Texas Unemployment C. Com'n v. Metropolitan Bldg., Etc.

• Decision Date: 03 April 1940
• Docket Number: No. 8838.,8838.
• Citation: 139 S.W.2d 309
• Parties: TEXAS UNEMPLOYMENT COMPENSATION COMMISSION et al. v. METROPOLITAN BUILDING & LOAN ASS'N et al.
• Court: Texas Court of Appeals

139 S.W.2d 309

TEXAS UNEMPLOYMENT COMPENSATION COMMISSION et al. v. METROPOLITAN BUILDING & LOAN ASS'N et al.

No. 8838.

Court of Civil Appeals of Texas. Austin.

April 3, 1940.

Rehearing Denied April 24, 1940.

Appeal from District Court, Travis County; Roy C. Archer, Judge.

Proceeding by the Metropolitan Building & Loan Association and others against the Texas Unemployment Compensation Commission and others to perpetually enjoin and restrain defendants from by civil suit, criminal prosecution, or otherwise attempting to enforce the provisions of the Texas Unemployment Compensation Act against plaintiffs. From an adverse judgment, defendants appeal.

Judgment reversed, and judgment rendered for defendants, and perpetual injunction dissolved.

Gerald C. Mann, Atty. Gen., Geo. W. Barcus and R. W. Fairchild, Asst. Attys. Gen., and Lee G. Williams and James W. Peavy, both of Austin, for appellants.

A. E. Wood and Dan Moody, both of Austin, for appellees.

BLAIR, Justice.

Appellees, ten building and loan associations, instituted this proceeding to perpetually enjoin and restrain appellants, the Texas Unemployment Compensation Commission and the Attorney General, from by civil suit, criminal prosecution, or otherwise, attempting to enforce the provisions of the Texas Unemployment Compensation Act, Vernon's Ann.Civ.St. art. 5221b— 1 et seq., against them, upon the ground that each of them was and is now an instrumentality of the United States and as such is by the Texas Unemployment Compensation Act specifically exempted from its provisions. Judgment was for appellees as prayed; hence this appeal.

Appellants make two contentions as follows:

First. That the trial court erred in overruling their general demurrer to the petition for injunction, upon the ground that the court was without jurisdiction to entertain the suit and to grant the injunctive relief, because, if the provisions of the Texas Unemployment Compensation Act is not applicable for the reasons plead, then each of the appellees (plaintiffs below) has a plain, adequate, and complete remedy at law against the enforcement of the act, by pleading as defense in any civil, criminal, or other proceeding instituted against them, their exemption from the operation of the act.

Second. That if the trial court did have jurisdiction to entertain the suit, then it erred in holding that each of the appellees is an instrumentality of the United States, and therefore entitled to exemption from the provisions of the Texas Unemployment Compensation Act, which expressly exempts instrumentalities of the United States from its operation.

In support of their first contention, appellants cite as decisive of the question the cases of Texas Unemployment Compensation Commission v. Campbell, Tex.Civ. App., 119 S.W.2d 388, writ dismissed, and Stephens v. Texas & P. Ry. Co., 100 Tex. 177, 97 S.W. 309. On the other hand, appellees cite as decisive of the jurisdiction of the trial court to entertain the suit for the injunctive relief prayed for, among others, the cases of Rogers v. Daniel Oil & Royalty Co., 130 Tex. 386, 110 S.W.2d 891; Sheppard v. Jacksboro Ref. Co., Tex. Civ.App., 123 S.W.2d 497, writ dismissed; and City of Fort Worth v. Southland Greyhound Lines, Ins., 123 Tex. 13, 67 S.W.2d 361, wherein the Stephens case was distinguished on the question of lien on property to secure the taxes, which distinction is applicable to the instant case.

We have reached the conclusion that the Rogers-Daniel Oil & Royalty Company case by the Supreme Court is decisive of the instant case; and that the question need not be discussed at length. Suffice it to say that in the instant case, appellees alleged that although they were exempted by the Texas act from its operation, being instrumentalities of the United States, appellants were threatening to enforce the act against them and compel them to pay the contributions or taxes, interest, fines, and penalties authorized by the statute against employers covered by the act; and after setting forth the various contributions or taxes, fines and money penalties, and other regulatory requirements which the Unemployment Compensation Act required of employers covered by it, appellees alleged as grounds for the injunction, as follows: * * * "that unless restrained by this Court, the Unemployment Compensation Commission and the Chairman and members thereof will insist that the Attorney General institute civil and criminal proceedings against the plaintiffs, and each of them, to compel the plaintiffs to pay said money and furnish said reports and submit to said inspection, regulations and visitations; and the Attorney General, unless restrained by this Court, will periodically and from time to time, as liability to payment would arise under said Chapter 482 [Acts 1936, 3d Called Sess.], if Plaintiffs were subject thereto, institute and prosecute civil and criminal proceedings against these Plaintiffs, and each of them, to compel each of them to submit to the rules and orders of said commission and to make the payments demanded of them by said Commission. Each of plaintiff corporations will be subjected to civil suits for the collection of contributions due under the Texas Unemployment Compensation Act as said payments mature from time to time and remain unpaid, and will further be subjected to criminal prosecutions for failure to comply with provisions of the Texas Unemployment Compensation Act which requires periodical reports to the Commission from all subject employers."

It was stipulated that appellants were threatening to and intend to proceed against appellees both by civil suit and criminal proceedings, if they did not comply with the provisions of the act.

Since the statute provides for the payment of the contributions or taxes every 30 days, and authorizes the Commission to instruct the Attorney General to institute civil suits and criminal prosecutions against delinquent employers for contributions or taxes, and for additional penalties, it follows that numerous suits could be filed to collect them; and since the statute provides for various fines and imprisonment penalties, and provides that each day shall constitute a separate offense, it is manifest that the failure to pay the contributions or taxes, and to comply with other regulatory requirements of the Commission, would subject each of the appellees to a multiplicity of suits and to the payment of accumulated penalties in the sum of thousands of dollars and years of imprisonment. These alleged and stipulated facts bring the instant case clearly within the rule announced in the Rogers-Daniel Oil & Royalty Company case, wherein the court say [130 Tex. 386, 110 S.W.2d 895]: "* * * In fact, if the litigation should be drawn out any great length of time a great number of such suits would result. * * * It is certainly the rule in this state that equity will take cognizance of a controversy to determine the rights of all the parties, and grant the relief required to meet the ends of justice in order to prevent a multiplicity of suits. * * * To our minds, if a remedy at law, though otherwise complete and adequate, leads to a multiplicity of suits, that very fact prevents it from being complete and adequate."

We have reached the conclusion that the trial court erred in holding that appellees are each an instrumentality of the United States within the meaning of that term as used in Section 19(g)(6) of the Texas Unemployment Compensation Act, as amended by Acts 1937, c. 67, § 7, Vernon's Ann.Civ.St. art. 5221b—17, the material portion of which reads as follows:

"The term `employment' shall not include: * * *

"(B) Service performed in the employ of any other State or its political subdivisions, or of the United States Government, or of an instrumentality of any other State or States or their political subdivisions or of the United States."

Seven of the appellees (Metropolitan Building and Loan Association, Abilene Building and Loan Association, Houston Building & Loan Association, Mutual Deposit & Loan Company, San Antonio Building & Loan Association, Dallas Building & Loan Association, and Gibralter Savings & Building Association) are building and loan associations organized under the laws of Texas. Title 24, Articles 852 to 881a—69, Vernon's Texas Civ.Sts. Prior to any time in question each of these seven corporations had become and is now a member of the Federal Home Loan Bank of Little Rock, Arkansas, by the provisions of Article 881a—37, Vernon's Texas Civil Statutes, and Title 12, Sections 1444, 1422(4), Ch. 11, United States Code Annotated. The Federal Home Loan Bank of Little Rock, Arkansas, was created under the Federal Home Loan Bank Act, 12 U.S.C.A. § 1421 et seq., p. 962, which act prescribes the eligibility requirements for a state-created building and loan association to become a member of the Federal Home Loan Bank, which membership may be terminated by the action of the Board of Directors of the Federal Home Loan Bank, or by the voluntary withdrawal of the state-created association. The shares of stock of each appellee state-created corporations not held by the United States Government through the Home Owners Loan Corporation is owned by individual shareholders who occupy the same relationship thereto as stockholders of any other corporation with respect to dividends; and the Home Owners Loan Corporation is entitled to the same privileges with respect to the...