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General Principles
 

General Principles law respects form less than substance.”  (Civ. Code, § 3528.) Nationwide Asset Services v. DuFauchard

On their second point, plaintiffs do not present any authority precluding a court from engaging in the common equitable practice of using the handy adjective “constructive” in order to impute a legal effect to a set of circumstances that does not literally come within a rule.  If plaintiffs indeed have managed to “receive” the money of their customers in all but name, then their conduct is precisely that which the statute has targeted.  There would not be any reason to permit them to evade the statute’s salutary requirement of subjecting their practices to defendant’s licensing oversight for the protection of consumers.  “The law respects form less than substance.”  (Civ. Code, § 3528.)  It is no different than deeming an employer-induced resignation to be a “constructive” discharge in order to prevent the employer from making an end run around discrimination laws.  (Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1244-1245.)

     In light of this well-established legal principle, their complaint of a violation of “fundamental due process” must fail.  It cannot be entirely unanticipated that exercising control, even through a third party, over funds to which a customer has only limited access, will result in imputation of possession of the funds.  Therefore, the statute is not void for vagueness with respect to the actions it seeks to regulate (Personal Watercraft Coalition v. Marin County Bd. of Supervisors (2002) 100 Cal.App.4th 129, 138-139), nor is there any obstacle to the customary retrospective application of decisional law (Peterson v. Superior Court (1982) 31 Cal.3d 147, 161; but see Camper v. Workers’ Comp. Appeals Bd. (1992) 3 Cal.4th 679, 688-689 [a departure from customary retroactive effect of statute’s interpretation where unforeseen and would interfere with expectations in numerous cases), especially where plaintiffs were able presently to obtain a decision of defendant from 2004 (of which we take judicial notice pursuant to their motion) that indicated defendant has employed the concept of constructive receipt in its rulings:  “. . . Even if respondent thereafter transferred all client trust monies into accounts controlled by Acuity to which . . . respondent [does not] have [any] access, the . . . documents make it clear that respondent still retains control over both the negotiation of settlements and the disbursement of funds to pay them, and receives compensation for doing so.  [¶]  Acuity’s role, by contrast, is that of a mere ‘scribe.’  It receives its instructions from respondent, and not from the clients for whom it is holding funds.  It [does not have any] discretion to refuse respondent’s directions, except if there are insufficient funds to issue a payment as instructed.  Acuity simply serves as respondent’s agent; respondent continues to constructively receive and disburse funds in violation of Financial Code section 12200.”  (In re Positive Return, Inc. (Cal. Dept. Corps., Dec. 29, 2004, OAH No. N2004070225, pp. 8-9 <http://www.corp.ca.gov/OLP/pdf/oah/Positive.pdf> [as of July 15, 2008].)

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