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Nat'l Account Systems, Inc. v. Anderson





APPEAL from the Circuit Court of Cook County; the Hon. NATHAN M. COHEN, Judge, presiding.


National Account Systems, Inc. (National), a collection agency, brought this action against Joan G. Anderson, the Director of the Department of Registration and Education (Director), and the Department of Registration and Education (Department) itself, seeking to enjoin the defendants from taking any further action to suspend or revoke National's certificate of registration to operate in this State. National also sought to have Rule 22.12 of the Rules and Regulations Promulgated for the Administration of the Collection Agency Act (1976) declared unconstitutional. The trial court held Rule 22.12 unconstitutional and issued the injunction. On appeal, defendants contend that: (1) equitable relief was improperly granted while administrative proceedings were pending; (2) Rule 22.12, which provides for a remand, is valid; and (3) the trial court usurped the Director's statutory authority in rendering its decision. We affirm in part. The facts are as follows.

In March 1977 the Department initiated proceedings to suspend or revoke National's license. A hearing officer was appointed and, following a full hearing, he submitted a preliminary statement, findings of fact and conclusions of law to the Director on October 13, 1977. The hearing officer recommended that National's license not be suspended or revoked. On November 9, 1977, the Department filed a motion with the Director asking for a rehearing of the matter. The Director heard arguments on the motion on January 11, 1978. On February 24, 1978, she issued an order refusing to adopt the hearing officer's recommendations for specific reasons. Acting pursuant to Rule 22.12, the Director referred the matter back to the hearing officer "for the purpose of correcting errors and correcting the Findings of Fact and reconsidering the Recommendations to the Director * * *."

On March 14, 1978, National filed suit in the circuit court of Cook County to obtain judicial review under the Administrative Review Act. (Ill. Rev. Stat. 1977, ch. 110, pars. 264 through 279.) On August 7, 1978, the court dismissed National's action, finding that the Director's order of February 24, 1978, was not a final order but that National had not waived any future judicial review of the matter.

On September 11, 1978, the hearing officer issued his restated findings of fact, conclusions of law and recommendations to the Director, again recommending that National's license be neither suspended nor revoked. Notice of the hearing officer's reconsidered decision was sent to National on September 29, 1978.

On January 5, 1979, National was served with notice that on December 29, 1978, the Director had rejected the hearing officer's restated findings, conclusions and recommendations. Again acting pursuant to Rule 22.12, the Director referred the matter to a new hearing officer "to review the record, transcripts and exhibits in this cause as well as any further evidence argument [sic] presented by the Respondent or the Department and submit new Findings of Fact, Conclusions of Law and Recommendations * * *."

National brought the instant action seeking equitable relief on February 2, 1979. After being directed to proceed with the second rehearing on March 16, 1979, National then filed a motion on February 26, 1979, seeking a preliminary injunction. The motion was granted the same day.

The trial court issued its final order on March 8, 1979, finding that the referral of the case to a new hearing officer was "not designed to correct error, clarify policy or reconcile conflict" and that the Director had used Rule 22.12 for a "multiplicity of re-references and not for the presentation of `* * * further evidence or argument * * *'." The trial court also concluded that the Director's re-referral of the administrative action was an abuse of her discretion and that further attempts by National to exhaust its administrative remedies would be "futile." The court found Rule 22.12 to be unconstitutional, both on its face and as applied to National, and enjoined defendants from any further action in the proceedings in the matter initiated March 7, 1977, to suspend or revoke National's license.


Defendants first contend that the trial court improperly granted equitable relief while administrative proceedings were pending, relying on the long-standing principle that a party involved in an administrative action must ordinarily exhaust all available administrative remedies before seeking relief from the courts>. (Myers v. Bethlehem Shipbuilding Corp. (1938), 303 U.S. 41, 82 L.Ed. 638, 58 S.Ct. 459.) The rule is not without its exceptions, however, and National maintains that it has established sufficient cause to warrant an exception to the exhaustion doctrine. We agree.

Exceptions to the exhaustion rule have been allowed where a statute, ordinance or rule is challenged as unconstitutional on its face (Bright v. City of Evanston (1956), 10 Ill.2d 178, 139 N.E.2d 270; Bio-Medical Laboratories, Inc. v. Trainor (1977), 68 Ill.2d 540, 370 N.E.2d 223), where multiple remedies exist before the same zoning board and at least one has been exhausted (Herman v. Village of Hillside (1958), 15 Ill.2d 396, 155 N.E.2d 47), where irreparable harm will result from further pursuit of administrative remedies (Peoples Gas Light & Coke Co. v. Slattery (1939), 373 Ill. 31, 25 N.E.2d 482), and where an administrative body's jurisdiction is attacked on its face on the ground that it is not authorized by statute. Landfill, Inc. v. Pollution Control Board (1978), 74 Ill.2d 541, 387 N.E.2d 258.

• 1 National alleges that the actions of defendants in ordering a second rehearing violate Rule 22.12 and constitute an abuse of discretion. It further alleges that the rule has been unconstitutionally applied and that Rule 22.12 itself is void in that it violates both the Illinois and United States constitutions and thereby exceeds defendants' authority to promulgate rules. Defendants maintain that National's challenge to the facial validity of Rule 22.12 is mere surplusage and that National has failed to establish irreparable injury or an inadequate remedy at law. We conclude that equitable relief was appropriate here in spite of the pending administrative proceedings, for National has shown the inadequacy of available legal remedies, the futility of pursuing relief through administrative channels and the likelihood of irreparable injury if the courts> do not intervene.

National clearly has no adequate remedy at law. As the court stated in Bio-Medical Laboratories, Inc. v. Trainor (1977), 68 Ill.2d 540, 549, 370 N.E.2d 223, 227:

"* * * For there to be an adequate remedy at law which will deprive equity of its power to grant injunctive relief, the remedy `must be clear, complete, and as practical and efficient to the ends of justice and its prompt administration as the equitable remedy.' (K.F.K. Corp. v. ...

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