212 P. 942 | Cal. Ct. App. | 1922
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 following 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 (c) 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,
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, sec. 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,
[1] Applying the rule to this case it would follow that, even in the absence of any provision in the statute, a broker is entitled to a notice and hearing before the commissioner can revoke his certificate. Such a hearing is plainly contemplated by the act which authorizes revocation only in the event that the commissioner "shall find" that the broker is guilty of one of the three grounds of revocation specified. A "finding" of the existence of certain facts presupposes some hearing of evidence tending to prove such facts. "The judicial function is to decide on the property or rights of a citizen (Robinson v.Board of Supervisors,
The very basis of a judicial or quasi-judicial hearing at which property rights are determined presupposes some sort of process by which 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. (Dyment
v. Board of Medical Examiners,
[2] Applying the rule to the present case, it follows that, even though an attorney appeared for petitioner at the time noticed, the commissioner would not have jurisdiction to make the order if the complaint or notice did not state facts showing that the petitioner had committed some breach within the purview of the act. This is so not because the statute requires the filing of charges against the broker but because the constitutional guaranty of due process of law requires that he be allowed to appear and defend, and the established rules of procedure demand that the accused shall be given "such notice of the nature of the charge against him as will enable him to formulate a defense." (Dyment v. Board of MedicalExaminers,
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.
[3] In addition to this, assuming, as we must, that the commissioner's action was based upon the ground that petitioner "has engaged, or is about to engage in any fraudulent transaction," a review of the evidence fails to support the finding. The only evidence which the commissioner could consider was that taken at the hearing in the presence of petitioner's counsel. This consisted of the testimony of one witness to the effect that he had purchased certain shares of corporate stock through petitioner's agents and upon their representations that the stock would increase in value, would soon pay a dividend and that petitioner would sell the stock at market on demand of the witness. There was no evidence that these representations were false or that witness relied upon them. There was no evidence that the petitioner knew that the representations were made or that, if made, they were false. There was no evidence that the agents who made the representations knew, or had reason to know, that they were false or fraudulent. There was no evidence that the petitioner had engaged in or that he was about to engage in a fraudulent transaction. [4] "The presumption is always against fraud. This presumption approximates in strength that of innocence of crime. (Truett v. Onderdonk,
[5] The petitioner argues with considerable force that the commissioner had no power to suspend his certificate because such power is not expressly conferred by the statute. The commissioner contends that the power to suspend is incidental to the power to revoke and is to be implied from the grant of the power of revocation; and that the power of suspension should be exercised pending a hearing of the charges and a determination of the question whether the certificate should be revoked. Similar statutes examined expressly confer such power. If we may assume that it is to be implied from the grant of the power of revocation, it nevertheless may be exercised only when the commissioner has obtained jurisdiction to proceed with a hearing and determination of that question. If this were not so the commissioner could, as has been done in this case, order a temporary suspension and continue the order indefinitely, thus depriving the broker of his right to do business without any legal process whatever.
Other points raised do not require consideration.
The order is annulled.
Sturtevant, J., and Langdon, P. J., concurred.