Court Opinion

ID: 9513306
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:34:03.695582+00
Date Added: 2024-06-11T09:05:48.938404
License: Public Domain

MESCHKE, Justice,
dissenting.
[¶26] I respectfully dissent. Raboin captained this company on its brief voyage from June 1990 through October 7, 1991, just shortly before November 21, 1991, when it *839struck an iceberg of insolvency. To begin, Raboin owned the entire company, but he sold 75% in December 1990, and continued as an 25% owner, a director, and president. Thus, Raboin, most of all, was responsible for the disastrous course of this business, even if he was bumped as president shortly before Classics collided with insolvency and sank. Eventually, Classics went into receivership and filed bankruptcy.
[¶ 27] Raboin plead guilty to conspiracy to commit theft of property by deception in operating Classics, and he was the only officer found criminally responsible. His personal liability for premiums on wages paid during his control, supervision, and responsibility clearly survived the company’s bankruptcy under N.D.C.C. 65-04-26.1(2), which, I would emphasize, also declares that “all wages paid by the corporation must be considered earned from the person determined to be personally liable.”
[¶ 28] After a “very long and involved administrative matter,” the Administrative Law Judge [ALJ] recommended holding Raboin liable for premiums unpaid on wages paid for 99 days of the last 144 days of Classics’s operation:
On August 1, 1991, the Bureau received a payroll report from [Classics]. Unfortunately, the payroll report was unsigned and the Bureau processed and billed the account without demanding a signed report. This was standard Bureau procedure at the time. The payroll report appears to be accurate, however. The payroll report listed gross payroll of $2,490.00 in class 8805, $3,357.50 in class 3504, and $11,842.79 in class 8747. The statutory payroll cap of $3,600.00 was applied to this payroll producing a limited payroll of $2,490.00, $3,357.50, and $10,506.02 respectively. Based upon this limited payroll, [Classics] was billed an actual premium of $759.85 for the 6/28/90 to 6/30/91 payroll period. This actual premium was offset by the $35.70 prepaid that had been billed and paid previously, leaving a balance due for that period of $724.15.
[Classics] was also billed a prepaid premium for the 7/1/91 to 6/30/92 payroll period, in the sum of $1,034.36. The prepaid premium is calculated by multiplying the previous year’s payroll, subject to the current year’s payroll caps, by the current year’s premium rates. No payment was ever made by [Classics] toward this delinquent balance, leading to the assessment of the statutory penalties of $25.00 plus 2% per month.
On April 21, 1992, the Bureau received a final payroll report from [Classics]. This report was signed by [another officer] and listed payroll from 7/1/91 to 11/21/91, when the business ... was closed. The report listed limited payroll of $17,722.65 in class 8805, $58,738.81 in class 3504, and $35,-048.55 in class 8747. Based upon this report, the Bureau billed actual premium for the period from 7/1/91 to 11/21/91 in the total sum of $12,731.39. Adding the account balance as of 11/21/91 ($2,029.70) and subtracting the previously billed prepaid premium ($1,034.36) produced a total balance owing of $13,726.73.
Again, this money remained unpaid, resulting in the assessment of statutory penalties in the amount of $233.94 per month. As of 10/15/92, the total balance owing was $14,921.43. The account continued and continues to accrue monthly penalties of $233.94. There were 40 months between 10/15/92 and the hearing in March 1996, leading to the accrual of an additional $9,357.60 in penalties, leaving a total balance due of $24,279.03 as of the date of the hearing.
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2. N.D.C.C. § 65-04-26.1 is the statute that imposes personal liability upon corporate officers for their failure to pay certain debts of their corporation. It bears an effective date of July 1, 1991. [Classic’s] account has a renewal date of 7/1/91 which makes it very easy to determine the potential corporate officer liability. Of the $24,-279.03 balance owing, $724.15 is the balance owing prior to 7/1/91, leaving a total balance of $23,554.88 potentially subject to corporate officer liability, and for which Raboin ... would be potentially liable as corporate officer[ ].
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*840(b) Raboin, it is undisputed, did have an equity interest in [Classics], 25%. The evidence shows that for a part of the period of liability in question (7/1/91 to 11/21/91), Raboin was the President of [Classics]. He was the President of [Classics] until he was removed on October 7, 1991. He was also a corporate director. His liability is, then, for the period from July 1,1991 until October 7,1991. During this period of time he had potential and actual supervisory responsibility over those individuals who did, could have, or should have filed the reports and made payment of premiums. In other words, he supervised those who had actual responsibility. He was ultimately responsible. He had stated powers and authority and, the evidence clearly shows, he exercised that power and authority at various times. He knew about the requirements for filing and payment of premiums, maybe not about all the particulars, but generally, yet he did nothing to make certain that payments were made. However, he could have made certain that payments were made. He clearly had the authority. The evidence clearly shows that Raboin is liable. He has the requisite equity interest, the official capacity (president and director), and the control of and responsibility (stated and actual) over the people and mechanisms of the corporation that could have, should have, and at times did relate to the reporting and payment of premiums.
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4. Unfortunately, no one involved with [Classics] actively or consciously thought too much about workers compensation premiums. Raboin and [another officer] were both indifferent, for the most part. They had more important things to do, in their minds. [A third officer] in his role as seeretary/treasurer did have hands-on involvement, but he also got caught up in apparently more pressing matters that involved the survival of the business. But, it is clear that any of them, or all three, could have done more. They had the authority to do more and exhibited the ability to do more. They had the control over people, stated and actual. They had the control over the day-to-day operations, stated and actual (Raboin, as president and CEO, moreso until October 7, 1991). Even though [another company] exercised a good deal of influence and control over the operations of the business, especially later, because of its equity position and its position on the Board, exercised through [the third officer] and others, it did not appear to have any stated or actual control of or supervision over the day-to-day operations, especially as to such mundane matters as workers compensation premiums and other such day-to-day financial operations. Ra-boin ... and [two other officers] had that authority, control and supervisory responsibility, jointly and severally. It was actually exercised or not exercised in various ways over the period in question (but, the failures and the other corporate disputes are to a large extent irrelevant and immaterial for the purposes of the issues in this matter). All three could and should be held accountable and liable.
The ALJ recommended computation of Ra-boin’s liability this way:
Jim Raboin is personally liable for the premiums due and owing by [Classics], under the provisions of N.D.C.C. § 65-04-26.1. But, he is only liable for premiums up until October 7, 1991. He is, therefore, liable for premiums for a fifteen week period after July 1,1991. It is reasonable that he is liable only for $16,824.91 of the amount due and owing (15/21 x $23,-554.88) (up until the time of the hearing— the amounts continue to grow by virtue of penalty and interest for unpaid amounts, for which he remains proportionately liable).
The Bureau adopted the ALJ’s recommendations and ruled Raboin was liable for his proportionate share after July 1 through October 7, 1997, of $16,824.91, out of total premiums due and subsequent penalties that totaled $23,554.
[¶29] On review of Raboin’s appeal, the district court affirmed, reasoning:
Of [Raboin’s] four specifications of error, numbers 1, 3, and 4 identify one and the same following issue: whether the Bureau’s finding that [Raboin] had control of *841or supervision over the filing of and responsibility for filing premium reports or making payment of premiums for [Classics] from July 1, 1991 (the effective date of § 65-04-26.1) through October 7,1991 is supported by a preponderance of the evidence. ...
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Upon review of the entire file in this matter, this court determines that the Bureau’s finding that [Raboin] had control of or supervision over the filing of and responsibility for filing premium reports or making payment of premiums for [Classics] from July 1, 1991 through October 7, 1991, pursuant to section 65-04-26.1, NDCC, is in accordance with section 28-32-19, NDCC....
[¶ 30] Our analysis should begin with the full statutory text. In 1991, the complete statute directed:
Corporate officer personal liability.
1.Any officer, director, or any employee having twenty percent ownership of a corporation that is an employer under this title who has control of or supervision over the filing of and responsibility for filing premium reports or making payment of premiums under this title, and who fails to file the reports or to make payments as required, is personally liable for premiums or reimbursement, including interest, penalties, and costs in the event the corporation does not pay to the bureau those amounts for which the employer is liable.
2. The personal liability of any person as provided in this section survives dissolution, reorganization, bankruptcy, receivership, or assignment for the benefit of creditors. For the purposes of this section, all wages paid by the corporation must be considered earned from the person determined to be personally liable.
3. After notice and opportunity for hearing, the bureau shall make a determination as to the personal liability under this section. A hearing must be requested within thirty days from the date of mailing of the notice. The determination is final unless the person found to be personally liable requests review by the bureau within thirty days after mailing of the notice of determination to the person’s last known address.
N.D.C.C. 65-04-26.1 (1991)(emphasis added).2 Subsection 1 of this statute makes a person who has “control,” “supervision,” and “responsibility” liable, not because he personally did not file “premium reports” or personally make “payments as required,” but rather “in the event the corporation does not pay.”
[¶31] That duty is enlarged and heightened by subsection 2 that makes “all wages paid by the corporation ... considered earned from the person determined to be personally liable.” N.D.C.C. 65-04-26.1(2)(1991). This law thus fixes a fiduciary responsibility on that officer to ensure payment for “all wages paid by the corporation” “earned from the person ... personally ha-ble.” Thus, all wages paid or payable by Classics from July 1 through October 7 in *8421991 “must be considered earned” from Ra-boin to calculate his personal liability.
[¶ 32] Unfortunately, the majority opinion ignores subsection 2, and instead uses the dates of default to focus solely on a single phrase in subsection l.3 The majority narrowly interprets that single phrase without considering the whole statute and without following our usual rules of statutory interpretation. “The entire statute is intended to be effective.” N.D.C.C. 1-02-38. Statutes must be construed as a whole to identify the intent of the legislature by comparing every section as part of a whole. Johnson v. North Dakota Workers’ Compensation Bureau, 484 N.W.2d 292, 295 (N.D.1992). Each word, phrase, clause and sentence of a statute should be given meaning and effect. Matter of Estate of Opatz, 554 N.W.2d 813, 815 (N.D.1996). As these precedents illustrate, both the statute’s connection with other related sections and the consequences of a particular construction should be considered.
[¶ 33] The majority incorrectly focuses on dates when premiums became past due, not when wages were paid. The majority ignores the fiduciary responsibility to provide for payment of premiums as they accrue. The majority thus assigns no meaning to the explicit declaration in subsection 2 that “all wages paid by the corporation must be considered earned from the person determined to be personally hable.”
Ell 34] Raboin founded Classics and acted as its president until just shortly before its closing on November 21, 1991. He qualifies in every respect as an officer personally ha-ble. The company was subject to his control, supervision, and responsibility during the time wages were paid and premiums accrued. When Raboin was bumped as president on October 7, 1991, the business was in such poor shape that it could not pay debts as they fell-due in the following weeks. This disastrous course came about under Raboin’s captaincy. In my opinion, Raboin is hable for a just share of premiums during his control, including the penalties and interest accrued thereafter for that proportion.
[¶35] For these reasons, I would affirm Raboin’s personal liability. Therefore, I respectfully dissent.
[¶ 36] MARING, J., concurs.

. While no relevant legislative history for the 1991 enactment has been located, there is relevant history from later amendments to this section by 1995 N.D. Laws, ch. 619, § 7. These amendments mainly clarified what officers were liable under subsection 1. Only a minor change was made to subsection 2 in 1995, changing "earned from the person determined to be personally liable” to "earned from any person determined to be personally liable.”
The legislative history with this change states the legislative purpose of the entire section:
Corporate Officer liability is a very effective tool for collections. Corporations, especially small, closely held corporations, are often seen primarily as a method to shield officers and owners from personal liability for business debts. Because debts owed the government; for example taxes, unemployment and workers compensation; would impair the public -coffers if not paid by the corporations, such debts have been made personal obligations of the corporate officers to increase the chances that they will be paid. These liability provisions are very effective. Frequently, corporations will find some way to pay their workers compensation bill when the corporate officers are informed that they will be held personally liable for the debt if not paid by the corporation.
Testimony by Robert W. Morris, Assistant Attorney General for the North Dakota Workers Compensation Bureau, on House Bill No. 1329 before the House Industry, Business and Labor Committee on January 23, 1995. Thus, an officer with a sufficient ownership in the corporation is charged with a duty to "find some way to pay their workers compensation bill” during his period of control because that debt "would impair the public coffers if not paid.... ”

. I have a great deal of difficulty, too, understanding the majority’s awkward analysis of due dates and default dates. N.D.C.C. 65-04-19 (1991) requires the Bureau to "determine the amount of premium due from every employer ... for the twelve months next succeeding the date of expiration of a previous period of insurance _ The bureau then shall order such premium to be paid into the fund....” While deferred payments are authorized, "[ilnterest must be charged at the same rate per annum as earned by the investment of the fund.... Such rate must be charged on all premiums deferred under the provisions of this section, and upon default in payment of any installment such installment shall carry penalties as provided in this chapter.” N.D.C.C. 65-04-20 (1991). See also NDAC 92-01-02-23 (effective November 1, 1991). Liability for premiums clearly accrues as employees work and are paid, not some later deferred payment date.
Moreover, "[t]o protect the lives, safety, and well-being of wage workers, to ensure fair and equitable contributions to the state workers' compensation insurance fund between all employers, and to protect the workers’ compensation fund,” the Bureau “may institute injunction proceedings" "[wjhen the employer defaults in the payment of insurance premiums into the state fund.” N.D.C.C. 65-04-27.1 (1991). Thus, as they accrue, provision for payment of premiums on wages is intended.