Unemployment v. City Ice & Coal Co. Inc

• Decision Date: 16 June 1939
• Docket Number: No. 450.,450.
• Citation: 216 N.C. 6,3 S.E.2d 290
• Court: North Carolina Supreme Court
• Parties: UNEMPLOYMENT COMPENSATION COMMISSION . v. CITY ICE & COAL CO.,Inc., et al.

3 S.E.2d 290

216 N.C. 6

UNEMPLOYMENTCOMPENSATION COMMISSION .

v.CITY ICE & COAL CO., Inc., et al.

No. 450.

Supreme Court of North Carolina.

June 16, 1939

.

Appeal from Superior Court, Wake County; Hubert E. Olive, Special Judge.

Controversy without action under C.S. § 626, by the Unemployment Compensation Commission against the City Ice & Coal Company, Inc., and others to determine whether the defendants are liable for contributions under the North Carolina Unemployment Compensation Act. Judgment for plaintiff, and defendants appeal.

Affirmed.

This is a controversy without action, under C.S. § 626, to determine whether defendants are liable for contributions under the N. C. Unemployment Compensation Act. Under the agreed statement of facts it appears that defendants are all North Carolina corporations, two of which are engaged in the coal and ice business while the third is engaged in the dairy business; that all three corporations have the same officers, and the same directors, and, with the exception of two names, the lists of stockholders of the three defendants is identical; that the three defendants have a single central business office where all records are kept and all clerical matters handled; that the payment of all obligations of the three defendants is handled through a single office and the same individual acts as secretary, treasurer, and general manager of each corporation; that the same attorney is legal adviser to all three defendants; that, with the exception of a single individual, all shares of the three corporations are owned by members of the same family; and that only asingle officer of each corporation, the secretary-treasurer, is paid a salary. It is further agreed that defendant City Ice and Coal Company, during 1936 and 1937, had more than eight employees in each of twenty weeks during each year, and, accordingly, such defendant is liable for contributions under the Unemployment Compensation Act. See Chapter 1, sec. 19(f) (1), Public Laws (Ex.Session) 1936. It is also agreed that, by the same test, the City Dairy Farm is not liable for contributions for the years 1936 and 1937, unless the three officers are counted as "employees" within the meaning of the Act, and that the Carolinas Ice Company, during these years, even counting the officers as employees was not liable for contributions under the Act. However, plaintiff contended, on these facts, that the inter-relationship of the three defendants and the degree of control over each exercised by the same interests was such that the three defendants should be considered together as a single, employing unit. The trial judge accepted this view. Accordingly, it became unnecessary to pass upon the secondary question, i. e. whether officers of a corporation who receive no salary are "employees."

From a judgment declaring that the defendants "are owned and controlled by legally enforceable means or otherwise, directly or indirectly by the same interests within the meaning and intent of Section 19(f) (4) of the Unemployment Compensation Law of North Carolina, " and so treating the three defendants as a single employing unit, holding defendants liable for contributions under the Act, defendants excepted, assigned error and appealed to the Supreme Court.

Oscar G. Barker, of Durham, for appellants.

Adrian J. Newton, Ralph Moody, and J. C. B. Ehringhaus, Jr., all of Raleigh, for appellee.

CLARKSON, Justice.

Are the three corporate defendants "owned or controlled * * * directly or indirectly by the same interest" within the meaning of Section 19(f) (4) of the N. C. Unemployment Compensation Act (Chapter 1, Public Laws, Ex.Session, 1936)? We think they are. As this question is answered in the affirmative, it becomes unnecessary to pass upon the incidental question as to the status of non salaried, corporate officers as "employees" of said corporation.

The agreed statement of facts presents a clear picture of three affiliated corporate enterprises, whose stock is closely held in a family corporation. The corporations are directed from a central office and are operated under a single, central management. All the stockholders (with a single exception as to the ownership of ten shares of stock in one of the corporations) are members of the same family, and the same individuals are the officers and directors of each corporate defendant. Not only does the instant case present the familiar picture of inter-locking directorates so frequently evident where allied commercial interests seek to bring several related enterprises within the scope of a common, central control, but the mutuality of interest is further accentuated by the fact that the number of stockholders in each...