Superx Drugs Corp. v. Michigan Bd. of Pharmacy

• Decision Date: 11 November 1966
• Docket Number: No. 6,6
• Parties: SUPERX DRUGS CORPOARTION, a Michigan corporation, Plaintiff and Appellant, v. MICHIGAN BOARD OF PHARMACY, Defendant and Appellee.
• Court: Michigan Supreme Court

Page 1

146 N.W.2d 1

378 Mich. 430

SUPERX DRUGS CORPOARTION, a Michigan corporation, Plaintiff and Appellant, v. MICHIGAN BOARD OF PHARMACY, Defendant and Appellee.

No. 6.

Supreme Court of Michigan.

Nov. 11, 1966.

Stanley E. Beattie, James C. Allen, Richard G. James, Detroit, for plaintiff-appellant.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Joseph B. Bilitzke, Maurice M. Moule, Asst. Attys. Gen., Lansing, for defendant-appellee.

Before the Entire Bench.

DETHMERS, Justice.

This was original mandamus to compel defendant to grant a license to plaintiff for operation of a drug store for the year commencing July 1, 1962. The case now makes its third full dress appearance here. On December 5, 1963, by opinion of a majority of this Court, it was ordered that the writ issue. Superx Drugs Corporation v. State Board of Pharmacy, 372 Mich. 22, 44, 125 N.W.2d 13. After rehearing denied and later granted, this Court remanded the matter to defendant board for hearing and determination, with jurisdiction retained here for further appellate review if desired by either party. Superx Drugs Corporation v. State Board of Pharmacy, 375 Mich. 314, 134 N.W.2d 678. Reading of the opinions at the above two citations will disclose the facts and issues involved. We are now at the juncture of the review desired by plaintiff of the determination of defendant board, on said remand, denying the license.

The question before this Court still is whether plaintiff is entitled to the license.

Plaintiff was incorporated in 1909, for a term of 30 years. In 1939 it filed articles with the corporation and securities commission extending its corporate life for On May 25, 1962, the Kroger Company acquired all of the stock of plaintiff corporation. From then on, concededly, none of plaintiff's stock was held by a registered pharmacist. On or about June 5, 1962, plaintiff filed with defendant board application for the license here in question. Upon its denial this suit was brought.

another 30 years. We take judicial notice of the fact that, as appears from that commission's records, Frank Jones, both in 1909 and 1939, owned more than 25% Of the stock, and that the records of defendant board disclose that he was continuously, during that period, a registered pharmacist. It is a fair inference--a valid presumption, not disputed in this case, that such was the situation, throughout that 30-year period, including September 5, 1927, when P.A.1927, No. 359, § 1 (C.L.1948, § 338.481 (Stat.Ann.1956 Rev. § 14.771)), governing the ownership and licensing of pharmacies and drug stores, became effective.

The above cited section of the governing statute reads as follows:

'Every pharmacy, drug store or apothecary shop shall be owned by a registered pharmacist and no partnership or corporation shall own a drug store, pharmacy or apothecary shop unless at least 25 per cent of all stock is held by registered pharmacists, except that any corporation, organized and existing under the laws of the state of Michigan, or any other state of the United States, authorized to do business in the state of Michigan and empowered by its charter to own and conduct pharmacies, drug stores or apothecary shops and which, at the time of the passage of this act, owns and conducts a drug store or stores, pharmacy or pharmacies, apothecary shop or shops in the state of Michigan may continue to own and conduct the same and may establish and own additional pharmacies, drug stores or apothecary shops in accordance with provisions of this article: Provided, That any such corporation which shall not continue to own at least 1 of the pharmacies, drug stores or apothecary shops theretofore owned by it, or ceases to be actively engaged in the practice of pharmacy in the state of Michigan, shall not be permitted thereafter to own a drug store, pharmacy or apothecary shop: And provided further, That any person not a registered pharmacist who at the time of the passage of this act owns a pharmacy, drug store or apothecary shop in the state of Michigan, may continue to own and conduct the same in accordance with existing laws and regulations: And provided further, That the administrator, executor or trustee of the estate of any deceased owner of a pharmacy, drug store or apothecary shop, or the widow, heirs or next to kin of such deceased owner, may continue to own and conduct such pharmacy, drug store or apothecary shop in accordance with existing laws and regulations: Provided further, That this act shall not apply to stores or shops in which patent or proprietary medicines and ordinary domestic or household remedies, such as the sale of is provided for in section 18 of Act No. 134, Public Acts of 1885, are the only drugs and medicines sold at retail.'

Plaintiff contended before defendant board, as here, that despite the lack of present ownership of any of its stock by a registered pharmacist, it was entitled to a license under the so-called grandfather clause of the above quoted governing statute. This was on the theory that plaintiff corporation, at the time of the passage of the 1927 act, owned and was conducting a drug store and had continued to do so, uninterruptedly, ever since, thus qualifying it for license renewal under that statutory provision.

Defendant's first position was that plaintiff had lost its 'grandfather' clause rights because the closing of its store, for remodeling, from August 30, 1958, to November 24, 1958, amounted to its discontinuance of ownership and conducting of a drug store within the meaning of the quoted language of the statute, thus ending its grandfather clause rights. That contention and On the latest argument before this Court, for the first time, counsel for defendant raised the point that plaintiff was not entitled to anything under the grandfather clause, not because, as previously contended by it, plaintiff had lost those rights, but because plaintiff had never had grandfather clause rights. Although belatedly raised, we permitted the question to be argued at that late date and to be considered and briefed by both parties in supplemental briefs.

the further reason advanced by defendant for denial or license, namely, that plaintiff had engaged in unlawful sales of drugs without prescriptions signed by a physician, this Court disposed of in 372 Mich., supra, adversely to defendant's position and, hence, ordered issuance of the writ. With respect to those points we remain of the same view still. We would be no further disposed now to go along with defendant's argument, not raised on the first appeal, that plaintiff's grandfather rights, if it had any, were lost by reason of and during a period when its capital stock was pledged to an insurance company as security for an indebtedness and loans.

This last above consideration presents a question of statutory construction. Defendant says that the language of the statute creating the so-called grandfather rights means that any corporation which, at time of passage of the act, did not meet the requirement of ownership of at least 25% Of its stock by registered pharmacists but was then owning and conducting a drug store would be permitted to continue to do so. Plaintiff says that the language means that any corporation, regardless of who held its stock at the time, which owned and conducted a drug store at the time of passage of the act might continue to do so thereafter, even if, in the future, there was no ownership of at least 25% Of its stock by registered pharmacists. We adopt defendant's version as the correct interpretation.

'The purpose of an exception or grandfather clause is to Exempt from the statutory regulations imposed for the first time on a trade or profession those members thereof who are then engaged in the newly regulated field'. State ex rel. Krausmann v. Streeter, 226 Minn. 458, 33 N.W.2d 56. (Emphasis supplied.)

See 18A Words and Phrases (Perm ed), p. 359.

Manifestly, the legislative intent and purpose was to require that at least 25% Of the stock of corporations owning and conducting drug stores should be owned by registered pharmacists, but to make an Exemption and Exception for corporations which, at the time of passage of the act, were not so owned but were owning and conducting drug stores. A corporation qualified to act under the statute, at the time of its passage, without benefit of that portion constituting the grandfather clause was in no need of an exemption from the requirements of the statute and, hence, the exemption was meaningless as to it and had no application to it. In the instant case, at the time of the passage of the act, more than 25% Of plaintiff's stock was owned by Frank Jones. Hence, passage of the act and enforcement of its requirements and regulations could have had no adverse effect on plaintiff's continued right to own and conduct a drug store. It was in no need of the beneficent terms of the exemption or grandfather clause and, accordingly, acquired no rights under it. Having acquired no grandfather rights, and 25% Or more of its stock not being held by registered pharmacists at the time of the application for the license here in question, plaintiff did not then meet statutory requirements and defendant board was, therefore, correct in denying the application.

It will be noted in Mr. Justice Carr's majority opinion, 372 Mich. 22, on pages 59 and 60, 125 N.W.2d 13 that constitutionality of the act was not there passed upon by this Court. Plaintiff asserts that, if construed to require denial of its application 'In the light of the various requirements of the Pennsylvania statutes, it is made clear, if it were otherwise doubtful, that mere stock ownership in a corporation, owning and operating a drug store, can have no real or substantial relation to the public health; * * * No facts are presented by the record, and, so far as appears, none were presented to the Legislature which enacted the statute, that property...