AGLO 1977 No. 17 - Apr 12 1977
OFFICES AND OFFICERS ‑- STATE ‑- EMPLOYMENT SECURITY ‑- UNEMPLOYMENT COMPENSATION ‑- COLLECTION OF UNEMPLOYMENT COMPENSATION TAXES BY PROCEEDING AGAINST CONTRACTORS' SECURITY DEPOSITS
The state department of employment security is not required first to obtain an inrem court judgment before a warrant issued by the department against a building contractor for unemployment compensation taxes and contributions may be executed against the contractor's security deposit under RCW 18.27.040.
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April 12, 1977
Honorable Joseph E. Garcia
Commissioner, Employment Security Department
Employment Security Building
Olympia, Washington 98504 Cite as: AGLO 1977 No. 17
This is written in response to your recent request for our opinion on a question which we paraphrase as follows:
Must the state department of employment security first obtain aninrem court judgment before a warrant issued by the department against a building contractor for unemployment compensation taxes and contributions may be executed against the contractor's security deposit under RCW 18.27.040?
We answer the foregoing question in the negative.
In the state of Washington, building contractors are required by RCW 18.27.020 to be registered with the state department of labor and industries. A prerequisite to registration is the filing of a surety bond or the posting of a security deposit with that department. See, RCW 18.27.040, the pertinent portions of which will be quoted below. It is important to note and emphasize, at the outset of this opinion, that your question only involves the procedures to be followed in executing a warrant for unpaid [[Orig. Op. Page 2]] unemployment compensation taxes and contributions against a contractor's security deposit and not, in the alternative, against a surety bond.
Before turning to RCW 18.27.040, however, let us first briefly describe the statutory procedures which apply in the case of unemployment compensation fund contribution assessments. Under RCW 50.32.030, such assessments become final against an employer unless a petition for review is filed with the department of employment security. When a notice of assessment thus becomes final, the department may then have a warrant entered upon the judgment docket in superior court. Accord, RCW 50.24.115, which then goes on to provide that:
". . . The aggregate amount of such warrant as docketed shall become a lien upon the title to, and interest in all real and personal property of the employer against whom the warrant is issued, the same as a judgment in a civil case duly docketed in the office of such clerk. Such warrant so docketed shall be sufficient to support the issuance of writs of execution and writs of garnishment in favor of the state in the manner provided by law in the case of civil judgment, wholly or partially unsatisfied. . . ."
The warrant process thus provides the department of employment security with an efficient and certain collection remedy and insures that taxes and contributions owed to the state of Washington are satisfied.
Bearing the foregoing in mind we return, next, to the pertinent provisions of RCW 18.27.040. First to be noted is the fact that ". . . taxes and contributions due the state of Washington . . ." are expressly listed in that statute as being among the several types of claims1/ that may [[Orig. Op. Page 3]] be enforced against either a surety bond or alternative security deposit. Nevertheless, prior to 1972 it also seems clear that the state of Washington and other eligible creditors could execute thereunder upon a contractor's security deposit or surety bond only by obtaining an inrem judgment. See, § 1, chapter 126, Laws of 1967, the original version of RCW 18.27.040.
In 1972, however, the statute was significantly amended by § 2, chapter 118, Laws of 1972, 1st Ex.Sess. Set forth in bill form for ease of reference, this amendment altered the terms of RCW 18.27.040 in the following material respects:
". . . Any person having a claim against the contractor for any of the items referred to in this section may bring suit upon such bond in the superior court of the county in which the work is done or of any county in which jurisdiction of the contractor may be had. Action upon such bondor deposit shall be commenced by serving and filing of the complaint within one year from the date of expiration of the certificate of registration in force at the time the claimed labor was performed and benefits accrued, taxes and contributions owning the state of Washington became due, materials and equipment were furnished, or the claimed contract work was completed. . . .
"In lieu of the surety bond required by this section the contractor may file with the ((
director)) department a (( cash)) deposit consisting of cash or other (( negotiable)) security acceptable to the (( director))department.
In the event of a judgment being entered against such deposit, the director of licenses shall upon receipt of a certified copy of a final judgment, pay from the amount of the deposit said judgment.)) Any person having an unsatisfied final judgment against the registrant for any items referred to in this section may execute upon the security held by the department by serving a certified copy of the unsatisfied final judgment by registered or certified mail upon the department within one year of the date of entry of such judgment. Upon the receipt of service of such certified copy the department shall pay or order paid from the deposit, through the registry of the superior court which rendered [[Orig. Op. Page 4]] judgment, towards the amount of the unsatisfied judgment. The priority of payment by the department shall be the order of receipt by the department, but the department shall have no liability for payment in excess of the amount of the deposit."
By this amendment the legislature appears to have intended to simplify the execution requirements in the case of a security deposit without, at the same time, altering the procedures to be followed in the case of a contractor's surety bond. It is now unnecessary for a creditor with judgment against a contractor to get yet a second judgment against the contractor's deposit ‑ a judgment on a judgment. To construe RCW 18.27.040, as amended, in any other manner would seem to us to render significant portions of the amendatory language meaningless in contravention of the rule that a statute should be construed so that no portion of it is superflous or insignificant. Kasper v. Edmonds, 69 Wn.2d 799, 420 P.2d 346 (1966). Conversely, to view the amended statute as authorizing alternative inpersonam andinrem procedures with respect to security deposits reconciles apparently conflicting portions of the statute and gives effect to each of them without distortion of the language used; State v. Fagalde, 85 Wn.2d 730, 539 P.2d 86 (1975).
Accordingly, we answer your question, as above paraphrased, in the negative. In the case of execution of an employment security department warrant against a contractor's security deposit (but not, in the alternative, against a surety bond), the department is no longer required first to obtain an inrem court judgment before a warrant issued by it against a building contractor for unemployment compensation taxes and contributions may be executed against the contractor's security deposit under RCW 18.27.040.
We trust that the foregoing will be of some assistance to you.
Very truly yours,
PHILIP H. AUSTIN
Deputy Attorney General
*** FOOTNOTES ***
1/The listed categories of claims include:
"(1) Labor, including employee benefits;
"(2) Claims for breach of contract by a party to the construction contract;
"(3) Material and equipment;
"(4) Taxes and contributions due the state of Washington;
"(5) Any court costs, interest, and attorney's fees plaintiff may be entitled to recover."