Tracy v. Contractors' State License Bd.

• Decision Date: 23 November 1965
• Citation: 63 Cal.2d 598,47 Cal.Rptr. 561,407 P.2d 865
• Court: California Supreme Court
• Parties: , 407 P.2d 865 E. W. TRACY, Plaintiff and Respondent, v. CONTRACTORS' STATE LICENSE BOARD, Defendant and Appellant. Sac. 7685.

Page 561

47 Cal.Rptr. 561

63 Cal.2d 598, 407 P.2d 865

E. W. TRACY, Plaintiff and Respondent, v. CONTRACTORS' STATE LICENSE BOARD, Defendant and Appellant.

Sac. 7685.

Supreme Court of California, In Bank.

Nov. 23, 1965.

Stanley Mosk and Thomas C. Lynch, Attys. Gen., E. G. Funke, Asst. Atty. Gen., W. B. Thayer and N. Eugene Hill, Deputy Attys. Gen., for defendant and appellant.

Forrest E. Macomber, Stockton, for plaintiff and respondent.

McCOMB, Justice.

Defendant, Contractors' State License Board of the State of California (hereinafter referred to as 'the board'), appeals from a judgment of the superior court granting a peremptory writ of mandate commanding it to reinstate plaintiff's contractor's license.

Facts: In September 1962 an accusation was filed against plaintiff, a licensed contractor, charging him with a violation of section 7113.5 of the Business and Professions Code, which at the time provided, in part: 'The adjudication of bankruptcy of a licensee * * * constitutes a cause for disciplinary action.'

It was established at the hearing on the accusation that plaintiff had been adjudicated a bankrupt and that a substantial portion of the liabilities from which he sought to be discharged in the bankruptcy proceedings represented amounts owed by him for labor, supplies, and materials furnished to him for his use as a licensed contractor.

After the hearing the Registrar of Contractors adopted a proposed decision for the suspension of plaintiff's license until such time as he should (1) present to the registrar a release of all claims against him by the Joint Delinquency Committee of the Carpenters Health & Welfare Trust Fund for Northern California, the Four Bay Counties Vacation Trust Fund, the Forty-two Northern California Counties Carpenters Vacation Trust Fund, and the Carpenters Pension Trust Fund for Northern California, 'even though the same were discharged in bankruptcy,' and (2) give a bond made pursuant to Business & Professions Code section 7071.5.

Question: First. Is section 7113.5 of the Business and Professions Code unconstitutional as being in conflict with the United States Bankruptcy Act and in violation of the Fourteenth Amendment to the United States Constitution?

No. In Hope v. Contractors' etc. Board, 228 Cal.App.2d 414, 416, 422-425, 39 Cal.Rptr. 514 (hearing denied by the Supreme Court), it was held that the provisions of section 7113.5 of the Business and Professions Code, making bankruptcy or acts of bankruptcy a cause for disciplinary action against a licensed contractor, constitute a proper exercise of the state's police power where the acts of bankruptcy relate to the licensee's business as a contractor and thus do not violate the Fourteenth Amendment or conflict with the federal Bankruptcy Act.

The Hope decision rested in part upon the decision of the United States Supreme Court in Kesler v. Department of Public Safety, 369 U.S. 153, 82 S.Ct. 807, 7 L.Ed.2d 641. That case involved a Utah statute requiring satisfaction of an automobile accident judgment as a condition to the reinstatement of the judgment debtor's driver's license, the statute specifically providing that a discharge in bankruptcy did not relieve the debtor from this condition. Suspensison of the judgment debtor's license was made dependent on the creditor's request.

In the Kesler case the Supreme Court discussed its holding in Reitz v. Mealey, 314 U.S. 33, 62 S.Ct. 24, 86 L.Ed. 21, involving a similar New York statute. In that case it was determined that no conflict with the Bankruptcy Act existed, because the statute was not designed to aid collection of debts but, rather, to enforce a policy against irresponsible driving, which policy would be frustrated if negligent drivers could avoid the statute by the simple expedient of voluntary bankruptcy (314 U.S. at p. 37, 62 S.Ct. 24, 86 L.Ed. 21.)

At the time the New York judgment should have been certified, the law in that state did not make suspension dependent on the creditor's request. The Supreme Court concluded in the Kesler case, however, that the differences between the Utah statute and the New York statute, even before the latter was amended to require action by the creditor, were insubstantial, and therefore held, on the basis of the Reitz case, that the Utah statute did not conflict with the Bankruptcy Act, pointing out that the bearing of the statute on the purposes served by bankruptcy legislation was essentially tangential. (369 U.S. at p. 174, 82 S.Ct. 807, 7 L.Ed.2d 641.)

Similarly, the statute here under consideration was not designed to aid collection of debts but to protect the health, safety, and welfare of the public. As stated in Howard v. State of California, 85 Cal.App.2d 361, 365, 193 P.2d 11, 13, 'The purpose of the act (Contractors License Law) is to guard the public against the consequences of incompetent workmanship, imposition and deception.' (See also Fraenkel v. Bank of America National Trust, 40 Cal.2d 845, 848(2), 256 P.2d 569; Hope v. Contractor's etc. Board, supra, 228 Cal.App.2d 414, 419, 39 Cal.Rptr. 514.) Accordingly, the present statute, as did the statute upheld in the Kesler case, bears only tangentially on the purposes served by the Bankruptcy Act and does not...