Lawrence Baking Co. v. Unemployment Compensation Commission ( 1944 )

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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] Plaintiff appeals from a circuit court judgment affirming an award of unemployment compensation benefits by the appeal board of defendant commission.

The facts are stipulated. Plaintiff, a Michigan corporation, is engaged in the wholesale baking business in the city of Lansing. Prior to July 1, 1941, the United Bakery Confectioners Workers, affiliated with the United Retail Wholesale Workers of America, C.I.O., attempted to organize the employees of plaintiff company into a union. The union representatives and plaintiff's officials conferred on several occasions regarding a collective bargaining agreement as to hours of work, wages, seniority, and other conditions of employment. Such negotiations failed, and on July 1, 1941, 16 union members of plaintiff's 98 employees stopped work and went on strike. Such strike interrupted plaintiff's baking operations for a period of only about 15 minutes. It immediately hired new employees, and after July 1st there was no further interruption or stoppage of its work and operations. On July 2d it notified each of the 16 striking employees, by letter, that "due to your participation in the strike it has been necessary to replace you with a new employee." The union established a picket line at plaintiff's plant and continued such picketing until about September 16th.

Eleven of the 16 striking employees filed claims with defendant commission for unemployment compensation benefits for the period from July 8 to July 22, 1941. The commission issued its determination allowing such claims, and plaintiff appealed to the referee, who affirmed the allowance. The appeal board of the commission affirmed the referee's decision, and, upon review by certiorari, the circuit court entered judgment affirming the appeal board. Plaintiff appeals from such judgment.

This case, involving the question of the qualification of the claimants to receive unemployment benefits, requires an interpretation of Act No. 1, § 29, subd. (c), Pub. Acts 1936 (Ex. Sess.), as amended by Act No. 364, Pub. Acts 1941, effective July 1, 1941 (Comp. Laws Supp. 1942, § 8485-69, Stat. Ann. 1941 Cum. Supp. § 17.531) (further amendments of said section 29 by Act No. 18, Pub. Acts 1942 [2d Ex. Sess.], and by Act No. 246, Pub. Acts 1943, are not involved in the present case). Prior to the 1941 amendment, said section 29 (c) of the 1936 act, as then last amended by Act No. 324, Pub. Acts 1939, and designated therein as section 29 (d), provided in part:

"An individual shall be disqualified for benefits * * *

"(d) For any week with respect to which his total or partial unemployment is due to a labor dispute which is actively in progress in the establishment in which he is or was last employed."

The 1941 act amended said section 29 to read in part as follows:

"An individual shall be disqualified for benefits * * *

"(c) For any week with respect to which his total or partial unemployment is due to a stoppage of work existing because of a labor dispute in the establishment in which he is or was last employed."

To summarize, section 29 (c) of the 1936 act disqualified an employee for benefits if his unemployment was "due to a labordispute * * * actively in progress in the establishment." The 1941 amendment of said section disqualifies an employee for benefits if his unemployment is "due to a stoppage of work existing because of a labor dispute in the establishment." Plaintiff contends that the phrase of the amendment, "stoppage of work," means the work or employment of the individual employee. Under such contention plaintiff argues that by stopping their work and going on strike, the claimants disqualified themselves for benefits. Defendant contends, as held by the circuit court, that such phrase means the stoppage of the operations or work of the employer establishment.

The constitutionality of State social security acts, which include provisions for unemployment compensation, were upheld, in general, in Carmichael v. Southern Coal Coke Co.,301 U.S. 495 (57 Sup. Ct. 868, 81 L.Ed. 1245, 109 A.L.R. 1327), andHelvering v. Davis, 301 U.S. 619 (57 Sup. Ct. 904,81 L.Ed. 1307, 109 A.L.R. 1319).

In construing the 1941 amendment of section 29 (c), we should ascertain and give effect to the intention of the legislature.In re Chamberlain's Estate, 298 Mich. 278; City of GrandRapids v. Crocker, 219 Mich. 178. It may be presumed that by the 1941 amendment the legislature intended to change the meaning of the existing law. In 59 C.J. p. 1097, § 647, it is stated:

"It will be presumed that the legislature, in adopting the amendment, intended to make some change in the existing law, and therefore the courts will endeavor to give some effect to the amendment. So a change of phraseology from that of the original act will raise the presumption that a change of meaning was also intended."

In said 1941 amendment of section 29 (c), the legislature adopted the identical provision used in the unemployment statutes of many other States to impose disqualification for unemployment benefits. See Social Security Yearbook 1940, p. 64 et seq. In the English National Insurance Act of 1911 (Statutes 1-2, Geo. V, chap. 55, § 87, as amended), the same provision is used to impose benefit disqualification. The construction placed upon similar statutory provisions by the courts of other States affords us guidance in interpreting such amendment. In re Cox's Estate, 284 Mich. 628 (117 A.L.R. 1224);Stellwagen v. Wayne Probate Judge, 130 Mich. 166.

A provision of the Nebraska unemployment insurance law (Nebraska Comp. Stats. Supp. 1939, § 48-705 [d]) was considered and construed in Magner v. Kinney, 141 Neb. 122 (2 N.W. [2d] 689). In holding that the phrase "stoppage of work" meant the work or operations of the employer establishment and not the work of the individual claimant as an employee, the court said in part, p. 128:

"The next question for our consideration is the challenge to the interpretation given by the district court to the words of the statute, section 48-705: ``An individual shall be disqualified for benefits * * * (d) For any week with respect to which the commissioner finds that his total unemployment is due to a stoppage of work which exists because of a labor dispute at the factory, establishment, or other premises at which he is or was last employed.' * * * The district court construed this language to mean ``that the term "stoppage of work," which appears in subsection (d) of section 48-705, Comp. St. Supp. 1939, refers to an existing condition at the former place of employment on the date of the claims and not to the original cause of any claimant's unemployment.' In other words, the technical meaning of the term, ``stoppage of work,' as used in our disqualification clause, is a substantial curtailment of work in an establishment, not the cessation of work by the claimant or claimants.

"The language of our unemployment compensation law quoted above was a substantial reenactment of the English national insurance act of 1911. See Statutes 1-2, Geo. V, chap. 55, § 87, which was amended in 1924 by section 4 (1), chap. 30, Statutes 14-15, Geo. V. This language, it appears, had received a settled construction by the English authorities charged with the administration of this English act long prior to the adoption of it by ourselves."

See, also, In re Steelman, 219 N.C. 306 (13 S.E. [2d] 544).

In the present case, in holding that the claimants were not disqualified from receiving benefits, the circuit court said in part:

"Under the present form of the statute, the disqualification to receive benefits is not imposed on the employee unless a stoppage of work results from the labor dispute. On behalf of plaintiff it is contended that the language used in the amended act should be construed as having reference to the status of the employee. However, such interpretation would make the phrase ``stoppage of work' practically synonymous with ``unemployment' as used in the same sentence. Furthermore such interpretation would, as a practical proposition, leave the amendment without significance. The decisions dealing with this matter, both in England and in this country, uniformly support the construction accepted by the appeal board. It must be assumed that the legislature made the amendment of 1941, using the language quoted, in the light of prior judicial and administrative interpretation."

We cannot agree with plaintiff's argument that the circuit court's construction of section 29 (c), as amended, is in conflict with the declaration of public policy stated in section 2 of the 1936 act.^* Said section provides in part:

"Declaration of policy. The legislature acting in the exercise of the police power of the State declares that the public policy of the State is as follows: * * * The systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment by the setting aside of unemployment reserves to be used for the benefit of personsunemployed through no fault of their own, thus maintaining purchasing power and limiting the serious social consequences of relief assistance, is for the public good, and the general welfare of the people of this State."

Plaintiff's argument is based upon the assumptions that the claimants were wrongfully on strike; were not justified in striking; that the strike was their own fault; and that they were unemployed because of their own fault. As stated in said section 2, the basic purpose of the unemployment compensation law is to afford protection against the hazard of unemployment. The payment of unemployment benefits is not dependent upon the merits of a labor controversy, and we cannot establish a rule that in all instances an employee on strike is unemployed necessarily because of his own fault. The amendment of section 29 (c) is not, we believe, in conflict with the policy of the act. Furthermore, the legislature had the power to adopt the amendment and, if a conflict with said section 2 resulted, the amendment must control. As said in People v. Johnson, 270 Mich. 622, 624, "amendments dominate and modify the former law, in case of conflict." In the case of In re Steelman, supra, in which a similar statutory enactment was involved, the court said, pp. 310, 311:

"The appealing employee-claimants take the position that the interpretation of this section is perforce controlled by the declaration of policy contained in section 2 of the act, the general designation of workers there selected for benefits being those who are ``unemployed through no fault of their own.' The commission and the court below thought otherwise. They followed the usual and accepted rule of construction that ``where a statute expresses first a general intent, and afterwards an inconsistent particular intent, the latter will be taken as an exception from the former and both will stand.' 1 Lewis' Sutherland on Statutory Construction (2d Ed.), § 268; Rodgers v. United States,185 U.S. 83 (22 Sup. Ct. 582, 46 L.Ed. 816). * * *

"Indeed, it may be doubted whether any serious conflict exists in the present law between the general intent expressed in the declaration of policy and the particular intent found in section 5 (d) of the act. School Commissioners, City of Charlotte, v.Board of Aldermen, 158 N.C. 191 (73 S.E. 905). It is a recognized principle of statutory construction, that when words of general import, the subject of a statute, are followed by words of particular or restricted import relating to the same subject matter, the latter will operate to limit or to restrict the former. Nance v. Railway, 149 N.C. 366 (63 S.E. 116);Orinoco Supply Co. v. Masonic Eastern Star Home, 163 N.C. 513 (79 S.E. 964). The end of all construction is to discover and to effectuate the legislative intent. Abernethy v. Board ofCommissioners of Pitt County, 169 N.C. 631 (86 S.E. 577)."

We are convinced that by the 1941 amendment of section 29 (c) the legislature intended to disqualify an employee for benefits only when his unemployment resulted from a stoppage or substantial curtailment of the work and operations of the employer establishment because of a labor dispute. The phrase "stoppage of work" refers to the work and operations of the employer establishment and not to the work of the individual employee.

Plaintiff relies upon the case of Board of Review v.Mid-Continent Petroleum Corp., 193 Okla. 36 (141 Pac. [2d] 69), in which the holding was contrary to that in Magner v. Kinney, supra. In considering a provision of the Oklahoma unemployment compensation law similar to the 1941 amendment of section 29 (c), the court said:

"Had the legislature intended to refer to the shutdown of the plant and not to the cessation of work by the employee, the term ``stoppage of operation' would have been far more appropriate. It seems to us that the word ``work' ordinarily refers to or comprehends the activities of the workman, not the operation of a factory. That portion of the act * * * which disqualifies a workman for benefits ``for any week in which * * * his total or partial unemployment is due to a stoppage of work which exists because of a labor dispute at the factory' refers, with respect to the workman, to his unemployment and to his stoppage of work. A strike in the labor sense is generally defined as a stoppage of work by common agreement of workingmen. 15 C.J.S. p. 1008, § 11. That was the definition evidently in the mind of the legislature; the term ``stoppage of work' was considered as synonymous with ``strike.'"

We call attention to the dissenting opinion in the above Oklahoma case which states, in substance, that benefits should be paid to the employees if there was no stoppage of the employer's work or production. Such dissent states in part:

"In 1941, the legislature again decided to change its policy. It provided disqualification for benefits ``for any week with respect to which the commission finds that his unemployment is due to a stoppage of work which exists at the factory, establishment or other premises at which he is or was last employed, because of a labor dispute.' The parties herein virtually admit that a striking employee could recover under that act if the employee were not otherwise disqualified and there was no stoppage of production."

The majority opinion of the Oklahoma court is based upon its interpretation of the phrase "stoppage of work" as being synonymous with the word "strike." We cannot agree with such interpretation which is contrary to the clear meaning and import of the words used. Plaintiff also cites Miners in General Group v. Hix, 123 W. Va. 637 (17 S.E. [2d] 810), which involved a statute similar to the 1941 amendment of section 29 (c). However, the factual situation presented in that case distinguishes it from the case at hand. Furthermore, such case did not involve the question as to whether or not claimant employees should be disqualified for benefits where there was no stoppage of the employer's work or production. The case of Bodinson Manfg. Co. v. California Employment Comm. (Cal. Dist. Ct. of App.), 101 Pac. [2d] 165 (affirmed, 17 Cal. [2d] 321 [109 P.2d 935]), cited by plaintiff and also cited in the Mid-Continent PetroleumCorporation Case, supra, involved an entirely dissimilar statute which did not contain the phrase "stoppage of work." Our decision in Chrysler Corp. v. Smith, 297 Mich. 438 (135 A.L.R. 900), did not involve the interpretation of the 1941 amendment of section 29 (c).

Plaintiff further contends that the circuit court's construction of the 1941 amendment, which construction we have hereinbefore affirmed, renders said amendment unconstitutional as denying plaintiff employer due process and equal protection of law.^** Under such contention plaintiff argues that the circuit court's construction results in arbitrary discrimination between employers by classifying them on the basis of (1) those who elect to stop work and close down and (2) those who do not elect to stop work or close down during a strike. The amendment, as construed, does not so classify employers. All employers who are similarly affected "because of a labor dispute" are treated alike. Under the amendment, as construed, employees are disqualified if the labor dispute results in a stoppage of the employer's work, and they are not disqualified if the labor dispute does not result in such stoppage. This is a reasonable means of determining qualification for benefits and does not result in arbitrary or unjust discrimination between employers. In the case of In re Steelman, supra, the court said, p. 310:

"It thus appears that the State seeks to be neutral in the labor dispute as far as practicable, and to grant benefits only in conformity to such neutrality. Of course, it is recognized that in a matter of this kind, some allowance must be made in fixing the line or point of difference between granting and withholding benefits during the stoppage of work caused by a labor dispute. Atlas Supply Co. v. Maxwell, 212 N.C. 624 (194 S.E. 117). ``But when it is seen that a line or point there must be, and that there is no mathematical or logical way of fixing it precisely, the decision of the legislature must be accepted unless we can say that it is very wide of any reasonable mark' — Mr. Justice Holmes in Louisville Gas Electric Co. v.Coleman, 277 U.S. 32 (48 Sup. Ct. 423, 426, 72 L.Ed. 770). The wisdom or impolicy of such decision belongs to the legislative, and not to the judicial, department of the government. UnitedStates v. Darby, 312 U.S. 100 (61 Sup. Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430)."

We are satisfied that the 1941 amendment of section 29 (c), as construed by the circuit court, does not result in an arbitrary or unjust classification of, or in discrimination between, employers involved in a labor dispute.

Under its contention of unconstitutionality, plaintiff further argues that, because the employer's contribution to the unemployment compensation fund is determined upon a variable tax rate based upon the employer's experience record (Act No. 1, § 19, Pub. Acts 1936 [Ex. Sess.], as last amended by Act No. 364, Pub. Acts 1941 [Comp. Laws Supp. 1942, § 8485-59, Stat. Ann. 1942 Cum. Supp. § 17.520]), the payment of unemployment benefits to employees on strike, without a judicial determination of the merits of the labor controversy, constitutes an arbitrary intervention by the State in aid of one party to the controversy. In other words, plaintiff claims that the 1941 amendment of section 29 (c), as construed, is unconstitutional because it does not base disqualification for benefits upon a determination of the merits of the labor dispute resulting in unemployment, and because it imposes a penalty against the employer, which constitutes an intervention by the State in behalf of the employees in the labor dispute. In Chrysler Corp. v. Smith,supra, Mr. Justice WIEST approved the following statement by the appeal board, pp. 446, 447:

"All interested parties who are involved in a claim for unemployment compensation * * * must be dealt with on an impartial basis. The unemployment compensation fund should never be used to finance claimants who are directly involved in a labor dispute, nor should it ever be denied to claimants who are legally entitled to receive benefits. * * * None of the money accumulated in this fund should ever be disbursed for the purpose of financing a labor dispute nor should it be illegally withheld for the purpose of enabling an employer to break a strike. The State of Michigan, in so far as this act is concerned, must remain neutral in all industrial controversies."

Plaintiff's argument is based upon the premise that the payment of compensation to employees on strike is a penalty upon the employer, because its rate of contribution to the unemployment fund will thereby be increased. The public purpose of the unemployment compensation law is to alleviate the distress of unemployment, and the payment of benefits is not conditioned upon the merits of the labor dispute causing unemployment. Likewise, the required contribution of the employer to the unemployment compensation fund is not determined upon the basis of the merits of the dispute. The increase in the amount of the employer's contribution to the fund because of its experience record of payments to employees is not in any sense a penalty. By the unemployment compensation act, the legislature provided a method of determining the employer's contribution to the compensation fund, and it did not see fit to base the amount of such contribution upon the merits of a labor dispute or upon the right or wrongdoing of the employer in connection with such dispute. Such legislative enactment is presumed to be constitutional unless the contrary clearly appears. In the case of Cady v.City of Detroit, 289 Mich. 499, 505, we said:

"A statute will be presumed to be constitutional by the courts unless the contrary clearly appears; and in case of doubt every possible presumption not clearly inconsistent with the language and the subject matter is to be made in favor of the constitutionality of legislation. * * * Every reasonable presumption or intendment must be indulged in favor of the validity of an act, and it is only when invalidity appears so clearly as to leave no room for reasonable doubt that it violates some provision of the Constitution that a court will refuse to sustain its validity."

In Sullivan v. Michigan State Board of Dentistry, 268 Mich. 427, Mr. Justice BUTZEL stated as follows:

"Even if the law could be construed in two ways, one consistent with the constitutionality, and the other inconsistent therewith, the former will be considered as the one presumptively intended by the legislature. Motz v. City of Detroit, 18 Mich. 495;Grand Rapids Booming Co. v. Jarvis, 30 Mich. 308; AttorneyGeneral v. Railway, 210 Mich. 227."

"A legislature is not bound to tax every member of a class or none. It may make distinctions of degree having a rational basis, and when subjected to judicial scrutiny they must be presumed to rest on that basis if there is any conceivable state of facts which would support it." Carmichael v. Southern Coal CokeCo., supra, p. 509.

We agree with the circuit court who, in affirming the decision of the appeal board, said in part:

"The legislature has seen fit to make the actual stoppage of work in the establishment concerned the controlling feature in determining whether the employee is disqualified from demanding and receiving unemployment compensation."

We conclude that in the present case the payment of unemployment benefits to claimant employees would not result in a penalty against plaintiff and would not constitute an intervention by the State on behalf of the employees in the pending labor dispute. The payment of such benefits is not dependent upon a determination of the merits of the dispute. The 1941 amendment of section 29 (c), as construed, does not deny plaintiff due process or equal protection of law, and we hold such amendment to be constitutional.

Much of plaintiff's briefs is devoted to arguing the wisdom of the 1941 amendment. As it is not within our province to consider or to determine the wisdom or policy of legislative enactments, such arguments might better have been addressed to the legislature.

The judgment of the circuit court is affirmed. Public questions being involved, no costs are allowed.

NORTH, C.J., and BUSHNELL, and SHARPE, JJ., concurred with STARR, J.

^* Comp. Laws Supp. 1940, § 8485-42, Stat. Ann. 1942 Cum. Supp. § 17.502. — REPORTER.

^** See U.S. Const. am. 14; Mich. Const. 1908, art. 2, § 16. — REPORTER.