State v. Warren

• Decision Date: 06 January 1937
• Docket Number: 650.
• Citation: 189 S.E. 108,211 N.C. 75
• Parties: STATE v. WARREN.
• Court: North Carolina Supreme Court

189 S.E. 108

211 N.C. 75

STATE v. WARREN.

No. 650.

Supreme Court of North Carolina

January 6, 1937

Appeal from Superior Court, Guilford County; W. C. Harris, Judge.

E. D Warren was convicted of violating statute licensing real estate brokers and real estate salesmen, and he appeals.

Reversed.

241 Public-Local Laws of 1927, to wit: "An Act to define regulate, and license real estate brokers and real estate salesmen; to create a state real estate commission, and to provide a penalty for a violation of the provisions hereof," applicable to certain designated counties-8 in number. The defendant contends that the act is unconstitutional.

DEVIN and SCHENCK, JJ., dissenting.

General Assembly can confer power on municipalities to tax trades professions, and the like.

The defendant was found guilty and sentenced for violating chapter

F. F. Myrick, of Greensboro, for appellant.

A. A. F. Seawell, Atty. Gen., and Hoyle & Hoyle, of Greensboro, amici curiæ, for the State.

CLARKSON Justice.

The sole question involved in this appeal: Is the act in controversy unconstitutional? We think so.

The Constitution of North Carolina, art. 1, § 7, is as follows: "No man or set of men are entitled to exclusive or separate emoluments or privileges from the community but in consideration of public services." Article 1, § 17: "No person ought to be taken, imprisoned, or disseized of his freehold, liberties or privileges, or outlawed or exiled, or in any manner deprived of his life, liberty or property, but by the law of the land." Section 31: "Perpetuities and monopolies are contrary to the genius of a free state and ought not be allowed." Article 5, § 3: Taxation shall be by uniform rule and ad valorem, with certain exemptions. Fourteenth Amendment to the Constitution of the United States.

In Public Laws 1935, chapter 371, we find under License Taxes, section 100, p. 450, the following: "Taxes in this article or schedule shall be imposed as a State License Tax for the privilege of carrying on the business, exercising the privilege, or doing the act named, and nothing in this act shall be construed to relieve any person, firm, or corporation from the payment of the tax prescribed in this article or schedule."

Section 109, in part: "Every person, whether acting as an individual, as a member of a partnership, or as an officer and/or agent of a corporation, who is engaged in the business of selling or offering for sale, buying or offering to buy, negotiating the purchase, sale, or exchange of real estate, or who is engaged in the business of leasing or offering to lease, renting or offering to rent, or of collecting any rents as agent for another for compensation, or who is engaged in the business of soliciting and/or negotiating loans on real estate as agent for another for a commission, brokerage and/or other compensation, shall apply for and obtain from the Commissioner of Revenue a State-wide license for the privilege of engaging in such business or profession, or the doing of the act named, and shall pay for such license twenty-five dollars ($25.00)."

The above is a state-wide act, and a state-wide license is issued to the real estate salesmen, applicable to the whole State. The act in controversy, chapter 241, Public-Local Laws of 1927, § 1, in part is as follows: "On and after May first, one thousand nine hundred and twenty-seven, it shall be unlawful for any person, copartnership, association or corporation to act as a real estate broker or real estate salesman, or to advertise or assume to act as such real estate broker or real estate salesman without a license issued by the North Carolina Real Estate Commission. No copartnership, association or corporation shall be granted a license unless every member or officer of such copartnership, association, or corporation who actively participates in the brokerage business of such copartnership, association, or corporation shall hold a license as a real estate broker, and unless every employee who acts as a salesman for such copartnership, association, or corporation shall hold a license as a real estate salesman." The contents of the act: Section 3, Creation of commission, details of same; section 4, Qualifications for license; section 5, Application for license; section 6, Procedure when license is refused applicant; section 7, Details relating to license; section 8, Suspension or revocation of license for causes enumerated; section 9, Provision for hearing before application is refused or license suspended or revoked; section 10, Nonresident brokers and salesmen; section 11, Publication of list of licenses; section 12, Penalties; section 13, Saving clause; section 14, Repealing clause; section 15, Interpretation of act; section 16, Date effective; section 17: "This act shall apply only to the counties of Buncombe, Durham, Forsyth, Guilford, Henderson, Lee, Rowan and Wake." Some counties have been withdrawn from the act and some added. It is operative in only a few counties of the State.

In section 3 is the following: "All fees and charges collected by the commission under the provisions of this act shall be paid into the general fund in the State Treasury. All expenses incurred by the commission under the provisions of this act, including compensations to members, secretaries, clerks, and assistants, shall be paid out of the general fund in the State Treasury upon warrants of the State Auditor from time to time when vouchers therefor are exhibited and approved by the commission: Provided, that the total expense for every purpose incurred shall not exceed the total fees and charges collected by the commission."

Section 4: "A license shall be granted only to persons who bear a good reputation for honesty, truthfulness and fair dealing, and are competent to transact the business of a real estate broker or a real estate salesman in such a manner as to safeguard the interests of the public." The act provides for suspension or revocation of license on its own motion or upon written complaint for 10 reasons-setting them forth.

It has long been settled in this state that under the police power of the state to protect the health, comfort, safety, and welfare of the people general acts have been passed and held constitutional, relating to professions and trades that require skill, learning, and training, such as attorneys at law, physicians, dentists, surgeons, accountants, osteopaths, chiropractors, opticians, cosmetologists, barbers, plumbers, etc. Roach v. Durham, 204 N.C. 587, 169 S.E. 149; Allen v. Carr, 210 N.C. 513, 187 S.E. 809.

If the present act in controversy was applicable to the whole state, we are not called upon here to decide the constitutionality of same.

In Rawles v. Jenkins, 212 Ky. 287, at page 292, 279 S.W. 350, 352, it is said: "If occasional opportunity for fraud is to be the test, then there is no reason why every grocer, every merchant, every automobile dealer, every keeper of a garage, and every manufacturer, and every mechanic who deals more frequently with the public in general and whose opportunities for fraud are far greater than those of the real estate agent or salesman, may not be put on the same basis. If that be done, then only those who, in the opinion of certain boards or the courts, have the necessary moral qualifications, will be permitted to engage in the ordinary occupations of life. The result will be that all others who fail to establish their moral fitness will not only be deprived of their means of livelihood, but will become a burden either on their families and friends or the community at large. In our opinion, the right to earn one's daily bread cannot be made to hang on so narrow a thread. Broad as is the police power, its limit is exceeded when the state undertakes to require moral qualifications of one who wishes to engage or continue in a business which, as usually conducted, is no more dangerous to the public than any other ordinary occupation of life. As said of the real estate agent in Hager, State Auditor, v. Walker, 128 Ky. 1, 107 S.W. 254, 15 L. R.A. (N.S.) 195, 129 Am.St.Rep. 238: 'The occupation taxed is essentially a harmless one. It has none of the features requiring police regulation, and there is no reason why the police power should be invoked concerning it.' Of course, moral fitness on the part of the real estate broker, and of every other business man, is a thing greatly to be desired, but, unless the business as ordinarily conducted is unusually dangerous to the public, we shall have to leave something to religious and moral training, to public opinion, and to the ordinary laws of the land. For the reasons given, we are constrained to the view that the statute, in so far as it makes the obtainment or retention of a license depend on the moral fitness of the applicant or licensee, is unconstitutional."

On the other hand, general state acts of this nature have been held constitutional. In Bratton v. Chandler, 260 U.S. 110, 43 S.Ct. 43, 67 L.Ed. 157, a state-wide act of Tennessee is upheld. Roman v. Lobe, 243 N.Y. 51, 152 N.E. 461, 50 A.L.R. 1329 et seq.

In this state certain public-local acts have been held constitutional, as in State v. Moore, 104 N.C. 714 10 S.E. 143, 17 Am.St.Rep. 696; State v. Blake, 157 N.C. 608, 72 S.E. 1080, and cases cited therein, but these matters were local in their nature. The sale of real estate is a business applicable to the whole State, and the State licenses those engaged in the business and issues them a "state-wide license." The state can no doubt, in a state-wide act, make reasonable regulations in regard to the real estate business. Those desiring real estate licenses to do business have to obtain same from the state, and in addition those living in these counties, under ...