West Coast Home Improvement Co. v. Contractors' State Licence Board

Petitioner and appellant (hereinafter designated as petitioner) filed in the superior court a petition for a writ of mandate directing the defendant and respondent (hereinafter referred to as respondent) to set aside its order and decision revoking the contractor’s license of petitioner, to restore said license to petitioner, and to dismiss the complaint and proceedings thereon pending before respondent board. From a judgment denying the peremptory writ of mandate prayed for petitioner prosecutes this appeal.

For a number of years prior to the entry of the judgment herein petitioner had been licensed as a contractor and was carrying on such business in Los Angeles County. On or about August 23, 1943, a complaint was filed with respondent board wherein petitioner was charged with violating the provisions of sections 7109, 7111, 7114, 7115, 7116, 7117 and 7118 of the Business and Professions Code. Within the time provided by law petitioner filed with respondent board a written answer to the charges set forth in said complaint. Thereafter a hearing was had as provided by law before a duly appointed, qualified and acting deputy registrar of contractors. The proceedings at such hearing were taken down in shorthand and later transcribed. At the conclusion of the hearing the deputy registrar presiding thereat made and signed written findings and recommendations. Subsequently, on December 7, 1943, the registrar of contractors made, signed and filed a decision in said proceeding finding the petitioner guilty of violating the aforesaid provisions of the Business and Professions Code and revoking its license to engage in the contracting business in the State of California. On December 21, 1943, petitioner filed a petition for rehearing, which was denied by the registrar of contractors on January 18, 1944.

Thereafter petitioner, pursuant to the provisions of section

The complaint lodged against petitioner before the state board charged it with willful departure from or disregard of plans and specifications in material respects (§ 7109); failure to make and keep records in accordance with the provisions of section 7111; aiding and abetting an unlicensed person to evade the provisions of chapter 9 of the Business and Professions Code (§ 7114); failure to comply in a material respect with the provisions of chapter 9 of the Business and Professions Code (§ 7115); the doing of willful and fraudulent acts as a contractor in consequence of which substantial injury was caused to others (§ 7116); acting in the capacity of a contractor in violation of the terms of section 7117; and knowingly entering into contracts with a contractor while such contractor was not licensed as provided by chapter 9 of the Business and Professions Code (§ 7118).

Petitioner’s method of doing business which was challenged by the complaint filed against it before the state board may be epitomized by the testimony of Mrs. Emma Moedl, one of

With reference to the alleged violation of section 7111, there was testimony to support the court’s finding that “the evidence is clear and convincing that it did make and keep records of a sort, but such records were not clearly decipherable even by the officers of the petitioner.”

There was also substantial evidence to support the finding that petitioner violated section 7114, 7117 and 7118, in that it did “aid salesmen and solicitors and representatives named in the complaint to evade the provisions of the Business and Professions Code relating to contractors; said salesmen were not licensed as contractors; the petitioner knowingly combined and conspired with said unlicensed persons and allowed his license to be used by said unlicensed persons and acted as an agent and a partner of such persons to evade the provisions of said chapter of the Business and Professions Code; the petitioner’s business is solely based upon contracts secured by his salesmen, who are usually preceded by a so-called ‘bird dog’ to make the original contact and to open negotiations; the salesmen are paid by the petitioner, not on a salary or a straight commission basis, but by a somewhat involved formula which constitutes a division of the profits; if the salesman secures the contracts upon which there is more than normal or average amount of profit, the salesman’s percentage in that job is increased, but if the salesman makes an error and underestimates the size of the job and thereby the profit is less than expected, the salesman loses because of his error; the salesman has absolute authority to enter into contracts in the name of the petitioner without the petitioner becoming aware of or approving the transaction; the sales

The evidence supports the finding that petitioner violated section 7116, in that it represented that the spray job was “equal in value and effect to a complete termite treatment under the houses, but knowing in fact it was only going to cover the mudsills, and that that was not a successful treatment to eradicate termites throughout the underpinning as a whole.

“It was represented that the regular price of this product was greatly reduced due to allowing the homes to be used as ‘models’, when in truth and in fact the usual prices charged by the petitioner was about $39 to $42 per square, whereas the normal price was only $22.50 per square, and that $22.50 is a fair and equitable price per square for such produce in the locality.

“It was further represented that pictures were to be taken before and after applying the siding, and that he would show

“The petitioner’s method in selling 'model house' or 'bonus transactions, ’ which method was used in all cases herein, was to lead the owner to believe that a bonus would be paid for every job done in that general neighborhood, and that the house would actually be advertised by ‘before and after’ pictures; the procedure set up for the payment of bonuses and the advertising of houses, in so far as the actual contractual documents are concerned, did not bind the petitioner to pay any bonuses unless the owner personally secured the prospect; nor did the petitioner bind himself to take pictures or to advertise the house; by securing the permission from the owner to advertise the house, the petitioner led the owner to believe that such would be done, which would lead to the payment of bonuses to the owner; in almost every instance the owner was misled as to the intentions of the petitioner; and the court finds that the petitioner purposely so conducted the conversations and negotiations that the wrong impression was left with the owner; the sales talk of all of the salesmen and solicitors was so similar as to indicate a concerted program, and the similarities were not either accidental or a mere coincidence.”

“That he influenced property owners to sign National Housing Administration Form 60-5 on jobs for a loan of more than twelve months, and the petitioner signed such forms himself to the effect that these particular houses were in need of repair; that in 10 contracts out of 14 which were admitted in evidence the 36-month loan under the jurisdiction of National Housing Administration was secured; in each instance in order to secure such a loan it was necessary to answer the following questions in the affirmative: 'Will the housing accommodations become uninhabitable (meaning a definite hazard to the health or safety of the occupants, not merely an inconvenience) if each item of repair listed under question V is not performed in ninety (90) days after the date of this application?’; that in every case it absolutely was unnecessary for the work to be done in order to keep the accommodations from being uninhabitable within ninety lays; it is true that the work to be done did constitute some improvements to

As a first ground of appeal petitioner contends that although in its pleadings a trial de novo was demanded the same was refused by the court. Under the law, the petitioner was not entitled to an ‘‘unqualified or unlimited trial de novo to which a litigant is entitled in the superior court on appeal from a justice’s court on questions of fact or on questions of both law and fact (Code Civ. Proc., see. 976), where, justifiably or not, he may present a ‘skeleton’ case in the lower court and reserve the real showing on the merits for the trial in the superior court.” (Dare v. Board of Medical Exam

No reporter’s transcript has been presented as part of the record on this appeal and the clerk’s minutes of proceedings had upon hearing of the petition for a writ of mandate are not contained in the clerk’s transcript. Nowhere in the record before us does it appear that at the trial petitioner produced any witnesses or made any offer of proof with reference to any evidence which it was claimed the administrative board refused to entertain, nor was any evidence offered in addition to that received at the board hearing. In its amendment to the petition for the writ in the trial court petitioner set forth some sixty specifications of claimed error on the part of the hearing officer in admitting allegedly erroneous evidence. A record of the proceedings had before the board was filed in the trial court and by reference thereto in

“The court carefully considered the entire record of the evidence introduced and the proceedings had before the respondent, together with the complaint filed with respondent and the findings and order made, and evaluated the evidence and gave consideration only to the legally admissible evidence and therefrom made its independent findings and conclusions;

It is noteworthy that in connection with the charge made against petitioner wherein it was accused of violating the building ordinances of the cities of Los Angeles, Gardena and Redondo Beach, the court held that the evidence offered in substantiation thereof was inadmissible and disregarded the same in its entirety.

The record before us reflects no showing to bring this case within the doctrine enunciated in Dare v. Board of Medical Examiners, supra, or Russell v. Miller, supra, which would entitle petitioner to present evidence in addition to that offered before the board. The trial court was not advised, nor is this court apprised, of any admissible evidence which the board refused to entertain, nor is any showing made as to any additional evidence which petitioner sought to introduce before the trial court. In the absence of a reporter’s transcript, we must assume from the findings that the petitioner was not foreclosed in the trial court from objecting to any incompetent evidence received by the board; but on the contrary, as heretofore pointed out, the trial court rejected certain evidence presented to the board and sustained objections to its competency.

If petitioner contends that he was entitled to an unlimited trial de novo and that the witnesses produced at the board hearing should again be called and re-examined as to facts about which they testified before the hearing officer, the petitioner is in error, as to his rights, for as held in Dare v. Board of Medical Examiners, supra, at page 799, it was never contemplated that the evidence presented to the board and contained in the record of its proceedings should be reiterated before the court.

Petitioner next asserts that the hearing officer was biased and prejudiced against it by reason of which it was

After thus carefully scrutinizing the record, the court made the findings hereinbefore narrated, and as heretofore stated by us, there was competent and substantial evidence in the record to sustain such findings. While we are not prepared to negative petitioner’s claim that the attitude of the hearing officer" toward Jacob Johnson, its president, was brusque, and we may say, manifested toward him a feeling of considerable displeasure which does not appear to have been warranted and of which we do not approve, the hearing officer was also abrupt, curt and brusque on occasions with the representative of the state board who was prosecuting the charges made against petitioner. However, the fact that the hearing officer may have exceeded the bounds of propriety does not entitle petitioner to have the decision of the administrative board annulled when competent and admissible evidence sustains the findings and order made by such board.

Finally, petitioner challenges the validity of the state board’s order on the ground that it was deprived of a constitutional right in that petitioner corporation’s president, Jacob Johnson, was called to and did testify under section 2055 of the Code of Civil Procedure in the absencé of any admonition. by the hearing officer of Mr. Johnson’s right not to be compelled to be a witness against himself (5th Amendment, Const. U. S.; § 13, art. I, Const. Cal.). It is petitioner’s contention that the charge made against it under section 7114 of the Business and Professions Code is denounced as a mis

It is clear from the record that petitioner as a corporation was owned and controlled by its president, Johnson, and vice-president, Katz. It is established law that there is no constitutional privilege for an officer of a corporation as such to refuse to testify. (United States v. White, 322 U.S. 694 , 699 [ 64 S.Ct. 1248 , 88 L.Ed. 1542 , 152 A.L.R. 1202 ]; Wilson v. United States, 221 U.S. 361 [ 31 S.Ct. 538 , 55 L.Ed. 771 , Ann.Cas. 1912D 558].) Furthermore, despite early cases which speak in general terms of the analogy between administrative proceedings for the revocation of a professional or business license and a criminal prosecution, a veritable forest of cases have rejected the contention that such administrative proceedings “are to be governed by criminal law theories on matters of evidence.” (Webster v. Board of Dental Examiners, 17 Cal.2d 534 , 538 [ 110 P.2d 992 ].)

The object of establishing the Contractors’ State License Board arid vesting in the registrar of contractors disciplinary powers is for the protection of the public. The law is intended primarily to keep the contracting business clean and wholesome, to the end that it may merit the respect and confidence of the public in general and in particular those who have recourse to contractors in the construction or improvement of their properties. Therefore, the purpose of a disciplinary proceeding such as the one with which we are here concerned is to determine the fitness of a licensed contractor to continue in that capacity. It is not intended for the punishment of the individual contractor, but for the protection of the contracting business as well as the public by removing, in proper cases, either permanently or temporarily, from the conduct of a contractor’s business a licensee whose method of doing business indicates a lack of integrity upon his part or a tendency

“It is insisted by appellant that the court erred in allowing him to be called to the stand and compelled to testify over his objection. He contends the disbarment proceedings are in the nature of a criminal action and that the accused in such a case should be accorded the same right to refuse to testify as is a defendant charged with the commission of a crime. This position cannot be maintained. Although it has been held that an accusation is in the nature of a criminal charge (Matter of Hammond, 121 Cal. 385 [ 53 P. 899 ]), and that a proceeding on such a charge is a qwasi-criminal action (In re McCowan, 177 Cal. 93 [ 170 P. 1100 ]), ‘this court has uniformly treated disbarment proceedings as peculiar to themselves, and governed exclusively by the code sections specifically covering them.’ (Matter of Danford, 157 Cal. 425 [ 108 P. 322 ].) The purpose of such a proceeding is to determine the fitness of an officer of the court to continue in that capacity, and it has been said the disbarment of attorneys is not intended for the punishment of the individual but for the protection of the courts and the legal profession. (Ex parte Finley, 97 S.C. 37 [ 81 S.E. 279 ].)”

The court further quoted from the same case as follows:

“ ‘This is a special proceeding of a civil nature, and the rules applicable to criminal cases do not apply. (In re Wellcome, 23 Mont. 259 [ 58 P. 711 ]; In re Bandel, 158 N.Y. 216 [ 52 N.E. 1106 ].) If the accused is not guilty, nothing would have been easier than for him to deny all knowledge of the charges laid at his door. His having failed to testify in his own defense, when he should do so, and deny the statements of Whiteside and Clark, not only justifies, but irresistibly implies, this court, upon the evidence before it, which is credible, to the conclusion that he is guilty. ’ In our opinion, in view of these considerations, this is not such a criminal prosecution against appellant as would entitle him to decline to testify on the ground that he cannot be compelled ‘to be a witness against himself’ (art. I, see. 13, Const.), but he may be called and

examined for the information of the court, without, of course, infringing his right to decline to answer questions propounded to him on the ground that his testimony would tend to incriminate him.”

See, also, Johnson v. State Bar, 4 Cal.2d 744 , 752 [52 P.2d 92S],

Thus it becomes apparent that if an individual licensee could not refuse to testify upon the sole ground that he is an accused in a disciplinary proceeding, the officer of a corporate licensee certainly cannot complain that he was called to give testimony. The president of petitioner corporation, having been advised of his right to procure counsel and having declined so to do, and having been present when several witnesses were advised of their constitutional right to refuse to testify, it cannot be held that in calling him to the witness stand the hearing officer was guilty of prejudicial misconduct which requires a reversal of the judgment here appealed from.

There is in the record substantial testimony that petitioner sold siding on a “model house deal” whereby an owner was led to believe that his was the first house in the district upon which siding would be applied and that such house would be used for display purposes, and that thereafter such customer would receive a bonus from future sales of siding in that district, and which bonus would be substantial. There is also evidence that the customers were led to believe that they were getting a special discount by reason of the fact that their house had been selected for display purposes. The evidence also supports the finding of the trial court that these representations were false. There is further testimony that the aforesaid representations were apparently made to all prospective customers, regardless of whether or not petitioner had previously applied siding to houses in the immediate neighborhood. The finding of the court that these representations were made with no intention to use the house for display purposes, to take pictures of the same or to advertise it, is also supported by the evidence.

In support of the claim that some, if not most, of the customers were substantially injured through representations made by petitioner’s agents, there is in the record evidence that petitioner’s customers were led to believe that they were getting a special discount, although they were in fact paying a high price. In fact, petitioner’s president testified that his base price was $22,50 per square, This was broken down to

From the foregoing, it must be held that the evidence supports the findings and the findings support the judgment, and that no prejudicial error appears in the record.

The judgment is affirmed.

York, P, J., and Doran, J., concurred.

Appellant’s petition for a hearing by the Supreme Court was denied February 21,1946.