United Interchange, Inc. v. Spellacy

• Decision Date: 03 December 1957
• Parties: UNITED INTERCHANGE, Inc., et al. v. Thomas J. SPELLACY, Insurance Commissioner. Supreme Court of Errors of Connecticut
• Court: Connecticut Supreme Court

Page 801

136 A.2d 801

144 Conn. 647

UNITED INTERCHANGE, Inc., et al. v. Thomas J. SPELLACY, Insurance Commissioner.

Supreme Court of Errors of Connecticut.

Dec. 3, 1957.

George F. Lowman, Stamford, with whom were Philip M. Drake, Stamford, and, on the brief, John F. Spindler, Stamford, for appellants (plaintiffs).

Louis Weinstein, Asst. Atty. Gen., with whom, on the brief, was John J. Bracken, Atty. Gen., for appellee (defendant).

Before WYNNE, C. J., and BALDWIN, DALY, KING and MURPHY, JJ.

BALDWIN, Associate Justice.

The plaintiffs in this action sought a judgment declaring unconstitutional certain provisions in the act requiring the licensing of real estate brokers and salesmen, and an injunction restraining the defendant from administering and enforcing the act against them. General Statutes, Cum.Sup.1955, § 2339d. The trial court rendered judgment for the defendant and the plaintiffs have appealed.

Following is a summary of the facts: The plaintiff United Interchange, Inc., is a New York corporation with its principal place of business in New York City. In will be referred to as United. It has not qualified to do business in Connecticut. By means of extensive advertising in newspapers and periodicals and on the air, United obtains the names of business and property owners who desire to sell, lease or make an exchange of their business enterprises or properties. It employs the plaintiffs, Joel Goldshine and Lester Kirby, nonresidents, on a commission basis to solicit in this state contracts from such prospective sellers to advertise their businesses or properties in 'Buyers Digest' and 'Brokers Bulletin,' two printed media published by Universal Interchange, Inc., hereinafter referred to as Universal, under agreement with United. The price for the insertion of an advertisement in the Digest and the Bulletin is a stipulated sum depending in amount upon the space devoted to the advertisement. It is payable either upon the sale of the property or upon the expiration of three months from the date of United's acceptance of the advertising contract, whichever occurs first.

'Buyers Digest' is issued monthly in magazine form and is substantially a directory containing advertisements for the sale, lease or exchange of many kinds of real estate, interests therein, and business opportunities. It includes some editorial material relating to real estate and business opportunity matters. 'Brokers Bulletin' is essentially a folder of unbound sheets listing prospective sales and exchanges and is issued to real estate brokers and others for the purpose of enlisting their aid in effecting sales during the period between the regular publications of the Digest. Universal, which publishes and circulates these periodicals under contract with United, advertises them extensively. Both publications are available free of charge to anyone who requests them. The Digest is sent without cost to chambers of commerce, public libraries and real estate and business opportunity brokers throughout the United States and elsewhere. United's purpose is primarily to promote sales and exchanges and to refer sales opportunities to licensed real estate brokers. It operates in several other states. It salesmen help prospective sellers to prepare their advertisements.

Prior to June, 1955, United was conducting its business in Connecticut, and during this period it and its affiliate, Universal, sold in this state 225 contracts for a total of $13,000. The defendant received complaints of fraudulent representations from those doing business with companies engaged in a type of enterprise similar to that of the plaintiffs. Some of these complaints were to the effect that sales were guaranteed and that no payment need be made unless there was a sale. Because of these complaints the defendant sought the legislative amendment which is now challenged.

In 1953 the General Assembly enacted a law requiring the licensing of real estate brokers and salesmen. General Statutes, Cum.Sup.1955, c. 237a. Before a license can issue, the prospective licensee must apply in writing to the insurance commissioner, who is charged with the administration of the law. Cum.Sup.1955, § 2342d. The commissioner is authorized to require of the applicant such information bearing upon his integrity and competency as is deemed desirable. § 2343d. The commissioner is directed to subject the individual applicant, or each member of an association or partnership applying for a license, or each of the officers and salesmen of a corporation, to a written examination to determine the competency of the person being examined 'to act as a real estate broker or real estate salesman.' Ibid. The fee for a broker's license and each annual renewal thereof is $15 for an individual, a member of a partnership or an association, or a corporate officer; the fee for a salesman's license is $5. Ibid. The applicant is required to post with the commissioner a bond in favor of the state with corporate surety in the amount of $2500 if the application is for a broker's license, and in the amount of $1000 if it is for a salesman's license. § 2344d. No one can act as a broker of salesman without a license. §§ 2341d, 2352d.

The 1953 act defined the term 'engaging in the real estate business' to mean 'acting for another and for a fee, commission or other valuable consideration in the listing for sale, selling, exchanging, buying or renting or offering or attempting to negotiate a sale, exchange, purchase or rental of an estate or interest in real estate, or collecting upon, or offering or attempting to negotiate, a loan secured or to be secured by a mortgage or other encumbrance upon or transfer of real estate.' Cum.Sup.1953, § 1783c (c). A broker was defined as one engaged in the activities described above as constituting 'engaging in the real estate business'; § 1783c (a); and a salesman was defined as one employed by a broker to do any of the things constituting 'engaging in the real estate business.' § 1783c(b). In 1955 the General Assembly repealed § 1783c and enacted a substitute therefor, § 2339d of the 1955 Cumulative Supplement, ¹ which added to the language of § 1783c defining the term 'engaging in the real estate business' the provision that 'said term includes engaging in the business, for a fee, in connection with any contract whereby any person undertakes to promote the sale of real estate through the listing of such property in a publication issued primarily for such purpose or for referral of information concerning properties to licensed real estate brokers or both.' The definition of 'real estate broker' was enlarged to embrace any person carrying on such an activity. A 'salesman' was also redefined to include a person employed by a broker for such an activity.

The 1953 act requiring the licensing of real estate brokers and salesmen (Cum.Sup.1953, c. 237a), including § 1783c, was declared to be a valid exercise of the police power under the federal and state constitutions in Cyphers v. Allyn, 142 Conn. 699, 118 A.2d 318. The plaintiffs now challenge the constitutional validity of the amendatory language of § 2339d, which, it is conceded, comprehends them. They charge that it violates the due process, equal protection of the laws and freedom of the press provisions of the federal and state constitutions. U.S.Const. Art. I, Amend. XIV, § 1; Conn.Const. Art. I, §§ 1, 5, 12.

We shall consider first the argument advanced with regard do due process and equal protection of the laws. Successfully to pass the test of constitutional validity in these respects, the act as amended to embrace these plaintiffs must be a proper exercise of the police power of the state. We have recently examined the basic principles applicable to police legislation regulating the conduct of business and professional activity. State v. Gordon, 143 Conn. 698, 702, 125 A.2d 477; Calve Bros. Co. v. City of Norwalk, 143 Conn. 609, 612, 124 A.2d 881; Cyphers v. Allyn, supra, 142 Conn. 705, 118 A.2d 332; Amsel v. Brooks, 141 Conn. 288, 298, 106 A.2d 152, 45 A.L.R.2d 1234. The test is whether (1) some need for serving the public health, safety or general welfare makes the regulatory legislation necessary or desirable, and (2) the legislation serves that need in a way which is not arbitrary, discriminatory and confiscatory to an unreasonable and unnecessary degree. In passing upon the need and in fashioning the method of serving it, the legislature under its police powers has a broad discretion. The limitation upon this discretion is drawn by the courts at that point where the regulatory measures either fail to serve the public good or serve it in a despotic way.

The 1955 amendment prevents the plaintiffs from carrying on a lawful business unless they obtain real estate brokers' and salesmen's licenses. This is done by defining the activities of the plaintiffs as 'engaging in the real estate business' and requiring of them brokers' and salesmen's licenses in order to continue their activities. It is true that legislatures may define the terms used in their enactments and that courts are bound to accept their definitions. First Federal Savings & Loan Ass'n of New Haven v. Connelly, 142 Conn. 483, 489, 115 A.2d 455, and cases cited. This rule extends only to the meaning to be given by the courts, in construing a statute, to the terms defined. It does not prevent a court, when the constitutionality of the statute is attacked, from examining a definition to see whether it logically and fairly describes what it purports to define. To take an extreme case, it is questionable whether a legislature could, by defining as a dog an animal having the components of a horse, subject the owner of a horse to the dog licensing statute.

United's business is primarily advertising. It differs from newspaper and magazine publishers generally in the respect only that it limits the range of its advertising activities to specific...