The question here presented concerns the right of the appellant, Federal Telephone & Radio Corp., to transfer to Federal Telecommunication Laboratories, Inc. (hereinafter called “ Laboratories ”) a contribution rate credit for the year 1945, granted to appellant under section 577 of the Unemployment Insurance Law (Labor Law, art. 18). The Appellate Division has reversed on the law the decision of the Unemployment Insurance Appeal Board which permitted such transfer, and has confirmed the Industrial Commissioner’s denial of appellant’s application.
The undisputed facts show that appellant, a manufacturer of radio and telephone parts, had departmentalized its business into a laboratory division,, a patent division, and a service divi*98sion. Pursuant to a decentralization plan, effective July 1, 1945, appellant transferred to its wholly owned subsidiary, Laboratories, the plant and equipment which had formerly been the laboratory division. The assets transferred amounted to a gross value of almost $2,500,000; only office furniture and a few other items, valued at less than $10,000, were retained by appellant.
All the employees of the laboratory division, aggregating over one thousand, were transferred to Laboratories, with no change in the location or nature of their work or working conditions, and appellant retained about twenty-five employees in the patent and service divisions. After the transfer, appellant ceased laboratory operations but operated the former patent and service divisions, and paid contributions on the wages of its few remaining employees.
Shortly before this transfer, the Industrial Commissioner had issued to appellant a contribution rate credit of approximately $23,000. This credit had been earned by appellant on the basis of its previous employment record and was applicable against contributions due during the year beginning July 1, 1945. Since appellant had retained only a few employees, it could not use the credit and sought to transfer it.
The commissioner denied the transfer on the authority of his rule 3, which permitted credits to be transferred only (subd. b) if
“ (1) the acquiring employer has acquired all or substantially all of the assets of the transferring employer, and
“(2) the transferring employer discontinues operations not later than the date of such acquisition and has submitted all reports on the wages paid by him to the date of acquisition ”. (N. Y. Official Compilation of Codes, Rules & Regulations [1948 Supp.], p. 988; Div. of Placement & Unemployment Ins.)
Since it is clear that appellant did not discontinue operations, it did not meet the requirements of rule 3.
It is our view, however, that rule 3 is invalid. Respondent contends that the rule properly interprets section 577 of the Unemployment Insurance Law, which provided:
“ Contribution rate credits. 1. Meaning of terms. * * *
“ (d) ‘ Qualified employer ’ means any employer who in each of the thirteen consecutive calendar quarters immediately pre*99ceding the computation date was required to file and filed all contribution reports prescribed by the commissioner and has paid contributions due thereon before the cut-off date. If an employer has acquired all or substantially all the assets of another employer and such other employer has discontinued operations upon such acquisition, the period of liability of both employers during such period shall be jointly considered for all purposes of this section. * * *
“ 4. * * * No credit shall be transferable by any employer to his successor or anyone else except in accordance with such rules as the commissioner may prescribed’ (Emphasis supplied.)
It will be noted that the commissioner has imported into his rule 3, formulated to interpret subdivision 4 of section 577, the restrictions which are found in paragraph (d) of subdivision 1 of that section. However, paragraph (d) of subdivision 1 is in nowise concerned with the transfer of credits already earned; it relates 'to the earning of credits in the first instance. The statutory scheme is clear — paragraph (d) of subdivision 1 relates to the earning of credits by a “ qualified employer ” and subdivision 4 to their transfer by “ any employer to his successor or anyone else ” — and the commissioner had no authority to transpose standards appropriate to the former and apply them to the latter situation. In so doing, he was setting up substantive standards for the transfer of credits which are found neither expressly nor by necessary implication in the statute.
In effect, the commissioner, in contravention of the authority given him in section 530 of the statute to “ administer ” the law and “ for such [administrative] purposes ” only to make rules and regulations, has assumed legislative authority. His action is therefore, on familiar principles, invalid (Packer Collegiate Inst. v. University of State of N. Y., 298 N. Y. 184; Matter of Levine v. O’Connell, 275 App. Div. 217, affd. 300 N. Y. 658). Matter of Newspaper P. M. (Corsi) (274 App. Div. 569, affd. 299 N. Y. 702) relied on by respondent, has no application here, since it dealt with the earning of credits, rather than their transfer.
The order of the Appellate Division should be reversed, and the decision of the Unemployment Insurance Appeal Board confirmed, with costs in this court and in the Appellate Division.