296 Mass. 275 (1936), Howes Bros. Co. v. Massachusetts Unemployment Compensation Com'n

Citation:296 Mass. 275, 5 N.E.2d 720
Opinion Judge:RUGG, Chief Justice.
Attorney:E. F. McClennen, J. J. Kaplan, E. C. Mower, Jr., E. Williamson, R. E. Ela, L. Kaplan, and R. V. Brown, all of Boston, for Howes Brothers Co. J. T. Pugh, R. A. B. Cook, and J. B. Rintels, all of Boston, for George H. Ellis Co. J. J. Ronan, Asst. Atty. Gen., and R. Clapp, Asst. Atty. Gen., for defe...
Case Date:December 30, 1936
Court:Supreme Judicial Court of Massachusetts

Page 275

296 Mass. 275 (1936)

5 N.E.2d 720







Supreme Judicial Court of Massachusetts, Suffolk.

December 30, 1936

Reservations and Reports from Supreme Judicial Court, Suffolk County.

Two suits in equity by the Howes Brothers Company and the George H. Ellis Company against the Massachusetts Unemployment Compensation Commission. On reservations and reports by the trial judge.

Bill in each case dismissed.

Page 276

[5 N.E.2d 722] E. F. McClennen, J. J. Kaplan, E. C. Mower, Jr., E. Williamson, R. E. Ela, L. Kaplan, and R. V. Brown, all of Boston, for Howes Brothers Co.

J. T. Pugh, R. A. B. Cook, and J. B. Rintels, all of Boston, for George H. Ellis Co.

J. J. Ronan, Asst. Atty. Gen., and R. Clapp, Asst. Atty. Gen., for defendant.

RUGG, Chief Justice.

Each of these suits in equity was heard by a single justice upon the bill, the answer and the evidence. The evidence consisted only of the facts set forth in briefs filed, pursuant to a stipulation of parties to the effect that any facts deemed material by the Attorney General

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and by counsel for each plaintiff might be incorporated in a printed brief and considered as evidence so far as material. The evidence and all questions of law in each case were reported at the request of the parties by the single justice for consideration by the full court. The issues thus raised relate chiefly to the constitutionality of the Unemployment Compensation Law, St.1935, c. 479, approved August 12, 1935 (as amended by St.1936, cc. 12 and 249), and of the Social Security Act approved August 14, 1935, c. 531, 49 U.S.Sts. at Large, 620 (42 U.S.C.A. §§ 301-1305). The title of said chapter 479 is ‘ An Act to provide for the establishment and administration of unemployment compensation.’ By section 5 of said chapter 479 there was inserted in the General Laws chapter 151A, entitled ‘ Unemployment Compensation.’ By section 51 of said chapter 151A the chapter shall be known and may be cited as the ‘ Unemployment Compensation Law.’

The several briefs on facts filed by the parties show that since 1929 there has been a serious and acute problem for both State and Federal governments due to the unemployment of large numbers of citizens. Vast sums of money have been expended to aid these unemployed and their dependents until they may be able to secure work and become self-supporting again. A great amount of study, thought and discussion has been devoted to attempts to determine the causes of unemployment, to establish sound means to reduce or alleviate its evil consequences, and to provide plans for the future whereby its extent may be reduced and its disheartening features softened. This crucial situation has been considered at successive sessions of the General Court. As a result said chapter 479 and its amendments, [5 N.E.2d 723] St.1936, cc. 12 and 249, were enacted. Each plaintiff is an employer as defined in the Unemployment Compensation Law, and the members of the commission created by that law are named as defendants.

The salient features of the Unemployment Compensation Law (said chapter 151A) are these: An unemployment compensation commission (hereafter called commission) consisting of three members is created with powers to enforce the law. Any individual, partnership, firm, association or foreign or

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domestic corporation which has employed at least eight individuals in employment included within the law on some day in each of twenty weeks in 1935, or so employs at least eight individuals for an equal period in any subsequent calendar year, becomes subject to the law. Section 1(c). By definition of the word ‘ employment’ the law comprises such employees as customarily perform all or the greater part of their work within the Commonwealth under any contract of hire, but does not apply to ‘ (1) Service in agricultural labor; (2) Domestic service in a private home; (3) Service performed as an officer or member of the crew of a vessel on the navigable waters of the United States; (4) Service performed by an individual in the employ of his son, daughter or spouse, and service performed by a child under the age of twenty-one in the employ of his father or mother; (5) Service performed in the employ of the United States government or of an instrumentality of the United States; (6) Service performed in the employ of the commonwealth, a political subdivision thereof, or an instrumentality of one or more states or political subdivisions; (7) Service performed in the employ of a corporation, community chest fund, or foundation, organized and operated exclusively for a religious, charitable, scientific, literary or educational purpose, or for the prevention of cruelty to children or animals, no part of the net earnings of which ensures to the benefit of any private shareholder or individual.’ Section 1(a), as amended by St.1936, c. 249, § 1. This definition is substantially the same as that in section 811 of the Social Security Act (42 U.S.C.A. § 1011), said chapter 531, approved August 14, 1935, 49 U.S.Sts. at Large, 620. All nonexempt employers are treated as one class without regard to the nature of their business or to their unemployment experience, and are subjected to the same requirements of contributions. Each employer subject to the law is required to contribute in his own behalf an amount with some variations for the year 1936 equal to one percent of his payroll of all employees except those employed at a rate of $2,500 per year, or more, or at a rate of $50 a week, or more; for 1937, two percent, and for 1938 and each, year thereafter, three percent. These contributions

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shall be transmitted to the commission, which shall keep a separate account for each employer. After January 1, during 1937, each employee shall contribute one percent of his wages, and after 1937 an amount equal to one half the amount contributed by his employer for him. The employer is required to withhold such contributions from the wages of his employees and to transmit them to the commission in like manner as his own contributions. Section 3, as amended by St.1936, c. 249, § 6. Any employer who fails after notice to make payments required of him shall pay interest at the rate of one percent per month. Section 6. The amounts uncollected shall constitute a lien against his assets. Section 7. All contributions shall be paid to the commission and by it paid over to the State Treasurer. By him they shall be credited to the unemployment compensation fund of which he is treasurer. That fund shall be administered by the commission in trust, without liability on the part of the Commonwealth beyond the amounts credited to and earned by the fund. All contributions are pooled in a common fund and are available to pay benefits to any employee entitled thereto irrespective of the source of such contributions. Sections 2, 9, 10, 11. The State Treasurer shall deposit or invest the funds under the supervision of the commission provided that, upon the establishment by the United States government of an ‘ unemployment trust fund,’ from which the State Treasurer, ‘ as the state agency which is custodian of the fund, may be entitled to requisition at any time such sums standing to his account therein as may be required by the commission to carry out the purposes of section ten, said treasurer shall deposit or invest the fund therein and keep it so deposited or invested, except sums requisitioned as aforesaid, so long as such trust fund exists and remains subject to such requisitions.’ Section 12, [5 N.E.2d 724] as amended by St.1936, c. 12, § 1. Such ‘ unemployment trust fund’ was established by the Federal Social Security Act by section 904 (42 U.S.C.A. § 1104). No benefits are to be paid before January 1, 1938, and then only to the eligible employees covered by the Unemployment Compensation Law. The benefits are payable

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to any employee covered by the Unemployment Compensation Law during his actual unemployment after a waiting period of four successive weeks, and shall be payable for sixteen weeks if he is unemployed for that length of time. Section 17, as amended by St.1936, c. 249, § 11. An employee is disentitled to receive benefits under conditions stated in some detail in sections 17 and 18. Employees in seasonal and irregular employment are entitled to share equally with others in the benefits until the commission shall determine otherwise. Section 26. No employee is entitled to benefits when his unemployment is due to a strike, lockout or other trade dispute still in active progress in the establishment where he was last employed. There are limitations upon the right to receive full benefits by employees who have left their employment without reasonable cause or by reason of commitment to a penal institution, or who have been discharged for misconduct, or who are receiving compensation under the Workmen's Compensation Act (G.L. [Ter.Ed.] c. 152, as amended), or who refuse to accept other ‘ suitable employment.’ These two words mean ‘ any employment not detrimental to the health, safety or morals of an employee, for which he is reasonably fitted by training and experience, including employment not subject to this chapter, which is located within reasonable distance of his residence or last employment, and which does not involve travel expenses substantially greater than that required in his former employment. No employment shall be deemed suitable, and benefits shall not be denied under this chapter to any otherwise eligible employee for refusing to accept new work, under any of the following conditions: (1) if there is a strike, lockout or other labor dispute in the establishment in which the employment is offered; (2) if the wages...

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