W.H.H. Chamberlin, Inc. v. Andrews

• Decision Date: 15 April 1936
• Citation: 271 N.Y. 1,2 N.E.2d 22
• Parties: W. H. H. CHAMBERLIN, Inc., v. ANDREWS, Industrial Com'r, et al. E. C. STEARNS & CO. v. SAME. ASSOCIATED INDUSTRIES OF NEW YORK STATE, Inc., v. DEPARTMENT OF LABOR OF NEW YORK et al.
• Court: New York Court of Appeals Court of Appeals

271 N.Y. 1

2 N.E.2d 22

W. H. H. CHAMBERLIN, Inc.,

v.ANDREWS, Industrial Com'r, et al.

E. C. STEARNS & CO.

v.SAME.

ASSOCIATED INDUSTRIES OF NEW YORK STATE, Inc.,

v.DEPARTMENT OF LABOR OF NEW YORK et al.

Court of Appeals of New York.

April 15, 1936.

Actions by W. H. H. Chamberlin, Incorporated, and by E. C. Stearns & Company, against Elmer F. Andrews, Industrial Commissioner of the State of New York, and another, wherein plaintiffs moved for judgments on the pleadings, and action by the Associated Industries of New York State, Incorporated, against the Department of Labor of New York and others. From a judgment of the Special Term, Onondaga County (-- Misc. --, 286 N.Y.S. 242) in the first two actions, plaintiffs appeal from such part of the judgments as provides that chapter 468 of the Laws of 1935, constituting article 18 of the Labor Law (ConsolLaws, c. 31), is not, except as to subdivision 2 of section 504 thereof, unconstitutional as to the plaintiffs, and the defendants appeal from so much of the judgments as declares subdivision 2 of section 504 of the Labor Law to be unconstitutional as to the plaintiffs; and from a judgment of the Special Term, Albany County, which in the third action declared chapter 468 of the Laws of 1935 unconstitutional (158 Misc. 350, 286 N.Y.S. 459), the State of New York appeals.

Judgments in the first two actions in so far as appealed from by plaintiffs affirmed, and in so far as appealed from by defendants reversed, plaintiffs' motions for judgments on pleadings denied, and final judgment ordered in favor of defendants dismissing the complaints upon the merits; and judgment in third action reversed, and complaint dismissed, and motion for judgment on the pleadings denied.

HUBBS and O'BRIEN, JJ., dissenting.

Appeal from Special Term, Onondaga County.

Appeal from Special Term, Albany County.

Henry S. Fraser and G. Everett De More, both of Syracuse, for appellants W. H. H. Chamberlin, Inc., and E. C. Stearns & Co.

John J. Bennett, Jr., Atty. Gen. (Henry Epstein, of Albany, and John F. X. McGohey and John C. Crary, both of New York City, of counsel), for Elmer F. Andrews and others.

John J. Bennett, Jr., Atty. Gen. (Henry Epstein, of Albany and John C. Crary, of New York City, of counsel), for appellant Department of Labor and others.

James McCormick Mitchell, of Buffalo, for respondent Associated industries.

A. S. Andrews, of New York City, amicus curiae.

CRANE, Chief Judge.

The complaint in each of the actions herein asks for a declaratory judgment that the New York Unemployment Insurance Law (Laws 1935, c. 468; Labor Law, art. 18; Consol. Laws, c. 31) is unconstitutional under both the Federal and the State Constitutions.

The plaintiffs moved for judgment on the pleadings under rule 112 of the Rules of Civil Practice, and the court in the first two cases granted the motions to the extent of holding that subdivision 2 of section 504 of the statute violates section 6 of article 1 of the New York Constitution, and section 1 of the Fourteenth Amendment to the Federal Constitution. The court upheld the statute otherwise and granted judgment in favor of the defendants to that extent.

In a companion case, Associated Industries of New York State, Inc., v. Department of Labor et al., 158 Misc. 350, 286 N.Y.S. 459, the Special Term, after issue joined, adjudged the said act to be unconstitutional and void in its entirety as depriving the plaintiff of its property without due process of law, and denying to it the equal protection of the law. These cases come directly to this court, pursuant to subdivision 3 of section 588 of the Civil Practice Act, a constitutional question being solely presented for review. We do not share the doubts expressed by these Special Terms.

The courts can take judicial notice of the fact that unemployment for the last five or six years has been a very acute problem for state and federal government. There have always been from earliest times the poor and unfortunate whom the state has had to support by means of money raised by taxation. We have had our homes for the poor and the infirm, hospitals, infirmaries, and many and various means for taking care of those who could not take care of themselves. The institutions housing our insane have grown to be an enormous expense, illustrating that the legality of the expenditure of public moneys for vast numbers of those who were without means of support or help has never been questioned.

Another problem has faced society which has been a source of study, discussion, agitation, and planning. Unemployment, from whatever cause, has increased enormously in every part of the country, if not throughout the world. Is there any means possible to provide against unemployment, the loss of work, with its serious consequences to the family, to the children, and to the public at large? When such a matter becomes general and affects the whole body politic, a situation has arisen which requires the exercise of the reserve power of the state, if there be a practical solution. Some have suggested that for the periodical recurrence of panics and hard times, the actuary might be able to work out a scheme of insurance. We need not pause to determine whether this can be done or not. The fact is that in the past few years enormous sums of state and federal money have been spent to keep housed and alive the families of those out of work who could not get employment. Such help was absolutely necessary, and it would be a strange kind of government, in fact no government at all, which could not give help in such trouble.

The Legislature of the State, acting after investigation and study and upon the report of experts, has proposed what seems to it a better plan. Instead of solely taxing all the people directly, it has passed a law whereby employers are taxed for the help of the unemployed, the sums thus paid being cast upon the public generally through the natural increase in the prices of commodities. Whether relief be under this new law of the Legislature or under the dole system the public at large pays the bill.

We may concede that much of unemployment is due to other factors than business depression. Just what does cause slumps in business, panics, and unemployment has never been satisfactorily explained, but a very large percentage of those who are out of work have lost their jobs or positions by reason of poor business conditions and hard times. I can see, therefore, nothing unreasonable or unconstitutional in the legislative act which seeks to meet the evils and dangers of unemployment in the future by raising a fund through taxation of employers generally.

This act in brief taxes a certain class of employers 3 per cent, on their pay rolls. This class of employer includes those who have employed at least four persons within each of thirteen or more calendar weeks in the year 1935, or any subsequent calendar year. The employment of farm labor, of one's spouse or minor child, or employment in certain charities are excluded.

Unequal protection of the laws and unfair classification are charged against this act because employers who have had no unemployment are obliged to contribute to a fund to help those who have lost positions in failing or bankrupt businesses; also because the line is drawn at four employees instead of including all and any employer. We do not think that this narrow view is required by any constitutional provision. People have to live, and when they cannot support themselves some one has to look after them. When able-bodied, willing mem cannot find work, they may be treated as a class, irrespective of their particular calling or trade. The peril to the state arises from unemployment generally, not from any particular class of workers. So likewise, employers generally are not so unrelated to the unemployment problem as to make a moderate tax upon their pay rolls unreasonable or arbitrary. As stated before, unemployment and business conditions generally are to a large extent linked together. Reasonable classification has been explained in Truax v. Corrigan, 257 U.S. 312, 337, 42 S.Ct. 124, 131, 66 L.Ed. 254, 27 A.L.R. 375. Quoting from Southern Ry. Co. v. Greene, 216 U.S. 400, 417, 30 S.Ct. 287, 54 L.Ed. 536, 17 Ann.Cas. 1247, the court said: ‘While reasonable classification is permitted, without doing violence to the equal protection of the laws, such classification must be based upon some real and substantial distinction, bearing a reasonable and just relation to the things in respect to which such classification is imposed; and classification cannot be arbitrarily made without any substantial basis.’

That the purpose of this law is to help those who have worked when they could get work-the working class at present out of work-is apparent from the limitation to the benefits. Section 503 of the act reads as follows:

‘Liability for payment of benefits. 1. Benefits shall be paid from the fund to each unemployed employee entitled thereto.

‘2. Benefits shall become payable two years from the date on which contributions by employers become payable under this article.

‘3. No employee shall be entitled to any benefits unless he

‘(a) is suffering total unemployment as defined in this article; and

‘(b) has, as provided in this article, registered as totally unemployed and reportedfor work or otherwise given notice of the continuance of his unemployment; and

‘(c) has had not less than ninety days of employment as defined in this article within the twelve months preceding the day on which benefits are to commence, or (in the alternative) unless he has had not less than one hundred and thirty days of employment during the twenty-four months preceding the day on which benefits are to commence; and

‘(d) in no case shall the fund be liable to pay benefits to an employee for any unemployment occurring more than twelve months after the date on which such employee was in employment, and in no case in which the claim for...