Case Title: Snyder's Drug Stores v. North Dakota St. Bd. of Ph.

Citation: 202 N.W.2d 140

Docket Number: 

State: north-dakota

Court: North Dakota Supreme Court

Date: 1972-10-31T00:00:00Z

Document:
202 N.W.2d 140 (1972) SNYDER'S DRUG STORES, INC., Respondent, v. NORTH DAKOTA STATE BOARD OF PHARMACY, Appellant. Civ. No. 8834. Supreme Court of North Dakota. October 31, 1972. Rehearing Denied November 29, 1972. *141 Conmy, Conmy, Rosenberg, Lucas & Olson, Bismarck, for appellant. Wattam, Vogel, Vogel & Peterson, Fargo, for respondent. ERICKSTAD, Judge. The North Dakota State Board of Pharmacy appeals from the summary judgment ordered by the district court of Burleigh County, which requires the Board to issue a permit to Snyder's Drug Stores, Inc., to operate a pharmacy in the Red Owl Family Center in Bismarck, North Dakota. The judgment is dated January 6, 1972. An application for a permit to operate a pharmacy was filed on the 25th of January 1971 by Lloyd D. Berkus, as president of Snyder's Drug. As indicated by various documents filed with the application, Snyder's Drug was to lease an area in the store building operated by Red Owl in Bismarck, North Dakota. A part of the store building was to be remodeled to meet the requirements of the Pharmacy Board. On receipt of the application, the secretary of the Pharmacy Board investigated the proposed site and subsequently filed a report with the Pharmacy Board. Without complying with Section 28-32-07, N.D.C.C., and without a hearing, the Pharmacy Board denied the application. The denial is contained in the Pharmacy Board's findings of fact, conclusions of law, and order, dated March 22, 1971. Basically, the Board found that the existing facilities of the applicant did not meet the standards required by the Pharmacy Board and that the applicant failed to comply with Subsection 5 of Section 43-15-35, N. D.C.C. This subsection requires in the case of a corporate applicant that the majority of the stock be owned by registered pharmacists in good standing, who are actively and regularly employed in and responsible for the management, supervision, and operation of the pharmacy. By notice of appeal dated April 12, 1971, Snyder's Drug appealed from the Board's order denying the application. In its specifications of error it asserted that Section 43-15-35(5), N.D.C.C., is unconstitutional, in that it violates the equal-protection and the due-process clauses of Section 1 of the Fourteenth Amendment to the United States Constitution, and Sections 11 and 20 of the North Dakota Constitution. It also asserted that the Board's findings that it failed to comply with the regulations of the Board were not supported by the evidence and were not in accordance with the law. On appeal to the district court, a motion for summary judgment was made by Snyder's *142 Drug. The trial court granted the motion upon the ground that Section 43-15-35(5), N.D.C.C., violates the previously described sections of the Constitutions of the United States and of North Dakota. It apparently further concluded that Snyder's Drug had satisfactorily complied with all reasonable regulations of the Board of Pharmacy entitling it to a permit to do business as a pharmacy. Because the constitutional question is most crucial, we shall consider it first. The case relied upon by the trial court in rendering its order and by Snyder's Drug in resistance to the appeal is Liggett Co. v. Baldridge, 278 U.S. 105, 49 S. Ct. 57, 73 L. Ed. 204 (1928). In Baldridge, the United States Supreme Court was considering the constitutionality of a Pennsylvania statute enacted in 1927. That statute required in the case of corporations, associations, and co-partnerships that all the partners or members thereof should be licensed pharmacists, with the exception that such corporations which were already organized and existing and duly authorized and empowered to do business in the state and owned and conducted pharmacies in the state, and which at the time of the passage of the Act still owned and conducted pharmacies in the state, could continue to do so. Liggett Company, which at the time of the passage of the Act was empowered to own and conduct, and did own and conduct, pharmacies in the state, purchased two additional pharmacies, and it was in conjunction with the operation of these two additional pharmacies that the company was threatened with prosecution. The company sought to enjoin the attorney general and the district attorney from prosecuting it. The lower court, composed of three judges, held that the statute was constitutional upon the ground that there was a substantial relation to the public interest in the ownership of the drugstore where prescriptions were compounded. The majority of the United States Supreme Court, speaking through Justice Sutherland, found the Act to be unconstitutional, in contravention of the due-process clause of the Fourteenth Amendment to the United States Constitution. A pertinent part of the Sutherland opinion follows: Justice Holmes, joined by Justice Brandeis, filed a short dissent. A part of the dissent follows: The Board of Pharmacy contends that Baldridge may be distinguished from the instant case on the basis of the statutory provisions. They point out that the Pennsylvania statute required that one hundred percent of the stock of the corporation be owned by pharmacists, whereas the North Dakota statute required only that a majority of the stock be owned by pharmacists. The Board further emphasizes that the North Dakota statute is concerned with control rather than mere ownership. We do not believe that this difference is significant, particularly in light of the fact *144 that under the Pennsylvania statute requiring pharmacists to own one hundred percent of the stock, control was of necessity in pharmacists much the same as under the North Dakota statute, which requires that the majority stock be owned by registered pharmacists in good standing, who are actively and regularly employed in and responsible for the management, supervision, and operation of the pharmacy. The Board of Pharmacy contends that this case should be remanded for an evidentiary hearing before it relative to the constitutionality of the Act. It contends that although the constitutional issue was argued before the trial court, no evidence as such was submitted to the trial court on this issue, and accordingly, because this was an appeal from an administrative agency to the trial court, that if any evidence is to be submitted on this issue the case should be remanded to the administrative agency for that purpose. Since no transcript has been certified to this court of the proceedings before the trial court, we do not know what took place before the trial court; but it does not appear from any of the arguments made in this court that a motion to remand the case to the administrative agency was made by any party for any purpose when the case was being considered by the trial court. In respect to the facts relative to the constitutional issue, we find ourselves in the same position as the majority of the United States Supreme Court in Baldridge. We quote: Having no assurance from the Board of Pharmacy that specific evidence lacking in Baldridge and so far lacking in the instant case could be supplied on a remand, notwithstanding the Board's request that this case be remanded to the trial court with instructions to remand to the Pharmacy Board for an evidentiary hearing on the constitutional issue, and because of the Board's failure to this date to produce such evidence, we hold that this request comes too late. Being bound by the decision of the United States Supreme Court in Baldridge, and seeing insufficient basis for distinguishing that decision from the instant case, we sustain the trial court's conclusion that Section 43-15-35(5), N.D.C.C., violates the due-process clause of Section 1 of the Fourteenth Amendment to the United States Constitution. Since genuine issues of material facts otherwise exist in conjunction with the application on the part of Snyder's Drug for a permit, the motion for summary judgment *145 as to those issues should have been denied by the trial court under Rule 56 of the North Dakota Rules of Civil Procedure. Because no evidentiary hearing was held by the Board of Pharmacy on the application for a permit, we remand the case to the trial court with instructions to it to remand the case to the Board of Pharmacy for an administrative hearing on the application, sans the constitutional issue, pursuant to our Administrative Agencies Practice Act. See especially Sections 28-32-07, 28-32-18, and 28-32-19, N.D.C.C. For the reasons stated, the judgment of the trial court is affirmed as it relates to the constitutional issue and reversed as it relates to the applicant's proof that it is otherwise qualified to receive a permit to operate a pharmacy under North Dakota law and the regulations of the North Dakota Board of Pharmacy. STRUTZ, C. J., and PAULSON, TEIGEN and KNUDSON, JJ., concur.