Celanese Corp. of America v. Davis

• Decision Date: 16 May 1946
• Docket Number: 128.
• Citation: Celanese Corp. of America v. Davis, 186 Md. 463, 47 A.2d 379 (Md. 1946)
• Parties: CELANESE CORPORATION OF AMERICA v. DAVIS et al.
• Court: Maryland Supreme Court

47 A.2d 379

186 Md. 463

CELANESE CORPORATION OF AMERICA v. DAVIS et al.

No. 128.

Court of Appeals of Maryland

May 16, 1946

Appeal from Superior Court of Baltimore City; J. Abner Sayler Judge.

Action by Celanese Corporation of America against Russell S. Davis and others, constituting the Maryland Unemployment Compensation Board, for recovery of alleged overpayment of unemployment compensation contributions. From an adverse judgment, plaintiff appeals.

Affirmed.

R Dorsey Watkins, of Baltimore (Piper, Watkins, Avirett & Egerton, of Baltimore, on the brief), for appellant.

Albert A. Levin, Sp. Asst. Atty. Gen. for Maryland Unemployment Comp. Board (William Curran, Atty. Gen., on the brief), for appellee.

Before MARBURY, C.J., and DELAPLAINE, COLLINS, GRASON, and HENDERSON, JJ.

COLLINS Judge.

This is an appeal from the Superior Court of Baltimore City by Celanese Corporation of America involving what appellant claims to be an overpayment for Unemployment Compensation for the quarterly period July 1, 1944 to September 30, 1944, in the amount of $84,279. It involves the interpretation of Section 7(c)(3) of Article 95A, Annotated Code of Maryland (1943 Supplement), Acts of 1943, Chapter 435, Section 7(c), which provided in part, 'no employer's rate shall be less than 2.7 per cent for any fiscal year if his total annual payroll in the calendar year immediately preceding such fiscal year exceeded 150 per cent of the total payroll in the calendar year 1940.' The number of employees of the appellant in 1940 was 10,567, in 1943 was 11,266, and in 1944 was 10,193.

The amount of the payroll reported by the appellant to the Maryland Unemployment Compensation Board for the year 1940 was $12,423,931.48. The payroll reported in 1943 was $19,301,259.52. The increase in the payroll in 1943 over 1940 therefore was $6,877,328.04. Based on these figures the annual payroll for 1943, the preceding year, exceeded 150% of the payroll in the calendar year 1940. The Board therefore assessed the appellant at the rate of 2.7%. An appeal was taken from the order of the Unemployment Compensation Board to the Superior Court of Baltimore City, which order was affirmed by that Court, and judgment was entered for the defendants for costs. The appellant, appealing, claims that based on merit rating the tax should be 0.9%.

If the Section above quoted is to be literally construed, the rate of tax (2.7%) levied by the Unemployment Compensation Board was correct.

The appellant contends that the payroll reported to the Board in 1943 included $902,360 paid in 1943 pursuant to a War Labor Board directive requiring compensation increases retroactive to October 1, 1942 and of this amount $446,871 represented compensation for work in 1942. The Unemployment Compensation Board did not deem it necessary to a decision of the case to decide whether the wage item of $446,871 should be allotted to 1942 or let remain in the 1943 payroll because in either event the amount of the employer's reported payroll for wages paid in 1943 would exceed 150% of its actual total payroll for wages paid and reported in 1940. For the same reason as given by the Board we see no reason to pass upon that question.

The appellant argues (1) that the 150% limitation of Article 95A, Section 7(c)(3) is not applicable to appellant as this provision was intended to cover the case of war expanded industries and 1940 was used as a base for the reason that that year was supposed to represent normal business not influenced by war activities. Further that appellant is a war contracted industry and 1940 was not a normal employment year because of a strike and voluntary loss of wages by the employees. The strike lasted twelve days causing a loss in wages of $464,475 and it took five weeks to get the plant back in full production. Further that the 150% provision was intended to apply to war industries only.

The appellant argues (2) that the inclusion of the appellant in the 150% war risk clause would render it unconstitutional.

Unemployment compensation was first adopted by this State at the Second Extraordinary Session of the Legislature in December, 1936. Section 2 of Chapter 1 of the Act creating unemployment insurance sets a guide for the interpretation and application of that Act. It states that economic insecurity due to involuntary unemployment being a serious menace to the health, morals, and welfare of the people of the State requires appropriate action by the Legislature to prevent its spread. Further, 'This can be provided by encouraging employers to provide more stable employment and by the systematic accumulation of funds during periods of employment to provide benefits for periods of unployment, thus maintaining purchasing power and limiting the serious social consequences of poor relief assistance. The Legislature, therefore, declares that in its considered judgment the public good, and the general welfare of the citizens of this State require the enactment of this measure, under the police powers of the State, for the compulsory setting aside of unemployment reserves to be used, for the benefit of persons unemployed through no fault of their own.'

At the regular session of the Legislature in 1939 an Act was passed, Chapter 278, Section 7(d) amending the Unemployment Compensation Act requiring the Unemployment Compensation Board to investigate and study the operation of the law for the purpose of determining the advisability of establishing a rating system which would equitably rate the unemployment risk and fix the contribution to the Unemployment Compensation Fund of each employer in order to encourage the stabilization of employment. As a result at the 1943 Session of the Legislature an act was passed, Chapter 435, amending the Unemployment Compensation Law. The title states that it was to add a section '* * * providing experience rating under certain conditions in the contribution rate of employers who meet certain requirements' and in that Act the section herein in dispute was adopted. This Section remained in effect during the Regular Session of the Legislature in 1945 and was repealed by Chapter 2 of the Extra Session of the Legislature in 1945, effective October 1, 1945.

Appellant relies strongly on the case of Maryland Unemployment Compensation Board v. Albrecht 183 Md. 87, 36 A.2d 666. That case is readily distinguishable from the one at bar. There the interpretation of Code 1943 Supplement, Article 95A, Section 19(f)(4) was before the Court as to whether two different businesses were under common control by reason of the fact that the owners of an office building owned the majority of stock in a book binding business. This Court there held that the facts in the case were not such as to bring these parties within 'common control' as defined by the Act. In the case before this Court the facts are not in dispute and the words of the statute are plain and simple. To adopt appellant's contention this Court must add words to the statute which do not there appear. The purpose of the Act enacted in 1936, hereinbefore quoted, states that the achievement of social security requires protection against unemployment. 'This can be provided by encouraging employers to provide more stable employment and by the systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment, thus maintaining purchasing power and limiting the serious social consequences of poor relief assistance.'

To encourage stabilization of employment the Legislature in 1943 passed an act changing the rates and enacting the clause in question. Anticipating that post war unemployment would drain the unemployment fund, it provided that no employer's rate should be less than 2.7% for any fiscal year if his total annual payroll in the calendar year immediately preceding such fiscal year exceeded 150% of the total pay roll in the calendar year 1940. Some line had to be drawn and some standard set. The Legislature could have provided that the test be the increase in the number of employees or could have provided for a different percentage of increase as was done in other States. However, the Legislature did not see fit to to this but established a clear and easily determined standard. There is nothing in the Acts or in the preambles thereto to confine this classification to war industries or to provide that any wages lost by reason of strike should be deducted from the 1940 base. If the Legislature had seen fit to confine this to war industries only and to provide for strikes as contended by appellant, they could have in plain language done so. However, this would no doubt have led to endless confusion. If loss of wages by strikes were to be excepted from the 1940 base, why should not loss of wages due to a breakdown of machinery, fires, or other interruptions be so deducted?

In the case of State of Minnesota v. Donovan, 1944, 218 Minn. 606, 16 N.W.2d 897, the provisions of the State Employment and Security Act which provided a war risk contribution on businesses and classified employers according to the amount of their payrolls and as to whether they commenced business after December 31, 1940 were before the Court. The Court said in that case at page 900 of 16 N.W.2d as follows: 'In the instant case, the Legislature selected December 31, 1940 as the 'before' and 'after' date for purposes of taxation. That date represents more than a mere calendar date. It represents the dividing line between prewar normal peacetime economy and abnormal war economy. The provisions of the act would have been too indefinite if the Legislature had merely said that any employer who became subject to the act after the war economy had set in would be subject to a 'war risk...