Wangerin v. Wis. State Bd. of Accountancy

• Decision Date: 08 December 1936
• Citation: 223 Wis. 179,270 N.W. 57
• Parties: WANGERIN et al. v. WISCONSIN STATE BOARD OF ACCOUNTANCY et al.
• Court: Wisconsin Supreme Court

223 Wis. 179

270 N.W. 57

WANGERIN et al.

v.WISCONSIN STATE BOARD OF ACCOUNTANCY et al.

Supreme Court of Wisconsin.

Dec. 8, 1936.

Appeal from an order of the Circuit Court for Dane County; A. G. Zimmerman, Judge.

Affirmed.

This suit was begun on January 13, 1936, by Edwin L. Wangerin, George Heiser, Jr., Ray M. Nosseck, and William Sidney Schmidt, plaintiffs, on their own behalf and on behalf of all others who sustain a like relation against the defendants, Clarence H. Lichtfeldt, Frank A. Yindra, and Fred C. Kellogg who constitute the Wisconsin State Board of Accountancy, as defendants, to enjoin the enforcement of chapter 481 of the Laws of 1935, being chapter 135 of the Wisconsin Statutes. From the order entered on April 16, 1936, sustaining the defendants' demurrer to the complaint, the plaintiffs appeal.Joseph Lieberman, of Milwaukee, and James S. Christensen, of Chicago, Ill., for appellants.

James E. Finnegan, Atty. Gen., J. E. Messerschmidt, Asst. Atty. Gen., and George D. Spohn, Sp. Counsel, of Milwaukee, for respondents.

ROSENBERRY, Chief Justice.

The practice of accounting was first regulated in this state by the enactment of chapter 337 of the Laws of 1913 (sections 1636-202 to 1636-211, St.1913). By that act a state board of accountancy was created with authority to hold examinations and to issue certificates entitling the holders thereof to practice as “certified public accountants.” The board was given authority by the act to revoke a certificate for “unprofessional conduct or other sufficient cause.” The act provided that, if any person should represent himself to the public as having received the certificate provided for by the statute or should assume to practice as a certified public accountant, a certified accountant, a chartered public accountant, a chartered accountant or to use the abbreviation C. P. A. or any other words, letters or abbreviations of similar import without having received a certificate to practice as a certified public accountant, he should be deemed guilty of a misdemeanor and might be punished by fine or imprisonment or both.

[1] It is conceded that the act was a valid enactment. Lehmann v. State Board of Public Accountancy (1922) 208 Ala. 185, 94 So. 94;State v. De Verges (1923) 153 La. 349, 95 So. 805, 27 A.L.R. 1526;Henry v. State (1924), 97 Tex.Cr.R. 67, 260 S.W. 190;People v. Marlowe (Sp. Sess.1923) 203 N.Y.S. 474.

Chapter 337 of the Laws of 1913 was supplanted by chapter 481 of the Laws of 1935, which became chapter 135 of the Wisconsin Statutes and will hereafter be so referred to. The 1935 law appears to be a very carefully drafted act. Section 135.01 provides for the creation of the “Wisconsin State Board of Accountancy” to be composed of three persons and vested in the board when created certain powers not necessary to be described here and made certain provisions as to the manner in which these powers were to be exercised. Section 135.02 is an elaborate definition of what is meant by practicing as a public accountant.

A consideration of the provisions of this section discloses that any one who holds himself out to the public as one skilled in the knowledge, science, and practice of accounting, and is ready to render professional service as an accountant for compensation brings himself within the provisions of the statute. Subsections (2), (3), (4), (5), (6) relate to particular ways in which a person may so hold himself out. Subsection (7) permits the employment of nonlicensed persons by one who is himself a certified public accountant or a public accountant. Subsection (8) excepts attorneys from the operationof the chapter. In view of the claims made by plaintiffs, subsection (9) is important. It provides: “Nothing contained in this chapter shall apply to any persons who may be employed by more than one person, partnership or corporation, for the purpose of keeping books, making trial balances or statements, and preparing audits or reports, provided such audits or reports are not used or issued by the employers as having been prepared by a public accountant.”

Subsection (10) relates to accountants from other states practicing within this state.

Section 135.03(1) prohibits any person from practicing as a certified public accountant until he has complied with the provisions of the chapter. Subsection (2) prohibits any person from practicing as a public accountant without having been granted a certificate of authority. Subsection (3) relates to practice by corporations and their officers.

Section 135.04(2) provides that no certificate as a certified public accountant shall be granted to any person except one over the age of twenty-three years and of good moral character, who has successfully passed an examination. Subsection (3) relates to holding examinations. Subsection (4) provides that any one seeking a certificate as a certified public accountant must have completed four years' high school course or its equivalent, had at least three years' accounting experience and provides that a sufficient technical education may be accepted in lieu of a certain amount of accounting experience.

Section 135.05 relates to the issuance of certificates to persons from other states or foreign states. Section 135.06(1) provides:

“The board shall issue a certificate of authority to practice as a public accountant to each individual who applies before December 1, 1935, who presents evidence of good moral character satisfactory to the board, and

“(a) Who furnishes satisfactory evidence he was maintaining an office in the state for the practice of public accounting on his or her own account at the date of the taking effect of this chapter; or

“(b) Who for four years has been in responsible charge of accounting engagements in the state of Wisconsin as an employed member of the staff of a certified public accountant or a public accountant, or of a firm of certified public accountants or public accountants; or

“(c) Who, in the opinion of the board, has had four years' experience equivalent to that specified in paragraph (b) of this subsection.”

Subsections (2) and (3) relate to certificates issued to firms and corporations.

Section 135.07 specifies the conditions under which one may use the title of C. P. A. Section 135.08 relates to the annual registration. Section 135.09 prescribes the fees to be paid. Section 135.10 requires any certified public accountant or public accountant who makes a report, schedule, or statement for a corporation in which he has an interest, to disclose that interest. Section 135.11 relates to the penalties for violation of the act. Section 135.12 relates to the revocation of licenses and registration cards.

Plaintiffs contend that chapter 135 is unconstitutional because: (1) It is an unlawful and arbitrary exercise of the police power; (2) it delegates legislative and judicial powers to the board; (3) it is class legislation; and (4) it is an invasion of the right to be free from unlawful search and seizure.

[2] It appears from the allegations of the complaint that the plaintiffs were entitled to be registered as public accountants upon application any time before December 1, 1935. Plaintiffs do not claim that they applied for registration or that it was denied them upon any ground or for any cause whatever. They are therefore not in a position to question the validity of those provisions of the statute relating to fixing of standards, examinations, revocation of licenses, etc. Arnold v. Schmidt (1913) 155 Wis. 55, 143 N.W. 1055;Milwaukee v. Rissling (1924) 184 Wis. 517, 199 N.W. 61.

The plaintiffs have, however, raised the question of the validity of the statute as a whole. Their principal contention is that the practice of accounting is not subject to regulation by the state because accountancy does not affect the public welfare, and the act is therefore an unlawful and arbitrary exercise of the police power which infringes the freedom of contract. Plaintiffs rely upon three cases: State ex rel. Short v. Riedell (1925) 109 Okl. 35, 233 P. 684, 42 A.L.R. 756;Frazer v. Shelton (1926) 320 Ill. 253, 150 N.E. 696, 699, 43 A.L.R. 1086;Campbell v. McIntyre (1932) 165 Tenn. 48, 52 S.W. (2d) 162.

Campbell v. McIntyre follows Frazer v. Shelton. All matters urged in State ex rel. Short v. Riedell are considered in Frazer v. Shelton. We shall therefore confine our consideration to the holding in Frazer v. Shelton. There are some significant differences in the law of Illinois and the provisions of chapter 135. The Illinois law made it unlawful for any person to practice, or attempt to practice, as a public accountant or certified public accountant without a certificate of registration. It then defined public accounting as accounting or auditing service as distinguished from bookkeeping on a fee basis, per diem or otherwise for more than one employer. Chapter 135 provides that one who holds himself out to the public as skilled in the knowledge and science of accounting shall be deemed to be practicing accountancy, which is quite a different thing. No one is prohibited by chapter 135 from rendering any service he chooses as a bookkeeper, and may make such statements as his employers desire him to make provided his employers do not use these statements as having been prepared by a public accountant. It is only when a person holds himself out to the public as one qualified to practice accountancy as defined in the statute that he comes within it. There is...