Lauren W. Gibbs, Inc. v. Monson

• Citation: 129 P.2d 887,102 Utah 234
• Decision Date: 13 October 1942
• Docket Number: 6331
• Court: Supreme Court of Utah
• Parties: LAUREN W. GIBBS, Inc., v. MONSON, Secretary of State, et al

129 P.2d 887

102 Utah 234

LAUREN W. GIBBS, Inc., v. MONSON, Secretary of State, et al

No. 6331

Supreme Court of Utah

October 13, 1942

Appeal from District Court, Third District, Salt Lake County; Allen G. Thurman, Judge.

Action by Lauren W. Gibbs, Incorporated, against E. E. Monson Secretary of State of the State of Utah, and others, as members of the Securities Commission of the State of Utah and the Securities Commission of the State of Utah to review an order cancelling plaintiff's registration as a dealer in securities. From a judgment setting the order aside defendants appeal.

Affirmed and remanded.

Grover A. Giles, Atty. Gen., Zar E. Hayes, Deputy Atty. Gen., and Delbert M. Draper, of Salt Lake City, for appellants.

Moyle Richards & McKay, of Salt Lake City, for respondent.

McDONOUGH, Justice. WOLFE and LARSON, JJ., concur. MOFFAT, C. J., having disqualified himself does not participate. PRATT, J., on leave of absence.

OPINION

McDONOUGH, Justice.

Appellants, hereinafter designated as the Securities Commission, have appealed from a judgment of the lower court setting aside an order of the Commission canceling the registration of respondents as a dealer in securities. After notice and hearing the Securities Commission canceled the license of Lauren W. Gibbs, Incorporated, as such dealer, pursuant to 82-1-21, R. S. U. 1933. Thereafter the Lauren W. Gibbs corporation commenced an action in the district court pursuant to 82-1-41, R. S. U. 1933, against the Commission, setting forth certain alleged errors committed by said Commission and attacking its order upon several grounds. The Commission interposed both general and special demurrers which were overruled by the court. The Commission elected to stand on said demurrers, and by reason of failure of the Commission to answer a judgment was rendered as recited above, in favor of Lauren W. Gibbs, Inc.

Appellants' assignments of error attack the trial court's action in overruling their demurrer to respondent's complaint, and in entering judgment setting aside the order of the Securities Commission. They likewise assail its action in suspending ex parte, without notice to appellants and without requiring bond to be furnished by respondent, the order of revocation entered by the Securities Commission. We shall consider, first, whether the demurrer was properly overruled, and second, whether the court properly entered judgment without further proceedings when defendants elected to stand on their demurrer.

Section 82-1-41, R. S. U. 1933, providing for judicial review of an order of the Securities Commission, reads as follows:

"Any person directly affected and aggrieved by any final order of the commission made under any of the provisions of this title may, within 30 days after notice of such order, institute an action in the district court of the county at the seat of government against the commission, setting out his grievance and right to complain. In its answer the commission may set out any matter in justification; and the court shall determine the issues on both questions of law and fact, and may affirm, set aside or modify the order complained of."

This section outlines the same procedure for judicial review of an order of the Securities Commission as 79-1-36, R. S. U. 1933, does with respect to orders of the Department of Registration. The latter statute was considered by this court in the recent case of Withers v. Golding, 100 Utah 179, 111 P.2d 550, 554, discussing the procedure contemplated by such statute we therein stated:

"* * * The proceeding in the district court is in the nature of an original action commenced by an aggrieved party who sets out his 'grievances' against the director of the Department of Registration. These grievances may be that the complainant was not given proper notice of the hearing before the department; that he was not given an opportunity to be heard; that the evidence did not warrant the ruling made; or any one or all of various objections to the procedure and action of the department.

"The director then may answer and deny the allegations and may further, as an affirmative defense set forth any matter in justification. On the issues thus raised the court is required to determine both the facts and the law and 'affirm, set aside or modify the ruling' of the department.

"The issues raised by the pleadings before the court may or may not be the same as those raised in the hearing before the department. But only such issues as are raised by the pleadings before the court are to be decided by it."

The issues raised by the pleadings before the lower court in that case were:

"(1) whether certain rulings of the department were correct; and (2) whether the evidence adduced before the department justified the revocation of appellant's license."

Regarding the nature of the review by the district court on the second issue the statute was thus construed in Withers v. Golding, supra.

"On this later issue we are of the opinion that the court should determine as on an appeal in equity whether the findings of the committee are contrary to the clear preponderance of the evidence adduced before it, rather than to determine merely whether there is any substantial evidence to support such findings. * * *"

In view of such construction, do the allegations of the complaint in the instant case sufficiently set out respondent's "grievance and his right to complain," as against appellants' general demurrer? The trial court properly overruled the general demurrer if the petition or complaint as a whole, or any of the allegations therein, set out facts, forming a sufficient basis for a "right to complain" of the Commission's order or ruling. Geros v. Harries, 65 Utah 227, 236 P. 220; Eddington v. Union Portland Cement Co., 42 Utah 274, 130 P. 243.

Allegations of the Complaint raised questions as to the constitutionality of certain sections of the act in question; as to the respondent having been accorded due process in the hearing before the Commission, and as to the sufficiency of the complaint made to the Commission and notice in said hearing; as well as other questions relative to alleged irregularities on the part of the Commission in conducting the hearing, which, in view of factual matter alleged therein and admitted by demurrer, presented issues of law only.

Assuming that the court below should have resolved such issues in favor of demurrant, nevertheless, we are of the opinion that at least two of the allegations of the complaint are sufficient in view of the nature of the proceeding to support the order overruling the demurrer. Paragraph 16 thereof reads as follows:

"That the said findings of fact and conclusions are not supported by, are in conflict with and go beyond the evidence adduced at said hearing, and that said evidence does not justify, sustain or support said findings of fact or conclusions."

Paragraph 20, referring to the conclusions of the Commission, allege that "said conclusions are contrary to the evidence."

Under such allegations the trial court is called on to determine "as on an appeal in equity" whether the findings of the Commission"are contrary to the clear preponderance of the evidence adduced before it." Withers v. Golding, supra. Appellants attack them as mere conclusions. But the complaint should be tested with its purpose in mind. The trial court in order to sustain the demurrer thereto on such ground would, in effect, hold that the particulars in which the evidence before the Commission was insufficient must be set out in the complaint. We think this is not necessary. The purpose of the action is to secure judicial examination of such of the proceedings before the Commission and of its conclusions as to the facts and the law as the plaintiff in such action desires to question.

The quoted paragraphs of the complaint were adequate to put in issue the sufficiency of the evidence adduced before the Commission to support the latter's findings and to justify its conclusions and order.

We are, nevertheless, of the opinion, that even though the demurrer was properly overruled, it was incumbent on the court to take evidence on the issue of the insufficiency of the evidence to sustain its order canceling registration. As stated in Withers v. Golding, supra, when such issue is raised the court is required to determine whether the order was against the clear preponderance of the evidence adduced before the department. After the overruling of the demurrer and defendants' election not to plead further, unless its ruling was on one of the indicated other issues of law, the court would be obliged to find either that the evidence did or did not support the order made. Such finding could not be made on the mere allegation to that effect in the complaint.

The action was instituted and the principal briefs filed in this court prior to rendition of the decision in Withers v. Golding, supra, wherein the kind of review provided for by statute was judicially determined. In view of such fact, and in view also of the nature of the allegations relative to the sufficiency of the evidence before the Commission, we are of the opinion that although the demurrer of the Commission was properly overruled, the case should be remanded for further proceedings, unless the issues raised by demurrer other than those relating to sufficiency of the evidence before the Commission likewise justify the order sustaining the demurrer.

Respondent contends that the demurrer was properly sustained for the reason that issues strictly of law, raised by the complaint should be resolved in its favor. The complaint alleges, and it is here contended that Title...