New Haven Metal & Heating Supply Co. v. Danaher

Decision Date15 July 1941
Citation21 A.2d 383,128 Conn. 213
CourtConnecticut Supreme Court
PartiesNEW HAVEN METAL & HEATING SUPPLY CO. v. DANAHER, Administrator Unemployment Compensation Law.

[Copyrighted material omitted.]

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

Proceeding by New Haven Metal & Heating Supply Company against Cornelius J. Danaher, Administrator Unemployment Compensation Law, wherein an appeal from a determination by defendant that plaintiff was responsible for contributions under the Unemployment Compensation Act, Gen.St.Supp.1939, § 1334e et seq, was taken to the Superior Court in New Haven County and reserved by the court for the advice of the Supreme Court of Errors.

Questions answered in part.

Argued before MALTBTE, C. J, and AVERY, BROWN, JENNINGS, and ELLS, JJ.

Max H. Schwartz and Alexander Winnick, both of New Haven, for plaintiff.

Harry Silvcrstone, Asst. Atty. Genl, and Francis A. Pallotti, Atty. Genl, for defendant.

BROWN, Judge.

Upon the plaintiff's appeal to the Superior Court from the assessment of a contribution by the defendant under the Unemployment Compensation Act, the court, upon a stipulation of facts, reserved the case for the advice of this court upon three questions: First, whether the so-called common control provision of General Statutes, Cum.Sum.1939, § 1335e, violates the State Constitution; second, whether it violates the Federal Constitution; and third, whether the defendant erred in determining that the plaintiff is liable under the act and in making the assessment thereunder as set forth in the stipulation.

The defendant is the administrator of the act. The plaintiff is a Connecticut corporation located at 469 Congress Avenue in New Haven where it conducts the business of selling plumbing and heating supplies. Prior to April 20, 1937, the plaintiff's business also included the selling of paint supplies at 463-465 Congress Avenue under the trade name of the "Yale Paint Company," and in the conduct of the business as so operated the plaintiff employed more than five persons, was subject to the act and made payments into the unemployment compensation fund as required by law. On April 20th, the plaintiff transferred the paint supply business to George and Yale Oppenheim, doing business as the Yale Paint Company; thereafter doing business under this name they continued to employ in the paint business the same employees formerly employed by the plaintiff during the time it had carried it on; and they have since conducted this business at 463-465 Congress Avenue in a store located in the same building with the store at 469 Congress Avenue, but separate from it. On and after April 20, 1937, the plaintiff employed less than five persons and on June 30, 1938, not having had as many as five employees for as many as twenty weeks during the preceding fifteen months, upon its request it was released by the defendant from liability under the act. On July 1, 1939, the plaintiff's capital stock consisted of one thousand shares, of which George and Yale Oppenheim, who are the same persons comprising the partnership doing business as the Yale Paint Company, each owned four hundred and ninety, and Rebecca and Elizabeth Oppenheim each ten. For twenty weeks subsequent to July 1, 1939, the plaintiff employed four persons. During the same period the Yale Paint Company employed for the first four weeks after July 1st two persons, for the next eight weeks three, and for the next fourteen weeks four.

The defendant determined that the plaintiff became liable under the act at the end of the twentieth week after July 1, 1939, to wit, on November 12, 1939, and made an assessment for contributions and interest for the fourth quarter of 1939 and the first and second quarters of 1940, aggregating $382.32. In determining that the plaintiff had five or more employees in its employment, the defendant counted in addition to its employees, those of the Yale Paint Company. The amount of the assessment in question is predicated upon the wages paid by the plaintiff to its own four employees for the three quarterly periods specified.

The provision of § 1335e referred to, the constitutionality of which is challenged under the first and second questions submitted, provides: "In determining whether an employer in question shall be considered, for the purposes of this section, as having had five or more employees in his employment at a given time, there shall be counted, in addition to his own employees, if any, (a) the employees of each employer whose business was at the given time owned or controlled, directly or indirectly, by the same interests which owned or controlled the business of the employer in question, * * *." Pursuant to its general scheme the Unemployment Compensation Act (General Statutes, Cum.Sup. 1939, Chap. 280a, §§ 1334e-1349e) provides for the creation of a fund by employers' involuntary contributions, out of which employees who lose their jobs may, after a waiting period, be paid certain benefits while looking for work but unable to find it. Waterbury Savings Bank v. Danaher, 128 Conn. 78, 20 A.2d 455. The obligation to pay the contributions prescribed in § 1336e is made applicable by the terms of § 1335e to every employer who has "five or more employees in his employment." Section 1335e, however, also contains the so-called common control amendment (Public Acts, 1939, Chap. 310, § 3), which is the enactment above quoted and here under attack. Its effect is to render an employer of less than five subject to the act if and when the interests which either own or control such employer's business also own or control some other business, and the total number employed by both businesses is five or more, although each employing unit becoming subject to the act under this provision is separately liable for contributions under § 1336e in respect to the wages paid to its own employees only. As its wording makes clear, this provision is of no effect in a case where neither common ownership nor common control is involved. The word "control" as well as the word "ownership" are frequently used in statutes and both have a sufficiently definite meaning so that they can be given effect by the courts in accordance with the legislative intent expressed in them. See Commissioner of Internal Revenue v. Richfield Oil Co., 9 Cir, 42 F.2d 360, 361; Rochester Telephone Corporation v. United States, D.C, 23 F. Supp. 634, 636.

We are asked to advise whether, upon the stipulated facts, the defendant erred in making the assessment. It is not stipulated that the plaintiff corporation and the partnership of George and Yale Oppenheim, doing business as the Yale Paint Company, were "at the given time owned or controlled, directly or indirectly, by the same interests. * * *" The decision whether there was common ownership or control would be a conclusion of fact, to be reached upon the basis of the subordinate facts stipulated and reasonable inferences to be drawn from them. It is not the proper function of this court to adjudicate such an issue. We must, therefore, decline to answer this question. We can, however, properly say this: It appears from the stipulation that the plaintiff originally owned and conducted both the plumbing and the paint business, that after it had sold the latter to the two Oppenheim partners no change was made in the name, location or employees of either business, and that the two partners were the owners of 98 per cent of the plaintiff's outstanding stock. These facts, unqualified and uncontradicted, with the reasonable inferences which might be drawn from them, might well justify a conclusion that there was in fact common control of the two businesses; nor are we to say that the ownership of the few shares standing in the names of the two women, each having the same surname as that of each of the partners, would prevent a reasonable inference that the partners were the real owners of these shares. Although we cannot give advice which will necessarily determine the judgment to be entered in this case, we may properly answer the other questions asked, because they will necessarily be involved in the decision of the case and their present determination is clearly in the interests of simplicity, directness and economy of judicial action. Practice Book, § 421.

The plaintiff's principal contention is that the provision is unconstitutional because it violates the equal protection clause of the State and Federal Constitutions. More concretely it argues that this clause is violated because under the statute other persons engaged in the same, similar, or different businesses, employing like the plaintiff but four employees, are not subject to the tax, compelling it to carry a burden these others are not obliged to bear either in the payment of this or of other taxes of equivalent burden. This presents for determination the question whether the classification made by the statute is arbitrary, unreasonable and unjustified. The applicable legal principles are well settled. "The equal protection of the laws is accorded when all persons similarly situated are accorded 'equal protection under the law in the enjoyment of rights belonging to all.' Yick Wo v. Hopkins, 118 U.S. 356, 369, 6 S.Ct. 1064, 1070 (30 L.Ed. 220); Grissell v. Housatonie R. Co., 54 Conn. 447, 9 A. 137, 1 Am.St.Rep. 138; State v. Travelers' Ins. Co., 73 Conn. 255, 269, 47 A. 299, 57 L.R.A. 481." State ex rel. Brush v. Sixth Taxing District, 104 Conn. 192, 200, 132 A. 561, 563. The provisions of the Fourteenth Amendment to the Constitution of the United States, guaranteeing the...

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