95 Ohio Law. Abs. 193 | Oh. Ct. Com. Pl., Franklin Civil Division | 1964
This is an appeal from the ruling of Willard P. Dudley, Administrator of the Bureau of Unemployment Compensation, holding that the Lord Baltimore Press, Inc., was not a successor in interest on January 2, 1962, by reason of its purchase of the non-physical assets of the Richardson Taylor Globe Corporation, and consequently was held by the Bureau as of April 4, 1962, to a contribution rate of 3.2 percent instead of the successor rate of about 1.0 percent. The facts in this case are not in dispute, only the accent on them and the application of the law to them. The controlling facts, some reported in and others elided from the Administrator’s decision, follow.
The Lord Baltimore Press, Inc. (called Lord Baltimore herein), is a wholly owned subsidiary of The International Paper Company (called International herein). Brown and Bailey Company was a subsidiary branch owned and operated by The Richardson Taylor-Globe Corporation (called R. T. G. herein). The plant of Brown and Bailey Company was in Baltimore, Maryland; that of R. T. G. in Cincinnati, Ohio. While the negotiations described later herein and their fruition were in progress, Lord Baltimore built a modern press and manufacturing plant also in Cincinnati, that would not only accommodate its business as conducted up to the times in question, but also the modernized but larger scaled method of any R. T. G. business that would or might come to it.
International was interested in R. T. G.’s line of commodities, method of produeiton, management, customer list and outlets, good will, name, patents, trade marks, and plant personnel. In other words, International was interested in adding to its field of production, the business of a more specialized and highly skilled concern operating successfully in a small segment of its own larger and probably far more greatly diversified field of production. But for two reasons it was not concerned with R. T. G.’s physical plant: (1) R. T. G.’s plant was
By proper action early in January, 1961, International resolved to purchase the good will and business of R. T. G. and its branch subsidiary, Brown and Bailey Company, for not to exceed $2,600,000.00 contingent upon the obtaining of employment agreements with the principal exécutive and sales employees of the two latter companies. This resolution specifically excluded those latter companies’ plants, equipment, inventories., other physical assets, cash and accounts receivable. Appellee relied on the wording of this resolution to the almost total exclusion of all else; but note well that not a single one of these excluded items separately or severally was either necessary or significant to International making R. T. G. and its business a part of International’s business, though their retention by R. T. G. could be and was a liquidation bonus, to R. T. G. In Union-May-Stern Co. v. Indus. Com’n., Mo. App.,
The negotiations were successful. In March, 1961, International and R. T. G. entered into a lengthy contract of sale of certain of the non-physical assets of R. T. G. and Brown and Bailey Company to International; it is before us on Exhibit 2. The material parts of that contract, for the purposes of this case, are (1) R. T. G. has taken, or before closing date of the contract will take, all proper and legal action to execute the sale; (2) all patents, patent applications, trademarks, trademark registration and trade names are free and clear in the sellers’ names (and are included in the transfer); (3) R. T. G. agreed to sell
“(a) RTG agrees to convey, sell, assign and transfer, or cause B&B to convey, sell, assign and transfer, to International, and International agrees to purchase and acquire from RTG or B&B, as the case may be, on the Closing Date, as hereinafter defined, all the assets owned by B&B or RTG, or in which either has a conveyable or assignable interest, as of the Closing Date, except the following items: cash and moneys on deposit; the capital stock and debentures, if any of B&B; accounts receivable; deferred assets; insurance policies; claims, including claims for tax refunds; the B&B Plant and the RTG Plant, as hereinafter defined; inventories of raw materials and supplies, work in process and completed paper products and paper board products at the RTG Plant and the B&B Plant; and any other physical assets. The assets to be sold to Inter
(4) the purchase price $2,600,000.00 was agreed; (5) the closing date and the nature and description of the documents of transfer were agreed on; (6) International agreed, though it is not mentioned in the decision appealed from,
“4. International agrees that, on or prior to the Closing Date, it will have offered employment, at a plant to be constructed by International or a subsidiary of International in the Cincinnati area, to not less than seventy-five per-cent of the employees then employed by RTG at the RTG Plant, on terms which are, in the opinion of RTG, substantially as favorable to such employees as the terms of such employment by RTG, and further that, on or prior to the Closing Date, it will have made arrangements, satisfactory to RTG, for the granting to all employees of RTG (and all employees of RTG and B&B subject to the employment contracts referred to in Section 5 hereof) who shall become on or before the Closing Date employees of International, or any subsidiary thereof, of insurance and pension rights with respect to their employment by International or such subsidiary which are substantially as favorable to such employees as the insurance and pension rights which are presently enjoyed by such employees with respect to their employment by RTG or B&B, as the case may be. RTG agrees to cooperate with respect to the foregoing employment arrangements. ’ ’
(7) RTG agreed to use all best effort to effectuate this last quoted agreement, that is, R. T. G. agreed to exert its best
For some strange, unexplained reason, appellee’s opinion makes no reference of any sort whatsoever to this contract. And this despite the fact that the contract is a complete abdication of R. T. G. to International, a case, in fact, wherein R. T. G. actively participated in its own demise. Name gone, personnel gone, employees gone, inventory to become nonexistent, trademarks, trade names and patents gone, good will gone, leases and future contracts and business gone; and all to one ready, willing and able to use them, and to carry on the RTG tradition as its own corporate subsidiary. What more could one ask? What more could a buyer seek? To ask these questions is to answer them. As witness Bond stated, Lord Baltimore took all, every part of R. T. G.’s business and customers; everything worth having to a going concern. Nor is it disputed that Lord Baltimore has taken over and is now doing R. T. G.’s business. This contract was business, industrial hari-kari to R. T. G., the death rattle in the throat of R. T. G.; and appellee should have recognized this and on the facts before us should have ruled accordingly.
Appellee’s ruling was entranced by the book value of the R. T. G. physical property salable at around $600,000.00. But book value is all to often meaningless; and even more frequently it is as different from true or actual value as night and day.
R. T. G. was so completely emasculated that it changed its name to the Mitchell Avenue Company to complete this last contract and collect its receivables. R. T. G.’s business was unusual. Every contract it received to manufacture corrugated boxes carried its own unique specifications. Consequently, it purchased paper stock separately for each order, and as that order was filled, R. T. G.’s stock in trade diminished and was uot replaced. It never had any general stock in trade. That is why R. T. G. ’s stock in trade was of no earthly value to Lord Baltimore. That is why R. T. G. kept going only to fill its one big outstanding order. That is why, as their jobs ran out with it, R. T. G. released its employees to Lord Baltimore. That is why R. T. G. then resolved in the spring of 1962 to wind up and go out of business as had Brown and Bailey six months before. Where would R. T. G. have been after this sale? Nowhere. It would have had to start all over from scratch.
Appellee’s opinion, quickly scanned, leaves the casual impression that when at last R. T. G. wound up, its employees at its plant numbered twenty. But if the eye is quick to grasp, the number was two, Mr. Thornberry and a janitor. In Apex Smelting Co. v. Cornell, 164 Ohio St., 369, the number on even an incredibly bad record was seven or eight. Further, in Eiber
Chapter 4141, Revised Code, is not concerned primarily with corporations; if it were, it would appear in the Corporation Law of Ohio. It is concerned with employees and their possible unemployment. But no compensable unemployment occurred here. As was said in Mark Hotel Corp’n. v. Catherwood, 194 N. Y. Supp. (2d), 580,
“The appellant Commissioner is not concerned with the transfer of the physical assets of the business but only in the unemployment aspects of the business. In that (the) report there was such continuity of employment here that it would seem in fairness to entitle respondent (here appellant) to the benefits of the employment experience of its predecessor in the operation of the business.”
Execution of the contract, Exhibit 2, took time. The propriety of this is recognized in In re: Stevens and Company, Inc., 125 N. Y. Supp. (2d), 615. International assigned its contract to Lord Baltimore. In the meantime, Brown and Bailey Company had to be wound up but this took a full year. R. T. G. worked to the completion of its one remaining contract (all others had been transferred) and as its needs for its employees and officers and office personnel ended, they stepped immediately at, at least, the same pay and with the same insurance and union recognition into the same jobs of R. T. G. Division of Lord Baltimore. Exhibit 3 shows that as a corporation R. T. G. wound up and so notified our Secretary of State.
Early in January, 1962, Lord Baltimore for its R. T. G.
The law applicable to this case is found in the present amended form of the first two sentences of Section 4141.24 (F), Revised Code. (Appellee’s decision alludes to its Regulation 306.7, but since that regulation is neither quoted nor offered in evidence as an exhibit or otherwise, we may not notice it judicially.) This statute was considered in December 3, 1963, by our own Court of Appeals (120 Ohio App., 145), Automatic Plating Co. v. Leach, Adm’r., No. 7364; there was found to be succession there under circumstances far shakier to the successor than in the case now before us. We follow that case and hold that Lord Baltimore is successor to R. T. G.
In that statute, succession arises (1) if an employer transfers or otherwise reorganizes his business, (2) if an employer acquires substantially all of the assets in a trade or business of another employer, (3) if an employer acquires a clearly segreable and identifiable portion of another employer’s enterprise. Note should be taken that succession arises in any one or more of three distinct ways. Neither party before us has rendered more than lip service to the first method listed above, though to us it is clearly applicable. We are, however, not necessarily required to rely solely on that method because the facts before us bring this case beyond question of doubt clearly within the ambit of the second method. An asset is something that has dollar worth to the one who wants it. Lord Baltimore left with R. T. G. nothing that it wanted, nothing of value, worth or use to R. T. G.’s business or to Lord Baltimore’s absorption of it into itself. It took everything usable.
Both because it is against the manifest weight of the evidence and, separately or severally, because it is an abuse of
Reversed and this case is remanded.
