Waters v. State to Use of Maryland Unemployment Ins. Fund, 220

• Decision Date: 29 June 1959
• Docket Number: No. 220,220
• Citation: 220 Md. 337,152 A.2d 811
• Parties: William WATERS v. STATE of Maryland, TO USE OF MARYLAND UNEMPLOYMENT INSURANCE FUND.
• Court: Maryland Court of Appeals

Page 337

220 Md. 337

152 A.2d 811

William WATERS v. STATE of Maryland, TO USE OF MARYLAND UNEMPLOYMENT INSURANCE FUND.

No. 220.

Court of Appeals of Maryland.

June 29, 1959.

Lowell M. Goerlich, Washington, D. C. (Edward W. Mogowski, Callegary, Bracken & Callegary, Baltimore, on the brief), for appellant.

James N. Phillips, Baltimore (C. Ferdinand Sybert, Atty. Gen., Bernard S. Melnicove, Sp. Asst. Atty. Gen., and J. Robert Brown, Baltimore, on the brief), for appellee.

Before BRUNE, C. J., and HENDERSON, HAMMOND, PRESCOTT and HORNEY, JJ.

BRUNE, Chief Judge.

William Waters, the appellant, was employed by American Radiator and Standard Sanitary Corporation (the Employer or the Radiator Company). He was discharged by the Employer on October 18, 1956, and promptly filed a claim for benefits under the Unemployment Insurance Law (Code (1951), Article 95A, referred to below as the Act). Following proceedings summarized below, on or about May 14, 1957, the Fund paid him benefits aggregating $449.00 for the period from October 18, 1956, to January 24, 1957. As the result of an arbitration proceeding pursuant to a collective bargaining agreement between his employer and his union, the arbitrator directed that Waters be reinstated as an employee of the Radiator Company with full seniority rights and that he 'be made whole for the time lost by reason of his discharge.' The arbitrator's decision was rendered on May 17, 1957, and Waters was reinstated on May 22nd. The net amount paid him by the Employer was $1,890.91, representing back pay of $2,382.34, less earnings of Waters during the period in other employment. No deduction was made for unemployment insurance benefits. The Department, on being informed of the award and payment under the labor agreement, and after notice to Waters made a redetermination of his claim and found that the benefits of $449.00 paid him constituted an overpayment which should be recovered under Section 16(d) of the Act (Section 17(d) of the Act in the 1957 Code). This suit was accordingly brought by the State on behalf of the Fund, and resulted in a judgment for the plaintiff in the amount of $449.00, plus interest and costs. Waters appeals therefrom.

Waters' claim was filed on October 21, 1956. The Radiator Company advised the Department of Employment Security (the Department) that Waters had been discharged for gross misconduct in connection with his work. Such a ground for discharge, if found to exist by the Executive Director of the Department (the Director), would, under Section 5(b) of the Act (Section 6(b) in the 1957 Code), disquality an employee from receiving benefits until he should have become reemployed and his earnings should equal at least ten times his weekly benefits. A Claims Examiner found Waters so disqualified. Waters appealed, and after a hearing a Referee, on December 12, 1956, found that Waters had been discharged but that there had been no misconduct on his part. The Referee accordingly reversed the decision of the Claims Examiner. The Employer appealed to the Employment Security Board, and that Board, also after a hearing, affirmed the Referee on May 14, 1957.

In the arbitration proceeding above mentioned, the arbitrator found that Waters had not been guilty of the misconduct charged against him, thus reaching substantially the same conclusion as the Referee and the Board.

Section 16 of the Act deals with offenses under the Act and penalties therefor and the recovery of overpayments. This suit was instituted pursuant to Section 16(d). Subsections (a), (b), (c), and (e) all deal with false statements or representations knowingly made and with a knowing failure to disclose a material fact. Section 16(d) is broader. It reads as follows:

'Any person who, by reason of the non-disclosure or misrepresentation by him or by another of a material fact (irrespective of whether such non-disclosure or misrepresentation was known or fraudulent) has received any sum as benefits under this Article while any conditions for the receipt of benefits imposed by this Article were not fulfilled in his case, or while he was disqualified from receiving benefits, shall, in the discretion of the Board, either be liable to have such sum deducted from any future benefits payable to him under this Article or shall be liable to repay to the Board for the unemployment compensation fund, a sum equal to the amount so received by him, and such sum shall be collectible in the manner provided in Section 14(f) of this Article for the collection of past-due contributions.'

As now amended, the Executive Director of the Department is substituted for the Board, and the cross-reference as to the manner of collection is to Section 15(f) of the 1957 Code. Section 16 of Article 95A of the 1951 Code has become Section 17 of the same Article in the 1957 edition. Chapter 391 of the Acts of 1957 added Subsection (f) to this Section. It imposes a limitation of two years from the date of commission of the offense or offenses charged upon prosecutions for violations of subsections (a), (b) and (c). Chapter 392 of the Acts of 1957 amended subsection (e) by providing: first, that any person found by the Board (now the Director) to have made a false statement or representation knowing it to be false, or knowingly to have failed to disclose a material fact, in order to obtain or increase any benefit, shall (instead of may) be required by the Board to repay all benefits for the benefit year with respect to which such false statement or representation or non-disclosure occurs; and second, that such a person shall (not, may) be disqualified from receiving benefits for a specified period of one year from the date on which the determination is made that an improper claim was filed, and thereafter while any sum payable under this subsection is still due and unpaid. The previous law did not relate the then specified period of disqualification to the date of determination that the claim was improper.

Subsection 15(f) of Article 95A of the 1957 Code, which

was in force when this suit was instituted, is identical in substance with the previous Section 14(f). It deals with collections of assessments from employers and provides that the amount due may be collected by civil action in the name of the State and imposes costs upon an employer adjudged in default. It further provides that the Director may proceed in the collection of contributions in the manner prescribed by Code (1957), Article 81, Sections 206-211, inclusive.

The only one of these Sections of Article 81 which has been specifically relied upon by either party to this suit is Section 206, invoked by the appellee, which authorizes a suit to be brought in assumpsit and provides that 'such suit may be maintained notwithstanding the existence of other remedies by way of sale of real estate, or otherwise.' The State contends that this action is maintainable as one for money had and received, and urges in substance that this is necessary in order to prevent unjust enrichment. The appellant-claimant contends that recovery can be had only if the conditions specified in Section 16(d) of the Act are met.

Before turning to the principal issues in the case we must note one matter which was brought to our attention by the appellee's brief and was discussed at the oral argument. This is the fact that pendente lite the Fund has been made whole through the Department's applying unemployment insurance benefits accruing to Waters to repayment of the $449.00. These benefits accrued through Waters having become unemployed in 1958. This suit was instituted by the filing on November 4, 1957, of a declaration clearly based upon Section 16(d) of the Act. The case was heard on September 17, 1958, the memorandum opinion of the trial court was filed on October 22, 1958, judgment nisi was entered on that date, and judgment absolute in favor of the plaintiff was entered on October 27, 1958. Meanwhile, Waters had filed a new claim for unemployment insurance benefits. Claims were accepted for eleven weeks from September 5 to November 14, 1958; but the amounts allowed were not paid to Waters and were used, instead, to reimburse the Fund. These facts were learned by counsel at some date subsequent to the entry of judgment. Though both sides wish to have this case determined on the merits, these facts have been brought to our attention as possibly showing that the case is moot.

We think that it should not be so regarded. The fact that this situation was unknown to counsel and is not shown by the record, of course, precluded any question of mootness--in whole or in part--being raised in the trial court, although it would appear that most of the applications of benefits had been made before the entry of judgment. In addition, the right of the Director or of the Department so to apply these benefits depended upon the very questions which were at issue in the trial court and which had been placed before that court by the plaintiff. It may be granted that under the terms of Section 16(d), the Director might have proceeded to collect either by suit or by application of subsequent benefits, as and if they might accrue. There were no such benefits at the time when this suit was filed, but the suit was pending when such new benefits did accrue and it was actually tried before more than two of such applications had been made. We think that by filing and by proceeding with the suit the State elected to pursue that remedy. See City of Baltimore v. Moore, 209 Md. 516, 523-524, 121 A.2d 857; Petillo v. Stein, 184 Md. 644, 651, 42 A.2d 675; Beall v. Pearre, 12 Md. 550, 566, each of which deals with the doctrine of election of remedies, though none of them is directly in point on the facts and the Petillo case recognized the doctrine but held it inapplicable. Here, to hold the case moot, would have a practical effect equivalent to giving the appellee the benefit of an attachment regardless of the...