Matson Terminals, Inc. v. California Employment Commission

CARTER, J.

I dissent. In my opinion the employees here involved were entitled to the payment of unemployment insurance benefits upon the affirmance of the allowance of such benefits to them by the referee pursuant to the provisions of section 67 of the California Unemployment Insurance Act. The holding of the majority opinion to the contrary in effect nullifies the provisions of section 67 of said act which were designed “to carry out the policy declared in section 1 of alleviating the evils of unemployment, as part of a national plan of social security in which federal and state legislation is coupled,” and overrules the case of Abelleira v. District Court of Appeal, 17 Cal.2d 280 [ 109 P.2d 942 , 132 A.L.R. 715 ] although it purports to rely upon this case in support of its conclusion. The majority opinion states: “In accord with *712 the statute as interpreted in the Abelleira ease, payments must be made pursuant to the referee’s determination. If subsequently, however, by a decision of the commission on appeal, or by a court on review, the payments are found to be unauthorized and illegal, section 67 does not make them valid. That section merely prevents a stay; it does not create a substantive right. Since the provision against stay does not create any rights in conflict with the substantive provisions of the statute, there is no ground upon which the illegal awards can be paid.”

Section 67 of the California Unemployment Insurance Act, after providing for a hearing and initial determination of a claim for benefits and an appeal therefrom reads: “If a

referee affirms an initial determination allowing benefits, such benefits shall be paid regardless of any appeal which may thereafter be taken, but if such determination is finally reversed no employer's account shall be charged with benefits so paid as to each such determination so reversed.”

The foregoing provision was interpreted by this court in the Abelleira case, and the holding in the case at bar is squarely contrary to the reasoning therein. It is said in the Abelleira case at page 298:

“This [referring to the provision in section 67] is one of the most significant statements in the act. In substance it provides that when the initial determination has been reviewed and approved by the intermediate appellate authority (the referee), no further delay in payment shall be permitted even though the issues may be still further considered in a subsequent appeal. It was designed to carry out the policy declared in section 1 of alleviating the evils of unemployment, as part of a national plan of social security in which federal and state legislation is coupled. (Sec. 2.) The very essence of the act is its provision for the prompt payment of benefits to those unemployed. (See 88 Univ.Pa.L.Rev. 137, 139.) Any substantial delay would defeat this purpose and would bring back the very evil sought to be avoided. The legislature, recognizing the importance on the one hand of avoiding improvident payments without due consideration of the right thereto, and the danger on the other hand of withholding the payments for long periods through the slow processes of appeal to the commission and perhaps eventually to the courts, took a middle course. It provided for a preliminary appeal or *713 review of the first determination where payments were ordered. This appeal, ordinarily decided in a short period of time, carries with it a stay. But when this second decision has also been made in favor of the applicants, the benefits begin, with protection, as already noted, for the employer in the event of later reversal. . . . But in truth there is nothing unusual in the provision, which is in force in some thirty-six of the states. The legislature has concluded on the basis of normal experience that the large majority of the administrative orders will be proper, and that to permit these justifiable and necessary payments to be postponed for long periods would defeat the objectives of the act. . . .

“The foregoing cases demonstrate the weakness of the argument that because a commission may make an occasional error in ordering some payment out of a public or semi-public fund, the courts must have the power to stay any and all payments during the lengthy period of judicial review. The legislature has concluded that it is wiser to have a system of unemployment compensation operating with a possible small percentage of error, than to have a system not operating at all. The legislative power to make such provision is unquestioned; the statutory language cannot be misunderstood; and for the courts that is the end of the matter.’’ (Italics added.) It is to be noted that great stress is laid upon the necessity of prompt payment and that the payments shall continue during appeal, otherwise the whole purpose of the act will be frustrated; that the Legislature chose to accept the risk of annullment of the order for payment of benefits believing that the probabilities were such that the great majority of the claims would be decided correctly.

The majority opinion states that it agrees with the Abelleira case, and then proceeds to hold that benefits need not be paid upon the affirmance of an allowance by a referee. On the contrary, the Abelleira case held that the Legislature chose to run the risk of the few instances in which an allowance of benefits, affirmed by a referee, would be found erroneous, and that, therefore, payment should be made upon such affirmance. The wording of the statute itself admits of but one interpretation. It states that the benefits shall be paid regardless of any appeal. Certainly the appeal em *714 braces a decision on appeal. The sole requirement is that the initial allowance of the claim for benefits be affirmed by the referee. There is no requirement that it be correct or found to be correct on appeal, and, as pointed out in the Abelleira case, the Legislature assumed the risk of the relatively few eases which would be incorrectly decided.

The conclusion reached in the majority opinion in support of its position that benefits need not be paid upon the affirmance of an allowance by a referee is based upon the obviously unsound premise that “that section (67) merely prevents a stay; it does not create a substantive right. Since the provision against stay does not create any rights in conflict with the substantive provisions of the statute, there is no ground upon which the illegal awards can be paid.” No authority is cited for the foregoing statement and I doubt if any can be found. It cannot be denied that the above quoted provision of section 67 of the Unemployment Insurance Act creates a right to receive benefits under said act “if a referee affirms an initial determination allowing benefits.” In other words, the act provides that upon such affirmance, “benefits shall be paid regardless of any appeal which may thereafter be taken.” To say that such a provision does not create a substantive right, is to disregard the clear meaning of the plain language there used. Can it be said that the above quoted provision of section 67 does not create a right to receive benefits? The answer is obvious that it does create such right. Can it be said that such right is not a substantive right? The answer to this question is also obvious that such right is a substantive right. This must be so if the Unemployment Insurance Act creates anything in the nature of a substantive right in favor of those unemployed.

A substantive right is contrasted with a remedial right. It is said in Black’s Law Dictionary (3d ed.), page 1672, that substantive law is:

“That part of the law which the courts are established to administer, as opposed to the rules according to which the substantive law itself is administered. That part of the law which creates, defines, and regulates rights, as opposed to adjective or remedial law, which prescribes the method of enforcing rights or obtaining redress for their invasion.” Here the act expressly and unconditionally gives a right— *715 the right to receive payment of the benefits. It is not a remedy, method, or rule by which a right is acquired. It is the right itself. No steps are required to obtain it. It is a granted right.

The payment of the benefit after affirmance by the referee is not by the terms of the statute wholly without limitation. Section 67 expressly provides that the employer’s account shall not be charged if the allowance of the claim is finally reversed on appeal. Hence, the Legislature did consider the question of what, if any, conditions should be imposed upon or result from the payment of benefits even though an appeal was taken. It must be presumed that that condition was the sole one intended by the Legislature. If it had intended others it would have so stated. Its failure to do so clearly evinces an intent that it did not so intend. The rule of statutory construction stated in In re De Neef, 42 Cal.App. 2d 691, 694 [ 109 P.2d 741 ], is applicable:

“Thus we are confronted with two well known rules of statutory construction—that when the language of a statute is clear and unambiguous it does not permit judicial interpretation or construction; and that, when the statute itself specifies its exceptions, no other may be added under the guise of judicial construction.” (Italics added.) And in Perkins v. Thornburgh, 10 Cal. 189 , 191:

“It will be seen that the Code itself states the effect of the verdict, if in favor of the claimant. It also states the effect of the verdict, if against the claimant, as to costs. When a statute assumes to specify the effects of a certain provision, we must presume that all the effects intended by the law-maker are stated. (Lee v. Evans, 8 Cal.Rep., 424; Bird v. Dennison, 7 Cal.Rep. [297], 307; Melony v. Whitman, [People v. Whitman] page 38 of this volume.) ” (Italics added.) (See also Duncan v. Superior Court, 104 Cal.App. 218 [ 285 P. 732 ].

Concerning the question of whether or not, in the instant case, the employees should be entitled to the benefits which should have been paid but were not prior to the reversal on appeal there are several persuasive arguments why the employees should be entitled thereto. First, the purpose of the act, that is, to have prompt payments regardless of an appeal will be thwarted if they are not so made. The officials administering the act will be wholly free at their whim or *716 caprice to defeat that purpose by merely failing to make the payments or by the action of the commission in setting aside the referee’s affirmance of the initial allowance. Certainly the Legislature did not intend that the main, and as expressed in the Abelleira case, the most important part of the act should rest upon such a precarious basis. Second, the benefits must be paid “regardless of any appeal.” That phrase clearly embraces the decision on appeal. Paraphrasing, it would read that the benefits are payable regardless of a reversal on appeal. In other words there was an absolute obligation to pay, and the Legislature chose to assume the risk of error by the referee. (Abelleira v. District Court of Appeal, supra.) Third, the above discussed rule of statutory construction applies, namely, that the only limitation attached to the payment was in respect to the employer’s account. The expression of that condition eliminates others and others may not be added by judicial construction.

From what I have said in the foregoing opinion, it follows that the employees here involved were entitled to unemployment insurance benefits from the date of the affirmance of the award in their favor by the referee and that such benefits should be paid until the final determination by this court that they were not entitled thereto.

Schauer, J., concurred.

Interveners’ petition for a rehearing was denied September 13, 1944. Carter, J., and Schauer, J., voted for a rehearing.