Arkansas Cemetery Board v. Memorial Properties, Inc. ( 1981 )

Darrell Hickman, Justice.

On rehearing, we decide the controlling issue in this case was not raised at the administrative hearing. The question of the Board’s authority to order the twenty percent contribution was only referred to in the hearing during the cross-examination of Tommy H. Russell, Sr., president of Memorial Properties, Inc., by the Board’s attorney.

At the administrative hearing the appellee did not claim that the Board lacked the authority to impose a twenty percent payment; the twenty percent requirement had been imposed on the appellee previously and the hearing was held to see whether the funding request had been met.

It is an elementary principle of administrative law that an issue must be raised at the lower level to be pursued on appeal. This was clearly stated in Hennesey v. SEC, 285 F. 2d 511 (3d Cir. 1960), where the court said:

It is well established that issues not effectively presented to an administrative agency, where ample opportunity to do so has been afforded, cannot be raised on appeal of that agency’s decision. This principle may be viewed as one facet of the judicial doctrine of “exhaustion of administrative remedies.”

The United States Supreme Court stated the same concept in Unemployment Comm’n v. Aragon, 329 U.S. 143 (1946):

A reviewing court usurps the agency’s function when it sets aside the administrative determination upon a ground not theretofore presented and deprives the Commission of an opportunity to consider the matter, make its ruling, and state the reasons for its action.

The trial court held that the Board exceeded its authority when it ordered the twenty percent contribution and reversed the Board. Since that issue was not raised at the administrative hearing it could not be raised at the trial court. Therefore, the trial court’s order was wrong and its judgment is reversed.

Adkisson, C.J., and Purtle, J., dissent.