Court Opinion

ID: 9537504
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:19:12.503203+00
Date Added: 2024-06-11T14:56:43.958452
License: Public Domain

McCLINTOCK, Justice,
dissenting, with whom ROSE, Justice, joins.
I do not say that it was improper for the state examiner to seek further information in this case. That right was expressly conferred upon him by the then applicable statute, § 13-44(c), W.S.1957 (now repealed), which required him “to inquire” into the various aspects of the charter application, including the “convenience and needs of the community to be served by the proposed corporation,” and declared him to be the “sole judge as to whether or not the charter shall be granted.” However, of equal pertinence is the direction of the Wyoming Administrative Procedure Act that one presiding at a hearing in a contested case shall not directly or indirectly consult with outside persons “except upon notice and opportunity for all parties to participate.” Section 9-4-111, W.S.1977. (Emphasis added.) The majority of this court mildly disapprove the examiner’s independent investigation, terming it “unwise”, but hold that it was not misconduct as that term is used in Rule 12.08 WRAP, permitting the reviewing court to take supplemental evidence in cases “involving misconduct of some person *303engaged in the administration of the law affecting the decision.” I disagree.
What has happened in this case is that the examiner, being dissatisfied with the state of the record as developed at the adversary hearing, took it upon himself to make an independent investigation. But he neither gave notice to the parties of his intention nor an opportunity to participate. He did not submit a report on the facts which he found and there was no possibility for the protestant to test the reliability of facts so found or to present evidence in rebuttal thereof. This was a material departure from the examiner’s own actions considered by this court in First National Bank of Thermopolis v. Bonham, Wyo., 559 P.2d 42 (1977). In that case the examiner had given notice of his intention to have his senior examiner make further investigation and although he did not invite the parties to participate, he did furnish them with a report of the findings and permitted cross-examination thereon, as well as the right to present evidence in rebuttal of such findings. This court in a divided opinion sustained the allowance of the charter, but with this observation:
“ . . .As long as it [the investigation] is not done secretly, the information gained is made available to the parties and an opportunity to rebut afforded, we can detect no difference as to when it is done.” (Emphasis added.) 559 P.2d at 46.
While the examiner did in the present case talk with persons connected with the protesting bank so that it cannot be said that the investigation was made secretly, it is also true that he never orally or in writing presented protestants with the information which he gathered and they had no opportunity whatsoever to rebut. Such a procedure is directly condemned in Interstate Commerce Commission v. Louisville and Nashville Railroad Company, 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431 (1912). When the Commission’s decision was attacked in court the government attempted - among other things to sustain action of the Commission on the basis of information independently gathered by it, even though not formally presented at the hearing. The court recognized the importance of the Commission’s investigative functions, but said (227 U.S. at 93, 33 S.Ct. at 187-88):
“ . . . [T]he more liberal the practice in admitting testimony, the more imperative the obligation to preserve the essential rules of evidence by which rights are asserted or defended. In such cases the Commissioners cannot act upon their own information as could jurors in primitive days. All parties must be fully apprised of the evidence submitted or to be considered, and must be given opportunity to cross-examine witnesses, to inspect documents and to offer evidence in explanation or rebuttal. In no other way can a party maintain its rights or make its defense. In no other way can it test the sufficiency of the facts to support the finding; for otherwise, even though it appeared that the order was without evidence, the manifest deficiency could always be explained on the theory that the Commission had before it extraneous, unknown but presumptively sufficient information to support the finding.”
There are many authorities that condemn the procedure followed by the examiner in this case. One illustrative case cited by appellant is Ohio Bell Telephone Company v. Public Utilities Commission of Ohio, 301 U.S. 292, 300, 57 S.Ct. 724, 729, 81 L.Ed. 1093, (1937), where the Commission sought to use information which it had acquired over the years but which was not put in evidence. The court said:
“ . . . The putative debtor does not know the proofs today. This is not the fair hearing essential to due process. It is condemnation without trial.”
The Supreme Court of California, in English v. City of Long Beach, 35 Cal.2d 155, 217 P.2d 22, 24,18 A.L.R.2d 547 (1950), said:
“ . . The action of such an administrative board exercising adjudicatory functions when based upon information of which the parties were not apprised and which they had no opportunity to controvert amounts to a denial of a hear*304ing. [Citing cases.] Administrative tribunals which are required to make a determination after a hearing cannot act upon their own information, and nothing can be considered as evidence that was not introduced at a hearing of which the parties had notice or at which they were present. [Citing cases.]”
Two expressions of the New Jersey courts are pertinent. In the first, Giordano v. City Commission of City of Newark, 2 N.J. 585, 67 A.2d 454 (1949), the Supreme Court said:
“No determination can be permitted to rest upon undisclosed findings or information dehors the record. If such could be, the parties would be denied the essence of a hearing, they would be kept in ignorance of the things controlling the action of the board, and due process would be flouted. The rights of the parties can only be protected, both in the trial tribunal and on review, by a full disclosure on the record of the facts relied upon for the board’s findings.”
In New Jersey State Board of Optometrists v. Nemitz, 21 N.J.Super. 18, 90 A.2d 740, 745 (1952) the Appellate Division of the Superior Court said:
“The very essence of due process is the opportunity to hear and controvert the evidence upon which the issue presented is to be decided. Factual knowledge on that issue, expert or otherwise, of the triers of the facts, is not evidence and cannot form the basis in whole or in part of the ultimate judgment. Morgan v. U. S., 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288 (1936).”
If the decision has been arrived at through improper action of the administrative agency, the question is not whether there is evidence in the record that would sustain the decision. Whatever were the facts sought out and developed by the examiner, it is clear that they were material to his decision and played an important part therein. This is established by the examiner’s own affidavit submitted to the district court. He there states that he would have been delinquent in his duties had he not made the investigation; that the trip was “necessary to clarify matters of location, ownership and community development”; that upon his return to Cheyenne he again reviewed the transcript and summaries of counsel which, “with clarification received during Affiant’s visit to Buffalo was more meaningful.” He affirms that as a result of the trip he determined that “the location of the proposed bank was proper, that the proposed capital of the bank should be increased, and that more of the capital should be made available to resident directors. Affiant confirmed his conclusion that a third bank was needed in Buffalo.”
The evil in such procedures as were here followed by the examiner is pointed out in English, supra, 217 P.2d at 24:
“ . . . The fact that there may be substantial and properly introduced evidence which supports the board’s ruling is immaterial. Cf. Ohio Bell Tel. Co. v. Public Utilities Comm., 301 U.S. 292, 57 S.Ct. 724, 81 L.Ed. 1093. A contrary conclusion would be tantamount to requiring a hearing in form but not in substance, for the right of a hearing before the administrative tribunal would be meaningless if the tribunal were permitted to base its termination upon information received without the knowledge of the parties. A hearing requires that the party be apprised of the evidence against him so that he may have an opportunity to refute, test, and explain it, and the requirement of a hearing necessarily contemplates a decision in light of the evidence there introduced.”
I do not think it necessary for this court to reach the question whether there may have been a failure to afford constitutional due process. Without attempting a lengthy analysis of the objections to permitting an administrative agency to act upon its own information, not disclosed to the contesting parties, it is my conclusion that federal and state administrative procedure acts uniformly condemn such action. Section 9-4-111, W.S.1977 is the Wyoming legislature’s attempt to prevent such action and to insure the fullest type of adversary hearing. *305The examiner proceeded in violation of that statute and our Rule 12.08 WRAP permits the question to be raised independently in the district court.
I would not want to be understood as saying that such violation of the express mandate of the statute amounts to conduct justifying removal from office as was the question in People ex rel. Emerson v. Shawver, 30 Wyo. 366, 222 P. 11 (1924), and which decision appears to be the only one of this court dealing with definitions of misconduct. However, I consider the examiner’s action to be within the Webster definition of misconduct as mismanagement of governmental responsibilities. In Citizens’ Insurance Co. of Pittsburgh v. Marsh, 41 Pa. (Wright) 386, 394 (1861) it is said that “[m]isconduct is a violation of definite law.” It has also been said that the term does not necessarily imply corruption or criminal intent. Kesling v. Moore, 102 W.Va. 251, 135 S.E. 246, 249 (1926).
Carroll v. Alabama Public Service Commission, 281 Ala. 559, 206 So.2d 364 (1968) appears to me to be definitely in point. In that case two members of a three-man commission had issued a certificate of convenience to an applicant without consultation or meeting with the third member. The applicable statute, Tit. 48 § 82, Code 1940, provided that the Commission’s order should be. taken as prima facie j'ust and reasonable and “ ‘[n]o new or additional evidence may be introduced in the circuit court except as to fraud or misconduct of some person engaged in the administration of this title and affecting the order.’ ” 206 So.2d at 366. The successful applicant argued to the reviewing court that the word “misconduct” as used in the statute was tantamount to fraud. That court disagreed and found that the failure of the Commission to act as a body constituted prejudicial error. Upon appeal the Supreme Court affirmed the reversal of the Commission order. Several definitions of misconduct are set forth in the opinion, including, “in usual parlance, a transgression of some established and definite rule of action.” The court then held:
“It was misconduct for two members of the Commission to issue a certificate of convenience and necessity without meeting as a body and failing to notify the third member of the Commission that they were going to pass on and decide the matter.”
In the case before us the examiner has violated a definite statutory requirement in that he has made his own investigation without inviting the interested parties to participate and in failing to make any report as to what he found in that investigation and permit cross-examination and rebuttal concerning it. This violation has not been approved by the majority but their conclusion that no misconduct was involved places an undue limitation on our rule permitting introduction of evidence of misconduct.
I have no quarrel with the general principle that “objections to the [procedures] of an administrative agency be made while it has opportunity for correction in order to raise issues reviewable by the courts,” United States v. L. A. Tucker Truck Lines, Inc., 344 U.S. 33, 37, 73 S.Ct. 67, 69, 97 L.Ed. 54 (1952), and I would agree with the further statement therein that,
“ . . . Simple fairness to those who are engaged in the tasks of administration, and to litigants, requires as a general rule that courts should not topple over administrative decisions unless the administrative body not only has erred but has erred against objection made at the time appropriate under its practice.” (Emphasis added.)
To me, the italicized portion of this last quotation presents the crux of our problem. The question is, has Wyoming Bank & Trust Company failed to object to the improper procedure of the examiner at a time appropriate under the practice of the examiner. That practice must be consistent with the statutes of the state and the rules of this court. The only rule that I have been able to find is the rule that the district court may hear evidence concerning charges of misconduct. This rule is based on the practical view that there is little point in *306arguing to someone who is proceeding in an improper manner that his actions amount to misconduct. As expressed in 2 Cooper, State Administrative Law, p. 623,
“If the proposed additional evidence is offered in an attempt to establish that the agency utilized improper procedures that are not disclosed by the administrative record, it would scarcely be fitting to ask the agency to hear and pass upon proofs of such alleged irregularities committed by the agency itself. The Revised Model Act, in recognition of the difficulty, provides: ‘In cases of alleged irregularities in procedure before the agency, not shown in the record, proof thereon may be taken in court.’ Such provisions are found in many of the state statutes.”
Our state has not adopted such a statute but I can find no real difference between our Rule 12.08 WRAP and the model statutory provision as quoted by Professor Cooper.
In my opinion the appellant timely presented its claim of misconduct on the part of the examiner in the manner contemplated by our rule. I believe that it was entitled to full development of the facts. I therefore am of the opinion that the district judge has committed error in rejecting such evidence and has sustained the examiner’s issuance of the application without full knowledge of facts that might have a material and important bearing upon the propriety of his procedures.
I would therefore reverse the case and remand the same with directions to proceed to take full evidence concerning the investigation conducted by the examiner, including examination of the examiner himself.