411 N.W.2d 113 (S.D. 1987), 15390, Permann v. South Dakota Dept. of Labor, Unemployment Ins. Div.

CourtSupreme Court of South Dakota
Writing for the CourtThe opinion of the court was delivered by: Morgan
Citation411 N.W.2d 113
PartiesShirley A. PERMANN, Claimant and Appellant, v. SOUTH DAKOTA DEPARTMENT OF LABOR, UNEMPLOYMENT INSURANCE DIVISION, Appellee.
Date22 July 1987
Docket Number15390.

Page 113

411 N.W.2d 113 (S.D. 1987)

Shirley A. PERMANN, Claimant and Appellant,

v.

SOUTH DAKOTA DEPARTMENT OF LABOR, UNEMPLOYMENT INSURANCE

DIVISION, Appellee.

No. 15390.

Supreme Court of South Dakota.

July 22, 1987

Considered on Briefs April 21, 1987.

Page 114

Billy J. Jones, Dakota Plains Legal Services, Eagle Butte, and Krista Clark, Dakota Plains Legal Services, Mission, for claimant and appellant.

Drew C. Johnson, Sp. Asst. Atty. Gen., Unemployment Ins. Div., Aberdeen, for appellee.

MORGAN, Justice.

Claimant and appellant, Shirley Permann (Permann) appeals a decision of the circuit court that affirmed the decision of the Department of Labor (Department) which denied Permann unemployment insurance benefits. She was denied benefits for failing to make the employer contacts required for eligibility. We affirm.

Permann was employed as a school teacher for twelve years in Agar, South Dakota, prior to the school's closing in May of 1984. In June of 1984, Permann applied for and began receiving unemployment insurance benefits. During the succeeding ten months, Permann made numerous job contacts as required to be eligible for unemployment insurance compensation. Five of those contacts, however, were determined to be improper by Department and Permann was ordered to refund payments for those five weeks. Four of the claimed improper job contacts occurred when Permann went into her husband's tavern in Gettysburg, South Dakota, and acquired his signature as an employer on her job contact cards. The fifth contact involved the Brookings school system. As a practicing teacher, Permann was allowed to send resumes to various school systems rather than make in-person contacts. Permann sent a resume to the Brookings school system and received by return mail an application for employment. Permann failed to fill out this application and return it to the Brookings school system.

The issue heard by the hearing examiner was whether Permann adequately complied with the job contact requirements for receiving unemployment benefits under the provisions of SDCL 61-6-2(3) and ARSD 47:06:04:21. The hearing examiner's findings of fact and conclusions of law stated the five job contacts were improper and that Permann must refund the benefits. On appeal, the hearing examiner's decision was affirmed by the Secretary of Labor and the circuit court. Permann frames three issues for review as follows:

I. The Secretary's interpretation of SDCL Sec. 61-6-2(3) and ARSD 47:06:04:21, which places additional restrictions upon applicants for unemployment insurance benefits not contemplated under the statute and regulation, is an unwarranted exercise of discretion in violation of SDCL Sec. 1-26-36(6).

II. Even if the Secretary's interpretation of SDCL Sec. 61-6-2(3) and ARSD 47:06:04:21 is held to be correct, her decision is nevertheless clearly erroneous in light of the entire evidence in the record and is therefore, in violation of SDCL Sec. 1-26-36(5).

Page 115

III. The Secretary's decision that the claimed overpayment must be repaid because the claimant was at fault is, in light of the entire evidence in the record, clearly erroneous and therefore in violation of SDCL Sec. 1-26-36(5).

We believe that these issues, as framed by Permann, evidence confusion as to the correct standard of review applied in cases such as this. This confusion may have been brought on by the language of the statute. The decisions of this court may also have contributed to the confusion since in the past we have been unclear as to the correct application of the various standards of review.

Our statute dealing with a review of administrative procedures was enacted in 1966 and has been amended five times. SDCL 1-26-36 states as follows:

The court shall give great weight to the findings made and inferences drawn by an agency on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority of the agency;

(3) Made upon unlawful procedure;

(4) Affected by other error of law;

(5) Clearly erroneous in light of the entire evidence in the record; or

(6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

A court shall enter its own findings of fact and conclusions of law or may affirm the findings and conclusions entered by the agency as part of its judgment. The circuit court may award costs in the amount and manner specified in chapter 15-17.

One of the problems with SDCL 1-26-36 is that it does not specifically set out which standards of review listed in subsections (1) through (6) apply to the appropriate item being reviewed, i.e., findings, inferences, conclusions, or decisions. Furthermore, since a decision of the agency must necessarily include findings of fact and conclusions of law (each of which have been historically reviewed under different standards) it is confusing to mingle these terms as was done in SDCL 1-26-36.

SDCL 1-26-36 can be interpreted in several different ways as is evidenced by some of our recent decisions. Prior to the 1978 amendment of SDCL 1-26-36, this court applied a substantial evidence review to findings of fact by an agency. Application of Mont.-Dak. Util. Co., 278 N.W.2d 189 (S.D.1979). In 1978, that standard was replaced with the language "clearly erroneous in light of the entire evidence in the record." The case of State, Div. of Human Rights v. Miller, 349 N.W.2d 42 (S.D.1984), is often cited for its recitation of the standard of review used in administrative reviews. The Miller court specifically addressed the appropriate standard to be applied in the future and clearly indicated that agency findings of fact would be reviewed under the clearly erroneous standard. We have reiterated this holding in numerous other cases. Appeal of Jackpine Gypsies Motorcycle Club, 395 N.W.2d 593 (S.D.1986); Application of Northwestern Bell Tel. Co., 382 N.W.2d 413 (S.D.1986); S.D. Wildlife Federation v. Water Mgt. Bd., 382 N.W.2d 26 (S.D.1986); Matter of S.D. Water Mgmt. Bd., 351 N.W.2d 119 (S.D.1984); Weltz v. Bd. of Educ. of Scotland Sch. Dist., 329 N.W.2d 131 (S.D.1983).

Some of these same decisions, plus several others, seem to indicate, however, that the entire decision is reviewed under the clearly erroneous standard. Gratzfeld v. Bomgaars Supply, 391 N.W.2d 200 (S.D.1986); Application of Koch Exploration Co., 387 N.W.2d 530 (S.D.1986); Raml v. Jenkins Methodist Home, 381 N.W.2d 241 (S.D.1986); Application of Northwestern Bell Tel. Co., supra; Matter of S.D. Water Mgmt. Bd., supra; S.D. Wildlife Federation, supra; In re Application of Southern Hills Bank, 339 N.W.2d 310 (S.D.1983);

Page 116

Matter of Ackerson, Karlen & Schmitt, 335 N.W.2d 342 (S.D.1983); Dakota Harvestore v. S.D. Dept. of Revenue, 331 N.W.2d 828 (S.D.1983); Fraser v. Water Rights Commission, 294 N.W.2d 784 (S.D.1980). Still other cases indicate our standard of review of agency decisions should be a combination of SDCL 1-26-36(5) & (6). We have stated in three recent opinions: "We do not substitute our judgment for the agency's judgment on the weight of evidence pertaining to questions of fact unless the agency's decision is clearly erroneous, or is arbitrary, capricious, or characterized by an abuse of discretion or a clearly unwarranted exercise of discretion." Appeal of Templeton, 403 N.W.2d 398, 399 (S.D.1987) (emphasis added); Anderson v. Western Dakota Insurors, 393 N.W.2d 87, 90 (S.D.1986) (emphasis added); Deuter v. South Dakota Highway Patrol, 330 N.W.2d 533, 538 (S.D.1983). In S.D. Wildlife Federation, we initially stated that the decision would be reviewed under the clearly erroneous standard, but went on to review the board's decision to see if it was "clearly erroneous, arbitrary, an abuse of discretion, or in error as a matter of law." 382 N.W.2d at 31.

Standing out from these somewhat confusing decisions are the cases of Johnson v. Skelly Oil Co., 359 N.W.2d 130 (S.D.1984) and Hartpence v. Youth Forestry Camp, 325 N.W.2d 292 (S.D.1982). In Skelly Oil Co. we set out the proper scope of review for administrative findings of fact and conclusions of law.

Before we address ourselves to the issues on appeal, we first address the proper scope of review on appeal. When the issue is a question of law, the decisions of the administrative agency and the circuit court are fully reviewable. Matter of Change of Bed Category of Tieszen, 343 N.W.2d 97 (S.D.1984); Nash Finch Co. v. South Dakota Dept. of Rev., 312 N.W.2d 470 (S.D.1981). When the issue is a question of fact, we ascertain whether the administrative agency was clearly erroneous. Matter of S.D. Water Mgmt. Bd., 351 N.W.2d 119 (S.D.1984); State, Div. of Human Rights v. Miller, 349 N.W.2d 42 (S.D.1984).

359 N.W.2d at 132; S.D. Wildlife Federation, 382 N.W.2d at 32 (Wuest, J. dissenting). Skelly Oil Co. was preceded by Hartpence, wherein we stated: "Initially, we must determine whether the holding [below involves] a finding of fact or a conclusion of law. We draw this distinction for the purpose of determining the proper standard of review; that is, clearly erroneous as opposed to mistake of law. SDCL 1-26-36(4)(5)." 325 N.W.2d at 296. In addition to Skelly Oil Co. and Hartpence, we have stated on many occasions that conclusions of law made by an agency are fully reviewable by this court. Modern Merchandising v. Dept. of Revenue, 397 N.W.2d 470 (S.D.1986); Application of Trade Development Bank, 382 N.W.2d 47 (S.D.1986); Matter of Public Util. Com'n Declar. Ruling, 364 N.W.2d 124 (S.D.1985); Matter of Change of Bed Category of Tieszen, 343 N.W.2d 97 (S.D.1984); Nash...

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