SW Legal studies in Business

State Licensing Procedure Cannot Conflict with State Law Regarding Licensing

Ohio appeals court held that a state agency that issued licenses for loan officers was more restrictive than the statute upon which the license procedure was based. Regulatory process cannot conflict with statutory requirements, so the procedure was stricken.

Topic Administrative Law
Key Words

Regulation; Conflict; Licensing

C A S E   S U M M A R Y

In 2008, Holtz sought to obtain a residential mortgage loan officer's license from the state of Ohio, which he needed to operate in that profession. The license was denied when it was noted that Holtz had been convicted for breaking and entering in 1968 and 1971. State law provides that the Division of Financial Institutions of the Ohio Department of Commerce may deny licenses to persons convicted of theft. Division rules prohibited issuing a license to a person convicted of many different crimes. Holtz appealed the Division's rejection of his license application. The trial court reversed the Division's order and the Division appealed.


Affirmed. The license procedure was in conflict with the state statute governing the application process for such a license. A regulatory procedure cannot conflict with state law or the procedure is invalid. The statute states that a person convicted of "theft" may not obtain a license. However, the statute notes that any applicant, even one convicted of theft, may appeal to the superintendent of the Department of Commerce to demonstrate rehabilitation that should qualify them to hold a license. Regulations issued by the Division barred any person from holding a license if they had been convicted of theft or related crimes. No appeal process was in place. To assert that a 40 year old conviction for breaking and entering is the same as "theft" is not logical and the failure to allow an appeal is in direct conflict with the statute. Hence the regulation conflicts with state law and cannot be enforced in the manner it has been.

Citation Holtz v. Ohio Department of Commerce, 2009 WL 4406131 (Ct. App., Ohio, 2009)

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