State v. Concrete Processors, Inc.

• Decision Date: 18 February 1963
• Docket Number: No. 9009,9009
• Citation: 379 P.2d 89,85 Idaho 277
• Parties: The STATE of Idaho, Plaintiff-Respondent, v. CONCRETE PROCESSORS, INC., Defendant-Appellant.
• Court: Idaho Supreme Court

Page 89

379 P.2d 89

85 Idaho 277

The STATE of Idaho, Plaintiff-Respondent, v. CONCRETE PROCESSORS, INC., Defendant-Appellant.

No. 9009.

Supreme Court of Idaho.

Feb. 18, 1963.

Alvin Denman, Idaho Falls, for appellant.

John W. Gunn, Counsel, Employment Security Agency, Boise, Everett D. Hofmeister, Jr., Sp. Asst. Counsel, Employment Security Agency, Ponderay, for respondent.

On Rehearing

Former Opinion Filed at the Conclusion of the Original Hearing Withdrawn and this Opinion Substituted.

McQUADE, Justice.

This action is one of foreclosure of a lien under provisions of Idaho statutes. Essentially the basis for the dispute in the trial court between the defendant corporation and the plaintiff State of Idaho was whether or not the defendant is a covered employer as defined by the Employment Security Law, I.C. § 72-1301 et seq.

A report was filed with the Employment Security Agency for the defendant covering the third quarter of 1955, listing 13 employees. Thereafter, reports were made for the corporation asserting that it had no employees. Pursuant to I.C. § 72-1358, the director of the Idaho Employment Security Agency in 1957 requested additional information and records from the defendant and V-1 Oil Company to determine whether the defendant was a covered employer.

V-1 Oil Company, like the defendant, has Sam H. Bennion as the principal owner. V-1 Oil Company is engaged in retail oil business, and is represented as the parent company of the defendant. The defendant is engaged in the making of concrete or pumice building blocks. Owner Bennion testified that the 1955 report listing employees for defendant was in error; he stated that all covered personnel then were and now are employees of V-1 Oil Company which paid the contribution at its established rate on all employees.

From records, papers and files some of which were obtained voluntarily and others by court order, the Agency director assessed the defendant as a covered employer and required the defendant to make contributions under the Employment Security Law. The director did not expressly find defendant to be a covered employer, but assessed it as such and notice of right of appeal and time for appeal for a covered employer were set forth on notices of assessment and served upon defendant.

No action was taken on the part of defendant nor its officers to appear before the director in opposition to the issue as to whether defendant might be a covered employer; nor did the defendant take an appeal, as provided by statute, to the Industrial Accident Board from the determination made by the director of the Agency.

The director of the Employment Security Agency determined that defendant owed contributions to the Agency in the principal amount of $4,995 at an experience rating of 2.7 per cent of the total payroll assessed at $185,000.

After appeal time had expired, the director, pursuant to I.C. § 72-1360, caused a certificate of contributions due to be filed in Madison County. Defendant substituted a bond in double the amount claimed in the certificate, thereby releasing all of defendant's property from the lien created by the statute. Thereafter, a writ of execution and notice of garnishment were executed by the sheriff, levying on defendant's bank account. At this time plaintiff discovered the bond had been substituted for defendant's property and had the execution quashed.

Subsequent thereto, this action was brought to foreclose the lien. A demurrer and a motion to strike were filed, and overruled and denied. Defendant answered to the effect that it had no employees for the period in question.

Trial of the cause was to the court sitting without a jury. The court entered a judgment that the director of the Employment Security Agency was justified in his findings as to the liability of the defendant to pay contributions, and that the assessment levied constituted a lawful claim against the defendant, and that the lien was levied according to law and was valid against the property of the defendant, and that the plaintiff was entitled to have such lien satisfied from the bond of the defendant. Defendant appeals from the judgment entered against it.

Defendant's argument, bolstered by propositions of law and authorities, urges three propositions: (1) that the Employment Security Law is unconstitutional because it invades the judicial field, (2) that the State must establish the validity of its lien by proving the elements which support the lien, and (3) that the lowest experience rating of either corporation is applicable because of the single corporate ownership.

Defendant urges that I.C. § 72-1355(c) is unconstitutional. The following is the questioned portion of the statute:

'* * * No suit, including an action for a declaratory judgment, shall be maintained and no writ or process shall be issued by any court of this state which has the purpose or effect of restraining, delaying, or forestalling the collection of any contributions under this act or substituting any collection procedure for those prescribed in this act.'

Defendant argues that the said portion of the section of the Employment Security Law is an attempt to exclude the courts from the exercise of powers properly belonging to the judicial department, and is contrary to Article 2, Section 1, of our State Constitution, which provides:

'The powers of the government of this state are divided into three distinct departments, the legislative, executive and judicial; and no person or collection of persons charged with the exercise of powers properly belonging to one of these departments shall exercise any powers properly belonging to either of the others, except as in this constitution expressly directed or permitted.'

Defendant argues also, on much the same ground, that I.C. § 72-1353 is violative of our Constitution. The applicable part of that section is:

'The director may, upon his own motion or upon application of any employer, and after notice and opportunity for hearing, make findings of fact and on the basis thereof, a determination with respect to whether such employer is a covered employer and whether services performed for or in connection with the business of such employer constitutes covered employment. Appeal from any such determination may be taken to the board within 14 days after the mailing of notice of such findings and determination to the employer, or, in the absence of mailing, within 14 days after the delivery of such notice. * * *'

Defendant argues that this section sets up a new court, that the employer is placed on trial, that the director makes findings of facts and conclusions of law, and that all are judicial functions. These are fundamental propositions having to do with the authority of administrative boards to carry out their designated functions, either by constitutional or legislative authority.

We have recognized the power of the legislature to confer upon administrative officers and agencies of the executive department functions and powers, quasi judicial in character, to make findings of fact and to enter orders and judgments thereon in the application of legislative acts to such fact determinations. We have also held that such legislation is not repugnant to the constitution as a delegation of legislative power. Howard v. Missman, 81 Idaho 82, 337 P.2d 592.

We have further held that such legislation does not constitute a denial of due process so long as it provides for notice and an opportunity for a fair hearing before the rights of persons affected are finally determined thereunder; and provided that such legislation does not attempt to give such finality to the determinations made by the administrative agency thereunder that property and constitutional rights of citizens may be conclusively determined without right to adequate judicial review. State v. Finch, 79 Idaho 275, 315 P.2d 529; Electors of Big Butte Area v. State Board of Ed., 78 Idaho 602, 308 P.2d 225; Foster v. Walus, 81 Idaho 452, 347 P.2d 120.

The statute here involved afforded the plaintiff an opportunity to be heard and a right of appeal to the Industrial Accident Board, and an appeal from that board to this court. It did not avail itself of either. Generally the administrative remedies provided by such legislation must be exhausted before the courts will act to prevent the invasion of any asserted constitutional or property right. Bohemian Breweries v. Koehler, 80 Idaho 438, 332 P.2d 875.

Our Employment Security Agency is a creature of the legislature. The Employment Security Law is designed to enhance the economic security of all covered employees, and for the additional purpose of reducing menance to health, morals and welfare of the people of the State of Idaho. To accomplish these objectives, every covered employer is required to make contributions to the Employment Security Fund. To assure that all covered employers make their contributions, the Legislature charged the director of the Agency to require compliance from all employers who are found to be covered employers under the Act.

'The term 'covered employer' means:

'(a) An employer as defined in section 72-1320, who in any calendar quarter after June 30, 1947, pays or becomes liable to pay for...