Employment Security Commission v. Arrow Plating Co.

Levin, J.

{concurring). The employment security act contains two applicable definitions. One defines “employer”1 and the other defines “transfer of business.”2 It appears from a comparison of the two *331definitions that the legislature intended to impose the liability of an “employer” on one who acquires the business of a former employer upon a lesser showing than that required to tack the unemployment claims experience of the former employer onto one who continues, as well as acquires, the former employer’s business.

It will be observed (footnotes 1 and 2) that while one who acquires the “organization, trade or business” of another is an “employer”, such an acquisi-' tion is not regarded as a “transfer of the business” unless there has been either an acquisition and use of the transferor’s trade name or good will, or the transferee has continued or resumed all or part of the business of the transferor.

I am inclined to think that when Arrow Plating acquired all the employees, excepting the proprietor Mr. Beck, all the plating equipment and the leasehold of "Wade Boring Works, which leasehold, although terminable, was not in fact to be terminated — indeed, the leasehold was the raison d’etre of the entire transaction — Arrow acquired the “organization, trade or business” of Wade.3 This interpretation of the statutory definition of “employer” seems more consistent with the act’s apparent purpose, which is, no doubt, to continue coverage under the act in situations such as this one without the necessity of waiting for 20 weeks to expire.

However, I see no need to decide whether Arrow is an “employer”. The only question raised by the Michigan employment security commission determination, taken to the appeal board by Arrow, was whether there was a “transfer of business” within *332tlie meaning of section 22(a).4 I agree with my colleagues there was not a “transfer of business”.

It is undisputed that Arrow did not acquire and use "Wade’s trade name or good will. Nor did Arrow continue or resume all or part of Wade’s business. Wade and Arrow used different plating processes. Arrow never did business with any of Wade’s customers. Thus, Arrow’s method of operation, product, and customers were different from that of Wade. The appeal board’s finding that there was not a “transfer of business” is supported by substantial evidence.

I concur in the reversal of the judgment here on appeal.

“See. 41. ‘Employer’ means * * * (2) Any individual, legal entity or employing unit which acquired the organization, trade or business, or 75% or more of the assets thereof, of another which at the time of such acquisition was an employer subject to this act.” CLS 1961, § 421.41 (Stat Ann 1963 Cum Supp § 17.543).

“See. 22(a) If an employer subject to this act transfers subsequent to June 30, 1954, any of the assets of his business by any means otherwise than in the ordinary course of trade, such transfer shall be deemed a ‘transfer of business’ for the purposes of this section if the commission determines:

“(1) That the transferee is an employer subject to this act on the transfer date or has become so subject as of the transfer date under section 41(2) * * * and

“(2) That the transferee has acquired and used the transferor’s trade name or good will, or that the transferee has continued or within 12 months after the transfer resumed all or part of the busi*331ness of the transferor either in the same establishment or elsewhere.” OLS 1961, § 421.22 (Stat Ann 1963 Cum Supp § 17.524).

The question does not turn on disputed faets, nor would it appear to be one within the special competence of the appeal board to decide.

While the appeal board decided both that Arrow was not an employer and that there was not a transfer of business, the basic dispute was whether by reason of a “transfer of [Wade’s] business” to Arrow, Arrow should be burdened with the higher experience rating of Wade. This appears not only from the nature of the arguments to us, but also from the initiating document. That document, a “notiee of determination of transfer of rating account”, from the employment security commission to Arrow, advised Arrow that certain records indicated that on February 7, 1965, a transfer of business occurred “wherein you acquired assets involving 100% of the payroll for the four completed calendar quarters prior to the date of acquisition, from Frank C. Beck, an individual owner, d/b/a Wade Boring Works”, and that, accordingly, it was determined the total rating account of the transferor would be transferred to Arrow as provided in section && of the act. It was from that determination that Arrow appealed. The employment security commission later issued a redetermination confirming its prior determination. Arrow appealed that redetermination.