21 A.2d 383 | Conn. | 1941
Upon the plaintiff's appeal to the Superior Court from the assessment of a contribution by the defendant under the Unemployment Compensation Act, the court, upon a stipulation of facts, reserved the case for the advice of this court upon three questions: first, whether the so-called common control provision of General Statutes, Cum. Sup. 1939, 1335e, violates the state constitution; second, whether it violates the federal constitution; and third, whether the defendant erred in determining that the plaintiff is liable under the act and in making the assessment thereunder as set forth in the stipulation.
The defendant is the administrator of the act. The *215 plaintiff is a Connecticut corporation located at 469 Congress Avenue in New Haven where it conducts the business of selling plumbing and heating supplies. Prior to April 20, 1937, the plaintiff's business also included the selling of paint supplies at 463-465 Congress Avenue under the trade name of the "Yale Paint Company," and in the conduct of the business as so operated the plaintiff employed more than five persons, was subject to the act and made payments into the unemployment compensation fund as required by law. On April 20th, the plaintiff transferred the paint supply business to George and Yale Oppenheim, doing business as the Yale Paint Company; thereafter doing business under this name they continued to employ in the paint business the same employees formerly employed by the plaintiff during the time it had carried it on; and they have since conducted this business at 463-465 Congress Avenue in a store located in the same building with the store at 469 Congress Avenue, but separate from it. On and after April 20, 1937, the plaintiff employed less than five persons and on June 30, 1938, not having had as many as five employees for as many as twenty weeks during the preceding fifteen months, upon its request it was released by the defendant from liability under the act. On July 1, 1939, the plaintiff's capital stock consisted of one thousand shares, of which George and Yale Oppenheim, who are the same persons comprising the partnership doing business as the Yale Paint Company, each owned four hundred and ninety, and Rebecca and Elizabeth Oppenheim each ten. For twenty weeks subsequent to July 1, 1939, the plaintiff employed four persons. During the same period the Yale Paint Company employed for the first four weeks after July 1st two persons, for the next eight weeks three, and for the next fourteen weeks four. *216
The defendant determined that the plaintiff became liable under the act at the end of the twentieth week after July 1, 1939, to wit, on November 12, 1939, and made an assessment for contributions and interest for the fourth quarter of 1939 and the first and second quarters of 1940, aggregating $382.32. In determining that the plaintiff had five or more employees in its employment, the defendant counted, in addition to its employees, those of the Yale Paint Company. The amount of the assessment in question is predicated upon the wages paid by the plaintiff to its own four employees for the three quarterly periods specified.
The provision of 1335e referred to, the constitutionality of which is challenged under the first and second questions submitted, provides: "In determining whether an employer in question shall be considered, for the purposes of this section, as having had five or more employees in his employment at a given time, there shall be counted, in addition to his own employees, if any, (a) the employees of each employer whose business was at the given time owned or controlled, directly or indirectly, by the same interests which owned or controlled the business of the employer in question, . . ." Pursuant to its general scheme the Unemployment Compensation Act (General Statutes, Cum. Sup. 1939, Chap. 280a, 1334e-1349e) provides for the creation of a fund by employers' involuntary contributions, out of which employees who lose their jobs may, after a waiting period, be paid certain benefits while looking for work but unable to find it. Waterbury Savings Bank v. Danaher,
We are asked to advise whether, upon the stipulated facts, the defendant erred in making the assessment. It is not stipulated that the plaintiff corporation and the partnership of George and Yale Oppenheim, doing business as the Yale Paint Company, were "at the given time owned or controlled, directly or indirectly, by the same interests. . . ." The decision whether there was common ownership or control would be a conclusion of fact, to be reached upon the basis of the subordinate facts stipulated and reasonable inferences to be drawn from them. It is not the proper function of this court to adjudicate such an issue. We must, therefore, decline to answer this question. We can, however, properly say this: It appears from the stipulation *218 that the plaintiff originally owned and conducted both the plumbing and the paint business, that after it had sold the latter to the two Oppenheim partners no change was made in the name, location or employees of either business, and that the two partners were the owners of 98 per cent of the plaintiff's outstanding stock. These facts, unqualified and uncontradicted, with the reasonable inferences which might be drawn from them, might well justify a conclusion that there was in fact common control of the two businesses; nor are we prepared to say that the ownership of the few shares standing in the names of the two women, each having the same surname as that of each of the partners, would prevent a reasonable inference that the partners were the real owners of these shares. Although we cannot give advice which will necessarily determine the judgment to be entered in this case, we may properly answer the other questions asked, because they will necessarily be involved in the decision of the case and their present determination is clearly in the interests of simplicity, directness and economy of judicial action. Practice Book, 421.
The plaintiff's principal contention is that the provision is unconstitutional because it violates the equal protection clause of the state and federal constitutions More concretely it argues that this clause is violated because under the statute other persons engaged in the same, similar, or different businesses, employing like the plaintiff but four employees, are not subject to the tax, compelling it to carry a burden these others are not obliged to bear either in the payment of this or of other taxes of equivalent burden. This presents for determination the question whether the classification made by the statute is arbitrary, unreasonable and unjustified. The applicable legal principles are well settled. "The equal protection of the *219
laws is accorded when all persons similarly situated are accorded `equal protection under the law in the enjoyment of rights belonging to all.' State v. Travelers Ins. Co.,
Applying these principles, since the formula established by the statutory provision in question applies to all employers similarly situated, that is, to all employers whose businesses are under common ownership or control, the question is resolved to whether the classification has a fair and substantial relation to the object of the legislation. If it has, it is valid. If it has not, it is arbitrary, unreasonable and capricious, and therefore void. It is apparent from the plan embodied in the act, as already stated, that its primary object is to relieve against the distress of unemployment, and that the imposition of the tax upon employers is incidental. The explicit provisions of 1346e(a), designed to render impossible the defeat of this object either through agreement by the employee or act of the employer, confirm this fact. Pursuant to the act's basic scheme of paying benefits to the employees of every employer of five or more persons, the duty to pay contributions is imposed upon every such employer as defined in it. The payment so required is a proper tax on the exercise of the right to employ, and a numerical classification of this nature is valid. Carmichael v. Southern Coal
Coke Co.,
The final claim calling for consideration is that the statute impairs the obligation of the state's contract with the plaintiff corporation and is for this reason unconstitutional. The plaintiff's contention is that it impairs this contract "for it tears the corporate veil from the plaintiff and denies to its stockholders that very protection for which it contracted with the state . . . action . . . expressly inhibited by Article I, Section 10 of the Federal Constitution. . . ." It is true that a court of equity will look through the corporate *222
veil is certain circumstances but none of those generally recognized is apparently present in this case. Connecticut Co. v. New York, N. H. H.R. Co.,
Our answer to each of the first two questions submitted is "No." The third question is not answered.
No costs will be taxed to either party in this court.
In this opinion the other judges concurred.