In Re Abernathy

Annotate this Case

130 S.E.2d 292 (1963)

259 N.C. 190

In the Matter of J. K. ABERNATHY, SS No. XXX-XX-XXXX, Employee, et al., Eastern Air Lines, Inc., Employer, and Employment Security Commission of North Carolina, Raleigh, North Carolina.

No. 233.

Supreme Court of North Carolina.

April 10, 1963.

*296 W. D. Holoman, R. B. Billings, D. G. Ball, Raleigh, for Employment Security Commission of North Carolina, appellant.

Gambrell, Harlan, Russell, Moye & Richardson, by E. Smythe Gambrell, William G. Bell, Jr., Harold N. Hill, Jr., Sidney F. Wheeler, Atlanta, for Eastern Air Lines, Inc., appellee.

Blakeney, Alexander & Machen, by Bailey Patrick, Jr., for North Carolina Employees of Eastern Air Lines, Inc., except the 123 Captains and Air Line Pilots based in North Carolina, appellees.

Warren C. Stack, by James L. Cole, Charlotte, for Charlotte Council, Air Line Pilots Association, Eastern Air Lines, Inc., appellees.

Joyner & Howison, by William T. Joyner, Raleigh, for Harriet Cotton Mills and Henderson Cotton Mills, amicus curia.

HIGGINS, Justice.

Here for review is the Superior Court judgment that the Employment Security Commission committed error (1) "In finding and concluding that claimants are disqualified from receiving Employment Security benefits by reason of the provisions of G.S. 96-14(4) upon the facts and circumstances revealed by the evidence in the record, * * *" and (2) If the 1961 amendment should be construed as a disqualification, then it constitutes an unlawful discrimination in violation of the State and Federal Constitutions. From this judgment the Commission appealed. The right to appeal is given by G.S. § 96-15.

In their appeal to the Superior Court from the Commission, the claimants, by exceptions, challenged the sufficiency of the evidence to support the Commission's findings of fact. The trial court did not pass on these exceptions. It seems from the wording of the judgment the court did not attempt to set aside any of the findings. However, to eliminate any uncertainty in this respect, we have reviewed all the evidence and conclude that it furnishes support for the Commission's findings of fact. Findings, supported by competent evidence, are conclusive on appeal. State ex rel. Employment Security Comm. v. Hennis Freight Lines, 248 N.C. 496, 103 S.E.2d 829; In re Stutts, 245 N.C. 405, 95 S.E.2d 919; State ex rel. Employment Security Commission v. Simpson, 238 N.C. 296, 77 S.E.2d 718; G.S. § 96-15(i). The pivotal question, therefore, is whether the claimants are disqualified by the 1961 amendment to G.S. § 96-14.

In the judicial process of construing legislation the courts take a long look at the purposes to be accomplished. The Congress, using the English Act of 1911 as a pattern, passed the Federal Social Security Act on August 14, 1935. One of its major purposes was to give aid, to be administered through State agencies, to those out of work through no fault of their own. To be eligible for Federal contributions, a State agency was required to levy an unemployment compensation tax on employers to supplement the Federal contribution. In its extra session in 1936 the North Carolina General Assembly enacted its Unemployment Compensation Law to take advantage of the Federal grant. One of its major purposes was to provide a fund by systematic accumulations during periods of employment to be retained and used for the benefit of persons furloughed from their jobs through no fault of their own.

Both the State and Federal Acts were passed at a time when the country appeared to be in the initial stages of recovery from a disastrous depression. The lessons learned in the early thirties were both fresh and poignant. The intent was to accumulate, *297 by Federal grant and by an employer's tax, an insurance fund which in a time of need would tide over workers temporarily laid off because work was not available. Employers in all probability did not contemplate their tax money would be used to encourage any work stoppage resulting from a labor dispute. In discussing this background, the Nebraska Law Review, Vol. 37, No. 4, of June, 1958, contained the following:

"(1). (I)t was not considered wise to permit the fund to be used to finance or subsidize workers engaged in trade disputes, because it was feared that if benefits were available to all workers unemployed as a result of a trade dispute, they would be encouraged to suspend work in furtherance of their position in the dispute, thereby imposing an unfair burden upon the employer, and working injury upon the national economy and upon the public at large; (2) because there had been no previous experience, it was feared that payment of benefits when unemployment was due to a labor dispute might cause a severe drain upon the funds available, thereby defeating the primary purpose for which the fund was createdthe payment of benefits when unemployment was due to `fluctuations in trade.'"

It is doubtful whether in 1935-36 legislatorsFederal or Statehad in contemplation a time when a few specialists out on strike could force a shutdown of a flourishing business employing nearly 18,000 persons in 26 States, the District of Columbia, Canada, Mexico, and Puerto Rico. Neither was it contemplated that the insurance fund could be depleted by workers who were not actually participating in the strike but who were out of work because of it. The depletion of the insurance fund required further employer taxes.

As the years passed the original objects lost some of their clear outlines. Rules and regulations were relaxed permitting depletion of the fund for purposes not in contemplation when provision was made for it. However, in North Carolina the amendment of 1961 reversed the trend. Prior to July 1, 1961, G.S. § 96-14 provided:

"An individual shall be disqualified for benefits. * * * (4) For any week with respect to which the Commission finds that his total or partial 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, provided that this subsection shall not apply if it is shown to the satisfaction of the Commission that "a. He is not participating in or financing or directly interested in the labor dispute which caused the stoppage of work; and "b. 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: Provided, for the purpose of this subdivision (4), that if in any case separate branches of work which are commonly conducted as separate business in separate premises are conducted in separate departments of the same premises, each such department shall be deemed to be a separate factory, establishment, or other premises."

Effective July 1, 1961, the General Assembly, by Chapter 454, Session Laws of 1961, struck out all of Section (4) above quoted and substituted the following:

"(4) For any week with respect to which the Commission finds that his total or partial unemployment is caused by a labor dispute in active progress on or after July 1, 1961, at the factory, establishment, or other premises at which he is or was last employed or caused after such date by a labor dispute at another place, either within or *298 without this State, which is owned or operated by the same employing unit which owns or operates the factory, establishment, or other premises at which he is or was last employed and which supplies materials or services necessary to the continued and usual operation of the premises at which he is or was last employed. Provided, that an individual disqualified under the provisions of this subdivision shall continue to be disqualified thereunder after the labor dispute has ceased to be in active progress for such period of time as is reasonably necessary and required to physically resume operations in the method of operating in use at the plant, factory, or establishment of the employing unit."

The effect of the amendment was to eliminate from Section (4) the means therein provided by which an employee might escape disqualification. Likewise, the amendment removed the provision that separate branches of work commonly conducted in separate premises or in separate departments of the same premises shall be deemed to be separate factories, establishments, or other premises. Instead the amendment extended the disqualification if the unemployment is caused by labor dispute in progress at the factory at which the worker was employed or at another place, either within or without this State, if owned or operated by the same employing unit and which supplies materials or services necessary to continue the operation where he was employed.

In this case planes carrying practically two-thirds of Eastern Air Line's transportation business were grounded because flight engineers refused to operate or to service the planes. Only two-motor craft could operate without the flight engineers. These small planes were engaged in feeder operations on short flights. The heart of Eastern's business was the four-motor and jet planes. As a result of the labor dispute between Eastern and its flight engineers, Eastern was forced to shut down its operations and to close its terminals in North Carolina where claimants had been at work. So far as the results are concerned, it was immaterial where the flight engineers lived, or where their flights originated. When they left the planes, transportation stopped. Eastern's employees at the terminals in North Carolina were furloughed because Eastern was forced out of business by the strike.

Without force is the argument that flight engineers were not based in North Carolina and hence the terminals in this State constituted other plants, factories, establishments, and premises of the employing unit. It must be remembered that new Section (4), in effect at the time the work stopped, extends the disqualification to workers at a factory, establishment, or other premise which supplies necessary materials or services to the plant where the claimants were last employed. The striking flight engineers refused to help man the planes to or from the terminals in North Carolina. This failure to perform this service caused the shutdown at the terminals where claimants were employed.

The many cases cited by the Air Line Pilots Association are not in point. Their brief states: "Since no statute has been found in any jurisdiction written in the discriminatory language of G.S. 96-14(4), as amended, all cases reviewed reveal situations arising under Unemployment Security Acts which are similar to the North Carolina Unemployment Security Act prior to 1961." The Commission was bound by the disqualifying terms of the 1961 amendment. Its duty was to protect the integrity of the insurance fund and to be neutral between the management and the workers.

The disqualification resulted from the labor dispute between the flight engineers and Eastern. All flight engineers in the system were out on strike. Their duties were so integrated into Eastern's entire operation that the big planes were grounded because of their refusal to work. Cameron v. DeBoard, 230 Or. 411, 370 P.2d 709; *299 Depaoli v. Ernst, 73 Nev. 79, 309 P.2d 363; Adamski v. State Bureau of Unemployment Comp., 108 Ohio App. 198, 161 N.E.2d 907; Spielmann v. Industrial Commission, 236 Wis. 240, 295 N.W. 1; Ford Motor Co. v. Abercrombie, 207 Ga. 464, 62 S.E. 209; Park v. Appeal Board of Michigan Employ. Sec. Com'n., 355 Mich. 103, 394 N.W.2d 407; Magner v. Kinney, 141 Neb. 122, 2 N.W.2d 689.

The cases here discussed, and many more therein cited, would seem sufficient to convince all but the highly skeptical that in passing the 1961 amendment the North Carolina General Assembly acted within its constitutional powers. "When the subject lies within the police power of the state, debatable questions as to reasonableness are not for the courts but for the Legislature, which is entitled to form its own judgment, and its action within its range of discretion cannot be set aside because compliance is burdensome." Sproles v. Binford, 286 U.S. 374, 52 S. Ct. 581, 76 L. Ed. 1167; In re Stevenson, 237 N.C. 528, 75 S.E.2d 520; State ex rel. Employment Security Com. v. Jarrell, 231 N.C. 381, 57 S.E.2d 403; In re Steelman, 219 N.C. 306, 13 S.E.2d 544. "Legislative bodies may distinguish, select, and classify objects of legislation. * * * They may prescribe different regulations for different classes * * *. The one requirement is that the ordinance must affect all persons similarly situated or engaged in the same business without discrimination." State v. Trantham, 230 N.C. 641, 55 S.E.2d 198; see also, Bickett v. State Tax Commission, 177 N.C. 433, 99 S.E. 415; Magoun v. Ill. Trust & Savings Bank, 170 U.S. 283, 18 S. Ct. 594, 42 L. Ed. 1037; City of Springfield v. Smith, 322 Mo. 1129, 19 S.W.2d 1; Unemployment Compensation Com. v. J. M. Willis Barber & Beauty Shop, 219 N.C. 709, 15 S.E.2d 4; Steward Machine Co. v. Davis, 301 U.S. 548, 57 S. Ct. 883, 81 L. Ed. 1279. The unemployment insurance acts of the states contain certain worker disqualifications, among them, (1) discharge for misconduct, (2) refusal to accept other suitable employment, (3) participation in a strike. The power of the legislature to provide these disqualifications is not challenged. The further disqualification contained in the 1961 amendment involves a question of degree and not of principle.

For the reasons here stated, we hold the judgment of the Superior Court of Mecklenburg County was erroneous and must be


RODMAN, J., took no part in the consideration or decision of this case.