"To the Supreme Court of Texas:
"This is an appeal by Harry B. Friedman from an adverse judgment entered against him in a cause in which he sued American Surety Company of New York, as surety on a bond executed by F. M. Kuhlman, as principal, and that company, as surety. Allegations were made that Kuhlman was insolvent and the company alone was sued.
"Friedman's petition shows that he was the original contractor for the construction
of a building for Fort Worth Independent School District; that he sublet to Kuhlman the lath and plaster work; that he held a contract with Kuhlman for the work covered by the subcontract, by which Kuhlman was to perform the work set out therein and would pay all claims arising thereunder for which he, Friedman, could be held liable, and that the American Surety Company of New York guaranteed Kuhlman's faithful performance of the contract; that after he (Friedman) had paid Kuhlman the contract price provided for in the contract, the Unemployment Compensation Commission of Texas demanded of him, Friedman, the payment of a tax owing to the Texas Unemployment Compensation Fund, amounting to $293.98, on the labor performed by Kuhlman's employees, since Kuhlman was not an employer under the law. The payment was made by Friedman and he asserted his right to collect it back from Kuhlman under the law as it was alleged to have existed at all times prior to the institution of the suit on October 31st, 1938.
"Among other defenses interposed by the defendant surety company was one asserting that the law and statute of Texas purporting to levy and collect a social security tax, such as plaintiff claims to have paid and for which he sued defendant, is void and in violation of the Constitutions of the State and the United States; that it violates the due process clause of the United States Constitution; that it violates the State Constitution which provides for the class and kind of taxes that can be levied and collected; that its enforcement would impair contracts previously made and that said law violates the necessarily implied provision of the Constitution which forbids the Legislature to delegate its powers to any other body, board or bureau.
"There is no material conflict in the evidence as disclosed by the record, and only a question of law is involved. For the purpose of the inquiry herein made, we believe enough has been said in regard to the pleadings to enable the Honorable Supreme Court to understand the controversy.
"On May 12th, 1936, Harry B. Friedman entered into a contract and bond with Fort Worth Independent School District for the erection of a Senior High School Building for an agreed price of $340,160.00.
"On May 27th, 1936, Friedman sublet to F. M. Kuhlman, doing business in the trade name of Fort Worth Plastering Co., all lath and plaster work to be done in the construction of said building, for an agreed price of $26,000.00, and on the same date, in compliance with the provisions of the contract, Kuhlman executed his bond to Friedman for $26,000.00, upon which bond American Surety Company of New York was surety.
"By the terms of the contract between Friedman and Kuhlman, the latter was familiar with all conditions and provisions of the contract between Friedman and the School District. Kuhlman obligated himself to Friedman in the performance of the subcontract in the same manner that Friedman was obligated to the School District.
"Among other things, the contract with Kuhlman provided:
"`Article III. The contractor (Kuhlman) shall pay promptly when due, for all labor and materials used and required, and protect the owner (School District) and Harry B. Friedman from all claims, mechanic's liens, judgments, court costs and all attorney's fees and expenses incurred on account of any failure on its (his) part to explicitly comply with this contract.'
"`Article VIII. The contractor (Kuhlman) shall protect, indemnify and save Harry B. Friedman and owner (the District) harmless from any and all claims, suits and actions of any kind or description, from damages or injuries to persons or property * * *.'
"`Article XIV. Should there prove to be any lien or claim after all payments are made, the contractor and its (his) surety shall refund to Harry B. Friedman all moneys that the latter shall be compelled to pay in discharging any lien or claim on said work made obligatory in consequence of said contractor's default.'
"The bond made to Friedman By Kuhlman, upon which American Surety Company appears as surety, and made a part of the contract, contains this provision:
"`Now therefore if the said principal (Kuhlman) shall well, truly and faithfully keep and perform all of the terms, provisions, covenants and conditions of the foregoing contract * * * and shall repay said Harry B. Friedman all costs and expenses, said Harry B. Friedman may incur in the prosecution of any suit or suits
which they may maintain against said principal on account of any breaches of said contract or of this bond, then this obligation shall be void, otherwise the same shall remain in full force and virtue.'
"Friedman began the construction of said building under his contract with the School District in June, 1936, and completed the structure and delivered it to the District in December, 1937.
"Kuhlman began his work of lathing and plastering, under his subcontract with Friedman, January 1st, 1937, and completed it when the building was finished in December, 1937. Friedman then made full payment to Kuhlman for the contract assumed by him.
"We call attention to the Legislative Acts and their several amendments. By House Bill No. 407, Chapter 236, the 44th Legislature passed what is now Article 5221a—2, V.T.C.S., which, among other things, accepts the provisions of the Wagner-Peyser Act (48 Stat. 113, U.S.Code Title 29, Section 49, 29 U.S.C.A. § 49), effective from and after May 11th, 1935.
"Article 5221a—2, Sect. 2, designates the Bureau of Labor Statistics as the agency of the State in administering the Act. Article 5221b—8 creates within the Bureau of Labor Statistics the Texas Unemployment Compensation Commission and the several subsections of that article provide for the organization of the Commission and the qualifications of its member(s). Article 5221b—9 enjoins upon the Commission the duty of administering the Act. Power and authority is given the Commission to promulgate rules and regulations, not inconsistent with law, by which the Act is to be administered.
"Under Article 5221a—2, Sect. 5, all funds allocated to the State by the Federal Government in virtue of the Wagner-Peyser Act, shall be paid into the State Treasury, and by Article 5221b—7, a special fund is created to be kept separate and apart from all other funds, in which all moneys received by the State under the Act shall be administered by the Commission, above referred to.
"By Senate Bill No. 5, Chapter 482, Third Called Session, 44th Legislature, page 1993, at Section 7(a), effective October 27th, 1936, this provision appears:
"`Sec. 7. (a) Payment: (1) On and after January 1, 1936, contributions shall accrue and become payable by each employer for each calendar year in which he is subject to this Act, with respect to wages payable for employment (as defined in section 19(g) occurring during such calendar year. Such contributions shall become due and be paid by each employer to the Commission for the fund in accordance with such regulation as the Commission may prescribe, and shall not be deducted, in whole or in part, from the wages of individuals in his employ.'
"The foregoing provision was amended in some respects, immaterial to the point involved here, effective April 1st, 1939, and now appears as Article 5221b—5 (a), Vernon's Ann.Civ.St.
"Among the rules and regulations promulgated by the Commission is No. Five, which reads:
"`Time for payment of contributions for Employers Newly Subject: In the case of an employer who becomes newly subject to the law in any year after 1936 by reason of employment performed for him within such year, his first contribution payment shall become due and be paid on or before the 25th day of the month wherein occurred the 20th week during the calendar year, within which he had eight (8) or more employees on any one day. Such first payment of an employer becoming newly subject in the course of a calendar year shall include contributions on wages payable for employment from the beginning of such calendar year.'
"Regulation No. 15 reads:
"`Employers Liable for Contributions: Commencing with the calendar year 1936, any person who employs eight (8) or more individuals on a total of twenty (20) or more calendar days during a calendar year, each such day being in a different calendar week, is an employer subject to this Act. The several weeks in each of which occurs a day upon which eight (8) or more...
