Summary
In Warren Brokerage Co. v. Mississippi Unemployment Compensation Commission, 194 Miss. 855, 13 So.2d 227, 228, the Supreme Court of Mississippi said: "To support its position appellant relies on Independent Gasoline Co. v. Bureau of Unemployment Compensation, 190 Ga. 613, 10 S.E.2d 58, and Benner-Coryell Lbr. Co. v. Indiana Unemployment Compensation Board, 218 Ind. 20, 29 N.E.2d 776. These two cases represent the minority view and seem to stand alone."
Summary of this case from Outdoor Display Advertising Corp. v. HakeOpinion
No. 35348.
April 26, 1943.
CONSTITUTIONAL LAW. Taxation.
Unemployment compensation statute defining employer as applied to corporation in which majority of stock was owned by another corporation and stock of both corporations was controlled by same interests, the two corporations together employing eight or more persons, is not invalid as denying "equal protection of law" (Laws 1936, chap. 176, sec. 19(n) (1, 4), as amended by Laws 1938, chap. 147 sec. 16).
APPEAL from circuit court of Hinds county, HON. J.F. BARBOUR, Judge.
Dabney Dabney, of Vicksburg, for appellant.
This proceeding is not to be considered as an attack on the unemployment compensation act as a whole or in its entirety, nor is there brought into question the wisdom of the act under the New Dispensation, but simply that Section 19(h) (4) of the act is unconstitutional in its application to either the Warren Brokerage Company or the Warren Credit Corporation; and that the action of the Mississippi Unemployment Compensation Commission in so holding against each of these appellants is violative of the rights of each of these appellants under the Fourteenth Amendment to the Constitution of the United States (Section 1), and Section 14 of the Constitution of the State of Mississippi.
Independent Gasoline Co. v. Bureau of Unemployment Compensation (Ga.), 10 S.E.2d 58, et seq.; Benner-Coryell Lumber Co., Inc., v. Indiana Unemployment Compensation Board (Ind.), 29 N.E.2d 776.
Harry M. Bryan and Henry Edmonds, both of Jackson, and Greek L. Rice, Attorney-General, for appellee.
The proceeding is under the authority of Section 14 of the Mississippi Unemployment Compensation Law (Chapter 176, Laws of 1936, as amended by Chapter 3, First Extraordinary Session of 1936, and Chapter 147, Laws of 1938, and Chapter 295, Laws of 1940.
The coverage provisions of the Mississippi Unemployment Compensation Law involved in these appeals are Section 19(g) and Section 19(h) (1) and (4) of the Unemployment Compensation Law.
The only question involved is whether or not Section 19(h) (4) of the Unemployment Compensation Law, as applied to the two corporations involved, is violative of the "equal protection" clauses of the state and federal Constitutions.
The "common control" provision of the unemployment compensation law is not violative of either the state or federal constitution.
Shortly after their passage, the Social Security Act and the unemployment compensation laws of the states were challenged on various constitutional grounds. The Federal Act was upheld by the United States Supreme Court in the case of Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 779. The Supreme Court of the United States also upheld the Alabama Unemployment Compensation law in Carmichael v. Southern Coal Coke Co., 301 U.S. 495, 57 S.Ct. 868, 81 L.Ed. 1245.
The Mississippi act, with certain minor differences, is identical with the Alabama act in its purposes. This court, in Tatum v. Wheeless, 180 Miss. 800, 178 So. 95, upheld it, disposing of all constitutional objections which were presented.
The sole and only constitutional question in the cases at bar, as we see it, is whether the legislative classification, which requires the combining of the employment experience of more than one employing unit under the circumstances set forth in the statute, is so arbitrary, discriminatory and unreasonable as to violate some provision of the state or federal constitution. In other words, the inquiry here is directed to the question of whether Section 19 (h) (1) and (4), upon the facts as developed before the Commission, works an unreasonable and unwarranted discrimination upon appellants that subjects them to special burdens and liabilities.
We respectfully submit that T.E. Avent v. Mississippi Unemployment Compensation Commission et al., 62 S.Ct. 947, 86 L.Ed. 1727, is decisive of the cases at bar.
The dismissal of Avent's appeal from this court's decision by the Supreme Court of the United States was tantamount to an affirmance. This is clear when the authorities cited by it in support of its failure to find therein "a substantial federal question" are examined.
Carmichael v. Southern Coal Co., 301 U.S. 495, 510-513, 57 S.Ct. 868, 872-874, 81 L.Ed. 1245, 109 A.L.R. 1327; Great A. P. Co. v. Grosjean, 301 U.S. 412, 57 S.Ct. 772, 81 L.Ed. 1193, 112 A.L.R. 293; H.E. Butt Grocery Co. v. Sheppard, 311 U.S. 608, 61 S.Ct. 52, 85 L.Ed. 385; Helvering v. Clifford, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788.
Before citing from other jurisdictions involving constitutional attacks upon the statutory provisions of various states' unemployment compensation laws identical with or substantially similar to the provision herein brought in question, we direct attention to certain general principles and precepts long established by this court in dealing with the legislature's power to classify for purposes of taxation.
It is well settled that the "equality and uniformity" clause of the constitution applies only to ad valorem taxation for general purposes.
Daily v. Swope, 47 Miss. 367; Holberg v. Macon, 55 Miss. 112; Clarksdale Ins. Agency v. Cole, Insurance Commissioner, 87 Miss. 637, 40 So. 228; Coca Cola Co. v. Skillman, 91 Miss. 677, 44 So. 985; Barataria Canning Co. v. State, 101 Miss. 890, 58 So. 769; State v. Lawrence, 108 Miss. 291, 66 So. 745; Cudahy Packing Co. v. Stovall, 112 Miss. 106, 72 So. 870; Postal Telegraph-Cable Co. v. Robertson, 116 Miss. 204, 76 So. 560; Hattiesburg Grocery Co. v. Robertson, 126 Miss. 34, 88 So. 4; State ex rel. Knox v. Gulf, M. N.R. Co., 138 Miss. 70, 104 So. 689; Southern Package Corporation v. State Tax Commission, 174 Miss. 212, 164 So. 45.
The classification comprehended within Section 19(h) (4) of the Unemployment Compensation Law rests upon a reasonable basis.
Gully v. Gulf Coast Industrial Loan Co., 168 Miss. 768, 151 So. 754; Mississippi State Tax Commission v. Flora Drug Co., 167 Miss. 1, 148 So. 373; Tatum v. Wheeless, 180 Miss. 800, 178 So. 95; Carmichael v. Southern Coal and Coke Co., 301 U.S. 495, 510-513, 57 S.Ct. 868, 872-874, 81 L.Ed. 1245, 109 A.L.R. 1327; United States v. Whyel (Pa.), 19 F.2d 260; Revenue Act of 1918, Sec. 240(b) (40 Stat. 1082); Unemployment Compensation Law, Secs. 19(h) (1), 19 (h) (4).
For authorities directly in point see: Benner-Coryell Lumber Co., Inc., v. Indiana Unemployment Compensation Board, 29 N.E.2d 776; Florida Industrial Commission et al. v. Gary-Lockhart Drug Stores, Inc., et al., 143 Fla. 293, 196 So. 845; Gibson Products Co., Inc., et al. v. Murphy, 186 Okla. 714, 100 P.2d 453; Independent Gasoline Co., Inc., v. Bureau of Unemployment Compensation, 190 Ga. 613, 10 S.E.2d 58, Cert. denied 61 S.Ct. 175; Maine Unemployment Compensation Commission v. Androscoggin, Junior, Inc., 137 Me. 154, 16 A.2d 252; New Haven Metal Heating Supply Co. v. Danaher, 128 Conn. 213, 21 A.2d 383; State of North Carolina ex rel. Unemployment Compensation Commission v. J.M. Willis Barber and Beauty Shop et al., 219 N.C. 709, 15 S.E.2d 4; State of Washington v. Kitsap County Bank, 110 Wn. Dec. 489, 117 P.2d 228; Unemployment Compensation Commission v. City Ice Coal Co. et al., 216 N.C. 6, 3 S.E.2d 290.
The Supreme Courts of Georgia and Indiana have held the "common control" provisions of the unemployment compensation laws of those states invalid in two cases involving corporations as employing units. These two decisions are the only authorities cited by appellants in the cases at bar in support of their contention that Section 19(h) (4) of the Mississippi Unemployment Compensation Law when applied to them is unconstitutional and void because of unreasonableness of classification.
Independent Gasoline Co. v. Bureau of Unemployment Compensation (Ga.), supra; Benner-Coryell Lumber Co. v. Indiana Unemployment Compensation Board, supra.
But compare Maine Unemployment Compensation Commission v. Androscoggin, supra; New Haven Metal Heating Supply Co. v. Danaher, supra; State of North Carolina v. J.M. Willis Barber Beauty Shop et al., supra; State of Washington v. Kitsap County Bank, supra; Unemployment Compensation Commission v. City Ice and Coal Co., supra.
See also Southern Photo Blue Print Co. v. Gore (Tenn.), 114 S.W.2d 796; Wiley Motors, Inc., v. Unemployment Compensation Commission of New Jersey, 130 N.J.L. 30, 31 A.2d 39.
The facts as found by the commission, and which are undisputed, are as follows: "The Warren Credit Corporation was incorporated under the laws of the State of Mississippi in 1935 and since its incorporation has been and is engaged in the City of Vicksburg, Mississippi, in the business of commercial banking or sales finance; that the Warren Brokerage Company, Incorporated, was incorporated in 1938 under the laws of the State of Mississippi and since its incorporation has been and is engaged in the City of Vicksburg, Mississippi, in the business of brokering personal loans through the Industrial Finance Thrift Corporation in New Orleans, Louisiana; that when the Warren Brokerage Company, Incorporated, was originally chartered and first began to do business its shares of capital stock were owned as follows: J.E. Bonelli, 2500 shares, F.Y. Dabney, 2500 shares, Natalie Groome, 1 share, and the Warren Credit Corporation 4999 shares; that on November 1, 1939, J.E. Bonelli and F.Y. Dabney each assigned, transferred and conveyed to the Warren Credit Corporation 250 shares of the stock held by them, thus increasing the interest of the Warren Credit Corporation's ownership of the capital stock of the Warren Brokerage Company, Incorporated, to 5499 shares, a substantial majority of all the capital stock of the Warren Brokerage Company, Incorporated; that all of said stock was voting stock, the only class of stock authorized and issued by the said Warren Brokerage Company, Incorporated; that this stock holding and ownership remained the same throughout the calendar years 1940 and 1941; that at no time during the calendar years 1940 and 1941 was any stock of the Warren Credit Corporation owned by the Warren Brokerage Company, Incorporated; that all of the Warren Credit Corporation stock was, during the calendar years 1940 and 1941, in the hands of twelve stockholders and that during said period all of the stock of the Warren Brokerage Company, Incorporated, was in the hands of four stockholders; that the two corporations are and have been at all times separate legal entities and that during said two calendar years of 1940 and 1941 they maintained separate books, accounts, bank accounts and records; that neither corporation alone has had as many as eight or more employees during the period for which the aforesaid assessment was made, but that during the whole of said period for which the said assessment was made, the Warren Credit Corporation and the Warren Brokerage Company, Incorporated, did have together more than eight employees engaged in non-exempt employment as defined by the said Unemployment Compensation Law."
Under the facts as stated, the commission ruled that appellant was an employer subject to Sec. 19(h) (4) of the Unemployment Compensation Act, Chap. 176, Laws 1936, as amended.
Sec. 19(h) (1) and (4) of the statute, as amended by Laws 1938, ch. 147, sec. 16, reads as follows:
"`Employer' means:
"(1) Any employing unit which for some portion of a day, but not necessarily simultaneously, in each of twenty different weeks, whether or not such weeks are or were consecutive, within either the current or the preceding calendar year, has or had in employment, eight or more individuals (irrespective of whether the same individuals are or were employed in each such day);
. . . . . . .
"(4) Any employing unit which, together with one or more other employing units, is owned or controlled (by legally enforceable means or otherwise) directly or indirectly by the same interests, or which owns or controls one or more other employing units (by legally enforceable means or otherwise), and which, if treated as a single unit with such other employing units or interests, or both, would be an employer under paragraph (1) of this subsection."
Appellant contends, to quote the contention in its own language, as follows: "That provisions of the Mississippi Unemployment Compensation Commission statute, including in definition of employer and employing unit, which together with one or more other employing units is owned or controlled by the same interests, and which, if treated as a single unit with such other employing units would be an `employer' violates the `equal protection' clauses of the State and Federal Constitutions as applied to a corporation which does not employ the minimum of eight required by the Act, but which is controlled by one also owns a majority of the stock of another corporation which must be treated with the first as a single unit in order to render them subject to the act."
To support its position appellant relies on Independent Gasoline Co. v. Bureau of Unemployment Compensation, 190 Ga. 613, 10 S.E.2d 58, and Benner-Coryell Lbr. Co. v. Indiana Unemployment Compensation Board (Ind. Sup.), 29 N.E.2d 776. These two cases represent the minority view and seem to stand alone. They were discussed and disapproved in State of Washington v. Kitsap County Bank, 10 Wn.2d 520, 117 P.2d 228, and in Unemployment Comp. Comm. v. Willis, 219 N.C. 709, 15 S.E.2d 4.
In addition to the two cases last mentioned, there are in accord therewith New Haven Metal Heating Co. v. Danaher, 128 Conn. 213, 21 A.2d 383; Florida Industrial Comm. v. Gary-Lockhart Drug Stores, Inc., 143 Fla. 293, 196 So. 845; Gibson Products Co. v. Murphy, 186 Okla. 714, 100 P.2d 453; Maine Unemployment Comp. Comm. v. Androscoggin, Junior, Inc., 137 Me. 154, 16 A.2d 252; and Wiley Motors, Inc., v. Unemployment Comm., 130 N.J.L. 30, 31 A.2d 39. By these it is seen that the majority of the courts have ruled against the contention here made by appellant; and there is such an elaboration of authority and reasoning in those cases that we do not attempt to enlarge upon them, adding only that we concur in the results reached therein, which means that we are of the opinion that the action of the commission in the present case was correct. Although not in precise point, Mississippi Unemployment Comp. Comm. v. Avent, 192 Miss. 85, 4 So.2d 296, 684, is of interest.
Affirmed.