Swiss Cleaners, Inc. v. Danaher

• Decision Date: 28 July 1942
• Court: Connecticut Supreme Court
• Parties: SWISS CLEANERS, Inc. v. DANAHER, Commissioner of Labor.

27 A.2d 806

SWISS CLEANERS, Inc.

v. DANAHER, Commissioner of Labor.

Supreme Court of Errors of Connecticut.

July 28, 1942.

[Copyrighted material omitted.]

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

Action by Swiss Cleaners, Inc., against Cornelius J. Danaher, Commissioner of Labor, for a declaratory judgment determining whether plaintiff is amenable to certain statutes in regard to keeping and reporting the hours of employment of and wages paid to a woman, allegedly a stockholder, director, president and principal executive officer of the plaintiff, and for other relief. Trial to the court, and from judgment for defendant declaring plaintiff to be amenable to the statutes in question, plaintiff appeals.

Error and new trial ordered.

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

Arthur T. Keefe and Douglas A. Anello. both of New London, for appellant.

Harry Silverstone, Asst. Atty. Gen. (Frances A. Pallotti, Atty. Gen., on the brief), for appellee.

BROWN, Judge.

The plaintiff is a Connecticut corporation. It brought this suit (1) to determine whether or not, with reference to the services of Nellie C. Connor, claimed to be its president, treasurer, director and principal executive officer, it is amenable to § 850e or § 1318e of the General Statutes, Cumulative Supplement 1939; and (2), if not so amenable, asking an injunction restraining the commissioner of labor and factory inspection from instituting or continuing a prosecution of the plaintiff or any of its officers for violation of those sections on account of any connection of Miss Connor with the plaintiff. The case was tried to the court and the finding, corrected in certain respects, presents the following situation: The plaintiff was organized in 1930 at the instigation of Harry M. Shalett, who was at that time the principal stockholder, president and general manager of the Shalett Cleaning and Dyeing Company, a corporation engaged in the business of cleaning and dyeing clothing. It was his purpose to open a cash and carry store to handle lower priced business than that handled by the Shalett Company. The Swiss Cleaners commenced business with a paid-in capital of $3,000, all of which was furnished by Harry M. Shalett, who caused all but two of its shares to be issued to his attorney. One shara was issued to Nellie C. Connor, an employee of the Shalett Company, and one share to another person. Upon the organization of the Swiss Cleaners, Miss Connor was elected a director, president and treasurer, and she has been elected to these offices annually since. Her stock certificate, as well as those in the name of Shalett's attorney, was endorsed in blank and remained in the stock book of the company in possession of its attorney. A share of stock stands on record in her name. As president, Miss Connor has presided at meetings of the stockholders and directors and has signed leases negotiated for the company by Shalett. She has signed such tax and other returns as by law require the signature of the president. She has not performed any duties as treasurer, these duties having been performed by an assistant treasurer who is the secretary of Shalett and an employee of the Shalett Company.

When the plaintiff commenced business, it opened one store in New London. Miss Connor, who was placed in charge thereof and has since been in charge, receives articles to be cleaned and dyed. The garments are not cleaned and dyed by the plaintiff but by the Shalett Company, which retains 65 per cent of the receipts for its services, the balance being retained by the plaintiff. Subsequently, the plaintiff opened three additional stores, each in charge of a girl who receives articles to be cleaned and dyed. These girls are hired by Miss Connor, who fixes their wages and has the power to discharge them. She supervises the other stores and receives such complaints as come in from customers. In case of difficulty, she consults with Shalett, who since the formation of the company has exercised advisory powers towards it. When a girl is employed in either of the other stores, Shalett gives her a share of stock and she is elected a vice president. Miss Connor receives a salary of $20 per week. The girls in charge of the other stores receive $15 per week. The plaintiff has furnished the labor commissioner with a record of the hours and wages paid to the girls at the other three stores but has refused to furnish such information in regard to Miss Connor on the ground that as president and principal executive officer she is exempt. In performing her duties, Miss Connor opened the New London store at 8 o'clock in the morning. She had no definite number of working hours for her employment at the New London store and was privileged to be absent at any time she chose, and at such times the plaintiff provided a substitute without any loss of compensation to her. The stock purchased by Harry M. Shalett was not placed in his name until 1939. He has never been and is not now an officer of the plaintiff company. The books of the plaintiff are audited annually and a report made to Miss Connor as president.

The trial court concluded that Miss Connor was not a bona fide stockholder and was not the chief executive officer or general manager of the plaintiff but was only nominally president and treasurer, and decided that the plaintiff was not relieved as to her services from compliance with §§ 850e and 1318e of the General Statutes, Cumulative Supplement 1939.

The plaintiff corporation was organized in 1930, and the two legislative acts in question did not become law until 1939. Under these circumstances no claim could be made that it was organized and Miss Connor employed with intent to evade the provisions of these statutes. As far as appears from the finding, the plaintiff was regularly organized and Miss Connor was regularly elected its president and was the owner of a share of its stock. No question of fraud is involved in the case, the only question being whether the statutes in question, or either of them, apply to the plaintiff with reference to the services of Miss Connor.

Section 850e was enacted by the legislature in 1939 as a part of the Minimum Wage Act. The purpose of that act is to enable a minimum wage scale to be adopted and to be put into effect as regards any "sweatshop occupation," defined as "an industry, trade, business or occupation which pays to its employees an unfair and oppressive scale of wage in which persons are gainfully employed." Section 840e. The act provides that, in determining what amounts to a fair wage, the wages paid in the state for...