Harris v. Egan.

• Decision Date: 21 July 1948
• Citation: 60 A.2d 922,135 Conn. 102
• Court: Connecticut Supreme Court
• Parties: HARRIS et al. v. EGAN.

135 Conn. 102

60 A.2d 922

HARRIS et al. v. EGAN.

Supreme Court of Errors of Connecticut.

July 21, 1948.

Appeal from Superior Court, New Haven County; Alcorn, Judge.

Appeal by Sidney Harris and others from the assessment by John J. Egan, administrator, Unemployment Compensation Act, of contributions under such act, brought to the superior court and tried to the court. Judgment for defendant dismissing the appeal and plaintiffs appeal.

No error.

Charles Albom, of New Haven (Nelson Harris, of New Haven, on the brief), for appellants.

Harry Silverstone, Asst. Atty. Gen. (William L. Hadden, Atty. Gen., on the brief), for appellee.

James F. Rosen, of New Haven, amicus curiae.

Before MALTBIE, C. J., and BROWN, JENNINGS, ELLS and DICKENSON, JJ.

ELLIS, Judge.

The defendant administrator decided that the plaintiffs, although not previously subject to the Unemployment Compensation Act, became subject to it because they acquired substantially all of the assets, organization, trade or business of another employer who at the time of such acquisition was subject to the act. The plaintiffs appealed to the Superior Court under the provisions of § 1345e(f) of the 1939 Cumulative Supplement to the General Statutes (amended, Sup.1947, § 1403i); the court sustained the administrator and the plaintiffs have appealed.

The facts are not in dispute. In January, 1946, the plaintiffs opened a feed and grain business in a warehouse in Wallingford. They were not subject to the Unemployment Compensation Act. Raymond Delaney was engaged in a similar business under the name of ‘Delaneys' and was subject to the act. On April 22, 1946, the plaintiffs agreed with Delaney to buy the land and buildings where he operated his business, all the machinery and equipment located therein, all his automotive equipment, his saleable merchandise on hand on May 5, the day prior to the date set for the consummation of the sale, and the good will of the business. The sale was completed on May 6, and the plaintiffs paid $27,800, of which $27,000 was for the real estate and $800 for the merchandise. Delaney retained only his accounts receivable and his accounts payable, each item amounting to about $15,000, his business records and minor items of office equipment. The plaintiffs moved their own merchandise, of the value of about $10,000, into the property acquired from Delaney and have conducted business there since the date of the sale. Delaney removed his business records and office equipment and thereafter did not engage in business except for a period of about five months, during which he made sales from railroad cars. The name ‘Delaneys' was discontinued. The plaintiffs employed one former employee of Delaney for about a week in order that they might learn to operate a machine which was included in the sale.

The single issue is whether the plaintiffs became subject to assessment under § 710f of the 1941 Supplement to the General Statutes. The pertinent portion is as follows: ‘Every employer who was subject to this chapter immediately prior to July 1, 1941, shall continue to be so subject. An employer not previously subject to this chapter shall become subject to this chapter as follows: * * * (2) an employer who acquires substantially all of the assets, organization, trade or business of another employer who at the time of such acquisition was subject to this chapter shall immediately become subject to this chapter’. The basis of the plaintiffs' appeal is the claim that § 710f is not applicable in this case. They contend (1) that it was not designed to apply to a transfer when the transferee does not assume the employer relationship to the employees of the old business but simply purchases tangible assets; and (2) that in any event there was no transfer of substantially all of the assets within the provisions of the statute.

Our Unemployment Compensation Act was first enacted at a special session of the General Assembly in 1936; it appears in the 1937 Supplement as chapter 280a. The particular provision before us was added as an amendment in 1939, § 1335e, as the result of a proposal made (p. 90) in Report of Department of Labor and Factory Inspection, 1936-1938. The stated reason was that an employer under the law as it then stood did not become liable to make contributions to the fund until the expiration of twenty weeks and consequently he could free himself from liability for that period by a reorganization of his business; and to avoid this it was recommended that the act be amended by inserting ‘a ‘successor-in-interest’ provision whereby an employer taking over the assets of an employer subject to the law shall become automatically subject.'

The use of the word ‘or’ in §710f(2) is of much significance; the successor employer becomes liable if he takes over substantially all of the assets or substantially all of the organization or substantially all of the trade or business. The language is quite like but somewhat broader, as regards the various specifications other than assets, than the acts of some other states. Those acts impose liability where an employer acquires ‘the organization, trade or business, or substantially all the assets' of another employer. Bucklin Coal Mining Co. v. Unemployment Compensation Commissioner, D.C.Mo., 53 F.Supp. 484, 485, note; Commissioner of Insurance v. Broad Street Mutual Casualty Ins. Co., 312 Mass. 261, 263, 44 N.E.2d 683, 143 A.L.R. 982; California Employment Stabilization Commission v. Lewis, 68 Cal.App.2d 552, 553, 157 P.2d 38; Teets v. Rapalje, 112 Colo. 325, 329, 148 P.2d 815; Southern Photo & Blue Print Co. v. Gore, 173 Tenn. 69, 77, 114 S.W.2d 796; see note, 158 A.L.R. 1241, 1247. These acts serve to make clear that ‘or’ in our act was intentionally used with its...