Title: Straughn v. O'RIORDAN

State: florida

Issuer: Florida Supreme Court

Document:

338 So. 2d 832 (1976)
J. Ed STRAUGHN, Executive Director, Department of Revenue, State of Florida, Appellant,
v.
Louis F. O'RIORDAN, Appellee.
No. 47452.

Supreme Court of Florida.
October 14, 1976.
*833 Robert L. Shevin, Atty. Gen., and J. Kendrick Tucker, Asst. Atty. Gen., for appellant.
Louis F. O'Riordan, in pro per.
ENGLAND, Justice.
By direct appeal pursuant to Article V, § 3(b)(1) of the Florida Constitution, we are asked to review a declaratory judgment of the Bay County Circuit Court holding Section 212.14(4), Florida Statutes (1973), invalid as an unconstitutional delegation of legislative authority. Appellee has not appeared in this proceeding and appellant has waived oral argument.
In 1973 Louis O'Riordan sought to establish a business in Panama City for which he was required to register with the Department of Revenue for the collection of state sales taxes.[1] Acting under Section 212.14(4), Florida Statutes (1973), the Department refused to register O'Riordan unless he agreed to post a cash bond of $200 or a surety bond of $1,000. O'Riordan refused and continued to operate his new business. After the initiation of legal proceedings not relevant here, O'Riordan sought declaratory relief in the circuit court, alleging that the bond statute constituted an unconstitutional delegation of legislative power in violation of Article II, Section 3 of the Florida Constitution. The circuit court in Bay County agreed and specifically held the statute unconstitutional. This appeal followed.
In relevant part Section 212.14(4) directs the Department to require a bond from sales tax registrants in "all cases where it is necessary to insure compliance with the provisions of this chapter... ." A hearing was conducted at which the Department developed evidence as to the guidelines and procedures it uses for determining when to require bonds and in what amounts.[2] The record shows, for example, that the chief of the sales tax bureau considers the financial stability of an applicant to be the primary guide, but that the area supervisor covering the Bay County area "plays it by ear" with his primary emphasis being on length of residence and good character. O'Riordan, in this case, was required to post a bond because he was a new resident without property holdings whose business did not have a large inventory, and because Bay County is in an area of seasonal *834 business. The record also shows that the Department's application form does not request any information on which the Department relies for bond-setting purposes, having no questions as to financial status, value of property holdings, length of residence, the existence of outstanding money judgments, credit references, or other factors. Based on this record the trial judge concluded that the legislative grant of authority lacked adequate standards and guidelines by which to govern the Department's unbridled discretion, and was invalid.
In our view, Section 212.14(4) is a constitutional delegation of power to protect the sales tax revenues of the state. It is not the Legislature's delegation which is improper, but rather the Department's exercise of that delegated authority. This delegation of authority can be readily classified with others we have upheld which require a factual determination of the fitness of each applicant for a license or similar permit. See, for example, Permenter v. Younan, 159 Fla. 226, 31 So. 2d 387 (1947). Cf. Bailey v. Van Pelt, 78 Fla. 337, 82 So. 789, 793 (1919). The problem of arbitrariness which concerned the circuit court is a consequence of the Department's failure to adopt rules which set out the standards to be applied to each sales tax applicant.
Over the years the Department has established informally guidelines by which its employees could determine whether a bond was "necessary". To date these guidelines have not been publicly promulgated, although the Department has at all relevant times been subject to the rulemaking provisions of the state's administrative procedure act.[3] Under the act in force at the time O'Riordan sought to register with the Department, a "rule" was defined to mean any
The standards attempted to be applied to O'Riordan were "rules" under the act, and as such were not enforceable against him in the absence of publication in the manner prescribed by law. See Section 120.031(1), Florida Statutes (1973).
The necessity for publication is emphasized by the facts in this case. Here the policies were so informal as to be diverse among Department personnel. Based on the record testimony in this case, it is apparent that the area supervisor for Bay County was attempting to apply the statute to O'Riordan in an arbitrary and totally discretionary manner. For that reason his attempted application of the statute was invalid. We hold, however, that under guidelines properly adopted and uniformly applied, the statute is a valid enactment for a purpose within the Legislature's power.
We reverse the circuit court's ruling that Section 212.14(4) is unconstitutional, but we affirm the order below in all other respects.
OVERTON, C.J., and BOYD and SUNDBERG, JJ., concur.
ADKINS, J., dissents with an opinion, with which ROBERTS and HATCHETT, JJ., concur.
ADKINS, Justice (dissenting).
I dissent.
Circuit Judge Larry G. Smith, of the Fourteenth Judicial Circuit, entered a final judgment which contained the following:
The trial judge then held that the statute was an unlawful delegation of legislative authority and in violation of Article II, § 3, Florida Constitution.
*838 I adopt this well-reasoned final judgment of Judge Larry G. Smith as my dissent.
ROBERTS and HATCHETT, JJ., concur.
[1]  Section 212.18(3), Fla. Stat. (1973).
[2]  The trial court's order recites: "It is true that certain criteria have been developed by the Department, and these have been communicated to the Area Supervisors by telephone, memorandums, and by seminar discussions. These criteria have never been promulgated in the form of rules or regulations of the Department. The Department itself, both in its memorandum of law and in the testimony, suggests adequate reasonable criteria for determining both the necessity for and the amount of the bond. These include the existence of outstanding money judgments, the past history of payment or non-payment of sales taxes, issuance of worthless checks, detailed information as to the nature, location, history, and type of business, and details as to ownership or equity of the business by the applicant. As to the amount of the bond, the Department itself has developed a `rule of thumb' by which it considers a bond adequate if it is in the amount of estimated tax collections over a three-month period."
[3]  Chapter 120, Part I, Fla. Stat. (1973); Section 120.52(1)(b), Fla. Stat. (1975). The Department had been exempt from the act's adjudication provisions. Section 120.21(1), Fla. Stat. (1973). With the adoption of a new act on January 1, 1975, however, the Department is no longer exempt in any respect unless it applies for and obtains exemption under Section 120.63, Fla. Stat. (1975). As pertains to this proceeding, the new act has as one of its principal goals the abolition of "unwritten rules" by which agency employees can act with unrestrained discretion to adopt, change and enforce governmental policy. The term "rule" was broadly defined in the new act to reach precisely the form of invisible policy-making which the Department has employed in the course of enforcing this bonding requirement. Section 120.52(14), Fla. Stat. (1975).