Mich. Unemployment Comp. Comm'n v. Vivian

• Citation: 318 Mich. 598,29 N.W.2d 102
• Decision Date: 13 October 1947
• Docket Number: No. 22.,22.
• Parties: MICHIGAN UNEMPLOYMENT COMPENSATION COMMISSION v. VIVIAN et al.
• Court: Supreme Court of Michigan

318 Mich. 598

29 N.W.2d 102

MICHIGAN UNEMPLOYMENT COMPENSATION COMMISSION

v.VIVIAN et al.

No. 22.

Supreme Court of Michigan.

Oct. 13, 1947.

OPINION TEXT STARTS HERE Appeal from Circuit Court, Marquette County; Frank A. Bell, judge.

Action by Michigan Unemployment Compensation Commission against Oliver J. Vivian and Wilbur J. Weber, doing business as Oliver Adjustment Company, to collect delinquent contributions, damages, and interest allegedly due the commission under the Unemployment Compensation Act. From a judgment in favor of the defendants, the plaintiff appeals.

Judgment set aside and case remanded for a new trial.Before the Entire Bench, except DETHMERS, J.

Foss O. Eldred, Atty. Gen., Edmund E. Shepherd, Sol. Gen., of Lansing, and Laurence A. Price, Asst.Atty. Gen., for plaintiff and appellant.

George C. Quinnell, of Marquette, for defendants and appellees.

BOYLES, Justice.

This is a law action brought by the Michigan unemployment compensation commission in the circuit court for Marquette county to collect delinquent contributions, damages and interest claimed to be due the commission under the unemployment compensation act.¹ The defendants pleaded as an affirmative defense that the claim was barred by the statutes of limitation. The case was submitted to the court without a jury on stipulated facts, and judgment was entered for the defendants.

Plaintiff appeals, mainly on the claim that the trial court erred in holding that the action was barred by the statute of limitation in the act.

The essential facts are stipulated. Defendants have been conducting a collection business in Marquette since 1927. Due to a misapprehension as to what employment should be included in considering whether they were employing eight or more persons for some part of each of 20 different weeks during the calendar years 1938 and 1939, the defendants did not file any returns with the commission or make any payments to the unemployment compensation fund for those years. On January 18, 1943, a field advisor of the commission completed a report of the defendants' employment for the calendar years 1937 through 1942 which showed that the defendants had eight or more individuals in employment within the act each year for 1938 to 1942, inclusive. Defendants have paid all claims for contribution for said years except 1938 and 1939, and these two years are the only ones involved in the instant suit. In the circuit court the issue was stipulated by counsel as follows:

‘5. That as a result of said field advisor's report (January 18, 1943), which was the first information the commission had of any liability, a notice of determination in the form of a letter was issued to the Oliver Adjustment Company by a representative of the commission on February 16, 1943. This determination was to the effect that the Oliver Adjustment Company became an employer subject to the Michigan unemployment compensation act as of January 1, 1938, and that said concern was liable for contributions on all services performed in employment on or after that date.’

‘8. The plaintiff claims there is due it from said defendants the following sums of money: for 1938, delinquent contributions, $217.29, interest $123.79; for the year 1939, delinquent contributions of $237.53 plus $115.02 interest; making a total of $693.63 as of February 28, 1945, which amount of money the defendants concede to be correct and admit it to be due and payable unless this action is barred by section 15(j) of the Michigan unemployment compensation act.’

‘11. The defendants admit herein the regularity of the proceedings in every way, including due notice of the delinquent contributions and interest for the years 1938 and 1939, except as to their defense of the limitation of action provision as contained in section 15(j) of said act. The parties agree that no assessment or penalty has ever been made or imposed by the commission with respect to the delinquent contributions for the years 1938 and 1939. This civil action for the collection of said delinquent contributions and interest is brought under the specific provisions of section 15(c) of the Michigan unemployment compensation act.’

The present action was started by plaintiff on February 16, 1945, and a summons issued which was returned, served and filed on the ensuing day. The issue here is whether plaintiff's cause of action was then barred by statutes of limitation, the issue having been properly pleaded in the case as an affirmative defense. If so, plaintiff cannot prevail in this suit and the judgment for defendants must be affirmed.

The provisions of section 15(c) of the unemployment compensation act, Comp.Laws Supp.1945, § 8485-55(c), Stat.Ann.1946 Cum.Supp. § 17.515(c), are as follows:

‘In addition to the mode of collection provided in subsection (b) above, after due notice, any employer defaults if, any payment of contributions or interest thereon, the commission may bring an action at law in any court of competent jurisdiction to collect and recover the amount of any contribution, and any interest thereon, and in addition 10 per centum of the amount of contributions found to be due, as damages. An employer adjudged in default shall pay costs of such action. Civil actions brought under this section shall be heard by the court at the earliest possible date.’

The defendants claim that this action is barred under the provisions of section 15(j), of said act, Stat.Ann.1946 Cum.Supp. § 17.515(j), which was as follows:

‘No assessment or penalty with respect to contributions unpaid shall be made or imposed after the expiration of 3 years from the date upon which such contributions first become due and payable.’

Section 13 of the act, Comp.Laws Supp. 1945, § 8485-53, Stat.Ann.1946 Cum.Supp. § 17.513, declares the date on which contributions by an employer who is subject to the act become due and payable, as follows:

‘Such contributions shall become due and be paid to the commission, for the unemployment compensation fund, by each employer semiannually or for such shorter periods of not less than 28 days, as the commission may be regulation prescribe.’

In plaintiff's brief it is claimed that on September 27, 1938, the commission adopted a regulation 23, providing in part that subsequent to June 30, 1938, the contribution period shall be the calendar quarter. The regulation referred to does not appear in the Michigan administrative code. Act No. 88, § 3, Pub.Acts 1943, administrative code act, Stat.Ann.1946, Cum.Supp. § 3.560(9), provides:

‘Any rule made by any state agency prior to the effective date of this act and not filed in the office of the secretary of state within 3 months after the effective date of this act, as required by section 2 hereof, shall be void and of no effect.’

Regulation 121 of the commission, appearing at page 1439 of the administrative code, applies only to contributions on employment occurring subsequent to October 1, 1939, and was not adopted until June 26, effective July 1, 1941. For the purposes of this case we must assume that the provisions for semiannual payment control, as provided in section 13 of the act. Therefore, defendants' payment of contributions for the first six-months' period of the year 1938 became due and payable June 30, 1938; for the last six months of said year, on December 31, 1938; and similarly on June 30 and December 31, 1939, respectively, for that year. Hence, if the three-year limitation in section 15(j) of the act should be held to control, this suit would be barred by the limitation, not having been started until February 16 or 17, 1945.

But counsel agree that the failure of the defendants to disclose and report to the commission the fact that they employed a sufficient number of persons in 1938 and 1939 to bring them within the provisions of the act amounted to fraudulent concealment of plaintiff's cause of action, and that 3 Comp.Laws 1929, § 13983, Stat.Ann. § 27.612, applies to the situation here. It provides:

‘If any person who is liable to any of the actions mentioned in this chapter, shall fraudulently conceal the cause of such action from the knowledge of the person entitled thereto, the action may be commenced at any time within two [2] years after the person who is entitled to bring the same shall discover that he had such cause of action, although such action would be otherwise barred by the provisions of this chapter.’

Hence, plaintiff's cause of action to collect the delinquent compensation for the years 1938 and 1939 would not be barred in three years by said section 15(j) of the unemployment compensation act, when 3 Comp.Laws 1929, § 13983, supra, is read into it. It is conceded that plaintiff first discovered its cause of action when its field advisor filed the report as to defendants' liability, on January 18, 1943, hence plaintiff's action, giving effect both to said section 15(j) and 3 Comp.Laws 1929, § 13983, supra, might, under certain circumstances to which reference will be made later, be barred from and after January 18, 1945. Inasmuch as plaintiff's present suit was not begun until February 16, 1945, the defense of limitation of action pleaded by the defendants might prevail. The circuit judge so held, and on that ground entered judgment of no cause for action.

Plaintiff insists that section 15(j) does not apply as a limitation on the time within which an action in court may be brought under section 15(c), as was done in this case, and claims that section 15(j) applies only to the limitation of time within which assessments and penalties may be imposed, not to suits begun under the provisions of section 15(c) of the act. Plaintiff argues that as to such suits the general statute limiting the bringing of personal actions to six years from the time such action accrues, 3 Comp.Laws 1929, § 13976, as amended, Comp.Laws Supp.1945, § 13976, Stat.Ann.1946 Cum.Supp. § 27.605, applies. Therefore, plaintiff claims, its suit here is not barred by the limitation of time in ...