Provens v. Comm. , 45 Ohio App. 2d 45 ( 1975 )

Although I concur in the judgment of reversal, I cannot concur in the basis set forth in the majority opinion for that judgment. The very reason that the majority finds the first assignment of error to be well taken demonstrates that the statute constitutes an unconstitutional delegation of legislative power. As the majority points out, the commission has not set forth any standards or guidelines, by rule, to indicate what constitutes sufficient experience to the satisfaction of the commission. I agree that without such standards or guidelines the action of the commission is arbitrary, but the problem lies not in the failure of the commission to adopt rules. It lies in the failure of the statute to set forth sufficient standards or guidelines for the commission to follow in its fact finding function of determining whether an applicant meets the statutory requirements to take the broker's examination.

Although this section has since been amended, R. C. 4735.07, at all times pertinent hereto, provided:

"The Ohio real estate commission shall issue a broker's license when it is satisfied that the applicant or each named member or officer of a partnership, association, or corporate applicant has complied with the rules of the commission, has received a passing grade in the broker's examination, and has provided evidence of having met the following qualifications * * *

"(E) Has had sufficient experience to the satisfaction of the commission to qualify him for the broker's examination and has complied with one of the following:

"(1) Has been associated as a real estate salesman with a licensed real estate broker for at least two years and, on and after January 2, 1972, has successfully completed at an institution of higher education:

"(a) Thirty hours of classroom instruction in real estate practice and thirty hours of classroom instruction in real estate law, provided that the commission shall waive the requirements of division (E)(1)(a) of this section if the applicant presents evidence of admission to practice before the supreme court of Ohio or the completion of a course of study equivalent to that required herein;

"(b) Thirty hours of classroom instruction in real estate appraisal and thirty hours of classroom instruction in real estate finance, provided the commission shall waive the requirements of division (E)(1)(b) of this section if the applicant presents evidence of the completion of a course of study equivalent to that required herein or has received a passing grade in a special examination given by the commission on the material covered by such courses;

"(2) Has had at least two years' experience full time in a real estate business or service prior to January 2, 1972.

"Prior to January 2, 1972, in lieu of the requirements of division (E) of this section, has finished a certificate that he has received a passing grade in each of two separate real estate courses approved by the commission, not taken concurrently, in a college or university approved by the department of education, and has to the satisfaction of the commission actively participated in a real estate business under the supervision of a licensed real estate broker for at least one year.

"Division (E)(1)(a) and (E)(1)(b) of this section do not apply to any applicant who holds a valid real estate salesman's license issued prior to January 2, 1972.

"Each applicant or other such person shall be examined in the principles of real estate practice as to the duties of real estate brokers and real estate salesmen, as to applicant's knowledge of real estate transactions and instruments relating thereto, and as to the canons of business ethics pertaining thereto. The commission shall from time to time promulgate such canons and cause them to be published in printed form. * * *"

The essential provision is the requirement that the applicant for a broker's license must submit evidence that he "has had sufficient experience to the satisfaction of the commission to qualify him for the broker's examination." It is this language which constitutes an unconstitutional delegation of legislative power.

The commission made the following factual finding with respect to plaintiff's qualifications:

"Mrs. Provens has been licensed as a real estate salesman for approximately two and one-half years, and had 12 residential, 1 industrial, and 2 investment property sales. Her total volume in real estate was over $250,000. In 1973 her income in real estate was $4,000. She has taken courses in real estate at the Columbus Technical Institute, which courses were Real Estate Finance, Real Estate Appraisal, Real Estate Law, and Real Estate Principles and Practice. She is presently taking courses toward her G. R. I. designation. She has managed rental property for her broker, Coye V. Burton, Hilliard, Ohio. Her broker, Coye V. Burton, stated that she was a good saleslady, and had handled many of the sales on her own."

The journal of the commission as certified by its assistant secretary then states that:

"At the close of the hearing, a motion was made and passed:

"The applicant's experience has been noted. In the broad area of real estate business and service, the applicant had minimal sales experience. The following transactions are noted:

"15 Real Estate Transactions

"Therefore, she does not meet the requirements of the statute, Section 4735.07, Ohio Revised Code."

There is no express finding that plaintiff's experience is insufficient, nor any indication as to the nature or extent of any deficiency. The motion states merely that the plaintiff "does not meet the requirements of" R. C. 4735.07. The original notice to plaintiff of the denial of her application does state that "you lack sufficient experience to the satisfaction of the commission." However, this preceded the hearing and final determination as set forth above.

The majority apparently concludes that the grant of power of R. C. 4735.07(E) with regard to "sufficient experience" is not self-executing but, rather, depends upon the adoption of rules as to what constitutes sufficient experience. The statute does not support such conclusion. Nothing in R. C. 4735.07 suggests that rule-making, rather than fact finding, is involved. R. C.4735.10 confers rule-making power upon the commission but does not include the power to make rules with respect to sufficient experience to qualify to take a broker's examination. Rather, R. C. 4735.10 provided, at the time concerned within this case:

"The Ohio real estate commission may make reasonable rules and regulations as provided by Chapter 119. of the Revised Code relating to:

"(A) The form and manner of filing applications for license;

"(B) The issuance, suspension, and revocation of licenses; and the conduct of hearings;

"(C) Standards for approval of courses of study required for licenses;

"(D) Times and form of examination for license;

"(E) Standards of ethical real estate practice;

"(F) Annual certificates of continuation in business.

"(G) Placing an existing broker's license in escrow for periods not to exceed two years upon good cause shown.

"The commission may hear testimony in matters relating to the duties imposed upon it, and the president and secretary of the commission may administer oaths. The commission may require other proof of the honesty, truthfulness, and good reputation of any person named in an application for a real estate broker's, real estate salesman's, limited real estate broker's or limited real estate salesman's license before admitting the applicant to the examination or issuing a license."

As conferring "fact finding," as opposed to rule-making authority, the statute in question is very similar to that involved in Harmon v. State (1902), 66 Ohio St. 249, which provided for a license for steam engineers if the applicant was found to be trustworthy and competent. It is stated, at page 252:

"By this section the examiner is made the exclusive judge as to whether an applicant is trustworthy and competent. No standard is furnished by the general assembly as to qualification, and no specifications as to wherein the applicant shall be trustworthy and competent, but all is left to the opinion, finding and caprice of the examiner. He is the autocrat with unlimited discretion, without rules prescribing the qualifications of applicants for license, only so that he finds them trustworthy and competent. * * *"

Similarly it is stated in the fourth paragraph of the syllabus of Weber v. Board of Health (1947), 148 Ohio St. 389:

"A resolution * * * which makes it unlawful to transport, deliver or deposit collected garbage for the purpose of feeding the same in whole or in part to swine or other animals into or within the territory under the jurisdiction of such board, but authorizes the health commissioner, without any standards for his guidance, to approve a system of collection and disposal of garbage * * * is an attempted delegation of legislative power. * * *"

In the first and second paragraphs of the syllabus of Weber, the Supreme Court held that the delegation of power to make regulations for the protection of the public health, without specific standards, is valid and constitutional where it is impossible or impractical to provide specific standards. This case followed paragraph seven of the syllabus of Matz v. J. L.Curtis Cartage Co. (1937), 132 Ohio St. 271, which states:

"As a general rule a law which confers discretion on an executive officer or board without establishing any standards for guidance is a delegation of legislative power and unconstitutional; but when the discretion to be exercised relates to a police regulation for the protection of the public morals, health, safety or general welfare, and it is impossible or impractical to provide such standards, and to do so would defeat the legislative object sought to be accomplished, legislation conferring such discretion may be valid and constitutional without such restrictions and limitations."

See also State v. Switzer (1970), 22 Ohio St. 2d 47 and State v. Schreckengost (1972), 30 Ohio St. 2d 30.

Each of these cases upheld the validity of statutes conferring power upon an administrative agency to adopt rules and regulations, without specific standards, where it is impossible or impractical to provide specific standards. In this case, however, the delegation is not one to adopt rules or regulations but, rather, the power to determine on a case by case basis whether an applicant has "sufficient experience" to qualify to take the broker's examination.

The power thus conferred, like that in Harmon, supra, is "left to the opinion, finding and caprice" of the commission without any requirement that the same standards be applied in each case and with no way of determining which standards are being applied or whether they are being uniformly and consistently applied. Even assuming that the delegation herein would have been proper if it had conferred rule-making power, the delegation herein is completely unbridled and unfettered without even a requirement that the commission adopt a standard to be applied leaving it free to determine each case arbitrarily without even being bound by standards it, itself, has adopted.

Furthermore, in this case it is not impossible or impractical to adopt specific standards as to what constitutes sufficient experience. The legislature has done so in the amendment to R. C. 4735.07, effective March 4, 1975. Under the amended law, "sufficient experience" consists of working as a real estate salesman at least thirty hours per week for two years, during which the applicant has completed thirty real estate transactions, at least five of which are of previously occupied residential properties or equivalent experience defined by rules of the commission. The specific standards are provided with power vested in the commission to determine by rule what experience may be equivalent to such standards.

While plaintiff may not meet the experience requirements of the amended statute, this is not determinative of the issues herein, nor does it moot this appeal, since under Ohio law an application for a license or permit is ordinarily determined by the law in effect at the time the application is made, rather than by subsequent legislative action amending such law. SeeGibson v. Oberlin (1960), 171 Ohio St. 1. Such principle is applicable here because if appellant had been given an opportunity to take the broker's examination and thereby obtained a broker's license, such license would remain effective despite the subsequent amendment to the law. See R. C. 4735.14.

As indicated above, there are two ways to exercise delegated authority: (1) to adopt rules under statutory guidelines whether general or specific, and (2) to make factual determinations as to whether statutory or rule requirements have been met. As to the first, rule-making authority, specific standards are unnecessary where it is impossible or impracticable to provide such standards. As to the second, factual determinations, specific standards must be established either by statute or by rule. Otherwise, there is no basis for determining whether the requirements of the statute or rule have been met, and the matter is left to the arbitrary determination of the administrative agency or officer.

Since the authority concerned with herein involves a factual determination, rather than rule-making, the provisions of R. C.4735.07, requiring "sufficient experience to the satisfaction of the commission," constitutes an unconstitutional delegation of legislative power. If, as the majority has apparently found, the statute can be construed to constitute a delegation of rule-making authority and is constitutional, then the requirement is not self-executing, but is dependent upon the adoption of rules implementing it. Until such rules are adopted, there would be no requirement that the applicant could meet, again rendering the action of the commission arbitrary.

Counsel for the commission points out that the commission members are required by R. C. 4735.05 to have ten years' experience in the real estate business and, therefore, "can bring special expertise to bear on questions falling within their jurisdiction," apparently in justification of the arbitrary authority attempted to be conferred by R. C. 4735.07 as to experience. However, had plaintiff's same experience been gathered over a period of ten years, rather than two and one-half years, she would qualify as a member of the commission but would not, under the determination of the commission herein, qualify to take the broker's examination.

Accordingly, I would sustain both assignments of error, and concur in the judgment of reversal, but would enter the order that the trial court should have rendered — i. e., reverse the decision of the commission and remand it for the processing of the appellant's application and the administering of the broker's examination.