Court Opinion

ID: 3999524
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:56:45.866981+00
Date Added: 2024-06-11T13:56:02.793759
License: Public Domain

I wish to add to the statement of the case given by the majority. In 1943, Yakima Artificial Ice and Cold Storage Company, an operating corporation, transferred its assets to Artificial Ice and Fuel Company, a partnership; and Rainier Fruit Corporation, an operating corporation, transferred its assets to Rainier Fruit Company, a partnership. City Ice Delivery Company, a corporation, remained dormant. The latter had never been an operating company; had never engaged in extrahazardous employment; and had never acquired an experience rating.
As mentioned by the majority, the statute has been considered by this court in two cases; Monroe Logging Co. v. Department ofLabor  Industries, 21 Wn.2d 800, 153 P.2d 511, and PugetSound Bridge  Dredging Co. v. Department of Labor  Industries,26 Wn.2d 534, 174 P.2d 541. In the Monroe Logging Co.
case, two corporations, the Jamison Mill Company and the Lyman Timber Company, acquired all the assets of the Monroe Logging Company, except cash, accounts receivable, notes receivable, etc. The Monroe Logging Company was dissolved, and the two purchasing corporations were allowed to use the name "Monroe Logging Company" as a trade name. The joint venture claimed that it was entitled to the merit rating earned by the original corporation, rather than being compelled to pay the basic rate as a new employer. This contention was based upon the fact that there was no shutdown occasioned by the transfer, operation being continuous and carried on by the same personnel and management. We held, however, that the joint venture composed of the Jamison Mill Company and the Lyman Timber Company, was a new employer under the act, saying:
"Appellant recognized the necessity of registering with the state tax commission for tax purposes and of filing reports *Page 297 
with the state unemployment compensation division. It seems to us that, if, in contemplation of the social security act and other tax statutes, the Monroe Logging Company lost or changed its identity as of November 10, 1941, as a taxpayer, it then became a new taxpaying entity (employer) in contemplation of § 7676. We do not think that continuity of the operation and retention of the old personnel and management have any bearing upon the construction of the statute. Appellant was under no obligation to retain the old personnel and management, and conceivably, would not have done so had the experience rating of the Monroe Logging Company, the corporation, been on the demerit side of the basic rate instead of on the merit side. It is a fair inference that, had the experience rating of the corporation been more than the basic rate, appellant would have resisted any attempt on the part of the department to assess premiums on such basis."
I disagree with the majority that the basic reason for our decision in the Puget Sound case was
". . . that while the form had changed, in that there had been a dissolution of the joint venture, the substance remained, in that the other member of the joint venture had secured the interests of its former associate."
There, the Lake Union company dropped out, but Puget Sound remained. It had earned the merit rating and was not a new employer. The majority says: "The only essential difference between the situation in the latter case and the ones before us seems to be a change in names." If, in the present case, the partnership and the corporation had jointly, as a joint venture, earned the merit rating and the partnership had withdrawn, the situation would then be analogous to that of the Puget Sound
case. That was not the situation here.
The majority bases its decision upon the ground that the change was one of legal structure only, that it was one of form and not of substance. If that theory were carried to its logical conclusion, we would have to hold, for example, that if "A" corporation, of which B, C, and D were the sole stockholders, had acquired a certain experience rating, and that thereafter B, C and D sold their stock to X, Y, and Z, *Page 298 
"A" corporation would then become a new employer and would be subject to the basic rate, because the change would be of substance though not of form.
Let us examine the situation in the present case realistically. We have a partnership which had acquired a certain merit rating. But it went out of existence; it dissolved; it sold all of its assets. Its assets were acquired by the City Ice Delivery Company, a corporation, which had remained dormant for years; had never been an operating company; had never engaged in extrahazardous employment; and had never acquired an experience rating. This dormant corporation, after being dusted off, then changed its name to that of the old partnership and increased its capital stock. Upon the completion of the transaction, the partnership ceased to exist and, hence, was no longer the employer. In acquiring the operating business, the reorganized corporation became the employer.
The test in each case is not whether there has been a change of form, a change in substance, or a change in the legal entity. Those are simply circumstances to be considered in arriving at the ultimate solution of each problem. The real test is: Did the individual or organization in question become an "employer" as defined by Rem. Supp. 1947, § 7676c, wherein it states: "Every employer who shall enter into any business or commence any operation subject to industrial insurance classification"? It seems clear to me that the rejuvenated corporation, City Ice Delivery Company, in taking over the name and business of the dissolved partnership and thus for the first time engaging in extrahazardous work, commenced an "operation subject to industrial insurance classification," and, as such, was required to start at the basic rate as provided by the statute.
January 21, 1950. Petition for rehearing denied. *Page 299