Com. v. Associated Industries of Ky.

• Decision Date: 07 June 1963
• Citation: 370 S.W.2d 584
• Parties: COMMONWEALTH of Kentucky ex rel. et al., Appellant, v. ASSOCIATED INDUSTRIES OF KENTUCKY, Appellee.
• Court: Supreme Court of Kentucky

Page 584

370 S.W.2d 584

COMMONWEALTH of Kentucky ex rel. et al., Appellant, v. ASSOCIATED INDUSTRIES OF KENTUCKY, Appellee.

Court of Appeals of Kentucky.

June 7, 1963.

Rehearing Denied Oct. 11, 1963.

Paul E. Tierney, Melbourne Mills, Jr., Frankfort, Herbert L. Segal, Louisville, for appellant.

Robert T. Caldwell, Ashland, for appellee.

MOREMEN, Judge.

This is an agreed case testing the constitutionality of KRS 341.145 which relates to unemployment compensation. The trial court declared the Act unconstitutional as violative of Sections 180 and 28 of the Kentucky Constitution.

The Act in question (KRS 341.145) as amended in 1952, authorized the Commissioner of Economic Security to enter into reciprocal administrative arrangements with agencies of other states or the federal government for the purpose of broadening the coverage of unemployment compensation. This law was passed to permit the participation of Kentucky in an interstate unemployment plan originated by the federal government. Its basic purpose was to provide unemployment compensation benefits to those persons employed in more than one state. The plan authorizes adding together work periods in different states to determine a base period permitting an unemployed person to qualify for benefits which he otherwise might not do if his employment period was limited to employment in the state where the compensation claim is filed.

Under the plan the laws of the last state where a person was employed shall be applicable with respect to benefit years, base periods, qualifying wages, benefit rates and duration of benefits. The work and wage records of the employee in other states which are parties to the agreement shall be taken into account in the computation of benefits, and such other states are required to reimburse the state paying the claim for their fair share thereof.

KRS 341.145(3)(a) provides in part:

'Reimbursements to another state or the Federal Government, paid from the fund pursuant to this subsection, shall be deemed to be benefits for the purposes of this chapter * * *.' (Our emphasis.)

The trial court decided that this scheme violated § 180 of the Constitution, particularly in view of Unemployment Compensation Commission v. Savage, 283 Ky. 301, 140 S.W.2d 1073. That section provides in part that: 'no tax levied and collected for one purpose shall ever be devoted to another purpose.' Admittedly the contributions to the unemployment compensation fund levied upon employers are taxes.

In the Savage case the legislature had authorized the transfer of approximately $1,000,000 from the Unemployment Compensation Fund to the federal government to be administered by it in the payment of claims to railway employees under the Federal Railroad Unemployment Insurance Act. Taking the view that the state was relinquishing all control of this fund (consisting of tax monies) and that it might be used to pay railroad employees in other states, we held this constituted an unlawful diversion of taxes for a purpose foreign to that for which they were originally collected. Conceding the soundness of this decision (which appellants vigorously deny), we do not think the principles invoked in that case are applicable here.

The taxes involved in the present controversy were collected for the payment of unemployment compensation benefits to those who had joined Kentucky's labor force. As plainly appears from KRS 341.145(3)(a), from which we have quoted above, the legislature has expressly declared that unemployment compensation benefits paid under the reciprocal arrangement plan shall be deemed benefits within the scope of the purpose for which the taxes are collected. Certainly, increasing benefits is not changing the purpose of the fund. Consequently § 180 of the Constitution is not violated.

The more difficult question involves the delegation of power by the legislature to other states and the federal government to fix by their laws the various criteria for determining eligibility for, the amounts and the duration of compensation payments. While the judgment and appellee's brief refer to § 28 of the Kentucky Constitution, perhaps § 29 is more clearly involved.

The question seems to be whether or not the General Assembly may delegate to other states and the federal government the authority to fix by laws and regulations the conditions under which Kentucky taxes may be expended. The legislature has not adopted particular laws and regulations, and the plan obviously contemplates the future changes in such laws and regulations.

We considered this problem (which is not the customary one of delegation of powers to administrative agencies) in Dawson v. Hamilton, Ky., 314 S.W.2d 532. See also Clay v. Dixie Fire Ins. Co., 168 Ky. 315, 181 S.W. 1123 and Seale v. McKennon, 215 Or. 562, 336 P.2d 340.

Through many of the opinions of this court and those of other states and the federal courts runs the theme that legislative power may not be delegated and, so far as we have been able to find, the opinions have devoted little time to determining the origin of this dogma or even the necessity for its existence.

We find nothing in our State Constitution that declares explicitly: 'Legislative power may not be delegated.' Here are the three sections of the Constitution usually quoted in support of that statement.

' § 27. The powers of the government of the Commonwealth of Kentucky shall be divided into three distinct departments, and each of them be confined to a separate body of magistracy, to wit: Those which are legislative, to one; those which are executive, to another; and those which are judicial, to another.'

' § 28. No person or collection of persons, being of one of those departments, shall exercise any power properly belonging to either of the others, except in the instances hereinafter expressly directed or permitted.'

' § 29. The legislative power shall be vested in a House of Representatives and a Senate, which, together, shall be styled the 'General Assembly of the Commonwealth of Kentucky."

We can read into § 27 only an intent to divide the sovereign power, which at one time existed in one person under the divine right of a king, into three separate and distinct departments.

Section 28 seems merely to prohibit one department from grabbing power that properly belongs to another, and the simple wording of § 29 sets up the mechanics for the exercise of legislative power in a bicameral assembly.

Section 29 uses the word 'vested' and though it is quite generally considered to be a word of art, still the word has no settled meaning which precludes the one in whom the title is vested from permitting others to use it or even divesting title entirely. When one is once vested with the title, say to real estate, he is not forever precluded from allowing others to use that real estate permissively or otherwise dispose of it.

Although we have found nothing in the Constitution that declares legislative power may not be delegated, we do find instances where the legislature is inferentially authorized to delegate its legislative power, such as § 156 of the Constitution where it is said:

'* * * The General Assembly, by a general law, shall provide how towns may be organized, and enact laws for the government of such towns until the same are assigned to one or the other of the classes above named; but such assignment shall be made at the first session of the General Assembly after the organization of said town or city.' (Our emphasis.)

The Supplement § 166 of the Constitution reads in part 'All acts of incorporation of cities and towns heretofore granted, and all amendments thereto, except as provided in section 167, shall continue in force under this Constitution, and all City and Police Courts established in any city or town shall remain, with their present powers and jurisdictions, until such time as the General Assembly shall provide by general laws for the government of towns and cities, and the officers and courts thereof; * * *.' (Our emphasis.)

It will be noted that neither section specifically affirms the right of the General Assembly to delegate a portion of its legislative power to the governmental body of a municipality. Inferentially it has the right to define the means of government and by statute set up law-making bodies for cities of the various classes and, thereby, delegate a portion of its power.

Even if we assign to the word 'vested,' as used in § 29, its usual meaning descriptive of a right which is complete and one of which the person to whom it belongs cannot be divested without consent, we find no admonition--here the right is and here it will remain. If the word is one of absolute limitation (a vested right may never be divested, even with the permission of the owner) then what right has the General Assembly to divest itself of this vested legislative power?

So, we repeat, the genesis of the phrase 'legislative power may not be delegated' is not in the Constitution itself. That document indicates that it should be delegated in certain cases.

A research of many of the decided cases in this country discloses that this proposition is of rather obscure origin. Most often quoted, as authority, is Judge Cooley's statement that:

'One of the settled maxims in constitutional law is, that the power conferred upon the legislature to make laws cannot be delegated by that department to any other...