BODINSON MFG CO v. CALIFORNIA EMPLOYMENT COMMISSION

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District Court of Appeal, Third District, California.

BODINSON MFG. CO. v. CALIFORNIA EMPLOYMENT COMMISSION et al.

Civ. 6414

Decided: April 04, 1940

J.M. Mannon, Jr., Edwin S. Pillsbury, George O. Bahrs, and McCutchen, Olney, Mannon & Greene, all of San Francisco, for petitioner. Horton & Horton and Joseph K. Horton, all of Los Angeles, Webster V. Clark and Rogers & Clark, all of San Francisco, Hubert H. Briggs, of Stockton, and Brobeck, Phleger & Harrison, M.B. Plant, and David Smith, all of San Francisco, amici curiae for petitioner. Earl Warren, Atty. Gen., John J. Dailey, Deputy Atty. Gen., and Maurice P. McCaffrey, of San Francisco, for respondent California Employment Commission. Robert W. Kenny, of Los Angeles, for corespondents.

By means of a writ of mandamus the petitioner seeks to compel the commission having control of an unemployment insurance fund created by statute to properly administer that trust fund as required by the provisions of the Unemployment Insurance Act of California. (Stats.1935, p. 1226, and amendments of 1939.) It is alleged the commission has consistently disregarded the clear mandate of section 56 of that act, St.1939, p. 8, and that it will continue to do so, by illegally and wrongfully paying and charging to its account benefits to workmen in petitioner's establishment who have left their work because of a trade dispute therein between the employer and members of a labor organization to which the correspondents do not belong. The claimants, by the advice of an agent of their own labor union, refused to pass through a picket line which was maintained about the plant. The petitioner asks that the commission be required to disallow and refrain from paying such illegal claims or from charging the same to the accounts of the petitioner. It also requests that its account be credited with the sum of such payments, and that its merit rating be restored.

The commission and the corespondents filed separate motions to quash the alternative writ, and separate demurrers on the ground that the petition fails to state facts sufficient to constitute a cause of action warranting the issuance of a writ of mandamus. Separate answers were also filed admitting all the essential allegations of the petition necessary to a determination of the issues presented thereby. No preliminary restraining order was sought or made in this proceeding.

The following essential facts related in the petition are admitted by the answers:

The Bodinson Manufacturing Company is a corporation engaged in manufacturing commodities at its establishment in San Francisco; it employs at that plant a large number of workmen who belong to various union labor organizations. The respondent commission consists of five named individuals who are appointed to administer the trust fund of the California Unemployment Insurance Act now containing over $150,000,000, to which fund the petitioner contributed, as required by law, prior to October 31, 1939, the aggregate sum of $9,851.72. To this fund the workmen contribute a designated percentage of their wages. (U.I.Act, sec. 44, St.1939, p. 2052.) This fund is augmented by appropriations from the federal government in accordance with the provisions of the Federal Social Security Act. 49 U.S.Stats. at Large, p. 620, 42 U.S.C.A. § 301 et seq. The state treasurer is ex-officio treasurer and custodian of the fund which he may disburse only by “direction of the commission”. The commission is required to administer and disburse the funds in the manner provided by the Unemployment Insurance Act of California. For the purpose of administering this fund the commission is required to keep a system of books in which each employer is credited with all payments of money on that account. All unemployment benefits paid to workmen by the commission are charged to the account of each employer thereof. (U.I.Act, sec. 39, St.1939, p. 2147.) Each employer is given a merit rating dependent upon the unused money which he has contributed to the fund. (U.I.Act sec. 42.) The unlawful payment of unemployment wages automatically impairs an employer's merit rating and increases the future payments he is required to contribute to the fund. (U.I.Act, sec. 67, St.1939, p. 3010.) The petitioner has a vested interest in the trust fund entitling it to protest against unlawful expenditures of unemployment wages to its workmen, since such payments increase the contributions which it will be required to make to the fund and deprive it of its proper merit rating.

The corespondents, Cailteaux, Harvey, Haydock, Almeida and Martinez, and many others who are not named, were continuously employed by the petitioner as machinists in its San Francisco plant for a period of time long prior to May 22, 1939. Paragraph VII of the petition, the allegations of which are admitted by the answers, states that the above-named corespondents belonged to San Francisco Lodge No. 68, International Association of Machinists, a sister lodge of the Welders Union, Local No. 1330; that on the morning of May 24th the employees of petitioner at its San Francisco plant, who belong to said Welders Union, Local No. 1330, and affiliated with the International Association of Machinists “called a strike against petitioner as a result of a trade dispute between said union and said petitioner”, and established a picket line at the entrance to its plant; that upon returning to their work on the morning of the last-mentioned day the named corespondents and many others refused to pass through the picket line or to return to their work in the plant “solely by reason of the continued existence of the strike and picket line carried on and maintained by said Welders Union, Local No. 1330”; that all other workmen who were employed in the plant, except those who belonged to the two previously-mentioned unions, continued to pass through the picket line and to perform their work in the plant daily during the entire period of the strike; that during the whole period of time involved in this proceeding there was ample work in the plant to keep the corespondents continuously employed, and that the corespondents were advised by one Harry Hook, an agent of their local labor union, not to return to their work in the plant during the “existence of said strike and picket line”, which advice they followed and absented themselves from their work from May 24th to July 10, 1939. It is not denied that a trade dispute existed in the petitioner's establishment during all of the time involved in this proceeding. That fact is conceded.

May 24th, after abandoning their jobs with petitioner, the corespondents registered for work in the Department of Employment, and claimed the benefit of unemployment wages. The adjustment unit of the unemployment compensation division of the commission denied their application. Two of the applicants appealed from that decision to the appellate board of the commission, which reversed the former decision and allowed the claims for unemployment wages. This petitioner then appealed to the commission pursuant to the provisions of section 72 of the act, St.1939, p. 3013. A formal hearing was held before the commission, which adopted findings and wrongfully determined that the two corespondents were entitled to unemployment wages under section 56 of the act. The petitioner thereby exhausted every remedy provided by the act. (U.I.Act, sec. 72.) The commission has repeatedly and consistently held under circumstances similar to those involved in this case, that workmen were entitled to unemployment wages in spite of the fact that they left their employment by reason of the fact that trade disputes exist in the establishments in which they work during the periods of time for which they claim benefits. At the hearing of this case the commission conceded that it would continue to allow and pay such unemployment wages under similar circumstances.

There is no substantial merit in either the motions to quash the alternative writ or the demurrers. This is not a suit for declaratory relief under section 1060 of the Code of Civil Procedure, as asserted by the respondents. It is a mandamus proceeding under section 1085 of the last-mentioned code to require the commission to administer the unemployment insurance trust fund in accordance with the clear language of the statute with respect to section 56 thereof.

The petitioner has a right to maintain this proceeding to compel a lawful and proper administration of the trust fund and to prevent an unjust impairment of its merit rating, both as a party directly interested in the fund (sec. 1085, Code Civ.Proc.; Gillum v. Johnson, 7 Cal.2d 744, 62 P.2d 1037, 63 P.2d 810, 108 A.L.R. 595), and as a taxpayer. Livermore v. Waite, 102 Cal. 113, 36 P. 424, 25 L.R.A. 312; Landsborough v. Kelly, 1 Cal.2d 739, 37 P.2d 93, 96 A.L.R. 707; Eby v. School Trustees, 87 Cal. 166, 25 P. 240; Winn v. Shaw, 87 Cal. 631, 25 P. 968; Yarnell v. City of Los Angeles, 87 Cal. 603, 25 P. 767; Santa Rosa Lighting Co. v. Woodward, 119 Cal. 30, 50 P. 1025; Anderson v. Houts, Tex.Civ.App., 240 S.W. 647, 58 A.L.R. 588, 599.

Section 67 of the Unemployment Insurance Act, relied on by the corespondents, does not bar this court from enjoining the illegal payment of benefits after the referee of the commission has directed the payment to be made. The portion of that section relied upon reads:

“If a referee affirms an initial determination allowing benefits, such benefits shall be paid regardless of any appeal which may thereafter be taken *.”

The preceding language does not purport to apply to an appeal to a court of competent jurisdiction to prevent an unlawful payment of benefits. It applies only to an appeal from the order of a referee to the commission. It does not prohibit a court from staying the unlawful payment of benefits. That section is merely directory and procedural in character, while section 56 of the act is mandatory and controlling. If section 67 did purport to prohibit a court from interfering with unlawful payments of benefits it would be in conflict with article VI, section 1, of the California Constitution, and therefore void.

We are of the opinion mandamus is a proper remedy where it clearly appears, as it does in the present proceeding, that the commission has abused its discretion in arbitrarily disregarding the plain and unambiguous provisions of the statute. Sec. 1085, Code Civ.Proc.; Drummey v. State Board of Funeral Directors and Embalmers, 13 Cal.2d 75, 87 P.2d 848; Gillum v. Johnson, 7 Cal.2d 744, 62 P.2d 1037, 1045, 63 P.2d 810, 108 A.L.R. 595. The code section last cited provides in part: “It may be issued * to any inferior tribunal, corporation, board, or person, to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station.”

Section 1086 of the Code of Civil Procedure provides that: “The writ must be issued in all cases where there is not a plain, speedy, and adequate remedy, in the ordinary course of law. It must be issued upon the verified petition of the party beneficially interested.”

In the Gillum case, supra, by means of a writ of mandamus, the proprietor of the Hotel Claremont in Alameda County, who was the employer of several hotel workmen, sought to compel the commission in charge of the Unemployment Insurance Fund to fully comply with the act which is here involved, by paying to the state treasurer, as required by the statute, the money collected by the commission from the petitioner. The court held that the money so collected constitutes a tax levied upon both the employers and the employees, which becomes a trust fund in which both parties have a beneficial interest authorizing the maintenance of a mandamus proceeding. The court said: “The funds so deposited do not belong to the United States. The beneficial title thereto is in the state or in the state agency depositing the same, which in turn is trustee for those who had made the contributions, or for the beneficiaries under the state act.”

It is true that mandamus will not issue to interfere with the discretion of a board or commission in determining a duty or benefit imposed by law. 16 Cal.Jur. 820, sec. 34. But when a board or commission acts without jurisdiction or authority contrary to the clear and unambiguous language of a statute, or it has clearly abused its discretion with respect to its statutory authority, the writ will lie. The text in 38 Corpus Juris., page 598, section 74, to that effect is supported by a multitude of authorities, among which are numerous California cases. It reads in part: “The great weight of authority is to the effect that an exception to the general rule that discretionary acts will not be reviewed or controlled exists when the discretion has been abused. The discretion must be exercised under the established rules of law, and it may be said to be abused within the foregoing rule where the action complained of has been arbitrary or capricious, or based on personal, selfish, or fraudulent motives, or on false information, or on a total lack of authority to act.”

Where the clear language of a statute specifically directs a board or commission how to act upon undisputed evidence of facts involved, the tribunal has no discretion, authority or jurisdiction to disregard the statute and to arbitrarily act otherwise. In the present proceeding, section 56 of the Unemployment Insurance Act is clear and unambiguous with respect to the disallowance of unemployment wages during the time a “trade dispute is * in active progress in the establishment”. That section reads:

“An individual is not eligible for benefits for unemployment, and no such benefit shall be payable to him under any of the following conditions:

“(a) If he left his work because of a trade dispute and for the period during which he continues out of work by reason of the fact that the trade dispute is still in active progress in the establishment in which he was employed.”

The dissenting opinion filed in this case by Commissioner Ansley K. Salz accurately and concisely expresses his conclusion regarding the undisputed facts: “I conclude that claimants voluntarily left their work because of a trade dispute and that they are ineligible for unemployment benefits under section 56(a), for the period during which they continued out of work because of the fact that the trade dispute was still in active progress in the establishment in which they were employed.”

No one connected with this proceeding denies that a trade dispute was in active progress in the institution where the corespondents were employed during all of the time for which they claim benefits. Nor can it be reasonably said they left their employment involuntarily. Other union labor members continued to work in that plant during the entire time which is involved in this controversy. There is no intimation the corespondents would have been in danger of personal injury if they had attempted to pass the picket line. We may not presume that a striking group of workmen will violate the law by making an assault upon other workmen who attempt to peaceably pass a picket line to resume their employment. The law recognizes the right of peaceable picketing but not of the use of force and violence. It is conceded that workmen belonging to another labor group passed through the picket line and continued to perform their usual labor in the plant throughout the period of time which is here involved. Those men exercised their personal volition to work and continued to do so without personal violence or harm. It follows that the corespondents exercised their volition not to pass through the picket line or to work in the plant while the trade dispute and strike were in progress. Evidently the corespondents, and their associates in Lodge No. 68, ceased to work and participated in what is commonly called a sympathetic strike to aid and assist the Welders Union, Local No. 1330, to win its labor dispute. It does not appear there was any agreement between those two labor organizations to render support to each other by sympathetic strikes in case of pending labor disputes. Even though there was such an agreement it could not affect the rights of this petitioner who was not a party to any such secret understanding. To hold that such an agreement would warrant the commission in determining that the corespondents did not voluntarily leave their work, and that they are therefore entitled to unemployment benefits, would place above the laws a secret agreement between labor organizations to which an employer is not a party. This trust fund was not created to be used as a weapon to coerce employers to submit to the demands of striking employees by paying the maintenance of workmen while they engage in prosecuting a strike. Nor was it intended to be used as an instrument to aid strike-breaking. On the contrary, it was enacted for the avowed purpose of assisting workmen while they are out of employment through no fault of their own. It is specifically provided that they may not recover benefits if they leave their work on account of an existing labor dispute in the plant where they are employed. The record is undisputed that the corespondents left their work at the petitioner's plant solely because of the existence of a labor dispute in that establishment.

Section 56 of the Unemployment Insurance Act does not purport to grant benefits to workmen who leave their jobs voluntarily. It specifically denies benefits to workmen out of employment in a particular plant during the time a trade dispute of any sort is in actual progress in that establishment, provided they leave their employment on account of that labor dispute. The world “left”, as it is used in paragraph (a) of section 56, has no mysterious meaning. From the context of the paragraph its meaning is clear and certain. It merely means that when the employee has departed or absented himself from his work, and fails to return to it, he is not entitled to benefits. There is no merit in the strained construction which is placed upon that word by some of the respondents.

Nearly every state of this Union possesses unemployment compensation acts similar to that of California. These statutes were inspired by the English National Insurance Act, 1911. (Stats. 1–2, Geo. V.) Section 87(1) of the last-mentioned act provides in part that: “A workman who has lost employment by reason of a stoppage of work which was due to a trade dispute at the factory, workshop, or other premises at which he was employed, shall be disqualified for receiving unemployment benefit so long as the stoppage of work continues.”

These statutes are enacted under police powers to minimize the harmful effect on society of unemployment of large numbers of workmen, who become idle through no fault of their own. The California statute declares that it is enacted for “the public good and the general welfare” to inaugurate “a system of unemployment insurance providing benefits for persons unemployed through no fault of their own, and to reduce involuntary unemployment and the suffering caused thereby to a minimum”. St.1939, p. 1968, § 1.

The British act has been consistently construed to deprive unemployed workmen of benefits thereunder, whether they participate in strikes and labor disputes or not, so long as the labor controversy which caused them to cease working remains in progress in the plant where they are employed.

The English statute was amended in 1924, by section 4(1) (Stats. 14–15, Geo. V), relieving the workmen from the absolute disqualification to receive benefits provided they could prove that they were neither financially or otherwise interested in the trade dispute and that they did not belong to the labor union, grade or class of workmen which inaugurated and maintained the strike or trade dispute.

In five states of this Union, including California, unemployment insurance acts have been adopted which are more stringent in their terms than the English law. In those five states—Wisconsin, Kentucky, Ohio, New York and California—the workmen are absolutely disqualified from receiving benefits regardless of whether they are interested in or participants in a strike or labor dispute, provided they leave their employment on account of a pending labor dispute. In the last-mentioned states non-interest and non-participation in the trade disputes on the part of the claimants are not conditions which are mentioned or which may be considered in construing the clear and unambiguous language of those statutes. The California statute contains no such conditional clause as is now present in the English statute as amended, and in those of most of the states of this Union. The only question to be determined in this case is, Did the corespondents leave the plant and fail to return to their work on account of the existence of a trade dispute therein? In other words, would they have continued to perform their work in the plant except for the existence of the trade dispute therein? Upon that question there can be no doubt. The record is uncontradicted that the agent of their Lodge No. 68 advised them not to pass through the picket line, and that they accepted that advice and refused to do so, although numerous workmen belonging to other unions continued to pass through the line and to perform their work throughout the entire period of time which is here involved.

It is argued that the corespondents did not voluntarily “leave their work”, since they belong to a labor union affiliated with the striking union, and that there is a recognized principle in vogue among labor unions that under certain circumstances the passing of members of one labor unit through the picket line established by another group, characterizes the invaders as “strike-breakers”, for the reason that they thereby aid and encourage the cause of the employers to the detriment of the strikers. That is a mere private rule adopted for the mutual benefit of associated labor organizations. It is not a general rule of law. Assuming that it is a justifiable conclusion regarding the effect of passing through a picket line, the converse of the rule must also be equally true, that one who refuses to pass through the picket line thereby aids, assists and supports the cause of the striking union as against the employers. It follows that those who refuse to pass through the line are interested and thereby participate in the trade dispute and strike. In that event, under the statutes of every state of this Union and of England, such workmen would be prohibited from participating in unemployment wages while they remain away from their employment. Certainly that is the incontrovertible and explicit language of the California statute.

In the state of Washington, which has an unemployment statute similar to the English law, 800 employees of a lumber mill, who refused to pass through the picket lines established at the mill by a union labor group to which the claimants did not belong, were refused compensation. (In re St. Paul & Tacoma Lumber Co., etc., Docket No. A–1, App. Trib. Unemp. Comp. and Placement, state of Washington.) It was there held that the refusal to pass through the picket line constituted acts of participation in and the establishment of a direct interest in the trade dispute. It is interesting to note the similarity of the Washington act to the English law. Section 5 of the Washington statute (Laws 1937, chap. 162, as amended in 1939, chap. 214) reads in part: “An individual shall be disqualified for benefits: * (e) For any week with respect to which the commissioner finds that his total or partial unemployment is due to a stoppage of work which exists because of a labor dispute at the factory, *.”

That statute provides that the preceding section does not apply if:

‘(1) He is not participating in or financing or directly interested in the labor dispute which caused the stoppage of work; and

“(2) He does not belong to a grade or class of workers of which, immediately before the commencement of the stoppage, there were members employed at the premises at which the stoppage occurs, any of whom are participating in or financing or directly interested in the dispute.”

It will be observed the California act contains no such modifying clause as the preceding statute contains, which will conditionally exempt workmen from the disqualification to receive benefits. To read the foregoing conditional language into the California statute would amount to judicial legislation, which is forbidden by law. In fact, an amendment to section 56 of the California act, conforming almost exactly to the conditions found in the English statute, was presented to the last legislature and failed of enactment. Poe v. Seaborn, 282 U.S. 101, 51 S.Ct. 58, 75 L.Ed. 239; 25 R.C.L. 1039, sec. 271. In view of the clear and explicit language of our statute in that regard, we must presume the legislature thereby deliberately refrained from so liberalizing the California Unemployment Insurance Act.

Much space in respondents' briefs and much time in their oral arguments were devoted to a recital of the anticipated evils or detriment to unemployed workmen which may follow the construction of section 56 of the act so as to deny them benefits under the circumstances of this case. If voluntary membership in a labor organization which enforces an agreement with another auxiliary union to participate in sympathetic strikes causes the employees to abandon their work, it may reasonably be said their voluntary membership is the primary cause of their loss of employment. The law, however, recognizes no such private agreement or labor practice which will guarantee sympathetic strikers compensation from the fund under section 56 of the act. That argument, in effect, is advanced on the theory that the harm which may follow a literal construction of the language of that section indicates that the legislature did not intend to deny benefits to employees who involuntarily left their work while a labor dispute existed in the establishment in which they were employed. In other words, the respondents urge the application of an ordinary rule of construction to determine the intention of the legislature with respect to the meaning of section 56 of the act. Section 56(a) is so clear and unambiguous that it requires the application of no rules of construction to ascertain the intention of the legislature. Those rules may be resorted to only when the statute is uncertain or ambiguous. When the language and meaning of a statute is clear and certain, there is no room for the application of the rules of construction. Sec. 1858, Code Civ.Proc.; In re Mitchell, 120 Cal. 384, 52 P. 799; 25 R.C.L. 957, sec. 213. In the authority last cited it is said in that regard:

“A statute is not to be read as if open to construction as a matter of course. It is only in the case of ambiguous statutes of uncertain meaning that the rules of construction can have any application. Where the language of a statute is plain and unambiguous and its meaning clear and unmistakable, there is no room for construction, and the courts are not permitted to search for its meaning beyond the statute itself. When the meaning of a law is evident, to go elsewere in search of conjecture in order to restrict or extend the act would be an attempt to elude it, a method which, if once admitted, would be exceedingly dangerous, for there would be no law, however definite and precise in its language, which might not by interpretation be rendered useless. In such a case arguments from the reason, spirit, or purpose of the legislation, from the mischief it was intended to remedy, from history or analogy for the purpose of searching out and justifying the interpolation into the statute of new terms, and for the accomplishment of purposes which the lawmaking power did not express, are worse than futile. They serve only to raise doubt and uncertainty where none exist, to confuse and mislead the judgment, and to pervert the statute.”

We conclude that section 56(a) of the statute is so clear and unambiguous that it does not require an application of the ordinary rules of construction to determine the meaning intended by the legislature. It follows that the commission has clearly abused its discretion in allowing unemployment benefits to workmen under the circumstances of this case.

The motions to quash the alternative writ are denied. The demurrers are overruled. Let the peremptory writ of mandamus issue. The commission is directed to comply with the prayer of the petition and disallow benefits to the corespondents, Haydock, Almeida and Martinez, between the dates of May 24, 1939, and July 10, 1939, and to credit to the petitioner's account all benefits heretofore paid to the other corespondents, and to disregard entirely the said claims of the corespondents in determining and fixing the petitioner's merit rating under the Unemployment Insurance Act.

PER CURIAM.

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