State ex rel. Short v. Riedell

• Citation: 233 P. 684,109 Okla. 35,42 A.L.R. 765,1924 OK 964
• Decision Date: 21 October 1924
• Docket Number: 14898.
• Parties: STATE ex rel. v. RIEDELL et al. SHORT, Atty. Gen., et al.
• Court: Supreme Court of Oklahoma

233 P. 684

109 Okla. 35, 42 A.L.R. 765, 1924 OK 964

STATE ex rel. SHORT, Atty. Gen., et al. v. RIEDELL et al.

No. 14898.

Supreme Court of Oklahoma

Oct. 21, 1924

Rehearing Denied Nov. 25, 1924.

Application to File Second Rehearing Denied Feb. 17, 1925.

Syllabus by the Court.

House Bill No. 204, Session Laws of 1917, c. 5, known as the Accountancy Act (article 10, c. 87, Comp. Stat. 1921), in so far as it prohibits uncertified accountants from holding themselves out as professional or expert accountants or auditors for compensation or engaging in the practice of that profession, is in conflict with the spirit and express provision of the Constitution and void, in this, that it abridges the right of private property and infringes upon the right of contract in matters purely of private concern bearing no perceptible relation to the general or public welfare, and thereby tends to create a monopoly in the profession of accountancy for the benefit of certified accountants, and denies to uncertified accountants the equal protection of the laws and the enjoyment of the gains of their own industry.

Additional Syllabus by Editorial Staff.

Term "police power" comprehends power to make and enforce all wholesome and reasonable laws and regulations necessary to the maintenance, upbuilding, and advancement of the public weal and public interests. It is exclusively for protection of public welfare, and cannot be fairly invoked except to promote the public convenience, general prosperity public health, or public safety. It is an attribute of sovereignty inherent in every sovereign state.

Commissioners' Opinion, Division No. 2.

Appeal from District Court, Oklahoma County; George W. Clark, Judge.

Action in nature of quo warranto by the State of Oklahoma, on the relation of George F. Short, Attorney General, and others against Charles M. Riedell and others. From judgment for defendants, plaintiff appeals. Affirmed.

Accountancy Act, Comp.St.1921, §§ 10922-10937, (repealed 1931), in so far as it prohibits uncertified accountants from holding themselves out as certified or professional accountants or auditors for compensation, or practicing such profession violates Constitution as tending to create monopoly in accountancy for benefit of certified accountants.

George F. Short, Atty. Gen., M. W. McKenzie, Asst. Atty. Gen., and Hunter L. Johnson, of Oklahoma City, for plaintiff in error.

Selby & Callihan and H. A. Kroeger, all of Oklahoma City, for defendants in error.

RAY, C.

This action in the nature of quo warranto was commenced in the district court of Oklahoma county by the state, on the relation of the Attorney General and the state board of accountancy, to oust the defendants from the exercise of what is termed as a "franchise," that is, the holding themselves out to the public, and practicing, as professional or expert public accountants and auditors for compensation without having first appeared before the state board of accountancy and stood an examination and received a certificate from that board authorizing them to engage in that business as professional accountants.

The defendants are not, and have not been, practicing their profession for the state or any of its subdivisions or municipalities, but have been, and are, holding themselves out to practice their profession for compensation for individuals, firms, and corporations, other than the state or its subdivisions, who may desire their services.

It is the contention of the defendants that the Public Accountancy Act does not by its terms prohibit the exercise of that profession by uncertified accountants; but, if so, then that act, in so far as it seeks to prohibit the practice of that profession without having received the certificate there provided for, is unconstitutional and void for the following reasons: That it deprives the defendants of their liberty and property without due process of law; that it deprives them of their inherent right to liberty, the pursuit of happiness, and enjoyment of the gains of their own industry; that it denies, impairs, and disparages the inherent rights of the defendants to contract in matters of private concern and in which the public at large and the public welfare, peace, health, and safety are not concerned or involved; that the act is violative of the Bill of Rights, in that, in effect, it attempts to create, and does create, a monopoly in the business of auditing and accounting; that it attempts to create an association of accountants and auditors to individuals, and to grant thereto individual and exclusive rights, privileges, and immunities; that it contravenes the spirit of the Constitution, in that it purports to grant certain arbitrary power and authority to the state board of accountancy, and lodges with that board an unlimited discretionary power to permit certain of the citizens of the state to engage in the business of auditing and accounting to the exclusion of others, and seeks to delegate an assumed power of the Legislature to the board of accountancy to establish rules and regulations and to arbitrarily make additional requirements to those required by the statute, and thereby to discriminate against one citizen of the state in favor of others; that it is an unlawful attempt upon the part of the state to exercise police power concerning a matter which in no way affects the public peace, health, safety, or general welfare, and without any public necessity therefor. It is contended on the part of the state that the act prohibits the practice of the profession of auditing and accounting by one not having first stood the examination before the board of accountancy and received a certificate of qualifications to practice as a professional accountant, and that the enactment of the law complained of by the defendants was a legitimate, valid, and proper exercise of the police power of the state and not violative of the Constitution or any of its provisions.

It is conceded by the defendants that the Accountancy Act, in so far as it requires an examination before the board of accountancy and the issuance of a certificate of qualifications for those practicing or intending to practice the profession of auditing and accounting for the state, or its officers, or any subdivisions of the state or their officers, and in so far as it creates degrees of accountancy and provides for the issuance of certificates of qualifications to practice as professional auditors and accountants, is within the police power of the state and valid; but they contend that it is invalid in so far as it seeks to prohibit accountants who have not stood the examination before the state board and received a certificate authorizing them to follow that profession as accountants for individuals, firms, and corporations desiring to employ them. In other words, the defendants contend that in following their profession as accountants for private individuals, firms, and corporations, and not for the state or any of its subdivisions or municipalities, they are not exercising a franchise, but are exercising a right guaranteed to them by the federal and state Constitutions.

The Accountancy Act is House Bill No. 204, chapter 5, Session Laws of 1917; chapter 87, art. 10, Comp. Stat. 1921. The sections complained of are sections 11 and 14 of the original act (sections 10922 to 10937, Comp. Stat. 1921). Section 1 of the act creates a state board of accountancy to be composed of the state examiner and inspector, the Attorney General and one member to be appointed by the Governor, who shall have had at least three years' practical experience as a public accountant. Section 4 authorizes the board to administer oaths to applicants, to conduct investigations and examinations, to determine the qualifications of applicants, to confer the degrees of, (a) certified commercial accountant, (b) certified municipal accountant, (c) certified public accountant, and to establish rules and regulations requisite to properly carrying out the purposes of the act. Section 5 provides that examinations of applicants shall be held at the state capitol twice each year, the examination to be oral or written, at the discretion of the board. Section 6 designates the subjects upon which applicants must stand a satisfactory examination to entitle them to the degrees of certified commercial accountant and certified municipal accountant, and authorizes the board to add such other subjects as it may deem appropriate and necessary. When the applicant has had the degrees of certified commercial accountant and certified municipal accountant conferred, the board is required to confer upon such applicant the degree of certified public accountant. By section 7 it is provided that any citizen of the United States over the age of 21 years, of good moral character, who has passed a satisfactory examination, shall receive a certificate of his qualifications to practice as a professional accountant. Section 9 confers the power upon the board to revoke any certificate, upon hearing, upon any of the grounds: For conviction of a felony; for conviction of conduct involving moral turpitude; for certifying to a false or fraudulent statement in relation to an audit or for fraud or misrepresentations in application for certificate. By section 12 the applicants are required to deposit $25 at the time of filing their applications, which shall not in any event be returned. These fees are required to be paid to the state treasurer. The expenses incident to the examinations and per diem of the appointive member of the board are required to be paid from the contingent fund of the state examiner and inspector, not to exceed in any event the amount of the fees collected and covered into the treasury under the act. ...