Seaside Memorial Hospital v. California Employment Commission

GIBSON, C. J. This is an appeal from a judgment of the superior court granting the application of Seaside Memorial Hospital (herein called petitioner) for a writ of mandate directed to California Employment Commission (herein called appellant). The main issue involved is the same as that considered in Scripps Memorial Hospital v. California Employment Commission, ante, p. 669 [151 P.2d 109], namely, whether the hospital is exempt from the operation of the California Unemployment Insurance Act (Stats. 1935, p. 1226, as amended; Deering’s Gen. Laws, 1937, Act 8780d, as amended) by virtue of the provisions of sections 7(g) or 7(k) thereof.

Petitioner was organized in 1937 as a nonprofit hospital corporation, and all of its assets are devoted to hospital purposes. It treats both charity and pay patients, deriving practically all of its revenue from those who pay. Its facilities are open to any persons without discrimination. None of its revenues are received as profits by any individual. Without reciting in detail the provisions of its articles, or describing the particular activities in which it is engaged, it may be said that the trial court correctly concluded that petitioner is a charitable corporation within the meaning of section 7(g) of the act, and it is likewise within the exemption provisions of section 7 (k) of the act., For a discussion of the law, see the opinion in the companion case of Scripps Memorial Hospital v. California Employment Commission, supra.

There are, however, procedural problems presented by the record herein, as a result of the following circumstances.

From November 1, 1937, to and including March 31, 1939, petitioner paid contributions to appellant, some with and some without protest. Its payment for the third quarter of 1938 was made under protest, accompanied by a claim of exemp[683]tion from the terms of the act." In July, 1939, the United States Treasury Department’s Bureau of Internal Revenue ruled that petitioner was not subject to taxes under the Federal Social Security Act. Pursuant to this ruling appellant, on application by petitioner, ruled that it was exempt from the operation of the California statute.

In August, 1939, petitioner applied to appellant for a refund of its contributions theretofore made. After protracted consideration, appellant in May, 1940, reversed its former decision and ruled that petitioner was an employer subject to the provisions of the act. On July 15, 1940, petitioner made written protest against this ruling.