Cottrell Clothing Co. v. Teets

• Decision Date: 06 July 1959
• Docket Number: No. 18930,18930
• Citation: 139 Colo. 558,342 P.2d 1016
• Parties: COTTRELL CLOTHING COMPANY, a Colorado Corporation, Plaintiff in Error, v. Bernard E. TEETS, as the Executive Director of Employment Security; Duke W. Dunbar, as the Attorney General of the State of Colorado; the Industrial Commission of the State of Colorado, as Ex-Officio the Unemployment Compensation Commission of the State of Colorado; and Phillip Downare, Defendants in Error.
• Court: Colorado Supreme Court

Page 1016

342 P.2d 1016

139 Colo. 558

COTTRELL CLOTHING COMPANY, a Colorado Corporation, Plaintiff in Error, v. Bernard E. TEETS, as the Executive Director of Employment Security; Duke W. Dunbar, as the Attorney General of the State of Colorado; the Industrial Commission of the State of Colorado, as Ex-Officio the Unemployment Compensation Commission of the State of Colorado; and Phillip Downare Defendants in Error.

No. 18930.

Supreme Court of Colorado, En Banc.

July 6, 1959.

Rehearing Denied Aug. 31, 1959.

Joseph F. Little, Denver, for plaintiff in error.

Duke W. Dunbar, Atty. Gen., Frank E. Hickey, Deputy Atty. Gen., James D. McKevitt, Asst. Atty. Gen., for defendant in error.

MOORE, Justice.

This cause is before us on writ of error to review the judgment of the district court of the City and County of Denver entered in proceedings which originated before the Executive Director of Employment Security on a claim for unemployment compensation.

The applicant was granted compensation without disqualification before the administrative agency. Upon review in the district court the award of the commission was modified to the extent that the maximum disqualification for benefits, amounting to ten weeks, was imposed upon claimant. The effect of the district court judgment was to make available to claimant a maximum of 16 weeks compensation, instead of 26 weeks to which he would have been entitled except for his alleged misconduct. The employer, The Cottrell Clothing Company, seeks reversal contending that the act authorizing unemployment compensation to an employee who has been discharged for misconduct connected with his work, is unconstitutional.

There is no dispute in the pertinent facts which were before the trial court on stipulation. The applicant, Phillip Downare, was a clothes presser employed by Cottrell. The employer had purchased and installed clothes pressing machinery which Downare refused to use after being directed several times to do so. On the date when he was discharged the employer found five suits on the delivery rack containing alteration marks which the new equipment would have removed had it been used. The suits were not in fit condition to be delivered to customers. Thereupon Downare was discharged. He applied for unemployment compensation and his application was opposed by Cottrell. The claimant, although served with process in the district court action, did not enter an appearance and is not represented in this court.

Pertinent provisions of the Colorado Employment Security Act to which our attention is directed by counsel, are the following:

C.R.S.1953, 82-1-2, contains the legislative declaration of public policy wherein we find this statement:

'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.' (Emphasis supplied.)

This section also uses the term 'involuntary unemployment' and states that it is 'a subject of general interest and concern which requires appropriate action by the legislature * * *.'

Prior to 1957 the law provided that the maximum weekly benefit payments and the maximum period of weekly disqualifications were equal at 20 each. In 1957 the legislature amended C.R.S. '53, 82-4-4 to read in pertinent part as follows:

'Any otherwise eligible individual shall be entitled during any benefit year to a total amount of benefits equal to whichever is the lesser of twenty-six times his weekly benefit amount and one-third of his wage credits for insured work paid during his base period; * * *.'

The 1957 amendment to 82-4-9(1) reads in part as follows:

'(a) An individual shall be disqualified for benefits if the department finds that such individual has * * * left work voluntarily without good cause, or been discharged for misconduct connected with his work * * *.

'(b) Such disqualification shall be not less than one week nor more than ten consecutive weeks in addition to the waiting period, * * *.'

C.R.S. '53, 82-7-1, creates the Unemployment Compensation Fund to which 'contributions' must be made by employers who come within the provisions of the act. This section concludes with the following language: 'All money in the fund shall be commingled and undivided.'

C.R.S. '53, 82-6-3, requires that the administrative agency shall 'maintain a separate account for each employer and shall credit his account with all contributions paid on his own behalf.' After a fixed period of 'contributions' to the fund on the part of an employer the amount thereof thereafter depends upon his benefit experience, that is to say, if his turnover of employees is large and numerous claims for compensation are made by his one-time employees, his 'contribution', or tax, is higher. If no claims are shown by his 'benefit experience' or if they are few, he may conceivably be relieved of further contributions to the fund, so long as required reserves in his account are available.

The complaint filed by the employer in the district court questions the constitutionality of the act which authorizes payment of 16 weeks unemployment compensation to one who is discharged for misconduct connected with his work. The specific contentions are that the act: (a) deprives the employer of its property without due process of law; (b) authorizes the administrative agency to expend moneys for purposes other than those for which they were intended; (c) grants irrevocable privileges to persons who quit their employment or are discharged for misconduct; (d) impairs the obligation of the contract alleged to exist between the employer and the State of Colorado; (e) permits the taking of private property by the State of Colorado for private use without consent of the owner; (f) allows an expenditure of moneys of the employer without affording it an opportunity to object thereto, or to pursue judicial remedies to restrain such taking; (g) that the act improperly delegates judicial powers to an administrative agency; and (h) that the procedures prescribed by article 5, chapter 82, for filing of claims and the determination thereof, violate the Colorado constitution in that they establish burdensome expensive and time-consuming procedures which, in effect, nullify and discourage appeals by persons adversely affected by the orders of the administrative agency.

Questions to be Determined.

First: Is the matter of compensation for unemployment a subject so related to the public welfare as to authorize the general assembly, in the exercise of the police power, to enact a law directing the payment of benefits to unemployed persons and levying a tax upon employers to defray the cost thereof?

This question is answered in the affirmative. The line of demarcation between a proper exercise of the police power and an infringement of constitutional guarantees is not always well defined. We deem it advisable to direct attention to some fundamentals in this connection, and to that end, we quote from the opinion in In re Interrogatories of Governor on Chapter 118, Session Laws of 1935, 97 Colo. 587, 52 P.2d 663, 667, as follows:

'Police power, the genesis of the General Assembly's action, is inherent in government, and was well known to the common law. 4 Black.Com. 162. 'This power * * * has been said to be as broad as the public welfare. It is an inherent attribute of sovereignty with which the state is endowed for the protection and general welfare of its citizens.' Rowekamp v. Mercantile-Commerce B. & T. Co., 8 Cir., 72 F.2d 852, 858. 'All authorities agree that the constitution presupposes the existence of the police power, and is to be construed with reference to that fact.' Village of Carthage v. Frederick, 122 N.Y. 268, 273, 25 N.E. 480, 481, 10 L.R.A. 178, 19 Am.S.R. 490. The statute claiming our attention is the expression of that branch of the government having primary authority to determine what is requisite to promote and preserve...