McCain v. Hammock

• Decision Date: 27 April 1942
• Docket Number: 4-6658
• Citation: 161 S.W.2d 192,204 Ark. 163
• Parties: MCCAIN, COMMISSIONER OF LABOR, v. HAMMOCK, CHANCELLOR
• Court: Arkansas Supreme Court

161 S.W.2d 192

204 Ark. 163

MCCAIN, COMMISSIONER OF LABOR, v. HAMMOCK, CHANCELLOR

4-6658

Supreme Court of Arkansas

April 27, 1942

Prohibition to Bradley Chancery Court; E. G. Hammock Chancellor; writ denied.

Petition denied.

Jack Holt, Attorney General, and Jno. P. Streepey, Assistant Attorney General, for petitioner.

Aubert Martin, D. A. Bradham, Lamar Williamson, J. Emmett Gaughan N. F. Lamb and Daggett & Daggett, for respondent.

OPINION

GREENHAW, J.

Petitioners are respectively the Commissioner of Labor and the Director of the Employment Security Division in the Department of Labor of the State of Arkansas. They seek a writ of prohibition restraining respondent from proceeding further in three suits filed against them in the chancery court of Bradley county by Southern Lumber Co., Inc., Bradley Lumber Company and Arkansas Wood & Paper Products Corporation, firms engaged in manufacturing and processing of lumber, and all domiciled in Bradley county.

Petitioners allege that individually and officially they are domiciled in Pulaski county, and it is their duty to administer and enforce the provisions of Act 391 of 1941, being specifically charged with the duty of collecting taxes that are and were delinquent under Act 155 of 1937 as amended by Act 200 of 1939, the collection of such delinquent taxes, if not voluntarily paid, to be enforced in accordance with § 14 (e) of Act 391 of 1941.

Their petition further recites that on August 26, 1941, the three companies aforesaid filed in the Bradley chancery court bills in equity wherein each of them sought to restrain petitioners from enforcing the above acts, and from exercising the powers and duties bestowed upon them as officers of the state of Arkansas. Summonses issued by the clerk of the Bradley chancery court, directed to the sheriff of Pulaski county, were served upon petitioners at their office in the State Capitol. On September 6, 1941, petitioners filed a motion to quash the summons in each of said actions, on the ground that they were issued and served contrary to law. They also filed motions to dismiss the causes of action on the ground that the venue was not in Bradley county, because the defendants (petitioners here) are domiciled in their official capacities in the State Capitol.

On October 27, 1941, both motions were presented to the court and overruled, and petitioners were required to answer in said actions. Petitioners allege that the respondent, as judge of the Bradley chancery court, is about to proceed in said cases without authority of law, and that said court is without jurisdiction; that no legal summons has been or can be issued from said court upon said complaints, and no legal service has been or can be had on these petitioners; and that unless this court prohibits the respondent from proceeding further in said actions, petitioners will be required to litigate actions in the Bradley chancery court, which is without jurisdiction, and where the venue does not lie.

On August 21, 1941, the Director of the Employment Security Division certified to the Commissioner of Labor "Certificates of assessment of contributions levied by the Arkansas Employment Security Act" against the three companies, copies of which were mailed to the respective companies, and which recited that the director assessed said contributions against each of them for the years 1937, 1938, 1939 and 1940. Each of the certificates stated the amount claimed to be due, together with penalties and interest. The certificates purported to be executed under authority of § 14 (e) of Act 391 of 1941, and contained the statement: "A copy of this assessment is being mailed or delivered to said employer and at the end of ten days thereafter said assessment shall become prima facie correct, and if the contributions are not paid within said period of ten days the amount of said delinquent contributions will be certified to the clerk of the circuit court of the county wherein the employer is domiciled, or has a place of business, to be filed, as provided by law, and thereupon an execution will be issued against such employer, and placed in the hands of the sheriff for action as by law in such cases made and provided."

On August 25, 1941, each of these companies filed in the Bradley chancery court its complaint, asking that the assessment be canceled, and that petitioners be restrained from attempting to enforce it. The allegations of the three complaints are the same with the exception of the names of the parties and the amounts involved.

The complaints alleged that the assessment was an illegal exaction, was based upon an arbitrary estimate of wages paid by persons with whom the company had dealt as independent contractors, and was in violation of provisions of the state and federal constitutions. These companies purchase timber, but do not engage in the logging business, in severing timber or in converting it into logs. They have paid all contributions due on their employees, and the assessments levied and certified against them were based upon wages paid to employees of independent contractors by the independent contractors, who agreed at the time of the enactment of the Arkansas Unemployment Compensation Law (Act 155 of 1937, as amended by Act 200 of 1939, which was repealed by Act 391 of 1941) to pay all contributions due upon wages due their employees. Compensation to the independent contractors was increased by the companies when this law was first passed to enable them to pay the contributions due thereunder, and the threatened assessment would in most instances constitute a double assessment.

They further alleged that the assessments are not based upon wages actually paid to any of their employees, and, if collection of the assessed contributions were permitted, it would not benefit known individuals or definite employees, but most of it would go into a dummy account to the credit of unknown persons. None of the employees for whose benefit contributions are sought to be collected were ever employed by plaintiff companies, and none were actually paid by them, nor do their names appear upon their pay rolls. Defendants undertook to ascertain the amount of compensation paid to several independent contractors by examining plaintiffs' books with respect to acquisition of logs from the independent contractors and vendors, which estimate was made arbitrarily, unfairly, illegally, and in an excessive amount.

They allege that the amounts of the assessments were fixed prior to July 1, 1941, when Act 391 became effective, and were based upon rules, regulations and interpretations wrongfully made of the provisions of Act 155 of 1937, as amended by Act 200 of 1939, which was repealed by Act 391 of 1941, and the assessments therefore are illegally based upon laws which no longer exist; that the assessment is not made by authority of Act 391, but is in direct violation of the express provisions of § 2 (i) 5 of Act 391.

Plaintiffs invoke the provisions of § 13 of art. XVI of the constitution of Arkansas to protect themselves against the enforcement of an illegal exaction, and further invoke the ancient jurisdiction of equity to prevent a wrongful imposition of a cloud upon their properties, and allege that said assessments, their threatened collection, and threatened cloud upon the title of their properties constitute an illegal exaction. They pleaded estoppel and the statute of limitations as a complete bar, and prayed, among other things, that the defendants be enjoined from undertaking to enforce the alleged illegal exaction.

Petitioners contend that the Bradley chancery court is without power to proceed in the cases pending there for the reasons that no court has jurisdiction to hear and decide the issues that will arise on the complaints, for they seek to substitute a court procedure for a valid, adequate statutory procedure, and there has been and can be no lawful service of process upon petitioners because the venue of a local action is in Pulaski county.

Petitioners say they have proceeded under § 14 (e) of Act 391. The first and fourth paragraphs, which they claim are pertinent to the inquiry, are as follows:

"If any person, firm or corporation shall become delinquent in the payment of any contribution or interest or penalties required to be paid by this act, it shall be the duty of the director, when the amount of such contribution, interest and penalties is determined, either by the report of the employer or by such investigations as the director may have made, to assess the contributions, interest and penalties so determined against such delinquent employer, and to certify the amount of said contributions, interest and penalties to the commissioner, and mail or otherwise deliver a copy of said assessment to the delinquent employer. At the end of ten days thereafter, said assessment shall become prima facie correct, and the director shall certify the amount of said delinquent contributions, interest and penalties to the clerk of the circuit court of the county wherein the employer is domiciled or has a place of business and it shall be the duty of the clerk to file such certificate of record and to enter the same in the record of the circuit court for judgments and decrees under the procedure prescribed for filing transcripts of judgments by §§ 8440 and 8442 of Pope's Digest of the Statutes of Arkansas, 1937, and thereupon the said assessment shall have the force and effect of a judgment of the circuit court. Execution shall thereupon be issuable, at the request of the director, his agent or attorney, or any other employee of the Employment Security Division of the Department of Labor of the State of Arkansas forthwith by the clerk of the circuit court, directed to...