Karlson v. Murphy
| Decision Date | 19 September 1944 |
| Docket Number | No. 27619.,27619. |
| Citation | 387 Ill. 436,56 N.E.2d 839 |
| Parties | KARLSON et al. v. MURPHY, Director of Labor. |
| Court | Illinois Supreme Court |
OPINION TEXT STARTS HERE
Certiorari by William C. Karlson and others, doing business as Lamson Bros. & Company, against Francis B. Murphy, Director of Labor, to set aside a decision of the Director denying plaintiffs' protest against assessment of contributions under the Unemployment Compensation Act on wages paid in excess of $3,000 and to recover such contributions. From a judgment for plaintiffs, defendant appeals.
Affirmed.Appeal from Circuit Court, Cook County; Michael Feinberg, judge.
George F. Barrett, Atty. Gen. (William C. Wines, of Chicago, of counsel), for appellant.
Moses, Kennedy, Stein & Bachrach, of Chicago (Walter Bachrach and Robert C. Kelso, both of Chicago, of counsel), for appellees.
This appeal presents for construction paragraphs (1) and (2) of subsection (g) of section 2 of the Unemployment Compensation Act declaring that the term ‘wages' shall not include:
‘(1) On and after January 1, 1940, that part of the remuneration which, after remuneration equal to $3,000.00 has become payable to an individual by an employer with respect to employment during the calendar year 1940, becomes payable to such individual by such employer with respect to employment during 1940; and
Ill.Rev.Stat.1943, chap. 48, par. 218.
Section 18(a)(1)(par. 234(a)(1) ordains that contributions shall accrue and become payable by each employer for each calendar year in which he is subject to the act, the contribution to be paid quarterly.
The principal question presented for decision is whether six successive partnerships engaged in the securities business in Chicago, known as Lamson Bros. & Co., are a single employer, within the contemplation of the foregoing provision. From January 1, to September 2, 1940, the partnership consisted of fourteen members. On the day last named, Lamson died and the surviving partners succeeded to the business and organization. The firm continued its business at the same location and transacted the same type of business. The thirteen survivors acquired Lamson's interest under the provisions of a clause in the partnership agreement relating to the death or withdrawal of a member. Upon the death of Lamson, his interest in the partnership property and profits was computed and the amount so ascertained paid to his estate. The continuation provisions read:
The second partnership continued until December 31, 1940, when three members withdrew. The third firm of ten members was in existence from December 31, 1940, to June 30, 1941, when one of the members retired. Life of the fourth partnership was but twelve days, expiring on July 12, 1941, when one of the partners died. The fifth partnership, consisting of eight members transacted business from July 12 to December 3, 1941, when one of its eight partners died. The sixth partnership of seven members continued in business for the remainingtwenty-eight days of the year 1941. For the years 1940 and 1941, Lamson Bros. & Co. paid contributions with respect to wages of persons in its employ as if it were a single continuous ‘employing unit.’ The firm, as constituted from time to time, claimed that it was not required to pay contributions for the third and fourth quarters of 1940 and 1941 on the portion of wages of their employees in excess of $3000.
After Lamson's death, the Division of Placement and Unemployment Compensation of the Department of Labor took the view that the first partnership described was no longer an employing unit, within the meaning of section 2(g), and that the second partnership was a new employing unit. As a result of this action of the Department of Labor and its refusal to treat Lamson Bros. & Co. as the same employing unit before and after Lamson's death, the second firm paid $665.42 as a ‘contribution’ which it would not have been compelled to pay had Lamson Bros. & Co. been treated as the same employing unit throughout the year 1940. The second firm filed a claim for refund for $665.42. Similarly, upon the retirement of three members at the end of 1940, the Department treated the third firm as a new employing unit. Again, as of July 1, 1941, the fourth partnership was treated as a new unit, and as of July 13, 1941, the fifth firm was deemed a new employing unit. The sum of $96.43 represents the amount of contribution which the fifth firm paid as the result of its inability to avail itself of the limitation upon the amount of contributions to be made by employers annually, as provided in sections 18 and 2(g)(1) of the statute. The amount involved, so far as the sixth and last firm is concerned, is $385.72. Refunds amounting in the aggregate to $1147.57 were thus sought by the second, fifth and sixth firms. The claims were consolidated for the purpose of hearing and decision. The Director disallowed all the claims. Thereafter, plaintiffs, the members of the second, fifth and sixth partnerships, filed a protest and a petion for hearing. The Director's representative found that, in 1940 and 1941, Lamson Bros. & Co. consisted of six distinct partnerships, each becoming an employer by reason of its succession to the organization and business of its predecessor; that each partnership was a distinct employing unit from its predecessor and, consequently, a distinct employer from its predecessor; that no one of the partnerships was entitled to make deductions for wages in excess of $3000 paid to an individual during either of the calendar years 1940 and 1941 where any portion of the amount so deducted was not paid by the particular partnership, but, instead, paid by one of its predecessors within the same calendar years. Accordingly, the recommendation was made that the determinations of the Director of Labor denying the three claims for refund be affirmed. Plaintiffs' objections interposed to the report of the representative were overruled and the report adopted as the decision of defendant, the Director of the Department of Labor of the State. The circuit court of Cook county, upon a writ of certiorari sued out by plaintiffs, set aside the decision of the Director and rendered judgment in favor of plaintiffs and against defendant for $1147.57. Defendant prosecutes this appeal.
To obtain a reversal, defendant makes the contention, among others, that each new partnership created by the withdrawal or death of a partner is a separate and distinct ‘employing unit’ and ‘employer,’ as defined by the Unemployment Compensation Act, and that, therefore, the successive partnerships cannot be treated as a single unit for the purposes of availing themselves of the $3000 limitation set forth in section 2(g)(1)(2). To sustain the judgment, plaintiffs maintain that, under the statute, an employing unit consisting of a copartnership remains and continues the same throughout the calendar year, irrespective of the death or retirement of any partner, where the articles of partnership, as here, contain a clause providing that upon such death or retirement the copartnership shall not cease but, instead, the firm shall be continued by the surviving or remaining members. The parties have also argued extensively the question as to whether the continuation provisions in the partnership agreement, under the Uniform Partnership Law in force in this State, operated to prevent the termination of the partnership during 1940 and 1941 upon the death or withdrawal of individual partners. It becomes unnecessary to consider this contention for the reason that the question of whether the benefits of section 2(g)(1)(2) are available to plaintiffs must be determined from the provisions of the Unemployment Compensation Act itself, and the terms employed in this statute must be construed in the light of the general purpose of the act.
If each successive partnership be considered as a separate and independent employer, plaintiffs are, of course, not entitledto the refunds awarded them. If on the other hand, the terms ‘employer’ and ‘employing unit,’ employed in the statute are construed in an economic rather than in a technical legal sense, they...
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