Crabtree v. Department of Agriculture, Div. of Agricultural Industry Regulation, Bureau of Warehouses

• Decision Date: 26 May 1988
• Docket Number: No. 4-86-0900,4-86-0900
• Citation: 524 N.E.2d 255,170 Ill.App.3d 387
• Court: United States Appellate Court of Illinois
• Parties: , 120 Ill.Dec. 490 James B. CRABTREE and Douglas Crabtree, Plaintiffs-Appellants, v. DEPARTMENT OF AGRICULTURE, DIVISION OF AGRICULTURAL INDUSTRY REGULATION, BUREAU OF WAREHOUSES, et al., Defendants-Appellees.

Page 255

524 N.E.2d 255

170 Ill.App.3d 387, 120 Ill.Dec. 490

James B. CRABTREE and Douglas Crabtree, Plaintiffs-Appellants, v. DEPARTMENT OF AGRICULTURE, DIVISION OF AGRICULTURAL INDUSTRY

REGULATION, BUREAU OF WAREHOUSES, et al.,

Defendants-Appellees.

No. 4-86-0900.

Appellate Court of Illinois,

Fourth District.

May 26, 1988.

Rehearing Denied June 29, 1988.

Evan H. Johnson, Frederic L. Kenney, Armstrong, Winters, Prince, Featherstun & Johnson, Decatur, for plaintiffs-appellants.

Neil F. Hartigan, Atty. Gen., Chicago, Roma Jones Stewart, Sol. Gen., (Frank A. Hess, Raymond J. Watson, Jr., Asst. Attys. Gen., Springfield, of counsel), for defendants-appellees.

Justice KNECHT delivered the opinion of the court:

Plaintiffs James B. Crabtree and Douglas Crabtree appeal from a Macoupin County circuit court order which upheld an administrative finding by the Director of Agriculture that they were not entitled to recovery from the Illinois Grain Insurance Fund (fund). The Atwater Grain Company failed, and the Crabtrees filed claims based on two warehouse receipts. A hearing officer and the Director of Agriculture essentially found the warehouse receipts issued by Atwater to the Crabtrees were improper and did not permit them to recover pursuant to the Illinois Grain Insurance Act (Grain Insurance Act). (Ill.Rev.Stat.1983, ch. 114, pars. 701 through 712.) The circuit court determined the Director's decision was not against the manifest weight of the evidence. We affirm.

Before addressing the merits of the appeal we consider plaintiffs' motion to strike portions of the State's brief.

The Crabtrees have moved to strike those portions of the State's brief which refer to facts not in evidence at the administrative hearing, and to an argument which Crabtrees claim was not before the administrative agency. (107 Ill.2d R. 361.) The State has not responded to this motion. The State's failure to respond does not concede the motion.

Section 3-110 of the Code of Civil Procedure (Code) provides for review of an administrative action in the following terms:

" * * * The hearing and determination shall extend to all questions of law and of fact presented by the entire record before the court. No new or additional evidence in support of or in opposition to any finding, order, determination or decision of the administrative agency shall be heard by the court. The findings and conclusions of the administrative agency on questions of fact shall be held to be prima facie true and correct." (Ill.Rev.Stat.1983, ch. 110, par. 3-110.)

Further discussing the role of the circuit court in reviewing an administrative decision, the Code provides the circuit court will have the power:

"[T]o remand for the purpose of taking additional evidence when from the state of the record of the administrative agency or otherwise it shall appear that such action is just. However, no remandment shall be made on the ground of newly discovered evidence unless it appears to the satisfaction of the court that such evidence has in fact been discovered subsequent to the termination of the proceedings before the administrative agency and that it could not by the exercise of reasonable diligence have been obtained at such proceedings; and that such evidence is material to the issues and is not cumulative." (Ill.Rev.Stat.1983, ch. 110, par. 3-111(a)(7).)

On appeal, this court has the power to "order or permit the record to be amended by correcting errors or by adding matters that should have been included." 107 Ill.2d R. 366(a)(3).

On appeal, the State concedes the reverse side of the Douglas Crabtree receipt was not in the administrative record. The State then suggests the records indicating Atwater Grain had no company-owned grain at the time of the receipts in question should be admitted as evidence discovered subsequent to the hearing. Implicit in this argument is the admission these records were not in the administrative record. Under section 3-110 of the Code, the circuit court is specifically confined to the administrative record in reviewing the agency's decision.

Although section 3-111 of the Code (Ill.Rev.Stat.1983, ch. 110, par. 3-111) permits the court to remand a case on the ground of newly-discovered evidence, the court must first determine this evidence had not been discovered prior to the administrative proceedings, and "that it could not by the exercise of reasonable diligence have been obtained at such proceedings." It is impossible for any party to be unaware of the reverse side of the Douglas Crabtree warehouse receipt if, as appears the original was available for photocopying. Similarly, the Atwater Grain Company records, which suggest the company had no "house" grain, must have been available at all times during this proceeding unless actively concealed by some participant. Nothing in the record suggests any party has concealed these records. Assuming this evidence was not available prior to the administrative hearing, nothing suggests it could not have been obtained with the exercise of reasonable diligence by the State. The Crabtrees' motion to strike references to the reverse side of the Douglas Crabtree receipt and to the records concerning Atwater's ownership of grain is granted.

The Crabtrees also claim in their motion to strike the State cannot raise the question of "due negotiation" because it has not brought a cross-appeal from the circuit court's ruling that the negotiation defense was not properly before that court. The administrative hearing record indicates the proceeding before the hearing officer was an extended affair, during which counsel did not generally make specific arguments concerning claims to the hearing officer. Rather, testimony would be presented concerning a specific claim, and the hearing officer would make a ruling as to the claim's proper classification. The hearing officer would state the basis for his ruling, but this does not appear to have been in direct response to arguments by counsel. Apparently, the issue of "due negotiation" was never raised by the parties, nor alluded to by the hearing officer at the original hearing. In their petition for reconsideration filed with the Department of Agriculture, however, the Crabtrees argue the receipts in question were duly negotiated as required by the Uniform Commercial Code (UCC). (Ill.Rev.Stat.1983, ch. 26, pars. 1-101 et seq.) The issue of "due negotiation" was not explicitly considered in denying the petition for reconsideration.

In the circuit court, the State raised the issue in support of the agency's decision, and the Crabtrees responded with a motion to strike that portion of the State's argument. The circuit court refused to consider the State's argument concerning "due negotiation" on the grounds the argument "was not raised at the administrative hearing." The State has not filed a cross-appeal in this case.

Although the State has not filed a response to the Crabtrees' motion to strike in this court, the State's brief seeks to justify this court's consideration of the "due negotiation" argument. The State relies on the general principle that an appellee may defend a judgment on review by raising any issue for which a factual basis appears in the record, citing Peters & Fulk Realtors, Inc. v. Shah (1986), 140 Ill.App.3d 301, 94 Ill.Dec. 636, 488 N.E.2d 635. The full and proper statement of the rule appears to be that "an appellee may defend a judgment on review by raising an issue not previously ruled upon by the trial court if the necessary factual basis for the determination of the issue is contained in the record. (Kravis v. Smith Marine, Inc. (1975), 60 Ill.2d 141, 324 N.E.2d 417; Shaw v. Lorenz (1969), 42 Ill.2d 246, 246 N.E.2d 285; LaSalle National Bank v. Grayslake (1963), 29 Ill.2d 489, 194 N.E.2d 250.)" (Emphasis added.) Roots v. Uppole (1980), 81 Ill.App.3d 68, 73, 400 N.E.2d 1003, 1006.

In general, a reviewing court should not consider complaints raised by an appellee concerning action taken by the circuit court unless the appellee has filed a cross-appeal from the court's decision. (Abdul-Karim v. First Federal Savings & Loan Association (1984), 101 Ill.2d 400, 78 Ill.Dec. 369, 462 N.E.2d 488.) In interpreting this rule, however, courts look to the relief sought by an appellee in the trial court in determining whether a trial court decision was adverse in any respect. (People v. Bradford (1939), 372 Ill. 63, 22 N.E.2d 691; State Farm Mutual Automobile Insurance Co. v. Stuckey (1983), 112 Ill.App.3d 647, 68 Ill.Dec. 147, 445 N.E.2d 791.) In Bradford, even though a trial court had stricken 8 of 12 defenses raised by a defendant, but had held in defendant's favor, defendant was permitted to argue each of the stricken defenses on appeal as bases for upholding the trial court decision. Similarly, in Stuckey, an arbitrator's decision in favor of a respondent was upheld by the circuit court following a ruling by the court that the arbitrator's decision was reviewable. The respondent was not required to cross-appeal in order to assert "non-reviewability" as a basis for upholding the arbitrator's decision at the appellate court.

The procedures in this case are different from those in either Bradford or Stuckey. "Due negotiation" was not made an issue by the State in the agency hearing. The Crabtrees had no reason to provide evidence relating to the issue. To now allow the State to present the defense would, for practical purposes, deprive the Crabtrees from participating in the evidentiary process. Because there was an insufficient evidentiary process relating to "due negotiation," there is not an adequate factual basis in the record to justify considering the subject on appeal, and we will not.

On January 4, 1985, Atwater Grain Company Negotiable Grain Warehouse Receipt A, No. A40, was issued to James B. Crabtree for 50,000 bushels of No. 2 corn. The receipt shows "Received for the account of James B. Crabtree." No storage...