Case Name: SUPERX DRUGS CORPORATION v. STATE BOARD OF PHARMACY
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1965-05-10
Citations: 378 Mich. 430
Docket Number: Calendar No. 32, Docket No. 50,087; Calendar No. 6, Docket No. 51,379
Parties: SUPERX DRUGS CORPORATION v. STATE BOARD OF PHARMACY.
Judges: Kelly and Smith, JJ., concurred with O’Hara, J.
Reporter: Michigan Reports
Volume: 378
Pages: 430–490

Head Matter:
SUPERX DRUGS CORPORATION v. STATE BOARD OF PHARMACY.
Decision oe the Court.
1. Mandamus-^-Deuggists — Licenses.
'i ' Mandamus to compel State board of pharmacy to issue lieense tq .corporate owner of pharmacy is gl'anted.
Dissenting Opinion.
■. Dethmers, J.
2. Druggists — Stock Ownership — Judicial Notice.
Judicial'notice is taken of the fact that, based on records of the corporation and securities commission, a named individual was owner of more than 85% of the stock of plaintiff corporation at the time of incorporation and again when the corporate life was extended SO years later and that records of defendant pharmacy board disclose such individual was, continuously during that period, a registered pharmacist, whereby it is inferred that such was the situation throughout the 30-year period including time when statute became effective requiring that 25% of stoclc of corporate owner of a pharmacy be.owned by registered pharmacists (PA 1927, No 359, § 1).
Deferences por Points in Headnotes
[1] 34 Am Jur, Mandamus §§ 184, 189.
[2] 20 Am Jur, Evidence §§ 16, 18, 65, 89.
[3] 25 Am Jur 2d, Drugs, Narcotics and Poisons §§ 10, 14.
[4] 5 Am Jur 2d, Appeal and Error § 545.
[5-7]v33 Am-Jur, Licenses § 52.5.
[8,11, 47] 25 Am Jur 2d, Drugs, Narcotics and Poisons § 7.
[9,10] 25 Am Jur 2d, Drugs, Narcotics and Poisons §§ 7, 14.
33 Am Jur, Licenses § 52.5.
[12] 50 Am Jur, Statutes § 170.
[13] 20 Am Jur 2d, Courts §§ 64, 65.
[14] 49 Am Jur, States, Territories and Dependencies § 33.
16 Am Jur 2d, Constitutional Law §§ 313-327, 371, 372.
[15, 27] 25 Am Jur 2d, Drugs, Narcotics and Poisons §§ 7-9.
[16] 25 Am Jur 2d, Drugs, Nareoties and Poisons §§ 7, 10, 12. 20 Am Jur 2d, Courts §§ 64, 65.
[17] . 33 Am Jur, Licenses § 52.5.
25 Am Jur 2d, Drugs, Narcotics and Poisons §§ 7, 10, 12.
[18] 35 Am Jur, Mandamus § 393.
[19] 5 Am Jur 2d, Appeal and Error § 739.
[20] 2 Am Jur 2d, Administrative Law §§ 730, 744.
[21j 22] 50 Am Jut, Statutes § § 223, 224.
I 23] 25 Am Jur 2d, Drugs, Narcotics and Poisons §§ 10, 14, 15.
[24, 25] 34 Am Jur, Mandamus § 70.
3. Same — License—Grandfather Clause.
Venial of renewal of license to corporate applicant because of alleged discontinuance of operations so as to cause it to lose status under so-called grandfather clause of pharmacy licensing act and for violation of such act held, not well founded (PA 1987, No 359, § 1).
References for Points in Headnotes
[26] 5 Am Jur 2d, Appeal and Error § 873.
[28] 25 Am Jur 2d, Drugs, Narcotics and Poisons § § 7-10.
20 Am Jur 2d, Courts §§ 65, 66.
[29,30] 49 Am Jur, States, Territories and Dependencies §§ 28, 33, 36.
16 Am Jur 2d, Constitutional Law §§ 198, 204, 284, 285.
[31] 49 Am Jur, States, Territories and Dependencies §§ 33, 36.
16 Am Jur 2d, Constitutional Law §§ 204, 284, 285.
[32, 33] 50 Am Jur, Statutes § 471.
16 Am Jur 2d, Constitutional Law §§ 307, 308.
[34] 16 Am Jur 2d, Constitutional Law §§ 259, 263, 277, 284, 289, 290.
'35] 16 Am Jur 2d, Constitutional Law §§ 311, 313-318.
’36] 16 Am Jur 2d, Constitutional Law §§ 277-280, 307, 308.
'37] 25 Am Jur 2d, Drugs, Narcotics and Poisons §§ 7, 10, 12.
[38] 18 Am Jur 2d, Corporations §§ 46, 208, 209.
[39, 42] 18 Am Jur 2d, Corporations §§ 460, 463, 481, 484, 490.
[40] 25 Am Jur 2d, Drugs, Narcoties and Poisons § 12.
[41] 25 Am Jur 2d, Drugs, Nareoties and Poisons §§ 7-9, 12.
[43] 20 Am Jur, Evidence §§ 783-786.
[44] 16 Am Jur 2d, Constitutional Law § § 485, 488-493.
[45] 16 Am Jur 2d, Constitutional Law § § 494, 498-505.
[46] 33 Am Jur, Licenses § 52.5.
16 Am Jur 2d, Constitutional Law § § 517-519.
[48] 2 Am Jur 2d, Administrative Law § 768; 35 Am Jur, Mandamus § 394.
[49] 34 Am Jur, Mandamus §§ 184, 386, 390.
[50] 2 Am Jur 2d, Administrative Law §§ 553-555, 610, 612, 645.
[51] 2 Am Jur 2d, Administrative Law §§ 767, 768.
[52] 33 Am Jur, Licenses § 67.
[53] 2 Am Jur 2d, Administrative Law §§ 645, 654, 676, 764-766.
[54] 2 Am Jur 2d, Administrative Law §§ 697, 755, 756, 759.
[55] 2 Am Jur 2d, Administrative Law §§ 553-555, 610, 612-614.
[56-58] 20 Am Jur 2d, Courts § 201.
[59] 25 Am Jur 2d, Drugs, Narcoties and Poisons §§ 7, 12.
[60] 25 Am Jur 2d, Drugs, Narcotics and Poisons §§ 7, 8, 10.
[61] 50 Am Jur, Statutes § 223.
[62] 25 Am Jur 2d, Drugs, Narcotics and Poisons §§ 7-15.
[63] 16 Am Jur 2d, Constitutional Law §§ 313-318.
[64, 66-68] 25 Am Jur 2d, Drugs, Narcoties and Poisons § § 7,12.
[65] 20 Am Jur, Evidence §§ 16, 18, 65, 89, 110, 120.
4. Appeal and Error — Questions Reviewable — Druggists—Statutes — Grandfather Clause — Pledge of Corporate Licensee's Capital Stock.
Claim of defendant pharmacy board that pledge of capital stock of corporate licensee under pharmacy act, as security for indebtedness and loans, caused such licensee to lose such rights it may have had under so-called grandfather clause is not discussed, where raised for the first time on second appeal (PA 1987, No 359, § 1).
5. Druggists — Construction of Statutes- — Grandfather Clause.
Defendant pharmacy board’s contention that the language of the statute controlling ownership of pharmacies creating the so-called grandfather rights means that any corporation which, at time of passage of the act, did not meet the requirement of ownership of at least 85% of its stock by registered pharmacists but was then owning and conducting a drugstore would be permitted to continue to do so held, correct (PA 1987, No 369, §D-
6. Same — Pharmacies—Grandfather Clause — Statutory Construction.
Plaintiff’s contention that the so-called grandfather clause of the statute regulating ownership of pharmacies means that any corporation, regardless of who held its stock at the time, which owned and conducted a drugstore at the time of passage of the act might continue to do so thereafter, even if, in the future, there was no ownership of at least 85% of its stock by registered pharmacists held, incorrect (PA 1987, No 359, §D-
7. Statutes- — Trade or Profession — Statutory Regulations— Grandfather Clause.
The purpose of an exception or grandfather clause in a statute is to exempt from the statutory regulations imposed for the first time on a trade or profession those members thereof who are then engaged in the newly regulated field.
8. Druggists — Act Regulating Pharmacies — Intent and Purpose.
The legislative intent and purpose of the statute regulating ownership of pharmacies was to require that at least 85% of the stock of corporations owning and conducting drugstores should be owned by registered pharmacists, but to make an exemption and exception for corporations which, at the time of passage of the act, were not so owned but were owning and conducting drugstores (PA 1927, No 369, § 1).
9. Same — Pharmacy Board — Denial of License — Grandfather Clause.
Defendant pharmacy board’s denial of a license to plaintiff corporation held, proper, where plaintiff corporation, which qualified under the regulations of the statute when it was passed in 1927 as more than 25% of its stock was owned by a registered pharmacist, was in no need of the beneficent terms of the exemption of grandfather clause, and, accordingly, acquired no rights under it (PA 1927, No 359, § 1).
10. Same — Pharmacy Board — Denial of License — Stockholding of Corporate License.
Plaintiff corporation which never had acquired rights under so-called grandfather clause of pharmacy licensing act was properly denied renewal of license, where 25% of its stock was not held by registered pharmacist (PA 1927, No 359, § 1).
11. Same — Constitutional Law — Statutes—Stock Ownership of Corporate Licensees.
Plaintiff’s contention that the statute regulating ownership of pharmacies violates its constitutional rights to operate a legitimate private business in that the acts’ prohibition bears no reasonable relationship to public health, safety, and morals and creates arbitrary and unnecessary restrictions depriving plaintiff of due process and equal protection of the law, held, not well taken, tinder record containing testimony of eminent pharmacologists, teachers, and practitioners in the field, that in their opinion there is a reasonable relationship between the statutory stock ownership requirements and public health and safety (PA 1927, No 359, § 1).
12. Statutes — Presumptions.
The presumption of the constitutionality of a statute favors validity and, if the relation between the statute and the public welfare is debatable, the legislative judgment must be accepted.
13. Constitutional Law — Courts—Legislature.
Courts do not substitute their social and economic beliefs for the judgment of legislative bodies.
14. Same — Legislation—Protection of Public — Arbitrary and Unreasonable Restrictions.
A State cannot, under the guise of protecting the public, arbitrarily interfere with private business or prohibit lawful occu pations or impose unreasonable and unnecessary restrictions upon them.
15. Druggists — Sale oe Drugs and Poisons — Public Health.
The sale of drugs and poisons can very directly affect public health, safety, and the general welfare.
16. Same — Statutes—Stock Ownership — Drugs—Public Health.
The legislative judgment, when supported by testimony of professional men in the field, that the character of ownership of stock in corporations engaging in the sale of drugs and poisons can have an effect on public health, debatable though it may be, is not a subject for judicial redetermination (PA 1927, No 359, § 1).
17. Same — Constitutional Law> — Stock Ownership oe Corporate Owner oe Pharmacy.
Statute requiring that 25% of stock of corporate owner of pharmacy be owned by registered pharmacists in order to obtain a license to own and conduct a pharmacy held, constitutional, as against contentions of corporation, which had acquired no rights under so-called grandfather clause, that such requirement was an arbitrary interference with a private business and an unreasonable and unnecessary restriction upon a lawful occupation (PA 1927, No 359 § 1).
18. Costs — Mandamus—Pharmacy License — Corporations.
No costs are allowed in mandamus proceeding to compel State pharmacy board to issue license to .plaintiff corporation (PA 1927, No 359, § 1).
Separate Opinion.
Kelly, Smith, and O’Hara, JJ.
19. Appeal and Error — Appellate Courts — Judicial Notice— Pleadings.
Appellate courts on review may not resort to judicial notice of facts to raise issues not presented by the pleadings.
20. Same — Special Statutory Procedure — Pharmacy Board— Pleadings — Proceedings.
The pleadings in an appellate review of a special statutory procedure, a hearing before the State board of pharmacy, are in fact the proceedings below, and they circumscribe the controversy as definitively as if they had been titled “complaint” or “answer.”
21. Statutes — Construction—Legislative Intent.
Legislative intent is found by statutory construction.
22. Same — Construction—Intent.
The cardinal rule of statutory construction is to ascertain and give effect to the intention of the legislature and the intent of an unambiguous statute must be determined accordingly.
23. Druggists — Licenses—Corporations—Grandfather Clause— Statutes.
Plaintiff corporation in mandamus proceeding held, entitled to proper license for operation of its pharmacy and drugstore in city where record shows it and its predecessors had operated such an establishment from 1927, denial of renewal of license for noncompliance with pertinent statutes not having been well founded (CL 1948, § 338.481).
24. Mandamus — Ministerial Act.
Mandamus lies to compel the performance of a ministerial aet by a board or commission where nothing remains to be done except to perform that act which the board or commission refuses to perform.
25. Same — Ministerial Duty.
The writ of mandamus lies to enforce performance of a clear legal right or ministerial duty.
26. Appeal and Error — Mandamus—Questions Reviewable — Constitutional Law — Corporate Ownership of Pharmacies.
Whether statute regulating ownership of pharmacies was constitutional and requiring ownership of 25% of stock of corporate owners by registered pharmacists is constitutional is not determined on appeal in mandamus action against State licensing agency, where such question is not reached in determination made (CL 1948, § 338.481).
Separate Opinion.
Souris and Adams, JJ.
27. Druggists — Sale of Drugs and Poisons — Public Health-Regulation.
Any reasonable exercise of the police power in the field of regulating the sale of drugs and poisons directly affecting the public health, safety, and general welfare must be upheld on appeal,
28. Same — Sale of Drugs and Poisons — -Regulation.
The validity of legislative regulation of the sale of drugs and poisons is tested by the rationality of the method of regulation employed by the legislature.
29. Constitutional Law — States—Police Power — Commercial and Business Affairs.
States have power to legislate against what are found to be injurious practices in their internal commercial and business affairs, so long as their laws do not run afoul of some specific Federal constitutional prohibitions, or of some valid Federal law.
30. Same — States—Statutes—New Techniques.
States have constitutional authority to experiment with new techniques and they are entitled to their own standards of the public welfare in the exercise of their legislative power.
31. Same — States—Regulation—Business.
States may within extremely broad limits control practices in the business-labor field, so long as specific constitutional prohibitions are not violated and so long as conflicts with valid and controlling Federal laws are avoided.
32. Same — Regulation—Public Health — Rationality.
A State regulation affecting the public health and welfare should be supported on appeal if the court finds that there is an evil for correction, and that it might be thought the legislative measure was a rational way to correct it.
33. Same — Public Welfare — Rationality.
State legislation, once the appellate court is satisfied that the public welfare is involved, is upheld if it reasonably and rationally either forbade an evil or regulated a business or profession.
34. Same — Police Power — Regulation—Prohibition of Trade— Useful and Harmless Articles of Commerce.
The State police power of regulation does not include the absolute prohibition of trade in useful and harmless articles of commerce.
35. Same — Right to Engage in Business — Harm to Public.
The Constitution guarantees to citizens the general right to engage in any business which does not harm the public.
36. Same — Police Power — Reasonable Relation Between Remedy and Public Purpose.
Exercise of the police power must be to promote the public welfare or to correct a public wrong, and the relation between the remedy adopted and the public purpose must be a reasonable one.
37. Druggists — Ownership op Pharmacies — Ownership op Corporate Stock.
Ownership of pharmacies act which requires that all pharmacies, drugstores, or apothecary shops must be owned by a registered pharmacist, or by a corporation 25% of whose stock is owned by registered pharmacists held, neither reasonable nor rational because there is no necessary or consequential relationship between ownership of 25% of the stock of a corporation and the control, management, and operation of the business and property of the corporation (CL 1948, § SS8.481).
38. Corporations — Stock—Capital—Management.
Stock of a corporation is issued to provide capital, not management.
39. Same — Stockholders—Control Over Conduct op Corporate Business.
A stockholder, as such, has no control over the conduct of a corporate business, nor is he required or permitted to engage in the activities of a corporation by virtue of stock ownership.
40. Druggists — Ownership op Pharmacy — Relation to Public Health.
Mere stock ownership in a corporation, owning and operating a drugstore, can have no real or substantial relation to the public health.
41. Same — Protection to Public — Individual Pharmacist.
The basic protection to the public in the practice of pharmacy is through the individual pharmacist.
42. Corporations — Stock Ownership — Management Control.
A 25% stock ownership in a corporation does not, in this State, give any significant management control.
43. Witnesses — Pharmacy—Corporations—Experts.
Witnesses who testified that legislation which required that registered pharmacists hold 25% of the stock of a corporation owning a drugstore has a reasonable relationship to public welfare held, to have failed to qualify as experts on validity of legislation, where their testimony reveals that while they hold extensive backgrounds in pharmacy, they readily confessed their ignorance of stock ownership and of corporate control, structure, or management (CL 1948, §388.481).
44. Constitutional Law — Equal Protection — State Action.
The equality clause is not limited only to the protection of rights granted by the Federal Constitution or otherwise protected by it, but extends to all rights whether granted by Federal or State. Constitutions, statutes, or executive orders, and against all forms of State action, executive, legislative, or judicial (US Const, Am 14).
45. Statutes' — Classification—Reasonable Relation to Object of Legislation.
Classification is permissible in the application of a statute or ordinance, but the classification must be based on natural distinguishing characteristics and must bear a reasonable relation to the object of the legislation, and operate equally upon all within a class.
46. Same — Grandfather Clause — Invalid Classification.
The so-called grandfather clause in the s'tatute purporting to regulate the ownership of pharmacies, which exempts from the operation of the statute corporations in existence at the time the act became effective, held, an unfair and discriminatory classification and devoid of equal protection of the laws, especially in view of the fact that domestic corporations are free to perpetuate themselves in perpetuity (US Const, Am 14; Mich Const 1963, art 1, §8; CL 1948, § 888.481; PA 1963 [8d Bx Sess], No 86).
Dissenting Opinion.
T. M. Kavanagh, C. J., and Black, J.
47. Administrative Law and Procedure — Pharmacies—Board of Pharmacy.
The administrative functions of the pharmacy act are vested exclusively with the State board of pharmacy (PA 1885, No 134 as'amended, and PA 1968, No 151, as amended by PA 1965, No 168).
48. Appeal and Error — Mandamus—Board of Pharmacy.
Review by the Supreme Court of determination by the State board of pharmacy held, a specially authorized “appeal" rather than original mandamus, where board had been directed to review its denial of license with granted right of- appeal.
49. Mandamus — Discretion of Officers — Board of Pharmacy— Licenses.
A writ of mandamus to compel grant of pharmacy license, if issued and served, will broolc no discretion of the State board of pharmacy to consider or reconsider administratively ascertained violations of the pharmacy laws by plaintiff corporation, will determine that previous findings of the board are a nullity the board may no longer employ against plaintiff, and will thus provide for plaintiff an overt advantage over other licensees and fxiture applicants.
50. Administrative Law and Procedure — Function of Reviewing Court.
The function of a reviewing court in an appeal from a decision by an administrative agency is to determine errors of law, and then to return the matter to the agency for reconsideration.
51. Same — Correction of Errors — Legislative Policy.
An administrative determination in which is embedded a legal question open to judicial review does not impliedly foreclose the administrative agency, after its error has been corrected, from enforcing the legislative policy committed to its charge.
52. Same — Courts—Licenses.
A court reviewing an administrative decision granting or denying a license or permit is limited to ascertaining the presence or observation of assigned errors of law and the correction of such errors, and when same are discovered, the courts are not authorized to grant, deny, or revolee licenses and permits, directly or by the indirection of peremptory writs.
53. Same — Courts—Correction of Errors.
In administrative cases the reviewing courts review and correct legal errors and leave the rest of the administrative process to the statutorily appointed administrator or administrators, subject always to further review as permitted by law.
54. Appeal and Error — Administrative Agency.
Finding by defendant State board of pharmacy that plaintiff corporation was not entitled to “grandfather rights” under the ■ statute pertaining to the ownership of pharmacies held, supported by the record (CL 1948, § 338.481).
55. Administrative Law and Procedure — Construction or Statute ■ — Courts.
A court’s review of a construction of a statute by an administrative agency is limited and all that is needed to support the agency’s interpretation is that it have “warrant in the record” and a “reasonable basis in law.”
56. Courts — -Precedents.
A judge of a subordinate court is not to pick and choose between various precedents when a court to which he owes obedience has definitely determined the question he must decide, in the exact substance of fact which confronts him, and has not overruled that determination.
57. Same — Precedents.
A judge of a subordinate court is constitutionally disabled from predicting, and from proceeding upon strength of such a prediction, that his superior will overrule or ignore established precedent, as obedience, not forecast, is the order of the day of a judge of a subordinate court.
58. Appeal and Error — Overrulement.
Reversal by overrulement spells honor rather than dishonor of the judge who stands upon law as it is written rather than his estimate of what the law might become on review.
59. Druggists — Statutes — Regulation op Ownership op Pharmacies.
Sole legislative purpose of statute pertaining to pharmacies held, to be regulation of the ownership of pharmacies, drugstores, and apothecary shops (CL 1948, §338.481).
60. Same — Statutes—Regulation op Practice op Pharmacy.
Comprehensive regulation of the praetiee of pharmacy held, to be the design of acts safeguarding the public health in such field (PA 1885, No 1S4, as amended, and PA 1962, No 151, as amended).
61. Statutes — Construction.
Statutes should be construed by attempting to ascertain what the legislative body meant at the time of adopting the act.
62. Druggists — Construction op Statutes — Ownership—Practice op Pharmacy.
Xhe conclusion that the ownership of pharmacies poses no “real and substantial relation” to the public health is supported by the fact that it would seem that every point at which the public health is likely to be wrongly affected by the act of the owner in buying, compounding, or selling drugs, and medicine is amply safeguarded by other statutes regulating the practice of pharmacy (PA 1885, No 134, as amended; PA 1927, No 359; PA 1962, No 151, as amended).
63. Constitutional Law — Interference With Business or Occupations.
A State cannot, under the guise of protecting the public, arbitrarily interfere with private business or prohibit lawful occupations or impose unreasonable and unnecessary restrictions upon them.
64. Druggists — Ownership op Drugstores — Statutes.
Statute which regulates ownership of drugstores plainly forbids the exercise of an ordinary property right and, on its face, denies what the Constitution guarantees (US Const, Am 14; PA 1927, No 359).
65. Evidence — Judicial Notice — Corporately Owned Drugstores— Ownership op Stock.
The court takes judicial notice of the fact that the stock in corporations owning and operating drugstores is bought and sold upon the various stock exchanges of the country, and, in the nature of things, must be held and owned to a large extent by persons who are not registered pharmacists.
66. Druggists — Ownership—Public Health.
The claim that mere ownership of a drugstore by one not a pharmacist bears a reasonable relation to the public health, held, not supported by the record (PA 1927, No 359).
67. Constitutional Law — Ownership of Pharmacies — Due Process.
Statute regulating ownership of drugstores, which requires that they be owned by registered pharmacists, or by corporations of whose stock 25% is owned by registered pharmacists, held, unconstitutional in contravention of the due process clause of the Constitution (US Const, Am 14; PA 1927, No 359).
68. Same — Ownership op Pharmacies — Public Health.
Statute regulating ownership of drugstores, which requires that they be owned by registered pharmacists, held, to disclose no constitutional relationship to the public health (PA 1927, No 359).
Original mandamus by Supers Drugs Corporation, a Michigan corporation, against the State Board of Pharmacy and David M. Moss, director of drugs and drugstores, to compel issuance of license to operate a pharmacy. Orders of reference made to Calhoun circuit for taking of testimony and for finding of facts.
Submitted July 17, 1963.
(Calendar No. 32, Docket No. 50,087.)
Writ granted December 5, 1963, directing defendant board to grant license.
See 372 Mich 22.
Rehearing denied February 3, 1964.
Writ withdrawn February 4, 1964.
Rehearing granted sua sponte January 13, 1965.
Record from Calhoun circuit transmitted to State Board of Pharmacy for board review and report to Supreme Court, by written opinion, within 20 days.
Decided May 10, 1965,
375 Mich 314.
Application for license denied by State Board of Pharmacy December 16, 1965. Plaintiff appeals.
Submitted June 9, 1966.
(Calendar No. 6, Docket No. 51,379.)
Writ granted November 11, 1966.
Stanley E. Beattie, James C. Allen, and Richard G. J ames, for plaintiff.
Frank J. Kelley, Attorney General, Robert A. Derengo ski, Solicitor General, Joseph B. Bilitzke, and Maurice M. Moule, Assistant Attorneys General, for defendants.

Opinion:
Dethmers, J.
(dissenting). This was original mandamus to compel defendant to grant a license to plaintiff for operation of a drugstore for the year commencing July 1, 1962. The case now makes its third full dress appearance here. On December 5, 1963, by opinion of a majority of this Court, it was ordered that the writ issue. Superx Drugs Corporation v. State Board of Pharmacy, 372 Mich 22, 44. After rehearing denied and later granted, this Court remanded the matter to defendant board for hearing and determination, with jurisdiction retained here for further appellate review if desired by either party. Superx Drugs Corporation v. State Board of Pharmacy, 375 Mich 314. Beading of the opinions at the above two citations will disclose the facts and issues involved. We are now at the juncture of the review desired by plaintiff of the determination of defendant board, on said remand, denying the license.
The question before this Court still is whether plaintiff is entitled to the license.
Plaintiff was incorporated in 1909, for a term of 30 years. In 1939 it filed articles with the corporation and securities commission .extending its corporate life for another 30 years. We take judicial notice of the fact that, as appears from that commission's records, Prank Jones, both in 1909 and 1939, owned more than 25% of the stock, and that the records of defendant board disclose that he was continuously, during that period, a registered pharmacist. It is a fair inference — a valid presumption, not disputed in this case, that such was the situation throughout that 30-year period, including September 5, 1927, when PA 1927, No 359, § 1 (CL 1948, § 338.481 [Stat Ann 1956 Bev § 14.771]), governing the ownership and licensing of pharmacies and drugstores, became effective. . _
On May 25, 1962, the Kroger Company acquired all of the stock of plaintiff corporation. Prom then on, concededly, none of plaintiff's stock was held by a registered pharmacist. On or about June 5, 1962, plaintiff filed with defendant board application for the license here in question. Upon its denial this suit was brought. - .
The above cited section of the governing statute reads as follows:
"Every pharmacy, drug store or apothecary shop shall he owned by a registered pharmacist and no partnership or corporation shall own a drug store, pharmacy or apothecary shop unless at least 25 per cent of all stock is held by registered pharmacists, except that any corporation, organized and existing under the laws of the State of Michigan, or any other State of the United States, authorized to do business in the State of Michigan and empowered by its charter to own and conduct pharmacies, drug stores or apothecary shops and which, at the time of the passage of this act, owns and conducts a drug store or stores, pharmacy or pharmacies, apothecary shop or shops in the State of Michigan may continue to own and conduct the same and may establish and own additional pharmacies, drug stores or apothecary shops in accordance with provisions of this article: Provided, That any such corporation which shall not continue to own at least 1 of the pharmacies, drug stores or apothecary shops theretofore owned by it, or ceases to be actively engaged in the practice of pharmacy in the State of Michigan, shall not be permitted thereafter to own a drug store, pharmacy or apothecary shop: And provided further, That any person not a registered pharmacist who at the time of the passage of this act owns a pharmacy, drug store or apothecary shop in the State of Michigan, may continue to own and conduct the same in accordance with existing laws and regulations : And provided further, That the administrator, executor or trustee of the estate of any deceased owner of a pharmacy, drug store or apothecary shop, or the widow, heirs or next of kin of such deceased owner, may continue to own and conduct such pharmacy, drug store or apothecary shop in accordance with existing laws and regulations: Provided further, That this act shall not apply to stores or shops in which patent or proprietary medicines and ordinary domestic or household remedies, such as the sale of is provided for in section 18 of Act No. 134, Public Acts of 1885, are the only drugs and medicines sold at retail."
Plaintiff contended before defendant board, as here, that despite tbe lack of present ownership of any of its stock by a registered pharmacist, it was entitled to a license under the so-called grandfather clause of the above quoted governing statute. This was on the theory that plaintiff corporation, at the time of the passage of the 1927 act, owned and was conducting a drug store and had continued to do so, uninterruptedly, ever since, thus qualifying it for license renewal under that statutory provision.
Defendant's first position was that plaintiff had lost its "grandfather" clause rights because the closing of its store, for remodeling, from August 30, 1958, to November 24, 1958, amounted to its discontinuance of ownership and conducting of a drugstore within the meaning of the quoted language of the statute, thus ending its grandfather clause rights. That contention and the further reason advanced by defendant for denial of license, namely, that plaintiff had engaged in unlawful sales of drugs without prescriptions signed by a physician, this Court disposed of in 372 Mich, supra, adversely to defendant's position and, hence, ordered issuance of the writ. With respect to those points we remain of the same view still. We would be no further disposed now to go along with defendant's argument, not raised on the first appeal, that plaintiff's grandfather rights, if it had any, were lost by reason of and during a period when its capital stock was pledged to an insurance company as security for an indebtedness and loans.
On the latest argument before this Court, for the first time, counsel for defendant raised the point that plaintiff was not entitled to anything under the grandfather clause, not because, as previously contended by it, plaintiff had lost those rights, but because plaintiff had never had grandfather clause rights. Although belatedly raised, we permitted the question to be argued at that late date and to be considered and briefed by both parties in supplemental briefs.
This last above consideration presents a question of statutory construction. Defendant says that the language of the statute creating the so-called grandfather rights means that any corporation which, at time of passage of the act, did not meet the requirement of ownership of at least 25% of its stock by registered pharmacists but was then owning and conducting a drugstore would be permitted to continue to do so. Plaintiff says that the language means that any corporation, regardless of who held its stock at the time, which owned and conducted a drugstore at the time of passage of the act might continue to do so thereafter, even if, in the future, there was no ownership of at least 25% of its stock by registered pharmacists. We adopt defendant's version as the correct interpretation.
"The purpose of an exception or grandfather clause is to exempt from the statutory regulations imposed for the first time on a trade or profession those members thereof who are then engaged in the newly regulated field." State, ex rel. Krausmann, v. Streeter, 226 Minn 458, 463 (33 NW2d 56). (Emphasis supplied.)
See 18A Words and Phrases (Perm ed), p 359, General law.
Manifestly, the legislative intent and purpose was to require that at least 25% of the stock of corporations owning and conducting drugstores should be owned by registered pharmacists, but to make an exemption and exception for corporations which, at the time of passage of the act, were not so owned but were owning and conducting drugstores. A corpo ration qualified to act under the statute, at the time of its passage, without benefit of that portion constituting the grandfather clause was in no need of an exemption from the requirements of the statute and, hence, the exemption was meaningless as to it and had no application to it. In the instant case, at the time of the passage of the act, more than 25% of plaintiff's stock was owned by Prank J ones. Hence, passage of the act and enforcement of its requirements and regulations could have had no adverse effect on plaintiff's continued right to own and conduct a drugstore. It was in no need of the beneficent terms of the exemption or grandfather clause and, accordingly, acquired no rights under it. Having acquired no grandfather rights, and 25% or more of its stock not being held by registered pharmacists at the time of the application for the license here in question, plaintiff did not then meet statutory requirements and defendant board was, therefore, correct in denying the application.
It will he noted in Mr. Justice Carr's majority opinion, 372 Mich 22, on pages 59 and 60, that constitutionality of the act was not there passed upon by this Court. Plaintiff asserts that, if construed to require denial of its application for license, the act is violative of plaintiff's constitutional rights to operate a legitimate private business, in that the act's prohibition hears no reasonable relationship to public health, safety, and morals and creates arbitrary and unnecessary restrictions, depriving plaintiff of due process and equal protection of the laws. Plaintiff's reliance in this connection is placed on Liggett Co. v. Baldridge, 278 US 105 (49 S Ct 57, 73 L ed 204), in which a Pennsylvania statute requiring that stockholders of a pharmacy corporation must be registered pharmacists was held to he constitutionally invalid on the ground that it contravened the due process and equal protection clauses of the 14th Amendment of the Constitution of the United States. This, says plaintiff, was a holding based on the concept of economic due process, with the court saying, so plaintiff asserts, that the act bore no relationship to public health. With respect to that precise point, what the court did say, on page 113, is the following:
"In the light of the various requirements of the Pennsylvania statutes, it is made clear, if it were otherwise doubtful, that mere stock ownership in a corporation, owning and operating a drug store, can have no real or substantial relation to the public health. No facts are presented by the record, and, so far as appears, none were presented to the legislature which enacted the statute, that properly could give rise to a different conclusion." (Emphasis supplied.)
In the instant case the record is otherwise. There is testimony of eminent pharmacologists, teachers and practitioners in the field, that in their opinion there is a reasonable relationship between the statute's stock ownership requirements and public health and safety. They also testified as to their reasons for their opinions. It is true that there also is testimony in the record to the contrary. As this Court said, however, in Grocers Dairy Company v. Department of Agriculture Director, 377 Mich 71:
"The presumption of the constitutionality of a statute favors validity and, if the relation between the statute and the public welfare is debatable, the legislative judgment must be accepted."
In the 1963 decision of Ferguson v. Skrupa, 372 US 726 (83 S Ct 1028, 10 L ed 2d 93, 95 ALR2d 1347), coming 35 years after Liggett, the court said (pp 730, 731):
"We have returned to the original constitutional proposition that courts do not substitute their social and economic beliefs for the judgment of legislative bodies.
"We refuse to sit as a 'superlegislature to weigh the wisdom of legislation,' and we emphatically refuse to go back to the time when courts used the due process clause 'to strike down State laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought.' "
The above was cited with approval in: Head v. New Mexico Board of Examiners in Optometry, 374 US 424 (83 S Ct 1759, 10 L ed 2d 983); England v. Medical Examiners, 375 US 411 (84 S Ct 461, 11 L ed 2d 440); Atlanta Motel v. United States, 379 US 241 (85 S Ct 348, 13 L ed 2d 258); Meat Cutters Union v. Jewel Tea Co., 381 US 676 (85 S Ct 1596, 14 L ed 2d 640).
In Daniel v. Family Security Life Insurance Co., 336 US 220 (69 S Ct 550, 93 L ed 632, 10 ALR2d 945), the court said (pp 224, 225):
"We cannot say that South Carolina is not entitled to call the funeral insurance business an evil. Nor can we say that the statute has no relation to the elimination of those evils. There our inquiry must stop.
"This rationale did not find expression in Liggett Co. v. Baldridge, 278 US 105, on which respondents rely. According to the majority in Liggett, 'a State cannot, "under the guise of protecting the public, arbitrarily interfere with private business or prohibit lawful occupations or impose unreasonable and unnecessary restrictions upon them." ' " (Emphasis supplied.)
We think significant the language of the United States Supreme Court in Daniel to the effect that there has been "a pronounced shift of emphasis" in that court since its decision in Liggett, with respect to the meaning of the words "unreasonable" and "arbitrary" as applied to State statutes regulating tbe operation of business, to tbe extent that in Daniel a State statute prohibiting life insurance companies from engaging in the undertaking business and undertakers from serving as agents for such companies was upheld as being a reasonable and not an arbitrary exercise of the police power for the protection of the public.
In People v. Carroll, 274 Mich 451, a statute requiring the owner or operator of a dental parlor to be a regularly licensed dentist was upheld as not unconstitutional. This Court said (p 456):
"It is a well-known fact that in the profession of dentistry the services rendered are personal and call for knowledge in a high degree and that to separate this knowledge from the power of control is an evil, the correction of which was attempted by the instant legislation. The evils which arise from divorcing the 'power of control' from 'knowledge' apply with equal force to a partnership as well as a corporation."
The sale of drugs and poisons can very directly affect public health, safety and the general welfare. The legislative judgment, when supported, as in this case, by testimony of professional men in this field, that the character of ownership of stock in corporations engaging in such sales can have an effect on public health, debatable though that may be, is not a subject for judicial redetermination. Grocers Dairy Company v. Department of Agriculture Director, supra.
"We hold that the act is constitutional, that plaintiff acquired no rights under its grandfather clause, and that the defendant board was, therefore, right in denying the license.
Writ should be denied. No costs.
O'Hara, J.
The background and facts in this case are sufficiently set forth in Mr- Justice Duthjiebs' opinion. I accept them as I do his statement of the issue:
"The question before this Court still is whether plaintiff is entitled to the license."
I disagree with his conclusion and respectfully dissent therefrom. In order to understand my position it is essential to set out in full the determination of the defendant board:
"1. Therefore it is the determination of the board that based upon the facts, as determined from the full record, the Owl Drug Co., the predecessor of the applicant, did not actively engage in the practice of pharmacy from January, 1958, even though the corporate structure was there. Thus the applicant has not fulfilled the requirements of the statute so as to be eligible for a license under the provisions of PA 1927, No 359.
"2. The board wishes to point out that this decision is based upon its determination of the facts and the law. The board further notes that the order of the Supreme Court of May 10, 1965 provides that each party shall have 20 days to appeal the decision of the board to the Supreme Court. The board assumes and hopes that the applicant will exercise this right of appeal so that the highest court of this State may determine the validity of the board's decision."
The foregoing "determination" is based upon the board's conclusions of law, and those conclusions, of necessity, are a part of the "determination." The critical conclusions are therefore set out:
"Conclusions or Law Regarding Foregoing Facts :
¿Í* # *
"II. Considering now: Is the applicant entitled to exercise the rights of a 'grandfather' as provided in PA 1927, No 359?
"1. That M. L. Briggs, the former sole stock owner of Owl Drug Company (predecessor of Superx Drugs Corporation), escrowed his stock to the Wolverine Insurance Company on December 12, 1957, as security for funds placed in escrow by Wolverine to pay the debts of Owl Drug Company.
"2. That subsequently, as a result of Briggs' inability to pay, Wolverine became the owner of the stock on January 2,1958. That thereupon, under the terms of the escrow agreement of December 12,1957, Briggs became the manager of the Owl Drug store in the employ of Wolverine Insurance Company at a salary of $100 weekly. That the escrow agreement was signed by Briggs and was between Briggs and Wolverine Insurance Company, and not the Owl Drug Company.
"3. That Wolverine Insurance Company continued to operate the Owl Drug store as the owner thereof until its sale of the stock on November 6, 1958, to Herbert Herman. That during the interim period there had been no reorganization of officers or board of directors.
"4. That during the above period prior to the sale to Herman, Wolverine as a part of its operation of the drug store paid all bills in connection therewith. Exhibit P. 1, item 6, introduced as part of the record before Judge Coleman states, First party (Briggs) agrees upon sale of stock to second party (Wolverine Insurance Co.) to resign in writing as an officer of Owl Drug and will secure resignations of all officers and directors.
"5. Wolverine Insurance Company applied for renewal of license in June of 1958 using Briggs' name as president, when in reality he was only an employee having no corporate power, was a deception of the true identity and fact.
"Further, a like situation did exist from 1958 through 1962 when the store was in Mr. Herbert Herman's name, d/b/a Herman Pharmacy, licensed as such and not that of the corporation. All business as far as the public was concerned, was conducted under his name. The prescription labels, store signs and advertising were in Herman's name and not that of the Owl Drug Company (Exhibits 11, 16, D-2, appendix 225a and others).
"Conclusions of Law, Regarding Grandfather Status:
"1. Application for license renewal in June of 1958 signed by Briggs as president of Owl Drug Company was in violation of section 19 of PA 1949, No 163 [which] stated 'If any registered pharmacist * • shall have obtained a license by misrepresentation, error, or fraud the State board of pharmacy shall have the power to revoke or suspend such license or certificate after giving any such person reasonable notice and an opportunity to be heard.' (Noting that a pharmacy is licensed and a pharmacist is certificated or registered.)
"2. PA 1927, No 359 (ownership of drug stores act), provides that every pharmacy shall be owned by a registered pharmacist and no partnership or corporation shall own a drug store, pharmacy or apothecary shop unless at least 25 per cent of all stock is held by registered pharmacist; provided, however, that drug stores or pharmacies which were owned and conducted at the time of the passage of the act (1927) may continue to own and conduct the same and establish and own additional pharmacies ; provided, that any such corporation which shall not continue to own at least one of the pharmacies, drug stores or apothecary shops theretofore owned by it, or ceases to be actively engaged in the practice of pharmacy, shall not be permitted thereafter to own a drug store.
"The Owl Drug Company, during the period of the operation of the drug store, by Wolverine from January of 1958 to November of 1958, ceased to be actively engaged in the practice of pharmacy within the meaning of this act. That Wolverine Insurance Company improperly controlled and operated the drug store without a license by use of subterfuge (also noting that Wolverine was acting beyond the scope of its corporate charter).
"3. Herbert Herman, d/b/a Herman Pharmacy, licensed as snch by the board and alluding to the public that the store was the Herman Pharmacy, further demonstrates that the Owl Drug Company was not actively engaged in the practice of pharmacy during this time. (Also noting that a corporation, by law cannot do business under an assumed name other than its corporate name.)"
It is beyond dispute that the board did not find or hold that plaintiff corporation did not acquire "grandfather" rights because such rights did not vest in plaintiff's predecessor. Contrariwise, it held unequivocally that they did. This for the reason that the board found those rights which accrued on the effective date of the statute in 1927 were lost during the period when the predecessor corporation, the Owl Drug Co., had escrowed its stock to the Wolverine Insurance Company, and thus that the "grandfather" sequence was broken. The board then critically and crucially holds in its "determination":
"3. If, upon appeal, the Supreme Court should determine that the decision of the board was incorrect, and that the Owl Drug Co. and the applicant have continued to he actively'engaged in the practice of pharmacy so as to come within the provisions of PA 1927, No 359 then there is nothing further of this record to deny applicant a license." (Emphasis supplied.)
However, Mr. Justice Dethmers holds:
"We would be no further disposed now to go along with defendant's argument, not raised on the first appeal, that plaintiff's grandfather rights, if it had any, were lost hy reason of and during a period iohen its capital stock was pledged to an insurance company as security for an indebtedness and loans." (Emphasis supplied.)
Thus, under his opinion, Mr. Justice Dethmers reverses the board on the only basis upon which it withheld a license, and this in face of the somewhat unusual statement that absent such a finding being affirmed "there is nothing further of this record to deny applicant a license."
Thus, to concur with my esteemed colleague I would perforce have to make an initial finding of fact in this Court that no "grandfather" rights accrued. The vigorous dissents in the prior opinions were directed only to the method of review of the fact-finding process. It would seem the dissenters would hardly be any less vigorous if this Court on review were to make its own original findings of fact. But the distinguished senior Associate Justice says, as I understand him, that he does this on the basis of taking judicial notice of certain public records. He then comes to certain legal conclusions therefrom.
Again, I must respectfully disagree. In the first place, it is well settled that appellate courts on review cannot take judicial notice in order to raise issues not presented by the pleadings:
"Resort cannot be had to judicial knowledge to raise controversies not presented by the pleadings." (Mountain View Mining & Milling Co. v. McFadden, 180 US 533 [syllabus] [21 S Ct 488, 45 L ed 656].)
I suppose it might be said that in this special statutory procedure that before the decision of the board there were no "pleadings" as such in a literal sense. But surely for the application of a settled legal principle no such narrow interpretation should be made. The "pleadings" are in fact the proceedings below and they circumscribed the controversy as definitively as if they had been titled "complaint" or "answer". Either the principle for which McFadden stands is settled and sound or it isn't. I think it is. To reject it in this case would be to revolutionize the appellate process to such, a degree as to change its essential character.
But let ns assume arguendo that there is some reason which I do not perceive that in this case this principle should not be applied, what then of the interpretation of the statute contended for by Justice Deti-imers? Is it sound? Put in the traditional phraseology, does it under well-established principles reflect that all important "legislative intent" ?
Legislative intent, our eases tell us, is found by statutory construction. But before courts are free to construe statutes, they must find some reason for so doing:
"The cardinal rule of statutory construction is to ascertain and give effect to the intention of the legislature. If the language of a statutory provision is unambiguous, the intent must be determined accordingly."
Further citations in support of this principle are unnecessary. None to the contrary, to my knowledge, exists. The relevant section of the statute, after stating the conditions under which corporations can, after the effective date of the act, own and operate drugstores and pharmacies, provides:
"except that any corporation, organized and existing under the laws of the State of Michigan, or any other State of the United States, authorized to do business in the State of Michigan and empowered by its charter to own and conduct pharmacies, drug stores or apothecary shops and which, at the time of the passage of this act, owns and conducts a drug store or stores, pharmacy or pharmacies, apothecary shop or shops in the State of Michigan may continue to own and conduct the same and may establish and own additional pharmacies, drug stores or apoth ecary shops in accordance with provisions of this article." (Emphasis supplied.)
This exception, my confrere says, really does not mean "any" corporation as it plainly reads, hut it means only any corporation which prior to the enactment of the statute was not in compliance with its stock ownership requirements. I cannot agree. In the first place, the statute doesn't say so. In the second place, there is no basis in reason for reading the additional language into it.
Contrariwise, to me, reason and logic inveigh against this judicial addition to the plain language of the statute. Many harsh examples of what this interpretation would and could do in individual cases to licensees who for years have operated upon the interpretation always heretofore accorded to the statute that "any corporation" means "any corporation" could be cited. However, the most all-embracing and clearest is that so to hold would bring about the following bizarre result. It would actually discriminate against the corporate licensee who was in compliance with the 25% ownership provision by a registered pharmacist prior to the effective date of the act. If such licensee was in compliance, and thus under the oral argument-advanced theory of the solicitor general (but not so found by the board) acquired no "grandfather" rights, such corporate licensee's capital stock could only be acquired by another corporation which meets the 25% prior ownership test. His noncomplying counterpart corporation on the effective date of the act however can sell to the world. It's one thing to read into a statute additional and necessary wording to avoid an absurd result. I'm not aware, however, of any principle of statutory construction that approves reading language into a statute to bring one about.
In view of the somewhat equivocal and, to a degree, anomalous findings of the board, I am hard put to know whether I am writing to affirm or reverse. However, all writing Justices in this case in any of its trips to our Bench seem in agreement that the issue presented is whether plaintiff appellant is entitled to the issuance of a license.
Within the well-established limitations on judicial review of fact-finding by hoards and commissions I can find nothing to do hut reverse the defendant board and order the issuance of a license. The only legal conclusion made by the board to support the denial of a license is specifically repudiated by Justice Dethmers in his opinion. It was specifically repudiated by the majority in the prior opinion.
Mr. Justice Black in his strong dissent, after the first hearing before us, stated the principle involved :
"The questions to he heard and decided on remand are those of specific application of statutory terms, to presented facts, which the appointed agency of administration must determine initially " (Emphasis supplied.)
Hnder the hoard's decision, the facts found and the statute applied, save for the twice repudiated break-in-sequence theory leave us no alternative. The effect of the hoard's finding and determination is to say appellant is entitled to a license. The hoard will not and did not issue it. In this situation a court has nothing to do but direct the issuance of the license by the proper writ. This is not to review the findings of fact of a board or commission by mandamus. This is not to compel a legislatively created and duty- entrusted hoard to act in a certain way. My decision here rests solely and completely upon the long settled-principle that where nothing remains to he done by a board or a commission, except to perform a ministerial act which that board or commission will not perform, mandamus lies to compel its performance. Said another way:
"Mandamus lies only to enforce strict legal rights." People, ex rel. Houghton County, v. Auditor General, 36 Mich 271, at p 273).
In the case at bar the board tells us:
"If, upon appeal, the Supreme Court should determine that the Owl Drug Co. and the applicant have continued to be actively engaged in the practice of pharmacy then there is nothing further of this record to deny applicant a license."
The Supreme Court has already determined that in legal consequence, the hypothecation of stock and the escrow agreement with regard thereto did not constitute a break in continuity of corporate succession, and that hence there was no failure to engage continuously in the practice of pharmacy.
Mr. Justice Dethmers in his opinion reaffirms this:
"We would be no further disposed now to go along with defendant's argument, not raised on the first appeal, that plaintiff's grandfather rights, if it had any, were lost by reason of and during a period when its capital stock was pledged to an insurance company as security for an indebtedness and loans." (Quoted supra.)
I cannot but conclude that under the findings of fact and the law of the case appellant is entitled to a license.
In view of the reasons herein assigned, I do not reach the question of the constitutionality of the in volved statute, and for this reason I do not pass thereon.
Let the writ of mandamus issue.
Kelly and Smith, JJ., concurred with O'Hara, J.
Emphasis supplied.
Melia v. Employment Security Comm., 346 Mich 544, at p 562.
CL 1948, § 338.481 (Stat Ann 1956 Rev § 14.771).
Superx Drugs Corporation v. State Board of Pharmacy, 372 Mich 22, at pp 42, 43.