Justice v. Standard Gilsonite Co.

• Decision Date: 27 November 1961
• Docket Number: No. 9326,9326
• Citation: 366 P.2d 974,12 Utah 2d 357
• Parties: d 357 Elba JUSTICE, Lawrence Justice, and Arthur Averett, Plaintiffs and Respondents, v. STANDARD GILSONITE COMPANY, Defendant and Appellant.
• Court: Utah Supreme Court

Page 974

366 P.2d 974

12 Utah 2d 357

Elba JUSTICE, Lawrence Justice, and Arthur Averett, Plaintiffs and Respondents, v. STANDARD GILSONITE COMPANY, Defendant and Appellant.

No. 9326.

Supreme Court of Utah.

Nov. 27, 1961.

Jensen, Jensen & Bradford, Salt Lake City, for appellant.

Simmons, Beaslin & Nygaard, Vernal, for respondents.

WADE, Chief Justice.

The defendant, Standard Gilsonite Company, appeals from a judgment awarding plaintiffs a penalty under Section 34-10-6(a), U.C.A.1953 of $2,715.00 for separating the three plaintiffs from its payroll without paying them the wages due for such services within 24 hours after demand therefor. ¹ In addition to the penalty above mentioned, the trial court awarded plaintiffs as past due wages $1,000.00.

Defendant claims that on September 1, 1959, an oral agreement was negotiated by the company with Elba Justice for mining of ore in an old mine at a specified rate per ton. Thereafter, Justice informed the company that 'mucking' and 'timbering' would be necessary before actual mining could be commenced. Elba Justice commenced such preliminary operation on September 7, and was joined by his son, Lawrence, on September 8, and by Arthur Averett on September 15. They continued at this preliminary work until September 30, when they demanded $1,000.00 as accumulated wages for the three of them. This the company refused, and now claims that it believed that no employer-employee relationship existed, but that the services rendered were merely preliminary to commencement of the oral contract which had been negotiated. Plaintiffs rendered their last services on October 1, 1959, and after failing to reach a settlement with the company, commenced this action on November 30 of that year. The trial court tried the issues and made findings and entered judgment in favor of the plaintiffs on all of the issues.

The company urges three grounds for reversal: (1) The penalty statute applies only where the employer acknowledges the employer-employee relationship and not where the refusal to pay is under a bona fide dispute on that issue. (2) The penalty statute is unconstitutional in that it denies the employer due process of law by imposing a heavy penalty for an unsuccessful though bona fide defense. (3) The penalty statute is unconstitutional class legislation in that it arbitrarily and discriminately excludes from the penalty provision other classes of employers not reasonably distinguishable from those included. We consider these contentions in the order above stated.

As to the first two contentions, we are unable to determine the merits thereof because they are based on the claim that defendant in the trial made a bona fide contention that no employer-employee relationship existed. No transcript of the evidence adduced at the trial was brought to this court, so we have no way of determining whether such defense was bona fide or not. In view of this fact we will not further consider the merits of these two contentions.

The third contention that the penalty statute is unconstitutional because it arbitrarily excludes from the penalty provision other classes of employers has merit.

Chapter 10, U.C.A.1953, under the heading 'Payment of Wages' contains 20 sections including the penalty provisions of Section 34-10-6(a) and Section 34-10-13 making it a misdemeanor, among other things, for an employer to refuse 'to pay wages due and payable when demanded.' However, it excepts from the provisions of that chapter certain classes of employers as follows:

Section 34-10-2. 'None of the provisions of this chapter shall apply to the state, or to any county, incorporated city or town, or other political subdivision, or to employers and employees engaged in farm, dairy, agricultural, viticultural or horticultural pursuits, or to banks and mercantile houses, or to stock or poultry raising, or to household domestic service, or to any other employment, where an agreement exists between employer and employee providing for different terms of payment.'

The question presented is whether the exclusion of 'banks and mercantile houses' makes the act arbitrary, discriminatory class legislation. ² We recognize as correct the rule as stated in 12 Am.Jur. 216 and 217, Sec. 521, as follows:

'One who assails the classification in a law must carry the burden of showing that it does not rest on any reasonable basis, but is essentially arbitrary

* * *

* * *

'* * * Before a court can interfere with the legislative judgment, it must be able to say that there is no fair reason for the law that would not require with equal force its extension to others whom it leaves untouched * * *.' ³

The difficult problem confronting us is the application of this rule of law to the facts of this case. In State v. Walker, ⁴ a criminal conviction of an employer for refusal to pay wages due when demanded under Chapter 60, Laws of Utah for 1937, where the statutes involved were similar to those involved in this action, ⁵ we held that there is a reasonable basis to differentiate banks and mercantile houses from the included employers so that the provisions were not unconstitutional. We have carefully reconsidered this problem and notwithstanding our previous holding in the Walker case, we conclude that there is no reasonable basis for exclusion of banks and mercantile houses from the penalty provisions of this act as distinguished from other employers which are included, and that such provisions are thus rendered unconstitutional.

As to banks, there are many regulatory provisions made for the protection of their customers, but not their employees. Under these regulations they are required to keep available ready cash to meet current obligations with which they might be confronted. However, this seems to be a reason why banks should be subjected to such penalty provisions rather than why they should be excluded therefrom. For a failure under these circumstances to pay an employee on separation from the employers' payroll would be more reprehensible and cause less hardship to the bank...