State of Missouri v. Gleick, 12398

• Decision Date: 14 May 1943
• Docket Number: 12439.,No. 12398,12398
• Parties: STATE OF MISSOURI v. GLEICK (two cases).
• Court: U.S. Court of Appeals — Eighth Circuit

135 F.2d 134 (1943)

STATE OF MISSOURI v. GLEICK (two cases).

Nos. 12398, 12439.

Circuit Court of Appeals, Eighth Circuit.

April 22, 1943.

Rehearing Denied May 14, 1943.

Edward D. Summers, of St. Louis, Mo. (George A. Rozier, Viva Hunt, and Harry G. Waltner, Jr., all of Jefferson City, Mo., on the brief), for appellant.

David W. Strauss, of St. Louis, Mo., for appellee.

Before GARDNER, JOHNSEN, and RIDDICK, Circuit Judges.

RIDDICK, Circuit Judge.

These appeals, consolidated for hearing in this court, are from a judgment denying a claim against a trustee in bankruptcy presented by Missouri under its Unemployment Compensation Law for contributions provided by that law with respect to employment in the state.

The Missouri Unemployment Compensation Law was adopted in 1937, Mo.R.S. A. § 9421 et seq. As amended and as applicable here, its pertinent provisions and definitions are:

"§ 9423. Definitions. * * *

"(g) `Employing unit' means any individual or type of organization, including any partnership, association, trust, estate, joint-stock company, insurance company or corporation, whether domestic or foreign, or the receiver, trustee in bankruptcy, trustee or successor thereof, or the legal representative of a deceased person, which has or subsequent to January 1, 1936, had in its employ one or more individuals performing services for it within this state. * * *

"(h) `Employer' means:

"(1) Any employing unit which for some portion of a day, but not necessarily simultaneously, in each of twenty different calendar weeks, whether or not such weeks are or were consecutive, within either the current or the preceding calendar year, has or had in employment, eight or more individuals irrespective of whether the same individuals are or were employed in each such day * * *;

"(2) Any individual, firm, corporation, or employing unit which acquired the organization, trade or business, or substantially all the assets thereof, of another employing unit which at the time of such acquisition was an employer subject to this law; * * *

"(6) Any employing unit, which having become an employer, has not under Section 9428 ceased to be an employer.

* * * * *

"§ 9428. Employing unit, when subject to law — termination of liability * * *

"(a) Except as provided in sub-section (c) of this section not material here any employing unit which is or becomes an employer subject to this law within any calendar year shall be subject to this law during the whole of such calendar year.

"(b) Except as otherwise provided in sub-section (c) of this section, an employing unit shall cease to be an employer subject to this law as of the first day of January of any calendar year, if it files with the commission, prior to the twenty-fifth of January of such year, a written application for termination of coverage, and the commission finds that there were no thirteen different days, each day being in a different week within the preceding calendar year, within which such employing unit employed eight or more individuals in employment subject to this law. For the purpose of this subsection, the two or more employing units mentioned in paragraph (2) or (3) or (4) of Section 9423 (h) shall be treated as single employing unit."

Employment, as used in the Act, is defined generally as "service * * * performed for wages or under any contract of hire, written or oral, express or implied", and excludes: "(E) Service performed in the employ of any other state or its political subdivisions or of the United States Government, or of an instrumentality of any other state or states or their political subdivisions or of the United States".

Employers subject to the Act are required to pay to a fund established by the state, contributions equal to certain percentages of the wages paid to employees. These contributions are properly denominated taxes. A. J. Meyer & Co. v. Unemployment Compensation Commission, 348 Mo. 147, 152 S.W.2d 184. Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 57 S.Ct. 868, 81 L.Ed. 1245, 109 A.L.R. 1327; In re Independent Automobile Forwarding Corporation, 2 Cir., 118 F.2d 537.

The facts in this case are not disputed. On March 14, 1935, the Parker Russell Company, a Missouri corporation, filed in the federal district court its petition for reorganization under § 77B of the Bankruptcy Act, 11 U.S.C.A. § 207. It continued the possession of its property and operated its business under § 77B until September 11, 1939, when it was adjudicated a bankrupt. On October 2, 1939, appellee was appointed trustee to liquidate the estate. During the reorganization proceedings the company was an employer within the meaning of the Unemployment Compensation Law of Missouri and, as such, was subject to all of the taxes imposed by that Act on account of employment. On March 8, 1939, the Missouri Unemployment Compensation Commission filed in the debtor proceedings its claim for unemployment compensation taxes covering the period from the effective date of the state compensation law to December 31, 1939, inclusive. After the adjudication in bankruptcy, the Commission presented its claim for taxes accruing under the Act from January 1, 1939 to September 30, 1939, inclusive. Both claims were allowed on May 23, 1940, as tax claims having priority. Nothing further was done concerning unemployment compensation taxes until the trustee in bankruptcy, on April 7, 1942, filed his petition for instructions regarding the claims of Missouri for taxes accruing after the appointment of the trustee in bankruptcy. In response to this petition the Missouri Compensation Commission presented the claim which is involved in these appeals.

In a memorandum opinion denying the liability of the trustee, the referee stated the question for determination by him to be whether the trustee in bankruptcy, liquidating a bankrupt estate, is liable for taxes of the character claimed here, merely because of the fact that after his appointment he failed to file with the Unemployment Compensation Commission the written application for termination of coverage required by Missouri law. He decided that the trustee was not liable in the circumstances stated and denied the claim of the Commission as not being "a fair or just claim against the trustee for costs of administration." The order of the referee was approved by the district judge.

We think the referee failed to state accurately the questions presented on this record. They were whether the Missouri Unemployment Compensation Law requires the trustee in bankruptcy to pay unemployment compensation taxes and, if so, whether this...