Court Opinion

ID: 5154313
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:10:33.635817+00
Date Added: 2024-06-11T08:25:13.913281
License: Public Domain

For the following reasons, I dissent. All statutory references are to U.C.A. 1953.
The statutory penalty of a 51-week period of disqualification, for unemployment compensation benefits was invoked against claimant because of fraud. This forfeiture is predicated on claimant's responses to a questionnaire sent weekly to claimants.
The Board of Review affirmed the determination of the appeals referee on the ground the claimant knowingly withheld material information to obtain benefits which he was not entitled to receive.
The undisputed facts are that claimant went to Price, Utah, on September 28, 1976, and returned to his home in Salt Lake City on October 1, 1976. Claimant went with his friends to go elk hunting, and he failed to report this activity on his claim card. He asserted he didn't know it was necessary to report this excursion.
While hiking, claimant sprained his ankle on September 30, 1976; he received treatment at the Price Hospital. He admitted his mobility was impaired, and he probably could not have worked until October 6, 1976. Claimant could not recall receiving a claim's handbook, and no finding to the contrary was made.
On his weekly claim card, claimant certified he was able, available, and willing to accept full time work. Claimant further responded in the negative to the following question:
 10. I traveled away from home. (If "yes" show the date and time left, destination, date and time returned and purpose of trip. If looking for work, list employers you contacted.)
Claimant testified at the hearing his understanding of question 10 was that only out of state travel need be reported.
The referee found:
 In regard to the claimant's failure to report travel away from home on his claim for the week ended October 2, 1976, it must also be held that the claimant's actions in this regard were committed knowingly. His statement that he considered he had not traveled away from home because he had not left the State of Utah cannot be considered a valid reason. The same reasoning might also be extended to include one's country, with the conclusion that if an individual did not travel outside the United States his travel need not be reported since he had not traveled away from home. The Referee rejects such reasoning and holds that the claimant violated the provisions of Section 35-4-5(e). . . .
The referee ruled claimant did knowingly withhold the material facts of his illness, travel and injury to receive benefits to which he was not entitled.
The findings of the referee are insufficient as a matter of law to sustain a finding of fraud under Section 35-4-5(e), U.C.A. 1953.
Clearly, there emerges a legislative intent to confine the 51-week disqualification penalty to those circumstances where the traditional elements of fraud have been established.
35-4-5(e) provides:
 For the week with respect to which he had willfully made a false statement or representation or knowingly failed to report a material fact to obtain any benefit under the provisions of this act, and for the 51-week period immediately following and until he has repaid to the fund all moneys he received by reason of his fraud and which he received during such following disqualification period, . . . [Emphasis supplied.]
Subsections (d) and (e) of Section 35-4-6 further indicate a legislative design to *Page 338 
establish three distinct categories for persons who have received benefits to which they are not entitled, viz., by reason of fraud, by reason of fault, and without fault. Those who have received benefits by reason of fraud or by reason of fault are liable to repay such sums. However, under Section 35-4-5(e), the statutory penalty of a 51-week disqualification period is confined to those who have received benefits by reason of fraud.
The nine basic elements of actual fraud are:
 (1) A representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted upon by the person and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) his reliance upon its truth; (8) his rights to rely thereon; (9) his consequent and proximate injury.1
Thus, to constitute fraud there must be scienter. Scienter is knowledge on the part of a person making representations, at the time they are made, that they are false.. . . The false statement must have been made intentionally to deceive or with what is recognized as the legal equivalent to a deliberately fraudulent intent to deceive; [Citation]. Proof of a mere naked falsehood or misrepresentation is not enough, even though the complaining party relied thereon. The rule is firmly established the existence of a fraudulent intent or an intent to deceive is an indispensable element. . . .2
The referee did not make any finding regarding an intent to deceive. There is a certain circuity of reasoning in the findings, viz., claimant knew he was elk hunting and obviously not available to accept employment; therefore, claimant's actions were committed knowingly. Such a finding does not resolve the issue of claimant's "guilty knowledge" of the falsity of his representation, his intent to deceive — an indispensable element of fraud.
The reference of the referee to claimant's understanding of question 10, on the weekly card, and the conclusion that it was not a valid reason; further negates a finding of an intent to deceive. The referee merely engaged in hyperbole in his comment that if claimant's explanation were accepted one could claim the entire United States as his home from whence he had not traveled. In addition, question 10 is not a model of clarity. The key elements of "travel," "trip," "destination," and "home" could reasonably be interpreted not to encompass an excursion to an area a few hours distant from one's home.
Claimant had been denied benefits when he had taken a vacation in California for two weeks the previous July. The contrast between the two absences could have been the basis of his misunderstanding that travel from home meant a trip to another state.. . . Furthermore, an alleged representation must be regarded in the light of the conversation, and may not be lifted out of its context nor considered apart from the circumstances or situation under which it was made. Nor can an alleged representation be given a meaning which cannot reasonably be attributed to it. [Citation]3
Claimant's explanation should have been evaluated within the context of question 10, his knowledge of the falsity of his response, and his intent to deceive. Without such a finding the determination of fraud cannot be sustained.
Even under the main opinion of this Court in Diprizio v.Industrial Commission claimant here could not be denied benefits pursuant to 35-4-5(e), because fraud was not proved. The Commission is limited to remedies existing in 35-4-6(d) and (e). *Page 339 
This matter illuminates the unnecessary harshness compelled by this Court's holding in Diprizio supra, a harshness which defeats the social purpose of the legislation. Consequently, I reaffirm the dissenting opinion, of Mr. Justice Crockett, toDiprizio; and assign it as an additional reason for this dissent.
WILKINS, Justice, concurs in the result of MAUGHAN's J., dissenting opinion.
1 Oberg v. Sanders, 111 Utah 507, 515, 184 P.2d 229, 234
(1947).
2 Cohen v. Metropolitan Life Insurance Co., Mo. App.,444 S.W.2d 498, 505 (1969).
3 Oberg v. Sanders, note 1 supra, at p. 515 of 111 Utah, at p. 234 of 184 P.2d.