Opinion ID: 1908480
Heading Depth: 1
Heading Rank: 7

Heading: Exercise of Judicial Power by an Administrative Agency

Text: The landlords contend that the lower court was correct in finding certain provisions of Chapter 93A unconstitutional as vesting in an administrative body judicial powers reserved exclusively to the courts by Article IV, § 1 of the Maryland Constitution, which provides in pertinent part: The Judicial power of this State shall be vested in a Court of Appeals, and such intermediate courts of appeal, as shall be provided by law by the General Assembly, Circuit Courts, Orphans' Courts, such Courts for the City of Baltimore, as are hereinafter provided for, and a District Court; all said Courts shall be Courts of Record, .... The powers conferred on the Commission found by the lower court to be violative of Article IV, § 1 were these: (1) to impose a civil penalty not exceeding $1,000; (2) to award money damages not exceeding $1,000; (3) to award payments for temporary substitute housing; (4) to terminate leases; (5) to order repairs; (6) to order the return of security deposits and rental monies paid. [11] The Council contends that these powers are not judicial powers reserved to the Courts, but rather are adjudicatory and quasi-judicial functions which constitutionally can be delegated to an administrative agency. The difference between the position of the Council and that of the landlords is more than a mere semantic one; it involves concepts that go to the essence of the still developing law of administrative agencies. Seldom has the precise issue now before us  i.e., the limits of adjudicatory powers which can, within the Maryland Constitution, be conferred on an administrative agency  been adjudicated in this State. In Solvuca v. Ryan & Reilly Co., 131 Md. 265, 101 A. 710 (1917), we upheld the then newly enacted Workmen's Compensation Act. The basic scheme of that Act created a commission to hold hearings, with the power to compel the appearance of witnesses and the production of documents (enforceable by the Circuit Court) and determine compensation for injured workmen in certain circumstances according to the schedule contained in the Act. Employers were required to secure the payment of compensation, as provided in the Act, in one of three ways: (1) by insuring through the state accident fund; (2) insuring through an authorized insurance company; (3) furnishing the commission with satisfactory proof of ability to pay such compensation and depositing a sufficient amount with the commission. Appeal was allowed to the circuit courts and then to the Court of Appeals. In finding no constitutionally impermissible delegation of judicial power, we quoted with approval from Borgnis v. Falk Co., 147 Wis. 327, 358, 133 N.W. 209, 219 (1911): ... [the Commission administering the Workmen's Compensation law] is an administrative body or arm of the government, which in the course of its administration of a law is empowered to ascertain some questions of fact and apply the existing law thereto, and in so doing acts quasi-judicially; but it is not thereby vested with judicial power in the constitutional sense. We then adopted a similar position, holding, 131 Md. at 284, 101 A. at 716: The Workmen's Compensation Law, which was passed in the exercise of the police power of this State, creates a commission known as the State Industrial Accident Commission to administer the provisions of the Act. In the discharge of its duties and the exertion of its powers it is required to exercise judgment and discretion, and to apply the law to the facts in each particular case, but it is clear that the Legislature never intended to constitute the Commission a Court, or to confer upon it the judicial power of the State within the meaning of the constitutional provision referred to. In Mattare v. Cunningham, 148 Md. 309, 129 A. 654 (1925), we reiterated our holding in Solvuca that the Workmen's Compensation Act did not violate Article IV, § 1, further noting that the Commission created thereunder had no power to enforce its awards. Subsequent cases have involved less direct challenges to the exercise of administrative power, by questioning the consequences which flow from granting quasi judicial powers to various boards. In Dal Maso v. Board of County Commissioners, 182 Md. 200, 34 A.2d 464, 466 (1943), in the course of deciding that the actions of the Montgomery County Commissioners sitting as the District Council, were not res judicata, we noted: There is some confusion as to the nature and character of these administrative boards, and there are many opinions and text writers who refer to them as quasi-judicial. They do hear facts, and based on them, make decisions, but those decisions are not judgments or decrees. If their findings, resolutions, or orders are resisted or ignored, they must call on the courts to enforce them. Administrative boards and officials are arms and instrumentalities of the Legislature, and are not judicial at all; they belong to and derive all their authority from the legislative branch under our form of government. In this State, all judicial authority is only such as is provided for by Article 4 of the Maryland Constitution, and it has been decided that only judicial functions can be exercised which find their authority in that Article ..., and that no court not coming within its provisions can be established in this State. This forbids any power in the Legislature to clothe administrative boards with any judicial authority. There may be states in which it can be done, but Maryland is not one of them. Cases subsequent to Dal Maso have tempered but not overruled that holding. In Hecht v. Crook, 184 Md. 271, 277, 40 A.2d 673, 675 (1945), decided two years after Dal Maso, we said: This court pointed out in the recent case of Dal Maso v. County Comm'rs, 182 Md. 200, 34 A.2d 464, that the latter term [(quasi judicial)] does not imply any power in the Legislature to clothe administrative boards with judicial authority. Nevertheless, the fact remains that innumerable controversies are decided today, by boards of legislative creation, of a character that traditionally fell within the scope of judicial inquiry. Heaps v. Cobb, 185 Md. 372, 379, 45 A.2d 73, 76 (1945) noted in a similar vein: Administrative boards in general may be said to act in a quasi judicial capacity insofar as they have the duty to hear and determine facts and, based on them, to make decisions.... the boards, however, are not clothed with judicial authority, which the legislature has no power to confer upon them, Article 4, Md. Constitution; Dal Maso v. Board, etc., 182 Md. 200, 34 A.2d 464, and their decisions, when they impair personal or property rights, are not irreviewable. The legislature is without authority to divest the judicial branch of the government of its inherent power to review actions of the administrative boards shown to be arbitrary, illegal or capricious, and to impair personal or property rights; but the courts are likewise without authority to interfere with any exercise of the legislative prerogative within constitutional limits, or with the lawful exercise of administrative authority or discretion. These and other cases led the court in Schultze v. Montgomery County Planning Board, 230 Md. 76, 80, 185 A.2d 502, 504 (1962) to conclude that the Planning Board's duties of determining facts necessitated its exercising a quasi-judicial function, and to note: Many cases since Dal Maso v. County Comm'rs, 182 Md. 200, 34 A.2d 464 (1943), have made it clear that notwithstanding anything therein said, administrative bodies or officers may exercise such power. The holding in Schultze was approved in Hyson v. Montgomery County Council, 242 Md. 55, 64, 217 A.2d 578, 584-85 (1966), that case identifying the quasi-judicial function as ... resolv[ing] disputed questions of adjudicative facts (as contradistinguished from legislative facts or judicial action ) concerning particular parties. By the time of Public Service Commission v. Hahn Transportation, Inc., 253 Md. 571, 253 A.2d 845 (1969), we no longer found it necessary to distinguish Dal Maso, saying at 253 Md. at 580, 253 A.2d at 850: Beyond question the Public Service Commission exercises quasi-judicial functions when on a record before it, consisting of pleadings, ... exhibits and testimony which later may undergo judicial scrutiny, it must after oral and written arguments determine adjudicative facts and choose the applicable law to produce a decision. This gradual relaxation of the tension between Article IV, § 1 and the practical exigencies of administrative bodies has been largely justified by reservation of ultimate authority in the courts. In Burke v. Fidelity Trust Co., 202 Md. 178, 187-89, 96 A.2d 254, 260 (1953), we rejected the contention that the Bank Commissioner, empowered in certain bank mergers to effect a final and binding valuation of dissenting stockholders' shares (a function previously reserved to the courts), was thereby vested with judicial power. We there noted: The substitution of compulsory arbitration and administrative review for a judicial valuation is not beyond the constitutional power of the legislature, so long as there is an opportunity for court review to pass on the legality and due process aspects of the award. This theory is more fully explained in the historical development of administrative law so eloquently articulated by Chief Judge Hammond in State Insurance Commissioner v. National Bureau of Casualty Underwriters, 248 Md. 292, 298-300, 236 A.2d 282, 285-87 (1967): In the earlier days of the exercise of governmental powers by administrative bodies, there was widespread fear that the delegating of administrative, legislative and judicial powers or functions to a single agency not only violated the theory of separation of powers but spelled its death knell. Emotional resentment against the rise of administrative power by lawyers and judges rose and resulted in efforts to thwart or destroy this veritable fourth branch of government by invoking the separation of powers theory or using the nondelegation doctrine or requiring a full and complete de novo judicial determination. These efforts had no more success than had the plaintiff in the case of King Canute versus The Sea. Legislatures, national and state, steadily continued to increase administrative agencies and administrative power, 1 Davis, Administrative Law Treatise § 1.01 (1958), and as these agencies have proliferated they have come to legislate more than legislatures and to adjudicate more than courts. 1 Cooper, State Administrative Law, pp. 1-2 (1965), the author says: `In several states, as many as sixty or seventy independent agencies make rules and adjudicate contested cases affecting in varied ways the lives, health, fortunes, safety, labor, and the business of millions of citizens. At a conservative estimate [as of 1965], more than 2000 state administrative agencies are exercising legislative and judicial functions.' Judge Hammond then pinpointed the essential concern of those disturbed by the power delegated to administrative agencies: The early fears of the bar and bench have largely disappeared with experience. It became apparent that the complex problems of modern social, economic and industrial life for ever-increasing numbers of knowledgeable people could be solved or settled more expeditiously, effectively, cheaply and simply by administrative processes than by the traditional executive, legislative and judicial processes, because the blending of powers in one agency, which operates in its particular field or specialty continuously over the years and produces an expertise and a superior ability both correctly to evaluate specialized questions and to supply correct answers to these questions  often due largely to the staff of permanent, expert employees who serve under the successive heads of the agencies; and secondly, it was recognized that the dangers inherent in government by administrative bodies lie not in the blending of powers in a single body but in permitting that body's power to be beyond check or review. The checks on administrative power have been supplied. 1 Davis, op. cit. § 1.09, pp. 68-69, says that in the establishment and control of administrative agencies in recent decades: `   the principle that has guided us is the principle of check, not the principle of separation of powers. We have had little or no concern for avoiding a mixture of three or more kinds of power in the same agency; we have had much more concern for avoiding or minimizing unchecked power. The very identifying badge of the modern administrative agency has become the combination of judicial power (adjudication) with legislative power (rule making). But we have taken pains to see that the agencies report to and draw their funds from our legislative bodies, that the personnel of the agencies are appointed and reappointed by the executive, and that the residual power of check remains in the judiciary.' Judge Hammond then noted the response of this Court to the exercise of quasi-judicial power by administrative agencies: The courts have been alert to exercise their residual power to restrain improper exercises of administrative powers whether judicial or legislative in nature. If the legislature has not expressly provided for judicial review, a court will ordinarily utilize its inherent powers to prevent illegal, unreasonable, arbitrary or capricious administrative action. In Heaps v. Cobb, 185 Md. 372, 379, this Court said: `The legislature is without authority to divest the judicial branch of the government of its inherent power to review actions of administrative boards shown to be arbitrary, illegal or capricious, and to impair personal or property rights;   ,' and then quoted the opinion in Hecht v. Crook, 184 Md. 271, 280: `Courts have the inherent power, through the writ of mandamus, by injunction, or otherwise, to correct abuses of discretion and arbitrary, illegal, capricious or unreasonable acts; but in exercising that power care must be taken not to interfere with the legislative prerogative, or with the exercise of sound administrative discretion   .' Relying upon the clear rationale of the State Insurance Commissioner case, the Council contends that Montgomery County properly determined that the well-being of all its citizens would best be served by an administrative forum which, within certain limits regulates the apartment rental business and landlord-tenant relationships within the County. It was recognized, the Council asserts, that the problems currently existing in the field could within the precise language employed by us in State Insurance Commissioner, be solved or settled more expeditiously, effectively, cheaply and simply by administrative processes than by traditional executive, legislative and judicial processes, because the blending of powers in one agency ... produces an expertise and a superior ability both correctly to evaluate specialized questions and to supply correct answers ... 248 Md. at 299, 236 A.2d at 286. The constitutional doctrine of separation of powers is, generally speaking, not applicable to local government, Barranca v. Prince George's County, 264 Md. 562, 287 A.2d 286 (1972) and as the Maryland cases now indicate, the existence of that doctrine does not itself inhibit the delegation to an administrative agency of a blend of executive or legislative powers with powers judicial in nature; the determining factor is not so much the specific powers granted to the administrative agency, but rather the relationship of the courts to the exercise of that power. See Davis, Administrative Law § 2.13 (1970 Supp.); Brown, Administrative Commissions and the Judicial Power, 19 Minn. L. Rev. 261 (1935); 1 Am.Jur.2d Administrative Law § 154 (1962). Despite the preservation of judicial powers in the courts through the theory of checks, as adopted by this Court in the State Insurance Commissioner case, the landlords contend that the Commission has been delegated judicial power to effect the remedies expressly provided in the Act. They refer to five factors as indicia of judicial power: (1) the power to make a final rather than an initial determination; (2) the power to make binding judgments; (3) the power to affect the personal or property rights of private persons; (4) the exercise of power formerly held by a court; and (5) the fashioning of remedies which are judicial in nature. As to the first of these objections, it is clear that the Commission's determinations are not final, but always open to judicial review by an aggrieved party. In Johnstown Coal & Coke Co. v. Dishong, 198 Md. 467, 472-74, 84 A.2d 847, 850 (1951), we held that [t]he law is settled that ... questions of fact may be finally determined by an administrative agency so long as the courts retain their inherent power to assess the sufficiency of evidence to support such factual conclusions and to review the actions of administrative agencies which are illegal, arbitrary, unreasonable or which impair personal or property rights. Clearly, with the exception hereinafter noted, the provisions for judicial review provided in Chapter 93A are sufficient under the Dishong standard. [12] Second, the Commission does not make binding judgments of the kind that denote strictly judicial power, see, 1 Am.Jur.2d Administrative Law §§ 170, 173 (1962); the Commission has no power to force compliance with its orders. Court action, instituted by the County Attorney or the parties before the Commission, is always required. Third, while the Commission obviously has the power to affect property rights of private persons, both landlords and tenants, such power is delegated on the basis of the declared public interest in landlord-tenant relationships. 1 Am.Jur.2d Administrative Law § 171 (1962). Section 93A-1 contains the legislative finding of public interest similar to that which justified the initiation of an administrative procedure affecting the rights of private employers and employees (the Workmen's Compensation Act) approved by us in Branch v. Indemnity Insurance Co., supra . Fourth, the fact that the administrative procedure created by Chapter 93A permits the agency to adjudicate some matters formerly decided by the courts is not determinative. Indeed, this was in effect the situation approved by us in Burke v. Fidelity Trust Co., supra , and in Solvuca v. Ryan & Reilly Co., supra , and is consistent with powers granted innumerable administrative agencies functioning in this State. Fifth, and most strenuously pressed by the landlords, is the asserted fact that the remedies entrusted to the Commission's discretion are remedies exclusively reserved to the courts. Consistent with our decisions, hereinbefore set forth, we think the power to fashion such remedies, viewed in the context of Chapter 93A, is more properly classified as quasi-judicial, or as described in Hyson v. Montgomery County Council, supra, 242 Md. at 62, 217 A.2d at 583, a power not purely and completely judicial ... in nature, but hav[ing] qualities or incidents resembling ... [such power]. Courts in other jurisdictions have recognized that administrative agencies, if they are to effectively fulfill the purposes for which they were created, may constitutionally be vested with broad remedial powers. In Jackson v. Concord Co., 54 N.J. 113, 126, 253 A.2d 793, 800 (1969), involving an administrative agency charged with enforcement of the State's antidiscrimination law, the court sustained the agency's award of compensatory damages for the economic loss suffered by the person discriminated against, stating: Initially, we may say that, at this advanced date in the development of administrative law, we see no constitutional objection to legislative authorization to an administrative agency, to award, as incidental relief in connection with a subject delegable to it, money damages, ultimate judicial review thereof being available. In Massachusetts Commission Against Discrimination v. Franzaroli, 357 Mass. 112, 256 N.E.2d 311 (1970), a statutory provision in an antidiscrimination law was approved which empowered the administrative agency to award damages not exceeding $1,000 for expenses incurred by the complainant for obtaining alternative housing or space, for storage of goods and effects, for moving and for other costs actually incurred by him. To like effect, see Williams v. Joyce, 4 Or. App. 482, 479 P.2d 513 (1971) and Zahorian v. Russell Fitt Real Estate Agency, 62 N.J. 399, 301 A.2d 754 (1973). In State v. Bergeron, 290 Minn. 351, 187 N.W.2d 680 (1971), the court approved an administrative order which compelled cancellation of a transfer of property made in violation of the State's antidiscrimination statute and required that the property be offered for sale to the complainant. The Supreme Court of Washington, in Rody v. Hollis, 81 Wash.2d 88, 500 P.2d 97 (1972), upheld an administrative award of damages for discrimination in a housing transaction; in approving the granting of administrative discretion to fix the amount of the award up to $1,000, the court said: All that can, and should, be done is to define the conduct sought to be punished, or the injury to be compensated, set out the normally acceptable limits of punishment or compensation, and then allow the adjudicative body to determine the appropriate punishment or compensation by applying general principles of morality and traditional concepts of justice. (500 P.2d at 100). In Ford v. Environmental Protection Agency, 9 Ill. App.3d 711, 292 N.E.2d 540 (1973), the court approved an order of the Pollution Control Board assessing a $1,000 civil penalty against the owner of a solid refuse disposal site found to be in violation of statute and the rules of the agency. There, the law authorized the Board to impose such monetary penalties not to exceed $10,000. In rejecting the argument that the power to impose such a civil penalty was a judicial power which could not be conferred upon an administrative agency, the court stated, 292 N.E.2d at 544 that an administrative officer or agency may penalize, without offending the constitution when the penal function is incidental to the duty of administering the law. The court said: Although the essentially legislative and judicial powers cannot be delegated, we believe it implicit in the authorities that where direct or immediate judicial action is inexpedient or impractical, quasi-judicial functions may be conferred upon and exercised by an administrative agency, provided the laws conferring such powers are complete in their content; are designed to serve a general public purpose; are such as to require a consistent and immediate administration; and further provided that all administrative actions are subject to judicial review. (292 N.E.2d at 543-44). While administrative impositions of civil penalties are commonplace within the State and Federal government structures (see 1 Davis, Administrative Law, § 2.13 (1959), the 1970 Supplement thereto, and cases cited) not all states agree that administrative agencies may constitutionally be empowered to impose civil monetary penalties for violations of law or of the rules of the agency. See, for example, State ex rel. Lanier v. Vines, 274 N.C. 486, 164 S.E.2d 161 (1968) holding unconstitutional, as a delegation of judicial power, authority vested in the Commissioner of Insurance to determine the amount of a civil monetary penalty; and Broadhead v. Monaghan, 238 Miss. 239, 117 So.2d 881 (1960), holding that in the absence of a definite legislative standard, an administrative agency could not constitutionally be vested with discretionary power to impose a tax delinquency penalty of not less than 10% nor more than 25% of the delinquent amount. Compare Wycoff Co. v. Public Service Commission, 13 Utah 2d 123, 369 P.2d 283 (1962), upholding the imposition of a civil penalty assessed by the Public Service Commission under a statute authorizing a penalty of not less than $500 nor more than $2,000 for each statutory violation. See also 1 Am.Jur.2d Administrative Law, § 173. [13] We think the grant of remedial powers to the Commission to award money damages, terminate leases, order repairs and the return of security deposits and rental monies paid, and to award funds for temporary substitute housing does not constitute an invalid delegation of judicial power to an administrative agency in violation of the Maryland Constitution. As to the granting of these powers, we are in full agreement with the Council's observation that (T)he pivotal point in determining the permissible extent of delegable adjudicatory functions is not merely their inherent nature but the context of the regulatory scheme and the enforcement procedure provided by the administrative process. We think it plain that the function of the Commission is primarily administrative and the power vested in it to hear and determine controversies involving landlords and tenants is granted only as an incident to its administrative duty; in other words, the Commission's function is not primarily to decide questions of legal rights between private parties, but is merely incidental, although reasonably necessary, to its regulatory powers. See 1 Am.Jur.2d Administrative Law § 160. The power vested in the Commission by § 93A-9(c) to enforce the provisions of the Act by imposing a civil penalty not exceeding $1,000 for the violation of any provision of this Chapter is far more elastic than its power to award money damages to a landlord or tenant for actual loss suffered by reason of the Commission's finding of a defective tenancy. Indeed, it is readily apparent that the Commission has unrestricted, unbridled discretion in fixing the amount of the penalty, within broad limits, up to $1,000 without regard to the nature or gravity of the violation. While we conclude that the authority to impose a civil monetary penalty is not a power beyond constitutional delegation to an administrative agency, we think the discretion vested in the Commission to fix the amount of the penalty in any amount up to $1,000, for any violation of the Act, in the total absence of any legislative safeguards or standards to guide it in exercising its discretion, constitutes an invalid delegation of legislative powers and otherwise violates due process of law requirements. See Theatrical Corp. v. Brennan, 180 Md. 377, 24 A.2d 911 (1942), involving a statute which prohibited the holding of various types of public entertainment in Baltimore City without first paying a fee between $5 and $100 as set by the Police Commissioner; we there held the statute invalid because it did not provide any standard to control the Commissioner's discretion, there being nothing in the nature of the various types of public entertainment to provide meaningful guidance to the Commissioner or a means of reviewing alleged abuses of his discretion. See Cohen, Some Aspects of Maryland Administrative Law, 24 Md. L. Rev. 1, 6-7. We recognize, of course, that the trend of cases is toward greater liberality in permitting grants of discretion to administrative officials, particularly in the fields of public health and safety, in order to facilitate the administration of the laws as the complexity of governmental and economic conditions increase. Marek v. Board of Appeals, 218 Md. 351, 146 A.2d 875 (1958); Pressman v. Barnes, 209 Md. 544, 121 A.2d 816 (1956); Givner v. Commissioner of Health, 207 Md. 184, 113 A.2d 899 (1954). We hold here that because of the complete lack of any legislative safeguards or standards, the grant of unlimited discretion to the Commission to fix civil penalties in any amount up to $1,000 is illegal. No meaningful judicial review of the Commission's assessment of such penalties would appear possible in light of the unrestricted nature of the discretion sought to be vested in the Commission. In this connection, we note that judicial review of final actions of the Commission shall be by appeal to the Circuit Court for Montgomery County in accordance with the Maryland Rules of Procedure for a review of such action. §§ 93A-25 and 93A-45. Undoubtedly, the Council contemplated that review of the Commission's final action would be in accordance with Chapter 1100 of the Maryland Rules, Subtitle B, regulating appeals from administrative agencies, and authorizing the court to affirm, reverse or modify the action appealed from, remand the case to the agency for further proceedings, or dismiss the appeal as now or hereafter provided by law. Rule B12. While neither the Act nor the Rules explicitly specify the substantive test to be applied in reviewing agency determinations, and the Administrative Procedure Act (APA), Maryland Code, Article 41, §§ 244-256A, is not by its terms applicable to county administrative agencies, Urbana Civic v. Urbana Mobile, 260 Md. 458, 272 A.2d 628 (1971), we think the Council intended that the standard of judicial review be reconciled with that contained in § 255 (g) (1)-(5), inclusive, of the APA. See County Fed. S. & L. v. Equitable S. & L., 261 Md. 246, 274 A.2d 363 (1971). Section 255(g), insofar as pertinent, provides: The court may affirm the decision of the agency or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the administrative findings, inferences, conclusions, or decisions are: (1) In violation of constitutional provisions; or (2) In excess of the statutory authority or jurisdiction of the agency; or (3) Made upon unlawful procedure; or (4) Affected by other error of law; or (5) Unsupported by competent, material, and substantial evidence in view of the entire record as submitted; .... We thus conclude that, with the exception of the power to impose civil monetary penalties, all the remedial powers vested in the Commission by Chapter 93A are legal and constitutional. [14]