South Side Chevrolet Co. of St. Louis v. Industrial Commission

• Decision Date: 06 February 1950
• Docket Number: No. 21284,21284
• Parties: SOUTH SIDE CHEVROLET CO. OF ST. LOUIS v. INDUSTRIAL COMMISSION et al.
• Court: Missouri Court of Appeals

Page 733

226 S.W.2d 733

240 Mo.App. 1215

SOUTH SIDE CHEVROLET CO. OF ST. LOUIS v. INDUSTRIAL COMMISSION et al.

No. 21284.

Kansas City Court of Appeals, Missouri.

Feb. 6, 1950.

Hay & Flanagan, Neal D. Flanagan, St. Louis, for appellant.

John L. Porter, Jefferson City, George Schwartz, Jefferson City, for respondents.

CAVE, Judge.

This is an appeal from a judgment of the circuit court of Cole County affirming the findings and order of the Industrial Commission that plaintiff was liable for contributions under the Unemployment Compensation Law for the calendar year 1947 at a contribution rate of 2.7 per cent.

The facts giving rise to the controversy are to the effect that prior to September 1, 1946, J. Rush James and Alma H. James, his wife, were partners in the ownership and operation of the South Side Chevrolet Company located at 3645 South Grand Boulevard in St. Louis; they also owned and operated a second business establishment known as the Wholesale Auto Parts, which was located at 3729 Gravois Avenue, St. Louis. This partnership was an 'employer', Laws 1943, p. 922, Sec. 9423, (h)(1), Mo.R.S.A. Sec. 9423, (h)(1), and had paid contributions on wages of the employees of both business establishments, and because of its excellent employment record had established a contribution rate of zero. On September 1, 1946, J. Rush James, Alma H. James, James R. James, Jr. and William F. James formed a four-way partnership which acquired all of the organization, trade, business and assets of the South Side Chevrolet Company; but the two-way partnership, consisting of J. Rush James and Alma H. James, continued to own and operate the Wholesale Auto Parts business until December 1, 1946, when it was sold to the National Auto Supply Company.

For brevity, we shall hereafter refer to the respective partnerships as the two-way partnership and the four-way partnership.

On January 11, 1947, the four-way partnership was converted into a Missouri corporation under the corporate name 'South Side Chevrolet Company of St. Louis' (plaintiff in this case), which corporation acquired the organization, business and assets of the four-way partnership. Thereafter the corporation requested the Commission to grant it the same contribution rate (zero) that had been enjoyed by the original two-way partnership. The commission denied this request and notified the corporation that it would be liable, as of January 1, 1947, for a contribution rate of 2.7 per cent. The corporation asked for a hearing, which was held before a Special Representative, who made findings of fact substantially as above outlined, and held that the corporation became a new employer for the year 1947 and was subject to the Unemployment Compensation Act, Art. 2, Chap. 52, R.S.1939, Mo.R.S.A. Sec. 9421 et seq.

The Commission adopted the findings of fact and held that the corporation was not entitled to a reduced contribution rate because its predecessor, the four-way partnership, was not a successor in interest to its predecessor, the two-way partnership, for the reason that the two-way partnership had owned and operated two separate business units or establishments, only one of which had been acquired by the four-way partnership. In due time the corporation filed its petition in the circuit court for a review of the decision of the Commission, and after a hearing the court affirmed the findings and order of the Commission and plaintiff appealed.

None of the partners testified and we know nothing of the terms and provisions of either partnership contract, except the percentage interest of each partner, and that fact alone does not give any partner control and management of a partnership.

The evidence abundantly supports the findings of fact of the Commission. The controversy arises over the application of the law to the facts.

At the beginning of the hearing before the Special Representative plaintiff stated its position to be: '* * * That the sale of the Wholesale Auto Parts, which was a minor part of this business, did not charge the employing unit, which was the two-way partnership.' From this premise plaintiff argues that since it is a successor to the four-way partnership and the four-way partnership was a successor to the two-way partnership, it is entitled to stand in the position of and receive all benefits of rating enjoyed by the two-way partnership, the original employing unit. The Commission contends that the corporation is not a successor to the two-way partnership because the four-way partnership did not acquire the organization, trade or business or all of the assets of the two-way partnership; that when the four-way partnership acquired the organization, business and assets of the South Side Chevrolet Company it became a new employing unit separate and distinct from the still existing employing unit of the two-way partnership.

In deciding this sharply drawn issue, we must look to certain provisions of Sec. 9427(g), Laws 1945, p. 1749, Mo.R.S.A. Sec. 9427(g), defining the steps which must be taken for a successor employer to succeed to the rights of the original employing unit. The material part of that section reads: '(g) Any individual, firm, corporation or employing unit which acquires the organization, trade, or business, or all of the assets thereof, 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 commission finds that (i) immediately after such...