6-1005-7118-2
STATE OF MINNESOTA
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE COMMISSIONER OF COMMERCE
In the Matter of The FINDINGS OF FACT,
Check Cashing Place, CONCLUSIONS.
Inc., a Minnesota RECOMMENDATION
Corporation AND MEMORANDUM
The above-entitled matter came on for hearing before Allan W. Klein,
Administrative Law Judge, on December 3, 1992, in Minneapolis.
Appearing on behalf of Respondent Check Cashing Place, Inc. was William
Franklin, who in turn was represented by Attorney Randall D. B. Tigue, 2620
Nicollet Avenue, Minneapolis, Minnesota 55408.
Appearing on behalf of the Department of Commerce was Michael A. Sindt,
Special Assistant Attorney General, 1100 Bremer Tower, Seventh Place and
Minnesota Street, St. Paul, Minnesota 55101.
The record closed on January 21, 1993, upon receipt of the final
memorandum.
Notice is hereby given that, pursuant to Minn. Stat. 14.61 the final
decision of the Commissioner of Commerce shall not be made until this Report
has been made available to the parties to the proceeding for at least ten
days, and an opportunity has been afforded to each party adversely affected to
file exceptions and present argument to the Commissioner. Exceptions to this
Report, if any, shall be filed with Bert McKasy, Commissioner, Department of
Commerce, 133 East Seventh Street, St. Paul, MN 55101.
STATEMENT OF ISSUE
Was the currency exchange operation at 1000 West Broadway in Minneapolis
licensed and operated so that the Cease and Desist Order dated July 21, 1992
should be either made permanent, or vacated?,
Based upon all of the proceedings herein, the Administrative Law Judge
makes the following:
FINDINGS OF FACT
1. William J. Franklin operated a furniture sales business at 1000 West
Broadway in Minneapolis from 1972 to 1992. This business operated under the
names of Gamble's Furniture and Broadway Sales. Franklin also operated a
check cashing service at the same location. In addition to this furniture
operation, Mr. Franklin also operated a check cashing business at 505 East
Lake Street in Minneapolis from 1987 to 1992.
2. In 1989, the Legislature enacted Chapter 247, Laws of 1989,
regulating the currency exchange business for the first time. That law, which
took effect on August 1, 1989, specified that existing currency exchanges had
to submit an application for a license by October 1, 1989, and no currency
exchange could operate without a license after December 31, 1989. The basic
prohibition of the act specified that no person could engage in the business
of a currency exchange without first obtaining a license. The act also
specified that a person could operate currency exchanges at more than one
location with one license. The act also provided that the application for a
license must state the location of all currency exchange locations operated by
the applicant. It went on to specify that if a licensee proposed to change
the name or location of any of its currency exchanges or add a new currency
exchange location, then the licensee must file an application for approval of
the change and obtain an amended license.
3. On January 4, 1990, the Department of Commerce processed a "currency
exchange license application" which was timely submitted by Franklin with a
fee of $350. Exhibit 1. The application form contains a number of
instructions to the applicant. Among them is the following:
If applicant is an individual proprietorship doing
business under a name other than the first and last name
of the owner, attach a copy of the Certificate of Assumed
Name issued by the Secretary of State.
A separate paragraph, similar in tone, required corporate applicants to attach
a copy of the Articles of Incorporation. At the end of that paragraph,
however, is a note indicating that a currency exchange licensee may only do
business under the name which appears on the license.
4. Franklin filled out the form indicating himself as an individual
proprietor, but listing two business names. The first was Broadway Sales,
located at 1000 West Broadway in Minneapolis. The second was Easy Money Check
Cashing, located at 505 East Lake Street.
5. At the bottom of the form is a fee schedule, indicating that there
is a $250 "application review fee", a $50 "license fee", and a $50 "addition
of new location fee". The fee schedule also lists a number of other fees,
which are not applicable to this situation. Franklin had placed a check mark
next to each of the three fees listed above. The application was submitted
with a $350 check.
6. Attached to the application was a Certificate of Assumed Name from
the Secretary of State, indicating that in April of 1985, the name "Easy Money
Check Cashing" had been registered. There was no corresponding certificate
for "Broadway Sales". Also attached to the application (as required) was a
schedule of check cashing fees which Franklin would charge his customers.
This schedule is labeled, at the top, as follows:
Broadway Sales
Easy Money Check Cashing
1000 West Broadway
Minneapolis, Minnesota 55411
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7. The same names and address appeared at the top of the cover letter
which accompanied the application.
8. When the application was received, the check was separated from it,
and the application form was processed. In the space where Franklin had typed
in the names and addresses of the two Minneapolis locations, a Department
employee had written the words "Must Apply Separately". Testimony at the
hearing established that it was the Department's policy to require separate
licenses for each assumed name, and separate application and license fees as
well, so that if Franklin wanted to operate at the West Broadway location
under the name "Broadway Sales", and at the East Lake Street location under
the name "Easy Money Check Cashing". then Franklin would have to submit two
application fees and two license fees, for a total of $600. Cheri McLean of
the Department's licensing division returned the application to Franklin, with
the handwritten notation, "Must Apply Separately", next to the name of
Broadway Sales. The $350 check was also returned to him.
9. Shortly after receiving the returned application form, Franklin went
to the Department's offices and met with Ms. McLean in her office. She
explained to him the requirement that he pay a total of $600 if he wanted to
operate under two business names. She advised him that if he wanted to
operate both businesses under a single name, he could do so without paying two
separate fees. Franklin advised her at that time that he wished to operate at
both locations under the name "Easy Money Check Cashing". Franklin left her
office under the assumption that he would be allowed to operate at both
locations under the same name without having to pay a double fee. McLean,
however, believed that Franklin still wanted to use different names at the two
locations, and that he would be submitting another application and supporting
documents for the "Broadway Sales", 1000 West Broadway location. On
February 26, 1990, Franklin submitted a new check for $300, which the
Department credited to his "Easy Money Check Cashing" application.
10. The Department never sent Franklin any letter stating that it was
waiting for his second application.
11. Franklin did continue to operate at both locations using the name
"Easy Money Check Cashing".
12. During the summer of 1990, Franklin called the Department and asked
where the license was. He was told that there was a delay in issuing
certificates, but that it would arrive shortly.
13. On October 29, 1990, McLean sent a letter to Franklin at the East
Lake Street address, indicating that his currency exchange license had been
approved, and the certificate was enclosed with the letter. Exhibit 2. The
letter went on to explain that the license would not expire until December 31,
1991, and would expire each December 31 thereafter. The reason for the delay
between the application and the actual issuance of the certificate had nothing
to do with Franklin individually -- the delay was caused by the Department
licensing currency exchanges for the first time, and it just took time to get
the process in place.
14. Sometime in January of 1992, the Department sent out a form letter
to Franklin, again at the East Lake Street address. Exhibit 3. The form
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letter indicates that all licensees must, by February 28, 1992, renew their
licenses. The form letter indicates that the licensee must sign, date and
return the form letter with a $50 check, that attached to the form letter
should be the exact name of the owner along with current position/title,
social security number and current residential address and phone number, as
well as a copy of the current fee schedule and a list of each location in
which business is conducted. The letter goes on to state that if the form
letter and renewal fee is not returned by February 28, 1992, the license will
lapse.
15. On February 18, 1992, Franklin signed the form letter in the space
indicated, and prepared a check for $50. Exhibit B. There is no drawer's
name or address printed on the check. Instead, handwritten on the check is
the following:
Easy Money Check Cashing Place
1000 W Broadway
Mpls., MN 55411
In the "Memo" line at the bottom left-hand corner of the check, there is
handwritten: 1992 currency exchange license. Franklin hand-delivered the
renewal form and check to Ms. McLean on or about February 19, but there was no
substantial conversation between them at that time.
16. Where the form letter requests the name, title, social security
number, etc. of the sole proprietor, there is written only "William J.
Franklin". Where the form letter requests a copy of the current fee schedule,
there is written "IOOO W Broadway - Mpls, MN 55411 529-9577". In other words,
the personal information on Franklin was incomplete because it did not include
his social security number, current residential address and phone number. The
current fee schedule was not attached. There was no list of each location
attached, but the appropriate location information for the West Broadway
operation was written on the form letter, albeit in the wrong space.
17. The form letter, along with the check, was returned to the
Department on or about February 19, well before the deadline of February 24.
18. The Department's records contain a copy of a letter, dated March 11,
1992, allegedly sent to Easy Money Check Cashing at the East Lake Street
address. Exhibit 4. This letter indicates that the renewal application and
$50 fee had been received, but that the application was deficient for failing
to fully answer the questions about personal identifying data, fee schedule,
and locations. The letter goes on to state that Franklin had until March 23
to complete the data, and that if it was not supplied by that date, the
license would lapse. Exhibit 4. There is no evidence in the record as to the
circumstances of mailing this particular letter. All that is known is that a
copy is in the Department's file.
19. Franklin never received the March 11 letter. He did not respond to
it in any way. The letter is addressed exactly the same way as the October 29,
1990 form letter was addressed, and the same way that the January 1992 renewal
notice was addressed. All three letters were addressed to 505 East Lake
Street, Minneapolis 55411. In fact, the zip code is incorrect. 55411 is the
correct zip code for the West Broadway address, but it is not the correct zip
code for the East Lake Street address. The correct zip code for the East Lake
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Street address is 55408. However, the October 1990 letter and the January
1992 letter used the wrong zip code, yet Franklin did receive both of them.
20. On January 14, 1992, Franklin entered into a management agreement
with a Chicago-based entity doing business as the Check Cashing Place, Inc.
Exhibit E. The management agreement, which is 14 pages in length, recites
that Franklin is doing business as Easy Money Check Cashing at 1000 West
Broadway in Minneapolis, and that Franklin is licensed by the Department of
Commerce at that location. The management agreement runs for a term of ten
years. Franklin received a $10,000 advance, and the total sum to be paid to
him (over a period of months) was to be $50,000.
21. On March 31, 1992, the Check Cashing Place, Inc. submitted an
application to amend its existing currency exchange license to add a new
location -- 1000 West Broadway in Minneapolis. Exhibit 5. Check Cashing
Place, Inc. had a license for a location on East Seventh Street in St. Paul.
and was seeking to amend that license to add the 1000 West Broadway location.
The cover letter, from a Chicago law firm, indicates that the Check Cashing
Place, Inc. had an option to acquire the check cashing business at the West
Broadway location, and intended to exercise the option.
22. In the course of processing the amendment application, the
Department discovered that there was not a current license in effect for the
1000 West Broadway location. An enforcement investigator for the Department
went to the location on June 23, 1992 and discovered that there was indeed a
check cashing business in operation there, operating under the name of Check
Cashing Place. Moreover, the enforcement investigator noticed that there was
a completely separate check cashing operation (operating under the name of
"The Unbank") immediately across the street. Later it was discovered that
there was yet another currency exchange within one-half mile of the West
Broadway location. During the 1992 legislative session, the Legislature had
passed amendments to the currency exchange law. These amendments, which
became effective on April 24, 1992, imposed a one-half mile separation
requirement for new places of business that began operating on or after that
effective date. Laws of Minnesota 1992, ch. 504, 2, subd. 2. Moreover, the
1992 legislation also prohibited a licensee from entering into a management
agreement for a currency exchange business. Id., subd. 3.
23. On July 21, 1992, a Cease and Desist Order was issued to the Check
Cashing Place, Inc. at 1000 West Broadway and to the Check Cashing Place, Inc.
through its Chicago attorneys. Exhibit 7. The Cease and Desist Order is
based on the Department's position that there was no license for the 1000 West
Broadway location, and that the currency exchange business in operation there
was in violation of the licensing law.
24. On July 22, the Department sent a letter to the Check Cashing Place,
Inc. through its Chicago attorneys, indicating that the March license
amendment application was denied because of the one-half mile spacing
limitation. Exhibit 6.
25. A request for a hearing was made within the 30 days required by the
statute. Notice of and Order for Hearing, paragraph 2.
26. On August 3, 1992, Franklin visited the Department's enforcement
investigator to protest the Cease and Desist Order. He indicated that he had
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always been properly licensed for the West Broadway location. However,
Franklin could not produce any license certificate or documentation (other
than his explanation of the foregoing events) to support his claim.
27. On August 19, 1992, the Department issued a Cease and Desist Order
to Franklin, d/b/a Easy Money Check Cashing, at 505 East Lake Street. The
Order finds that Franklin is not licensed at that location, and that he does
not own the real estate or operate any business there. Attachment I to
January 19 Memorandum of Michael A. Sindt. There was no appeal from this
Order.
28. On September 17, 1992, the Department issued a third Cease and
Desist Order. This Cease and Desist Order was issued to William J. Franklin,
d/b/a Broadway Sales and/or Gamble's Furniture at the 1000 West Broadway
address. ID, Attachment 2. This Order appears to be designed to respond to
the suggestion that the currency exchange operation at 1000 West Broadway was
only "incidental to primary business", which is part of an exemption from the
licensing requirements in the statute. The Order alleges various facts
regarding the relationship between the furniture business and the check
cashing business, and concludes that the check cashing business is not
incidental to the primary business, and thus the exemption is not available.
There was no appeal from this Order.
29. On August 10, 1992, Franklin entered into a plea agreement with the
United States Attorney for the District of Minnesota. Franklin agreed to
enter a plea of guilty to a charge of assisting in the structuring of a July
1989 transaction to avoid currency transaction reporting requirements, in
violation of Title 31, U.S. Code, 5324(3) and 5322(a). Franklin claims that
one of his employees was the wrongdoer, and that he did not condone or
encourage her at all.
Based upon the foregoing Findings, the Administrative Law Judge makes the
following:
CONCLUSIONS
1. That the Commissioner of Commerce and the Administrative Law Judge
have jurisdiction in this matter pursuant to Minn. Stat. 45.027, subd. 5
and 14.57 - 14.69.
2. Timely notice of the hearing was given, and the Department has
complied with all other substantive and procedural requirements of law and
rule.
3. That William J. Franklin does have standing to contest the Cease and
Desist Order issued to The Check Cashing Place, Inc. on July 21, 1992 and the
denial of the license application on July 22, 1992. See Memorandum.
4. That the currency exchange operation at 1000 West Broadway was never
licensed by the Department.
5. That the Department is not equitably estopped from asserting that
the location at 1000 West Broadway was never properly licensed.
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6. That even if the Department were equitably estopped, and the
location at 1000 West Broadway were determined to have been licensed up to
December 31, 1991, Franklin's attempt at renewal was properly denied by the
Department because he failed to supply all of the required data, and thus any
such license did lapse on December 31, 1991.
7. That the Cease and Desist Order dated July 21, 1992 was proper in
that it correctly alleged that the operation at 1000 West Broadway was not
licensed.
8. That The Check Cashing Place, Inc.'s application to add the location
at 1000 West Broadway was properly denied because of the separation
requirement.
Based upon the foregoing Conclusions, the Administrative Law Judge makes
the following:
RECOMMENDATIONS
1. That the Cease and Desist Order of July 21, 1992 be made permanent;
and
2. That the denial of The Check Cashing Place, Inc.'s application for a
new location at 1000 West Broadway be affirmed.
Dated this 10th day of March, 1993.
ALLAN W. KLEIN
Administrative Law Judge
NOTICE
Pursuant to Minn. Stat. 14.62, subd. 1. the agency is required to serve
its final decision upon each party and the Administrative Law Judge by first
class mail.
Reported: Tape Recorded.
MEMORANDUM
The easiest way to understand this tangled web of misunderstandings and
mistakes is to go through them chronologically.
The initial question which must be asked is whether or not the Department
is equitably estopped from denying that Franklin was licensed at 1000 West
Broadway on the basis of his conversation with Ms. McLean in January or
February of 1990. Although I believe that Franklin ended up asking her to
license both locations under one name in order to avoid having to pay two
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fees, McLean did not understand it that way, and proceeded as if Franklin
would soon be submitting a second application and paying the double fee. This
is confirmed by the fact that Franklin only paid $300, rather than $350, and
the fact that Franklin never received a certificate for the 1000 West Broadway
address.
This is not a situation where a governmental employee has given out false
information or an incorrect interpretation of the law, and a member of the
public relied upon it to his detriment. See , for example, Department of Human
Services v. Muriel Humphrey Residences, 436 N.W.2d 110, 118 (Minn. App.
1989). Nor is it a case where governmental silence or inaction is wrong
because there was a duty to speak. Su, New Ulm Telcom, Inc., 399 N.W.2d 111
(Minn. App. 1987). Instead, this is a case where there was a simple failure
of communication. Franklin was communicating one thing, but McLean heard
something else. In such a case, equitable estoppel is not appropriate.
Regardless of the equitable estoppel situation with regard to the initial
license, the renewal form was never properly filled out and thus any license
that may have existed for the 1000 West Broadway location did lapse. The
Department claims to have sent a letter to Franklin, outlining the
deficiencies and setting a new deadline for the submission of a complete
application. Franklin never received the letter. Although the letter bore
the wrong zip code, that error had not prevented the receipt of two previously
letters which were similarly addressed. There is a rebuttable presumption
that a letter, properly addressed with postage prepaid, was received by an
addressee if the sender demonstrates proper mailing of the document through
evidence of habit or custom, coupled with some evidence that these procedures
were complied with in the particular instance. See , for example, Thomas v.
Fey", 405 N.W.2d 450 (Minn. App. 1987). In that case, there was a dispute
about whether or not a document was actually received by the addressee. The
sender kept a copy, which bore a handwritten notation, "8-7-86 il", which a
trial judge assumed was the date which the document was actually mailed by a
clerk with the initials "il". The Court of Appeals held that this evidence
was inadequate to create a presumption of receipt in the face of testimony
from the addressee that it was not received. In the case of Nafstad v.
Merchant, 303 Minn. 569, 570-71, 228 N.W.2d 548, 550 (1975), the court noted
that there must be some evidence that the ordinary custom or habit was
complied with in the particular instance of the document at issue. In other
words, it is not enough to say that the Department's licensing agency
routinely places outgoing correspondence in an envelope, runs it through a
postage meter, and places it in a tray for pickup by a mail person. In
addition, there must also be testimony that in the case of the particular
letter at issue, these steps were followed, in order to invoke the
presumption. There was no such evidence in the record regarding the March 11
letter.
Franklin's position, that he never received the letter, is buttressed by
the circumstances of its contents. The materials which it requested from
Franklin was all simple and straightforward. It was certain personal
identifying data (which he had already supplied in his initial application), a
copy of the fees which he charged his customers for cashing checks, and a list
of locations where he operated. All of this information had already been
supplied to the Department at one time or another, and there is no logical
reason why Franklin could not have supplied it again. Given the fact that he
had already received some cash in connection with the management agreement,
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and the fact that he was scheduled to continue to receive additional payments
over a period of months, it makes no sense for him not to take the easy steps
demanded in the letter in order to keep his license current. But while it has
been found that the letter was not received by Franklin, that does not mean
that his renewal application was complete, or that the Department must renew
him. If Franklin had somehow indicated on his renewal form that there was no
change from the original application for any of the requested information, he
would be on firmer footing in saying the Department was being unreasonable.
For example, when the form requests a copy of his current fee schedule, he
could have written something like "no change from original schedule already
submitted" or something to that effect. But he did not. The Department has
no way of knowing whether or not his fees have changed. While certainly the
reasonable thing to do would be for the Department to send him a letter or
contact him by telephone, the ultimate burden is on Franklin to supply the
requested information. Therefore, Franklin was not licensed, and the Cease
and Desist Order was properly issued, and should be made permanent.
At the start of the hearing, Mr. Sindt moved for a default judgment on
the grounds that The Check Cashing Place, Inc. did not appear at the hearing.
Mr. Tigue responded that Mr. Franklin was a real party in interest, and could
properly appear and contest the Cease and Desist Order, both on his own behalf
and on behalf of The Check Cashing Place, Inc. because of the Management
Agreement between the two. The Administrative Law Judge ruled that he would
take the motion under advisement, and that the hearing would go forward.
The Motion for a default judgment is properly denied because of the
Managemnt Agreement between Franklin and The Check Cashing Place, Inc.
("CCP"). In that Agreement, Franklin agrees to maintain his license in his
name for the term of the Agreement (ten years). With regard to the currency
exchange operation at 1000 West Broadway, Franklin was the licensee and CCP
was his agent. While the Order was issued to CCP, not Franklin, Franklin is
entitled to assert CCP's interest, as well as his own, in the proceeding. The
underlying purpose of the doctrine of standing is to assure that there is a
sufficient case or controversy between the parties so that the issue is
properly and competently presented. See, for example, Twin Ports
Convalescent, Inc. v. Minnesota State Board of Health, 257 W.W.2d 343 (Minn.
1977). Clearly, Franklin did vigorously assert both interests at the
hearing. A secondary reason for the standing doctrine is to assure a party
that he will not be subjected to multiple claims for the same relief. That
will not happen in this case. CCP was named in the Order, and allowed
Franklin to appear. As such, in light of their contractual arrangement in the
Management Agreement, they are bound by the results of this proceeding. There
will not be multiple proceedings. Therefore, there was no default by CCP.
A.W.K.
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