Los Angeles Railway Corp. v. Department of Employment

SHINN, Acting P. J. This is an appeal by plaintiffs Los Angeles Railway Corporation, hereafter called corporation, and Pacific Electric Railway Company, hereafter called company, from a judgment in favor of defendant and cross-complainant California Employment Commission and others in four actions consolidated for trial. These actions were brought to recover certain employer and employee contributions together with certain penalty and interest thereon, all of which were paid, under protest, pursuant to the provisions [955]of the California Unemployment Insurance Ant of 1935 (Stats. 1935, ch. 352; 3 Deering’s Gen. Laws, Act 8780d) hereafter called California Act, upon wages paid in the operation of certain motor coach lines, now designated as Los Angeles Motor Coach Lines but hereafter called Lines.

In 1923 the corporation and the company pursuant to a written agreement commenced the joint operation of the Lines as supplemental to their several streetcar services in and about Los Angeles. In 1935, the California Act was enacted as a part of the national unemployment insurance system contemplated by title IX of the Social Security Act. (49 Stats. 620; 29 U.S.C., § 45b.) Thereafter employer and employee contributions under the California Act based upon the wages paid those working for the Lines were paid by the corporation and the company. Each paid one-half of the wages paid such employees and each paid contributions based upon its one-half of such wages. On July 1, 1939, the Bail-road Unemployment Insurance Act (52 Stats. 1094; 45 U.S.C., §§ 351-367), hereafter called Bailroad Act, became effective. Just prior thereto and in anticipation thereof the Legislature passed chapter 169 of Statutes 1939, effective immediately, which made various amendments to the California Act. Among those made was section 7.5 which, so far as here pertinent, reads as follows: “The term employment does not include service performed after June 30, 1939, with respect to which unemployment compensation is payable under the Bailroad Unemployment Insurance Act. ...”

On July 1, 1939, the company, which is a carrier and employer under various federal railroad statutes, in response to demands made under the Bailroad Act, began making the appropriate payments under that act upon its share of wages paid to those working for the Lines and, claiming the quoted exemption of section 7.5 of the California Act, ceased its payments of contributions to respondent commission. The corporation continued to pay under the California Act. In June, 1942, respondent commission first took the position that the Lines constituted an employing entity distinct from the corporation and the company, and set up a separate account for the Lines. Therefore, it denied that the company, to the extent of the wages paid by it to workers for the Lines, came under the Bailroad Act, as an employer of those workers, and thereafter demanded that the company pay the delinquency, consisting of unpaid contributions to March 31,