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Washington National Insurance Co. v. Board of Review of New Jersey Unemployment Compensation Commission

Decided: March 7, 1949.


On appeal from the Appellate Division of the Superior Court, whose judgment is based on an opinion of the former Supreme Court reported in 137 N.J.L. 596.

For affirmance: Chief Justice Vanderbilt and Justices Case, Heher, Oliphant, Wachenfeld, Burling and Ackerson. For reversal: None. The opinion of the court was delivered by Heher, J. Justices Case and Wachenfeld concurred in the result.


[1 NJ Page 549] The essential question here is the constitutional sufficiency of R.S. 43:21-19, as amended by ch. 385 of the Laws of 1941 (Pamph. L. p. 992) to contain this provision:

"(i) (7) The term 'employment' shall not include:

"(J) Service performed by agents of insurance companies, exclusive of industrial life insurance agents, or by agents of investment companies, who are compensated wholly on a commission basis."

Industrial life insurance agents in the service of the appellant company were held to be within the coverage of the Act.

It is said that the amendment contravenes the Fourteenth Amendment of the Federal Constitution and also Article IV, section VII, paragraphs 8 and 9 of the new State Constitution of 1947, barring the grant to any corporation, association or individual, by private, special or local laws, of "any exclusive privilege, immunity or franchise whatever." As to the latter, we must look to the corresponding provisions of the Constitution of 1844, for the constitutional validity of legislation in this regard is to be measured by the organic law in force when the legislation was adopted, except to the extent that the later constitution is made retroactive. Limitations on special or local laws, without more, do not operate to repeal or render inoperative preexisting laws of that class conforming to the old constitution. Kirkpatrick v. New Brunswick, 40 N.J. Eq. 46 (Ch. 1885); Stockton v. Central Railroad of New Jersey, 50 N.J. Eq. 52 (Ch. 1892); Gaslight Co. of City of New Brunswick v. Borough of South River, 77 N.J. Eq. 487 (Ch. 1910); Saunders v. Morris, 48 N.J.L. 99 (Sup. Ct. 1886); Ingersoll v. Nassau Electric R. Co., 157 N.Y. 453, 52 N.E. 545 (1899); Barber Asphalt Paving Co. v. Jurgens, 170 Cal. 275, 149 Pac. 560 (1915); Leser v. Lowenstein, 129 Md. 244, 98 A. 712 (1916). A constitution is to be given a prospective operation only, unless an intention to make it retrospective is clearly revealed in the legislative expression. San Antonio v. San Antonio Public Service Co., 255 U.S. 547, 41 S. Ct. 428, 65 L. Ed. 777 (1921); Cooley's Constitutional Limitations (8 th Ed.) 136. Article XI, section I, paragraph 3 of the new Constitution directs that all law, statutory and otherwise, in force at the time the Constitution or any article thereof became effective "shall remain in full force until they expire or are superseded, altered or repealed by this Constitution or otherwise." But there is no difference of substance in this behalf between those particular

mandates and Article IV, section VII, paragraphs 9 and 11 of the Constitution of 1844; and thus the inquiry is whether the statutory provision now under review is within the interdicted class.

The argument is that the inclusion of "industrial life insurance agents" alone within the beneficiary class, as provided in the amendment of 1941, serves to deny to the appellant insurance company due process of law and the equal protection of the laws and constitutes "special legislation which grants to a certain class an exclusive privilege or immunity, arbitrarily and capriciously, without a logical and reasonable basis in fact."

This enactment came after the adoption by the Congress, in 1939, of the act relating to Employment Taxes, which defined the term "employment" to exclude "Service performed by an individual for a person as an insurance agent or as an insurance solicitor, if all such service performed by such individual for such person is performed for remuneration solely by way of commission." 26 U.S.C.A. section 1607 (c) (14). In the Federal Social Security Act of 1935 (42 U.S.C.A. sections 301-1305), there was not an explicit exclusion of the "services" of insurance agents from the statutory employment category; and until the passage of the cited Federal Act of 1939, there was a contrariety of view both on the Federal and State levels as to the status of insurance agents. There were holdings that industrial insurance agents were independent contractors, and therefore not within the statutory class. In this State, the old Supreme Court ruled that certain insurance agents, whose services would seem to be of the industrial class, were not independent contractors but employees within the coverage of the Act. Superior Life, Health and Accident Insurance Co. v. Board of Review of the Unemployment Compensation Commission, 127 N.J.L. 537 (Sup. Ct. 1942). Following the adoption of the Federal Act of 1939, 33 states and the District of Columbia, we are told without challenge, enacted a like provision barring from such coverage the services of insurance agents whose remuneration is solely by way of commissions. But New Jersey deviated from the substance of the provision by including "industrial life insurance agents" within the beneficiary class

and excluding all other insurance agents; and thus the question arises as to whether the classification is arbitrary and discriminatory, and therefore vicious ...

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