Gulf States Paper Corporation v. Carmichael

• Decision Date: 15 December 1936
• Docket Number: 691.,No. 692,692
• Citation: 17 F. Supp. 225
• Court: U.S. District Court — Middle District of Alabama
• Parties: GULF STATES PAPER CORPORATION v. CARMICHAEL, Atty. Gen. of Alabama, et al. SOUTHERN COAL & COKE CO. v. SAME.

17 F. Supp. 225

GULF STATES PAPER CORPORATION v. CARMICHAEL, Atty. Gen. of Alabama, et al.^*

SOUTHERN COAL & COKE CO. v. SAME.

Nos. 692, 691.

District Court, M. D. Alabama.

December 15, 1936.

Borden Burr, of Birmingham, Ala., Neil P. Sterne, of Anniston, Ala., and Marion Rushton, of Montgomery, Ala., for plaintiff in No. 691.

Forney Johnston, Joseph F. Johnston and Lucien D. Gardner, Jr., all of Birmingham, Ala., for plaintiff in No. 692.

A. A. Carmichael, Atty. Gen., of Alabama, and Inge & Stallworth, of Mobile, Ala., for defendants.

Before SIBLEY, Circuit Judge, and KENNAMER and ERVIN, District Judges.

PER CURIAM.

Statement.

The Federal Social Security Act was approved August 14, 1935 (42 U.S.C.A. §§ 301-1305). The Alabama Unemployment Compensation Law was approved September 14, 1935 (Gen.Acts 1935, p. 950) and amended by three acts approved April 21, 1936 (Gen.Acts 1936, Ex.Sess. pp. 176, 225, 228). The Alabama act follows the suggestions or requirements of the Social Security Act and has been approved by the Federal Social Security Board. The Alabama act creates the Alabama Unemployment Compensation Commission to administer it, and its enforcement in court is required of the Attorney General of Alabama. Under the Alabama act reports by employers have been required and payments, being pay roll percentages in part deducted from employees' pay and in part paid by the employers, are already due and demanded. Failures to comply are punishable by cumulative penalties and by criminal prosecutions, all requiring court action. Two bills have been filed in this court seeking preliminary and permanent injunctions and other relief, against the members of the Alabama Unemployment Compensation Commission and the Attorney General of Alabama, one by the Southern Coal & Coke Company and one by the Gulf States Paper Company, and have been heard together by a court of three judges on the same evidence, and on their respective pleadings. The Alabama act is assailed as unconstitutional both under the equal protection and due process clauses of the Fourteenth Amendment, and under the Alabama Constitution, and the Social Security Act which is contended to be necessarily involved in the Alabama act is assailed as being not within the powers of Congress and in violation of the due process clause of the Fifth Amendment. Other constitutional difficulties are alleged. Both preliminary and permanent injunctions are now for decision.

Findings of Fact.

1. There is in each case diversity of citizenship and more than $3,000 involved exclusive of interest and costs.

2. If payment be made of the sums demanded, their recovery, if the act be unconstitutional, would be uncertain and difficult, no clear and adequate remedy at law being apparent, and there would arise a multiplicity of suits with employees whose pay was withheld. If payment be refused so as to test the validity of the act by a forced collection, penalties and criminal liabilities would be incurred if the act be valid, both numerous and serious, so that the remedy by resistance at law is not safe and adequate. The remedy here sought in equity is more certain and effectual.

3. The act seeks to alleviate the public evils and private hardships of unemployment. The evidence, aided by common knowledge, shows that Alabama was originally and still is predominantly an agricultural state, and that in agriculture unemployment is not an acute problem. The land may always be tilled and will yield a living, though business conditions be adverse, and even the old and the ill are generally worth their keep on a farm. The development of capitalistic industry has created a great class who work for others and have no capital but only their capacity to work. On the average, they save nothing and make no adequate provision for illness, old age, or unemployment. Illness and old age, though fairly certain to come, are spread out in time and space. Unemployment becomes acute and cumulative in periods of business depression, the unemployed, especially in industrial communities, are unable to help each other, or to help themselves, and suffer great distress, even starvation. Sickness is apt to occur, criminality is encouraged, and riot and revolution risked. The whole public is vitally interested in ameliorating the distress of such unemployment.

4. In the past no special legislative remedy for unemployment has been attempted. Poverty, however caused or by whomever suffered, has had the traditional relief in Alabama by poor laws, through the counties and their general taxation. This relief is limited and proved wholly inadequate during the great depression of the past few years.

5. The remedy proposed in the act of September 14, 1935, is, as interpreted in behalf of the state of Alabama in the answers, not a relief for indigence, but a scheme for compulsory insurance against unemployment, in which the beneficiary draws his benefits, not because he is poor, but because he has paid for them. The relief is not complete, for there is a waiting period during which nothing can be drawn, and the relief when it begins continues in general for only sixteen weeks, and covers but half the wage loss in those weeks. But it gives a support for a time within which new employment may be found or the old resumed, and keeps some money in circulation to uphold general business, relieving the cumulative collapse that so often attends either local or general business depressions. The means adopted by the Legislature is appropriate to the end in view.

6. At the passage of the act there were no accurate and full data available on which actuarial estimates could be made of the fund and the contributions necessary to sustain the proposed benefits. Unemployment, as it depends on business cycles, would seem hardly predictable. But the Legislature had the federal census of 1930, the investigations and tabulations of the Federal Bureau of Labor Statistics, and the data and suggestions assembled in connection with the Federal Social Security Act, besides the fund of general knowledge and the judgment which all legislatures are supposed to possess. There were no special hearings touching the proposed law, but it had the usual constitutional delays in its passage. It was reconsidered for amendment in April, 1936. The act is on its face somewhat tentative, in that the right to amend and repeal is expressly reserved, a delay of two years provided before benefits can be paid, and the Commission established is to get information and acquire experience which is to be made the basis of classifications and adjustment of rates after 1940.

7. The exceptions from the act have discernible reasons which prevent them from being arbitrary. The peculiar status of agriculture and its slight need for the remedy have been above alluded to. Domestic service in homes is similar, such servants seldom being discharged in great numbers at once or left to suffer. The same is true of the employers of the near relatives mentioned in the act. Service on ships in navigable waters, service on interstate railway carriers, and for the United States and its instrumentalities are peculiarly subject to federal law, and impositions on employer and employee would run into peculiar difficulties. So also impositions on charitable institutions and their employees would burden the charities which are semipublic at best. The state and its instrumentalities are excluded for like reasons. Why solicitors and agents of insurance companies are omitted is not apparent.

8. The main classification is between employers of eight persons or more and those of less than eight. Some employers and employees are now by litigations opposing the law on the ground that it is arbitrary to include in the burdens and benefits of the law employers and their employees where there are eight employed and to exclude where there are only seven or six. No reason for the difference thus...