to give legal advice or services, exceeds the bounds of correct interpretation of the agency's rule-making authority and constitutes an attempted usurpation of the inherent and exclusive power of the Supreme Court of Wisconsin: (1) to determine what is the practice of law, (2) to establish the qualifications of persons entitled to engage in such practice, (3) to license these persons who have qualified themselves, by education, training, examination and character to exercise such franchise, and (4) to exercise supervisory and disciplinary control over such licensees.'

Defendants' answers deny the conclusions asserted by the complaint and in affirmative defense allege additional facts which will be referred to later. Defendants' pleadings conclude that Rule R.E.B. 5.04 is valid and the Board has not usurped the prerogatives of the court.

The state's brief concedes:

'The plaintiff has demurred to the separate answers of each of the defendants and to all alleged defenses therein on the grounds that neither of the answers state a defense to the complaint.

'Under familiar principles the effect of the demurrer to the answers is to admit facts well-pleaded but not the legal conclusions of the pleader.

'Mitchell v. City of Madison (1953) 264 Wis. 350, 59 N.W.2d 469;

'Olson v. Ortell (1953) 264 Wis. 468, 59 N.W.2d 473.

'A demurrer to an answer will reach new matter pleaded as a defense.

'Selts Investment Co. v. Baireuther (1930) 202 Wis. 151, 231 N.W. 641.

'It relates back to the complaint and tests its sufficiency.

'Stephens v. Wheeler (1927) 193 Wis. 164, 213 N.W. 464.'

Material to this case, sec. 256.30, Stats., declares:

'(1) Every person, who without having first obtained a license to practice law as an attorney of a court of record of Wisconsin, as provided by law, shall practice law within the meaning of sub. (2) of this section, or hold himself out as licensed to practice law as an attorney within the meaning of sub. (3) of this section, shall be guilty of a misdemeanor, and upon conviction, shall be punished by a fine of not less than $50 nor more than $500 or by imprisonment in the county jail not exceeding one year, or by both such fine and imprisonment, in addition to his liability to be punished as for a contempt.

'(2) Every person who shall appear as agent, representative or attorney, for or on behalf of any other person, or any firm, copartnership, association or corporation in any action or proceeding in or before any court of record, court commissioner, or judicial tribunal of the United States, or of any state, or who shall otherwise, in or out of court for compensation or pecuniary reward give professional legal advice not incidental to his usual or ordinary business, or render any legal service for any other person, or any firm, copartnership, association or corporation, shall be deemed to be practicing law within the meaning of this section.'

(Note that sub. (2) of the statute exempts from the prohibition the rendering of professional legal advice or services when such advice or service is incidental to the usual and ordinary business of the person furnishing the service or advice. Note, too, that R.E.B. Rule 5.04(1), hereinafter set out, authorizes a broker to use and fill out a standard form only when he does so as a broker incidental to his trade or business and without extra compensation.)

Art. VII, sec. 2, Wisconsin Constitution, declares:

'The judicial power of this state, both as to matters of law and equity, shall be vested in a supreme court, circuit courts, courts of probate, and in justices of the peace. * * *'

The constitution does not prescribe the limits of what is or is not the judicial power of the state.

In 1919, with subsequent modifications of language which are immaterial for present purposes, the legislature enacted what presently appears as sec. 235.16, which reads:

'Forms approved and recommended; recording fees. (1) The several forms of deeds, mortgages, land contracts, assignments, satisfactions and other conveyancing instruments prepared or approved by the Wisconsin state register of deeds association, denominated 'State of Wisconsin' forms and numbered 1 to 60, both inclusive, and filed with the secretary of state, are approved and recommended for use in the state of Wisconsin. Such forms shall be kept on file with and preserved by the secretary of state as a public record.

'(2) The secretary of state shall, upon sufficient copies thereof being furnished to him without expense, thereupon certify the same to be correct copies of the forms on file in his office, approved by this section, and transmit a set of the same to each register of deeds in the state of Wisconsin; and each such register of deeds shall thereafter preserve the same on file in his office for the convenient use of the public.'

On November 30, 1960, defendant Board rescinded its former Rule R.E.B. 5.04 and in its place adopted a more detailed new Rule R.E.B. 5.04 with which we are presently concerned. This Rule is as follows:

'R.E.B. 5.04 Legal Advice or Services

'1. A real estate or business opportunity broker in transactions in which he is acting as a broker and incidental to his trade or business may use a standardized contract in a form prepared or approved by this Board, or as set forth in Section 235.16 of the Wisconsin Statutes. Said broker may complete said forms by filling in the blank spaces to show the parties and the terms of the transaction. Said forms shall not, however, be prepared by a salesman.

'2. Real estate or business opportunity brokers, in transactions in which they are acting as a broker may use standardized forms, as set forth in paragraph one (1), of deeds, land contracts, leases, options, mortgages, assignments of mortgages and land contracts, releases of mortgages, chattel mortgages, bills of sale, conditional sales contracts and other instruments of a similar nature, provided, however, that such are appropriate and incidental to transactions in which they act as licensed brokers, and that said brokers receive no extra compensation for filling in or completing such forms. The brokers may not do so in any other transactions. Said forms shall not, however, be prepared by salesmen.

'3. Real estate, business opportunity or cemetery brokers and their salesmen may, in transactions in which they are acting as licensees of this Board, use standardized forms, approved by this Board or as set forth in Section 235.16, Wis. Statutes, of offer to purchase and listing contracts and may complete them by filling in the blank spaces to show the parties, descriptions and terms necessary.

'4. A licensee of this Board may not make a separate charge for completing any standardized forms, or may not prepare such forms for persons in transactions in which they are not acting as a licensee, unless they are themselves one of the parties to the contract or instrument.

'5. At no time may a licensee of this Board give advice or opinions as to the legal rights of the parties as to the legal effect of instruments to accomplish specific purposes or as to the validity of title to real estate; and they may not prepare reservations or provisions to create estates for life or in remainder or any limited or conditional estates or any other form of conveyance than a direct present conveyance between the parties as provided for in standardized approved forms to be effective upon delivery.

'6. Any licensee who violates the foregoing provisions of this rule shall be in violation of Section 136.08(2)(i), Wisconsin Statutes, and deemed to be incompetent to act as a broker or salesman in such manner as to safeguard the interests of the public.

'The adoption of the above rule shall take effect on January 1, 1961, as provided in Section 227.023, Wisconsin Statutes.'

The real questions at issue are (1) whether the completion and use of the standardized forms by brokers in transferring the titles of the real estate of their clients is the practice of law, and (2) if such completion and use is the practice of law may the Board authorize such practice by their licensed brokers.

The appendix submitted with plaintiff's brief contains a standard form of deed and mortgage and everyone who has been in the general practice of law, as each justice on this court has been, is familiar with some or all of the 60 standard forms pertaining to real estate transactions prescribed by sec. 235.16, Stats., supra. It...