Brooks v. State Board of Funeral Directors & Embalmers

Brune, C. J., delivered the opinion of the Court. The State Board of Funeral Directors and Embalmers (the Board) on April 12, 1962, ordered the suspension of the license of the appellant, L. Scott Brooks as a funeral director, and the next day notified him that it was for one year. Brooks appealed to the Circuit Court for Baltimore County. That Court, in accordance with an oral opinion delivered after a hearing-on January 31, 1963, entered an order on February 21, 1963, affirming the Board’s order with a modification (assented to) making it specific that the suspension was for one year.

This appeal is from that order. The initial appeal operated as a stay of the Board’s order, and we are advised that it is still in effect pending this appeal. The questions here presented arise out of the provisions of Section 360 of Article 43 of the 1957 Code which permit corporations previously licensed as funeral directors (in 1937 as to some, in 1945 as to others) to continue to engage in the “business or profession of funeral directing,” sometimes referred to below as the “undertaking business,” but which prohibit other corporations from doing so. The appellant makes three contentions: first, that these provisions are invalid and unconstitutional because they bear no ¹⁰² substantial relationship'to the public health, safety or welfare; second, that they are invalid because they discriminate between corporations engaged in the business before a certain date and corporations thereafter seeking to enter it; and third, that these provisions do not prevent a corporation from conducting the undertaking business through licensed individuals.

Article 43 of the Code is entitled “Health,” and one subtitle thereof is headed “Funeral Directors and Embalmers.” In the 1957 Edition this subtitle consisted of Sections 339-367, and (except as to changes in license fees not here material) remained in force up to June 1, 1962, when a rather general revision of the subtitle took effect. References herein to sections will be to sections of the 1957 Code unless otherwise stated. Section 360 states that “the provisions of this sub-title shall not be construed as preventing the conducting [of] the business or profession of funeral directing by a corporation heretofore licensed,” if it is registered with the Board and if it complies with such rules and regulations as the Board may prescribe. It prohibits such a corporation from operating any branch not in operation on June 1, 1945.

It further states: “The Board shall not hereafter issue licenses to, nor register any corporation, nor shall any corporation be permitted to conduct the business or profession of funeral directing which has not already been licensed and registered.” This section also contains a proviso derived from Ch. 741 of the Acts of 1945, permitting a corporation to be formed during World War II to take over and carry on (subject to stated conditions) the business of any person licensed as a funeral director or embalmer who may have been inducted into the armed forces of the United States during that war. Both the provision in favor of corporations “heretofore licensed” and the general prohibitions against new corporations originated in Ch. 503 of the Acts of 1937, and were carried forward in subsequent amendments of the statute. They are the major objects of attack here. From the time when the undertaking business first became the subject of statutory regulation (under Ch. 160 of the Acts of 1902) until the 1937 Act, corporations could obtain licenses as funeral directors. ¹⁰³ The pertinent facts disclosed by the record may be briefly summarized.

Mr. Brooks, the appellant, was duly licensed as an individual as a funeral director and also as an embalmer, holding a separate license for each of these occupations. In August, 1960 (not through his present counsel) he caused to be organized under the general corporation laws of Maryland a corporation known as Brooks Funeral Service, Inc., and on August 10th of that year he wrote the Board a letter requesting the issuance of a license to the corporation as a funeral director. He stated that he was aware of the statute against granting such a license, but contended that the statute was unconstitutional. The Board refused to license the corporation.

About January 1, 1962, the corporation, nevertheless, started to carry on the business of a funeral director. Mr. Brooks is the sole stockholder and is an officer and director of the corporation. All of the employees of the corporation who are active in the conduct of its business (except a woman who does only cleaning or domestic work) are licensed as funeral directors or embalmers, or both. The Board found after a hearing on April 12, 1962, at which Mr. Brooks appeared as a witness and renewed his attack on the statute, that Mr. Brooks had operated the corporation, that it had engaged in the business of a funeral director without a license, and that Mr. Brooks had “purposely, knowingly, and deliberately operated” the corporation “for the purpose, among others of testing the validity of * * * Section 360 * * *.” It concluded that, as a matter of law, Mr. Brooks had violated Section 360 and suspended his license pursuant to Section 352(2) (i).

We may comment first on what is stated as the appellant’s third contention — that Section 360 does not prohibit a corporation from conducting an undertaking business through licensed individuals. We think that this argument is unsound because it simply ignores the flat prohibition contained in the statute against a corporation not already licensed and registered being “permitted to conduct the business or profession of funeral directing.” In Dvorine v. Castelberg Jewelry Corp., 170 Md. 661, 185 A. 562 , it was held that a corporation which, as a part of its business, sold eyeglasses, was not engaged in the “practice of optometry,” as defined by statute, when it em ¹⁰⁴ ployed a registered optometrist, compensated by a salary and by commissions to serve such patrons as the corporation might refer to him. At p. 673 of 170 Md., Judge Offutt said: “The question is, not whether the Legislature may prohibit a corporation or a lay natural person from furnishing service in a regulated employment through the agency of others, but whether it has done so in this statute, and a mere reading of the statute demonstrates that it has not.” In the instant case, we think that a mere reading of the statute demonstrates that the Legislature has prohibited unlicensed corporations from obtaining a license and from conducting “the business or profession” of a funeral director without a license. The case of State v. Kindy Optical Co., 216 Iowa 1157 , 248 N. W. 332 , distinguished in Dvorine seems directly in point here.

It is hardly necessary to add that our holding here does not apply in cases where a statute requires individuals to obtain a license, based upon skill, training or experience, or some combination thereof, in order to engage in some specified occupation and also permits corporations to engage in that occupation. In such instances, the employment by a corporation of duly licensed individuals by whom or under whose direction or supervision the work is to be done, seems not only proper, but necessary. 1 This brings us to consideration of the appellant’s contentions that the statute is void as a denial of due process and of the equal protection of the laws. On the question of due process the appellant contends, among other things, that undertaking is essentially a business, rather than a profession, and he challenges the validity of any regulation of the business which prevents its being conducted in corporate form. We are inclined to agree with the appellant’s contention that the occupation is a business, rather than a profession.

It was referred to in our statutes, without ex ¹⁰⁵ ception so far as we are advised, as a business from 1902 to 1937, and in Sections 345, 346 and 357 (1957 numbering) down to and including the 1957 Code. The amendment of Section 360 made by Ch. 503 of the Acts of 1937 introduced the phrase “business or profession” as applied to the occupation of a funeral director, but that same Chapter spoke consistently of the “profession” of embalmer. Nothing appears in the record in this case to show what, if any, changes had occurred in the nature of the occupation of a funeral director between 1902 and 1937 to bring about even the equivocal change then made in its characterization in Section 360. It was described by the statutes then involved and was treated by the Court as a business in State v. Rice, 115 Md. 317 , 80 A. 1026 (1911), and in Keller v. State, 122 Md. 677 , 90 A. 603 (1914); and it was so referred to in Maryland State Funeral Directors Assn. v. State Board of Undertakers, 150 Md. 294 , 133 A. 62 (1926).

See also Grissom v. Van Orsdel, 137 So. 2d 246 (Fla. App. 1962); State v. Winneshiek Co-op Burial Assn., 237 Ia. 556 , 22 N.W. 2d 800 (1946); and Jackson, Law of Cadavers (2d Ed.), p. 467. We note that Ch. 129 of the Acts of 1962, which revised most of the subtitle of Article 43 of the 1957 Code dealing with Funeral Directors and Embalmers purports to put funeral directing and embalming under a single license and speaks of the “occupation of funeral director and embalmer.” (Italics supplied.) We shall, for the purposes of this case, but without undertaking to foreclose the question for the future when a more adequate record might be presented, regard the occupation of a funeral director as a business and not a profession. Accordingly, in our view, cases upholding the right of a legislature to bar corporations from the practice of a profession are not here applicable.

That undertaking be regarded as a business and not a profession does not of itself solve the problems presented by this case. The occupation is one which bears such a relation to public health as to make it appropriate for regulation through licensing. See the Rice and Keller cases above cited. See also Walton v. Commonwealth, 187 Va. 275 , 46 S. E. 2d 373 .

Cf. Pitts v. State Board of Examiners of Psychologists, 222 Md. 224 , 160 A. 2d 200 . Requirements stated in Sec. 346 as to the ¹⁰⁶ subjects upon which applicants for licenses are to be examined show that the business is concerned with matters affecting' the public health. This section, after providing that applicants must meet certain requirements, including two years of practical ex-perence as an apprentice, further provides that they “shall be examined as to the proper sanitation and disinfection of the clothing and bedding of persons dying from infectious or contagious diseases and the premises in which they shall have died; [and] as to the laws of this State and the local laws * * * relative to burials and burial permits and the proper care, preparation for burial or shipment of dead human bodies, * * * ” 2 It is evident, of course, that corporations as such could not be examined on the above matters and that corporations can act only through agents.

Just why the statute does not of itself contain a requirement similar to that set forth in the Board’s Regulation IV A quoted in footnote 1, above, that corporations licensed under the statute may act only through or under the direction of licensed individuals, is not clear. 3 However that may ¹⁰⁷ be, in the instant case there is no attack upon the validity of a license issued to any corporation. Thus, whether the statute here involved might be open to objection because of the lack of a requirement that a licensed corporation act only through a licensed individual, and whether, if it would otherwise be open to such objection, the objection would be cured by the Regulation, are questions which are not before us. The present case arises upon the suspension of the appellant’s license as a funeral director, and his corporation is not itself a party to the case. The right or rights which the appellant claims here are seemingly partly individual and partly corporate.

He claims as an individual the right to engage in the undertaking business through a corporation, and he also seems to seek to assert the right of his corporation to engage in it. The rights of an individual to engage in a lawful business are entitled to protection under the due process and equal protection clauses of the Fourteenth Amendment and by the due process clause, Art. 23, of the State Declaration of Rights. See such cases as Dasch v. Jackson, 170 Md. 251 , 183 A. 534 (regulation and licensing of paperhangers only in Baltimore City held invalid), and Schneider v. Duer, 170 Md. 326 , 184 A. 914 (unreasonable provisions in Act for the regulation and licensing of barbers held to deny due process). Of course, many regulatory and licensing statutes are upheld as valid exercises of the police power, and a number of authorities upholding such regulations are collected and reviewed in the Dasch case, 170 Md., at 263-266, as well as some cases in which regulations were held invalid.

Our most recent case touching upon licensing concerns architects. Snodgrass v. Immler, 232 Md. 416 , 194 A. 2d 103 . Among the cases cited in Dasch as upholding the existence of power to regulate and license various occupations were Keller v. State, and Maryland State Funeral Directors Assn. v. State Board of Undertakers, both cited above and both dealing with undertaking. In the Funeral Directors case, the validity of statutes providing for the regulation and licensing of persons engaged “in the business of undertaking and in the profession of embalming” was assumed.

The object there sought by the ¹⁰⁸ appellant was the revocation of licenses issued by the Board to an allegedly unqualified person. It is also well established and is not disputed that corporations are entitled to protection) under the Due Process and Equal Protection Clauses of the Fourteenth Amendment and under Article 23 of the Declaration of Rights. See, for example, among the cases in this Court which might be cited in this connection, Board of Regents of University of Maryland v. Trustees of Endowment Fund of University of Maryland, 206 Md. 559 , 112 A. 2d 678 , and Luman v. Hitchens Bros. Co., 90 Md. 14 , 44 A. 1051 .

There may be, however, some important differences between corporations and individuals as to whether rights which an individual may have, actually have been or may be acquired by corporations. A non-existent corporate right could scarcely receive constitutional protection. The right of individuals to form a corporation to carry on a business is not so extensive as to authorize the formation of corporations for purposes contrary to a statute. Fletcher on Corporations (Perm.

Ed.), Vol. 1, Sec. 93. Cf. Terwilliger v. Graceland Memorial Park Assn., 35 N. J. 259, 173 A. 2d 33 ; Braeburn Securities Corp. v. Smith, 15 Ill. 2d 55 , 153 N. E. 2d 806 . Our General Corporation Law (Code (1957), Art. 23, Sec. 3) provides that corporations (with exceptions not here relevant) may be formed under Art. 23 for any one or more lawful purposes.

The charter of Brooks Funeral Service, Inc. is not in the record, but it does appear from the record that it was conducting the business of a funeral director, notwithstanding the prohibition contained in Sec. 360 of Art. 43 against corporations formed after 1937 doing so. If, as we think it reasonable to suppose, a purpose stated in the charter of the Brooks corporation was to conduct the business of funeral director, it is difficult to see how, in the face of Sec. 360 of Art. 43, this could qualify as a “lawful purpose,” if Sec. 360 is valid. It follows, we think, that any right of the appellant as an individual to form or cause to be formed a corporation to conduct the business of a funeral director can be established only if that prohibition is for some reason invalid. There is authority that neither the persons who elect to form a new corporation under the existing statutes of a state nor the corpora ¹⁰⁹ tion formed by them, at least insofar as the new corporation is concerned, may challenge the constitutionality of existing statutes of the state applicable to the new corporation at the time of its formation.

See Grand Rapids & Indiana Ry. Co. v. Osborn, 193 U. S. 17 ; People ex rel. Schurz v. Cook, 148 U. S. 397 ; 13 Am. Jur., Corporations, § 1151.

This is a case of a statutory prohibition against a corporation engaging in a specified business, not of an unconstitutional condition imposed upon a right granted by statute to engage in or conduct a business. Though the rule of the cases just cited might well be an effective bar to any claim by or on behalf of the corporation itself against the prohibition contained in Sec. 360, it may not necessarily be a bar to Mr. Brooks’ attack based upon his asserted individual rights. The appellant relies heavily upon Liggett Co. v. Baldridge, 278 U. S. 105 , Dasch v. Jackson, supra, and Schneider v. Duer, 170 Md. 326 , 184 A. 914 , to support his contention that the statutory prohibition against new corporations conducting the business of a funeral director and against granting them licenses so to do involve a denial of due process of law. None of these cases seems to us to be controlling here.

Dasch v. Jackson, supra, a licensing case, held invalid unreasonable statutory restrictions upon the right of an individual to engage in a lawful, common calling, that of a paperbanger. Schneider v. Duer, supra, was a similar case involving the trade of barbering. There was no controversy over the right of a corporation to engage in either the business of paperhanging or that of barbering in spite of a statute prohibiting a corporation from doing so, since no corporation was involved, nor, for that matter, was there any such statute, so far as appears. The right of individuals to work themselves at their respective callings was at issue; not their right to carry on their trades through corporations organized by them.

Liggett v. Baldridge, supra, held invalid, as a denial of due process of law, a Pennsylvania statute requiring that all stockholders in corporations owning drugstores be registered pharmacists. This statute contained an exception in favor of existing corporations authorized to do business in the state, which permitted them to continue to own and conduct drug stores or ¹¹⁰ pharmacies owned and conducted by them when the statute took effect, but they could not own and conduct new stores. The Liggett Co. had acquired and wished to operate new drug stores in the state and sought an injunction to prevent enforcement of the statute to keep it from doing so. The Supreme Court, with Justices Holmes and Brandéis dissenting, held the statute void as an undue restriction upon the Liggett Company’s business, since the requirement as to ownership of stock bore no reasonable relation to the public health.

The Liggett case has never been expressly overruled, but it has been seriously limited, if not completely undermined. See Daniel v. Family Security Life Ins. Co., 336 U. S. 220 ,