Livingston v. The Susquehanna Oil Co.

• Decision Date: 09 June 1923
• Docket Number: 24,554
• Citation: 113 Kan. 702,216 P. 296
• Parties: R. B. LIVINGSTON, Appellant, v. THE SUSQUEHANNA OIL CO., Appellee
• Court: Kansas Supreme Court

216 P. 296

113 Kan. 702

R. B. LIVINGSTON, Appellant, v. THE SUSQUEHANNA OIL CO., Appellee

No. 24,554

Supreme Court of Kansas

June 9, 1923

Decided January, 1923.

Appeal from Montgomery district court; JOSEPH W. HOLDREN, judge.

Judgment reversed and remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. STATUTES--Touching the Weekly Payment of Laborers' Wages by Corporations Void. Chapter 187 of the Laws of 1893 including its amended section 3 (Gen. Stat. 1915, § 5873 et. seq., and chapter 221 of the Laws of 1919), which imposes certain duties on corporations touching the payment of laborers' wages, and which awards certain liquidated damages and inflicts certain penalties on corporations for the violation of such statute, but from which railway, farm, and dairy corporations are exempted, makes an unreasonable classification of corporations, and denies to them the equal protection of the law within the purview of the fourteenth amendment to the federal constitution, and is therefore void.

2. SAME. Chapter 187 of the Laws of 1893, including its amended section 3 (Gen. Stat. 1915, § 5873 et. seq., and chapter 221 of the Laws of 1919) has certain infirmities under the Kansas constitution indicated in the opinion.

3. SAME--Statutory Penalties--Liquidated Damages--Exemplary Damages. Statutory penalties which are essentially compensatory in their nature and which make certain exemplary allowances to private litigants for aggravating circumstances are not necessarily mere fines for the breach of penal laws which must inure to the school fund under constitutional mandate, but are or may be valid as liquidated and exemplary damages.

4. SAME--Statutes Providing for Payment by Corporations of Laborers' Wages on Leaving Their Employ Constitutional and Valid. Chapter 219 of the Laws of 1911 (Gen. Stat. 1915, §§ 5880, 5881), which provide when wages shall be paid by corporations to persons leaving their employ and which prescribes penalties which are essentially exemplary damages for failure of any corporation to pay its employees within ten days after the termination of their employment does not violate any provision of the federal constitution; and an employee discharged without payment of his wages within ten days may have a cause of action under such act.

5. SAME--Action by Employee for Wages--Demurrer to Petition Erroneously Sustained. Plaintiff's second cause of action was not subject to the federal constitutional objections stated in the trial court's ruling on defendant's demurrer.

A. R. Lamb, and Clement A. Reed, both of Coffeyville, for the appellant.

C. D. Ise, of Coffeyville, and Thomas E. Wagstaff, of Independence, for the appellee.

OPINION

DAWSON, J.:

This appeal presents a question of constitutional law.

The plaintiff was a workman in the service of defendant and was discharged without promptly receiving his pay. He sued for a month's wages due him, $ 200, and for an item of expense, $ 7.50; and in a second cause of action he sued for a large sum at the rate of $ 200 per month, as a statutory penalty, pursuant to certain legislative enactments which will be set out below.

Judgment was entered in plaintiff's favor for his wages and expenses, but the trial court sustained defendant's demurrer to the second cause of action on constitutional grounds. Plaintiff appeals.

Two statutes are relied on by plaintiff. The first of these reads:

"An act providing for the weekly payment of wages in lawful money of the United States by certain corporations, and providing a penalty for the violation thereof.

"§ 5873. All private corporations doing business within this state, except all steam surface railways and except corporations engaged in the production of farm and dairy products, shall pay to their employees the wages earned each and every week in lawful money of the United States, and all such wages shall be due and payable and shall be paid by such corporation not later than Friday of each week for all such wages earned the preceding week. (L. 1893, ch. 187, § 1; April 5.)

"§ 5874. Whenever such corporation fails to pay any of their employees, as provided in section 1 of this act, then a penalty shall attach to such corporation and become due to such employees, as follows: A sum equivalent to a penalty of five per cent per month as liquidated damages; and such penalty shall attach and become a judgment in any court of competent jurisdiction, and the penalty shall continue in full force and effect, including all the time intervening up to time of final payment. (L. 1893, ch. 187, § 2; April 5.)"

Section 5875, as amended by chapter 221, Laws of 1919:

"§ 5875. Whenever any employee is discharged from the employment of any such corporation, firm or person then the wages of such employee shall become due and payable on the day of such discharge, and any corporation, firm or person failing to pay such wages on written demand, within twenty-four hours of time of demand, shall, as a penalty for such failure, continue to pay to such employee, from day to day, additional wages at the same rate that he had been earning previous to such discharge, until full payment of original wages is made."

The next three sections of this act need no attention here, and the next section (Gen. Stat. 1915, § 5879) which authorizes an attorney's fee in actions to collect wages has been held unconstitutional for want of uniformity, ( Anderson v. Oil Co., 106 Kan. 483, 186 P. 198) and because it violated the fourteenth amendment.

The second statute relied on reads:

"An act providing when wages shall be paid to any person leaving the service, either by resignation or discharge, of any firm or corporation; and providing penalty for violation of the provisions of this act."

"§ 5880. It shall be unlawful for any firm or corporation employing labor within this state, to refuse or neglect to pay to any person leaving its service either by resignation or discharge any money due as wages within ten days from the termination of such services, and such payment must be made either at the place of discharge or at any office of such company or corporation within the state as may be designated by the party employed, he giving notice in writing, to the foreman or party in charge of such work." (L. 1911, ch. 219, § 1; March 31.)

"§ 5881. Any corporation or firm failing or refusing to pay wages due to any person leaving their employment, as provided in section 1 of this act, shall, as a penalty for violation thereof for such nonpayment, the wages of such servant or employee shall continue from the date of the discharge or resignation of said employee, at the same rate as if he was still in the service, until full and complete settlement is made: Provided, Such wages shall not continue for more than 60 days unless action for the recovery of the same shall have been commenced in any court of competent jurisdiction within that time." (L. 1911, ch. 219, § 2; March 31.)

Touching the first of these, the act of 1893 and its amended third section (act of 1919), the constitutional infirmities are quite apparent. It is not all corporations, nor all corporations within some reasonable classification, which must exercise dispatch under liquidated damages (section 2) and penalties (amended section 3) in the payment of wages to their employees. Steam surface railway corporations and corporations engaged in the production of farm and dairy products are exempted from its provisions. There is no conceivable basis for such discrimination. Such legislation offends against the fourteenth amendment just as clearly as did section 7 of the same act, held invalid in Anderson v. Oil Co., supra, and for the same reasons. See, Rose's notes to Gulf, Colorado & Santa Fe Ry. Co. v. Ellis, 165 U.S. 150, 41 L.Ed. 666, 17 S.Ct. 255, in 41 L.Ed. 845, appendix.

Another objection to the act, not perhaps so disastrous to the whole of it, inheres in the penalties prescribed. Note that in section 2 a penalty of 5 per cent of the wages due and withheld is added, which is also declared by the statute to be an allowance of liquidated damages, and this allowance could fairly be construed as such without a legislative declaration. But amended section 3 also provides penalties which preclude any interpretation that these are liquidated damages, since the liquidated damages are already defined and provided for in section 2. In such a situation, amended section 3, which would dispose of what is essentially and purely a penalty by bestowing it on a private person, and not on the school fund as the constitution provides (Art. 6, § 6), is void. (Harrod v. Latham, 77 Kan. 466, 95 P. 11; see, also, Condon v. Kemper, 47 Kan. 126, 27 P. 829; Hardy v. Kingman County, 65 Kan. 111, 68 P. 1078; Kuter v. Bank, 96 Kan. 485, 152 P. 662; 2 Bouvier, [Rawle's 3d Rev.] 2024; 8 R. C. L. 578, 21 id. 206; 1 Sedgwick on Damages, [8th ed.] § 361 et seq.)

On the other hand, exemplary or punitive damages, sometimes allowed by statute, are not ordinarily construed to be pure penalties which must go to the school fund. While they savor of penalties they are not exclusively so. They are essentially compensatory, taking cognizance of attendant aggravating circumstances which in their nature are not generally susceptible of accurate measurement in each particular case. Exemplary damages were known and familiar at common law, and there is no reason for supposing that the adoption of the constitution with its provision that pure penalties--proceeds of fines for breach of penal laws, should inure to the school funds--was intended to abrogate private right to exemplary or punitive damages as known at common law. Later enactments in substantial accord therewith are similarly free from constitutional defect.

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