7 Cal.2d 744, 15685, Gillum v. Johnson

Docket Nº:15685
Citation:7 Cal.2d 744, 62 P.2d 1037
Opinion Judge:[11] Shenk
Party Name:Gillum v. Johnson
Attorney:[7] Hugh K. McKevitt and Charles W. Fisher for Petitioner. [8] Athearn, Chandler & Farmer, Cullinan, Hickey & Sweigert and John C. Wood as Amici Curiae on Behalf of Petitioner. [9] U. S. Webb, Attorney-General, John J. Dailey, Deputy Attorney-General, and John L. McNabb, Special Counsel for Unemp...
Case Date:November 25, 1936
Court:Supreme Court of California

Page 744

7 Cal.2d 744

62 P.2d 1037

CLAUDE C. GILLUM, Petitioner,


CHARLES G. JOHNSON, State Treasurer, etc., et al., Respondents.

S. F. No. 15685.

Supreme Court of California

November 25, 1936

In Bank.

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Hugh K. McKevitt and Charles W. Fisher for Petitioner. Athearn, Chandler &amp Farmer, Cullinan, Hickey &amp Sweigert and John C. Wood as Amici Curiae on Behalf of Petitioner. U.S. Webb, Attorney-General, John J. Dailey, Deputy Attorney-General, and John L. McNabb, Special Counsel for Unemployment Reserves Commission, for Respondents. Allen G. Wright as Amicus Curiae on Behalf of Respondents


[62 P.2d 1038] SHENK, J.

This is a proceeding in mandamus to compel the respondents, in so far as their official duties may be involved, to comply fully with the State Unemployment Reserves Act (Stats. 1935, p. 1226), and with the Federal Social Security Act (49 Stats. at Large, 620).

The petitioner is the proprietor of the Hotel Claremont in the county of Alameda. As such, he is the employer of eight or more persons in the state of California. In accordance with the state act he forwarded to the Unemployment Reserves Commission of this state nine-tenths of one per cent of the wages paid to his employees, and forty-five hundreths of one per cent deducted from the wages of his employees during the same period, said sums representing the tax on the employer and the employee under the state act. The petitioner alleges that the respondent commission received the moneys but refuses to pay the same to the state treasurer as required by the state act, notwithstanding the

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demand of the respondent state controller that it do so; that the respondent controller has notified the petitioner that even if said funds be paid to the Sta te Treasurer he (the controller) will refuse [62 P.2d 1039] to audit and draw warrants for the amounts for deposit as required by the federal act.

The state act was approved by the Governor on June 25, 1935, and is entitled: "An act to establish a system of unemployment reserves for this state, and making an appropriation therefor." Section 1 sets forth the basis of and reasons for the enactment of the statute, viz., that experience has shown that large numbers of the population of California do not enjoy permanent employment by reason of which their purchasing power is unstable, and which is detrimental to the interests of the people of the state as a whole; that the benefit to all persons resulting from public and private enterprise is realized in the final consumption of goods and services; that it is contrary to public policy to permit the supply of consumption goods and services at prices which do not provide against that harm to the population consequent upon periods of unemployment of those who contribute to the production of such goods and services; that experience has shown that private charity and local relief cannot alone prevent the effects of unemployment and that if the state awaits the coming of excessive unemployment it can neither create immediately the organization necessary to orderly, economical and effective relief, nor bear the burden of relief without disrupting its whole system of ordinary revenues and without jeopardizing its credit; that in order to meet in some measure the situation shown to be created by excessive unemployment, this act is designed to accumulate a reserve to assist in protecting the public against the social effects of unemployment which may be created in future years.

Section 2 provides that the statute is enacted as a part of a national plan of unemployment reserves and social security, and for the purpose of assisting in the stabilization of unemployment conditions; that the imposition of the tax provided by the act upon California industry alone, without a corresponding tax be imposed upon all industry in the United States would, by the corresponding penalty upon California industry, defeat the very purposes of the act; that "therefore this act shall take effect only if and when there is enacted legislation by the United States Government providing

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for a tax upon the payment of wages by employers in this state, against which all or any part of the contributions required by this act may be credited"; that whenever the legislation enacted by the United States government is repealed, amended, affected, or otherwise changed in such manner that the contributions required by the act or some portion thereof cannot be thus credited, then upon the date of such change the provisions of the act requiring contributions and providing for payment of benefits shall cease to be operative and any assets in the unemployment fund or unemployment administration fund shall in the discretion of the State Treasurer be held in the then existing depositaries or otherwise in the state treasury; that in the case of the unemployment administration fund, such moneys may thereafter be dealt with by the State Treasurer pursuant to the conditions of the grant thereof to the state by the United States government or agency thereof.

The state act is administered by the Unemployment Reserves Commission of five members, appointed by the Governor, by and through the state department of employment also created by the act, of which department the commission is the governing body. Two major funds are created, the "Unemployment Fund" and the "Unemployment Administration Fund".

The unemployment fund consists of all contributions and moneys paid into and received by the fund as provided in the act and of property and securities acquired by and through the use of moneys belonging to the fund, and of interest earned upon the moneys belonging to the fund.

The unemployment administration fund consists of all moneys received by the state or by the commission for the administration of the act. This fund shall be in the state treasury and shall be handled as other state moneys are handled, except that it shall be expended solely for the purposes of the administration of the act and except also that any balances therein shall not lapse at any time but shall remain continuously available to the commission for appropriate expenditures. All federal moneys allotted or apportioned to the state by the federal social security board or other agency for the administration of the state act are to be paid into the unemployment administration fund.

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The obvious distinction between these two funds is that the unemployment fund and its earnings are to be used solely for the payment of benefits provided in the act and this fund is not subject to diminution for administration purposes; whereas the unemployment [62 P.2d 1040] administration fund is intended to be used for purposes other than the payment of benefits and contributions to that fund consisting of allocations from the federal government, presumably at least in part from the ten per cent of the federal excise tax which is not credited on contributions under the state act, and moneys received otherwise than in the exaction of the tax, state or federal.

The state act requires contributions from the employers subject thereto of nine-tenths of one per cent of their payrolls in 1936, one and eight-tenths per cent in 1937, and two and seven-tenths per cent in 1939 and thereafter. The employees subject to the act are required to contribute from their wages one-half of one per cent in 1936, and one per cent beginning January 1, 1937, and thereafter. The employer is required to deduct the employee's contribution from his wages and transmit both to the unemployment fund. The state commission is authorized to exempt from the payment of contributions certain employers who adopt an approved guaranteed employment plan or an approved private unemployment benefit plan.

The following types of employment are not included in the taxable payrolls: (1) Employees who did not perform the greater part of their work in this state; (2) agricultural labor; (3) domestic service in a private home; (4) service performed as an officer or member of the crew on a vessel on the navigable waters of the United States; (5) service performed by parents, minor children or spouses of employers; (6) service by government employees; (7) service for certain nonprofit organizations; and (8) service for which an unemployment compensation system is established by the United States.

An eligible employee is defined as every person employed by an employer subject to the provisions of the act in an employment subject to the act. An employer is defined as every individual, trust or estate, partnership, association, joint-stock company or corporation, subject to a payroll tax levied by the United States government, if the tax levied by

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the state act, or any portion thereof, may be credited against such payroll tax.

The term "benefits" is defined to mean the money allowance payable to an employee as compensation for his wage losses due to unemployment as provided in the act. The term "total unemployment" is defined to mean the condition caused by the inability of an employee, who is capable of and available for work, to obtain suitable employment when such condition causes total loss of wages. Partial unemployment means any temporary reduction in working hours below the normal working hours per week, and which results in loss of wages. Normal working hours are then defined.

The act defines "suitable employment" as employment in the employee's usual employment or employment for which the employee is reasonably fitted, but is not suitable (1) if vacancy in it is created by strike, lockout or other labor dispute; (2) if...

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