STOCKTON v. DEPARTMENT OF EMPLOYMENT ET AL.
The respondents named in the petition will be referred to as defendants, pursuant to Section 1063 of the Code of Civil Procedure.
They have appealed from a judgment granting a peremptory writ of mandamus directing the reinstatement of the petitioner, Roy S. Stockton, to his former position of Chief of the Division of State Employment Agencies, and requiring the payment of his salary at the rate of $440 per month from July 20, 1940, at which time the Division was abolished and his office as Chief was terminated. The defendants demurred to the petition on the ground of misjoinder of parties and for failure to allege facts sufficient to constitute a cause of action. It was asserted the California Employment Commission (formerly the Unemployment Reserves Commission) or its members are necessary parties defendant in this proceeding, since Section 75 of the Unemployment Insurance Act constituted the Commission the sole governing agent of the Department of Employment. (Stats.1935, ch. 352, p. 1226, and amendments thereto, Deering's Supp. to Calif. Laws of 1935, p. 2039, Act 8780d.) The demurrer was overruled. The defendants filed their return and answer to the petition, setting up the same issues of alleged misjoinder of parties and failure to state facts sufficient to constitute a cause of action. At the hearing, when the petitioner's evidence was completed, the defendants moved for a nonsuit, which was denied. The defendants then adduced evidence of the regularity of the proceedings of the Commission in abolishing the Division of State Employment Agencies, and the cause was argued and submitted. Findings were adopted by the trial court favorable to the petitioner. The peremptory writ of mandamus was issued directing the reinstatement of the petitioner and the payment of his salary as prayed for.
The Department of Industrial Relations was divided into five divisions (Sec. 56, Labor Code, St.1937, p. 187, former Pol.Code Sec. 364a), one of which was the Division of State Employment Agencies. From and after December 13, 1934, the petitioner, Roy S. Stockton, was employed and served as Chief of the Division of State Employment Agencies, in the Department of Industrial Relations. On July 1, 1936, this Division was transferred to the Department of Employment, with Stockton as its Chief. He served in that capacity until July 23, 1940, at a salary of $440 a month. On that date, in the interest of economy and efficiency, the Division was abolished by resolution of the Commission and its functions were combined with those of the Department of Employment, over which R. G. Wagenet presided as Director of the Department. Stockton was then placed on the lay–off list as provided by Section 172 of the Civil Service Act St.1939, p. 2510. (Stats.1937, p. 2085, and amendments, 1 Deering's Gen.Laws of 1937, p. 742, and Supp.1939, Act 1404.)
The California Unemployment Insurance Act was adopted and became effective September 15, 1935. Section 75 of that Act provides: “This act shall be administered by the Unemployment Reserves Commission of this State, to be appointed by the Governor, by and through the State Department of Employment which is hereby created and of which such commission shall be the governing body.”
Section 88 of that Act provides: “The commission may appoint and employ an executive officer, who shall act as the secretary of the commission, and shall be Director of the Department of Employment. The commission may employ such assistance as seems to it necessary for the administration of this act, subject to the provisions of the Civil Service laws.”
Section 93 of that act provides in part:
“On July 1, 1936, the Division of State Employment Agencies of the Department of Industrial Relations shall become and remain the Division of State Employment Agencies in the Department of Employment. All persons employed in such division and the records and property thereof shall, upon such change, become the employees, records and property of the Department of Employment. All persons employed in any capacity in such division shall continue and remain in such capacity in such division after the change, subject to the power of the commission as the governing body of the department to abolish such division, change old divisions or create new divisions, change duties and powers of such division, or impose upon it new and additional powers and duties.
“The State of California hereby accepts the provisions of the Wagner–Peyser Act, approved June 6, 1933, passed by the Congress of the United States, and entitled ‘An act to provide for the establishment of a National employment system and for cooperation with the States in the promotion of such system, and for other purposes,’ in conformity with section 4 thereof, and will observe and comply with the requirements of said act of Congress.
“The Division of State Employment Agencies in the Department of Employment shall be the agency of this State for the purposes of said act.” (Italics added.)
Pursuant to Section 93 of that Act, the Commission, as the governing body of the Department of Employment, for the avowed purpose of economy and efficiency, adopted a resolution on June 14, 1940, as previously stated, abolishing the Division of State Employment Agencies, over which the petitioner presided as Chief officer, and transferred his duties to R. G. Wagenet, the Director of the Department of Employment. All civil service employees of the abolished division, except Stockton and his assistant, were transferred to positions in the Department of Employment having duties comparable with those which they previously performed. Mr. Stockton was then placed on the list of lay–off employees as provided by Section 172 of the State Civil Service Act. (Stats.1937, p. 2085, 1 Deering's Gen.Laws of 1937, p. 742, and Supp.1939, Act 1404.) That resolution provides in part:
“Resolved, that the California Employment Commission, pursuant to the authority conferred upon it by law, and for the purpose of achieving economy, efficiency of operations, and for the purpose of simplifying the operating functions of the Department of Employment, does hereby order the reorganization of the Department of Employment as follows:
“1. The existing position or office of the Executive Director is hereby abolished and in lieu thereof is hereby created the position or office of Director of the Department of Employment, said position or office to be held by the present incumbent of the former position or office, Mr. R. G. Wagenet.
“2. The existing Division of State Employment Agencies, as such, (otherwise known as Division of Employment Service) of the Department of Employment is hereby abolished; and it is hereby ordered that lay–offs shall be made forthwith from the positions or offices of Chief and Associate Chief of said division. The aforementioned lay–offs are hereby expressly declared to be for the purpose of economy and increased efficiency of operations. All other personnel in said division are hereby assigned, under the direction of the Director of the Department, to positions of similar class and responsibilities in the Department of Employment. All duties and responsibilities heretofore performed in the positions of Chief and Associate Chief of said division are hereby transferred to said Director of the Department of Employment and shall be performed by said Director in addition to his existing duties and responsibilities. * * *”
The foregoing Resolution was duly served on the petitioner. No further duties were thereafter performed by him. He was prevented from doing so by the Director of the Department of Employment, who assumed the duties and performed them as directed by the Commission, in addition to his own obligations. On July 21, 1940, the petitioner appealed under Section 172(k) of the Civil Service Act, St.1939, p. 2510, to the Personnel Board from the order abolishing the Division and transferring the duties of the Chief to the Director of the Department of Employment. That appeal to the Personnel Board was taken on the ground that the abolition of the Division and the transfer of the duties of Chief thereof to the Director of the Department of Employment were illegal and void for the reason that those acts were performed in bad faith by the Commission for the purpose of depriving the petitioner of his civil service status. It was also asserted the change in that service was not made on account of a lack of either work or funds in that Division. The petitioner asked the State Personnel Board to reinstate him as Chief of the Division and to direct the payment of his salary of $440 per month from July 20, 1940. Several hearings of the Board were held on that appeal, which was submitted September 4, 1940. Counsel for the petitioner and for the Department of Employment were present and participated in the hearings. Oral and documentary evidence was adduced in behalf of both parties. October 17, 1940, the Personnel Board rendered its decision which contained the following language:
“It Is Hereby Ordered, Adjudged and Decreed that the Department did not comply with Section 172 of the State Civil Service Act of 1937, as amended, and said layoff was improper.
“It Is Further Ordered that the petition of said Roy S. Stockton be granted and petitioner be reinstated to his position as Chief, Division of State Employment Agencies, as of July 20, 1940, and that he be granted his salary from and after said date.”
A petition for rehearing before the State Personnel Board was denied. The Department of Employment, however, refused to comply with that order to reinstate the petitioner or to pay his salary, as directed by the Board. This petition for a writ of mandamus was then filed in the Superior Court of Sacramento County. The defendants demurred to the petition on the grounds previously stated. The demurrer was overruled. The answer and return of the defendants was then filed denying the material allegations of the petition. The trial of the mandamus proceeding began January 12, 1942, and was concluded on January 15th. On April 8, 1942, the court adopted findings favorable to the petitioner. Finding “X” determines: “That it is true said lay–off of petitioner was made in bad faith and for the purpose of depriving petitioner of his civil service rights; that it is true said lay–off was not made because of lack of work or lack of funds; that it is true no interests of economy were served by reason of said lay–off.”
The court further found that the petitioner, since December 13, 1934, has been and now is the holder of the permanent civil service position of Chief of the Division of State Employment Agencies, at a salary of $440 per month. A peremptory writ of mandamus was issued, directing the reinstatement of Roy S. Stockton to the position of Chief of the Division of State Employment Agencies, and ordering the payment of his salary at the rate of $440 per month from July 20, 1940. From that judgment this appeal was perfected.
On January 1, 1942, while this proceeding was pending in the trial court, the Division of Employment Agencies was transferred to Federal control and all of its employees were inducted into the service of that department of the United States government, with Federal civil service status. The Director of the State Department of Employment, however, failed and refused to certify the petitioner Stockton as an employee of the Federal government.
The petitioner concedes that the appellants correctly state in their opening brief the question to be determined on this appeal, which reads: “Did the State Personnel Board have authority to reinstate petitioner after the Employment Commission abolished the Division of Employment Agencies?”
The petitioner states the issue in his own language as follows: “The question thus propounded by appellants is the sole issue on this appeal; it has been the only issue in the case since its inception. The solution of the question involves a determination of the essential jurisdiction of the State Personnel Board over layoffs in the State civil service. In short, the basic question is: What is the jurisdiction of the State Personnel Board?”
A consideration of this question prompts the further inquiry: How could the Personnel Board or the trial court act within its jurisdiction in assuming to direct the reinstatement of the petitioner, Stockton, to a position which was eliminated as the result of abolishing the Division of State Employment Agencies, as permitted by statute, in the absence of proof of fraud, bad faith or violation of the statute on the part of the Commission?
Another preliminary question is involved regarding the failure of the trial court to require the Commission or its members, as indispensable parties, to be joined as defendants in this proceeding. It is contended that since the Commission and its members are indispensable parties, the peremptory writ is ineffectual.
The petitioner suggests that the position formerly occupied by him consists of the particular duties which he performed rather than the office of Chief of Division, and that so long as the service remains and there is ample work and funds with which to maintain it, the office may not be dispensed with. The right to retain an office or employment of indefinite term depends upon the existence of the department or agency to which the services belong. Where the statute authorizes the abolishing of the agency, and it is lawfully terminated in good faith, the office or employment ceases to exist when the agency is abolished. In the case of Tanner v. Edwards, 31 Utah 80, 86 P. 765, 766, 120 Am.St.Rep. 919, 10 Ann.Cas. 1091, it is said: “The term ‘office’ is defined as ‘a right to exercise a public or private employment, and to take the fees and emoluments thereunto belonging.’ * * * It embraces the ideas of tenure, duration, emoluments, and duties, and these ideas or elements cannot be separated, and each considered abstractly. All, taken together, constitute the office * * *.” See 29 Words and Phrases, Perm. Ed., p. 248.
In the present case the Chief of Division had no fixed term of office. His duties were those which were prescribed by the Commission. It had the sole right to abolish the agency under which the office existed, and to transfer those duties to another officer, provided the change was made pursuant to statute for the purpose of economy or efficiency. The purpose of the Civil Service system is not to perpetuate offices but rather to preserve the status of state employees as a reward for faithful and efficient services and for the welfare of government. We know of no statute which prohibits the abolishing of a division of state service, when that change is made in the interest of economy or efficiency, regardless of whether there are sufficient funds in the particular department with which to pay for its maintenance or its officers. A department of state may exercise economy by conservative and prudent expenditures of money even when it has access to an inexhaustible fund for that purpose. It should be the policy of the legislature to encourage public officers and commissions to exercise economy. If a state agency, such as the Department of Employment, may be just as efficiently and more economically operated by abolishing a division thereof pursuant to law and uniting its functions with another similar agency, we know of no reason why that may not be done, even though that procedure leaves one of the principal officers without a job. Indeed, we think that was the very purpose of the adoption of Section 93 of the Unemployment Insurance Act. When separate branches of similar state agencies in effect are united for convenience, efficiency or economy, and the duties of the chief officer of the abolished division are transferred to and imposed upon the principal officer of the department, it reasonably follows that the impelling object of that transfer of obligations would be to save the unnecessary expense of paying two high–salaried officers when one can just as well perform the duties of both.
In the present case it was the province of the Commission, as the governing body of the employment agencies, to determine whether Wagenet, as Director of the Department of Employment, was qualified to efficiently perform the duties of both offices. The Commission determined that Wagenet could efficiently and more economically perform those services. We assume the Commission concluded it was unnecessary to retain and pay both officers. Since a discretion was conferred by statute upon the Commission to abolish the Division and to consolidate the functions with the Department of Employment, we may not interfere with that discretion in the absence of proof of bad faith, fraud, or violation of the statute. Stockton was then placed on the lay–off list of employees pursuant to the provisions of the Civil Service Act. We are not informed as to whether Wagenet possessed civil service status or not. As Director of the Department of Employment and Secretary of the Commission he occupied a confidential relationship toward the Commission, and it was not necessary that he should possess civil service status. We think it is immaterial whether or not he held civil service standing. We know of no law which forbids the imposing of duties formerly performed by a civil service employee upon the executive head of another branch of the same service, even though the latter officer may not enjoy civil service status, provided the transfer of duties is lawfully accomplished in the interest of economy or efficiency, and not for ulterior purposes.
We are persuaded the record is devoid of proof of fraud, bad faith or violation of the statute on the part of the Commission in abolishing the Division and transferring the duties of the petitioner, Stockton, to the Director of the Department of Employment. Without that evidence, the trial court exceeded its jurisdiction in issuing the writ.
In the case of Bank of Italy v. Johnson, 200 Cal. 1, at page 34, 251 P. 784, 797, which was a petition for a writ of mandamus to compel the Superintendent of Banks to issue a certificate authorizing the establishing of a branch bank in Los Angeles, the court said with respect to the lack of proof of fraud or bad faith on the part of a commissioner having discretionary powers in that regard, quoting with approval from the case of Doble Steam Motors Corp. v. Daugherty, 195 Cal. 158, 232 P. 140, that: “ ‘When subordinate boards or commissioners were by statute invested with discretion with respect to the exercise of their powers, courts would not interfere with such discretion, in the absence of grave reasons tending to show that fraud, corruption, improper motives or influences, plain disregard of duty, gross abuse of power, or violation of law had entered into or characterized the determination of such body; and that, in the absence of such showing of an abuse of discretion, the determination of such board or commission would not be interfered with or overthrown.’ ” For discussion of that principle see Stewart v. Stockburger, Cal.App., 62 P.2d 758, 762.
We therefore conclude that the Commission was authorized by law to abolish the Division and to transfer the duties of the Chief thereof to the Director of the Department of Employment in addition to his former responsibilities, notwithstanding the fact that he may not have enjoyed a civil service status.
It is conceded the Personnel Board, on appeal, would have had the right to determine from competent evidence adduced, that the petitioner, Stockton, had been illegally deposed from office by means of fraud, the exercise of bad faith or in violation of the statute with relation thereto, and to reinstate him under such circumstances, on the theory that the abolishing of the Division and the transfer of his duties would therefore have been void. But clearly, if the Division in which he held the office of Chief was legally abolished, that office ceased to exist, even though the duties were transferred to another duly qualified officer and, in the absence of proof of fraud, bad faith or violation of the statute, neither the Personnel Board nor the trial court had jurisdiction to direct his reinstatement to an office which did not exist.
In the present proceeding the trial court, upon the petition for a writ of mandamus, heard the case on its merits and issued the writ, commanding Wagenet, “as Director of the Department of Employment,” to “forthwith reinstate petitioner Roy S. Stockton in the position of Chief, Division of State Employment Agencies,” and to certify his name, as such Chief, to the State Personnel Board, with allowance of his salary at the rate of $440 per month from July 20, 1940, to be approved and certified by the Board to the State Controller. The writ also commanded Wagenet, as such Director, to “transfer and induct petitioner Roy S. Stockton into the civil service and pay of the United States Government with his civil service title of Chief, Division of State Employment Agencies, at his salary therefor of $440.00 per month, as of January 1, 1942.” The writ then directed the State Controller to allow petitioner's claim for $440 per month from July 20, 1940 to January 1, 1942, and to draw his warrant for that amount. Finally the writ directed the State Treasurer to pay that warrant.
It will be observed the writ orders Wagenet, as Director, to perform all acts necessary to reinstate the petitioner as Chief of the Division which was abolished by the Commission, independently of the necessary approval and affirmative action of the Commission, which is the sole governing body of that agency. Neither the Commission nor its members are parties to this proceeding. We assume Wagenet, as Director, could not usurp the powers of the Commission and therefore had no ability or authority to comply with the writ or to perform any of the mandates of that order. It follows that the writ is ineffectual and void on account of an excess of jurisdiction of the trial court.
Conceding that the trial court had a right to review the proceedings of the Personnel Board to determine whether it acted arbitrarily or contrary to law and therefore without jurisdiction in directing the reinstatement of the petitioner without proof of bad faith or illegal action in abolishing the Division and transferring petitioner's duties to the Director of the Department of Employment, it appears that the trial court also exceeded its jurisdiction in adopting findings and directing the issuance of the peremptory writ of mandamus without proof of bad faith or violation of the statute on the part of the Commission. The trial court's judgment would therefore be void for the same reason. It exceeded its jurisdiction.
The Personnel Board did not find that the Commission acted in bad faith. It merely determined that the proceedings of the Commission “did not comply with section 172 of the State Civil Service Act of 1937, as amended, and said layoff was improper.” But the trial court did find, “That * * * said lay–off of petitioner was made in bad faith and for the purpose of depriving petitioner of his civil service rights”; that the lay–off was not in the interest of economy, or on account of a lack of work or funds in that Division.
This court, on appeal from the order granting the peremptory writ of mandamus, may examine the record of proceedings in the trial court for the purpose of determining whether it acted arbitrarily, without or in excess of its jurisdiction, or contrary to law. For that purpose this court may review that record to ascertain whether there is any evidence to support the charge that the Commission acted in bad faith and contrary to law in abolishing the Division and in transferring the duties of the petitioner to the Director of the Department of Employment. Drummey v. State Board of Funeral Directors and Embalmers, 13 Cal.2d 75, 87 P.2d 848; Cullinan v. Superior Court, 24 Cal.App.2d 468, 472, 75 P.2d 518, 77 P.2d 471; Tulare Water Co. v. State Water Commission, 187 Cal. 533, 202 P. 874; 16 Cal.Jur. 815, sec. 31. In the Cullinan case, supra, in which the petitioner sought by means of a writ of prohibition to prevent the trial court from reviewing in a mandamus proceeding the evidence adduced before the State Personnel Board, which resulted in the reinstatement of petitioner to the office from which he had been discharged, this court said [24 Cal.App.2d 468, 75 P.2d 520]:
“If that board was without jurisdiction to make the order for the reason that there was no evidence or lawful proceedings upon which to base it, the order would be void and the superior court would lack authority to direct his reinstatement. Upon the petition for a writ of mandamus the court has a right to review the proceedings before the state personnel board to determine whether it had jurisdiction to reinstate the petitioner. For the purpose of determining whether the inferior tribunal had jurisdiction a court may examine a record or even receive evidence upon a petition for a writ of mandamus. It is said in 16 California Jurisprudence, p. 815, § 31, in that regard:
“ ‘The question whether a board, * * * is acting without jurisdiction or in excess of jurisdiction cannot be finally settled and determined by the board itself beyond the power of review of such determination by a court.’
“The preceding declaration is supported by California authorities. The superior court, therefore, has a right to review the proceedings of the board which resulted in reinstating the petitioner for the purpose of ascertaining whether it had jurisdiction to make the order. In 38 Corpus Juris, page 703, § 287, it is said:
“ ‘But even where mandamus is considered a proper remedy for the enforcement of the provisions of these (civil service) statutes, the discretion of the officers or board in passing on the qualifications of applicants is not subject to review or control by the courts, except in cases where it clearly appears that there has been an abuse of this discretion, or that the officer has acted in bad faith and with intent to evade the law.’ ”
Assuming from the foregoing authorities that the trial court had power to review the proceedings before the Personnel Board and to admit evidence to prove the alleged bad faith of the Commission or the illegality of its proceedings in abolishing the Division of which the petitioner Stockton was Chief, to transfer his duties to the Director of the Department of Employment, and to authorize the placing of his name on the lay–off list, it was not the province of that court to direct the reinstatement of the petitioner without evidence tending to prove bad faith or illegality of procedure on the part of the Commission. With that issue in view, we have carefully read the entire record. The Attorney General challenges the petitioner to point to any evidence in the record which even tends to show bad faith or fraudulent intent on the part of the Commission in abolishing the Division or in transferring the duties of the Chief to the Director of the Department of Employment. We think the petitioner has failed to meet that challenge. We are directed to no evidence which shows a violation of the statute in any particular with respect to the proceedings of the Commission. The Commission was authorized, by Section 93 of the Unemployment Insurance Act, to abolish the Division and to reorganize the service by transferring the duties thereof to appropriate officers of the Department of Employment. Its action was lawful in that regard. We find no evidence in the record to support the findings of the trial court to the effect that the Commission acted in bad faith or for the purpose of depriving petitioner of his civil service rights. In the absence of evidence to the contrary, we must presume that the Commission performed its duty in a lawful and proper manner and that it was guilty of neither bad faith nor fraud in so doing. Hayman v. City of Los Angeles, 17 Cal.App.2d 674, 62 P.2d 1047; Nilsson v. State Personnel Board, 25 Cal.App.2d 699, 78 P.2d 467.
We therefore conclude the Division of State Employment Agencies was lawfully abolished in good faith by the Commission, and that the duties of that service which were formerly performed by the petitioner Stockton were properly transferred to the Director of the Department of Employment. It follows that the findings and judgment of the trial court with respect to the alleged bad faith of the Commission are not supported by the evidence.
We are of the opinion the appellants' demurrer to the petition for a writ of mandamus, on the ground of misjoinder of parties defendant, should have been sustained. The suit was commenced against the “Department of Employment”, the “Executive Director” thereof, the State Controller, the State Treasurer, and one Raphael M. Dorman, an employee. Neither the California Employment Commission nor its duly appointed members are parties to the action. The Commission, by the provisions of the statute, has sole supervision and control of the administration of the Act in question. It was that Commission that abolished the Division. It would appear that neither R. G. Wagenet as Director of the Department of Employment nor any other officer or individual has power to reinstate Stockton, the former Chief of the Division of State Employment Agencies. His reinstatement may be accomplished only by action of the Commission. It may not be done by the Director of the Department of Employment independently of the approval or action of the Commission. We are therefore persuaded the writ of mandamus is ineffectual to reinstate the petitioner under any circumstances since the Commission appears to be an indispensable party to the action, and the mandate runs only against the Department of Employment and certain specified officers and individuals, who apparently have no authority to perform the acts required until the Commission has first authorized them. Sec. 389, C.C.P.; Ambassador Petroleum Co. v. Superior Court, 208 Cal. 667, 284 P. 445; 20 Cal.Jur. 531, secs. 32 and 33. On page 533 of the authority last cited it is said: “Where it appears that there can be no binding adjudication without the joinder of other parties, it is the imperative duty of the court to require the pleadings to be so amended as to bring them in.”
Section 75 of the Unemployment Insurance Act declares that the Commission shall be the governing body in the administration of the Department of Employment. The Department is administered by the authority of five commissioners who are appointed by the Governor (Sec. 78). Section 88 of the Act provides: “The commission may appoint and employ an executive officer, who shall act as the secretary of the commission, and shall be Director of the Department of Employment. The commission may employ such assistance as seems to it necessary for the administration of this act, subject to the provisions of the Civil Service laws.” (Italics added.)
The powers of the Commission are enumerated in Sections 90 and 91 of the Act. Complete power is conferred on the Commission to administer the statute (Sec. 75). That Commission or its members therefore appear to be necessary parties to carry out the mandate of the court. We are of the opinion they are indispensable parties to the proceeding and should have been joined as defendants. The demurrer was erroneously overruled.
The trial court directed the allowance of petitioner's full salary of $440 per month from July 20, 1940, without deducting remuneration from any gainful employment, which he may have subsequently received. The rule is well established that a civil service employee who has been wrongfully deprived of his position is entitled to recover the amount of his accrued salary during the period he is prevented from performing his duties, less the sum he receives from private or public employment during that period. State Board of Equalization v. Superior Court, 20 Cal.2d 467, 474, 127 P.2d 4; Rexstrew v. City of Huntington Park, 20 Cal.2d 630, 634, 128 P.2d 23; Wiles v. State Personnel Board, 19 Cal.2d 344, 352, 121 P.2d 673. A different rule prevails with respect to public officers with fixed salaries, as distinguished from mere employees. 43 Am.Jur. 164, sec. 382; 53 A.L.R. 924 note.
The judgment is reversed and the trial court is directed to enter judgment denying the prayer of the petitioner.
PEEK, J., and ADAMS, P. J., concur.