Dennis Bailey; Garland County Cash Advance, Inc.; Beebe Fast Cash, Inc.; Bryant Fast Cash, Inc.; Corning Fast Cash, Inc.; Harrison Fast Cash, Inc.; Little Rock Fast Cash, Inc.; Mountain Home Fast Cash, Inc.; Searcy Fast Cash, Inc.; Sheridan Fast Cash, Inc.; Walnut Ridge Fast Cash, Inc.; Baileys Fast Cash, Inc.; Fast Cash Check Cashers, Inc.; and Central Arkansas Check Cashing, Inc. v. Arkansas State Board of Collection Agencies
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SUPREME COURT OF ARKANSAS
No.
07-896
DENNIS BAILEY; GARLAND
COUNTY CASH ADVANCE, INC.;
BEEBE FAST CASH, INC.; BRYANT
FAST CASH, INC.; CORNING FAST
CASH, INC.; HARRISON FAST CASH,
INC.; LITTLE ROCK FAST CASH,
INC.; MOUNTAIN HOME FAST
CASH, INC.; SEARCY FAST CASH,
INC.; SHERIDAN FAST CASH, INC.;
WALNUT RIDGE FAST CASH, INC.;
BAILEY’S FAST CASH, INC.; FAST
CASH CHECK CASHERS, INC.; and
CENTRAL ARKANSAS CHECK
CASHING, INC.,
APPELLANTS,
Opinion Delivered April 17, 2008
AN APPEAL FROM THE CIRCUIT
COURT OF PULASKI COUNTY,
ARKANSAS, NO. CV 07-2784,
HONORABLE MARION A.
HUMPHREY, CIRCUIT JUDGE
VS.
ARKANSAS STATE BOARD OF
COLLECTION AGENCIES,
APPELLEE,
AFFIRMED.
TOM GLAZE, Associate Justice
Appellant Dennis Bailey is the owner of fourteen businesses, located across Arkansas,1
that are or were engaged in check-cashing and deferred-presentment transaction operations.
Bailey applied for licenses for thirteen of those businesses in January 2005, but after
1
His businesses were located in Beebe, Bryant, Corning, Harrison, Little Rock,
Mountain Home, Searcy, Sheridan, Walnut Ridge, Fordyce, Camden, Hot Springs, Cabot
and Newport.
07-896
discovering that other businesses he owned had previously been found to be in violation of
state laws, the Arkansas State Board of Collection Agencies (“the Board”) declined to issue
him a permit. In March 2005, Bailey applied to the State of Missouri to organize BMB
Finance Company, LLC (BMB). Missouri issued BMB a license to operate,2 and Bailey then
set up his Arkansas businesses, structuring the deferred-presentment transactions conducted
at those businesses as “loans” from BMB, which loans were then “serviced” by the Arkansas
businesses.
On March 10, 2005, the Board wrote to Bailey and instructed him to “cease all check
cashing as he [did] not have a check-cashing license and [was] operating in violation of the
law.” Over the next few months, the Board’s investigators went to each of Bailey’s stores and
determined that he was still engaging in check-cashing and deferred-presentment transactions.
In addition, the Board determined that BMB was not authorized to enter into loan
transactions in Arkansas.
On June 28, 2006, the Board held a hearing on Bailey’s alleged violations and
determined that he had violated the Arkansas Check-Casher’s Act, Ark. Code Ann. § 23-52101 et seq. (Supp. 2005), by operating his check-cashing and deferred-presentment operations
without licenses. The Board entered an administrative order that same day in which it voided
all check-cashing and loan transactions into which the Bailey businesses had entered. It then
2
On January 26, 2006, Joe Crider, the Supervisor of Consumer Credit in the
Missouri Division of Finance, wrote to Bailey and informed him that the Missouri business
license only authorized Bailey to conduct business at BMB’s West Plains, Missouri,
location.
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fined Bailey and each of his businesses $1,000 for each check-cashing violation transaction in
2006, totaling $562,000; fined Bailey and his businesses $250 for each deferred-presentment
transaction in 2006, totaling $725,250; fined him $20,200 for the illegal operation of a Pine
Bluff store in 20053; ordered him to cease all operations immediately; and ordered him to
refund any fees that had been collected from anyone for the services of check cashing or
providing a deferred-presentment transaction or loan. In addition, the Board ordered Bailey
to pay the Board’s attorney’s fees in the amount of $10,000.
Bailey filed a petition for judicial review of the Board’s administrative order on July
10, 2006. After a hearing on March 2, 2007, the Pulaski County Circuit Court entered an
order on April 13, 2007, affirming the decision of the Board. The court entered judgment
in the Board’s favor on May 1, 2007, nunc pro tunc to April 13, 2007, ordering Bailey to pay
$1,417,450 to the Board. Bailey filed a notice of appeal on May 30, 2007, and now raises one
point for reversal, contending that the circuit court should have remanded the matter to the
Board because the Board’s decision was not based on sworn testimony.
Bailey takes issue with the fact that the testimony of Peggy Matson, the Executive
Director of the Board, “was replete with . . . hearsay[,] . . . was not under oath, [and] was not
verified.” At the hearing before the Board, Bailey asked the Board to exclude any hearsay
testimony, but the hearing officer declined to “make a blanket ruling prohibiting any paper
3
The Board determined that Bailey had operated “Pine Bluff Fast Cash, Inc.”
without a permit from the Board in 2004; the Board fined him $20,200 at that time.
Bailey submitted a check for that amount but subsequently stopped payment on that
check, and the fine remained unpaid at the time of the 2006 hearing.
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that somebody . . . may offer into evidence on hearsay grounds.” The hearing officer noted
that, since the Rules of Evidence did not apply to administrative proceedings, he did not
“understand that hearsay objections, just in and of themselves, [would] be applicable like they
would be in an ordinary court of law.” Bailey responded that, if the hearing officer was going
to allow hearsay, he would “stipulate” to all of the exhibits and documentation, “subject to
the [hearing officer’s] decision [on his hearsay objection].”
After Bailey’s stipulation to the exhibits, Matson informed the hearing officer that she
had put together a summary of her investigation; her summary was offered as an exhibit,
which was labeled S-2. Matson explained that the summary was a narrative of what her
testimony would be if she had gone through all of the exhibits, previously entered as exhibit
S-1, page by page. After the reporter marked the exhibits and the hearing officer accepted
them, Matson then went on to describe the investigation of Bailey and how it was determined
that he was engaging in check-cashing and deferred-presentment transactions in each of his
fourteen locations throughout Arkansas. At the conclusion of the hearing, Matson asked that
Bailey be found to have violated the Check-Casher’s Act, fined, and ordered to cease all
operations. The Board agreed, and, as noted above, an order to that effect was entered on
June 28, 2006.
Bailey contends that the Board’s decision was improper because it was based on
Matson’s written testimony, which he claims was nothing more than hearsay. In addition,
he urges that Matson’s testimony was neither under oath nor verified. However, after the
hearing officer rejected his hearsay objection, not only did Bailey stipulate to Matson’s
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documentary evidence, he also failed to object to the fact that her testimony was written and
not under oath. This court has been resolute in requiring an objection to first be made at the
administrative level, holding many times that it is an appellant’s obligation to raise such
matters first to the administrative agency and obtain a ruling. See Franklin v. Arkansas Dep’t
of Human Servs., 319 Ark. 468, 892 S.W.2d 262 (1995) (declining to review appellant’s
arguments that she was denied due process and her right to a hearing under Ark. Code Ann.
§ 25-15-208 where such arguments were not made to the administrative tribunal); Wright v.
Arkansas State Plant Bd., 311 Ark. 125, 842 S.W.2d 42 (1992) (declining to reach “several
arguments” that were not raised before the Board); Alcoholic Bev. Control Div. v. Barnett, 285
Ark. 189, 685 S.W.2d 511 (1985) (declining to reach a challenge to the timing of two localoption elections because the argument was not raised before the Board).
The rationale behind this rule is that, if the appellate court were to set aside an
administrative determination on a ground not presented to the agency, it would usurp the
agency’s function and deprive the agency of the opportunity to consider the matter, make its
ruling, and state the reasons for its action. See Wright, supra. Therefore, we decline to reach
Bailey’s argument that Matson’s testimony was required to be under oath.
Moreover, to whatever extent Bailey might have preserved his challenge to the alleged
hearsay nature of Matson’s testimony,4 his argument is without merit. The United States
Supreme Court has held that, in certain circumstances, hearsay evidence can constitute
4
We note that Bailey stipulated to the introduction of what he termed “hearsay,”
but did so subject to his previous objection.
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substantial evidence in an administrative proceeding. See Richardson v. Perales, 402 U.S. 389,
402 (1971). See also Smith v. Everett, 276 Ark. 430, 431, 637 S.W.2d 537, 538 (1982)
(evidence consisting of affidavits was “competent and constituted substantial evidence to
support the Board’s findings”); Bockman v. Arkansas State Medical Board, 229 Ark. 143, 313
S.W.2d 826 (1958). Accordingly, we affirm the decision of the Board.
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