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AGO 1967 No. 26 - July 10, 1967
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John J. O'Connell | 1957-1968 | Attorney General of Washington


INDUSTRIAL INSURANCE - COUNTIES - CRIMES - LIABILITY OF COUNTY FOR COLLECTION AND REMITTANCE TO ACCIDENT AND MEDICAL AID FUNDS - PENALTY FOR UNLAWFUL ISSUANCE OF BUILDING PERMITS.

(1) Where a county has entered into a contract with a contractor for the performance of work by employees of the contractor which comes within the provisions of the industrial insurance (workmen's compensation) laws, the county is liable to the state of Washington for collection and remittance of monies due to both the industrial insurance accident fund and the industrial insurance medical aid fund on account of such work.

(2) Where a county issues a construction building permit in violation of the provisions of chapter 20, Laws of 1965, Ex. Sess., (RCW 51.12.070) the county itself is not subject to a criminal penalty; however, if the violation is wilful, the county employee issuing the permit may be prosecuted for commission of a misdemeanor under RCW 42.20.100; in addition, the county may be liable to the state for resulting unpaid industrial insurance premiums depending upon the facts of a particular case.

                                                              - - - - - - - - - - - - -

                                                                    July 10, 1967

Honorable Arthur E. Sherman, Jr.
Prosecuting Attorney
Pacific County Court House
South Bend, Washington 98586

                                                                                                                 Cite as:  AGO 1967 No. 26

Dear Sir:

            By letter previously acknowledged, you have requested the opinion of this office on questions which we paraphrase as follows:

            (1) Where a county has entered into a contract with a contractor for the performance of work by employees of the contractor which comes within the provisions of the industrial insurance laws, is the county liable to the state for collection and remittance of monies due to

            (a) the industrial insurance accident fund;

            (b) the industrial insurance medical aid fund;

             [[Orig. Op. Page 2]]

            on account of such work?

            (2) If a county issues a construction building permit in violation of the provisions of chapter 20, Laws of 1965, Ex. Sess.,

            (a) is the county itself subject to a criminal penalty;

            (b) are any of its employees subject to a criminal penalty, and

            (c) is the county liable to the state for any unpaid industrial insurance premiums, although it is not a party to the construction contract?

            We answer both parts of question (1) in the affirmative.  With regard to question (2) we answer part (a) in the negative and parts (b) and (c) as set forth in our analysis.

                                                                     ANALYSIS

            Question (1):

            The statutes which must be considered in answering your first question are RCW 51.12.050 and RCW 51.12.070, providing, in material part, as follows:

            RCW 51.12.050:

            "Whenever the state, county, any municipal corporation, or other taxing district shall engage in any extrahazardous work, or let a contract therefor, in which workmen are employed for wages, this title [Industrial Insurance Act] shall be applicable thereto.  The employer's payments into the accident fund shall be made from the treasury of the state, county, municipality, or other taxing district. If the work is being done by contract, the payroll of the contractor and the subcontractor shall be the basis of computation and, in the case of contract work consuming less than one year in performance, the required payment into the accident fund shall be based upon the total payroll.  The contractor and any subcontractor shall be subject to the provisions of this title, and the state for its general fund, the county, municipal corporation, or other taxing districtshall be entitled to collect from the contractor the full amount payable to the accident fund and the contractor, in turn, shall be entitled to  [[Orig. Op. Page 3]] collect from the subcontractor his proportionate amount of the payment."  (Emphasis supplied.)

            RCW 51.12.070:

            "The provisions of this title shall apply to all extrahazardous work done by contract; the person, firm, or corporation who lets a contract for such extrahazardous work shall be responsible primarily and directly for all payments due to the accident fund and medical aid fund upon the work.  The contractor and any subcontractor shall be subject to the provisions of this title and the person, firm, or corporation letting the contract shall be entitled to collect from the contractor the full amount payable to the accident fund and medical aid fund, and the contractor in turn shall be entitled to collect from the subcontractor his proportionate amount of the payment.

            ". . ."1/ (Emphasis supplied.)

            Notably, your question pertains only to the responsibilities of a county, as a party letting a contract for extrahazardous work, and not as itself an employer of workmen engaged in such work.2/   You have asked whether, in its capacity as a contracting party, a county is liable to the state for collection and remittance of monies due to both the industrial insurance accident fund and the industrial insurance medical aid fund.

            Our state's industrial insurance act was enacted in 1911, as chapter 74, Laws of 1911.  However, at this point in time, the  [[Orig. Op. Page 4]] act provided only for the accident fund, the medical aid fund not being established until 1917 (§ 5, chapter 28, Laws of 1917).

            Soon after its enactment, § 17 of the original act, from which both RCW 51.12.050 and 51.12.070,supra, are derived, was litigated in our courts, inState ex rel. Pratt v. Seattle, 73 Wash. 396, 132 Pac. 45 (1913).  In this case, the state sued the city of Seattle to recover premiums due to the accident fund, relying on this section.  The city had retained from payments due to the contractors a sufficient sum to pay the premiums to the state.  The contractors intervened in the action contending that the statute authorized collection of premiums only by the state and that the city had no power to collect or withhold from the contractors sufficient sums to reimburse the city for the premiums paid.  The court rejected this contention, stating at page 401:

            ". . . The act, by the first sentence of the section quoted, is made applicable to any extra hazardous work engaged in by the city in which workmen are employed for wages.  By the next sentence it is provided that payments to the accident fund for work so performed shall be made from the treasury of the city.  It is then provided that if the work is done by contract the pay roll of the contractor shall be the basis of computation, that the 'municipality shall be entitled to collect from the contractor the full amount paid to the accident fund, and the contractor in turn shall be entitled to collect from the subcontractor. . . .' Surely this language can have but one meaning, namely, that the city is entitled to collect from its contractors, where its public works is done by contract, such sums as it is obligated to pay to the accident fund on account thereof.

            ". . . It is true the method by which the collection is to be made is not prescribed by the statute; but since the authority is given, the city is permitted to pursue any or all of the methods of making the collection that is recognized by the general laws.  Where the obligations are of equal degree, it is a recognized method of making collections to balance accounts; that is to say, a person having money in his possession  [[Orig. Op. Page 5]] belonging to another may retain such money as an offset to any indebtedness of equal degree therewith which such other may be owing to him.  This rule applies with particular force to the state and its municipal institutions.  Indeed it would be such a breach of duty as to amount practically to malfeasance in office for an officer of a municipality to pay moneys from the municipal treasury to an individual when that individual was owing a like sum to the municipality.  Clearly, therefore, since these obligations were of equal degree, it was the right of the municipality to retain from the contractors the moneys it was obligated to pay on their behalf."3/

             Accordingly, part (a) of your first question, relative to county liability for the collection and payment of monies to the industrial insurance accident fund, is clearly answerable in the affirmative.

            Additionally, although the court has not had an opportunity to pass upon this question as regards payments due to the more recently created medical aid fund, we are of the opinion that this aspect of the question would be similarly answered.  It is true that the portion of § 17, chapter 74, Laws of 1911, which is now codified (including intervening amendments) as RCW 51.12.050, supra, does not contain any express reference to the medical aid fund.  However, RCW 51.12.070,supra, codifying the remaining paragraph of the original section,4/ which was separated from the first paragraph by the compilers of the Revised Code of Washington and thereafter by the legislature through its enactment of §§ 6 and 7, chapter 74, Laws of 1955, does contain a specific reference to both the accident and the medical aid funds.  As noted above, the section provides, in material part:

             [[Orig. Op. Page 6]]

            "The provisions of this title shall apply to all extrahazardous work done by contract; the person, firm, or corporation who lets a contract for such extrahazardous work shall be responsible primarily and directly forall payments due to the accident fund and medical aid fund upon the work.  The contractor and any subcontractor shall be subject to the provisions of this title and the person, firm, or corporation letting the contract shall be entitledto collect from the contractor the full amount payable to the accident fund and medical aid fund, and the contractor in turn shall be entitled to collect from the subcontractor his proportionate amount of the payment."  (Emphasis supplied.)

            Furthermore, the legislature's insertion of reference to the medical aid fund into this provision, following the creation of that fund in 1917, occurred while the provision and its preceding paragraph (now RCW 51.12.050) were still a part of the same section.  See § 5, chapter 136, Laws of 1923.  Accordingly, it seems logical to conclude that the legislature, at that time, had in mind counties and other governmental contracting parties, as well as all other persons, firms, or corporations letting contracts, when it added to the law a requirement of collection and remittance of medical aid fund premiums due from contractors to the previous requirement of such collection and remittance of accident fund premiums.

            This conclusion is further supported by the reasoning of our court inState v. King County, supra.  Though that case specifically involved the liability of a county, as an employer, for contributions to both the accident and the medical aid funds, the basis of the decision was simply that, by virtue of the provision in RCW 51.12.050 which states:

            "Whenever the state,county, any municipal corporation, or other taxing districtshall engage in any extrahazardous work, or let a contract therefor, in which workmen are employed for wages, this title shall be applicable thereto. . . ." (Emphasis supplied.)

            a county, or other governmental agency, was to have the same responsibilities as any other employer engaging in, or letting a contract for, extrahazardous work.

             [[Orig. Op. Page 7]]

            Question (2):

            Your second question involves the interpretation of RCW 51.12.070,supra, as amended by § 1, chapter 20, Laws of 1965, Ex. Sess.  This statute provides in pertinent part as follows:

            "It shall be unlawful for any county, city or town to issue a construction building permit to any person who has not submitted to the department an estimate of payroll and paid premium thereon as provided by chapter 51.16 of this title."5/

             You have asked the following question (as paraphrased):

            If a county issues a construction building permit in violation of the provisions of chapter 20, Laws of 1965, Ex. Sess.,

            (a) is the county itself subject to a criminal penalty;

            (b) are any of its employees subject to a criminal penalty, and

            (c) is the county liable to the state for any unpaid industrial insurance premiums, although it is not a party to the construction contract?

            The essential issue to be determined in regard to part (a) of the question is whether the legislature, by declaring the described conduct "unlawful," intended to subject a county (or, as well, a city or town) to criminal liability for issuing a building permit without compliance with the statute.

            The legislative authority for issuance of building permits by counties is contained in RCW 36.21.050, which requires that the county commissioners of every county shall provide for their issuance.  RCW 51.12.070 provides that "it shall be unlawful" for a county to issue a building permit until certain conditions are met.  However, the word "unlawful" does not necessarily denote a crime in every instance.  Use of the word may, alternatively, simply imply that an act is not done as the law allows or requires.  See, 43 Words and Phrases, p. 276.  Thus, the use of the word "unlawful" does not necessarily indicate a legislative intention to create a crime.  Its use is equally consistent  [[Orig. Op. Page 8]] with an intention to limit the power of the county to issue building permits.

            Furthermore, it is notable that the generally recognized rule of law is that a municipal corporation (as distinguished from its officers and employees through whom it acts) is not subject to criminal indictment for acts done in the exercise of its governmental functions, because at such times it acts as a part of the sovereignty.  17 McQuillin, Municipal Corporations, § 49.88 (3rd ed., 1950); State v. Metropolitan Park District, 100 Wash. 449, 171 Pac. 254 (1918).  Therefore, while a county may not have all of the attributes of a pure municipal corporation, 1 Dillon, Municipal Corporation, § 36 (24) (5th ed., 1911), to the extent that it is acting in the exercise of governmental functions, the immunity of municipal corporations to indictment should be extended to it, in the absence of an express statutory provision waiving this immunity.  Cf., State ex rel. Thielicke v. Superior Court, 9 Wn.2d 309, 114 P.2d 1001 (1941).

            Accordingly, we answer question 2 (a) in the negative.

            Question 2 (b) relates to the criminal liability, if any, of county employees who issue building permits in violation of RCW 51.12.070.

            RCW 42.20.100 provides:

            "Whenever any duty is enjoined by law upon any public officer or other person holding any public trust or employment, their wilful neglect to perform such duty, except where otherwise specially provided for, shall be a misdemeanor."

            The nature of the duty contemplated by this statute is one which is ministerial in nature.  43 Am.Jur., Public Officers, § 329, 332; State v. Twitchell, 61 Wn.2d 403, 408, 378 P.2d 444 (1963).  A ministerial duty is distinguished from a discretionary duty and is one which the law prescribes and defines with such certainty as to leave nothing to the exercise of discretion or judgment.  State ex rel. Linden v. Bunge, 192 Wash. 245, 249, 73 P.2d 516 (1937).

            The duty imposed upon county employees by the provisions of RCW 51.12.070 is mandatory.  In 3 Sutherland, Statutory Construction, (3rd ed.) § 5808, the rule is stated as follows:

             [[Orig. Op. Page 9]]

            "Where authority is granted to public officers to do a thing in a certain way, the manner of doing the thing is mandatory, or jurisdictional, and a limitation on the authority of the officer, . . ."  (p. 89.)

            and, at § 5814:

            "One of the strongest indications as to what construction should be given to a statutory provision may be found in the use of negative, prohibitory, or exclusive words.  Where statutory restrictions are couched in negative terms they are almost invariably held to be mandatory. . . ."  (p. 96.)

            The duty is likewise certain.  There is no discretion vested in the employee as to whether a building permit will or will not issue without the applicant's having submitted his estimate of payroll and having paid premium thereon to the department as provided by chapter 51.16 RCW.  Therefore, if an employeewilfully violates RCW 51.12.070, he may be prosecuted under RCW 42.20.100,supra.

            Question 2 (c) is whether a county is liable to the state for unpaid premiums in the event a building permit is issued contrary to the provisions of RCW 51.12.070 and the premiums are not paid by the person responsible therefor.

            In providing that it shall be unlawful for a county to issue a building permit to any person who has not submitted to the department an estimate of payroll and paid premiums thereon as provided in chapter 51.16 RCW, it is clear that the legislature intended to secure the payment of estimated industrial insurance premiums, as provided in chapter 51.16 RCW, by withholding the permit until such premiums were paid.  A clear statutory duty is now imposed on counties (as well as cities and towns) to see that this is done.

            InWendel v. Spokane County, 27 Wash. 121, 67 Pac. 576 (1902), the court stated:

            "In discussing the liability of municipal corporations for acts committed by their officers which are defended on the ground  [[Orig. Op. Page 10]] of the same being ultra vires, we must not lose sight of the distinction which exists between acts which are absolutely ultra vires by reason of the corporation having no authority to act on the subject-matter -it being wholly beyond the scope of its powers -and those acts which in a sense are termed ultra vires, where the body has jurisdiction of the subject-matter, but, in the execution of its authority, trespasses upon the rights of others.  In the first instance it is conceded by all authority that the corporation is not liable, and in the second, by almost universal modern authority, that it is; that the wrongful act may be the foundation of an action for damages against the corporation, and that such action will lie against the corporation either when the act is done by its officers under its authority or has been ratified by it.  Keeping these distinctions in view, it is not difficult to determine that the action will lie in this case if the allegations of the complaint are true; for the action of the county in this respect was not in reference to a matter which was entirely without its authority and scope.  On the contrary, it was acting upon a subject especially relegated to its management and control by the laws of the state."

            See, also,Fordney v. King County, 9 Wn.2d 546, 115 P.2d 667 (1941), andCommercial Electric Light and Power Company v. Tacoma, 20 Wash. 288, 55 Pac. 219 (1898).

            In issuing building permits, a county is acting upon a subject especially relegated to its management and control by RCW 36.21.050.  It, therefore, appears that the act of an employee in issuing a permit contrary to RCW 51.12.070, would not beultra vires in the sense that the county had no power to deal with the subject.

            In our opinion, the county does not enjoy immunity from liability in the event permits are issued contrary to RCW 51.12.070.  Its liability will necessarily depend upon the facts in each case; however, if it is shown that such a violation was pursuant to a  [[Orig. Op. Page 11]] general authority to act for the county or was subsequently ratified by the county and that the state has suffered damages as a result, it may be expected that liability will result.

            We trust the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

KENNETH R. AHLF
Assistant Attorney General

STEPHEN M. REILLY
Assistant Attorney General

                                                         ***   FOOTNOTES   ***

1/The omitted portion of this statute is germane to your second question, and will be et forth later.

2/See, however, RCW 51.16.010, requiring all employers who are engaged in extrahazardous work to contribute to both the accident and the medical aid funds.  Clearly a county, as an employer, is covered by this provision.  See, RCW 51.12.050,supra, and State v. King County, 45 Wn.2d 397, 275 P.2d 429 (1954).

3/Attention is also directed to Tacoma v. Peterson, 165 Wash. 461, 5 P.2d 1022 (1931), in which the city was permitted recovery against its controller for his breach of a ministerial duty to deduct from payments made to a contractor certain money owing to the city.

4/Also as amended.

5/The 1965 amendment simply added counties to the statute.

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