Broadway v. Alabama Dry Dock Shipbuilding Co. , 246 Ala. 201 ( 1944 )

The questions on this appeal are controlled by Section 204, Tit. 26, Code, rightly interpreted.

Appellee is an employer whose duty is to make contributions to the "fund" set up in that title. The amount of his contributions is controlled by his contribution rate, and that is figured on the basis of the relation of his benefit wage percentage to the state's experience factor. Both of these elements are affected by the amount of employees' benefit wages. The wage percentage of this employer is affected by his experience in relation to his own employees' benefit wages; the state factor is affected by the employees' benefit wages of all such employers in the state. We held in the Metcalf case,245 Ala. 299, 16 So.2d 787, that the employees' benefit wages should be computed on a four quarter basis as directed in Section 193, Tit. 26, Code.

The director had computed it for the year now in question, on an eight quarter basis, including the same four quarters required by section 193. It is agreed in this case in substance that if the computation be based on the four quarters using the same amount for them as was used for them in making the computation on the eight quarter basis, the contribution rate on account of that erroneous computation would be substantially the same as that which was fixed by using the eight quarters. To use the correct formula, based on four quarters, no factual inquiry is necessary outside the records of the department. No evidence or further information is needed. No expense is necessary to find out anything. The director found the facts here material and his finding is conclusive as a factual inquiry. There is no complication or difficulty in computing the entire problem on the basis of four quarters instead of eight. The effect is agreed to in this case. But the contention is that under Section 204(H), it is only an error in the percentage rate which can be corrected and not an error in the state factor, although that was the same error, and although it didn't enter into the factual finding. The contention in substance is an admission that had the error not been made in both aspects of the formula, the employer would not be entitled to his claim (except that based on the maritime contention); and that its correction by using the proper base period throughout the problem would result in substantially the same amount of contribution by him as was reached by the director, not considering the maritime question.

Did the legislature mean that to be the effect of an appeal under Section 204(H)? It is insisted that the state factor once fixed is immutable, by any proceeding, for an error of law apparent on its face. This is never true in respect to any administrative authority created by law though its finding of fact may be conclusive. Such an error is open to correction on review by certiorari if there is no other remedy provided by law. 42 Am.Jur. 666, § 229; Alabama Power Co. v. City of Fort Payne, 237 Ala. 459, 187 So. 632, 123 A.L.R. 1337; Almon v. Morgan County, 245 Ala. 411, 16 So.2d 511(14); Baker v. Denniston-Boykin Co., 145 Ala. 407, 17 So.2d 148(7).

It is true that this inquiry by certiorari should not involve a review of the facts as found. But it does involve an application of those facts to the law. 4 Ala.Dig., Certiorari, 64.

Section 204 (H) provides for a de novo trial with respect to the wage percentage, but says nothing about the state factor. If the court cannot on such appeal review the state factor in respect to an error on its face, why say that the de novo trial shall only apply to the wage percentage? It would be sufficient to say that the trial shall be de novo, without more, if the wage percentage is all that is to be tried. The evident meaning is that the court cannot go behind the findings of fact by the director on which the state factor is to be computed, but may review the ruling of the director in applying his findings to the law, or correct any apparent error, such as mathematical miscalculations. The contention would eliminate the correction of a glaring mathematical error in the computation of the state factor, though based upon a correct formula.

The foregoing discussion is emphasized by the fact that the entire process of determining the contribution rate of each employer is not judicial. But it is partly judicial and partly administrative. The director determines the facts on which the employee's benefit wages and on which the employer's benefit wages and the state factor are computed, such as the amounts paid the employees and whether they were maritime workers, and the amount of the payroll of the employer subject to the process. But the law fixes the base period, and the director has no discretion as to whether it shall be four quarters or eight quarters. In determining the facts necessary to be known to make the calculation by him he acts in a quasi judicial capacity and his determination is conclusive, except on appeal under section 204 (H), when they may be tried de novo. Here they are agreed on.

When there has been a determination of the facts necessary to enter into the formula, the set-up of the formula and the calculation of it are purely executive or administrative and not judicial. The director must make up the formula as specifically provided for by section 204, and make the calculation on that basis.

As when the value of assessable property is being ascertained by the proper tribunal, the process is judicial. 61 Corpus Juris 756, § 976, page 758, § 985. When the assessor applies the legal rate and makes a calculation of the tax, and sets down the amount, that is administrative. Daffin v. Scotch Lumber Co., 226 Ala. 33, 145 So. 452. See, section 62, Title 51, Code. That status is not changed because the calculation is as here complicated and has several stages in the process. In none of those stages has the director a discretion or a judicial act to perform. The standards are all fixed by law and not changeable in his discretion. It is immaterial whether it is the director or some other tribunal which finds and fixes the facts. When that is done the judicial feature of the proceeding has ended (subject to appeal), regardless of the agency which made the determination. Thereafter the process is administrative and not judicial.

This is important because an error in an administrative process is not conclusive in any sort of attack either direct or collateral, or whether it is apparent on its face or not. True, sometimes the officer who made the mistake may not be authorized to correct it, but it is not conclusive on the parties affected by it. (Section 243, hereinafter referred to, seems to give the director this power.)

That principle is fully settled in this State. Com'rs' Court v. Moore, 53 Ala. 25; Jeffersonian Publishing Co. v. Hilliard,105 Ala. 576, 17 So. 112; City of Demopolis v. Marengo County,195 Ala. 214, 70 So. 275; Fountain v. State, 210 Ala. 51,97 So. 59; Converse Bridge Co. v. Geneva County, 168 Ala. 432,53 So. 196; State ex rel. Norwood v. Goldsmith, 162 Ala. 171,50 So. 394.

"Defining the line of distinction between judicial and ministerial functions, it was said by this court, in Grider v. Tally, 77 Ala. 422 [54 Am.Rep. 65]: 'Judicial power is authority vested in some court, officer, or person, to hear and determine when the rights of persons or property, or the propriety of doing an act, are the subject-matter of adjudication. Official action, the result of judgment or discretion, is a judicial act. The duty is ministerial when the law exacting its discharge prescribes and defines the time, mode, and occasion of its performance with such certainty that nothing remains for judgment or discretion. Official action — the result of performing a certain and specific duty, arising from fixed and designated facts — is a ministerial act;' citing authorities. Throop, Pub. Off. §§ 535, 538, 539; Flournoy v. Jeffersonville, 17 Ind. 169 [79 Am.Dec. 468]; 14 Am. Eng. Enc. Law, 100, in note." Merlette v. State,100 Ala. 42 (44), 14 So. 562, 563; State v. Bradley, 207 Ala. 677,93 So. 595, 26 A.L.R. 421.

A failure by an administrative body to apply a clear unequivocal standard fixed by law is not judicial but administrative. Grider v. Tally, supra.

When an appeal is taken under section 204 (H), the factual finding by the director of the matters which enter into the calculation of the employer's wage percentage rate is triable de novo. When that finding is shown not to be erroneous, as here by stipulation (except as to the maritime workers), the process thereafter throughout the formula is administrative. The director redetermines the contribution rate on that basis. If he did not make any mistake in the finding of facts which is here virtually agreed upon, but his mistake was administrative, it may be corrected in the redetermination, as in any proceeding in which the amount of the employer's contribution is under judicial inquiry. Such was held in the Moore case, supra. The mistake was in not observing the four quarter period under section 193. The redetermination is a mixed question of law and fact. 30 Amer.Jur. 145, note (15).

Under section 204 (H) the director or the court, on appeal, must observe the correct administrative process, after the facts are tried de novo and found. To do this on a four quarter period as required by law does not require a review of any fact judicially determined. The trial de novo is of the matters to be judicially determined by the director, and does not embrace his administrative processes. But the latter are not conclusive, regardless of an appeal.

Under section 243, Title 26, any administrative error in the process is subject to correction. I think it is inaccurate to say that it means only an error of calculation after the contribution rate is ascertained. It does not so declare. It specifies any error in the amount collected. That does not mean an error in the judicial process of finding the facts, because that may only be corrected on appeal under section 204 (H). When no appeal is taken, the facts as found cannot afterwards be inquired into. But if at any time within four years an administrative error is found in the process it may be corrected under section 243.

This result does not make a different state factor for different employers. It does for the benefit of all employers correct an error in calculating the state factor as an administrative process when it is judicially questioned. That same error is open to the benefit of any employer who seeks it under section 243, or when he is sued under section 240.

The question here is whether this employer has been injured in figuring the amount of his contribution by reason of the administrative error in not observing section 193, equally applicable to all employers.

No employer can complain if the error carried throughout the process did not increase the proper amount of his contributions. This principle has been so declared by the Supreme Court of the United States, and applied in tax appeals. It is said: "That a decision of the Board of Tax Appeals is based on an erroneous rule of law, will not justify its reversal by a Circuit Court of Appeals, if the findings of fact, governed by the correct rule of law, are sufficient to sustain the decision and have substantial support in the evidence." 30 Am.Jur. 145; Helvering v. Gowran,302 U.S. 238(8), 58 S.Ct. 154, 82 L.Ed. 224; 42 Amer.Jur. 687, note 2.

An employer is not entitled to a refund of $53,000, or any other amount, on account of an error, such as I have described which does not change the amount of his contributions from what it would be when properly calculated, and the error entirely eliminated.

Maritime Workers. I agree that if on appeal under section 204 (H) by an employer there is found an error in the factual finding or in the administrative process which entered into and affected the wage percentage ofthat employer, not common to them all, and which should be corrected on that appeal, as illustrated in this suit by the error as to the maritime workers of this employer, it would be impractical to carry that error as to a single employer into the calculation of the state factor. True, that error affects that employer's benefit wages, and the state factor is affected by the amount of the benefit wages of all such employers combined and a change in that employer's benefit wages affecting his benefit wage percentage might in some degree affect the amount of the state factor. It happens in this instance that the error as to the maritime workers which affects this employer's benefit wage percentage appreciably would not affect the state factor, because it is such a small proportionate part of the elements making up that factor; and it is so agreed in this case. But there might arise a status when it would materially affect the state factor. But I do not think any such error should be considered as changing the state factor for the benefit of that employer whose appeal is under consideration. That would give him a different factor from that of other employers whether they may have appealed or not. On each appeal there is a redetermination of that employer's contribution rate, involving his benefit wages. That redetermination cannot be worked into that of each other employer who may have separately appealed. Each such appellant is entitled to a de novo trial of his benefit percentage, necessarily including his benefit wages. Each may show on his separate appeal an error differing from that of other appellants. That, if carried into the state factor, would affect it only as to him whose rate is being redetermined. Each such appellant could have a different state factor and it could be different from that of those employers who did not appeal.

To carry an error affecting the benefit wage percentage of each separate appellant into the state factor on his separate redetermination would complicate the situation to where it would not be practical or evenly applied and therefore probably not intended by the legislature. When the error of the directoraffects all employers on the same basis and so that bycorrecting it the state factor shall be the same for all alike, whether they appealed or not, it would be practical and not complicated, but fair to all.

So that the error presently considered as to the base period is equally available to all employers and it may be corrected either (a) by the director on his own initiative under section 243, supra, or (b) when there is a redetermination on an appeal under section 204(H) when there shall have been a review of the judicial features of the process, or (c) when an employer calls for such redetermination on the basis of the elimination of that error as he may do under section 243 or sometimes under section 240.

The result is that the judgment of the trial court should be corrected in respect to the error relating to the base period and affirmed in respect to the error relating to the maritime workers.

On Rehearing.