Southern California Jockey Club, Inc. v. California Horse Racing Board , 36 Cal. 2d 167 ( 1950 )

TRAYNOR, J., Dissenting.

The trial court found that the determination of the board was supported by “substantial evidence and by the weight of the evidence.” The majority opinion herein affirms the decision of the trial court on the ground that there was substantial evidence to support the determinations of the board and of the trial court. It holds that if plaintiff was entitled to a finding by the trial court that the board’s decision was or was not supported by the weight of the evidence, this court discharges its duty to review that decision by determining whether there was substantial evidence to support it. As an alternative ground for decision it holds that plaintiff was only entitled to a determination by the trial court whether there was substantial evidence to support the decision of the board, since denial rather than revocation of a license was involved. For the reasons set forth in my dissenting opinion in Moran v. Board of Medical Examiners, 32 Cal.2d 301, 315, 317 [196 P.2d 20], I cannot agree that if the issue before they trial court was whether the decision of the board was supported 1 by the weight of the evidence, our duty of review is discharged by discovering substantial evidence to support the trial eourtJ Manifestly, if we must determine whether the trial court correctly decided the issue before it, namely, whether the board’s finding was supported by the weight of the evidence, we cannot do so without reviewing the entire record to see where the weight of the evidence lies. In affirming the judgment on the alternate ground the majority opinion abandons the position previously taken by the majority of this court that the findings of fact by state-wide administrative agencies must be independently reexamined by the trial court to determine whether they are supported by the weight of the evidence. (Moran v. Board of Medical Examiners, 32 Cal.2d 301 [196 P.2d 20]; Dare v. Board of Medical Examiners, 21 Cal.2d 790 [136 P.2d 304].)

The majority opinion seeks to explain its abandonment of the rule of these cases by establishing a distinction between cases such as this, in which the action reviewed consists of the denial of a license or permit, and cases in which the action reviewed consists of the revocation or suspension of a previously granted license. Notwithstanding that in either instance the result of the administrative action is to deprive the petitioner of the opportunity to carry on a lawful business, profession, or occupation, the majority opinion approves the doctrine of McDonough v. Goodcell, 13 Cal.2d 741, 752-753 [91 P.2d 1035, 123 A.L.R. 1205], that there is a sufficient practical difference between the two types of action to merit the application of divergent theories of judicial review. It is held that if the agency revokes a license upon a specific finding of fact, the action must be reversed by the reviewing court if the finding is not supported by the weight of the evidence, but if on an identical finding it merely denies a license or permit, its action may be reversed only if there is no substantial evidence to support it.

In my opinion, the failure to overrule the Dare and Moran eases is not justified by the approval of a double standard for a single problem. It is apparent that there is no practical difference between the denial of a license, as in McDonough v. Goodcell, supra, to a petitioner who has for thirty years conducted the business for which the license is sought, and the revocation of a license under which the petitioner may have operated his business. It has been aptly stated that “the majority position has led to an unsound distinction between suspending a professional license and refusing to grant a license where the result in each instance is to eject a person from a business in which he has engaged for a number of years . . . The position taken in the majority opinion can lead only to further unfortunate complications in this field of the law.” (Dissenting opinion of Gibson, C. J., in Laisne v. State Board of Optometry, 19 Cal.2d 831, 869 [123 P.2d 457].)

The application of the present decision to the Horse Racing Act demonstrates the wisdom of that prophecy. “All persons participating in or having to do with the racing of horses” must obtain licenses from the board. (Bus. & Prof. Code, § 19510.) Such licenses are valid only for the calendar year for which they are issued and new licenses must be secured annually. (Bus. & Prof. Code, § 19511.) Licenses may be refused or revoked only for just cause. (Bus. & Prof. Code, § 19513.) Assume that during the calendar year the board after notice and hearing finds that there is just cause for the revocation of the license of a horse owner, rider, or trainer, and orders his license revoked. He petitions for writ of mandate and the trial court grants the peremptory writ for the reason that the board’s finding, although supported by substantial evidence, is not supported by the weight of the evidence. Thereafter, petitioner applies at the close of the calendar year for his license, but the board upon the same evidence and upon the same finding upon which its previous action was predicated, refuses to issue the license. The peremptory writ must now be denied for the reason that the finding is supported by substantial evidence. Thus, although the same finding is made in each case upon the same evidence under the same statute and “the result in each instance is to eject a person from a business in which he has engaged for a number of year,” the majority opinion apparently finds no inconsistency' between the types of review that it prescribes.

The present case is the first since McDonough v. Goodcell in which this court has approved the doctrine of that case. The decisions of the majority of this court have stated the rule to be that in the case of a state-wide agency the court must exercise an independent judgment on the facts and reweigh the evidence in each ease without qualification or limitation to those cases in which only revocation or suspension of a license is involved. McDonough v. Goodcell has occasionally been adhered to by the District Courts of Appeal on the theory that “whatever our view may be as to the correctness of this distinction, as an intermediate court we are bound by this holding of the Supreme Court.” McDonough v. Garrison, 68 Cal.App.2d 318, 337 [156 P.2d 983] [see, also, dissenting opinion of Ward, J., at 348-352]; Housman v. Board of Medical Examiners, 84 Cal.App.2d 308, 315, 319 [190 P.2d 653]; Glick v. Scudder, 69 Cal.App.2d 717, 719 [160 P.2d 90].) References to the McDonough case in other decisions were, as petitioner contends, dicta unnecessary to such decisions. (Dierssen v. Civil Serv. Comm., 43 Cal.App.2d 53, 61 [110 P.2d 513]; Wallace v. Board of Education, 63 Cal.App.2d 611, 615 [147 P.2d 8].) In other cases, which in the view of the majority opinion herein required the application of McDonough v. Goodcell, the distinction has been abandoned in favor of adherence to the logical implications of the rule of the Dare and Moran cases. (Transportation Bldg. Corp. v. Daugherty, 74 Cal.App.2d 604, 616 [169 P.2d 470]; Kleiner v. Garrison, 82 Cal.App.2d 442, 446, 447 [187 P.2d 57].)

The doctrine of McDonough v. Goodcell cannot be reconciled with the rationale of the Dare and Moran cases upon which it is purportedly based. In Standard Oil Co. v. State Board in announcing its departure from the heretofore prevailing of Equalization, 6 Cal.2d 557, 559 [59 P.2d 119], this court rule (see Sudeow v. Alderson, 182 Cal. 247 [187 P. 965]) that certiorari will lie to review the decisions of a state-wide administrative agency stated: “Concisely stated, our conclusion that we are without authority or jurisdiction to entertain this proceeding or to issue the writ here sought, is based upon the established premises that a writ of certiorari . . . will lie only to review the exercise of judicial functions (sec. 1068, Code Civ. Proc.) and that the legislature is without power ... to confer judicial functions upon a state-wide agency” under article VI, section 1 of the California Constitution. Subsequent cases have expanded the doctrine of the Standard Oil Company ease into the following syllogism: Judicial functions cannot constitutionally be delegated to state-wide administrative agencies. The function of making final findings of fact is judicial, and such finality can be accorded only to the findings of fact of a court. (Drummey v. State Board of Funeral Directors, 13 Cal.2d 75, 84-85 [87 P.2d 848].) Accordingly, the findings of fact of an administrative agency must be reviewed by a court that must exercise its independent judgment on the facts (Drummey v. State Board of Funeral Directors, supra) and determine therefrom whether those findings are supported by the weight of the evidence (Dare v. Board of Medical Examiners, 21 Cal.2d 790, 801 [136 P.2d 304]; Moran v. Board of Medical Examiners, 32 Cal.2d 301, 308 [196 P.2d 20]), and not merely by substantial evidence. Presumably, any more limited review would confer judicial functions upon the administrative agency in violation of the constitutional prohibition thereof.

Given this reasoning as the basis of the foregoing decisions, it is difficult to justify the distinction established by McDonough v. Goodcell and the majority opinion herein. If finality cannot be accorded the findings of fact of an administrative agency because the function of making such findings is exclusively judicial, is the function any less judicial because the petitioner attacking the findings does not already have a license 1 Insurance Code, section 1805, provides that the insurance commissioner may refuse to issue a bail license upon any of eight specified findings. Section 1807 provides that he may suspend or revoke a bail license for any cause for which he could refuse to issue a license. If he were to make a finding of fact under section 1807, does the California Constitution prohibit this court from according finality to that finding but permit the same finding to be made final under section 18051 If there can be no administrative finality under the California Constitution, as the majority of this court holds, then the prohibition should apply whether the petitioner seeks to secure a license or to retain it. If, on the other hand, the administrative findings of fact may constitutionally be made final in license denial cases, they may constitutionally be made final in license revocation cases. Manifestly, the doctrine of McDonough v. Goodcell is at odds with the principles of judicial review announced by the majority of this court in the Dare and Moran cases. If the majority opinion herein is to be consistent with those principles, it should overrule McDonough v. Goodcell. Otherwise, the Moran, Dare, Laisne, Drummey and Standard Oil Co. cases must be overruled.

The fallacy of McDonough v. Goodcell is not its announcement of the rule of administrative finality but its failure to give that rule its full and proper application. The remedy for the presently existing inconsistency is not the total repudi-. ation of the rule of administrative finality but the recognition that "our duty is at an end when it becomes evident that the Commission’s action is based on substantial evidence and is consistent with the [statutory] authority.” (Securities & Exchange Com. v. Chenery Corp., 332 U.S. 194, 207 [67 S.Ct. 1575, 1760, 91 L.Ed. 1995]; Republic Aviation Corp. v. National Labor R. Board, 324 U.S. 793, 800 [65 S.Ct. 982, 89 L.Ed. 1372, 157 A.L.R. 1081]; National Broadcasting Co. v. United States, 319 U.S. 190, 224 [63 S.Ct. 997, 87 L.Ed. 1344].) “The construction of a constitutional provision like that in question, given by the California court, is not upheld by the weight of authorities and would, if carried to its logical conclusion, emasculate, if not destroy, the powers of practically every administrative board or tribunal in [the] state.” (Batty v. Arizona State Dental Board, 57 Ariz. 239 [112 P.2d 870, 873].) Compelling reasons for the abandonment of the position taken by the majority of this court have been expressed in the dissenting opinion in the Laisne case (19 Cal. 2d at 848-869) and in the concurring and dissenting opinion in the Dare ease (21 Cal.2d at 803-816). Further repetition of these arguments is unnecessary.

It is contended, however, that this court is foreclosed from the reexamination of its error by virtue of the legislative adoption of the rule of the Dare and Laisne cases in the enactment of section 1094.5 of the Code of Civil Procedure. I can find no such legislative intention in the statute, which provides merely that “Where it is claimed that the findings are not supported by the evidence, in cases in which the court is authorized by law to exercise its independent judgment on the evidence, abuse of discretion is established if the court determines that the findings are not supported by the weight of the evidence; and in all other cases abuse of discretion is established if the court determines that the findings are not supported by substantial evidence in the light of the whole record.” (Italics added.) The Legislature, how'ever, did not prescribe the cases in which the court is authorized by law to exercise its independent judgment on the evidence. Indeed, under the decisions of this court, it could not for the reason that the decisions from Standard Oil to Dare speeifically held that the authority to exercise án independent judgment is expressly conferred on the court by the California Constitution. This court, and not the Legislature', is the final arbiter of the meaning of the California Constitution. A decision by this court that the superior court is not, in cases such as this, “authorized by law to exercise an independent judgment on the evidence,” would be consistent with, not contrary to, section 1094.5.

Edmonds, J., concurred.