Court Opinion

ID: 9884378
Source: CourtListenerOpinion
Date Created: 2023-10-06 02:54:25.71608+00
Date Added: 2024-06-11T07:48:37.297002
License: Public Domain

Mr. Justice Crampton, dissenting: I cannot agree with the majority opinion and the importance of the issue to many small business concerns impels me to dissent. The question presented is whether or not the ownership and common control clause is arbitrary and unreasonable when applied to the factual situation involving the ownership and operation of these three theatres. I do not wish to be construed in opposition to the declared purpose of the act, namely, to alleviate widespread unemployment, nor to approve of decentralization of business enterprises for the purpose of escaping contributions. It is the application of the general rule of law to the facts present here which, in my opinion, makes the rule arbitrary and discriminatory. It has already been pointed out that under our decisions the words of the statute “own or control” mean “own and control.” (Italics supplied.) Therefore, both "ownership” and “control” must be present before the businesses may be treated as a unit. The majority opinion states the facts are undisputed. It is true the facts as testified to are uncontroverted and findings thereon were made by the director, but there is a wide area of disagreement between the parties as to the proper interpretation and effect of the testimony and the correctness of the findings. The question of whether the businesses were owned and controlled by the same interests is a question of law which must be decided by the courts and not by the parties. The effect of facts stipulated is a question of law for the decision of the courts. (See Nat. Bank of Colchester v. Murphy, 384 Ill. 61, 65.) Some of the conclusions as found by the Department are directly opposite to those of appellant. For instance, the finding was made that the theatres maintained a joint office and telephone. Todd claims the office was separate and a block from the theatre in LaHarpe, where he lived, from which he conducted his farm, livestock, telephone, and other business. The finding was that Todd made all the decisions as to policies and operations of the theatres, but the evidence shows he constantly conferred with his different partners as to the policies and the hiring of managers and their joint agreement controlled. It is pertinent to point out that the Amus-U Theatre in LaHarpe was organized by Ralph D. Todd’s father, Charles K. Todd, and one Ewing, in 1936, as a corporation. Later the father sold to the son one half of his interest and when the father died, in 1938, his widow, Eva D. Todd, took the father’s interest under the father’s will, and Ralph Todd later purchased the share of Ewing. The corporation was then dissolved and the business operated as a partnership, but the mother retained the same ownership. In 1943, Todd became the sole owner of the Diana Theatre at Blandinsville, and in June of 1945, Todd, and his wife, Emma Louise, became equal owners of the Dawson Theatre in Stronghurst, which was sold in 1947. Thus it is obvious there was no attempt here to circumvent the law by dividing a business into smaller units to escape the act. Likewise, there is no “successor” clause to be interpreted here but the case only involves the “affiliate” or "common control clause.” The businesses, it is safe to say, were operated independently, except for the services of the manager, Hallowell, who sometimes purchased pictures for all three theatres. But he was paid separately by each theatre for the services performed by him to it. All accounts, checks, returns, and incidents of the businesses were handled separately by and for each theatre in the various towns. The only question then is whether the ownership and control were vested in the same interests. These are words in common use and such should be given their plain, natural, and commonly understood meaning. Yet in their application to particular factual situations there is a great conflict of authority. Many cases are to be found wherein the businesses are treated as a unit, within the purview of the statute, when a majority of the stock or participation in the business is, owned by the same individuals or interests. Even here, a different result has often been reached. See Benner-Coryell Lumber Co. v. Indiana Unemployment Compensation Board, 218 Ind. 20, 29 N.E. 2d 776; State ex rel. Oklahoma Employment Security Commission v. First Nat. Bank of Texhoma, 197 Okla. 652, 174 Pac. 2d 259; Florida Ind. Com. v. Fraser, 151 Fla. 755, 10 So. 2d 496; Texas Unemployment Comp. Com. v. Bass, 151 S.W. 2d 567; Murphy v. Doniphan Tel. Co. 347 Mo. 372, 147 S.W. 2d 616. The majority opinion relies upon four cases to bring these properties within the contemplation of section 2(e) (5). They are McGrew Paint & Asphalt Co. v. Murphy, 387 Ill. 241, Moriarty, Inc. v. Murphy, 387 Ill. 119, Zehender & Factor, Inc. v. Murphy, 386 Ill. 258, and Lindley v. Murphy, 387 Ill. 506. In the McGrew case, a stipulation was entered into reciting that each corporation was controlled either directly or indirectly by legal and enforceable means by McGrew and, further that he owned a majority of the shares of each of the four corporations in question. The elements of ownership and control were both present and admitted. This was held to be a binding stipulation of fact and the judgments were affirmed. As to the fifth corporation involved in that case, in which McGrew owned less than a majority of the stock, the judgment was reversed, although this court said that corporation might have been liable under section 2(e)(2) under which section no finding was made. In Zehender & Factor, Inc. v. Murphy, 386 Ill. 258, the constitutionality of the section in question was raised and upheld and it was clear that Zehender and Factor, either as partners or stockholders, together, owned and controlled the large majority interests in the drugstores and personally managed the business. The other large stockholder in only one of the stores was the landlord and he owned the shares as security for back rent. In Lindley v. Murphy, 387 Ill. 506, the issue was one of a succession of interests in a brokerage firm under section 18(c) (6) involving the rate to be paid based upon the employment experience of the previous partnerships. Moriarty, Inc. v. Murphy, 387 Ill. 119, has a factual situation which in many respects is similar to the case here. The accepted opinion of the court in this case holds plaintiffs cannot rely upon the Moriarty case for the reason the Director made no finding with respect to the control of the corporation. Yet reference to that case shows Moriarty was president and treasurer of one corporation in which he held all the stock except two shares; that the second concern, a copartnership, was under the supervision of Moriarty and the two Doodys and in which he held a fifty per cent interest. Again, he was president of the third corporation in which he held a two-thirds interest. All companies were in the construction field. In that case we said: “The findings of the Director pertain to the ownership of the three units. There is no finding of fact as to actual joint control * * * that evidences a unification in the management and formation of policies of each employer. The ownership of the stock has evidentiary value in determining whether unification of control is present but it does not, standing alone, furnish a basis for combining the employment experience of two employers so that they may be considered as a single unit. In considering such matter, the character of the business in which each employer is engaged, the relation of one to the other, their respective locations, the ownership of interests and the management of the business of each are factors to be given consideration. The findings in that regard do not sustain the assessments.” The fifth case, Karlson v. Murphy, 387 Ill. 436, quoted from, likewise a brokerage company case, involved six successive partnerships. The opinion here assumes from the quote in the Karlson case that the enterprises here “economically and in reality constitute a single business.” With this I cannot agree. The law of partnerships carries an elemental and statutory rule that a partner is a co-owner with his partners in specific partnership property, holding as a tenant in partnership, carrying with it as an incident thereof an equal right to the specific partnership property for partnership purposes, and a partner has no right to possess (or control) such property for any other purpose without the consent of his partners. (See Uniform Partnership Act, Ill. Rev. Stat. 1951, chap. 106½, par. 25.) This is, most certainly, especially true where one partner, as here, owns a fifty per cent interest with another partner who likewise owns the remaining fifty per cent of that partnership and no interest whatsoever in another of the partnerships sought to be included in the “Unit,” unless we can say that the close relationship of the mother and wife constituting the partners in the unrelated partnerships makes the interests the same. The word “control” should be accorded its full and complete meaning with due regard to the general purpose for which it was used in the statute. The statute in no way limits its meaning. The word as there used should be held to connote the management and direction of every act, and the formulation of every business policy, of the employment unit, without right of legal interference from anyone with respect to all lawful pursuits. (State ex rel. Oklahoma Employment Secur. Com. v. Tulsa Flower Exch. 192 Okla. 293, 135 Pac. 2d 46.) The fact one of Todd’s partners was his wife in one partnership and his mother a partner in another partnership and the further fact the theatres were operated as “related businessses” are not sufficient to justify the conclusion that they were owned and controlled directly or indirectly by the same interests. It was so held in Huiet v. Dayan, 69 Ga. App. 81, 24 S.E. 2d 728, where there were three businesses, each conducting a store handling almost identical goods and together employing more than the statutory number necessary to bring an employing unit within the Unemployment Compensation Act, and wherein one person was the sole owner of one business, he and a brother were equal partners in another and he and another brother were equal partners in a third business, although the owner of the one, who was also the half owner of the other two, did the buying for all the stores and had all deliveries made to his store, from which the merchandise was apportioned to all three. To the same effect is State Dept. of Unemployment Comp. etc. v. Vasilatos, 21 Wash. 2d 140, 150 Pac. 2d 695. To say these businesses were owned and controlled by the same interests, in my opinion, is to read a construction into the statute which is not there. If this is to be the meaning of the statute, the legislature should so state in plain and concise terms. The judgment, I firmly believe, should be reversed.