HANDLER v. DEPT. OF COMM., 14 Ohio Misc. 9 (1967)

233 N.E.2d 147

HANDLER, D.B.A. WEST SIDE JEWELERS LOANS, APPELLANT, v. DEPT. OF COMMERCE, DIVISION OF SECURITIES, APPELLEE.

No. 128682Court of Common Pleas, Montgomery County.
Decided October 31, 1967.

Licenses — Pawnbrokers — Revocation of license by administrative agency — Section 4727.16, Revised Code — Appeal from administrative order of revocation — Court may reverse or modify — Pursuit of second revocation proceeding during pendency of appeal from first — Dismissal of first by agency — Res judicata.

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1. When a court finds that the order of an administrative agency appealed pursuant to Section 119.01 et seq., Revised Code, is not supported by reliable, probative, and substantial evidence or is not in accordance with law it may reverse, vacate, or modify such order.

2. Section 4727.16, Revised Code, when properly construed in relation to Sections 119.12 and 4727.03, Revised Code, does not require a revocation of a pawnbroker’s license automatically upon the mere assertion of two convictions for violations of any of the sections of the pawnbroker’s law.

3. A proceeding by an administrative agency to revoke a license, commenced while an appeal to Common Pleas Court is pending from an earlier order revoking such license on the same alleged grounds, when the agency has since terminated the earlier proceeding by reinstating the license on its own motion, cannot give rise to a valid order of revocation in the later proceeding, since the agency’s jurisdiction is barred by the pendency of the earlier appeal at the time of commencing the second action to revoke.

4. Where the division of securities first revoked a pawnbroker’s license without a hearing on the contention that Section 4727.16, Revised Code, made a revocation mandatory upon proof of the second conviction of any offense under the Pawnbrokers Act and then reinstated the license on its own motion in an effort to establish its jurisdiction to conduct a second proceeding for revocation on the same grounds, the two convictions of the licensee as a ground for revocation became merged in the judgment of the court which dismissed the appeal from the first proceeding at the instance of the division, and it is barred thereby from reasserting them as grounds in any further proceeding.

Mr. Gerald Office, for appellant.

Mr. William B. Saxbe, attorney general, and Miss Winifred A. Dunton, for appellee.

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BRENTON, J.

This cause is before this court on appeal from an order of the Division of Securities, Department of Commerce, pursuant to Section 119.12, Revised Code.

Appellant has been licensed as a pawnbroker pursuant to Chapter 4727, Revised Code, since January 22, 1948. On March 3, 1966, appellee notified appellant that said license had been revoked as of said date without first providing appellant with a reasonable opportunity to be heard.

On March 15, 1966, appellant filed in this court his appeal from said order which is case No. 127675. On the same date this court suspended the execution of the order of the appellee pending that appeal.

On April 1, 1966, appellee, on its own motion, removed the revocation order of March 3, 1966, and reinstated the license of appellant.

On the same date, April 1, 1966, appellee issued an order setting a date for hearing on appellee’s contemplated revocation of the license. The hearing date was continued until May 23, 1966. Appellant and his counsel declined to appear because the appeal in case No. 127675 was still pending, and written notice thereof reached appellee on the same day after the hearing had concluded.

On September 13, 1966, this court adjudicated the appeal in case No. 127675 by an entry of dismissal.

Thereafter, on September 20, 1966, the appellee, pursuant to the aforesaid notice and hearing, issued an order revoking the license of appellant effective in fifteen days.

From this latter order this present appeal was perfected.

Thereafter, a hearing was had and the matter was submitted upon the record and the arguments of counsel on their respective propositions of law and authorities.

Appellant contends that the Pawnbrokers Act, Chapter 4727, Revised Code, is unconstitutional. He especially excepts to such parts of Sections 4727.03 and 4727.16, Revised Code, having to do with the power of appellee to revoke a license. Specifically he contends that Section 4727.03, Revised Code, is an unlawful delegation of legislative power and that Section 4727.16, Revised Code, is unreasonable and inconsistent with due process. He also contends that so long as his appeal in case No. 127675 was

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pending that the conduct and action of the appellee in proceeding with a hearing and rendering an order on a new charge for the same matters that were then pending on appeal, was contrary to law. And finally, he contends that appellee’s reinstatement order of April 1, 1966, vitiates the prior records upon which the revocation order was predicated.

On appeal this court may affirm the order of the appellee if it finds, upon consideration of the entire record, “that the order is supported by reliable, probative, and substantial evidence and is in accordance with law.” (Emphasis added.) In the absence of such a finding, the court may reverse, vacate, or modify the order or make such other ruling as is supported by reliable, probative, and substantial evidence and is in accordance with law. Section 119.12, Revised Code.

Without indulging in an extensive review of the various ramifications of the police power of the state, this court adopts the concept set forth in Wessell v. Timberlake, 95 Ohio St. 21, and Division IX, Police Power, Sections 324 through 431 of 10 Ohio Jurisprudence 2d. Constitutional Law. Chapter 4727, Revised Code, the Pawnbrokers’ Act, has heretofore been by the Supreme Court declared a constitutional exercise of the police power by the Legislature of Ohio. Wessell v. Timberlake, supra. The court reserved for future consideration that portion of the Act as it relates to the revocation of a license issued pursuant to the Act when such question may be raised in a proper case.

This court would be inclined to rationalize that the provisions for revocation under the Act at the time of Wessell v Timberlake, supra, were arbitrary, capricious and unreasonable, because at that time, there was no provision for any hearing before the agency, or for any notice to licensee, nor was any provision made for attendance of witnesses. Neither was there any provision for any appeal or review of the action of the agency.

At this time, however, such objections are overcome by the express provisions of Sections 4727.03 and 119.12, Revised Code. These sections, as well as Section 4727.16, Revised Code, must be construed with reference to each

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other; that is, they are in pari materia in giving credence to a reasonable exercise of the police power. This court cannot construe Section 4727.16, Revised Code, as an enactment requiring the automatic or mandatory revocation of a pawnbroker’s license upon the mere assertion of two convictions for violations of any of the sections of the entire Act. The word “shall,” as used in Section 4727.16, Revised Code, means nothing more than may. The directive for this conclusion is expressed in Section 4727.03, Revised Code, as follows: “The said divisio may, upon notice to the licensee and reasonable opportunity to be heard, revoke any license, if the licensee, * * *, shall violate Sections 4727.01 to 4727.16, inclusive, Revised Code.” (Emphasis added.) This seems to express the spirit and tenor of the whole matter of revocation under the Pawnbrokers Act.

In light of these interpretations this court construes the entire Act as constitutionally valid.

The court will now consider the question of the appellee asserting jurisdiction of the entire matter to proceed anew and hold a hearing during the pendency of the same said matter between the same said parties on appeal. While the transcript of the record of the proceedings had by appellee does not contain the matter of the appeal in case No. 127675, this court certainly has the power to judicially notice its own records. Furthermore, the appellee in open court, upon the record, admitted the same and the content thereof. Therefore, the court finds that on March 3, 1966, appellee revoked appellant’s license. On March 15, 1966, appellant perfected his appeal from that order pursuant to Section 119.12, Revised Code, which appeal is case No. 127675 on the docket of this court.

On May 3, 1966, appellant filed in that case a motion for a finding in his favor for failure of the appellee to file and certify its record in accordance with Section 119.12, Revised Code. On May 11, 1966, appellee filed in that case a motion to dismiss the case on the ground that the question was moot. Memorandums of the parties were also filed in that case. That case was finalized on September 13, 1966, by entry. In the case now before this court appellee, during the pendency of the aforesaid appeal, on its own

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motion reinstated, on April 1, 1966, the license of appellant, and at the same time, notified him that appellee contemplated revoking his license and set same for hearing. The hearing was held on May 23, 1966, which said hearing appellant declined to attend. Thereafter, but not until September 20, 1966, did the appellee issue its revocation order based thereon. Significantly appellee waited until after case No. 127675 had been finalized in this court to issue its revocation order.

The right to prosecute an appeal is a cause of action within the meaning of the Administrative Procedure Act. This court holds that where an administrative determination has been reviewed by the courts, the res judicata effect, if any, attaches to the courts’ judgment. Further it would appear that where the administrative determination has been deemed by the courts as an exercise of a “judicial” or “quasi-judicial” function, its operation as res judicata has been recognized. 42 American Jurisprudence 522, Section 161.

Section 119.01, Revised Code, subdivision (H) defines an appeal:

“`Appeal’ means the procedure by which a person aggrieved by a finding, decision, order, or adjudication of any agency, invokes the jurisdiction of a court.”

Appellee, in an attempt to exercise its jurisdiction under Chapter 4727, Revised Code, and by reason of Section 4727.16, Revised Code, issued a revocation order because it had on file two convictions of the appellant under the Pawnbrokers’ Act. Thus, by its action and conduct, causing appellant to invoke the jurisdiction of this court by appealing from that order, it thereby surrendered its jurisdiction over the same subject matter against the same party and had no power or authority to institute proceedings, order and conduct a hearing thereon during the pendency of that appeal. Thus, an order of revocation founded thereon is not in accordance with law.

In the hearing in open court upon this appeal the appellee emphatically represented that it had the mandatory duty to revoke a license upon two convictions. This, of course, is not in keeping with the holding of the court hereinbefore in this decision expressed.

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While the court believes that appellee has wide inherent discretionary powers in administering the Pawnbrokers Act it does appear that its action and conduct during the pendency of the appeal in case No. 127675 was arbitrary and capricious. This is especially so when it waited to issue its second revocation order for the same cause from May 23, 1966, until September 20, 1966, the latter date being only seven days after appellant’s cause of action on his appeal from the first revocation order had been adjudicated.

This brings the court to appellant’s last contention. What is the legal significance of the action of appellee in removing its first revocation order and reinstating the license in the appeal in case No. 127675?

In view of the fact that appellee removed its revocation order and reinstated the license of the appellant during the pendency of the appeal in case No. 127675, and further, in view of the fact that appellee made the same a part of the record in this case, and the further fact that the final adjudication in that case was predicated thereon, it would appear that the two convictions of appellant merged in the judgment of the court and appellee should be barred from reasserting them in a new proceeding.

Implicit in this result is the fact that but for the exercise of its discretion in foregoing the two convictions the first appeal would not have been dismissed on the grounds of its mootness. On the contrary, because of the failure to certify the record appellant’s motion for a finding in his favor would have necessarily been sustained on authority of Stephan v. State Board, 18 O. O. 2d 319. It must be borne in mind that appellee did take away the pawnbroker’s license and did later give it back.

In these days the courts are constantly striving to eliminate the playing of games in litigation. The sole concern is the rights of the litigants. There is no reason why administrative agencies should not apply the same standard.

The court concludes upon a consideration of the entire record, including that judicially noticed, that the order of appellee complained of on this appeal, is not supported, for the reasons hereinbefore expressed, by reliable, probative

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and substantial evidence. And further, it is not in accordance with law.

Therefore, the order of the appellee issued September 20, revoking appellant’s license is reversed.

Order reversed.