Court Opinion

ID: 3895028
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:26:40.518873+00
Date Added: 2024-06-11T07:45:51.690333
License: Public Domain

ON PETITION TO REHEAR
On October 18, 1947, we rendered an opinion in favor of complainants on two grounds: (1) That a fair and reasonable construction of section 6901.7 (a) (2), Williams Ann. Code, 1946 Cumulative Pocket Supplement, justified application of section 14 of the Code. (2) That equity required that the same rule be adopted for credit on the tax as had been applied by the Commissioner in assessing the tax. Change in the form of the operation (as not *Page 261 
being a change in ownership) had been disregarded by the Commissioner for determining tax liability and it reasonably followed in fairness and common sense, that the change in form should also be disregarded in determining the credit or reduction in rate for which the complainants insisted.
Petition to rehear has been filed by defendant Commissioner. He first takes issue with the Court's application of Code sec. 14 to the construction of Code sec. 6901.7 (a) (2). It would serve no useful purpose to restate the reasons which prompted the Court to apply section 14. They are fully set out in the former opinion. The gist of the argument in the petition to rehear is that section 14 is inapplicable because it is expressly limited by the clause, "except when the contrary intention is manifest." Petitioner insists that such contrary intention was manifested by the legislative enactment of Code sec. 6901.19, which undertakes to prescribe definitions for various terms used in the Tennessee Unemployment Compensation Law, and among them a definition of "employing unit 6901.19 (e)" as being: "Any individual or type of organization, including any partnership, association, trust, estate, joint stock company, insurance company or corporation, whether domestic or foreign, or the receiver, trustee in bankruptcy trustee or successor thereof or the legal representative of a deceased person which has or subsequent to January 1, 1935, had in its employ one or more individuals performing services for it within this state."
All of these synonyms of "employing unit" are in the singular number and there is no definition attempted of "employing units" (the plural) but the first sentence of sec. 6901.19 indicates the proper course for construction. It is: "Definitions. — as used in this act, unless the context *Page 262 
clearly require otherwise:" The context of section 6901.7 and the undisputed facts of this case clearly required the application of Code sec. 14 to carry out our conclusion of the fair meaning of that part of the section which provided for business successors.
However, if we delete that part of the opinion which applies section 14 to the construction of section 6901.7, the judgment must remain unchanged for the second reason stated in the opinion. For the purpose of fixing the rate of tax or contribution of the employer, we adopt the method which the Commissioner, himself, had adopted for the assessment. Since Mr. and Mrs. Busch, though ceasing to be partners, still own all the shares of stock of the successor corporations, the Commissioner has disregarded the separation of the business of the partnership into three corporations, and for the purpose of tax liability, has assessed them as a single unit. That he has justified the course by a certain construction of the Act is immaterial. He has recognized that the controlling factor is a unity of ownership which is the same now as when the business was operated as a partnership. But disregarding the "tax experience" of the partnership, he has since the corporate organization, assessed the unit at a new and higher rate. If McKullocks', which as a separate corporation, would escape taxation because it has less than eight employees, is to be taxed as part of the Busch operation, and the operation so assessed as a unit, then the operation, though made up of three corporations, must be given the "experience benefit" to which the partnership was entitled at the time the three corporations succeeded to the entire business and assets of the partnership.
We confine his opinion to the facts of this record. A case might be stated where a partnership was divided *Page 263 
into corporations in such a way that some of the new corporations succeeded to a part of the partnership in which the "tax experience" was bad and others of the new corporations succeeded to parts of the partnership business where the experience was good. On evidence of the fact, each new corporation would as an incident of successorship, take the "experience" (good or bad) of that part of the partnership allocated to such corporation. However, the record here makes no such case and so far as the evidence shows, Royal of Knoxville, Royal of Maryville and McKullocks, all had the same "experience" and were all entitled to the lower rate of 1% provided in section 6901.7.
Finally, the petition to rehear suggests the dire consequences that will befall the Tennessee taxpayers at the hand of Federal authorities on account of our former opinion. (1) This argument is introduced in the petition de novo and is without any support in the record. (2) It is an argument to be addressed to the Legislature, not to this Court. The judicial function is to declare the law as we find it (Anderson v. Wilson,289 U.S. 20, 27, 53 S. Ct. 417, 77 L. Ed. 1004), and it is for the Legislature to weigh the effect and consequences of legislation enacted.
The threat of disapproval by Federal bureaux is not such authority as would sway the course of our opinion in any event. It lacks all persuasive force in the present case, because we expressly confine the decision in the record before us, and the Act construed has apparently been repealed and a new Act substituted as Chapter 29 of Public Acts of 1947, which became effective on February 21, 1947.
Petition denied.
All concur. *Page 264