Phillips v. J. L. Peed Co.

The finding of the trial court in favor of the illegality filed by the defendant was authorized by the evidence under the law applicable thereto, and the court did not err in overruling the plaintiff's motion for new trial.

DECIDED JANUARY 21, 1949. On June 24, 1947, Glenn S. Phillips, as Commissioner of Revenue of the State of Georgia, issued an unemployment contribution fi. fa. against J. L. Peed Company, a partnership composed of W. F. Newman and J. L. Peed, of Columbus, Georgia, for $566.54 principal, and interest, penalty and costs, for sums which had accrued during 1942 and 1943 to the State and to the unemployment trust fund established in the act approved March 29, 1937, known as the Unemployment Compensation Law. The fi. fa. was levied by the sheriff on certain property on February 9, 1948.

J. L. Peed filed an affidavit of illegality asserting that the execution and levy were proceeding illegally against him and making the following material allegations: "Deponent says J. L. Peed operated a business, as individual owner, for 7 or more years, prior to the time it became a partnership, and was subject to the Unemployment Compensation Law from the inception of said law, and which business on December 26, 1940, was converted into the partnership, J. L. Peed Company, composed of W. F. Newman and deponent, and that this partnership continued until May 7, 1944, when it was dissolved by W. F. Newman acquiring all of the interest of deponent in said firm. . .

"Deponent says that said execution was issued under and by virtue of the ``Unemployment Compensation Law' of the State of Georgia, and purports to be a tax delinquency rate adjustment for the year 1942 and for the first quarter of the year 1943 against the partnership, J. L. Peed Company, based on the standard contribution rate of 2.7%.

"Deponent says that the partnership, J. L. Peed Company, had as of January 1, 1942, acquired an experience rate of 1.5%, and that this rate, and not the standard rate, was the contribution rate to which J. L. Peed Company was subject for the year 1942 and the first quarter of 1943.

"Deponent shows further that J. L. Peed Company has paid all of the contributions due on unemployment compensation for 1942 and the first quarter of 1943, computing on the experience rate of contribution, which was the rate said company was subject to and that said company was not subject to the standard rate, and does not owe the additional sum of $566.54, which represents the amount of the execution above referred to and is the excess of the standard rate over the experience rate."

By agreement the case was tried by the judge without a jury. The only evidence introduced was the fi. fa. and certain stipulations of fact agreed to by the parties as follows: "There being no oral evidence introduced it is agreed between the parties that the effective date of the Unemployment Compensation Law of Georgia is January 1, 1937; that J. L. Peed, prior to that date, was in business as an individual in Columbus, Georgia; that from January the 1st, 1937, his business was subject to the Unemployment Compensation Law; that on December 26, 1940, J. L. Peed, who, prior to that time, had been conducting his business under the name and style of J. L. Peed Company took into his business a partner, W. F. Newman Jr. and that from December 26, 1940, to May 7, 1944, J. L. Peed Company was a partnership composed of said Peed and Newman; that prior to December 26, 1940, W. F. Newman Jr. had not been engaged in any business that would subject him to the Unemployment Compensation Law of Georgia, and that from December 26, 1940, to March 7, 1944, J. L. Peed Company, the partnership, was conducted with virtually the same employees as prior to said date, and that the partnership succeeded to the entire individual interest of J. L. Peed Company while being conducted by J. L. Peed individually; that on the 1st day of January, 1942, J. L. Peed Company had an experience benefit record of 1.5 percent; that no notice that the partnership had been formed December 26, 1940, was given by J. L. Peed or W. F. Newman to the Employment Security Agency of the Department of Labor of Georgia.

"It was further stipulated that during the period in dispute the standard benefit rate for employers was 2.7 percent; on March 28, 1947, the Agency contended and so held that the partnership was liable for the standard rate of 2.7 percent effective December 25, 1940; immediately thereafter W. F. Newman Jr. and J. L. Peed, a partnership trading as J. L. Peed Company, were notified that they were liable to the Employment Security Agency for the difference between what had been paid, to wit, 1.5 percent of the pay roll and the amount due thereon at 2.7 percent for the year 1942 and for the first quarter of 1943. This difference amounted to $566.54 principal, plus interest.

"It is further stipulated that the amendment providing for the successor acquiring the experience rate of the predecessor was enacted by the legislature, and approved March 20, 1943.

"The issue to be determined is whether or not the experience rate of 1.5 percent or the standard rate of 2.7 percent should be applied in determining the contribution of J. L. Peed Company for the year 1942 and the first quarter of 1943."

The court found in favor of the illegality and dismissed the levy. The plaintiff moved for a new trial which was denied and he excepted. The Unemployment Compensation Law was enacted in an act approved March 29, 1937 (Ga. L. 1937, p. 806). Contributions and payments required of each employer under Section 7 of the act for 1938 and thereafter was 2.7 per centum. An amending act approved March 21, 1941 (Ga. L. 1941, p. 532) retained the standard rate of contributions payable by each employer at 2.7 per centum, but provided for reductions and variations from the standard rate by classifying employers in accordance with their actual experience in the payment of contributions, with a view to fixing such contribution rates as would reflect the benefit experience of employees. Section 1 of another act approved March 20, 1943 (Ga. L. 1943, p. 613) amended the original act as amended by adding to section 7 the following: "Provided, however, that any corporation, partnership, individual or other legal entity, who acquires by purchase, merger, consolidation, or other means, substantially all of the business or assets thereof, of any employer and who thereafter continues such acquired business shall be deemed to be a successor to the predecessor from whom such business was acquired for purposes of section 7 of this act, and, if not already an employer prior to such acquisition, shall become an employer on the date of such acquisition. The successor shall succeed to the employment benefit experience record of the predecessor. . . ." Section 2 provides that "The provisions of this act shall apply to all contributions payable by a successor, regardless of whether or not such successor acquired the business, or assets thereof, from his predecessor prior or subsequent to the effective date of this act," and section 3 that: "As regards the rates of contribution, the provisions of this act shall become effective as of January 1, 1942, and shall apply to all contributions thereafter payable by an employer affected hereby, as respects business previously or thereafter acquired; however, neither this section, nor any other section of this act, shall be construed to authorize or require the refund of any sum lawfully paid into the trust fund created by section 9 (a) of the original act, or to otherwise use any of the same except to pay compensation benefits." These several acts are found in Ch. 54-6 of the Code (Ann. Supp.), and particularly in § 54-622.

It appears from the stipulations that the partnership operated from December, 1940, until May, 1944, and "was conducted with virtually the same employees as prior to said date, and that the partnership succeeded to the entire individual interest of J. L. Peed Company while being conducted by J. L. Peed individually; (and) that on the 1st day of January, 1942, J. L. Peed Company (which was then the partnership) had an experience benefit record of 1.5 percent." Under the facts stipulated, as well as under the amending act of March 20, 1943, it seems clear that the partnership successor acquired the experience benefit rate of 1.5 percent, on or before January 1, 1942, and that this was the contribution rate applicable to the partnership and for which it was subject during 1942 and the first quarter of 1943, the period for which the additional contribution is claimed. The failure of the defendants to give notice of the formation of the partnership to the proper agency of the Department of Labor, in the absence of some law or regulation of the agency providing for such notice, does not require a different ruling. Nor does the provision in the amending act that it shall not be construed to authorize or require the refund of any sum lawfully paid into the trust fund demand a different holding. The case of Schwob Mfg.Co. v. Huiet, 69 Ga. App. 285 (25 S.E.2d 149), was decided before the passage of the amending act which we think controls this case; and the ruling therein is not applicable here.

The amending act of March 20, 1943, became effective on the date it provided it would become effective, which was January 1, 1942, unless it is invalid for some apparent reason. It was not attacked in the trial court as being unconstitutional, and it can not now be attacked for the first time on the ground. Smith v.Macon, 202 Ga. 68 (42 S.E.2d 128). Counsel for the plaintiff contend that it should not be construed as having a retroactive aspect and effect because the legislature did not so intend. We must accept what the act says in plain words as to what the legislature intended, and we can not hold that the legislature did not mean what it said. Furthermore, "this court has definitely settled the law to be that our Constitution forbids the passage of only those retroactive, or rather retrospective, laws which injuriously affect the vested rights of citizens." Bullard v. Holman, 184 Ga. 788, 792 (193 S.E. 586, 113 A.L.R. 763); Darby v. Cook, 201 Ga. 309 (39 S.E.2d 665). Obviously the act did not injuriously affect the vested rights of citizens by making it effective January 1, 1942.

We think it is apparent from the reading of the stipulations, which comprise all of the evidence except the fi. fa., that the material allegations of the affidavit of illegality were sustained and that the court did not err in finding in favor of the illegality.

Judgment affirmed. Sutton, C. J., and Felton, J., concur.