United Aircraft Corp. v. Fusari

Decision Date12 July 1972
Citation311 A.2d 65,163 Conn. 401
PartiesUNITED AIRCRAFT CORPORATION v. Jack A. FUSARI, Labor Commissioner.
CourtConnecticut Supreme Court

William G. DeLana, Hartford, with whom, on the brief, were Charles W. Page, J. Danford Anthony, Jr., and Paul F. McAlenney, Hartford, for plaintiff.

Carl D. Eisenman, Special Asst. Atty. Gen., with whom, on the brief, was Robert K. Killian, Atty. Gen., for defendant.

Before COTTER, RYAN, SHAPIRO, LOISELLE and MacDONALD, JJ.

COTTER, Associate Justice.

The plaintiff, United Aircraft Corporation, an employer subject to the Unemployment Compensation Act, seeks to recover alleged overpayments in its contribution to the unemployment compensation fund. It is the plaintiff's claim that the defendant's predecessor, the administrator of the Unemployment Compensation Act of the state of Connecticut, erroneously interpreted and applied § 31-226 of the General Statutes, Revision of 1958, as amended, in computing the plaintiff's tax or unemployment contribution rate for the years 1968 and 1969, resulting in the determination of an erroneous tax or contribution rate for the plaintiff and in the payment by the plaintiff of excess taxes in those years.

At the request of the parties, the case was reserved pursuant to General Statutes § 52-235 for the advice of this court and for an answer to each of nine questions. Only those questions we find relevant to a disposition of this case are set forth in the footnote. 1

The facts as contained in the stipulation between the parties, and the summary of facts in the plaintiff's brief which are not in dispute, may be stated as follows: The plaintiff is a Delaware corporation with an office and principal place of business in East Hartford, Connecticut. During the years 1968 and 1969 it was subject to the provisions of the Connecticut Unemployment Compensation Act. The defendant is the duly appointed and qualified administrator of the Unemployment Compensation Act and as such is charged with its administration.

Each employer subject to the unemployment compensation law is required under § 31-225(a) to pay a tax equal to 2.7 percent of the wages paid by it with respect to employment, 2 subject to any applicable adjustment in the rate of contribution as provided in § 31-226. 3 Under § 31-226, if, on June thirtieth of any year, the balance in the unemployment compensation fund is at least 1.25 percent of the total state payroll for the three-year period ending on June 30, the defendant is required to adjust the rate of contributions. When an adjustment is made the employer will pay a tax measured by the adjusted rate rather than the base rate of 2.7 percent.

The amount of the downward adjustment of each employer is determined, pursuant to General Statutes § 31-226, by computing a merit rating index for each of the eligible employers with respect to the whole three-year period ending on June 30. The merit rating index is the quotient obtained by dividing the experience payroll of a particular employer by the total unemployment benefit paid as a result of compensable separations charged to the employer.

Section 31-226(b) provides that the defendant then divide the total of the experience payrolls of all employers with a merit rating index into thirteen approximately equal parts, with the first of these parts consisting of the experience payrolls of those employers with the lowest (or worst) merit rating indexes, and the thirteenth of these parts consisting of the experience payrolls of those employers with the highest (or best) merit rating indexes. The payrolls of the other employers would then be divided among the intervening parts according to their merit rating indexes. If the division of the total of the experience payrolls into thirteen exactly equal parts would require that an employer's payroll be divided between two of the parts, then his payroll would be included in the lower numbered merit rating and the employer would be taxed at the higher rate, as set forth in § 31-226(b)(4).

The statute sets forth a tax table establishing the contribution rate applicable to employers in each of the thirteen parts. The portion of this table applicable for the years 1968 and 1969 is as follows:

                MERIT RATING PART  RATE
                -----------------  ----
                        1          2.7%
                        2          2.55
                        3          2.4
                        4          2.25
                        5          2.1
                        6          1.95
                        7          1.8
                        8          1.65
                        9          1.5
                       10          1.35
                       11          1.2
                       12          1.05
                       13           .9
                

In 1968 the total experience payroll of all employers under the plan was $7,727,645,871. To arrive at thirteen approximately equal parts, the defendant first divided the total payroll into thirteen exactly equal parts, with each part containing $594,434,298. The employers with the lowest merit rating were taxed at the rate applicable to merit rating part one, or 2.7 percent. The employers with the lowest rating were placed in part one until that merit rating equaled $594,434,298; the employers with the next lowest merit rating index would then be placed in merit rating two until that equaled $594,434,298. This procedure would continue until the entire experience payroll for the state had been placed, subject to the adjustment of contribution rates in accordance with § 31-226(b) of the General Statutes. 4

In 1968, the plaintiff's experience payroll was $658,195,373. After dividing the total of the experience payrolls into thirteen approximately equal parts, the plaintiff's experience payroll would have been spread among merit ratings nine, ten, and eleven, falling into the merit rating parts as follows:

                    MERIT           AMOUNT OF
                   RATING      PLAINTIFF'S PAYROLL  CONTRIBUTION
                    PART           IN THE PART          RATE
                -------------  -------------------  ------------
                      9               $ 63,746,940     1.5%
                     10                594,434,298     1.35
                     11                     14,134     1.2
                               -------------------
                Total Payroll         $658,195,372
                

Pursuant to General Statutes § 31-226(b)(4), the defendant allocated the entire experience payroll of the plaintiff to merit rating nine, thus requiring the plaintiff to pay the contribution rate of 1.5 percent, the highest of the three rates for the parts into which the payroll fell. In taxing the plaintiff in this manner no payroll of any employer was allocated to merit rating part ten because the plaintiff's payroll took up this category and under statutory direction the administrator placed the employer's payroll in the lower number, viz. nine.

In the year 1969, the total experience payrolls of all employers with a merit rating index was $8,354,563,157 and this was divided into thirteen approximately equal parts of $642,658,704. The plaintiff's total experience payroll for 1969 was $749,040,786. The payrolls were assigned to the thirteen parts based on the employer's merit rating index and the plaintiff's payroll, once again, fell among parts nine, ten and eleven as follows:

                 MERIT               AMOUNT OF
                RATING          PLAINTIFF'S PAYROLL  CONTRIBUTION
                 PART               IN THE PART          RATE
                --------------  -------------------  ------------
                   9                   $ 90,539,151      1.5%
                  10                    642,658,704      1.35
                  11                     15,842,931      1.2
                                -------------------
                 Total Payroll         $749,040,786
                

The defendant then allocated the plaintiff's entire payroll to part nine and taxed the entire experience payroll at 1.5 percent. As was the case in 1968, no payroll was allocated to merit rating part ten because the plaintiff's payroll exceeded on part and took up all of category ten.

The plaintiff duly notified the defendant of its claim that he had erred in his interpretation of § 31-226(b) for the purpose of determining the contribution rate for the plaintiff for the years 1968 and 1969. The plaintiff requested that the defendant correct the allocation made with respect to its experience payroll for 1968 and 1969 and refund to the plaintiff the amounts by which it had overpaid the taxes. The defendant refused to alter the allocation made under § 31-226(b), or to refund to the plaintiff any alleged overpayment.

The plaintiff argues, in the first instance, that the words of § 31-226(b)(4) are clear and unambiguous and that they do not cover the situation where the experience payroll of a single employer is initially divided among more than two parts. Later in its brief, however, it states that the absence of an express provision covering the present situation in which a payroll falls into three parts 'may arguably render the statute ambiguous as it applies to the plaintiff's in the years in question and in that event the statute should be construed in favor of the plaintiff.

The Unemployment Compensation Act was first enacted at a special session of the General Assembly in 1936. The particular provision before us was added as an amendment in 1939, § 1337e, and appears in the 1939 Supplement to the 1930 Revision of the General Statutes. The primary purpose of the act is to relieve the distress of unemployment; it is remedial in character; and it is to be liberally construed. New Haven Market Exchange, Inc. v. Administrator,139 Conn. 709, 712, 97 A.2d 262.

When § 31-226[b](4) of the act was enacted in 1939 no single employer was large enough so that its experience payroll was likely to be divided among more than two parts. The statutory language in question is clear and describes a specifically delineated procedure which admits of no ambiguities. We cannot 'search out some intent which we may believe the legislature actually had and give effect to it, . . . we are confined to the intention which is expressed in the words it has used.' Connecticut Light & Power Co. v. Walsh, 134 Conn. 295, 301, 57 A.2d 128, 131. The intention of the legislature, expressed in...

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