Unemployment Comp. Comm'n v. Harvey

• Decision Date: 19 January 1942
• Parties: UNEMPLOYMENT COMPENSATION COMMISSION. v. HARVEY.
• Court: Virginia Supreme Court

18 S.E.2d 390

UNEMPLOYMENT COMPENSATION COMMISSION.

v.HARVEY.

Supreme Court of Appeals of Virginia.

Jan. 19, 1942.

Error to Circuit Court of City of Richmond; Julien Gunn, Judge.

Suit by the Unemployment Compensation Commission of Virginia by notice of motion for judgment against Louise B. Harvey to recover pay-roll taxes under the Unemployment Compensation Act. Toreview a judgment for defendant, plaintiff brings error, and the defendant moves to dismiss the writ.

Motion 'overruled and judgment reversed and remanded.

Before CAMPBELL, C. J., and HOLT, HUDGINS, GREGORY, BROWNING, EGGLESTON, and SPRATLEY, JJ.

Abram P. Staples, Atty. Gen., and Kenneth C. Patty, Asst. Atty. Gen., for plaintiff in error.

John B. Welsh, of Richmond, for defendant in error.

EGGLESTON, Justice.

The Unemployment Compensation Commission of Virginia filed a notice of motion for judgment in the court below against Louise B. Harvey to recover pay roll taxes for the years 1937, 1938 and 1939, amounting in all to $209.68. The basis of the motion was that the defendant was an "employer" as defined in section 2 of the Virginia Unemployment Compensation Act, Acts 1936-7, Ex.Sess. ch. 1, p. 3, as amended by Acts 1938, ch. 446, p. 1004; 1938 Supp. to Michie's Code of 1936, § 1887(94), and hence was liable for the pay roll taxes for the respective years in accordance with the provisions of section 7 of the act, 1938 Supp. to Michie's Code of 1936, § 1887(99). The defendant filed a plea denying that she was an employer, as defined in the act, and alleging that therefore she was not liable for the taxes sought to be recovered.

The plaintiff, the Unemployment Compensation Commission, filed a replication to this plea, alleging that in a proceeding filed by one Alice Towns with the Unemployment Compensation Commission claiming benefits under section 6 of the act, 1938 Supp. to Michie's Code of 1936, § 1887(98), it had been determined by the commission that the defendant was an employer within the meaning of the act; that since the defendant "was present at said hearing and a party thereto and submitted evidence * * * in support of her contention that she was not, and never had been, an employer within the meaning of said act, " and that since the defendant had not appealed from the decision of the Unemployment Compensation Commission, as provided by the act, she was now estopped by the final judgment rendered by the commission to deny both that she was an em ployer within the meaning of the act and that she was liable for the taxes sought to be recovered. The defendant demurred to this replication.

A jury having been waived by both sides, all matters of law and fact were submitted to the court upon the identical evidence produced before the commission in the proceeding filed by Alice Towns.

The lower court held (1) that the defendant was not estopped by the former proceeding to deny that she was an employer, and (2) that she was not, under the evidence submitted, an employer within the meaning of the act, and hence was not liable for the taxes sought to be recovered. To the judgment entered for the defendant the Unemployment Compensation Commission, the plaintiff below, has sought and obtained the present writ of error.

At the outset we are met with a motion to dismiss the writ on the ground that it is a matter "merely pecuniary" and does not involve the jurisdictional amount of $300 required by Code, § 6337, as amended by Acts 1922, ch. 41, p. 45, Acts 1938, ch. 76, p. 134.

In our opinion the motion should be overruled. Code, § 6336, provides that, "Any person who thinks himself aggrieved by any judgment, decree, or order in a controversy concerning * * * the right of the State, county, or municipal corporation to levy tolls or taxes, or involving the construction of any statute, ordinance, or county proceeding imposing taxes, " may present a petition for an appeal or for a writ of error, etc.

Code, § 6337, as amended, prohibits the granting of an appeal or writ of error to review a final judgment or decree where the amount in controversy is less than $300, "unless there be drawn in question * * * some matter not merely pecuniary."

These sections conform to section 88 of the Constitution of 1902 relating to the jurisdiction of this court. That section provided:

"The court shall not have jurisdiction in civil cases where the matter in controversy, exclusive of costs and of interest accrued since the judgment in the court below, is less in value or amount than three hundred dollars, except in controversies concerning * * * the right of the State, county, or municipal corporation, to levy tolls or taxes, or involving the con-struction of any statute, ordinance or county proceeding imposing taxes; * * *."

In Prince George County v. A., M. & O. R. Co., 87 Va. 283, 12 S.E. 667, it was held that under Article VI, § 2, of the Constitution 1870, then in effect, denying to this court jurisdiction "in civil cases where the matter in controversy, exclusive of costs, is less in value or amount than five hundred dollars, except in controversies concerning * * * the right of a corporation or of a county to levy tolls or taxes, " we had jurisdiction of a suit to recover taxes paid under protest, although the amount involved was less than $500, where the right of the county to levy the taxes was involved.

In that case the county had levied taxes against the railroad company for the year 1880 under an enabling act passed by the General Assembly and which became effective that year. The railroad company successfully contended in the court below that under a proper interpretation of the act, taxes could not be assessed against it for the year 1880. Although the amount involved was less than $500, this court assumed jurisdiction of the matter and reversed the judgment of the lower court.

That holding was expressly approved by this court in the later case of Schermer-horn's Ex'x v. Commonwealth, 107 Va. 707, 711, 60 S.E. 65. The Schermerhorn case, however, involved the question as to whether the assessment of certain property and the tax thereon were excessive. Since only the amount of the tax was there involved the writ was dismissed, this court saying (107 Va. at page 709, 60 S.E. at page 66): "Unless the right to impose the tax, or the construction of the statute under which it is imposed, was called in question, or necessarily passed upon by the court below, it would seem clear that this court is without jurisdiction, as the aggregate amount of the taxes and levies involved is less than $300, " citing section 88 of the Constitution of 1902, supra. To the same effect see Cohen v. Walford, 111 Va. 812, 70 S.E. 850.

The inescapable inference to be drawn from these cases last cited is that if the judgment below had involved the right to impose the tax, or the construction of the statute under which it had been imposed, the jurisdiction of the court would have been sustained regardless of the amount involved.

Since these cases were decided the constitutional limitations on the jurisdiction of this court, found in section 88 of the Constitution of 1902, quoted above, have been eliminated by the 1928 amendment. The effect of this amendment, however, in no way impairs the statutory provisions of Code, §§ 6336 and 6337.

Inasmuch as the present proceeding is "a controversy concerning * * * the right of the State, * * * to levy tolls or taxes, " or is one "involving the construction" of a "statute" "imposing taxes, " it comes squarely within the jurisdiction of this court as defined in Code, § 6336.

In our opinion the lower court correctly held that the final order entered by the Unemployment Compensation Commission in the proceeding filed before it by Alice Towns did not estop Louise B. Harvey from denying in the present proceeding that she was an employer or that she was liable for the tax, under the provisions of the Unemployment Compensation Act.

It is well settled that in order for the principle of res judicata to apply to an in personam judgment or decree, such judgment or decree which is pleaded by way of estoppel must have been rendered in a suit between the same parties or their privies. Barton's Chancery Practice, 3d Ed., p. 348; Chapman v. Chapman, 1 Munf. 398, 15 Va. 398, 402; Stinchcomb v. Marsh, 15 Grat. 202, 56 Va. 202, 204; Bargamin v. Clarke, 20 Grat. 544, 61 Va. 544, 548, 549; Fishburne v. Engledove, 91 Va. 548, 556, 22 S.E. 354. Or, to state the matter another way, a judgment does

not bind strangers to it.

Moreover, the operation of estoppel must be mutual. Both litigants must be concluded or the proceeding can not be set up as conclusive upon either. Anderson v. Sisson, 170 Va. 178, 182, 196 S.E. 688, 689.

The judgment or order which the plaintiff asserts by way of estoppel was rendered in a proceeding filed by Alice Towns before the commission claiming benefits under the act. The claimant took the position that she was entitled to share in a fund which had been set up in the treasury of Virginia for the benefit of her and others under the act. Louise B. Harvey was not a party to the proceeding and no judgment was sought or renderedagainst her. While a finding by the commission that Alice Towns was her (Louise B. Harvey's) employee was of sufficient interest to the latter to justify her presence at the hearing, her attendance there did not make her a party to the litigation. One not a party to an in personam proceeding is not bound by the judgment rendered therein merely because he was present and cross-examined the witnesses. Turpin, Adm'r v. Thomas' Representatives, 2 Hen. & M. 139, 12 Va. 139, 3 Am.Dec. 615.

Neither was the Unemployment Compensation Commission a party to the proceeding filed by Alice Towns. It was the administrative tribunal which heard her claim. Had the claim of Alice Towns been disallowed, Louise B. Harvey could not have pleaded such disallowance in the present suit.

Since the parties to the present proceeding were not parties to the...