Chief Freight Lines Co. v. Industrial Commission, Division of Employment Sec.

• Decision Date: 04 February 1963
• Docket Number: No. 23558,23558
• Citation: 366 S.W.2d 48
• Parties: The CHIEF FREIGHT LINES COMPANY, a corporation, Appellant, v. INDUSTRIAL COMMISSION of Missouri, DIVISION OF EMPLOYMENT SECURITY, Respondent.
• Court: Missouri Court of Appeals

Page 48

366 S.W.2d 48

The CHIEF FREIGHT LINES COMPANY, a corporation, Appellant, v. INDUSTRIAL COMMISSION of Missouri, DIVISION OF EMPLOYMENT SECURITY, Respondent.

No. 23558.

Kansas City Court of Appeals, Missouri.

Feb. 4, 1963.

Tom B. Kretsinger, James A. Broaddus, Kretsinger & Kretsinger, Kansas City, for appellant.

George Schwartz, Jefferson City, for Division of Employment Security, Jefferson City, for respondent.

CROSS, Judge.

This is an appeal by The Chief Freight Lines Company, a corporate common carrier of freight by motor truck, from a judgment of the Cole County Circuit Court affirming a decision of the Industrial Commission to the effect that appellant had acquired substantially all of the business of the Kansas Nebraska Express (a corporate common carrier of like nature), and that appellant therefore, stood in the position of Kansas Nebraska Express in all respects, under the provisions of Section 288.110 V.A.M.S., as to liability for employment security taxes and contributions.

At all times relevant to this case, both appellant and Kansas Nebraska Express (hereinafter referred to as KNX) were interstate common carriers of motor freight under respective certificates of convenience and necessity granted to them by the Interstate Commerce Commission, and were subject to the laws of the United States regulating interstate motor carriers. Likewise, both carriers were subject to the provisions of the Missouri State Employment Security Law.

Prior to November 1, 1958, and at a time when KNX was in poor financial condition, it was agreed by appellant and KNX that the former would 'take over the assets and liabilities' of KNX, upon approval by the Interstate Commerce Commission, and that the assumption of those assets and liabilities would be the 'purchase price for the company' (KNX). On or about November 1, 1958, appellant applied to the Interstate Commerce Commission for approval of the described sale agreement. During the pendency of that application, the appellant was granted temporary authority to operate as an interstate carrier under the certificate of public convenience and necessity then held by KNX, and pursuant to a lease agreement by the terms of which appellant paid KNX rentals in the sum of $400 per month.

On January 2, 1959, KNX ceased operations and turned over substantially all of its physical properties and facilities to appellant. Thereupon, appellant commenced operating between interstate points under KNX's certificate and established a terminal in Omaha, Nebraska, equipping it with office furniture received from KNX. Appellant also utilized certain vehicles KNX and formerly used. The president of KNX and an office employee, a salesman, two city pickup men and three road drivers, all formerly employed by KNX, went to work immediately for appellant. Only one of KNX's employees was not immediately employed by appellant. He was, however, hired by appellant three or four months later.

On May 5, 1960, the Interstate Commerce Commission entered an order denying its approval of the sale agreement and requiring appellant to cease operating under the temporary authority on or before June 5, 1960. On the latter date appellant complied with the order, after having continuously operated the business of KNX, in the manner above described, from and after January 2, 1959.

On the basis of the foregoing facts, it was held, in the first instance, by a deputy for the Division of Employment Security, that appellant 'acquired substantially all of the business of Kansas Nebraska Express, a corporation, and, therefore, that The Chief Freight Lines Company stood in the position of Kansas Nebraska Express in all respects under the provisions of Section 288.110 R.S.Mo.Supp.' On appeal, the foregoing administrative determination was affirmed by the Appeals Referee of the Division of Employment Security. The decision of the referee contains findings of fact essentially as we have noted above and states the following conclusions of law:

'The Missouri Employment Security Law, Section 288.110 RSMo.Supp., provides in part as follows:

"Any individual, type of organization or employing unit which has acquired substantially all of the business of an employer, excepting in any such case any assets retained by such employer incident to the liquidation of his obligations, and in respect to which the division finds that immediately after such change such business of the predecessor employer is continued without interruption solely by the successor, shall stand in the position of such predecessor employer in all respects, including the predecessor's separate account, actual contribution and benefit experience, annual payrolls, and liability for current or delinquent contributions, interest and penalties * * *'.

'The appellant contends that it is not a successor to Kansas Nebraska Express because it did not buy the assets of Kansas Nebraska Express but only used certain equipment of the company temporarily under a rental agreement. 'To 'acquire' means to gain by any means. The Law does not distinguish between a permanent and a temporary acquisition of a business. The term 'business' means a commercial or industrial enterprise. It refers primarily to the activities, processes or transactions which make up a commercial or industrial enterprise rather than the physical assets which may be used in the enterprise. (See also Union-May Stern Co. v. Industrial Commission, et al. [Mo.App.], 273 S.W.2d 766.)

'The evidence shows that prior to January 2, 1959, the business of Kansas Nebraska Express, an employer subject to the Missouri Employment Security Law, was that of a common carrier of motor freight operating under an I.C.C. Certificate of Convenience and Necessity between Kansas City, Missouri and Omaha, Nebraska, and to other points in northeast Kansas. Although Kansas Nebraska Express retained ownership of its physical assets, the appellant on and after January 2, 1959, under a rental agreement with Kansas Nebraska Express and with the permission of I.C.C. to operate temporarily under the Certificate of Kansas Nebraska Express, engaged in the business of a common carrier of motor freight in the same territory formerly served by Kansas Nebraska Express, used the same equipment formerly used by Kansas Nebraska Express, and employed all but one of the same employees employed by Kansas Nebraska Express. In so doing it acquired and continued the business of Kansas Nebraska Express, an employer subject to the Missouri Employment Security Law.

'By applying the Law to the facts as found, the Referee holds that as of January 2, 1959 the appellant, The Chief Freight Lines Company, a corporation, stands in the position of Kansas Nebraska Express in all respects under the provisions of Section 288.110 quoted above.'

The Industrial Commission denied appellant's application for a review of the decision by the appeals referee, which, however, is deemed to be the decision of the Industrial Commission for purposes of judicial review. Section 288.200 V.A.M.S. As heretofore stated, the circuit court affirmed that decision on review. Thereafter, this appeal was duly perfected.

There is no dispute as to the evidence and there is no contention that the evidence does not support the appeals referee's findings of fact. Appellant admits that 'The facts in the case are clear'. The question presented here is one of law. It is appellant's sole contention that the circuit court erred in sustaining the appeals referee's determination that under the evidence appellant acquired the business of KNX within the meaning of the Missouri Employment Security Law and thereby became liable for amounts owed to the employment security fund by KNX prior to November 1, 1958. It is appellant's position that 'The evidence and facts show that appellant made an unsuccessful attempt to acquire seller's operating authority and that appellant acted in the capacity of a receiver or conservator in operating the certificate of the seller, which capacity is not the equivalent of a successor within the meaning of Missouri State Employment Law'. Appellant simplifies its single point by suggesting that 'the sole question to be decided is the meaning of the word 'acquire".

It is conceded by appellant that it took over the operation of the interstate business of KNX under an agreement to purchase, under a temporary rental agreement, and under a temporary operating authority granted by the Interstate Commerce Commission, and that it (appellant) so operated such business for 1 1/2 years, all for a money consideration of $400.00 per month. In so doing, appella...