Wisconsin Collectors Ass'n, Inc. v. Thorp Finance Corp.

• Decision Date: 04 October 1966
• Citation: 32 Wis.2d 36,145 N.W.2d 33
• Parties: WISCONSIN COLLECTORS ASSN., INC., a Wis. corporation et al., Plaintiffs-Respondents, v. THORP FINANCE CORP., a Wis. corporation, Defendant-Respondent, William E. Nuesse, Commissioner of Banks of the State of Wisconsin, Defendant-Appellant.
• Court: Wisconsin Supreme Court

Page 33

145 N.W.2d 33

32 Wis.2d 36

WISCONSIN COLLECTORS ASSN., INC., a Wis. corporation et al Plaintiffs-Respondents, v. THORP FINANCE CORP., a Wis. corporation, Defendant-Respondent William E. Nuesse, Commissioner of Banks of the State of Wisconsin, Defendant-Appellant.

Supreme Court of Wisconsin.

Oct. 4, 1966.

Rehearing Denied Nov. 29, 1966.

Bronson C. La Follette, Atty. Gen., E. Weston Wood, Asst. Atty. Gen., Madison, for appellant.

Geisler & Kay, Madison, for plaintiffs-respondents.

Whyte, Hirschboeck, Minahan, Harding & Harland, Milwaukee, Edward D. Cleveland, Milwaukee, and Corwin C. Guell, Thorp, of counsel, for defendant-respondent.

GORDON, Justice.

This case presents a difficult and important problem touching on the relationships between courts and administrative agencies. We must decide whether a circuit court is jurisdictionally competent to hear and determine issues which could have been presented to an administrative agency. If a court is not jurisdictionally foreclosed, we must also determine whether the court's refusal to resolve the dispute in the case at bar was an abuse of judicial discretion.

The plaintiffs sought to have the circuit court adjudge that Thorp was illegally engaging in the collection business in violation of sec. 218.04, Stats. Although Thorp is licensed to engage in various aspects of finance, it is not licensed as a collection agency, and the plaintiffs contend that the purchase of accounts by Thorp in a manner which gives Thorp the option to require the seller of the accounts to repurchase them is a subterfuge for Thorp's participation in the collection business.

Although the point was not raised by way of demurrer or answer, Thorp made a motion 'in the nature of a demurrer ore tenus' immediately after the first witness was sworn in which it was argued by Thorp that the court had no jurisdiction because the plaintiffs had failed to exhaust their administrative remedies. The court reserved its decision on this question and proceeded to take extensive testimony during the ensuing five days. The record of proceedings before the circuit court covered 830 pages. A total of 86 exhibits were received into evidence. At the conclusion of the trial, Thorp moved for dismissal on the grounds that the court had no jurisdiction because the commissioner of banks had primary jurisdiction and had failed to exercise it. The circuit court found that the commissioner of banks did have primary jurisdiction and that there had been no exhaustion by the plaintiffs of their administrative remedies.

The trial court's order, from which all parties have appealed, transferred the dispute to the commissioner of banks and directed him to determine within sixty days whether there had been a violation of sec. 218.04, Stats. The order further directed that any party aggrieved by the commissioner's decision must seek review before the consumer credit review board pursuant to secs. 220.037(7) and 220.035(2) before submitting the matter to the court. The circuit court's order expressly retained jurisdiction of the matter.

The Effect of Sec. 263.12, Stats.

The motion by Thorp after the first witness was sworn was almost, if not precisely, denominated a demurrer ore tenus. Regardless of its label, it was in effect a demurrer ore tenus and as such is inappropriate under sec. 263.12, Stats., unless it relates to the court's lack of jurisdiction over the subject matter. This opinion will subsequently discuss the jurisdictional question.

When this court amended certain practice rules in 1954 and adopted the pressent sec. 263.12, Stats., it was the court's intention to abrogate the demurrer ore tenus. See 265 Wis. vi. However, as noted in our recent decision in Buckley v. Park Building Corp. (1966), 31 Wis.2d 626, 143 N.W.2d 493, a motion for judgment on the pleadings, although closely related to a demurrer ore tenus, remains a permissible motion notwithstanding sec. 263.12. We repeat what we said in the Park Building Corp. Case, at page 631, 143 N.W.2d at page 495, and acknowledge that 'further amendment or clarification of sec. 263.12, Stats., may be advisable.' Pending any such clarification we encourage trial courts to be circumspect about entertaining an objection as to a nonjurisdictional matter in the complaint at the onset of trial which was not previously raised either by demurrer or by answer.

The Doctrine of Primary Jurisdiction.

The defendant Thorp contends that primary jurisdiction rested in the commissioner of banks and that this ousted the circuit court of the power to entertain the plaintiffs' complaint. Thorp further urges that the question of primary jurisdiction affected the subject matter and, accordingly, that the circuit court was wholly devoid of such jurisdiction.

The trial court found that the commissioner of banks had primary jurisdiction which he had not exercised. Although the circuit court in its order recognized that Thorp's motion to dismiss was based on an alleged lack of jurisdiction of the subject matter, the court's formal order did not affirmatively assert the absence of subject matter jurisdiction. In his decision, the trial judge stated that the primary jurisdiction question 'goes to jurisdiction over the subject matter.' Nevertheless, the actual order of the court sent the matter to the commissioner of banks for administrative action and went on to provide that 'this Court shall retain jurisdiction over the cause while the mandate of this Court is carried out.' It is thus not clear whether the trial court regarded itself devoid of jurisdiction of the subject matter or whether it concluded that it has jurisdiction but as a matter of discretion should refer the matter to the commissioner.

There appear to be no Wisconsin cases dealing with the doctrine of primary jurisdiction. The absence of Wisconsin decisional law on this question does not, however, warrant the conclusion that the doctrime is unestablished. It is generally acknowledged that the primary jurisdiction rule was first announced in Texas and Pac. Ry. v. Abilene Cotton Oil Co. (1907), 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553, and it has been the subject of numerous judicial expressions and law review discussions since that time. Local Union No. 189, Amalgamated Meat Cutters, etc. v. Jewel Tea Co. (1965), 381 U.S. 676, 684--688, 85 S.Ct. 1596, 14 L.Ed.2d 640; United States v. Philadelphia Nat. Bank (1963), 374 U.S. 321, 353, 354, 83 S.Ct. 1715, 10 L.Ed.2d 915; Great No. Ry. v. Merchants' Elev. Co. (1922), 259 U.S. 285, 42 S.Ct. 477, 66 L.Ed. 943; 3 Davis, Administrative Law, pp. 1--55, secs. 19.01--19.09; Convisser, Primary Jurisdiction: The Rule and its Rationalizations, 65 Yale Law Journal (1956), 315; Latta, Primary Jurisdiction in the Regulated Industries and the Anti-Trust Laws, 30 University of Cincinnati Law Review (1961), 261.

The purpose of the primary jurisdiction rule is to promote proper relationships between the courts and administrative agencies, and we believe that such purpose can be fully accomplished without also depriving the courts of subject matter jurisdiction.

We fully recognize that administrative agencies are designed to provide uniformity and consistency in the fields of their specialized knowledge. The expertise that comes with experience and also the factfinding facility that comes with a more flexible procedure enable the agencies to perform a valuable public function. When an issue arises which fits squarely within the very area for which the agency was created, it would be logical to require prior administrative recourse before a court entertains jurisdiction. Cf. State ex rel. City B. & T. Co. v. Marshall & I.B. (1958), 4 Wis.2d 315, 90 N.W.2d 556.

Nonetheless, we believe it improper to couch such priority in terms of power or jurisdiction. The standard, in our opinion should not be power but comity. The court must consider which course would best serve the ends of justice. If the issue presented to the court involves exclusively factual issues within the peculiar expertise of the commission, the obviously better course would be to decline jurisdiction and to refer the matter to the agency. On the other hand, if statutory interpretation or issues of law are significant, the court may properly choose in its discretion to entertain the proceedings. The trial court should exercise its discretion with an understanding that the legislature has created the agency in order to afford a systematic method of factfinding and policymaking and that the agency's jurisdiction should be given priority in the absence of a valid reason for judicial intervention.

Far East Conf. v. United States (1952), 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576, is a case which we believe demonstrates that the primary jurisdiction rule does not negate jurisdiction in the courts. In that case, the question was whether resort could be had to the federal district court before going to the federal maritime board. The United States supreme court held that the matter should have been presented to the board but, speaking for ...