Fehrman v. Blunt

• Decision Date: 10 March 1992
• Docket Number: No. 59918,59918
• Citation: 825 S.W.2d 658
• Parties: Blue Sky L. Rep. P 75,671 Robert M. FEHRMAN, Plaintiff/Respondent, v. Roy D. BLUNT, Secretary of State of the State of Missouri, and John R. Perkins, Commissioner of Securities of the State of Missouri, Defendants/Appellants.
• Court: Missouri Court of Appeals

Page 658

825 S.W.2d 658

Blue Sky L. Rep. P 75,671

Robert M. FEHRMAN, Plaintiff/Respondent, v. Roy D. BLUNT, Secretary of State of the State of Missouri and John R. Perkins, Commissioner of Securities of the State of Missouri, Defendants/Appellants.

No. 59918.

Missouri Court of Appeals,

Eastern District,

Division Four.

March 10, 1992.

William L. Webster, Atty. Gen., B.J. Jones, Asst. Atty. Gen., Jefferson City, for defendants/appellants.

Richard J. Pautler, Peper, Martin, Jensen, Maichel & Hetlage, St. Louis, for plaintiff/respondent.

AHRENS, Judge.

Defendants-appellants Missouri Secretary of State and Commissioner of Securities appeal from the circuit court's judgment reversing a decision of the Administrative Hearing Commission (AHC) and ordering that plaintiff-respondent Robert M. Fehrman be registered as a securities agent under Chapter 409 RSMo. We affirm the circuit court's judgment reversing the decision of the AHC.

Respondent submitted an application for registration as a securities agent to the National Association of Securities Dealer's Central Registration Depository ("CRD") on January 9, 1990. CRD approved the application and notified appellants on January 24, 1990, that respondent was seeking registration in Missouri. On January 26, 1990, appellants sent a letter to respondent requesting additional information with regard to the application. Respondent sent his written response dated February 14, 1990. Appellants sent a second letter to respondent on February 16, 1990, again requesting additional information with regard to the application. Respondent forwarded his response dated February 16, 1990. When appellants received the response on February 19, 1990, they considered respondent's application complete as of that date. On March 14, 1990, appellants filed written findings of fact and conclusions of law denying respondent's application for certain violations of Chapter 409, the Missouri Securities Act.

On April 3, 1990, respondent filed a complaint with the AHC pursuant to § 409.204(f)(2) RSMo 1986 challenging appellants' denial. He filed an amended complaint on May 23, 1990, alleging, inter alia, that pursuant to § 409.202(a)(5) RSMo 1986, respondent's registration was effective at noon of the thirtieth day after January 24, 1990, the day CRD filed respondent's application with appellants. Section 409.202(a)(5) provides in part:

The commissioner may also require such additional information as he deems necessary to establish the qualifications and the good business repute of the applicant. If no denial order is in effect, and no proceeding is pending under section 409.204, registration becomes effective at noon of the thirtieth day after an application is filed. The commissioner may by rule or order specify an earlier effective date, and he may by order defer the effective date until noon of the thirtieth day after the filing of any amendment.

On June 8, 1990, the AHC entered its written findings of fact, conclusions of law, and judgment. The AHC found that appellants had, pursuant to statutory authority under § 409.413 RSMo 1986, issued regulation 15 CSR 30-51.160(1) which provides:

(1) If no suspension or denial orders are in effect or proceedings therefor are pending, registration shall become effective no later than noon of the thirtieth [30th] day after the filing of an application is complete, but an earlier effective date may be specified by the commissioner (section 409.202(a)). Filing shall be considered complete when the application and all attachments and exhibits thereto, as required by the commissioner, have been filed in the division and are satisfactory to the commissioner, and the examination of the applicant has been accepted by the commissioner. Any application, the filing of which is not considered complete within a period of one (1) year following the original filing thereof, shall be presumed subject to the entry of an order of cancellation pursuant to section 409.204(d) of the Act. (emphasis ours).

The AHC stated: "According to the holding in PIA Psychiatric Hospitals, Inc. v. Missouri Health Facilities Review Committee, 729 S.W.2d 491 (Mo.App.1987), if there is no explicit statutory authority, agencies cannot extend statutory deadlines for acting on applications by enacting a regulation allowing the agency to determine the filing date by when it considers the application completed. For this Commission to apply that principle favorably to Fehrman implicates the question of whether we can refuse to apply a regulation by in effect holding that it is invalid as being contrary to a statute or beyond the statutory power of the agency to promulgate it." Relying on State Tax Comm'n v. Administrative Hearing Comm'n, 641 S.W.2d 69, 75 (Mo. banc 1982), and other decisions cited in its opinion, the AHC concluded it must give effect to 15 CSR 30-51.160(1) and consider the application filed for purposes of the statutory 30-day period on the day appellants considered it to have been completed by respondent's submission of all the additional information requested. But cf. Bridge Data Co. v. Director of Revenue, 794 S.W.2d 204, 207 (Mo. banc 1990) (State Tax Comm'n, 641 S.W.2d 69, "held simply that the legislature could not give the [AHC] authority to render a declaratory judgment as to the validity of rules of the State Tax Commission. When review of decisions of the Director of Revenue is sought the [AHC] must resort to the statutes and has full authority to reach a decision on the law as it finds it, subject of course, to judicial review.") Finding that the March 14, 1990, denial was within 30 days of the February 19, 1990, date on which appellant considered the application completed and filed, the AHC entered summary judgment in favor of appellants and against respondent on respondent's first amended complaint.

On June 11, 1990, respondent filed his first amended petition in the circuit court for judicial review of the decision of the AHC pursuant to § 536.110 RSMo 1986. On respondent's motion, the circuit court on June 29, 1990, entered an order staying appellants' denial of registration and suspending the AHC order pending further order of the circuit court.

After a hearing, the circuit court on February 13, 1991, filed written findings of fact and conclusions of law, which included the following: respondent's application was filed on January 24, 1990, which notified the state that respondent was seeking registration, and his completed application was made available to the state for review; appellants had neither filed any type of denial order regarding respondent or initiated any type of action relative to respondent pursuant to § 409.204 prior to appellants' March 14, 1990, denial order; agencies such as appellants cannot, either directly or indirectly, extend statutory deadlines for acting on applications by enacting regulations; filing is defined as the actual delivery of the paper to the clerk without regard to any action he may take thereon; the language in § 409.202 empowering appellants to seek additional information concerning an applicant cannot be read to authorize appellants to extend the 30-day deadline specifically provided for by statute; appellants did not contend, and the AHC did not find, that respondent ever filed an "amendment" which would allow appellants to extend the 30-day deadline under § 409.202(a)(5); to the extent 15 CSR 30.51-160(1) is interpreted to extend the 30-day period prescribed by § 409.202, it is invalid and unenforceable; and appellants' denial order of March 14, 1990, was untimely and in excess of appellants' authority and jurisdiction. The circuit court ordered that respondent be fully, completely, and unconditionally registered as an agent with the state. Further, the circuit court suspended appellants' denial order and the AHC order; ordered the denial order expunged from appellants' records; and ordered appellants to notify CRD and other parties respondent identified.

Appellants timely filed this appeal, raising four points in which they allege the circuit court erred in reversing the AHC's decision: first, the denial order was within the statute and regulations, because the regulation is reasonable and within the authority of the Commissioner of Securities, and respondent's application was not complete until his application and all attachments and exhibits thereto, as required by the commissioner and satisfactory to the commissioner, had been filed; second, the regulation constitutes a legislative rule and should be accorded the force and effect of law; third, in the alternative, respondent's responses to appellants' requests for additional information constituted an amendment to his request for registration; and fourth, the commissioner may consider the additional information he requests as part of the application or attachments and exhibits and may consider these matters incomplete until sufficient information is submitted.

We review the decision of the administrative agency, not the decision of the circuit court. Americare Sys., Inc. v. Missouri Dept. of Social Serv., 808 S.W.2d 417 (Mo.App.1991). Our scope of review includes whether the action of the agency is in excess of the statutory authority or jurisdiction of the agency. § 536.140.2(2) RSMo 1986. For purposes of review, the action of the AHC and the denial order of the appellants shall be treated as one decision. § 621.145 RSMo 1986.

We address appellants' first and second points together. Effective January 1, 1968, Missouri adopted the Uniform Securities Act. Chapter 409 RSMo. The statutory section at issue here, § 409.202, is similar to § 202 of the Uniform Securities Act, as amended August 1958, in providing that if no denial order is in effect, and no proceeding is pending under section 409.204, registration becomes effective at noon of the thirtieth day after an application is filed. § 409.202; UNIF. SECURITIES ACT § 202, 7B U.L.A. (1985). Neither par...