Arado v. Keitel

• Decision Date: 03 July 1944
• Docket Number: 38964
• Citation: 182 S.W.2d 176,353 Mo. 223
• Parties: John Arado, Otto Burk and Louis Puricelli, copartners, doing business as John Arado and Company, v. Elmer John Keitel, Sr., Chairman, George A. Rozier, and Harry P. Drisler, Members of the Unemployment Compensation Commission of Missouri, Appellants
• Court: Missouri Supreme Court

182 S.W.2d 176

353 Mo. 223

John Arado, Otto Burk and Louis Puricelli, copartners, doing business as John Arado and Company, v. Elmer John Keitel, Sr., Chairman, George A. Rozier, and Harry P. Drisler, Members of the Unemployment Compensation Commission of Missouri, Appellants

No. 38964

Supreme Court of Missouri

July 3, 1944

Rehearing Denied September 5, 1944.

Appeal from Cole Circuit Court; Hon. Edward T. Eversole Special Judge.

Affirmed.

Edward D. Summers, Acting Chief Counsel, for appellants George A. Rozier of counsel.

(1) The Supreme Court has jurisdiction of this cause, because the members of the Unemployment Compensation Commission are parties hereto in their official capacities as state officers. Murphy v. Hurlbut Undertaking & Embalming Co., 346 Mo. 405, 142 S.W.2d 449; Trianon Hotel Co. v. Keitel, 169 S.W.2d 891. (2) Each employer must have been subject to the Unemployment Compensation Law during at least thirty-six months (three years) during which his account could have been charged with benefits, before he is entitled to a reduced contribution rate. Sec. 9427, R.S. 1939, as amended, Laws 1941, p. 592; Schwob Co. v. Florida Industrial Comm., 11 So.2d 782; Schwob Mfg. Co. v. Huiet, 25 S.E.2d 149; 26 U.S.C.A. 1600. (3) The experience of one employer under the Unemployment Compensation Law cannot be acquired by another who takes over the former's business unless all of the statutory conditions are met. Subsec. 8 (k), Laws 1939, p. 911; Subsec. 9427 (h), Laws 1941, pp. 590, 596. (4) The business of respondents is not owned or controlled by legally enforceable means, directly or indirectly, by the same interests as owned or controlled their predecessor's business. Subsec. 9423 (h) (4), R.S. 1939; Murphy v. Doniphan Tel. Co., 347 Mo. 372, 147 S.W.2d 616; Kelly v. Thuey, 143 Mo. 422, 45 S.W. 300; State ex rel. Buerk v. Calhoun, 330 Mo. 1172, 52 S.W.2d 742, 83 A.L.R. 1393; 59 C.J., p. 1050, sec. 620; Kellogg v. Murphy, 349 Mo. 1165, 164 S.W.2d 285; Krisman v. Murphy, 171 S.W.2d 575; Texas Unemployment Comp. Comm. v. Bass, 142 S.W.2d 406 (affirmed), 151 S.W.2d 567; Dayan v. Huiet, 24 S.W.2d 728; Section 9432A (b), Laws 1941; Trianon Hotel Co. v. Keitel, 169 S.W.2d 891; Hughes v. Ewing, 162 Mo. 261, 62 S.W. 465; Schneider v. Schneider, 347 Mo. 102, 146 S.W.2d 584; Cotton Plant Oil Co. v. Buckeye Cotton Oil Co., 92 Ark. 271, 122 S.W. 658. (5) Respondents have not shown that the treatment of their predecessor and themselves as a single unit will not tend to defeat or obstruct the object and purpose of the Unemployment Compensation Law. Report of Committee on Social Security to Hon. Guy B. Park, p. 24. (House and Senate Journal, 59th Gen. Assembly, Vol. 2, Appendix); Subsection 9427(c) (3), Laws 1941, p. 593.

Moser, Marsalek & Dearing and J. C. Jaeckel for respondents.

(1) Under the facts in this case the transfer to respondents of the predecessor's experience rating account will not tend to defeat or obstruct the object and purpose of the law, and the denial by the Commission of respondents' application for such transfer was a gross injustice and contrary to the spirit and letter of the statute which provides for such transfer. Sec. 9422, R.S. 1939; Sec. 9427 (b), R.S. 1939, as amended by Laws 1941, p. 594; Sec. 9427 (h), R.S. 1939, as amended by Laws 1941, pp. 596, 597. (2) The present partnership is "directly or indirectly owned or controlled by legally enforceable means by the same interests, as owned or controlled the predecessor employing unit prior to such acquisition," within the meaning of Section 9427 (h), R.S. 1939, as amended by Laws of 1941, and is entitled to stand in the position of such predecessor unit in all respects as contemplated by said Section 9427 (h). The Commission erred in finding and deciding otherwise, and the circuit court properly reversed the decision of the Commission. Sec. 9427 (h), R.S. 1939, as amended by Laws 1941, pp. 596, 597; Schneider v. Schneider, 347 Mo. 102, 146 S.W.2d 937; 40 Am. Jur., p. 210, secs. 115, 116; 1 Rowley on Partnership, p. 493, sec. 416; Anderson v. Whitener, 261 P. 156; Cotton Plant Oil Co. v. Buckeye Cotton Oil Co., 92 Ark. 271, 122 S.W. 658; Reirden v. Stephenson, 89 A. 465. (3) There is no conflict in the evidence and but one conclusion can be drawn therefrom. Therefore, the question of whether respondents are entitled to stand in the position of the predecessor employing unit in all respects as contemplated by Section 9427 (h), supra, is one of law, and the findings of fact of the Commission are not conclusive. Stanton v. Leonard, 344 Mo. 998, 130 S.W.2d 487; State ex rel. Wenneker v. Cummings, 151 Mo. 49, 52 S.W. 29; Sawtell v. Stern Bros. & Co., 44 S.W.2d 264.

Van Osdol, C. Bradley and Dalton, CC., concur.

OPINION

VAN OSDOL

Action by plaintiffs (respondents) to review a decision of the Unemployment Compensation Commission of Missouri holding that, under the provisions of Section 9427, R.S. 1939, as amended, Laws of Missouri 1941, pp. 592-7, Mo. R.S.A., sec. 9427, a successor employing unit (partnership composed of respondents, John Arado, Otto Burk and Louis Puricelli), upon acquiring a business, does not stand in the position (in the respects mentioned in the Section as amended) of the predecessor employing unit, a partnership composed of Philip Darsch, John Arado and Otto Burk. The trial court reversed the decision of the Commission and ordered the cause remanded for further proceedings not inconsistent with the trial court's finding. The members of the Commission (hereinafter referred to as "Commission") have perfected this appeal.

The various state unemployment compensation acts stem from the Federal Social Security Act, 42 U.S.C.A., secs. 301-1307. It is stated that such acts have now been passed in all the states of the Union. Such legislation was inspired by the economic emergency which threatened this country early in the last decade and was enacted with the purpose of relieving the distress of unemployment. Kellogg v. Murphy, 349 Mo. 1165, 164 S.W. 2d 285.

Under the provisions of the Unemployment Compensation Law of Missouri (Article 2, Chapter 52, R.S. 1939, as amended) the employer in the law defined is required to pay (an excise tax) contributions into the unemployment compensation "pooled fund"; the amounts of the contributions paid by each employer, however, are credited to the employer's separate account maintained by the Commission, and all benefits paid to an eligible individual are charged against the account of the employer. The rate of an employer's contributions to the fund is classified in a relation to the employer's success in effecting employment stabilization. Contributions in amounts equal to two and seven-tenths per centum of wages paid by the employer during the calendar year are required to be paid until there shall have transpired thirty-six calendar months immediately preceding a calculation date throughout which period the employer's account could have been chargeable with benefits; thereafter, upon a calculation date fixed by regulation, the contributions rate of an employer is classified in accordance with his actual experience in the payment of contributions in his own behalf and credited to his account, and with respect to benefits charged against his account. If the total of all contributions paid and credited to the employer's account for all past periods preceding a calculation date exceeds total benefits charged to his account during such periods, and the excess equals or exceeds given percentages of the employer's average annual pay roll, his contributions rate is reduced to stated percentages of the wages paid by the employer during the calendar year; if the excess equals or exceeds 15 per centum of his average annual pay roll his contributions rate is reduced to nothing; but, if for one of specified alternative periods, the total of an employer's contributions paid and credited to his account is less than the total benefits charged against his account, his contributions rate is increased to three and six-tenths per centum of the wages paid by him. Subsection (c), Section 9427 as amended, Laws of Missouri 1941, pp. 592-4, Mo. R.S.A., sec. 9427.

It is provided that an acquiring successor employing unit, upon the acquisition of an organization, trade or business of an employer, stands in the position of the predecessor employing unit in all respects, including the predecessor's separate account, actual contribution and benefit experience, annual pay rolls, and liability for current or delinquent contributions, interest and penalty and contributions rate whether more or less than two and seven-tenths per centum, if the Commission finds that "(i) immediately after such change the business and activity of the predecessor employing unit or units are conducted solely through the successor employing unit (ii) after such change, such successor is directly or indirectly owned or controlled by legally enforceable means by the same interests, as owned or controlled the predecessor employing unit prior to such acquisition (and for the purpose of this subsection, direct or indirect ownership by the same interests of the majority of the voting shares of an employing unit shall, among other things, constitute prima facie evidence of control by legally enforceable means) and (iii) the consideration of such two or more employing units as a single employing unit for the purposes of this section will not tend to defeat or obstruct the object and purpose of this law, . . ." Subsection (h), Section 9427, as amended, supra.

In the instant case, since the acquisition, the (restaurant) business of the predecessor (partnership composed of Darsch Arado and Burk) has (i) been conducted solely through the successor employing...