Ernst v. Kootros

• Decision Date: 17 August 1938
• Docket Number: 27195.
• Citation: 82 P.2d 126,196 Wash. 138
• Parties: ERNST, Director of Department of Social Security, v. KOOTROS.
• Court: Washington Supreme Court

82 P.2d 126

196 Wash. 138

ERNST, Director of Department of Social Security, v. KOOTROS.

No. 27195.

Supreme Court of Washington

August 17, 1938

Department 1.

Appeal from Superior Court, King County; Donald A. McDonald, Judge.

Action by Charles F. Ernst, Director of Washington State Department of Social Security, against P.J. Kootros, doing business as P. K. Fruit Company, seeking to impose or collect a tax from defendant under the Unemployment Compensation Act and plaintiff's regulations. From a judgment in favor of the plaintiff, the defendant appeals.

Judgment reversed with instructions to dismiss proceeding.

Wright & Wright and Ambrose C. Grady, all of Seattle, for appellant.

Green &amp Burnett and Evans, McLaren & Littell, all of Seattle, amici curiae.

G. W Hamilton, Harry L. Parr, and Lyle L. Iversen, all of Olympia for respondent.

HOLCOMB Justice.

Respondent brought this action under § 19(e), chapter 162, Laws of 1937, p. 609, known as the unemployment compensation act, seeking to impose or collect a tax from appellant, based upon the provisions of that act and one of respondent's regulations, known as Regulation Number 2, subsection (a).

It is admitted in the case that in 1936, or prior to January 1, 1937, appellant had eight or more persons in his employ during twenty weeks of that calendar year, but it is likewise admitted that after January 1, 1937, he never had as many as eight individuals performing services for him within this state or at all.

To the amended complaint of respondent, appellant demurred and believed that the complaint and demurrer directly raised all questions.

The lower court overruled the demurrer, whereupon appellant, in order to be sure to clarify the entire matter, filed his answer to the amended complaint. Thereupon respondent moved for a judgment on the pleadings, which motion was granted, and the lower court entered judgment against appellant in conformity with the prayer of the amended complaint of respondent.

Section 19(e), supra, reads:

"Employing unit' means any individual or type of organization, including any partnership, association, trust, estate, joint-stock company, insurance company or corporation, whether domestic or foreign, or the receiver, trustee in bankruptcy, trustee or successor thereof, or the legal representative of a deceased person, which has or subsequent to January 1, 1937, had in its employ eight or more individuals performing services for it within this state. All individuals performing services within this state for any employing unit which maintains two or more separate establishments within this state shall be deemed to be employed by a single employing unit for all the purposes of this act.'

Laws of 1937, chapter 162, § 19(f)(1), reads:

'(f) 'Employer' means:

'(1) Any employing unit which in each of twenty different weeks within either the current or the preceding calendar year (whether or not such weeks are or were consecutive) has or had in employment eight or more individuals (not necessarily simultaneously and irrespective of whether the same individuals are or were employed in each such week).'

Chapter 162, Laws of 1937, was passed pursuant to Titles 3 and 9 of the Federal Social Security Act, 42 U.S.C.A. §§ 501 et seq., 1101 et seq. In order to obtain credit against the tax imposed under Title 9 of that act, it was necessary that the state conform to the requirements of Title 3 thereof. The Federal Social Security Board had submitted to the several states draft-bills recommending their approval. Such a draftbill was received by this state and various changes were made for the purpose of conforming it to the particular needs of this state. That bill was introduced as Senate Bill 113 in the legislature of 1937. The original draft-bill of section 19(e) in the material part reads: '* * * which has or subsequent to January 1, 1937, had in its employ one or more individuals performing services for it within this state.'

Section 19(f)(1) read the same as it now reads in chapter 162 of the Laws of 1937.

The Federal Social Security Act, in so far as pertinent, reads:

'Title IX--Tax on Employers of Eight or More

'Imposition of tax

'[Section 901.] § 1011. On and after January 1, 1936, every employer (as defined in section 907 [section 1107 of this chapter]) shall pay for each calendar year an excise tax, with respect to having individuals in his employ, equal to the following percentages of the total wages (as defined in section 907 [section 1107 of this chapter]) payable by him (regardless of the time of payment) with respect to employment (as defined in section 907 [section 1107 of this chapter]) during such calendar year * * *.' 42 U.S.C.A. § 1101.

Section 907 of the act, so far as material here, reads:

'[Sec. 907.] § 1107. When used in this title [sections 1101 to 1110 of this chapter]----

'(a) The term 'employer' does not include any person unless on each of some twenty days during the taxable year, each day being in a different calendar week, the total number of individuals who were in his employ for some portion of the day (whether or not at the same moment of time) was eight or more.' 42 U.S.C.A. § 1107.

It is to be noted that the act as passed by the legislature of Washington strictly conforms to the Federal act.

The legislative history of this law in the session of 1937 shows that Senate Bill 113 was read the first time on January 25, 1937; on the same date it was read the second time under a suspension of the rules, and referred to the committee on social security. In this original bill an employing unit was defined in § 19(e) as one having 'one or more' employees. Senate Journal, p. 82.

On February 27, 1937, the committee on social security filed its report on the above bill, and recommended adoption of Substitute Senate Bill 113, which was presented with its report. Substitute Senate Bill 113 was then introduced through reception of that report, and on the same day was read the first time, and, under suspension of rules, a second time, by title. Senate Journal, p. 348.

On March 1, 1937, the senate resolved itself into a committee of the whole for the consideration of Substitute Senate Bill 113. Senate Journal, p. 376. On that day it adopted certain amendments proposed by the committee. One of these amendments changed § 19(e) to read 'eight or more' instead of 'one or more'. Senate Journal, p. 379. Substitute Senate Bill 113, as amended, was then advanced for passage and adopted by a vote of 35 to 9. Senate Journal, p. 380.

On March 2, 1937, the House received Senate Bill 113 as adopted (House Journal, p. 548), and the same was referred to the committee on unemployment relief and public welfare. On March 8, 1937, that committee filed its report and recommended, among other things, that § 19(e) and § 19(f)(1) be amended to read 'one or more' instead of 'eight or more.' House Journal pp. 735-6. The committee recommended passage of the bill with its amendments. House Journal, p. 720. On the same day, the bill as amended with respect to § 19(e) and § 19(f)(1), together with certain other amendments, was passed by the House by a vote of 93 to 1. House Journal, p. 738.

On March 9, 1937, the Senate received a message from the House with respect to that bill, which message, among other things, contained the amendments to § 19(e) and § 19(f)(1). Senate Journal, pp. 678-9, and proceeded to reconsider the bill with the House amendments thereto.

With respect to § 19(e), the following occurred:

'The secretary read the following House amendment to Engrossed Substitute Senate Bill No. 113;

'In Section 19(e) line 18 of the Engrossed Substitute Senate Bill, being line 17, page 19 of the printed bill as amended, strike the words 'eight or more' and insert in lieu thereof the words 'one or more.'

'Senator Wanamaker moved that the Senate do not concur in the House amendment just read and that the House be asked to recede therefrom.

'The motion by Senator Wanamaker carried.' Senate Journal, pp. 685-6.

On March 11, 1937, the House received a message from the Senate upon Substitute Senate Bill 113, in which was set forth the Senate's action on House amendments including that action directed to § 19(e). House Journal, pp. 851-2. A motion was then made that the House concur in the action of the Senate upon that bill and pass the same without certain House amendments, among them being that of § 19(e), and in due course the bill with § 19(e) reading 'eight or more' passed the House with a vote of 72 to 18. House Journal, p. 852.

The House advised the Senate of this action on the bill on March 11, 1937, and Substitute Senate Bill 113 was finally passed by the Senate on that day by a vote of 35 to 8. Senate Journal, pp. 744-5. Substitute Senate Bill 113 then became a law immediately upon the signature by the Governor on March 16, 1937, it having contained an emergency clause.

It will thus be seen, by the legislative history of the law, that the matter was carefully and deliberately considered twice by each house.

There...