Opinion
As Amended Jan. 18, 1962.
Hearing Granted Feb. 14, 1962.
Opinion vacated 23 Cal.Rptr. 404, 373 P.2d 468.
Walter T. Winter, San Francisco, for appellant.
Stanley Mosk, Atty. Gen., James B. Davis, Deputy Atty. Gen., for respondent.
BRAY, Presiding Justice.
Petitioner appeals from a judgment denying a writ of mandate to compel respondent State Board of Dry Cleaners to reinstate petitioner's license to operate a clothes-cleaning establishment.
Questions Presented.
1. Is section 9547, Business and Professions Code unconstitutional: (a) because of the language 'questionable' financial ability; (b) because of the language 'for the protection of persons with whom the licensee may deal as a licensee'?
2. Did the board prescribe reasonable conditions of the bonds?
Record.
Petitioner operated a dry cleaning business licensed by respondent board. Sections 9547 through 9547.4, Business and Professions Code became operative. In general, these sections permitted the board to investigate the financial responsibility of its licensees. 'If after investigation the board determines that the financial responsibility of * * * licensee is questionable, the board may, in the public interest, require' the licensee to file a surety company bond, in the sum of $1,000 'for the protection of persons with whom the licensee may deal as a licensee.' (§ 9547; Emphasis added.) Section 9547.4 provided that in lieu of the surety company bond mentioned in section 9547, the licensee may deposit a $1,000 bearer bond.
After investigation of the petitioner by the board, it determined that his financial responsibility was 'questionable,' and demanded that he file either a surety company or a bearer bond. Petitioner did not comply. Between June 4, 1959, and November 18, 1959, in excess of $31,000 in liens were on record against petitioner. After hearings the board again found petitioner's financial responsibility to be questionable. There is a finding of the trial court as to unsatisfied liens imposed by the state and the federal government in large sums. The record does not disclose petitioner's financial condition in any other respect. As the evidence before the board and the trial court is not before us, we must presume that it was sufficient to support the findings of questionable financial responsibility. Moreover, the court found that petitioner did not 'comply with the said hearing officer's request that the petitioner supply said hearing officer with documentary evidence concerning the petitioner's financial condition with regard to the liens. * * *' Such failure would be sufficient to justify the findings. On petitioner's representation that he would produce 1. Constitutionality of Section 9547.
(a) 'Questionable' financial responsibility.
Petitioner contends that that phrase in the section is not susceptible of a definite interpretation and is so vague, indefinite and uncertain as to make the section unconstitutional. In determining the constitutionality of a statute under an attack of this kind certain rules must be kept in mind. The right to operate a business is a valuable property right. (Cozad v. Bd. of Chiropractic Examiners (1957) 153 Cal.App.2d 249, 314 P.2d 500.) A statute that governs fundamental rights is subject to the same requirements of certainty as would be a criminal statute. (Perez v. Sharp (1948) 32 Cal.2d 711, 728, 198 P.2d 17.) Therefore, a requirement that a business licensee put up a bond or else suffer suspension of his license, thereby denying him of his right to derive his living, should be definite and its meaning ascertainable. A statute which is "so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law." (People v. McCaughan (1957) 49 Cal.2d 409, 414, 317 P.2d 974, 977.) '* * * a statute attacked for vagueness will be upheld if its terms may be reasonably certain by reference to its legislative purpose.' (Jacobsen v. Bd. of Chiropractic Examiners (1959) 169 Cal.App.2d 389, 394, 337 P.2d 233, 236.) '* * * all presumptions and intendments are in favor of the constitutionality of a statute enacted by the legislature * * *' statute enacted by the legislature * * *' (1939) 13 Cal.2d 620, 636, 91 P.2d 517, 586.)
Is the term 'questionable financial responsibility' capable of reasonable interpretation? It would seem so. By a simple logical elimination, the possibility of it being synonymous with either bankruptcy or insolvency may be disregarded, for if either of these conditions existed it would be too late and impossible for the licensee to obtain either a surety company bond or a bearer bond. Both parties agree that this was not the intended meaning. The term, then, means some condition of financial adversity less extreme than bankruptcy or insolvency. Webster's New International Dictionary, 2d edition (1949) defines 'questionable': 'Admitting of being questioned; inviting or seeming to invite, inquiry. * * * Open to doubt or to being called in question; not sure, exact, or decided; problematical.' Probably the best synonym for 'questionable' is the word 'doubtful.' This word is more commonly used in statutory construction and has an old and accepted meaning not out of character with the present problem. In property law a doubtful title is one that exposes the possessor to the hazard of litigation. (Black's Law Dict., 4th ed. (1951); Beeler v. Sims (1914), 93 Kan. 213, 144 P. 237, 239.) Perhaps a slightly less stringent definition is that it may be a financial condition that may be reasonable and fairly questioned in the opinion of competent persons. (Swearingen v. Beyer, 275 Ill.App. 152.)
The willingness or unwillingness and the ability or lack of ability of a licensee to meet his financial obligations bears upon the question of whether his financial responsibility is questionable. In Boyce Motor Lines v. United States, 342 U.S. 337, 72 S.Ct. 329, 330, 96 L.Ed. 367, the court said: '* * * few words possess the The term 'questionable' financial responsibility means such financial condition that the licensee is not willing or able to meet his financial obligations. As used in this statute it would mean a financial condition which to competent persons would indicate that the licensee was not reasonably able to reimburse patrons whose garments and other materials left with him for cleaning or dyeing might be damaged, lost or destroyed. The term has a reasonable degree of certainty and understanding.
(b) 'Protection of persons with whom the licensee may deal as licensee.'
Section 9547 provides that the surety company bond which the board may require 'shall be in such form and on such conditions as the board may by regulation require for the protection of persons with whom the licensee may deal as a licensee.' (Emphasis added.) Petitioner contends that this section grants to the board an unlawful delegation of governmental authority in that it allows the board to determine the extent of protection to be given under the bond.
We have pointed out that the delegation of legislative power must be accompanied by sufficient standards, and that these standards need be only reasonably precise. Here there is a standard set forth by the Legislature for the board to follow in its regulations as to the conditions of the bond, namely, that the conditions shall be for the protection of persons with whom the licensee may deal as a licensee; in other words, to protect persons in their business dealings with a cleaner and dyer as such.
In In re Weisberg (1932) 215 Cal. 624, 631, 632, 12 P.2d 446, 450, the court was considering the forerunner of the present Dry Cleaners Act. (Stats.1931, ch. 425, § 5.) The court held the bond requirement of that act discriminatory and void, pointing out that ,'read literally, the section requires the owners and operators of such shops and establishments to furnish an undertaking for the benefit of 'any person having dealings' with them. This language is sufficiently broad to include any and all kinds of dealings, whether associated with or disassociated from the businesses regulated by the act. A provision requiring such a bond is undoubtedly discriminatory and void.' However, the court stated: 'Undoubtedly the Legislature may with propriety require cleaning and dyeing shops and spotting and sponging establishments to furnish a reasonable bond for the protection of that portion of the public having dealings with them in that line of endeavor,' and that a requirement so limiting the operation of the bond would be valid. Apparently section 9547 was drawn to meet that requirement by limiting the operation of the bond to dealings with the licensee as a licensee, in other words, to protect customers dealing with the licensee in his business as a cleaner and dyer.
Because of the peculiar nature of the cleaning and dyeing business it is reasonable to classify such business differently from other businesses, and to require protection for persons leaving their property in the hands of the licensees to ensure the return of the property in good condition, or to reimburse the owner is case of damage to or loss of his property. The small size of the bond which can be required indicates the nature of the bond, i. e., to protect those persons doing business with a dry cleaner and dyer from those dangers peculiar to and inherent in that type of business. The language of the section is clear and therefore the act is constitutional. 2. The Conditions of the Bonds.
The court found that petitioner was unable to obtain 'a surety bond conditioned in the manner required by * * * [the board] and in accordance with section 509 of chapter 6 of title 16 of the California Administrative Code by reason of the fact that no surety company would issue such bond conditioned in the manner required by said [board]. * * *' An examination of the bond required by the board as set forth in section 509 of the Administrative Code shows that the board clearly exceeded the power granted by section 9547 of the Business and Professions Code to fix conditions 'for the protection of persons with whom the licensee may deal as a licensee' by setting forth conditions not contemplated by the statute.
The condition of the bond as required by the board follows: 'Now, therefore, if the said Principal shall honestly and faithfully perform and discharge all financial undertakings and obligations arising out of the conduct of business as a licensee as aforesaid, then this obligation shall be null and void; otherwise to remain in full force and effect.' (Emphasis added.) As we have hereinbefore shown, the proper interpretation of section 9547 is that the bond is to be given for the protection of customers of the licensee. Classifying cleaning and dyeing businesses as a class of business in which the customer is entitled to protection from loss or damage to his property entrusted to such business is reasonable. Separating for this purpose this type of business from other types such as grocery, clothing, drug, etc., businesses is reasonable and justifiable.
The bond is to afford protection from those conditions which set aside the dry cleaning business from the other businesses. The bond required by the board goes far beyond this purpose and the manifest intention of the Legislature. This bond would cover the licensee's landlord in the event the licensee failed to pay his rent, the seller of cleaning fluids if the licensee failed to pay for them, his employees if he failed to pay their wages, and any other debt incurred by the licensee in the operation of his business. There is no reason which would justify classifying the cleaning and dyeing business as one requiring its owner when his financial condition is questionable, to put up a bond to protect his general creditors, when no such requirement is made of any other line of business.
While the language 'for the protection of persons with whom the licensee may deal as a licensee' is sufficient as a grant of power to the board to make regulations for the conditions of the bond, it is not sufficient as a statement of the conditions of the bond itself. As pointed out in the Weisberg case, supra (215 Cal. 624, 12 P.2d 446), one of the purposes of the act is to protect the public from potential loss by reason of the fire hazard involved in this type of business. Another purpose is to ensure the return to the owner in an undamaged condition articles left for cleaning and dyeing. The bond should so state. The language in the board's form of bond is too general. There should be specific conditions set up limited to the purposes for which the bond can be required, so that both the licensee and the surety company could know precisely what protection persons dealing with the licensee were getting. That this bond does not do that is further shown by the fact that the surety companies refused to issue a bond in that form.
Section 9547.1, dealing with actions on the bond, states: 'Any person injured by the breach of any condition to secure which the bond is given shall have a cause of action * * *.' This section indicates that there must be conditions set forth in the bond other than a vague statement which does not specify conditions. The bond required by the board was an unreasonable one whose conditions did not comply with section 9547, making it impossible for petitioner, through no fault of his own, to obtain a surety company bond. Therefore the board could not deprive petitioner of his license because of failure to file such a bond. Nor could it compel petitioner to deposit the bearer bond mentioned in section 9547.4. This section provides: 'In lieu of furnishing the bond required by Section 9547 of this code, licensees may deposit with the board a bearer bond or bearer bonds having a market value of one thousand dollars ($1,000) or more, and such deposit shall satisfy the requirements of Section 9547 of this code. * * *' (Emphasis added.)
It is clear from a reading of the sections 9547 through 9547.4 that the licensee is given the choice of either filing a surety company bond or a bearer bond and that the choice is not given to the board. Section 9547 provides that the board may require a surety company bond. $Nothing is said about the board requiring either in the alternative, or otherwise, a bearer bond. Section 9547.4 provides that 'In lieu of furnishing the bond * * * licensees may deposit * * * a bearer bond * * *.' Thus, whether the licensee wants to pay a premium for a surety company bond or to save that premium and deposit a bearer bond (section 9547.4 provides that the interest on such a bond while on deposit goes to the licensee) is a matter for him to determine. The law is satisfied if the licensee presents to the board either one of these bonds.
For another reason the board did not have the right to require a bearer bond of petitioner. The conditions upon which such bond would be deposited were not specified by the regulations of the board. The general language of the statute giving power to the board to establish conditions of the bonds, both surety company and bearer, is not sufficient to constitute the terms upon which the bearer bond would be deposited. The general language of the statute is intended as a guide to the board in prescribing the conditions of the bond. Just as in the case of surety company bonds, the licensee and the persons for whose benefit the bond is deposited are entitled to know the exact conditions a breach of which would entitle such persons to recover on the bond.
Until the board adopts regulations prescribing proper conditions of the surety company bond mentioned in section 9547 and the conditions of the deposit of the bearer bond mentioned in section 9547.4, it may not revoke a license for failure of the licensee to file or deposit a bond with it even though, as here, the board finds that the financial responsibility of the licensee is questionable.
Our decision makes it unnecessary for us to consider petitioner's claim of discrimination.
The judgment is reversed and the trial court is directed to issue a peremptory writ of mandate compelling respondent board to reinstate petitioner's license.
TOBRINER and SULLIVAN, JJ., concur.