Court Opinion

ID: 9660991
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:25:46.83735+00
Date Added: 2024-06-11T18:14:23.958420
License: Public Domain

BECKER, Justice.
I respectfully dissent.
The issue at this point is not whether Mrs. Smith should lose her license but rather whether the'commission can cancel her license without a hearing preceded by reasonable notice. It might well develop that the commission can and should cancel the license but not, I submit, without notice and hearing.
Had the license holder been convicted of selling beer to a minor I would have no trouble concurring. The guilt of the per-mittee, with respect to the violation used as a basis for revocation, would have first been “established in a legal manner”.
*812This problem has been examined in depth in I Davis, Administrative Law Treatise, sections 7.18 to 7.20, pages 493 to 506. Selective excerpts follow:
“ * * * The large body of state case law which relies upon the privilege concept to justify a denial of opportunity to he heard on issues of adjudicative fact where licenses of various kinds are at stake is one of the most prominent areas of weakness in all judge-made administrative law. This body of law is much in need of a full critical examination.
“The state courts are badly befuddled by the privilege doctrine in allowing the death sentence to be imposed upon a lawful business by petty officials who determine disputed facts about the business without giving the owner of the business a chance to be heard. Even if fhe investment in the business is a large one, even if the businessman denies the charges against him, even if the only sensible system for resolving the disputed facts is to put the evidence on the record and allow opportunity for rebuttal or explanation or cross-examination, and, in some of the cases, even if the only evidence in support of the charges is undisclosed gossip or rumor, still the courts hold that the valuable interest may be destroyed without a hearing. The only reason for such astonishing law is the idea of privilege— the inscrutable concept that often causes able and conscientious judges to promote procedural injustice.
“The state courts, with dismaying uniformity, spin the theory that licenses are of two kinds — those which are mere privileges and those which involve legal rights or property rights. A holder of or applicant for the first kind is not entitled to procedural fairness. The test, so we are told, is whether the licensed activity can be constitutionally prohibited.
“But no court explains why procedural fairness should be denied to those whose businesses can be constitutionally prohibited. The courts often seem tacitly to reason that because sale of liquor may be prohibited, therefore an individual seller of liquor may be unfairly treated. Such reasoning is palpably fallacious. If selling liquor is unlawful, the state does not license it; no procedural unfairness is involved in general legislation making the sale of liquor unlawful. But if the state or other governmental unit has issued a license to a seller, then the business is lawful, and a seller who has made his investment and developed his business should be entitled to fair treatment. Revoking or refusing to renew the license without giving the licensee a chance to be heard on issues of fact about the business is not fair treatment. (Emphasis supplied.)
“If the interests affected were too trivial to justify a fair hearing, or if the advantages of a hearing were thought to be outweighed by some other interest, such as national security in loyalty cases, then the denial of hearing could be sound. But the courts give no such reason for allowing the unfair procedure. The usual reason is merely that the license is a privilege because the business could constitutionally be prohibited altogether.
“True, occasionally the courts say that a licensee takes his license with notice that it may be summarily revoked and that he cannot complain because he has consented to unfair treatment. This argument might have some degree of validity if a legislature has deliberately set up a system of granting licenses on the condition that they may be summarily revoked and if the only question before the court is the constitutionality of such a system. But such circumstances are rare. The typical case is one in which the legislature has failed to make explicit provision for or against hearings, so that the true lawmaker on the subject is the court. Even if constitutions are assumed to permit a system of granting licenses with the understanding that they may be revoked without fair procedure, such a system is still bad government because contrary to our traditions of fairness, and the courts *813should not allow such a system unless legislative bodies have explicitly provided for it. To the extent that the law of requiring or dispensing with fair hearings is judge-made-law — as it is almost altogether, whether the theory is constitutional interpretation, statutory interpretation, or common law — the courts should reject the notion that valuable businesses may be administratively destroyed without giving their owners a chance to be heard on disputed facts. * * *
“In a good many of the cases invoking the privilege doctrine, the denial of a hearing is sound because facts were not in dispute; for instance, revoking licenses without a hearing on the basis of prior convictions in court is entirely proper when the fact of the convictions is not challenged.1 In some cases invoking the doctrine, denial of administrative hearings was fair because the licensee had opportunity for de novo judicial hearing. In some cases denial of hearing was fair because the action was legislative action revoking all licenses of a specified kind, where the action did not depend upon adjudicative facts.
“Although many of the privilege cases are old, and although the privilege doctrine has long been adversely criticized, the movement away from the doctrine has been disappointingly small. Recent cases using the privilege doctrine to justify denial of hearing on disputed facts are rather numerous.
“California has set an especially good example for other state courts to follow. Even though a California court had held in 1935 that a liquor license may be revoked without opportunity for hearing,2 a California court held in 1940 that ‘we cannot forget that the law contemplates justice, whether the license is granted as a privilege or recognized as a vested right; that under the American system of justice it is the policy of our law that a person should not be deprived even of a “permit” to engage in a legitimate business without a fair and impartial hearing and without an opportunity to present competent evidence for consideration by the licensing authority in opposition to the proposed revocation of his permit’.3 The California Supreme Court, referring to the 1935 decision that a liquor license could be revoked without a hearing, has declared that ‘the conclusion reached in that case is contrary to both principle and authority, and it is disapproved to the extent that it is inconsistent with the present decision.’ In 1952 the same court, in holding that an application for a license for an amusement business could not be denied without a hearing, reviewed its own decisions and again made clear that whether or not alcoholic beverages are involved, ‘Law contemplates justice whether it is granted as a privilege or recognized as a vested right. * * * [T]he right to engage in the sale of beverages * * * may not be arbitrarily denied by the board of supervisors without a hearing or an opportunity on the part of the petitioner to present the merits of her application to the licensing tribunal.’4
“Massachusetts has provided a different kind of leadership. Its Administrative Procedure Act, unlike the statutes in other states, provides: ‘Except as otherwise provided in this section, no agency shall revoke or refuse to renew any license unless it has first afforded the licensee an op*814portunity for hearing’ in conformity with provisions specifying a trial type of hearing.
“Samples of recent holdings that licenses regarded as ‘rights’ may not be revoked without a hearing involve exclusion of a physician from a public hospital, a bus line license, a license of a barber college, and a taxi license. Cases treating refusal to renew in the same way as revocation, so that a hearing is required, involve a drive-in theater, a school of cosmetology, and an insurance license.”
About two pages of criticism by Mr. Davis of Walker v. City of Clinton, 244 Iowa 1099, 59 N.W.2d 785 is deliberately omitted here. Suffice it to say, the writer leaves little doubt that the case ought to be overruled. I agree.
The Davis treatise is followed in the supplement with citations to the courts of New York, Massachusetts and New Jersey which have followed its reasoning. Of greater importance is the citation to Hornsby v. Allen, 326 F.2d 605 (5 Cir., 1964) which reviews the action of a state court upholding licensing decisions without a hearing. The federal circuit court of appeals has told at least one state that the procedural unfairness inherent in license actions, without hearing, will be reexamined in the federal courts under the Civil Rights Act, 28 U.S.C.A. § 1343. If Hornsby v. Allen, supra, becomes the law in all jurisdictions (it is already the law in the 5th circuit) we will simply have invited federal interference by failure to properly analyze the problem ourselves.
One of our own cases points the way for a new look at the problems. In Koelling v. Board of Trustees of Mary Frances Skiff Hospital, (1967), 259 Iowa 1185, 1197, 146 N.W.2d 284, 291-292, we said: “‘Whether the right to practice medicine be classed as a property right, strictly speaking, or as a mere privilege is not material; for whichever name be given it, it is a valuable right which cannot be taken away without due process of law, the essential elements of which are notice and opportunity to defend. [citing cases] But due process does not require that any particular form of proceedings be observed, but only that the same shall be regular proceedings, in which notice is given of the claim asserted and an opportunity to defend against it [citing cases].’ Smith v. State Board of Medical Examiners, 140 Iowa 66, 69, 117 N.W. 1116; Elk River Coal & Lbr. Co. v. Funk, 222 Iowa 1222, 1227, 271 N.W. 204, 110 A.L.R. 1415; Gilchrist v. Bierring, 234 Iowa 899, 911, 14 N.W.2d 724; Brinkley v. Hassig, 130 Kan. 874, 289 P. 64; Brinkley v. Hassig, 10 Cir., 83 F.2d 351.
“ ‘Under general requirements applicable to quasi-judicial proceedings, or under the requirement of a full hearing, a party has the right, and the hearing must afford him the opportunity, to defend the right involved, usually by argument, proof, and cross-examination of witnesses, with knowledge of the evidence, the witnesses to be heard, and the claims and contentions of the opponents, and the trier of facts must have reached his decision in accordance with the facts proved.’ 2 Am. Jur.2d 227, Administrative Law, § 417.”
It seems to me the foregoing acknowledgments by this court cannot be squared with what was said in Walker v. City of Clinton, supra, and Michael v. Town of Logan, 247 Iowa 574, 73 N.W.2d 714, or what the majority says here. The only possible rationale would be the idea that sale of beer and whiskey is “inherently illegal.” Mr. Davis has pretty well destroyed this concept but one should also ask; if the business is inherently illegal, why is it licensed? Why was the ill-fated 18th Amendment necessary ? Why does the state itself engage in such inherently illegal business?
The view that a prior judicial construction of a statute should not be changed is often expressed as an excuse for a court’s failure to correct its own mistakes, but it is not always thus. In Fitzgerald v. Hale, 247 Iowa 1194, 1204, *81578 N.W.2d 509, 515 this court changed its construction of a statute after some 90 years with the observation:
“Courts are properly slow to overrule a line of decisions, even though, as here, the change will affect no property rights or interests. Moreover, there is a rule of statutory construction that when a statute has received a judicial construction and is substantially * reenacted, such construction may be regarded as having been adopted by the legislature. 50 Am.Jur. Statutes, section 443; 82 C.J.S. Statutes § 370b (1). However, these matters do not constitute a har to the correction by a court of its palpable errors. They are merely factors to be weighed in determining the advisability of such correction.
“Consideration of these and other factors has resulted in the conclusion that the advantages which will result from correcting the erroneous rule of our former decisions outweigh the objections thereto.” (Emphasis added.)
Cf. Schaefer, J., 34 Chicago L.Rev. 3, 24 Precedent and Policy;5 Haynes v. Presbyterian Hospital Ass’n, 241 Iowa 1269, 1272, 45 N.W.2d 151, 153; Boyer v. Iowa High School Athletic Association (dissent), 256 Iowa 337, 356, 127 N.W.2d 606.
The point on which Mrs. Smith demands a hearing is simple. Was she bound by, or is she to be punished for, the actions of Elsie Watts? It may well be that Elsie Watts was in fact acting as Mrs. Smith’s barmaid but procedural fairness requires a hearing. Mr. Davis, at page 506, sets forth three pertinent quotations: “The essence of justice is largely procedural. Time and again, thoughtful judges have emphasized this, truth. Mr. Justice Douglas: ‘It is not without significance that most of the provisions of the Bill of Rights are procedural. It is procedure that spells much of the difference between rule by law and rule by whim or caprice. Steadfast adherence to strict procedural safeguards is our main assurance that there will be equal justice under law/ Mr. Justice Jackson: ‘Procedural fairness and regularity are of the indispensable essence of liberty/ Mr. Justice Frankfurter: ‘The history of liberty has largely been the history of procedural safeguards/ ”
For the reasons herein expressed I would hold due process considerations require a hearing before this license is revoked and remand for further proceedings.
STUART, MASON and RAWLINGS, JJ., join in this dissent.

. State Board of Equalization of California v. Superior Court, 5 Cal.App.2d 374, 42 P.2d 1076 (1935).

. Carroll v. California Horse Racing Board, 16 Cal.2d 164, 105 P.2d 110 (1940).

. Fascination, Inc. v. Hoover, 39 Cal.2d 260, 246 P.2d 656 (1952).

. “It (the legislature) has little time and little taste for the job of keeping the common law current.”