Johnson v. Elkin

Decision Date16 February 1978
Docket NumberNo. 9341,9341
Citation263 N.W.2d 123
PartiesApplication of Dale L. Johnson, d/b/a Johnson's Moving Co., Wahpeton, North Dakota, for a Special Certificate of Public Convenience and Necessity. Dale L. JOHNSON, d/b/a Johnson's Moving Co., Wahpeton, North Dakota, Appellee, v. Richard A. ELKIN, Ben J. Wolf, Bruce Hagen, as members of the Public Service Commission of the State of North Dakota, Appellants, and Nick Schmit of Schmit's Inc., Wyndmere, North Dakota, a corporation, Respondent. Civ.
CourtNorth Dakota Supreme Court

Ray H. Walton, Commerce Counsel, and David W. Tiistola, Asst. Commerce Counsel, Public Service Commission, Bismarck, for appellant; argued by David W. Tiistola.

Johnson, Milloy, Johnson, Stokes & Robinson, Wahpeton, for appellee; argued by A. W. Stokes, Wahpeton.

VOGEL, Justice, On Reassignment.

This is an appeal by the PSC (Public Service Commission) from a judgment entered by the Richland County District Court reversing the decision of the PSC and holding, inter alia, that the PSC determination made under the 1973 amendments to Chapter 49-18, North Dakota Century Code (Ch. 380, S.L.1973), violated Johnson's rights under Sections 1, 13 and 20 of the North Dakota Constitution and Section 1 of the Fourteenth Amendment to the United States Constitution. We reverse the judgment as to constitutionality, hold that the statute is constitutional and remand for reinstatement of the PSC determination.

In February 1976, Dale Johnson filed an application (pursuant to the provisions of Section 49-18-12, N.D.C.C.) with the PSC "Buildings, sections of buildings and other bulky objects, which because of their nature require the use of equipment characteristic to the house moving industry, to, from and within Richland County in North Dakota."

for a Special Certificate of Public Convenience and Necessity to authorize the transportation of:

A hearing before an examiner for the PSC on the application was held in Wahpeton in May and, in July, the PSC entered its findings of fact, conclusions of law and order which denied the application on the grounds that public convenience and necessity did not require a granting of the application and that the applicant was not financially able to provide the services. Pursuant to the Administrative Agencies Practice Act (Chapter 28-32, N.D.C.C.), Johnson filed an appeal, with specifications of error, claiming that (1) the decision is not in accordance with law, (2) the decision violates his constitutional rights, and the statute in question is unconstitutional, (3) the findings of fact are not supported by the evidence, and (4) the conclusion and decision are not supported by the findings of fact.


We begin with a matter not raised by the parties, which concerns the orderly administration of the judicial procedures involved in appeals from administrative agencies. The question is whether a constitutional issue can be raised for the first time at the district court level on an appeal from an administrative agency. We hold that under certain circumstances it can be so raised.

Johnson applied to the PSC for a permit to operate as a house mover. A hearing was held on his application and a subsequent order entered denying the application. At the PSC hearing no question of constitutionality was raised. Johnson then appealed to the district court, raising both constitutional and statutory questions. The constitutional issue was decided in his favor, by a judgment that the decision was unconstitutional. The PSC appealed to this court and the constitutional issues were briefed and argued by both parties.

At the district court hearing no issue was raised as to whether the record of the administrative hearing must raise the issue of constitutionality. Both parties apparently assumed that the issue was properly before the district court and the court did likewise. No additional evidence was received at the district court level. When the PSC appealed the district court judgment to this court, neither party raised the question of whether the record in the administrative agency (which is what we review in such cases see O'Brien v. North Dakota Workmen's Compensation Bureau, 222 N.W.2d 379 (N.D.1974) and cases cited) permits us to review a constitutional question raised only at the district court level. On the contrary, both parties ask us to decide the constitutional issue, rather than leave intact the determination of the district court.

We are faced, then, with a statute (Section 28-32-19, N.D.C.C.) and court interpretations which permit us to review, on the second appeal in an administrative agency case, only the record made in the administrative agency, and a record in this case which indicates that the constitutional issue was not raised at the agency level but was raised in the first appeal, to the district court, which heard no additional evidence.

We hold that it was proper, under the circumstances of this case, to raise and consider the constitutional question in the district court. No further evidence was received in that court it obeyed the injunction of Section 28-32-19, N.D.C.C., that it "try and hear an appeal . . . without a jury and the evidence considered by the court shall be confined to the record filed with the court. . . ." The court considered a new issue, constitutionality, but that issue is one which the statute, at least by implication, allows to be raised at the district court level. The statute provides that the court shall affirm the decision of the administrative agency unless it makes one of six findings, two of which are: 1. The "decision or determination is not in accordance with law." 2. The decision It seems to us that a decision which is, or is claimed to be, unconstitutional is, or may be, in violation of the constitutional rights of a party who has standing to challenge constitutionality.

"is in violation of the constitutional rights of the appellant."

On the question of whether a litigant can raise constitutional questions for the first time on an appeal to a district court we have made inconsistent statements. In Family Center Drug Store, Inc. v. North Dakota State Board of Pharmacy, 181 N.W.2d 738 (N.D.1970), an appellant had attempted to raise the constitutional question for the first time in the Supreme Court, and we referred to the rule that questions could not be raised for the first time in this court, and said:

"Without deciding whether circumstances and conditions in some cases might justify the nonapplication of that rule, we conclude that in this case there is no compelling reason why that rule should not be applied, and accordingly we apply it here. It is our view in support of that conclusion that if this constitutional issue is to be considered, it should be considered only after it has been adequately and properly briefed by both sides and after it has been submitted in the first instance to the trial court for its determination." 181 N.W.2d at 745-746.

In Benson v. North Dakota Workmen's Compensation Bureau, 250 N.W.2d 249, 250-251 (N.D.1977) we said, in a case involving an appeal from a district court determination that the agricultural exclusion in the workmen's compensation law was unconstitutional, that:

"Furthermore, while Section 65-10-01, NDCC, of the Workmen's Compensation Act provides for appeal to the district court from the Bureau's decision, the appealable issues under the Act do not include the constitutionality of the Act itself. Section 65-10-01 provides that any appeal to the district court shall be heard upon the record transmitted from the Bureau and it further specifies that an appeal under that section shall be taken in the manner provided in Chapter 28-32, NDCC, the Administrative Agencies Practice Act. That Act also provides that the record made before the administrative agency is the record considered on appeal. Section 28-32-19, NDCC; Application of Bank of Rhame, 231 N.W.2d 801 (N.D.1975). The issue of the constitutionality of the agricultural exclusion was not raised before the Workmen's Compensation Bureau, and therefore it cannot be a part of that agency's record filed with the district court on appeal. It cannot be raised for the first time on appeal to the district court when it was not raised initially at the administrative hearing. See 5 Am.Jur.2d Appeal and Error, § 574, at 48; Hazelton-Moffit Special School Dist. No. 6 v. Ward, 107 N.W.2d 636 (N.D.1961)."

We are satisfied that the latter statement goes too far. It fails to distinguish between evidence, which must be part of the record made in the administrative agency, and issues, which may be raised in the district court. Most of the authorities cited by us in Benson refer to the undoubtedly correct rule that issues must be raised in the trial court if they are to be raised on appeal. This rule does not preclude the raising of issues in the first court to consider the case (here the district court), with a subsequent appeal to the Supreme Court. We further note that in Benson our ruling was based in part upon factors not present here a "seriously inadequate evidentiary record," the fact that the farmer-employer was not a party to the proceedings at any level, and a hint that his presence was necessary in order to provide a desired adversary confrontation.

In holding that the issue may be first raised at the district court level, we have in mind the general rule, which we adopt, that administrative agencies have no authority to decide upon the constitutionality of the statutes under which they operate. See authorities collected in Justice Mosk's dissent in Southern Pacific Transportation Company v. Public Utilities Commission,18 Cal.3d 308, 134 Cal.Rptr. 189, at page 194 We adhere to the majority rule. Having done so, we believe there is no good reason to require the issue of constitutionality to be raised before an administrative agency which not only lacks the power to decide the question, but is often presided over by...

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