Fox v. Michigan Employment Sec. Commission

• Decision Date: 07 November 1967
• Docket Number: No. 3,3
• Parties: Walter W. FOX, Plaintiff-Appellant, v. MICHIGAN EMPLOYMENT SECURITY COMMISSION, Appeal Board of the Michigan Employment Security Commission, and Pioneer Engineering and Manufacturing Company, a Michigan corporation, Defendants- Appellees.
• Court: Michigan Supreme Court

Page 644

153 N.W.2d 644

379 Mich. 579

Walter W. FOX, Plaintiff-Appellant, v. MICHIGAN EMPLOYMENT SECURITY COMMISSION, Appeal Board of the Michigan Employment Security Commission, and Pioneer Engineering and Manufacturing Company, a Michigan corporation Defendants- Appellees.

No. 3.

Supreme Court of Michigan.

Nov. 7, 1967.

Harry Dworin, Stephen I. Schlossberg, John A. Fillion, Bernard F. Ashe, Jordan Rossen, Detroit, for appellant.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Edward J. Setlock, Asst. Atty. Gen., for appellee Michigan Employment Security Commission.

Before the Entire Bench.

KAVANAGH, Justice.

Plaintiff, in 1955, suffered an injury to his right knee arising out of and in the course of his employment. In June of that year plaintiff was awarded $34 a week for 500 weeks under the workmen's compensation statute for permanent and partial disability. Since 1955 plaintiff has developed new skills and found employment with other employers at wages higher than he was receiving at the time of the injury. However, when unemployed he collected the $34 per week allowed him as workmen's compensation benefits.

In May of 1964 plaintiff was laid off work by his then employer Pioneer Engineering and Manufacturing Company and was awarded $37 per week for 19 1/2 weeks in unemployment compensation benefits. Under section 27n of the employment security act, ¹ the employment security commission deducted from its award of $37 per week the benefits of $34 per week plaintiff was receiving under the workmen's compensation act. His final unemployment compensation benefits, therefore, were reduced to $3 per week. This determination was upheld by the referee, the appeal board of the Michigan employment security commission, and the circuit court for the county of Wayne.

Leave to appeal prior to decision of the Court of Appeals, pursuant to GCR 1963, 852, was granted by this Court on April 27, 1966.

Plaintiff contends that he is denied equal protection of the laws because of unreasonable classification of persons applying for benefits under section 27n of the employment security act. He contends that the classifications are unreasonable:

(1) As between claimants under the employment security act who at that time are receiving workmen's compensation benefits and those seeking only unemployment compensation benefits;

(2) As between those seeking benefits under the employment security act who have received weekly workmen's compensation benefits other than death benefits or scheduled benefits for a specific loss and those seeking unemployment compensation benefits who are receiving other benefits under the workmen's compensation act; and

(3) As between those seeking benefits under the employment security act who had entered into a lump sum settlement of their benefits under the workmen's compensation act prior to seeking unemployment compensation benefits and those seeking unemployment compensation benefits who are receiving weekly benefits under the workmen's compensation act.

Plaintiff further contends that his right to workmen's compensation benefits vested as of the date of injury in 1955, and that therefore (a) he is deprived of property without due process of law, and (b) there is an impairment of the obligations of contract when the legislature attempts to affect this vested right by providing that he must give up that same amount of unemployment compensation benefits to which he otherwise would be entitled.

Plaintiff's final contention is that the circuit court applied section 27n of the employment security act retroactively absent an express mandate in the statute compelling that application.

Defendants, after accepting the facts set forth by plaintiff, contend that there is no need to look to the purpose of the employment security act to determine the meaning of section 27n, as the section is clear, unambiguous, and needs neither interpretation nor clarification.

It is further contended by defendants that there are neither contractual nor vested rights to unemployment compensation benefits, as section 57 of the employment security act ² subjects all the rights, privileges or immunities conferred by that act to repeal or amendment by the legislature.

In answer to plaintiff's contention that section 27n of the employment security act is applied retroactively, defendants state that it has not been so applied, but rather is effective to all claimants who Receive workmen's compensation benefits after September 6, 1963 (the date section 27n became effective), Irrespective of the date of the award.

Defendants' final contention is that section 27n of the employment security act does not, as applied to plaintiff, deny equal protection of the laws under the United States or the Michigan Constitution, as the classes adopted present reasonable classifications among applicants for employment security benefits.

We have concluded it is necessary in disposing of this case to consider the constitutional question dealing with the classification of parties under the equal protection clauses of the State and Federal Constitutions. This question will be discussed first.

Section 27n of the employment security act, as added by P.A.1963, No. 188, reads in pertinent part as follows:

'(a) If an individual claims and is otherwise eligible for weekly benefits under this act for a week with respect to which he has received weekly benefits, Other than death benefits or scheduled benefits for a specific loss, under the workmen's compensation act of this state or under any similar law of another state or of the United States, the individual's weekly benefits otherwise payable under this act for such week shall be reduced to the amount, if any, by which the individual's workmen's compensation weekly benefit for such week was less than his benefits otherwise payable under this act for such week. If the individual's workmen's compensation weekly benefit for such week equaled or exceeded his weekly benefits otherwise payable under this act for such week, no weekly benefits shall be payable under this act for such week.' (Emphasis supplied.)

This Court has held numerous times that the Michigan Const.1908, art. 2, § 1, secures the same right of equal protection as does its counterpart in the Constitution of the United States. Gauthier v. Campbell, Wyant & Cannon Foundry Co., 360 Mich. 510, 514, 104 N.W.2d 182, and cases therein cited. The same provisions in Const.1963, art. 1, §§ 1 and 2, must likewise be held to afford the same rights as the Federal equal protection clause.

There is no doubt that State legislatures have a broad range of discretion in establishing classifications in the exercise of their powers of regulation. However, the constitutional guarantees of equal protection are interposed against discriminations that are entirely arbitrary. In determining what is within legislative discretion and what is arbitrary, regard must be had for the particular subject of the State legislation. There must be a relation between the classification and the purposes of the act in which it is found. Smith v. Cahoon, Sheriff, 283 U.S. 553, 566, 51 S.Ct. 582, 587, 75 L.Ed. 1264, 1274; Morey v. Doud, 354 U.S. 457, 465, 77 S.Ct. 1344, 1350, 1 L.Ed.2d 1485, 1491; Beauty Built Construction Corporation v. City of Warren, 375 Mich. 229, 134 N.W.2d 214; Palmer Park Theatre Company v. City of Highland Park, 362 Mich. 326, 106 N.W.2d 845.

In the case of People v. Chapman, 301 Mich. 584, 4 N.W.2d 18, a statute of this State was challenged as unconstitutionally denying the defendant therein equal protection of the laws. Justice Starr, writing for the Court, stated (pp. 597, 598, 4 N.W.2d p. 24):

'It is well recognized that the legislature may make classifications of persons, provided such classifications are based on substantial distinctions and are in accord with the aims sought to be achieved. (Citing cases.) However, such classification must be neither arbitrary nor capricious, but must rest on reasonable and justifiable foundations. In Haynes v. Lapeer Circuit Judge, supra, ³ p. 141 of 201 Mich., at page 940 of 166 N.W., L.R.A. 1918D, 233 the rule is stated:

"Legislation which, in carrying out a public purpose for the common good, is limited by reasonable and justifiable differentiation to a distinct type of class of persons is not for that reason unconstitutional, because class legislation, if germane to the object of the enactment and made uniform in its operation upon all persons of the class to which it naturally applies; but if it fails to include and affect alike all persons of the same class, and extends immunities or privileges to one portion and denies them to others of like kind, by unreasonable or arbitrary subclassification, it comes within the constitutional prohibition against class legislation."

See, also, Davidow v. Wadsworth Manufacturing Co., 211 Mich. 90, 97--102, 178 N.W. 776, 12 A.L.R. 605; Peninsular Stove Co. v. Burton, 220 Mich. 284, 286, 189 N.W. 880; Smith v. Wayne Probate Judge, 231 Mich. 409, 204 N.W. 140, 40 A.L.R. 515.

The obvious intention of the legislature in enacting section 27n of the employment security act was to prevent duplication of benefits to the unemployed who receive workmen's compensation benefits. In doing so, the legislature made certain classifications of persons.

It permitted those not receiving workmen's compensation benefits to receive full unemployment compensation benefits, while preventing those receiving total permanent, partial permanent, or temporary disability payments under the workmen's compensation act from receiving full unemployment compensation benefits.

It permitted those who were recipients of death benefits under the workmen's compensation act to receive unemployment compensation benefits, while preventing those receiving total permanent, partial permanent, or temporary disability payments under the workmen's compensation act from receiving the...