Anchor Casualty Co. v. Bongards Co-op. Cream. Ass'n

• Citation: 253 Minn. 101,73 A.L.R.2d 933,91 N.W.2d 122
• Decision Date: 27 June 1958
• Docket Number: No. 37422,CO-OPERATIVE,37422
• Parties: , 73 A.L.R.2d 933 ANCHOR CASUALTY COMPANY, Appellant, v. BONGARDSCREAMERY ASSOCIATION, and Byron G. Allen, as Commissioner of Agriculture, Dairy and Food of Minnesota, Respondents, Wallace H. Pearson, d.b.a. Pearson Produce Company, Respondent.
• Court: Supreme Court of Minnesota (US)

Page 122

91 N.W.2d 122

253 Minn. 101, 73 A.L.R.2d 933

ANCHOR CASUALTY COMPANY, Appellant, v. BONGARDS CO-OPERATIVE CREAMERY ASSOCIATION, and Byron G.

Allen, as Commissioner of Agriculture, Dairy and

Food of Minnesota, Respondents,

Wallace H. Pearson, d.b.a. Pearson Produce Company,

Respondent.

No. 37422.

Supreme Court of Minnesota.

June 27, 1958.

Syllabus by the Court.

1. Since M.S.A. § 27.06, relating to complaints filed by creditors with the commissioner of agriculture against produce dealers, is a remedial act, it should be construed liberally with a view of giving effect to the objects which the legislature sought to accomplish and so as not to deny creditors the beneficial purposes of the act.

2. Where through mistake or misconception of facts the commissioner of agriculture enters an order pursuant to § 27.06, which he promptly recognizes may be in error, he has power to vacate said order for the purpose of making a correction or revision, providing that such action is taken by him within a reasonable time after due notice to the interested parties.

Daniel F. Foley, Minneapolis, for appellant.

O. S. Vesta, Arlington, for respondent Bongard's Creamery.

Miles Lord, Atty. Gen., John F. Casey, Jr., Sp. Asst. Atty. Gen., for respondent Byron G. Allen.

Lawrence L. Olson, Minneapolis, for respondent Pearson.

MURPHY, Justice.

This is an appeal by Anchor Casualty Company from an order of the District Court of Ramsey County discharging a writ of certiorari issued on its application.

The respondent Walter H. Pearson, doing business as Pearson Produce Company, executed a bond as required by the Wholesale Produce Dealers Act, M.S.A. c. 27, in the penal sum of $7,500. It was approved by the commissioner of agriculture and conditioned upon the faithful performance of his duties as a wholesale produce dealer and 'payment, when due, of the purchase price of all produce purchased * * *.' Anchor Causualty Company was the surety on the bond.

In February 1953 Pearson purchased from respondent Bongards Creamery Association produce valued in excess of $35,000. When Pearson failed to pay this account, on March 5, 1953, Bongards instituted an action against him in the District Court of Hennepin County. Under the provisions of § 27.04, in order to secure indemnification from the bonding company, Bongards as a creditor was required to submit to the commissioner of agriculture its claim against the produce dealer within 30 days from the date the obligation became due. It appears from the record that the reason Bongards instituted action in district court before it filed its claim with the commissioner was that it had acquired information to the effect that Pearson was in the process of transferring his assets in fraud of creditors. To protect itself in face of this development, Bongards had not only instituted action in district court but filed its claim with the commissioner on March 11, 1953, as a creditor entitled to indemnification under the terms of the bond.

On July 27, 1953, the parties to the proceedings before the commissioner agreed by stipulation to postpone final adjudication until after the termination of the district court action. In the meantime Pearson had filed an answer in Bongards' action in district court admitting liability for the sale of the produce but entering counterclaims for over $117,000. It appears from the record that in this action a judgment was entered in favor of Bongards and against Pearson for $40,202.26; Pearson's counterclaims were dismissed; and the question of the alleged fraudulent transfer of assets was reserved.

Pursuant to the stipulation of July 27, 1953, the matter came on for hearing before the commissioner of agriculture on March 5, 1956. The commissioner, who was represented by a deputy, proceeded with the hearing without the aid or advice of a representative of the attorney general's office. As a result of this hearing, the deputy commissioner on July 11, 1956, made findings of fact and an order denying Bongards' claim. Apparently the deputy commissioner was persuaded by the argument of the bonding company to the effect that, when Bongards instituted action in district court against Pearson without notifying the commissioner of agriculture, it waived or surrendered any rights it may have had against the surety under § 27.04.

After the commissioner's order had been made, Bongards on August 30, 1956, noticed a motion to amend the findings, which motion was to be heard September 7, 1956. It appears that the commissioner on August 30, 1956, made an order vacating the order denying the claim and set a hearing for the taking of additional evidence in the matter for September 7, 1956, as indicated by Bongards' notice of motion. The Anchor Casualty Company, taking the position that the commissioner had no right to vacate or review the order of July 11, 1956, promptly applied for certiorari. At the hearing on September 7, 1956, the commissioner continued the matter until the writ should be disposed of. It is still pending.

1--2. The question as to whether the creditor, by instituting an action in district court without notifying the commissioner of agriculture, waived or surrendered its rights against the surety is not before us for review. The only question presented by the record is whether the commissioner of agriculture may set aside his order entered pursuant to § 27.06 when he is in doubt as to the correctness of that order, and reopen the proceedings for the purpose of reconsidering and taking additional evidence under circumstances where such action to review is taken by the commissioner promptly before the rights of the parties to the proceedings have been prejudiced.

The authorities on this question are divided. There is considerable authority to the effect that an administrative tribunal in the absence of statute has no power to reconsider, grant a rehearing, or set aside its final determination. On the contrary there are authorities which hold that, even in the absence of a specific grant of authority by the statute to reconsider or modify determinations, administrative tribunals have the right to rehear and reconsider a cause for the purpose of correcting any injustice, on the theory that such agencies have inherent or implied power comparable to that possessed by the courts to rehear or reopen and reconsider its actions or determinations where the proceeding is in essence a judicial one. Numerous authorities supporting both points of view are gathered in 42 Am.Jur., Public Administrative Law, §§ 173 to 178, inclusive, and 73 C.J.S. Public Administrative Bodies and Procedure § 156. ¹ The view in support of the petitioner's position is set forth in Suryan v. Alaska Industrial Board, 12 Alaska 571, 573, where the court said: '* * * an administrative body has no power to grant a rehearing or to set aside or modify its decisions except by virtue of express statutory provision or by necessary implication.' The principal reason given for this holding is that: 'There must be an end to litigation. * * * Hence, a claim denied today could be reopened at any indefinite future time. It is inconceivable that such a power would be granted even by express statutory provision.'

While it is true that the statute in question, § 27.06, does not specifically grant to the commissioner the power to open and rehear matters, neither does it deny that power to him. The statute provides that the creditor may file a claim against the delinquent produce dealer with the commissioner, who 'shall investigate the charges made and, at his discretion, order a hearing before him, giving the party complained of notice of the filing of the complaint and the time and place of the hearing.' The statute provides that the commissioner shall report his findings...