Tasco Developing & Bldg. Corp. v. Long

• Decision Date: 10 May 1963
• Citation: 368 S.W.2d 65,16 McCanless 96,212 Tenn. 96
• Court: Tennessee Supreme Court
• Parties: , 212 Tenn. 96 TASCO DEVELOPING AND BUILDING CORPORATION et al., Appellees, v. John R. LONG, Commissioner of Insurance and Banking, et al., Appellants.

Page 65

368 S.W.2d 65

16 McCanless 96, 212 Tenn. 96

TASCO DEVELOPING AND BUILDING CORPORATION et al., Appellees, v. John R. LONG, Commissioner of Insurance and Banking, et al Appellants.

Supreme Court of Tennessee.

May 10, 1963.

John T. Conners, Jr., Nashville, Tenn., for appellees.

George F. McCanless, Atty. Gen., Thomas E. Fox, Walker T. Tipton, Asst. Attys. Gen., Nashville, Tenn., for appellants.

Phillips, Gullett & Steele, Nashville, Tenn., W. Harold Bigham, Nashville, Tenn., of counsel, amicus curiae, on behalf of Tennessee Road Builders Ass'n.

Howell & Tuck, Nashville, Tenn., Morton B. Howell, Jr., Nashville, Tenn., of counsel, amicus curiae, on behalf of Tennessee State Branch Assoc. Gen. Contractors of America.

BURNETT, Chief Justice.

The real question for consideration in this lawsuit is whether or not the State Board for Licensing General Contractors has the right, power and authority to classify and limit the license which it issues to general contractors.

The Tasco Developing and Building Corporation and others filed a bill in which they allege that certain rules and regulations of the State Board for Licensing General Contractors were illegal and void, wherein this Board had limited these complainants to contracts not to exceed a specified amount as to each of the complainants. To this bill first a motion was made that the bill should be dismissed because the action of this Board in limiting or classifying these licenses issued to general contractors is limited to review (statutory certiorari as provided in § 27-901 et seq., T.C.A.). This motion was overruled and the Board answered setting up the proposition that under the Act creating the State Board for Licensing General Contractors that the Board had a right to adopt certain rules and regulations, and, having adopted these rules and regulations, these complainants had failed to comply with them in that their licenses were limited in specified amounts and they were therefore precluded from bidding on contracts in a greater amount. The question was heard on bill and answer. After argument, briefs, and a consideration of the matter, the Chancellor entered an injunction enjoining the Board because in his opinion the Board had no authority to classify and limit general contractors' licenses issued by said Board to the complainants. A discretionary appeal was allowed, and after a thorough consideration of the matter in reading the very able briefs of all parties, the record and making an independent investigation of the statutes and authorities, we are in a position to determine the question.

A State Board for Licensing General Contractors was created by Chapter 135 of the Public Acts of 1945. It has been subsequently amended in minor particulars, but these amendments do not affect this lawsuit. This Act is now codified as § 62-601 et seq., T.C.A. The Act became effective March 1, 1945, and pursuant thereto either the Board serving under a previous Act, or the Board members appointed pursuant to this Act, adopted certain rules and regulations on April 19, 1945. These rules and regulations so far as this record shows have been followed since that time. The questionable portion (that is as far as this lawsuit is concerned) is a portion of Section 4 of said rules and regulations, reading as follows:

'Section 4. Applicant for license as a contractor, in order to be accepted and licensed, shall qualify under one or more of the classifications outlined in Section 11 of the Act creating the State Board for Licensing General Contractors and the amendments and the classifications shall be shown on the face of the certificate when issued. A designation of 'small' or 'light' may be placed before a classification. In such instances, projects or contracts exceeding one hundred twenty-five thousand ($125,000.00) dollars, would cease to be 'small' and those exceeding two hundred twenty-five ($225,000.00) dollars would cease to be 'light'. Contractors bidding in excess of their classifications would be in violation of the Act.'

It is under this provision of their regulations that the appellees in this lawsuit were so classified. They now question the right of the Board to classify them and say that such regulation is illegal and void because primarily the Legislature did not provide for any such classification and when the Board makes such a classification it is in effect legislating and making laws and that such Board has no right to legislate or make laws, but must follow the law as adopted by the Legislature.

The first Act to our knowledge creating a Board for the purpose of Licensing General Contractors was embodied in Chapter 70 of the Public Acts of 1931. This Act was superseded and repealed by the 1945 Act above referred to. In 1937 by Chapter 156 of the Public Acts of 1937, among other things, the Board was given the power to limit the license to the character of work to which the applicant was qualified and the maximum contract he may undertake. In 1939 by Chapter 114, the Public Acts of that year, this provision, that is that of 1937, was repealed. It is for this reason, that is, that the Board once having been granted specifically the power to enact such regulation as quoted from Section 4 of their regulations above that the Chancellor bottomed his action herein in holding that the Board does not have a right to classify and limit licensees, because by doing this and then repealing it it was the Chancellor's idea that the Legislature did not intend for the Board to have such power.

The Chancellor failed to take into consideration the fact that subsequent to this action of the Legislature, on which he bases his opinion, that they enacted an entirely new full and complete Act (Chapter 135, Public Acts of 1945) under which the Board has enacted certain rules and regulations which have been effective for some seventeen (17) years at the time this lawsuit was brought. He likewise failed to take into consideration that in enacting this Act, which is now controlling, that Board instead of being told they could grant a license under a certain particular and not grant it under another particular or this and that and the other thing, the Legislature provided under Section 4 of the Act (§ 62-606, T.C.A.) that the Board 'shall have the power to make such by-laws, rules and regulations as it shall deem best, providing the same are not in conflict with the laws of Tennessee.' This identical provision had been in the previous Acts of 1931. The 1945 Act also provided that any rules and regulations which the Board had been acting under the 1931 Act which were in effect on the day of the adoption of the 1945 Act, 'shall remain effective until changes are made by appropriate action of the board.' § 62-607, T.C.A. All these things are necessary for a proper solution of the question here involved.

Of course, an administrative body of this kind which is given legislative power to make rules and regulations does not have the power to make a rule or regulation which is inconsistent with the constitutional provision or other law on the subject, and it does not include the authority to enact laws, or to make rules affecting or creating substantive rights. Said body though does have the power when it is given it by the Legislature to make rules and regulations and in...