Mordhorst v. Egert

Citation223 N.W.2d 501,88 S.D. 527
Decision Date21 November 1974
Docket NumberNo. 11264,11264
PartiesCharles MORDHORST, Plaintiff and Respondent, v. R. W. EGERT et al., Defendants and Respondents, and Austin Battin et al., Defendants, C. A. Kelley et al., Defendants and Appellants.
CourtSupreme Court of South Dakota

Bangs, McCullen, Butler, Foye & Simmons, Rapid City, Stewart, Hatfield, Klass & Whicher, Sioux City, Iowa, for plaintiff and respondent.

Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendant and respondent, R. W. Egert.

Blue & Haeder, Huron, for defendant and respondent, D. J. Bregel.

Costello, Porter, Hill, Banks & Nelson, Rapid City, for defendant and respondent, M. A. Grove.

Gunderson, Farrar, Aldrich, Warder, DeMersseman & Wilkins, Rapid City, Austin, Hinderaker & Hackett, Watertown, for defendants and appellants.

ADAMS, Circuit Judge.

This is but another round in the continuing contest that has involved numerous optometrists, the South Dakota Optometric Association, the State Board of Examiners in Optometry and at least two corporations. One of the corporations manufactures and sells optical goods and the other provides prepaid eye-care plans. Only the latter is a party in this lawsuit. Prior events are well described in Kelley v. Duling Enterprises, Inc., 84 S.D. 427, 172 N.W.2d 727, decided by this court on December 8, 1969.

Less than one year after that decision was handed down, the State Board of Examiners in Optometry received written complaints signed by the president of the South Dakota Optometric Association alleging that R. W. Egert, D. J. Bregel, M. A. Grove, and one other optometrist were guilty of unprofessional conduct. It was claimed that each of these optometrists aided and abetted Duling Optical Company in the unlawful practice of optometry. Informal hearings were held on November 30, 1970. By its Order and Notice of Hearing dated June 1, 1971, the four optometrists were advised of the charges and told that formal hearings would be held on December 6, 1971. That date came and went without the hearings being held or rescheduled.

On May 28, 1971, Charles Mordhorst, a South Dakota citizen (and an employee of Duling Optical Company), commenced this action. His pleading includes charges against Drs. Egert, Bregel and Grove that are substantially identical to those described in the Board's Order and Notice of Hearing, plus an allegation that the Board had failed to commence and properly process these and other charges. He also included as defendants the three members of the South Dakota State Board of Examiners in Optometry. An additional defendant is the corporation that offers prepaid eye care for the patients or customers of certain member optometrists, unlawful activity on its part being alleged.

Mordhorst sought to enjoin each of the nonboard member defendants from further unprofessional conduct and to enjoin the continuance of the alleged unlawful practices of the named corporation. As to the Board and its members, Mordhorst sought to enjoin further proceedings on the pending complaints against the nonboard member optometrists.

Answers, amended answers, cross-claims, motions and briefs followed. Discovery was had and hearings were held. The trial was eventually completed. By its memorandum decision, the trial court found no unprofessional conduct on the part of Drs. Egert, Bregel and Grove, and granted injunctive relief against the South Dakota State Board of Examiners in Optometry 'because of a showing of a lack of a fair and impartial tribunal and violation of the South Dakota Administrative Procedures Act.' The court also found capping and steering between South Dakota Visions Service Corporation and its member optometrists, and that the corporation was unlawfully practicing optometry. Neither the corporation nor Drs. Battin, Hines and Kelley have appealed.

This appeal is from that part of the trial court's judgment that enjoins the Board from further action on the still unresolved administrative proceedings against Drs. Egert, Bregel and Grove. Numerous questions have been raised by appellants but only three issues seem critical:

(1) Does Charles Mordhorst's status as an employee of Duling Optical Co. disqualify him as plaintiff and establish that this action is collusive?

(2) Should there have been an exhaustion of administrative remedies before the circuit court assumed jurisdiction?

(3) Were the procedures of the Board of Examiners sufficient when measured by due process requirements?

Each of these questions must be answered in the negative. The answers will be discussed separately and in order.

Proper Plaintiff

This action was commenced under SDCL 36--7--28 which provides in part:

'Any person violating the provisions of this chapter may be enjoined from further violations in the circuit courts of this state in actions to be brought by the state board of examiners in optometry. Such suits may also be brought by any citizen of the state. * * *'

Appellants contend that this lawsuit is the result of an 'arrangement' between Duling Optical Company (the corporation that employs the plaintiff but which is not a party to this lawsuit), and Drs. Egert, Bregel, and Grove, the nonboard member defendants (respondents herein).

Factual support for this contention is not to be found in the record. Absent such proof, the court must conclude that Charles Mordhorst, a citizen of this state, does qualify as a proper plaintiff. Only upon a showing that plaintiff is using this statutory right contrary to the public interest, will courts withdraw their aid. Morton Salt Company v. G. S. Suppiger Company, 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363.

Exhaustion of Remedies

Two well-established doctrines are involved at this point. One of the doctrines claims the generic title (i.e., exhaustion of remedies); the other is referred to as the doctrine of primary jurisdiction.

It is often said that where a claim or dispute is cognizable by an administrative body, judicial interference will be withheld until the administrative process has run its course. Myers v. Bethlehem Shipbuilding Corporation, 303 U.S. 41, 50, 58 S.Ct. 459, 463, 82 L.Ed. 638, 644. This statement is too broad; it is not supported by the holdings. Both the doctrine of exhaustion of remedies and the doctrine of primary jurisdiction must be considered when problems of this nature are encountered. Davis, Administrative Law Treatise, § 20.01; Jaffe, The Exhaustion Of Administrative Remedies, 12 Buffalo L.Rev. 327.

The exhaustion of remedies doctrine is primarily concerned with the timing of the judicial review of administrative action. 2 Am.Jur.2d, Administrative Law, § 595. It is to be distinguished from the doctrine of primary jurisdiction; application of the latter doctrine determines whether the court or the agency should make the initial determination. Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576; Davis, Administrative Law Treatise, § 19.08.

The doctrine of primary jurisdiction can arise only when both the court and an administrative agency have authority to pass on a question. The proper application of this doctrine should result in orderly and sensible coordination of the work of agencies and the courts. Davis, Administrative Law Treatise, § 19.01. Since both the courts and the South Dakota State Board of Examiners in Optometry have authority to pass on some of the questions raised by this lawsuit, and since this lawsuit is not an appeal from a decision or order of the South Dakota Board of Examiners in Optometry but is an original action, a primary jurisdiction question exists.

The exhaustion of remedies doctrine is raised by the fact that written complaints were filed with the South Dakota State Board of Examiners in Optometry and Ex parte informal hearings were completed. Even though formal hearings have not been held, an order was issued calling for such proceedings. It can be argued that some significant administrative action has been taken. In addition, this plaintiff attacks the administrative procedures on the ground that the South Dakota State Board of Examiners in Optometry is unconstitutionally constituted. More specifically, it is his contention that the Board's bias and its inaction render it incompetent to act.

The presence of constitutional questions coupled with a sufficient showing of the inadequacy of administrative relief and impending irreparable harm flowing from delay incident to following the prescribed administrative procedures is sufficient to overcome the claim that administrative proceedings must first be exhausted. Sandia Savings and Loan Association v. Kleinheim, 74 N.M. 95, 391 P.2d 324; Wisconsin Collectors Assn. v. Thorp Finance Corp., 32 Wis.2d 36, 145 N.W.2d 33; 2 Am.Jur.2d, Administrative Law, § 602.

Professor Davis suggests that the applicability of the exhaustion doctrine be determined by weighing certain...

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