334 Mich. 82 | Mich. | 1952
Euss Dawson, a copartnership, composed of the members of the Euss Dawson family, operated an automobile sales and service agency con
On April 1, 1946, the Russ Dawson partnership sold, for $33,000, to a newly-formed partnership, which is not a party to these proceedings, all of its assets located at the Cass avenue branch, including the lessee’s interest in an unexpired lease covering the premises at Cass avenue.-
The sale of the Cass avenue branch included only the physical assets at that address plus the unexpired portion of a lease covering the premises there, but it did not cover good will, the name of Russ Dawson, or an assignment of the Ford Motor Company automobile agency franchise outstanding in the partnership name. These intangible assets were transferred to the corporation on May 1, 1946.
On May 1,1946, the Russ Dawson partnership sold, for $210,000, to Russ Dawson, Inc., a newly-formed Michigan corporation, all of the remaining assets of the partnership which consisted of those assets in the Woodward avenue place of business. Included in this transaction was an assignment by the partnership to the corporation of the automobile' agency franchise. The stockholders of the- corporation were the same individuals who were members of the predecessor partnership.
The aggregate wages paid by the Russ Dawson partnership for the' period from April 1, 1945, through March 31, 1946, at the Woodward avenue place of business represented approximately 75%, and at the Cass avenue place of business approx
In July, 1946, the Michigan unemployment compensation commission issued a determination combining the experience records of Buss Dawson, Inc., and the Buss Dawson partnership under the provisions of section 22 of the Michigan unemployment compensation act, PA 1936 (Ex Sess), No 1, as amended by PA 1943, No 246 (Stat Ann 1946 Cum Supp § 17.524 [62]). On October 3, 1946, the commission issued a redetermination declaring the previous determination void and held that the experience record of the corporation could not be combined with that of the predecessor partnership. On May 20, 1947, the commission issued a notice of assessment to Buss Dawson, Inc., for additional contributions on the basis of a rate of 3% as a result of the decision not to combine the experience record of the corporation and the predecessor partnership. The matter was appealed to the appeal board, which held that the experience records could not be combined. The matter was then taken for review by writ of certiorari to the circuit court of Wayne County. On October 13, 1950, the circuit court reversed the decision of the appeal board, and held that the experience records could be combined.
The trial court in an opinion stated:
“The present litigation arises out of the claim of that corporation to the benefit of the experience records of the former partnership and the consequent maintenance of the contribution level enjoyed by the partnership. The position of the commission is that the corporation must start its contributions at the maximum level of 3%, as if it were just starting in business. This involves a construction of section 22 of the statute. There is no question (and it is conceded) that the corporation is the successor, within the meaning of the act, of the partnership,*86 and that it has accepted responsibility for any unpaid contributions of the partnership as of May 1, 1946.
“The immediate question involves an interpretation of subsection (c) of section 22, reading as follows :
“ ‘In the interpretation of this section, substantially all of the employing enterprises of a predecessor employer shall be deemed to be continued solely through a single employer as successor thereto if the commission finds that the successor has acquired business establishments or properties, or other trade or assets, the operation of which during the last 4 completed calendar quarters involved more than 95% of the aggregate wages payable for employment by the predecessor employer during such period.’ * # *
“The proper question to be determined is the percentage of wages arising from the operation of ‘business establishments or properties, or other trade or assets,’ wherever located. It is entirely conceivable that the operation of only 50% of the property or assets might involve 75% of the wages, and conversely, that the operation of 75% of the property or assets might, involve only 50% of the wages. The fact in the instant case is, that the operation of the .Ford agency franchise coupled, of course, with the physical properties necessary to implement it, involved all the wages under the partnership, regardless of the geographical location of the buildings where the various employees worked. It is apparent to the court that the predominant and indispensable asset and property which produced all the wages paid to the plaintiff’s employees when it was a partnership, was its agency contract with the Ford Motor Company. It is quite true that this alone would produce no wages, and that physical assets such as buildings and machinery were necessary to give it value. It is equally true that these physical assets without the franchise would have produced only a small fraction of the wages which were paid. This lucrative and wage-producing asset was retained by the part*87 nership after the separation of Lare and West on April 1st, and passed on directly to the corporation on May 1st. It is apparent, then, that the successor corporation on May 1st acquired properties and assets, the operation of which during the preceding year involved more than 95% (in fact, 100%) of the aggregate wages paid by the partnership.
“It follows, therefore, that the successor corporation, the plaintiff in this case, succeeded to all of the benefits of the experience records of its predecessor, the partnership, and that the decision of the appeal board of the unemployment compensation commission must be reversed. A judgment in accordance herewith may be entered.”
Defendant appeals and urges that the trial court was in error in holding that the experience records of the corporation and the partnership could be combined in order to determine a rate for the corporation.
The statute provides that under certain conditions a successor employer shall be entitled to a transfer of the experience record of its predecessor employer. The provisions for the transfer of an experience record are contained in section 22 of the act, PA 1936 (Ex Sess), No 1, § 22, subd (a) (1), as amended by PA 1943, No 246 (Stat Ann 1946 Cum Supp § 17.524 [a]) reads as follows:
“(1) That an employer has acquired the organization, trade or business, or substantially all the assets thereof, of a predecessor employer which at the time of such acquisition was an employer subject to this act, and immediately after such acquisition substantially all the employing enterprises of such predecessor employer are continued solely through the employer which has acquired such organization, trade or business, and has accepted responsibility for any*88 unpaid contribution due and payable at the time of such acquisition; or”
The statute also provides in section 22, subd (c) :
“(c) In the interpretation of this section, substantially all of the employing enterprises of a predecessor employer shall be deemed to be continued solely through a single employer as successor thereto if the commission finds that the successor has acquired business establishments or properties, or other trade or assets, the operation of which during the last 4 completed calendar quarters involved more than 95 per cent of the aggregate wages payable for employment by the predecessor employer during such period.”
The above section is a mandate from the legislature providing a basis for determining when a successor employer is entitled to the experience records of its predecessor. In the case at bar the stipulated facts show:
“The aggregate wages paid by the Russ Dawson copartnership for the period from April 1, 1945, through March 31,1946, was $294,411.87, these wages being paid for services rendered at both the principal place of business and the branch establishment at Cáss avenue. Of this amount $219,985.39 was paid during that period for employment in the operation of the Woodward avenue place of business, which amount represents a fraction more [less?] than 75% of the total wages paid by the partnership during that period. The balance represents wages for employment in the Cass avenue branch.”
Under the above-stipulated facts the corporation, in taking over the assets of the Woodward avenue place of business, took over a business that paid only 75% of the total wages paid by the partnership during the preceding year, and under the above sub
The trial court in determining that the corporation was entitled to the experience record of the partnership took into consideration that the corporation took over the agency contract with the Ford Motor Company, and held that the value of this contract as an asset enhanced the assets of the Woodward avenue business sufficient to comply with the statutory requirement.
The record is void of any evidence as to the value of the Ford Motor Company contract. The trial court was in error in placing a value upon an asset contrary to the stipulated facts as contained in the record. It follows that the plaintiff has not made a sufficient showing to enable it to claim the benefit of the experience record of the former partnership.The judgment is reversed, but without costs as a public question is involved.
