Gilchrist v. Bierring , 234 Iowa 899 ( 1944 )

I. In the majority opinion there is, in Division IV, an imposing array of authorities where this court and other supreme courts have discussed the constitutionality of statutes that regulate business and professions. From these authorities the majority is convinced "that the act of instructors of cosmetology working on the public has no such relation to the public health that would warrant the department's condemning such conduct under delegated police power." Since the constitutionality of the statute is not involved in this division, nor in the whole case, for that matter, I find myself in agreement with the rules of law established by the authorities but unconvinced that the board's regulation against "instructors working on the public" was wrong. We need no discussion of constitutional issues to decide whether it was right or wrong. The majority opinion correctly holds the board had authority to make reasonable rules and regulations. The rules and regulations were obviously for the purpose of enabling the board to carry out its duties with respect to approving or not approving school licenses. The only question is whether the regulation against instructors working on the public was a reasonable rule or regulation. To answer this question I turn to the statute. In section 2585.21, Code of 1939, it is provided:

"Managers of shops or other places where cosmetology is practiced, who directly or indirectly supervise the work of operators, shall be licensed cosmetologists."

The argument of the board is that if the instructors work on the public the school becomes a shop. The manager of the school need not be a licensed cosmetologist. So, if a person, not a licensed cosmetologist, such as Gilchrist, conducts a school with instructors working on the public, he becomes the proprietor of a shop without being a licensed cosmetologist. That this is not a remote possibility is well demonstrated by this record where the instructors devoted a great deal of time to working on the public. The comment in the majority opinion that "In many professional schools, instructors are permitted to also engage in private practice" is easily answered by pointing out that in Gilchrist's school the money paid for the work the instructors did on the public was paid to Gilchrist and the instructors were paid a salary. I am not prepared to say that the regulation against instructors working on the public was wrong. The legislature thought it necessary to provide that shop proprietors be licensed. The regulation would seem to me to be carrying out the legislative intent.

II. My chief disagreement with the majority opinion, however, is with Divisions V and VI, where it holds the board cannot refuse to approve Gilchrist's application for a cosmetology-school license without a notice and hearing. Here, too, I find it unnecessary to discuss the authorities cited. None of them reaches the question involved. Most of them deal with the necessity for notice and hearing in case of revocation of licenses. And, as the majority opinion points out, the appellant does not challenge the necessity of notice and hearing in the case of revocation of licenses. The basic question is whether an administrative board that is charged with the duty of approving or not approving a license for one year can refuse approval for a renewal applicant without notice and hearing. I say that it can. By so saying I do not mean that the board has been granted unbridled administrative discretion. All of the authorities agree that such a statute as here only invests the board with reasonable discretion. State v. Conragan, 58 R.I. 313,192 A. 752; McDonough v. Goodcell, 13 Cal.2d 741, 91 P.2d 1035; Noble v. English, 183 Iowa 893, 167 N.W. 629.

It will be noted here that the license is actually issued by the state board of health. The entire chapter dealing with the practice of cosmetology and the operation of cosmetology schools, chapter 124.2, is found in Title VIII of the Code of 1939, which purports to legislate on the subject: "The Practice of Certain Professions Affecting the Public Health." We have, then, a legislative act that regulates a business that affects public health. The regulation takes the form of a license requirement that is issued by the department of health and can only be obtained upon the approval of the cosmetology board. Surely, the statute as it is written is perfectly constitutional, even though it provides for no notice and hearing. See 33 Am. Jur. 377, 379, section 60, where the rule is stated:

"It is not essential to due process of law that a hearing be provided an applicant for a license by an administrative board empowered to issue such a license, especially when the business or activity to be licensed is subject to regulation under the police power, unless the statute delegating power to the board expressly or impliedly requires one to be afforded the applicant."

I feel that the majority would probably hold that, under this statute, notice and hearing would not be essential before refusal of a new applicant's license. The majority opinion places the refusal to grant a renewal license on the same basis as the revocation of an existing license. No authority is cited for this rule. This is just announced as a premise. The argument is that refusal to renew and revocation are the same, and, since notice and hearing are necessary in case of revocation of an existing license, then notice and hearing are necessary in case of refusal to renew. The fallacy in this argument lies in the first premise. Refusal to renew and revocation are not the same.

A case that is much in point is State v. Conragan, supra. Here the defendants were indicted for operating a school of hairdressing and cosmetic therapy without a license. It appeared the department had refused to renew the defendants' license. The statute, like ours, provided:

"Any certificate of approval issued by said department to any school shall be good for one year from the date when issued, unless sooner revoked. Said certificate may, so long as such school continues to meet the approval of said board, be renewed from year to year upon payment of a fee of seventy-five dollars for each renewal." [Pub. L., 1936, chapter 2362, section 4.]

Certain constitutional questions were certified to the supreme court, and the court had this to say with respect to this statute, 58 R.I. 313, 318, 192 A. 752, 755:

"The statute in the instant case is directed at the public policy that shall be followed in relation to the practice of hairdressing and cosmetic therapy for hire and reward, so that these practices shall not become, in their mode of exercise, dangerous or injurious to the health of the community. We would have to shut our eyes to existing conditions to regard the precaution unreasonable or the legislation to effect it as a wanton interference with personal liberty. The power of the legislature to regulate trades and occupations likely to be injurious to the inhabitants of the state and to punish as a crime any act in violation of its policy is clearly within the police power of the state and no longer open to question. It is a matter of legislative will alone. If the legislation is not unreasonable or arbitrary, the courts are not concerned with its wisdom, policy or expediency."

In this Rhode Island case the very question here under discussion was raised, for the opinion states:

"The defendants contend that the due process clause is violated because the department may refuse to renew a certificate of approval without previous notice and hearing."

In upholding the constitutionality of the statute, the court, in this case said:

"A certificate to operate a school of hairdressing and cosmetic therapy is nothing more than a license to do that which the state otherwise declares to be unlawful. Although the privilege conferred by the certificate may be valuable, it is neither a contract nor a property right within the constitutional meaning of those words. The permission thus granted remains at all times subject to complete control by the state. It may be denied or revoked for cause or it may be entirely annulled by a change of policy or legislation in regard to the subject. The refusal to renew a license of this character is not a deprivation of property without due process of law."

In this case the Rhode Island court did comment on a general provision in the statute granting appeal rights to "any person aggrieved" by a board order, but the appeal only granted the same review an action such as this would grant. It would protect the applicant against arbitrary action.

In McDonough v. Goodcell, supra, 13 Cal.2d 741, 751,91 P.2d 1035, 1041, 123 A.L.R. 1205, the court had under consideration the California statute licensing the bail-bond business. This statute did not provide for any notice and hearing but the commissioner who was authorized to grant the license did hold a public hearing. When the applicant was refused a license he contended in the courts that the statute was unconstitutional because it did not provide for notice and hearing and it deprived him of his property (his bail-bond business) without due process. In upholding the constitutionality of the statute, the court did not place it on the ground that notice and hearing were given but stated:

"The answer is that the notice and hearing which it is insisted the statute fails to provide for could in any event be only such notice and hearing as would afford due process when it is contemplated that some constitutional right is claimed to be invaded. Here, the hearing was not for the purpose of affording the petitioners an opportunity to resist an invasion of a constitutional right but was for the purpose of enabling the commissioner fairly and intelligently to determine whether a right should be granted to the petitioners, namely, a right to engage in a business the conduct of which, without a permit, was unlawful.

"Nor did the order of the commissioner denying the permit deprive the petitioners of their property without due process. True, the statute had the effect of terminating their right to do business without a permit, but owing to the nature of the business, the legislature had the right to so terminate it conditionally, under its constitutional power to regulate such business. ``Where the purpose of the statute is to protect the public from unfit persons, it is constitutional, although it disqualifies a person, by reason of past acts, from continuing in the practice of his profession, or from remaining in his business.' (12 Corpus Juris, p. 1106, sec. 815, and cases there cited.)"

Presumably, any other method that would have enabled the commissioner to ascertain the facts would have sufficed.

Another Rhode Island case that discusses the necessity for notice and hearing before the granting of a license is Thayer Amusement Corp. v. Moulton, 63 R.I. 182, 187, 197, 7 A.2d 682, 685, 689, 124 A.L.R. 236, where the question of a license to exhibit a moving picture was involved. The court stated one of the issues to be:

"2. Did the bureau's refusal to grant the petitioner a formal hearing on its applications constitute a violation of the enabling statute and a denial of due process of law?"

After citing many cases, among them State v. Conragan, supra, the court answered the question in the negative, stating:

"It may be that there would be less danger of arbitrary action if a hearing were made a prerequisite; but that is a matter for legislative consideration, and not for us. The bureau therefore did not commit an error of law in refusing to grant the petitioner's petition for a hearing and opportunity to present evidence * * *."

In Noble v. English, 183 Iowa 893, 898, 167 N.W. 629, 631, this court upheld the right of the insurance commissioner to refuse either a license or a renewal license to an insurance agent where the statute authorizing him to so act did not provide for notice and hearing. The act provided that insurance agents must procure a license from the commissioner which expired at the end of the insurance year for the company represented. The plaintiff was denied a license under a ruling by the commissioner that nonresidents would not be granted agents' licenses "effective with beginning of 1917 insurance year." In upholding the constitutionality of the law and the action of the commissioner, this court stated:

"This does not give to the commissioner arbitrary power to capriciously refuse a license, but does vest in him the right to determine whether or not the person applying is one whose appointment will conserve the good of the state and of the public; and when good cause appears for denying a license to an applicant, and good cause exists, he is within the exercise of the delegated power in denying a license, and cannot be forced by mandamus to grant it until it is made to appear affirmatively that good cause for such refusal does not exist."

I do not feel that the applicant for a renewal license is in any better situation than the first-year applicant. Surely the board has the same duty as to each, namely, the duty to approve the application if, in the exercise of honest discretion, the same should be approved. Why should the applicant for renewal license receive a notice and be entitled to a hearing and the original applicant not? Is it because he has a school that will be worthless if he does not receive the license? The record here shows Gilchrist was in operation as a school for several months before he received his first license. Besides, the fact that a member of the regulated classes may suffer economic losses not shared by others has never been a barrier to the exercise of police power.

The force of the majority opinion is to convert the annual license into a perpetual license. For, according to the majority, the holder of an annual license becomes entitled to all the rights of the holder of a perpetual license. The board must thereafter renew from year to year. He cannot be deprived of a license in the ensuing years without a notice and hearing. This is the extent of the rights of the holder of a perpetual license. In fact, the majority opinion contains a judicial condemnation of annual licenses, for it states:

"Where the state confers a license to engage in a profession, trade, or occupation not inherently inimical to the public welfare, such license becomes a valuable personal right which cannot be denied or abridged in any manner except after due notice and a fair and impartial hearing before an unbiased tribunal. * * * The state cannot, by issuing only annual licenses, ingeniously thwart these precious rights."

I do not feel that because the board chooses to proceed as the law requires it, it should merit criticism. The state cannot, under this statute, issue anything but an annual license, and the "precious rights" will not be "ingeniously thwarted" by such annual licenses so long as courts sit in Iowa with the power to annul the arbitrary action of any board. The case of Craven v. Bierring, 222 Iowa 613, 269 N.W. 801, cited by the majority, is not authority upon the question involved, for the dentist statute there reviewed specifically provided for notice and hearing before the licensee could be refused a renewal.

This law was in effect when Gilchrist started his school, though I do not think that makes much difference. He knew that he was engaging in a business for which he could be criminally prosecuted unless he had a license. He knew that he could get a license for one year only. I feel that if he knew the law, he knew he could receive renewal licenses each year upon payment of the $100 and the board could not arbitrarily and capriciously refuse to grant this renewal. He knew, or should have known, that if the board's action was not arbitrary or capricious, his business would be destroyed. I feel the only issue on this appeal is whether that action was arbitrary or capricious. Upon this issue the evidence weighs heavily in favor of the board. The evidence of the inspectors (eleven different inspections from May 1940 to September 1942), where the inspectors found so much that was objectionable, fully warranted the refusal to approve this school. The record shows that copies of the inspectors' reports were furnished Gilchrist and he repeatedly agreed to make the changes recommended in the interests of cleanliness and sanitation, but never did. Combs, sterilizers, towels, and pads were unsanitary. The classroom without a window or ventilator, and many other conditions shown by the evidence to exist in this school, fully warranted the action taken. The plaintiff failed to show the action taken was arbitrary, and that means the board's action should be upheld. I would reverse the case.