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Volume VI. Social Insurance
Such regulative legislation has for its primary object the readjustment of the relations between certain classes of society employers and employees to the development of the public welfare by raising a fund by levying a tax both upon the employer and the employee to be distributed to employees who are forced into unemployment through no fault of their own. The levying of said tax is justified through the exercise of the police power of the State within the constitutional limitations of the Fifth Amendment. It is shown first of all in Part I, that the need of the protection of society and workmen from the evils of unemployment is clearly established. It is then shown that the remedy provided in the bill of Appendix B is justified by the exercise of the police power of the State for the purpose of regulation of employments and the protection of the general welfare of the people of the State and that said remedy does not infringe upon any of the constitutional limitations of the Federal Constitution, or of the Constitution of the State of Ohio, or any other State of the United States. To establish a System of Compulsory Unemployment Insurance Without Liability
on the Part of the State of Ohio or Any Other State Adopting the Same
and to Create an Unemployment Insurance Commission to Administer the Fund
to Provide Unemployment Insurance. It may be claimed that said proposed model compulsory unemployment insurance bill, set forth in Appendix B, is unconstitutional in that it violates the Constitution of the United States and of the State of Ohio in the following particulars: 1. Section 3, paragraph b and e of said proposed bill violates the Constitution of the United States, Section 1, Article 14 of the Amendments of the Constitution, Ordinance of 1787, Article 2, State of Ohio Constitution, Article 1, Section 2 and 16 in that they take property without due process of law. 2. Section 6, paragraph b of said model unemployment insurance act violates the State Constitution of Ohio, Article 1, Section 2 in that said act is not uniform in operation upon individuals of the state (and violates similar provisions in the constitutions of other states) 3. Section 5, paragraphs a, b, c, d, and e of said model act providing for unemployment insurance as set forth in Appendix B violates the State Constitution of Ohio, Article 4, Section 1 (similar provisions in constitution of other states) in that is vests judicial power in a Tribunal from which no appeals or error lies in the Supreme Court. 4. Section 5, paragraphs b, in particular (1), (3), (5), (6), (9), of said Act violates the Constitution of the State of Ohio, Article 2, Section 32 (or the corresponding provisions in the statutes of any other State of the United States) in that the Legislature seeks to delegate legislative power. 5. Section 3, paragraphs in particular a, b, e, of said Act violates the Ordinance of 1787, Article 2, Constitution of the State of Ohio, Article 2, Section 28 ( or the corresponding provisions of any other State of the United States) in that it impairs the obligation of contracts between employers and employees in existence at the time an employer is required to come under said Act. 6. The entire Act is an unreasonable exercise of the police power of the State of Ohio (or the police power of any other State of the United States.) FOUNDATION OF INDUSTRIAL INSURANCE AND UNEMPLOYMENT INSURANCE 1. "We, the people of the United States, . . . and promote the general welfare . . . ." (Preamble to the Constitution of the United States.) 2. "We, the people of the State of Ohio, . . . and promote our common welfare . . . ." (Preamble to the Constitution to the State of Ohio.) "Laws may be passed . . . providing for the comfort . . . and general welfare of all employees . . . ." (Constitution of the State of Ohio, Article II, Section 34. And corresponding provisions in the Constitutions of the other State of the United States. 3. "The State is a social compact by which the whole people covenants with each citizen and each citizen with the whole people, and all shall be governed by the same laws for the common good." (Constitution of Massachusetts.) 4. It has been established by a series of cases, that am ulterior public advantage may justify a comparatively insignificant taking of private property for what, in its immediate purpose, is a private use." (Clark vs. Nash, 198 U.S. 361 & Noble State Bank vs. Haskill 219 U.S. 104.) 5. "Besides the cases of every day taxation there are the cases: ‘in which the share of each party in the benefit of a scheme of mutual protection is sufficient compensation for the correlative burden that it is compelled to bear.'" (Ohio Oil Co. vs. Indiana, 177 U.S. 190, Noble State Bank vs. Haskill 219 U.S. 104.) 6. "The Police Power of the State and Nation extends to all of the great public needs". (Camefield vs. U.S. 167 U.S. 518.) 7. ‘The Police Power of the State and nation may be put forth in aid of what is sanctioned by usage or hold by the prevailing morality or strong or preponderant opinion to be greatly and immediately necessary to the public welfare." (Noble State Bank vs. Haskill 219 U.S. 104.) The Problem of Industrial Insurance and Industrial Efficiency. The writer's studies of Industrial Insurance covering a period of twenty-five years, leads him to the observation that the most intelligent, profound and modern statement of the economic and social value of Industrial Insurance in its relation to ‘Industrial Efficiency" is that made by Charles P. Steinmetz. Dr. Steinmetz was a profound mathematician and electrical engineer who was a permanent paralytic from childhood, incapacitated to perform ordinary common labor. He was a practical engineer who was employed by and maintained the unlimited confidence of his employer, one of the greatest electrical manufacturing companies of the United State for many years until he died. In discussing "Industrial Efficiency and Political Waste" he says: "There will be competition, whether gas-engine or electrical motor
is to be used, whether a local steam-turbine plant is to be installed
or power brought from along-distance transmission system. But the decision
will be made on the basis of the relative economy. 1) Industrial Efficiency and Political Waste (November 1916), p. 725-27, The American Journal of Sociology, May 17, 1917, Socialization of the Law, p. 834-835.
"We consider it our Imperial Duty to impress upon the Reichstag
the necessity of furthering the welfare of the working people. We should
review with increased satisfaction the manifold successes, with which
the Lord has blesses our Reign, could We carry with Us to the grave the
consciousness of having given our country an additional and last insurance
of internal peace, and the conviction that We have rendered the needy;
that assistance to which they are justly entitled." The Prussian law of more than a century ago (140 years) acknowledged the famous right to work and to a living. The state, in its very nature, is the guarantee of the weaker classes. In the common law of that time it is states: "It is the duty of the state to provide sustenance and support of
those of its citizens who cannot provide sustenance themselves. Work adapted
to their strength and capacities shall be supplies to those who lack means
and opportunities of earning a livelihood for themselves and those dependent
upon them. It therefore follows that in our analysis of constitutional limitations we can not look for any analogy in the decisions, which have to do with the regulation of the private relations between the employer and his employees. However, for this purpose, there have been brought into the earlier stages of the discussions on this subject cases, which hold a statute of Pennsylvania constitutional which abolished the doctrine of respondent superior in the cases of persons on or near railroads and not in the employ of the railroad company; cases which held statutes constitutional that make railroads liable for fire set by engines though without fault; cases holding a statute constitutional making a railroad company liable for injury though without fault, or the common illustrations as the liability of a master for the acts of his servant, or the ancient law of deodands, or the liability of the husband for the tort of his wife. All of the common law or statutory duties defined in these decisions relate to the preservation of private rights. It appears from the history of unemployment insurance in the United States established by companies, by trade-unions, and joint agreement plans beginning as early as 1916, set out in Part I above, that by natural development funds providing compensation for unemployed workmen, which prevented them from depending upon public charity. The economic and social need of the enactment of unemployment insurance acts, for the protection of regional welfare of the public, is shown by the establishment of unemployment insurance systems by seventeen European countries. These national acts cover the entire working population. Great Britain passed her law in 1911. In addition to these national acts many cities, Belgium as early as 1897 made appropriations for unemployment relief. Besides municipal and National acts there have been for a long time hundreds of trade-union and other private plans providing such insurance. (See Part I above.) Our problem is, therefore, the following: has the State of Ohio (or the other states of the United States) the power to regulate its industries foe the purpose of protecting the health, safety and genera; welfare of the community, by levying a tax in the form of an insurance obligation upon such industries and upon the wages of the operatives employed in the same, for the benefit of those operatives who are forced out of employment and unable to procure work although they are able and willing to work under the terms and conditions set forth in the proposed bill in Appendix B. Hence we next consider the Scope and Limitations of the Taxing Power of the State. Then it will be shown: First, that "it is established by a series of cases that an ulterior public advantage may justify a comparatively insignificant taking of private property for what, in its immediate purpose, is a private use." Justice Holmes in Noble State Bank vs. Haskill, 219 U.S. 104; Clark vs. Nash, 198 U.S. 361; Stickley vs. Highland Boy Gold Mining Co., 203 U.S. 372; Pacon v. Walker, 204 U.S. 311, 315. And in the second place "it would seem that there may be other cases besides the every day one of taxation in which the share of each party in the benefit of the scheme of mutual protection is sufficient compensation for the correlative burden that it is compelled to assume." See 209 U.S. 104; Ohio Oil Co. vs. Ind., 177 U.S. 190. And third, that we have a case within the reasonable exercise of the police power as the facts herein fully show, no more need be said.
"Everything to which legislative power extends may be the subject of taxation, whether it be person or property, or possession, franchise or privilege, or occupation or right. Nothing but express constitutional limitation upon legislative authority can exclude anything to which the authority extends from the grasp of the taxing power, if the legislative in its discussion shall at any time select it from revenue purposes; and not only is the power unlimited in its reach as to subjects, but in its very nature it acknowledge no limits, and may be carried even to the extent of exhaustion and destruction, thus becoming in its exercise a power to destroy. If the power be threatened with abuse, security must be found in the responsibility of the legislative that imposes the tax to the constituency which must pay it. The judiciary can afford no redress against oppressive taxation, so long as the legislature, in imposing it, shall keep within the limits of legislative authority and violate no express provision of the constitution. The necessity for imposing it addresses itself to the legislative discretion, and it is or may be an urgent necessity which will admit of no property or other conflicting right in the citizen while it remains unsatisfied." But in regard to its limitation (page 83): "Great is the power of any sovereignty to levy and collect taxes
from the citizens that power in a constitutional country has very distinct
and positive limitations" "It is the first requisite of lawful taxation, that the purpose for which it is laid shall be a public purpose. The decision to lay a tax for a given purpose involves a legislative conclusion that the purpose is one for which a tax may be laid; in other words, is a public purpose. But the determination of the legislature on this question is not, like its decision of ordinary questions of public policy, conclusive either on the other departments of the government, or on the people. The question, what is and what is not a public purpose, is one of the law; and though unquestionably the legislature shall have clearly exceeded its authority in this regard and levied a tax for a purpose not public, it is competent for any one who on person or property is affected by the tax, to appeal to the courts for protection."
SCOPE OF TAXING POWER. In regard to the domain of the subject matter in which the taxing power may obtain, Cooley says (Cooley on Taxation, p. 25) quoting from the case of State tax on Foreign Held Bonds, 12 Wallace, 315: "The power of taxation, however vast in its character, and searching in it's extent, is necessarily limited to subjects within the jurisdiction of the State. These subjects are persons, property and business. Whatever form taxation may assume, whether as duties, imposts, excises or licenses, it must relate to one of these subjects. It is not possible to conceive of any other, though as applied to them the taxation may be exercised in a great variety of ways. It may touch property in every share in its natural condition, in its manufactured form, and in its various transmutations. And the amount of the taxation may be determined by the value of the property, or its use, or its capacity, or its productiveness. It may touch business in the almost infinite forms in which it is conducted, in professions, in commerce, in manufactures and in transportation." Justice Marshall in Providence Bank vs. Billings, 4 Peters 514 at 561, says: "The power of legislation, and consequently of taxation, operates on all persons and property belonging to the body politic. This is an original principle. Which has its foundation in society itself. It is granted by all for the benefit of all. It resides in the government as part of itself, and need not be reserved where property of any description, or the right to use it in any manner, is granted to individuals, or corporate bodies. However absolute the right of an individual may be, it is still in the nature of that right that it must bear a portion of the public burdens, and that portion must be determined by the legislature. This total power may be abused; but the interest, wisdom and justice of the representative body, and its relations with its constituents, furnish the only security where there is no express contract against unjust and excessive taxation, as well as against unwise legislation generally."
THE LIMITATIONS OF THE RIGHTS OF THE COURTS TO
"It is unfit for the judicial department to inquire what degree of taxation is the legitimate use, and what degree may amount to the abuse of the power." "Notwithstanding the vast power which resides in the states to tax, all taxation proceeds upon the theory that a corresponding benefit returns to the individual taxed for the property which belonged to him and which was appropriated. For example, in the use of a general tax collected for the general revenues of the state, it is assumed that the state is suffered to make full and adequate return in the protection which the state gives to the value of his possessions by the uses to which the state applies the money contributed, (Cooley on Taxation p. 3). In the case of a tax which is levied for a special purpose, this theory of return becomes emphasized so that for the purpose of determining the validity of the tax, it becomes necessary to find an immediate specific benefit passing to the individual taxed."
SIMILARITY OF THE ATTRIBUTES OF SPECIAL TAXATION AND EMINENT DOMAIN See Cooley's Constitutional Limitations, 7th Ed. P. 715, where he says: "Taxation and eminent domain indeed rest substantially on the same foundation, as such implies the taking of private property for the public use on compensation made; but the compensation is different in the two cases. When taxation takes money for the public use, the taxpayer received, or is supposed to receive, his just compensation in the protection which government affords to life, liberty and property, in the increase in the value of possessions which comes from the use to which government applies the money raised by the tax; and these benefits amply support the individual burden." And in his work on Taxation, p. 1183, he says: "The theory of the law is that fill compensation is then received
in every instance. It is not, it is true, a compensation made in money,
but, as in every other case of taxation, the person taxed is to receive
a benefit from the expenditure of the moneys collected."
THE PUBLIC PURPOSE FOR WHICH A TAX MAY BE LEVIED The regulation of private rights for a public purpose under the police power is as much an appropriation of property as the direct taking of property under the taxing power. Thus one of the powers of exercising the police power is to levy a tax for regulative purposes instead of for revenue. See Cooley on Taxation, page 1125, where he says: "There are some cases in which levies are made and collected under the general designation of taxes, or under some form employed in revenue laws to indicate a particular class of taxes, where the imposition of the burden may fairly be referred to some other authority than to that branch of the sovereign power of the state under which the public revenues are apportioned and collected. The reason is, that the imposition has not for its object the raising of revenue, but looks rather to the regulation of relative rights, privileges and duties as between individuals, to the conservation of order in the political society, to the encouragement of industry, and the discouragement of pernicious employments. Legislation for these purposes it would seem proper to look upon as being made in the exercise of that authority, which is inherent in every sovereignty, to make all such rules and regulations as are needful to secure and preserve the public orders, and to protect each individual in the enjoyment of his own rights and privileges by requiring the observance of rules of order, fairness and good neighborhood, by all around him. This manifestation of the sovereign authority is usually spoken of as the police power." Industrial insurance would seem in part to come within the scope of regulative legislation above referred to, since the fund necessary to be raised to protect the employed class must necessarily be created through the exercise of some form of the taxing power, and moreover, the primary object of such regulative legislation is to re-adjust relations between certain classes of society to the development of the public welfare. Therefore in determining whether such legislation be constitutional or not, one is confronted with the limitations placed by the Fifth Amendment upon the exercise of the policy power by the state in the form of the taxing power. What then is a public purpose, from the standpoint of such regulative legislation? Cooley's Constitutional Limitations, Ed. P. 1026, gives many cases falling within the category of taxes levied for what the courts have held to be for public purposes: "In the first place, taxation having for its only legitimate object the raising of money for public purposes and the proper needs of government, the exaction of moneys from the citizens for other purposes is not a proper exercise of this power, and must therefore be unauthorized. In this place, however, we do not use the word ‘public' in any narrow and restricted sense, nor do we mean to be understood that whenever the legislature shall overstep the legitimate bounds of their authority the case will be such that the courts can interfere to arrest their action. There are many cases of unconstitutional action by the representatives of the people which can be reached only through the ballot-box; and there are other cases where the line of distinction between that which is allowable and that which is not is so faint and shadowy that the decision of the legislature must be accepted as final, even though judicial opinion might be different. But there are still other cases where it is entirely possible for the legislature so clearly to exceed the bounds of the due authority that we cannot doubt the right of the courts to interfere and check what can only be looked upon as ruthless extortion, provided the nature of the case is such that judicial process can afford relief. An unlimited power to make any and everything lawful which the legislature might see fit to call taxation, would be, when plainly stated, an unlimited power to plunder the citizen. "It must always be conceded that the proper authority to determine what should and what should not constitute a public burden is the legislative department of the state. This is not only true for the state at large, but is true also in respect to each municipality or political division of the state; these inferior corporate existences having only such authority in this regard as the legislature shall confer upon. And in determining this question, the legislature cannot be held in any narrow or technical rule. Not only are certain expenditures absolutely essential to the continued existence of the government and the performance of its ordinary functions, but as a matter of policy it may sometimes be proper and wise to assume other burdens which rest entirely on considerations of honor, gratitude or charity. The officers of government must be paid, the laws printed, roads constructed and public buildings erected; but with a view to the general well being of society, it may also be important that the children of the state should be educated, the poor kept from starvation, losses in the public service indemnified, and incentives held out to the faithful and fearless discharge of duty in the future, by the payment of pensions to these who have been faithful public servants in the past. There will therefore be necessary expenditures which rest upon considerations of policy only, and in regard ti the one as much as to the other, the decision of that department to which alone questions of the state policy are addresses must be accepted as conclusive. "Very strong language has been used by the courts in some of the cases on the subject. In a case where was questioned the validity of the state law confirming township action which granted gratuities to persons enlisting in the military service of the United States, the Supreme Court of Connecticut assigned the following reasons in support: "In the first place, if it be conceded that it is not competent for the legislative power to make a gift of the common property, as of a cum if money to be raised by taxation, where no possible public benefit, direct or indirect, can be derived therefrom, such exercise of the legislative power must be of an extraordinary character to justify the interference of the judiciary; and this is not that case. Second. If there be the least possibility that making the gift will be promotive in any degree of the public welfare, it becomes a question of policy, and not of natural justice, and the determination of the legislature is conclusive. Such is this case. Such gifts to unfortunate classes of society, as the indigent blind, the deaf and dumb, or insane, or grants to particular colleges or school, or grants of pensions, swords, or other mementoes for past service, involving the general good indirectly and in slight degree, are frequently made and never questioned." IN THE APPLICATION OF THE REMEDIES AS MADE AND PROVIDED IN THE MODEL
COMPULSORY UNEMPLOYMENT COMPENSATION ACT GIVEN IN APPENDIX B, ARE THE
FOLLOWING CONSTITUTIONAL LIMITS INFRINGED?: SUCH LEGISLATION IS ALREADY WELL GROUNDED ON FOUR DISTINCT LINES OF CASES IN AMERICAN JURISPRUDENCE a. The bank depositors guarantee act cases; (a) The cases which sustain Bank Depositors Guarantee Acts. Mr. Justice Holmes, delivering the opinion of the court in the case first cited, said: "This a proceeding against the governor of the state of Oklahoma and other officials, who constitute the State banking Board, to prevent them from levying and collecting an assessment from the plaintiff under an act approved December 17, 1907. This act creates the board and directs it to levy on every bank existing under the laws of the state an assessment of 1 per cent of the bank's average daily deposits, with certain deductions, for the purpose of creating a depositors' guaranty fund. There are provisions for keeping up the fund, and by and act passed march 11, 1909, since the suit was begun, the assessment is to be 5 per cent. The purpose of the fund is shown by its name. It is to secure the full repayment of deposits. When a bank becomes insolvent and goes into the hands of the bank commissioner, if its cash immediately available is not enough to pay depositors in full, the banking board is to draw from the depositors' guaranty fund (and from additional assessment if required), the amount needed to make up the deficiency. …In answering that question we must be cautious about pressing the broad words of the 14th Amendment to a drily logical extreme. Many laws which it would be vain to ask the court to overthrow could be shown, easily enough to transgress a scholastic interpretation of one or another of the great guarantees in the Bill of Rights. They more or less limit the liberty of the individual, or they diminish property to a certain extent. We have few scientifically certain criteria of legislation, and as it is often difficult to mark the line where what is called the police power of the state is limited by the Constitution of the United States, judges should be slow to read into the latter nolumus mustare as against the law-making power. "The substance of the plaintiff's argument is that the assessment takes private property for private use without compensation. And while we should assume that the plaintiff would retain a revisionary interest in it contribution to the fund so as to be entitled to a return of what remained of it if the purpose were given up (see Danby Bank vs. State Treasurer, 39 Vt. 92, 98) still there is no denying that by this law a portion of its property might be taken without return to pay debts of a failing rival in business. Nevertheless, notwithstanding the logical form of the objection, there are more powerful considerations on the other side. In the first place, it is established by a series of cases that an ulterior public advantage may justify a comparatively insignificant taking of private property for what, in its immediate purpose, is a private use. Clark vs. Nash. 198 U.S. 361, 49 L. ed. 1085, 25 Sup. Ct. rep. 676, 4A. E. Ann. Cas. 1171; Strickley vs. Highland Boy Gold Min. Co. 200 U.S. 527. 531, 50 L. ed. 581, 583, 26 Sup. Ct. Rep. 301; 4 A. & E. Ann. Cas. 1174; Olfield vs. New York, N.H. & H.R. Col. 203 U.S. 372, 51 L. ed. 231, 27 Sup. Rept. 72; Bacon vs. Walker, 204 U.S. 311, 315, 51 L. ed. 499, 501, 27 Sup. Ct. rep. 289. And in the next, it would seem that there may be other cases besides the every day one of taxation, in which the share of each party in the benefit of a scheme of mutual protection is sufficient compensation for the correlative burden that it is compelled to assume. See Ohio Oil Co. vs. Indiana, 177 U.S. 190, 44 L. ed. 729, 20 Sup. Ct. Rep. 576, 20 Mor. Minn. Rep. 466. At least if we have a case within the reasonable exercise of the police power, as above explained, no more need be said. "It may be said in a general way that the police power in a general way extends to all the great public needs. Camefield vs. United States, 167 U.S. 518, 42 L. ed. 260, 17 Sup. Ct. Rep. 864. It may be put forth in aid of what is sanctioned by usage, or held by the prevailing morality or strong or preponderant opinion to be greatly and immediately necessary to the public welfare. Among matters of that sort, probably few would doubt that both usage and preponderant opinion give their sanction to enforcing the primary conditions of successful commerce. One of those conditions at the present time is the possibility of payment by checks drawn against bank deposits, to such an extent do checks replace currency in daily business. If, the, the legislature of the state thinks that the public welfare requires the measure under consideration, analogy and principle are in favor of the power to enact it. Even the primary object of the required assessment is not a private benefit as it was in the cases cited above of a ditch for irrigation or a railway to a mine, but it is to make the currency of checks secure, and by the same stroke to make safe the almost compulsory resort of depositors to bank as the only available means of keeping money on hand. The priority of claim given to depositors is incidental to the same object and is justified in the same way. The power to restrict liberty by fixing a minimum of capital required of those who would engage in banking is not defined. The power to restrict investments to securities regarded as relatively safe seems equally plain. It has been held, we do not doubt rightfully, that inspections may be required and the cost thrown on the bank. See Charlotte, C. & A. R. Co. vs. Gibbes, 142 U.S. 386, 35 L. ed. 1051, 12 Sup. Ct. Rep. 255. The power to compel beforehand, co-operation, and thus, it is believed, to make a failure unlikely and a general panic almost impossible, must be recognized, if government is to do its proper work, unless we can say that the means have no reasonable relation to the end. Gundling vs. Chicago, 177 U.S. 183, 188, 44 L. ed. 723, 728, 20 Sup. Ct. Rep. 633. So far is that from being the case that the device is a familiar one. It was adopted by some states the better part of a century ago, and seems never to have been questioned until now. Danby Bank vs. State Treasurer, 39 Vt. 92; People vs. Walker, 17 N.Y. 502. Recent cases going not less far are Lemieux vs. Young, 211 U.S. 489, 496, 53 L. ed. 295, 300, 29 sup. Ct. Rep. 174; Kidd, D. & P. Co. vs. Mussleman Grocer Co. 217 U.S. 461, 54 L. ed. 839, 30 Sup. Ct. Rep. 606." (b) Many states, notably Ohio, Illinois, Indiana, Kentucky, Michigan, Wisconsin, New Hampshire, Massachusetts, Connecticut and Texas, exercising the police power for the promotion of the sheep industry and public welfare, have enacted statutes imposing a tax or license upon dogs in a stated sum, collecting the same from the owner, placing the collections in a public fund, and distributing the same through state officers in paying damages to owners of sheep killed by dogs. These statutes have been universally upheld by the Courts. The Ohio Act was attacked as being an unconstitutional exercise of the taxing power of the state and an unreasonable exercise of the Police Power. In Holtz vs. Roe 39 O.S. 340-344. The court said in sustaining the Ohio Law: "While the dog as a species, posses many valuable traits which by some are denominated virtues, it is nevertheless known of all men, that he possesses vicious traits which are especially inimical to the important industry of raising sheep and wool. If the government were powerless to protect this industry from the ravage of dogs, it would indeed be impotent to protect its citizens in the enjoyment of property, than which none other is more essential to the public welfare. But such power is unquestionably vested in the general assembly as a police power, and, in the judgment of the general assembly a per capita tax on dogs has been deemed a means of securing the necessary protection to sheep owners; and , as the choice of means was within the power and (page 115 missing)
"Syl. 3 – DUE PROCESS OF LAW – TOWNSHIPS. Nor is said Act in conflict with sec. 16, Article 2 of the Constitution providing that no person shall be deprived of his property without due process of law, because, under the Act in question, the duty to pass on a claim, because, under the Act in question, the duty to pass on a claim for sheep killed by dogs devolved upon a justice of the peace rather than the township board, the fund from which said claim was paid not being a township fund." "4 – POLICE POWER – REGULATION. Said Act held, not tax legislation, but the exercise of the police power of the State in relation to the licensing of dogs, the killing of sheep, and the compensation of owners therefor." "5 – VESTED RIGHTS – TOWNSHIPS. The township has no vested right in a fund crated by said Act by the licensing of dogs for the sole benefit of sheep owners." (2) Cole vs. hall, 103 111. 39. (May 12, 1882) "Syl. 1 - TAXATION – LICENSE ON DOGS – NOT A TAX. The license fee imposed on the owners of dogs under the Act of 1879, entitled ‘An Act to indemnify the owners of sheep in cases of damage committed by dogs' is no sense a tax, and is therefore, not within the constitutional provision that all needful revenue shall be raised by levying a tax by valuation. Such a fee is imposed under the police power, and not under the taxing power of the State." "2 – POLICE POWER OF THE STATE – IMPOSING LICENSE FEE UPON DOGS. (3) Mitchell vs. Williams 27 Ind. 86. (Nov. 1866.) "TAX. – DEFINITION OF. – The word tax means a burden, charge or imposition, put upon persons or property for public uses." "DOG TAX. – As a measure of internal police, the legislature has
the power to encourage the rearing of sheep, and with that object in view
to discourage the keeping of dogs, by assessing a penalty upon the owner
or keeper of the latter." The Court citing with approval: Thorpe vs. Rutland and Burlington Railway Co., 27 Vt. 140, where the Court held: "This police power of the State extends to the protection of the lives, limbs, health, comfort and quiet of all persons, and the protection of all property within the State." (4) McGlone vs. Womack 129 Ky. 274 (June 17, 1908.) 111 S.W. 688 "1 – STATUTES – SUBJECTS AND TITLES – ACT TO PROMOTE SHEEP INDUSTRY. "2 – LICENSES – CONSTITUTIONAL RESTRICTIONS – PUBLIC PURPOSES. "4 – SAME – REGULATION OF DOGS – KILLING SHEEP – REMUNERATION OF OWNERS OF SHEEP. Act March 1, 1906, (Acts 1906, p. 25, c. 10), providing for the imposition of a tax on dogs for the creation of a fund to remunerate owners of sheep for losses arising from the killing of sheep by dogs, is a valid exercise of the police power of the Legislature to regulate the keeping and ownership of dogs." (5) Blair vs. Forehand 100 Mass. 136. (6) Tenney etc. Vs. Lenz 16 Wisc. 298. Tenney vs. Lenz 566 (Jan. 1863.) "Chap. 175, Laws of 1860, regulating an licensing the keeping of dogs, is an exercise of the police power of the State and not of its taxing power, and is constitutional." "The Legislative may, in regulating any matter that is a proper subject of the police power of the State, impose such sums for license as will operate as a partial restriction upon the business, or upon the keeping of the particular kinds of property regulated." "Chap. 48, R.A., and Chap. 175, Laws of 1860, furnish the owner of sheep killed by dogs two different remedies, and he may elect which he will pursue, but after recovering upon one he cannot pursue the other." "If the owner of sheep killed by dogs, elects to prove his damages to the supervisors of the town, and accepts an order on the town treasurer for the amount, his claim becomes by operation of law transferred to the town, and it may recover against the owner of the dog, but the owner of the sheep cannot thereafter recover against him." (c) Cases which sustain an act to tax saloonists to create a fund for the benefit if inebriates. In State vs. Cassidy, 22 Minn. 312, the court sustained an act to establish a fund for the foundation and maintenance of an asylum for inebriates, requiring all sellers of liquors to pay ten dollars a year to the state treasurer, through the county treasurers, in addition to the usual license, the fund to be disbursed by the state commission in the erection and operation of a state asylum for inebriates. Th court in its opinion points out that the act is and exercise of the police power upon a subject clearly within that power saying: "This act regards the traffic as one tending to produce intemperance and as likely, by reasoning thereof, to entail upon the state the expense and burthen of providing for class of persons rendered incapable of self-support, the evil influence of whose presence and example upon society is necessarily injurious to the public welfare and prosperity, and therefore, calls for such legislative interposition as will operate as a restraint upon the business, and protect the community from the mischiefs, evils and pecuniary burdens flowing from its prosecution. . . .That these provisions unmistakenly partake of the nature of police regulations, and are strictly of that character, there can be no doubt, nor can it be denied that their expediency or necessity is solely a legislative, and not a judicial, question. . . . Regarding the law as a precautionary measure, intended to operate as a wholesome restraint upon the traffic, and as a protection to society against its consequent evils, the exacted fee is not unreasonable in amount, and the purpose to which it is devoted is strictly pertinent and appropriate. It could not be questioned but that a reasonable sum imposed in the way of an indemnity to the state against the expense of maintaining a police force to supervise the conduct of those engaged in the business and to guard against the disorders, and infractions of law occasioned by its prosecution, would be a legitimate exercise of the police power, and not open to the objection that it was a tax for the purpose of revenue, and, therefore, unconstitutional. Reclaiming the inebriate, restoring him to society, prepared again to discharge the duties of citizenship, equally promotes the public welfare, and tends to the accomplishment of like beneficial results, and it is difficult to see wherein the imposition of a reasonable license fee would be any the less a proper exercise of this power in the one case than in the other. The purpose to which the license fund created by the act is designated is more consonant to the idea of regulating the traffic and preventing its evil than is the case under the general license law, which devotes the fees received to common school purposes, and we are not aware that any objection has ever been urged against that law on that account." This case is cited with approval by Professor Fruend in his work on the Police power, Sec. 623. (d) Cases which sustain acts, which create a fund for the benefit of sick and injured firemen. Statutes imposing a liability upon fire insurance agents, based upon the amount of the insurance effected by them, for the benefit of a fund to care for and cure such sick and injured firemen, have been upheld in the States of New York and Illinois. Fire Department vs. Noble, 3 E.D. Smith (N.Y.), 440; Fire Department vs. Wright, 3 E.D. Smith (N.Y.), 453; Except Fireman's Fund vs. Roome, 29 Hun. 391, 394; Firemen's Benevolent Ass'n. vs. Lounsbury, 21 111. 511, 74 Am. Dec. 115. A similar statute relating to agents for foreign insurance companies was upheld in Wisconsin. Fire Department vs. Helfenstein, 15 Wis. 136. Each class of these four lines of cases is an example of the police power of the States to create a fund by taxation for the protection of the health, safety and general welfare of classes of citizens and the general public. The rule is that an ulterior public advantage may justify a comparatively insignificant taking of private property for what, in its immediate purpose, is a private use. THE AUTHORITY OF THE LEGISLATURE OF OHIO (OR ANY OTHER STATE OF THE UNITED STATES) TO ENACT THE UNEMPLOYMENT INSURANCE ACT EXEMPLIFIED BY APPENDIX "B", IF IT EXISTS AT ALL, RESIDES IN THE POLICE POWERS. WHAT IS THE NATURE AND WHAT ARE THE LIMITATIONS OF THE POLICE POWER? The Police Power The Supreme Court of the United States has perhaps most clearly defined the conditions under which the conduct of business or employments warrants the exercise of legislative power of any state to pass proper police measures to regulate the same for the purpose of protecting society as a whole, in speaking through its Chief Justice (Waite), in Munn vs. Illinois, 94 U.S. 113-154, 24 L. ed. 77-94. In this case the constitutionality of a law passed by the legislature of Illinois to regulate the rates which grain elevators might charge was raised. This act fixed a maximum rate which grain elevators might charge the public for storing grain. These principles are clearly stated as follows: "The state is a social compact by which the whole people convenants with each citizen, and each citizens with the whole people, that all shall be governed by certain laws for the common good." "From this source come the police powers, which, as said by Chief Justice Taney in the License Cases, 5 How. 583, 12 L. ed. 291, "are nothing more or less than the powers of government inherent in every sovereignty, . . . that is to say, . . . the power to govern men and things'. Under these powers the government regulates the conduct of its citizens one towards another, and the manner in which each shall use his own property, when such regulation becomes necessary for the public record. In their exercise it has been customary in England from time immemorial, and in this country from its first colonization, to regulate ferries, common carrier, hackmen, bakers, millers, wharfingers, innkeepers, etc., and in so doing to fix a maximum of charge to be made for services rendered, accommodations furnished, and articles sold. To this day statutes are to be found in many of the states upon some or all of these subjects, and we think that it has never yet been successfully contended that such legislation came within any of the constitutional prohibitions against interference with private property. With the 5th Amendment in force, Congress in 1820, conferred power upon the city of Washington ‘to regulate...the rates of wharfage at private wharves...the sweeping of chimneys, and to fix the rates of fees therefor, ...and the weight and quality of bread,' 3 Stat. at L. 587, Chap. 104, Sec. 7; and in 1848, ‘to make all necessary regulations respecting hackney carriages, and the rates of fare of the same, and the rates of hauling by cartmen, wagoners, carmen, and draymen, and the rates of commission of auctioneers.' 9 Stat. At L. 224, Chap. 42, Sec. 2. From this it is apparent that, down to the time of the adoption of the 14th Amendment, it was not supposed that statutes regulating the use, or even the price of use, of private property necessarily deprived an owner of his property without the due-process of law. Under come circumstances they may, but not under all. The amendment does not change the law in this particular; it simply prevents the states from doing that which will operate as such a deprivation... Property does become clothed with a public interest when used in a manner to make it of public consequences, and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest, he in effect grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use, but, so long as he maintains the use, he must submit to the control. . . Neither is it a matter of any moment that no precedent can be found for a statute precedent can be found for a statute precisely like this. It is conceded that the business is one of the recent origin, that its growth has been rapid, and that it is already of great importance. And it must also be conceded that it is a business in which the whole public has a direct and positive interest. It presents, therefore, a case for the application of a long known and well-established principle in social science, and this statute simply extends the law so as to meet this new development of commercial progress. There is no attempt to compel these owners to grant the public an interest in their property, but to declare their obligations, if they use it in this particular manner. First. It follows from the definition foregoing, that the existing conditions relative to the economic and social effects of the unemployment of workmen, hereinbefore set forth in Part I, upon their families and society as a whole, come within the domain of applicability of the police power of the state. Second. That the remedy provided in the bill in Appendix S, namely Compulsory Unemployment Insurance, is not in conflict with the constitutional limitation of the several state of Federal Constitutions.
POLICE POWER DISTINGUISHED FROM TAXING POWER Taxation may be for the purpose of raising revenue, or for the purpose of regulation, when for the purpose of regulation it is an exercise of the police power of the state: Carthage vs. Rhodes, 101 Md. 175; Davis vs. Petrionovich, 112 Ala. 654; Mulcahy vs. Newark, 57 N.J. L. 513 and cases cited. Maxim of Police Power Prof. Ernest Freund - Police Power 1904 - Sec. 8. p. 6: Syl. "2 - Chapter 112 of the State Laws of 1896 of N.Y. known as
Liquor Tax Laws, is not a "tax law" in the proper sense, as
it does not have for its primary purpose the raising of revenue for the
support of the government, but it is a law enacted under the police power,
the exaction of which, although denominated taxes are imposed for the
primary purpose of regulating and controlling the liquor traffic (1896)":
People vs. Murray et. al., 149 N.Y. 367. "The term ‘police power' as understood in American Constitutional Law mean simply the power to impose such restraints upon private rights as are practically necessary for the general welfare of all." "The police power is a general term used to express the particular right of a government which is inherent in every sovereignty:" L.S. & N.S.R. Co. vs. Smith, 173 U.S. 684. "The police power extends to the protection of lives, health, and property of the citizens and to the preservation of good order and public morals:" Davock vs. Moore 105 Mich. 120. Licenses for the regulation of occupations and not for revenue can be justified only upon the ground that a necessity exists for the exercise by the state either directly, or through the delegation to municipal corporation, the police power;" Bessetts vs. People 193 111. 334. In order that an ordinance to license a particular occupation, such as the business of plumbing, may be justified as an exercise of the police power, it must appear that the requirement of a license tends to promote the public health, morals, safety and comfort, or welfare or to support disease:" Wilkie vs. Chicago, 188 111. 444. The Right of any State of the United States to Regulate Employment for the Conduct of any Business through the Exercise of the Police Power to Conserve a Public Purpose.
1. "Under the powers inherent in very sovereignty, a Government may regulate the conduct of its citizens toward each other, and, when necessary for the public record, the manner in which each shall use his own property." 3. "Down to the time of the adoption of the Fourteenth Amendment of the Constitution of the United States, it was not supposed that statutes regulating the use, or even the price of the use, of private property, necessarily deprived an owner of his property without due process of law. Under some circumstances they may, but not under all. The amendment does not change the law in this particular: it simply prevents the States from doing that which will operate as such deprivation." 4. "When the owner of property devotes it to a use in which the public has an interest, he in effect grants to the public an such use, and must to the extent of that interest, submit to be controlled by the public, for the common good, as long as he maintains the use, He may withdraw his grant by discontinuing the use." 5. "The rights of property and to reasonable compensation for its use, created by common law, cannot be taken away without due process; but the law itself, as a rule of conduct, may, unless constitutional limitations forbid, be changed at the will of the Legislature. The great office of statutes is to remedy defects of the common law as they are developed, and to adapt it to the changes of time and circumstances." The court speaking through Chief Justice Wait at page 124 says: "When one becomes a member of society, he necessarily parts with some rights or privileges which as an individual not effected by his relations to others, he might retain. A body politic as aptly defined in the preamble of the Constitution of Massachusetts, ‘is a social compact by which the whole people convenants with each citizen, and each citizen with the whole people, that all shall be governed by certain laws for the common good. The Principle upon which the Power of Regulation rests. "Looking, then, to the common law, from whence came the right which the Constitution protects, we find that when private property is effected with a public interest, it ceases to be juris privati only.' This was said by Lord Chief Justice Hale more than 200 years ago, in his treatise De Portibus Maris, 1 Hard. Law Tracts, 78, and has been accepted without objection as an essential element in the law of property ever since. Property does become clothed with the public interest when used in a manner to make it of public consequence, and effect a community at large. When, therefore, one devoted his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good to the extent of the interest as thus created." The case Munn vs. Illinois, 94 U.S. 113, arose out of the violation of a statute enacted by the Legislature of the State of Illinois limiting the price which a grain elevator might charge for storing grain. The plaintiff Munn was convicted of violating the statute for charging more for storage than the maximum price fixed by the statute. The plaintiff Munn claimed that the statute violated the V and XIV amendments to the Constitution of the United States. The Supreme Court of the United States sustained the statute. Limitations in the Use of Property
"Under our form of government the use of property and the making of contracts are normally matters of private and not of public concern. The general rule is that both shall be free of governmental interference. But neither property rights nor contract rights are absolute; for the government cannot exist if the citizen may at will use his property to the detriment of his fellows, or exercise his freedom of contract to work them harm. Equally fundamental with the private right is that of the public to regulate it in the common interest. As Chief Justice Marshall said, speaking specifically of inspection laws, such laws form ‘a portion of that immense mass of legislation, which embraces every thing within the territory of a State...all which can be most advantageously exercised by the States themselves. Inspection laws, quarantine laws, health laws of every description, as well as laws for regulating the internal commerce of a State, ...are component parts of this mass.' 10 "Justice Barbour said for this in court: ‘...it is not only the right, but the bounden and solemn duty of a state, to advance the safety, happiness and prosperity of its people, and to provide for its general welfare, by any and every act of legislation, which it may deem to be conductive to these ends; where the power over the particular subject, or the manner of its exercise, is not surrendered or restrained, in the manner just stated. That all those powers which relate to merely municipal legislation, or what may, perhaps, more properly be called internal police, are not thus surrendered or restrained; and that, consequently, in relation to these, the authority of a state is complete, unqualified, and exclusive.' "And Chief Justice Taney said upon the same subject: ‘But what are the police powers of a State? They are nothing more or less than the powers of government inherent in every sovereignty to the extent of its dominions. And whether a State passes a quarantine law, or a law to punish offences, or to establish courts of justice, or requiring certain instruments to be recorded, or to regulate commerce within its own limits, in every case it exercises the same powers; that is to say, the power of sovereignty, the power to govern men and things within the limits of the dominion. It is by virtue of this power that it legislates; and its authority to make regulations of commerce is as absolute as its power to pass health laws, except in so far as it has been restricted by the constitution of the United States.' "Thus has this court from the early days affirmed that the power tp promote the general welfare is inherent in government. Touching the matters committed to it by the Constitution, the United States possesses the power, as do the states in their sovereign capacity touching all subjects jurisdiction of which is not surrendered to the federal government, as shown by the quotations above given. These correlative rights, that of the citizens to exercise exclusive dominion over property and freely to contract about his affairs, and that of the state to regulate the use of property and the conduct of the business, are always in collision. No exercise of the private right can be imagined which will not in some respect, however slight, effect the public; no exercise of the legislative prerogative to regulate the conduct of the citizen which will not to some extent abridge his liberty or affect his property. But subject only to constitutional restraint the private right must yield to the public need. "The Fifth Amendment, in the field of federal activity, and the Fourteenth, as respects state action, do not prohibit governmental regulation for the public welfare. They merely condition the exertion of the admitted power, by securing that the end shall be accomplished by methods consistent with the due process. And the guaranty of due process, as has often been held, demands only that the law shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained. It results that a regulation valid for one sort if business, or in given circumstances, may be invalid for another sort, or for the same business under other circumstances, because the reasonableness of each regulation depends upon the relevant facts. "The reports of our decisions abound with cases in which the citizen, individual or corporate, has vainly invoked the Fourteenth Amendment in resistance to necessary and appropriate exertion of the police power." "The court has repeatedly sustained curtailment of enjoyment of private property, in the public interest. The owners' right may be subordinated to the needs of other private owners whose pursuits are vital to the paramount interests of the community. The state may control the use of the property, in various ways; may prohibit advertising bill boards except of a prescribed size and location, or their use for certain kinds of advertising; may in certain circumstances authorize encroachments by party walls in cities; may fix the height if buildings, the character of materials, and methods of construction, the adjoining area which must be left open, and may exclude from residential sections offensive trades, industries and structures likely injuriously to affect the public health or safety; or may establish zones within which certain types of buildings or businesses are permitted and others excluded. And although the Fourteenth Amendment extends protection to aliens as well as citizens, a state may for adequate reasons of policy exclude aliens altogether from the use and occupancy of land. "Laws passed for the suppression of immorality, in the interest of health, to secure fair trade practices, and to safeguard the interests of depositors in banks, have been found consistent with due process. These measures not only affected the use of property, but also interfered with the right of private contract. Other instances are numerous where valid regulation has restricted the right of contract, while less directly affecting property rights. "The Constitution does not guarantee the unrestricted privilege to engage in a business or to conduct it as one pleases. Certain kinds of business may be prohibited; and the right to conduct a business, or to pursue a calling, may be conditioned. Regulation of a business to prevent waste of the state's resources may be justified. And statutes prescribing the terms upon which those conducting certain businesses may contract, or imposing terms if they do enter in agreement, are within the state's competency." Equal Protection and Classification In the case of Continental Baking Company vs. Woodring, 55 F. (2d) 347, and in particular at page 353, District Court, District of Kansas, 2nd Division, decided December 15, 1931, the plaintiffs, the Continental Baking Company, sough to enjoin the enforcement of a statue regulating transportation by motor vehicles on the ground that a statute is arbitrary and discriminatory and that it compels private carriers to assume the burdens of common carriers. The Court, page 353, citing with approval Munn vs. Illinois, 94 U.S. 113-132, held: "That a legislative classification should stand, ‘if any state of
facts reasonably can be Is the proposed compulsory employment insurance act (appendix B) of
welfare operation xxxxx individuals? a. "Commission" means the unemployment insurance commission of Ohio. b. "Employer", except where the context clearly shows otherwise means any person, partnership, firm, association or corporation who (which) has six or more persons employed in any employment subject to this act. It shall not include the state of Ohio as an employer, nor any municipal or public corporation, nor any political subdivision; nor any farmer; or any person, partnership, firm, association or corporation to which this act may not apply by reason of any provision of the constitution of the United States or any act of Congress. c. "Employee", except where the context clearly shows otherwise, means any person, including aliens and minors, employed for hire by an employer in an employment subject to this act, except a person whose employment is not in the usual course of the trade, business, profession or occupation of the employer, and except further any person employed as other than manual labor at a rate of remuneration of two thousand dollars a year or more. d. "An employment", except where the context clearly shows otherwise, means any employment in which all or the greater part of the employee's work is performed within the state of Ohio, under any contract of hire, express or limited, oral or written, including all contracts entered into by helpers and assistants of employees, whether paid by employer or employee, if employed with the knowledge actual or constructive of the employer; and shall include any trade, occupation, profession or process of manufacture, or any method of carrying on said trade, occupation, profession or method of manufacture in which any person may engage; except that for the purpose of this act it shall not include: (1) Employment as an agricultural laborers. (2) Employment in the personal or domestic services of an employer at his home. (3) Employment in the service of a common carrier engaged in interstate commerce, subject to the laws of Congress and supervision of interstate commerce commission. (4) Employment by any governmental unit, or municipal or public corporation, or any political subdivision; or in any employment in a private or parochial school or college where the contract of hire is on annual salary basis. (5) Employment as a short-time or casual laborer for a period of less than four weeks, provided that where such short-time or casual labor is employed during four successive weeks or more, it shall be deemed an employment within the scope of this act. (6) Employment of a physically handicapped person by an institution financed largely by charitable donations and organized not for profit but primarily for the relief and rehabilitation of such handicapped person. (7) Employment as physician, surgeon, intern, or nurse in a hospital, sanatarium, or other similar private endowed institution not operated for profit. (8) Employment of the father, mother, spouse, or minor child by the employer. e. "Benefits" means money allowances payable to an employee as insurance or compensation for losses of wages due to unemployment as provided by this act. f. "Wages" means what is customarily meant by the term, the money rate at which the employee is recompensed under the contract of hire, except that it shall include commissions and bonuses and the reasonable value of board, rent, housing, lodging or similar advantages received from the employer. g. "Average Weekly Wages" means the weekly earnings that an employee subject to this act would average if he were employed full time, i.e. the full member of schedule or customary working hours per week in the employment or employments in which he is or has engaged prior to applying for benefits under this act. The commission shall make suitable rules for the purpose of calculating the average wages on the basis of which benefits under the act are to paid, and for this purpose may average full time earnings over a period of three months or more in order to include reasonable proportions of busy and slack weeks, and may adopt such method or methods of calculating the said average weekly wages as may be suitable and reasonable under this act. h. "Payroll" means and shall include all wages, salaries, and remuneration paid to employees subject to this act. i. "Total Unemployment", except where the context clearly shows otherwise, means the condition caused by the inability of an employee, who is capable of an available for employment, to obtain work in his usual employment or in suitable employment as defined by this act; which condition causes total loss of wages. j. "Partial Unemployment" means part-time employment resulting in less of wages amounting to forty per cent or more of an employee's average weekly wages. Section 3. PREMIUMS. a. On and after the first day of July, 1936, premiums for insurance in the fund shall accrue and become payable by every employer and employee subject to this act and in accordance with its provisions. All premiums payable to the fund shall be paid to the commission, at such times and in such manner as the commission shall prescribe, and shall promptly be paid over by the commission to the treasurer of state who shall credit same to the fund. b. Employer's Premium. Every employer subject to this act shall in the month of July, 1936, and thereafter at such intervals as the commission may determine and require, pay into the fund the amount of premiums fixed by this act, and by the commission as authorized by this act, for the employment or occupation of the employer. Until July 1, 1939, the contributions or premiums regularly payable by every employer into the fund shall be an amount equal to two per cent per annum of his payroll. Thereafter the premium to be paid by each employer shall be determined by the classifications, rules and rates made and published by the commission; and every employer shall thereafter pay at regular intervals fixed by the commission such premiums into the fund as may be ascertained to be due from him by applying the rules of the commission; provided that the premium for an employer shall in no case amount to less than one per cent per annum or more than three ad one-half per cent per annum of such employer's payroll. c. Employees' Premium. Every employee whose employment is subject to the provisions of this act shall pay into the fund a sum equal to one per cent of all wages received by him in such employment, and the employer shall deduct such amount and shall pay the same into the fund under such regulations and at such intervals as the commission may determine and require. No agreement by an employee to pay any portion of the premium, or other payment required to be made by his employer for the purpose of providing benefits, shall be valid; and no employer shall make a deduction for such purpose from the wages or salary of any employee. But nothing in that act shall affect the validity of voluntary arrangements by which employees individually or collectively agree to make contributions for the purpose of securing benefits in addition to those provided by this act." CLASSIFICATION OF EMPLOYMENTS Your commentator contents that the proposed State Bill, Appendix B. is constitutional, even though the bill limits the Act to cover employments in which six (6) or more persons are regularly employed; and also further limits the classes of employees covered by the Act by excluding certain classes of employment. See especially paragraphs b, c, d, Section 8 of the bill; that these limitations are not in violation of Article I, Section 2 of the Constitution of the State of Ohio, which provides that "Government is instituted for the equal protection and benefit . . . " and the corresponding provisions in the constitution of the other States of the United States. That such a limitation is a reasonable exercise of the Police Power has been decided by abundance of authorities. The United States Supreme Court, in St. Louis Consolidated Coal Co. vs. Illinois, said: "Another question is whether the act, as amended in 1897, insofar as it discriminates as to penalties imposed upon some persons engaged in the mining business, and not upon others, is a proper exercise of the police power. It is true that the act of 1897 amended the former law of 1895, by limiting its application to coal mines ‘where more than five men are employed at any one time.' This is a species of classification which the legislature is at liberty to adopt, provided it be not wholly arbitrary or unreasonable, as it was in Cotting vs. Kansas City Stock Yards Company, 183 U.S. 79, in which an act defining what should constitute public stock yards and regulation all charges connected therewith was held to be unconstitutional, because it applied only to one particular company, and not to other companies or corporations engaged in a like business in Kansas, and thereby denied to that company the equal protection of the laws. In the case under consideration there is no attempt arbitrarily to select one mine for inspection, but only to assume that mines, which are worked upon so small a scale as to require only five operatives, would not be likely to need the careful inspection provided for the larger mines, where the workings were carried on upon a larger scale or at a greater depth from the surface, and where a much large force would be necessary for their successful operation. It is quite evident that a mine which is operated by only five men could scarcely have passed the experimental stage, or that precautions necessary in the operation of coal mines of ordinary magnitude would be required in such cases. There are clearly reasonable foundation for a discrimination here." To the same effect is the decision of the Supreme Court of the United States in McLean vs. Arkansas, where the court held that it was not an unreasonable classification to divide coal mines into those where less than ten miners are employed and those where more than that number are employed, and that a State police regulation was not unconstitutional under the equal protection clause of the Fourteenth Amendment because only applicable to mines where more than ten miners are employed. A similar classification was sustained by the same court in Williams vs. Arkansas, and in Engel vs. O'Malley. In Borgnis vs. Falk Co., the Wisconsin Supreme Court unanimously sustained a like provision in the Wisconsin Compensation Act and in State of Ohio, in State ex rel. of Wallace D. Yaple vs. David S. Creamer, Treasurer of State, the Supreme Court of Ohio sustained a like provision in the Ohio Workmen's Compensation Act. EXTENT OF THE POLICE POWER We cite Holden v. Hardy 169 U.S. 326, showing to what extend the Legislature may go in the exercise of its police power in regulating the relation of employer and employee, without violating the provisions of the Fourteenth Amendment of its Constitution of the United States by abridging the privileges or immunities of the citizens, or by depriving them of their property, or by depriving to them the equal protection of the Laws, the court says: "The provisions in the act of March 30, 1896, c 72, of Utah, providing that: "The period of the employment of workingmen in all underground mines or workings shall be eight hours per day, except in cases of emergency where life or property are in imminent danger;" that "the period of the employment of workingmen in smelters and all other institutions for the reduction of refining of ores or metals shall be eight hours per day, exempt in cases of emergency where life or property are in imminent danger;" and that "any person, body corporate, agent, manager or employer who shall violate any of the provisions of sections one and two of this act shall be deemed guilty of a misdemeanor," are a valid exercise of the police power of that State, and do not violate any of the provisions of the Fourteenth Amendment to the Constitution of the United States by abridging the privileges or immunities of its citizens, or by depriving them of their property, or by denying to them the equal protection of the laws. The cases arising under the Fourteenth Amendment are examined in detail,
and are held to demonstrate that, in passing upon the validity of state
legislation under it, this court has not failed to recognize the fact
that the law is, to a certain extend, a progressive science; that in some
We cite additional cases in support of our contention that the Legislature of this or any other State of the United States is vested with the authority to exercise its police power to regulate employment and make the classification of employment's set forth in the proposed Compulsory Unemployment Insurance Bill set up in Appendix B, in promotion of the general welfare of the State. 1. Some employers of laborers engaged in hazardous employment's may be required to compensate such laborers for injuries received while so engaged without regard to fault upon the part of the employer (Cooley's Constitutional Limitations, 8th Edition, p. 1337.) 2. The legislature, within the exercise of its police powers, in enacting a compulsory compensation act, may abrogate common-law defenses, and impose liability without fault, substituting new rules of legal procedure in place of the old, so long as its action in that regard is not arbitrary, unjust, or unreasonable. State ex rel. Amerland v. Hagan, 44 N.D. 175 N.W. 372. 3. In a test of he constitutionality of a State compulsory workmen's compensation act under the Fourteenth Amendment to the Federal Constitution, "the questions whether there is inherent hazard in an occupation or a group of occupations is not to be settled conclusively by a legislature . . . is justified in extending the benefits of the compensation law as far as it reasonably may determine occupational hazards to extend, -- to the ‘vanishing point', as it were, -- and any lines of group definition it may adopt, if easily understood and applied, cannot reasonably be called an empty form of words merely because they do not carry on their faces the reasons for adopting them." Ward & Gow v. Krinsky, 259 U.S. 503. See also State ex. Rel. Davis-Smith Co. v. Clausen, 65 Wash. 156. 4. It is within the province of the legislature, in the proper exercise of its police power as a matter of public policy, to declare that there is an element of hazard or of danger in employment in the modern business world, and a court, upon construction of tis definition in that regard, will not presume that the term "hazardous" must necessarily refer to employment's that have heretofore been termed hazardous, by reason of extra features of hazard inherent to the nature of occupation. State ex rel. Amerland v. Hagan, 44 N. D. 306. 5. The exclusion from the operation of a workmen's compensation law of certain classes of employees is not a denial of the equal protection of the laws. Among the classes of laborers whose exclusion has been held not to constitute such denial, are the following: Domestic servants, farm and other agricultural laborers, employees engaged in dairy labor, or in stock or poultry raising, laborers in cotton gins, coal mine operators, railroad employees, casual employees, employees receiving more than a stated salary, and employees or employers employing not more than a certain number or workmen. New York C. R. Co. v. White, 243 U.S. 188; Middleton v. Texas Power & Light Co., 249 U.S. 152; Lower Vein Coal. Co. v. Industrial Bd., 255 U.S. 144; Western Indemnity Co. V. Pillsbury, 170 Cal. 686; Hunter v. Colfax, 175 Iowa 245; In re Opinion of Justices, 209 Mass 607. 6. A workmen's compensation law is not violative of the due process clause or the equal protection of the laws clause of the Fourteenth Amendment of the Federal Constitution because it operates compulsorily upon coal mining companies, while as to other employers it is permissive, or does not apply at all. Labor Vein Coal Co. v. Industrial Board, 255 U.S. 144. We cite in particular in "7" & "8", decisions of the Supreme Court of the United States, in which that Court unanimously affirmed the judgments respectively of the Supreme Court of Ohio and the State of Washington, which courts sustained the constitutionality of the Ohio Workmen's Compensation Act and the State of Washington's Workmen's Compensation Act. Both of these Acts are based upon a very broad and extensive use of the exercise of the police power of the State in its right to tax and regulate employment's to promote the general welfare of the working classes and the people of the State. The needs of the states of the United States to regulate employment's and unemployment for the protection of the general welfare of the people of the states of the United States is set forth in Part I of this memorandum pp. 1 to 83. 7. Re: Constitutionality of the Ohio Workmen's Compensation Act. 1. - The Jeffrey Manufacturing Co. v. Blogg (Jan. 5, 1915) 235 U.S. 571. The Supreme Court of the United States held: " In general Workmen's Compensation Act, establishing a state plan that all employers having five (5) or more employees may enter on equal terms, a provision, abolishing the defenses of contributory negligence as to such employers who do not come into the plan, is not unconstitutional as denying equal protection of the laws as to them because the defense is not abolished as to those having less than five (5) employees and so held as to such provisions in the Workmen's Compensation Law of Ohio." The Supreme Court of the United States unanimously affirmed the judgment of the Supreme Court of Ohio which had held in the case The State ex, rel. Yaple v. Cramer, Treasurer of the State. (Feb. 6, 1912) 85 O. St., 349, that: "The Act entitled ‘An Act to create a state insurance fund for the
benefit of injured, and the dependents of killed employees' etc., 102
O.L. 524, is a valid exercise of legislative power not repugnant to the
Federal or State Constitutions, or to any limitation contained in either",
citings: 8. 2. The Supreme Court of the United States in the case: Mountain Timber Co. v. The State of Washington, 243 U.S. 219 (March 6, 1917) unanimously affirmed the decision of the Supreme Court of the State of Washington in the case: The State of Washington, Respondent vs. Mountain Timber Company Appellant, 75 Wash. 581 which held: "CONSTITIONAL LAW - POLICE POWER - SCOPE. The police power is as broad as the public welfare and as strong as the arm of the state, and its scope is to be measured by the legislative will of the people in acts passed in affirmance of established usage or of such standards of morality and expediency as have, by gradual process and accepted reason, become so fixed as to fairly indicate the better will of the people in their social, industrial and political development. "JURY - RIGHT TO JURY TRIAL - CONSTITUTIONAL PROVISIONS. The right to trial by jury guaranteed by the Federal constitution does not apply to state courts or to prosecutions for the violation of state laws. CONSTITUTIONAL LAW - REPUBLICAN FORM OF GOVERNMENT. The compulsory industrial insurance law does not violate the Federal constitutional guarantee of a republican form of government." 9. We cite below the cases which Honnold in Vol. 3, of his work on "Supreme Court Law" has cited in support of the constitutionality of workmen's compensation acts of the states of the United States. Honnold has grouped these decisions under two types of compensation acts: Type "1" - where in general, where "provisions for compulsory compensation are made to apply only to those employed in hazardous employment's" and Type "2" - where there is something more in a compensation law than the element of hazard, - something that gives room for the power of classification which a legislature may exercise in its judgment of what is necessary for the public welfare through the exercise of the police power in the regulation of employment's. We cite the following authorities in support of the constitutionality of compulsory workmen's compensation acts in the several states of the United States. See "Supreme Court Law" by Honnold, volume 3, pages 2645-2647: to wit: Workmen's Compensation 1. In general, provisions for compulsory compensation are made to apply only to those employed in hazardous occupations, where it may be contemplated by both parties in advance that sooner or later some of those employed probably will sustain accidental injury in the course of employment, but where nobody can know in advance which particular employees, or how many, will be the victims, or how serious will be the injuries. Ward & Gow v. Krinsky, 259 U.S. 503, 42 S. Ct. 529, 66 L. Ed. 1033; New York C.R. Co. v. White, 243 U.S. 188, 202, et seq., 37 S. Ct. 247, 61 L. Ed. 667, 674, LR. A. 1917D, 1, Ann. Cas. 1917D, 629, 13 N. C. C. A. 943; Mountain Timber Co. v. Washington, 243 U.S. 219, 239, 243, 244, 37 S. Ct. 260, 61 L. Ed. 685, 697-699, Ann. Cas. 1917D, 642, 13 N.C.C.A. 927; Arizona Employers' Liability Cases (Arizona Copper Co. v. Hammer), 250 U.S. 400, 420, 422-426, 39 S. Ct. 553, 63 L. Ed. 1058, 1066, 1067, 1069, 6 A.L. R. 1537. The remedy which the Compensation Statute attempts to give is of character
wholly unknown to the common law, incapable of enforcement by ordinary
processes of any court, and is not saved to suitors from the grant of
exclusive jurisdiction. Southern P. Co. v. Jensen, 244 U.S. 205, 37D.
Ct. 524, 61 L. Ed. 1086; The Hine v. Trevor, 4 Wall. 571, 572, 18 L. Ed.
456; The Belfast, 7 Wall. 624, 644, 19 L. Ed. 266, 272; American S. B.
Co. v. Chase, 16 Wall. 522, 531, 533, 21 L. Ed. 369, 371, 372; The Glide,
167 U.S. 606, 623, 17 S. Ct. 930, 42 L. Ed. 296, 302. Lower Vein Coal Co. v. Industrial Board of Ind., 255 U.S. 144, 41 S. Ct. 252, 65 L. Ed. 555; German Alliance Ins. Co. v. Lewis, 233 U.S. 389, 34 S. Ct. 612, 58 L. Ed. 1011, L.R.A. 1915C, 1189; International Harvester Co. v. Missouri, 234 U.S. 199, 34 S. Ct. 859, 58 L. Ed. 1276, 52 L.R.A. (N.S.) 525. Liability without fault is not unknown to the maritime law, and, apart from this fact, considerations are applicable to the substantive provisions of legislation, with respect to the relation of master and servant, similar to those which the Court has found sufficient to sustain workmen's compensation laws of the states against objections under the due process clause of the Fourteenth Amendment. Crowell v. Benson, 285 U.S. 22, 52 S. Ct. 285, 289, 76 L. Ed. 598; New York Central R. Co. v. White, 243 U.S. 188, 37 S. Ct. 247, 61 L. Ed. 667, L.R.A. 1917D, 1, Ann. Cas. 1917D, 629; Mountain Timber Co. v. Washington, 243 U.S. 219, 37 S. Ct. 260, 61 L. Ed. 685, Ann. Cas. 1917D, 642; Ward & Gow v. Krinsky, 259 U.S. 503, 42 S. Ct. 529, 66 L. Ed. 1033, 28 A.L. R. 1207; Lower Vein Coal Co. v. Industrial Board, 255 U.S. 144, 41 S. Ct. 252, 65 L. Ed 555; Madera Sugar Pine Co. v. Industrial Accident Commission, 262 U.S. 499, 501, 502, 43 S. Ct. 604, 67 L. Ed. 1091; Sheehan Co. v. Shuler, 265 U.S. 371, 44 S. Ct. 548, 68 L. Ed. 1061, 35 A.L.R. 1056; Dahlstrom Metallic Door Co. v. Industrial Board, 284 U.S. 594, 52 S. Ct. 202, 76 L. Ed. 54; Nogueira v. N.Y., N.H. & H.R. Co., 281 U.S. 136, 137, 50 S. Ct. 303, 74 L. Ed. 754. Workmen's compensation acts are treated, almost universally, as creating a statutory relation between the parties--not like employer's liability acts, as substituting a statutory tort for a common-law tort. Bradford Electric Light Co. v. Clapper, 286 U.S. 145, 52 S. Ct. 571, 76 L. Ed. 1026. See Cudahy Packing Co. v. Parramore, 263 U.S. 418, 44 S. Ct. 153, 68 L. Ed. 366, 30 A.L.R. 532; Mulhall v. Nashua Manufacturing Co., 80 N.H. 194, 115 A. 449; Cameron v. Ellis Construction Co., 252 N.Y. 394, 169 N.E. 622; Chandler v. Industrial Commission, 55 Utah, 213, 184 P. 1020, 8 A.L.R. 930; Anderson v. Miller Scrap Iron Co., 169 Wis. 106, 170 N.W. 275 171 N.W. 935. THE AUTHORITY OF THE UNEMPLOYMENT INSURANCE COMMISSION It is believed that the provisions of the Compulsory Unemployment Insurance Act, set out in Appendix B, are effective and practical and that the executive and judicial functions of the State are not confounded and that unconstitutional difficulties have been avoided; that the provisions of the Act take the form of administrative measures, the principles of which have been approved largely in the administrative provisions of the various Workmen's Compensation Acts of the different States, which have long been practical operation. The Seventh Amendment of the Constitution of the United States reads
as follows: Proposition I. Does the exercise of the legislative act creating the proposed bill Appendix B, for the purpose of appropriating the property of the employer and employee, for the purpose of compulsory unemployment insurance and determining the rights of the employee to such fund, come within the exercise of the executive function or within the judicial function of the State? Proposition II. If it comes within the judicial function, does it fall within the class of actions which receive a trial by jury? Does the Unemployment Insurance Commission created by the Model Unemployment Insurance Bill set forth in Appendix B exercise a judicial function? In considering this proposition it is necessary to investigate the nature of the limitations created by the 5th Amendment to the Constitution of the United States, with respect to the provisions "due process of law," which is deemed to apply not only to the power of the legislative, but also to the judicial, branches of the State government. The 5th Amendment reads: "No person shall be deprived of life, liberty, or property, without due process of law, nor shall private property be taken for public use, without just compensation." The phrase "due process of law" has application in our problem, not only to the rights created by the act, but also rather to the remedy provided by the act to make the putting into operation of the same effective. The executive arm of every State government disposes of many problems
which, considered by themselves, are purely judicial in character. This
principle, as the authorities show, is illustrated in the following examples,
viz: (1) In the levying of special assessments; (2) in the exercise of
the power of eminent domain; (3) in the collection of various taxes; (4)
in the adjudication of those controversies (of purely judicial nature)
which deal with questions of account between tax collectors and the State,
in which the State many finally determine all issues through its administrative
agencies. In the case of Murray v. Hoboken Land & Emprov. Co., 9 Justice
Curtis, after referring to the summary methods used in England in the
collection of taxes and in adjusting accounts of receivers of revenue,
says: " For, though due process of law "That the auditing of the accounts of a receiver of public moneys may be, in an enlarged sense, a judicial act, must be admitted. So are all those administrative duties the performance of which involves an inquiry into the existence of facts and the application to them of rules of law. . . But it is not sufficient to bring such matters under the judicial power, that they involve the exercise of judgment upon law and act." Cooley, 0speaking of trial by jury in eminent domain cases cites the
case of People v. Smith1, 1and quotes from the decision as follows: "The
constitutional provision securing a trial by jury in certain cases, and
that which declares that no citizen shall be deprived of his property
without due process of law, have no application to the case. The jury
trial can only be claimed as a constitutional right where the subject
is judicial in its character. The exercise of the right of eminent domain
stands on the same ground with the power of taxation. Both are emanations
of the law making power. They are the attributes of political sovereignty,
for the exercise of which In respect to the levying and collection of taxes in a summary manner, the court says in Kelly v. Pittsburgh 2: "Taxes have not, as a general rule, in this county since its independence, nor in England before that |