State v. Renalist, Inc.

• Decision Date: 07 December 1978
• Docket Number: No. 78-261,78-261
• Citation: 10 O.O.3d 408,56 Ohio St.2d 276,383 N.E.2d 892
• Parties: , 10 O.O.3d 408 The STATE of Ohio, Appellant, v. RENALIST, INC., et al., Appellees. The STATE of Ohio, Appellant, v. WATLING, Appellee.
• Court: Ohio Supreme Court

Page 276

56 Ohio St.2d 276

383 N.E.2d 892, 10 O.O.3d 408

The STATE of Ohio, Appellant, v. RENALIST, INC., et al., Appellees.

The STATE of Ohio, Appellant, v. WATLING, Appellee.

No. 78-261.

Supreme Court of Ohio.

Dec. 7, 1978.

Defendant, Renalist, Inc., through its owner-manager, John L. Knight, and its branch-office managers, Ralph McLaughlin and Robert E. Watling, was involved in the business of both collecting and selling information concerning rental properties. Once the information was collected by the corporation it was sold in the form of an agreement called a "policy" to prospective tenants for a fee and good for three months from the date of purchase.

Effective April 8, 1977, while the defendants were engaged in the foregoing activity, R.C. 4735.01 and 4735.99 were amended and newly enacted R.C. 4735.021 went into effect. R.C. 4735.01, which defines the term "(r)eal estate broker" was amended to include subsection (A)(10) which adds to the definition of broker an individual who: "Collects rental information for purposes of referring prospective tenants to rental units or locations of such units and charges the prospective tenants a fee."

In order to regulate such activity the General Assembly saw fit to enact a new statute dealing with that subject in the form of R.C. 4735.021. ¹ In addition, R.C. 4735.99 as amended, designates a violation of either R.C. 4735.02 or 4735.021 as a misdemeanor of the first degree. R.C. 4735.02 reads, in pertinent part: "No person * * * or corporation shall act as a real estate broker * * * without first being licensed as provided in Chapter 4735 of the Revised Code."

Defendant Renalist, Inc., was subsequently charged with a violation of the organized crime statute, R.C. 2923.04(A)(5), and defendants Knight, McLaughlin and Watling were all charged with acting as real estate brokers without a license pursuant to R.C. 4735.02. ²

All the defendants pled "no contest" to the charges pursuant to Crim.R. 11, were found guilty, and sentenced. Three of the four cases were consolidated for purposes of appeal. On appeal, the judgments were reversed on the ground that newly enacted R.C. 4735.01(A)(10) was unconstitutional.

The causes are now before this court pursuant to the allowance of motions for leave to appeal.

Stephan M. Gabalac, Pros. Atty. and William I. Arbuckle, III, Akron, for appellant.

Hershey & Browne and John L. Wolfe, Akron, for appellees Renalist, Inc., Knight and McLaughlin.

Randall L. Johnson and Edmund M. Sawan, Akron, for appellee Watling.

PER CURIAM.

The appellant has raised two propositions of law. The first asserts that R.C. 4735.01(A)(10) bears a reasonable relationship to a proper protection of the public welfare and does not infringe upon the appellees' right to commercial speech as embodied in the First Amendment to the United States Constitution. In the second proposition of law it is argued that the Court of Appeals committed error by holding the statute unconstitutional on the basis that the records of the "no contest" pleas did not reflect the area of legitimate public interest underlying the statute's enactment.

A resolution of these appeals requires an examination of some fundamental rules of judicial construction applicable when a court is required to assess a challenge to the constitutionality of an Act of the General Assembly. For example, it is well established that an Act of the General Assembly is entitled to a strong presumption of constitutionality. State, ex rel. Jackman v. Court of Common Pleas (1967), 9 Ohio St.2d 159, 161, 224 N.E.2d 906; State ex rel. Dickman v. Defenbacher (1955), 164 Ohio St. 142, 128 N.E.2d 59; American Cancer Society, Inc. v. Dayton (1953), 160 Ohio St. 114, 121, 114 N.E.2d 219; State, ex rel. Lourin v. Indus. Comm. (1941), 138 Ohio St. 618, 622, 37 N.E.2d 595; Xenia v. Schmidt (1920), 101 Ohio St. 437, 130 N.E. 24; Ohio Public Interest Action Group v. Pub. Util. Comm. (1975),43 Ohio St.2d 175, 331 N.E.2d 730. The necessity for a court adhering to this time-honored presumption is that it prohibits one branch of state government from encroaching on the duties and prerogatives of another. 16 American Jurisprudence 2d 338-339, Constitutional Law, Section 138.

However, this strong presumption is rebuttable, but only by proving the existence of the constitutional infirmity "beyond a reasonable doubt." State, ex rel. Dickman v. Defenbacher, supra. Furthermore, when an enactment under attack is a legislative exercise pursuant to the police power, a party opposing such action must demonstrate a clear and palpable abuse of that power in order for a reviewing court to substitute its own judgment for legislative discretion. Allion v. Toledo (1919), 99 Ohio St. 416, 124 N.E. 237; Dayton v. S. S. Kresge Co. (1926), 114 Ohio St. 624, 151 N.E. 775. In addition when the Application of a statute is challenged, "the burden rests upon the party making such (an) attack to present clear and convincing evidence of a presently existing state of facts which makes the act unconstitutional and void when applied thereto." Belden v. Union Cent. Life Ins. Co. (1944), 143 Ohio St. 329, 55 N.E.2d 629, paragraph six of the syllabus.

A perusal of the record and the Court of Appeals' decisions ³ reveals a fundamental failure to adhere to these principles and for that reason the conclusion that the amendment was unconstitutional was arrived at erroneously.

The Court of Appeals initially determined that the question of the constitutionality of the statute had not been "directly raised" by way of motion in the trial court and therefore the trial judge had not been called upon to rule on that issue. In discussing the state of the record on appeal, the court indicated the following:

"The record here, including the transcript of proceedings, shows no motions filed by any of the defendants before entering their pleas. Thus, the constitutionality of the statutes underlying the charges was not directly raised in the trial court. We stated in State v. Geriak, Nos. 8524 and 8525 (9th Dist.Ct.App.) (Dec. 21, 1977), that the pre-rule pleading of demurrer was replaced by Crim.R. 12(A), motions to dismiss or quash. These vehicles allow the trial court to confront and decide the issue which is the subject of the motion directly and allow defendant to appeal the ruling of the court on that issue. In the instant case, the constitutionality of the statutes was not raised by motion at the trial level and, thus, we have no ruling by the court to consider on appeal. As a general principle, if the trial court is not given the opportunity to pass on questions of law, those questions cannot be raised here for the first time." See, also, 4 Ohio Jurisprudence 3d 298, Appellate Review, Section 137.

However, the court went on to conclude that certain "exceptional facts" were present in the record which revealed "At least inferentially, that the subject of appellate review was discussed at least in the pretrial stage by the parties and the court." (Emphasis added.) The determination that the issue had been raised "inferentially" left the Court of Appeals with a record that was barren of any evidentiary basis asserted by the appellees demonstrating the unconstitutionality of the statute, or any corresponding justification by the state of Ohio.

Nevertheless, the Court of Appeals went on to hold the Application of the statute to be unconstitutional because that very same record in no way Reflected the "public interest" protected by the amendment. In discussing the validity of the amendment as an exercise of the state's police power, the court concluded: "Under such circumstances, we believe R.C. 4735.01(A)(10), As...