Abrams v. Daugherty
Abrams v. Daugherty
Opinion of the Court
This is a proceeding in certiorari to review the action of the respondent as commissioner of corporations of the state of California in temporarily suspending the certificate authorizing petitioner to act as a broker under the provisions of the Corporate Securities Act of 1917. (Stats. 1917, p. 673.) The respondent has filed a return, which, in addition to a large amount of extraneous and immaterial matter, contains a copy of a notice to the petitioner to show cause why his certificate should not be revoked, a transcript of certain evidence taken before the commissioner in response to said notice, and a copy of the order of suspension. The notice of hearing' was mailed to the petitioner herein and was in the words and figures following: “You are hereby notified to appear at this office at 2:30 P. M., on Friday, September 29, 1922, to show cause why your broker’s certificate should not be revoked.” At the time set an attorney appeared for the petitioner and at his request the hearing was continued until the folowing day. At that time, the attorney again being present, testimony was taken by the deputy commissioner of a witness who claimed that he had purchased stock of the Coast Tire & Rubber Co. upon representations made by selling agents of the petitioner herein that said stock would soon increase *299 in value and that a dividend thereon would soon be paid. This witness further testified that he had been for some time prior thereto a stockholder in the Coast Tire & Rubber Co., had received several reports of the financial condition from the officers of the company, had visited its plant, and that he did not believe everything that the salesman had stated to him, but doubted their representations that the stock would increase in value and that a dividend would soon be paid. He also testified that the agents represented to him that if he became dissatisfied with his purchase the petitioner herein would sell his stock at market and that he had requested the petitioner to do so, but had been unable to obtain from the petitioner any satisfactory reply as to whether such sale would be made. Upon this evidence the commissioner executed the order temporarily suspending the petitioner’s certificate to act as a broker. This order was made on October 3, 1922, and, it is alleged, is still outstanding.
Respondent concedes that the only grounds upon which he may revoke a license or certificate issued under the act are those contained in section 6 of the act. That is to say, before the commissioner could justify a revocation of the license it was necessary that he should find that the petitioner: (a) was of bad business repute; (b) had violated some provision of the act; or (e) had engaged or was about to engage in a fraudulent transaction. It is also conceded that this court may examine the evidence taken by the commissioner in order to ascertain whether the commissioner exceeded his authority in making the order.
The commissioner did not make any finding of any nature, but from an examination of the evidence it is apparent that his action was based upon the ground designated “c” above, because no competent evidence was produced to support either grounds “a” or “b.” An attempt was made to have the witness testify as to the business reputation of the petitioner, but the witness disqualified himself from giving such testimony. Treating the case then as one in which the broker was charged as having engaged in or being about to engage in a fraudulent transaction, it is necessary to consider whether the petitioner was accorded the due process of law to which he was entitled before an order of revocation could be made.
*300 The statute is silent upon the matter of the procedure to be. followed in cases of this kind except that it does require the commissioner to find the broker guilty of one of the three designated causes. In Bannerman v. Boyle, 160 Cal. 197, 205 [116 Pac. 732], the supreme court, in considering the provisions of the San Francisco charter authorizing the mayor to remove certain officers “for cause,” held that, in the absence of clear statutory authority, such power of removal could not be exercised until “notice has been given to the officer of the charges made against him and he has been given an opportunity to be heard in his defense. ’ ’ The charter did not fix any mode of procedure and did not specify any grounds for removal. It merely authorized the mayor to remove “for cause” and the court held (p. 206) that “the words ‘for cause,’ without more, imply good cause, the existence of some fact which would constitute a reasonable cause for the removal.” To the same effect is Welch v. Ware, 161 Cal. 641 [119 Pac. 1089], where the court had under consideration the provisions of section 4149b of the Political Code, which authorized the removal of a fish and game warden “for intemperance, neglect of duty, or other good and sufficient reasons.” It was argued that the language “good and sufficient reasons” authorized the board of supervisors to remove the warden summarily and without charges filed or a hearing thereon; but the court held that the case was controlled by Bcmnermcm v. Boyle, supra, and that there was no essential difference between the code section and the provisions of the charter authorizing a removal “for cause.” It was said that “under such provision of the code the respondent could only be legally removed after an opportunity to be heard on charges preferred against him.” In these cases, as in the statute under consideration, there was no provision for a notice and hearing before the action was taken. In this respect the statute differs from the Medical Practice Act (Stats. 1913, p. 722, sec. 14, amended 1921, p. 1009), the Real Estate Brokers’ Act (Stats. 1919, p. 1252, see. 12), and similar acts which specifically require the filing of formal charges and a hearing thereon before a license can be revoked. But the silence of the statute in this respect is of no importance if the right to act as a broker is a property right of which the holder may not be deprived without due process of law.
*301 In Hewitt v. Board of Medical Examiners, 148 Cal. 590 592 [113 Am. St. Rep. 315, 7 Ann. Cas. 750, 3 L. R. A. (N. S.) 896, 84 Pac. 39], the supreme court say: “The right to practice medicine is, like the right to practice any other profession, a valuable property right, in which, under the constitution and laws of the state, one is entitled to be protected and secured.” In Suckow v. Alderson, 182 Cal. 247, 249 [187 Pac. 965, 966], in referring to this principle, the court say: ‘ ‘ The fourteenth amendment to the constitution of the United States provides that no person .shall be deprived of life, liberty, or property, without due process of law. Article I, section 1, of the constitution of California, provides that all men have certain inalienable rights, among them being those of enjoying liberty and possessing and protecting property, and section 13 thereof provides that no person shall be deprived of life, liberty, or property, without due process of law. The deprivation of such right without due process of law would be a violation of these provisions. The meaning of this is that no one can be deprived thereof without notice and an opportunity for a hearing before some tribunal authorized to determine the question.” To the same effect is Brecheen v. Riley, 187 Cal. 121, 124 [200 Pac. 1042, 1044], where the court, having the Real Estate Brokers’ Act under consideration, say: “It is firmly established that it is the right of every person to pursue any lawful business or vocation he may select, subject to such legal restrictions and regulations as the proper governmental authority may impose for the protection and safety of society, and that such right is valuable and must be protected and secured, and cannot be taken from those who possess it, without ‘due process of law.’ ” In Schomig v. Keiser, 189 Cal. 596 [209 Pac. 550, 551], while considering the same act, the court say: “The portion of the act which authorizes the real estate commissioner to forfeit the license of a broker or salesman and take it away from him is highly penal in its nature, and should not be construed to include anything which is not embraced within its terms.” In Hovey v. Elliott, 167 U. S. 409, 418 [42 L. Ed. 215, 17 Sup. Ct. Rep. 841, see, also, Rose’s U. S. Notes], it is said: “It is a rule as old as the law, and never more to be respected than now, that no one shall be personally bound until he has had his day in court, by which is meant, until he has been *302 duly cited to appear, and has been afforded an opportunity to be heard. Judgment without such citation and opportunity wants all the attributes of a judicial determination; it is judicial usurpation and oppression, and can never be upheld where justice is justly administered.” (Italics ours.)
The very basis of a judicial or quasi-judicial hearing at which property rights are determined presupposes some sort of process by w'hich the interested party is put upon his notice as to the time, place, and nature of the hearing. Where the statute requires the filing of charges and notice of the hearing thereon, it has been uniformly held that the one accused must be given such notice of the nature of the charge against him as will enable him to formulate a defense. (Dy ment v. Board of Medical Examiners, 57 Cal. App. 260 [207 Pac. 409, 411], and cases there cited.) That *303 case involved a construction of section 14 of the Medical Practice Act as amended in 1917. (Stats. 1917, p. 109.) The section provides in part: “Whenever any holder of a certificate herein provided for is guilty of unprofessional conduct, as the same is defined in this act, ... or whenever a certificate has been procured by fraud or misrepresentation ... it shall be the duty of said board ... to revoke his certificate.” The same section provides that no certificate shall be revoked unless the holder has been cited to appear and answer to a sworn complaint. In the Dyment case a complaint' was filed charging that the physician had procured his certificate through fraud and misrepresentation. It was this complaint which the district court of appeal held to be insufficient to give the board jurisdiction of the hearing. In denying a petition to transfer the case to the supreme court, the latter court approved this ruling of the district court of appeal and held further that, even though the insufficiency of the complaint was not attacked prior to the hearing before the board, the proceedings should be set aside in certiorari upon the ground that the board did not have jurisdiction to make the order. The language of the supreme court on the question of the insufficiency of the complaint is particularly applicable to the present case: “It contains no specific allegations of fact, but merely states that he ‘procured by fraud and misrepresentation a certificate to practice medicine.’ Such method of charging fraud has always been held insufficient; the specific facts must be stated. (9 Ency. of PL & Pr. 686; 31 Cyc. 55.)” (57 Cal. App. 260, 266 [207 Pac. 409, 412].)
The notice mailed to the petitioner was merely an order to show cause why his certificate should not be revoked. It contained no charges of any nature and nothing from which he could ascertain what he would be required to defend. It was, therefore, insufficient to give the commissioner any jurisdiction to either suspend or revoke the certificate.
Other points raised do not require consideration.
The order is annulled.
Sturtevant, J., and Langdon, P. J., concurred.
Reference
- Full Case Name
- ALEXANDER R. ABRAMS, Petitioner, v. EDWIN M. DAUGHERTY, as Commissioner, Etc., Respondent
- Cited By
- 24 cases
- Status
- Published