Court Opinion

ID: 6363234
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:38:01.487065+00
Date Added: 2024-06-11T15:49:45.369341
License: Public Domain

*518Dissenting Opinion by
Judge Mencee
I respectfully dissent.
The facts in this case are not in dispute. Mrs. Finn was laid off, due to • lack of work, by TRW Incorporated/where’she had been employed for sixteen years. On June 3, 1974, she and her husband purchased a hotel iii Sunbury, Pennsylvania, and acquired a liquor license for the hotel bar. The property and lieénse are held jointly by Mr. and Mrs. Finn. The referee found that Mrs. Finn performs no work in connection with the hotel nor does she receive income directly from its operations. Plowever, she and her husband live on the income derived from the operation of the hotel.
On June 30, 1974, Mrs. Finn applied for unemployment benefits and was denied compensation for the weeks ending July 13, 1974 through September 21, 1974, the disputed period, by notice dated September 26, 1974, on the grounds that she was unavailable for work and was self-employed. After a hearing on appeal, the referee upheld that part of the decision denying benefits on the ground that Mrs. Finn was self-employed. He specifically found, however, that she was at all times available for work. The Board upheld the referee in an order dated February 7, 1975. Claimant appeals, alleging that the referee erred in determining that she was self-employed within the meaning of Section 402(h) of the Unemployment Compensation Law, Act of December 5, 1936, Second Ex. Sess., P.L. [1937] 2897, as amended (Act), added by the Act of December 17, 1959, P.L. 1893, §10,43 P.S. §802(h).
Our consideration of this case is therefore limited to the question of whether, as a matter of law, Mrs. Finn was self-employed within the meaning of the Act.
*519As we observed in Leary v. Unemployment Compensation Board of Review, 14 Pa. Commonwealth Ct. 409, 412, 322 A.2d 749, 750 (1974), “[s] elf-employment is not defined in onr Unemployment Compensation Law, and a review of relevant cases unfortunately does not give us a working definition.” Therefore, it is necessary to review the cases applying Section 402(h) to discover an applicable test to determine self-employment.
In reviewing the cases applying Section 402(h) to discover an applicable analogue, I discern basically two types of situations in which that section is used to deny benefits. The first type arises when an operating concern, usually because of financial reverses, reduces its staff or goes out of business, thus rendering unemployed persons who were owners, shareholders, or officers of the business in addition to being employees. See generally Wedner Unemployment Compensation Case, 449 Pa. 460, 296 A.2d 792 (1972); Chaiken v. Unemployment Compensation Board of Review, 12 Pa. Commonwealth Ct. 534, 317 A.2d 345 (1974); Gilbert v. Unemployment Compensation Board of Review, 7 Pa. Commonwealth Ct. 406, 299 A.2d 695 (1973); DePriest Unemployment Compensation Case, 196 Pa. Superior Ct. 612, 177 A.2d 20 (1961).
One of the criteria used to determine self-employment in this type of case is the extent of control exercised by the claimant over the business. The rationale for denying benefits is declared in Freas Unemployment Compensation Case, 201 Pa. Superior Ct. 150, 152, 191 A.2d 740, 741 (1963):
“The Unemployment Compensation Law was not enacted to compensate individuals who fail in their business ventures and become unemployed businessmen____” (Citation omitted.)
*520Clearly, the criteria applied in those cases to determine ineligibility for benefits dne to self-employment are inapplicable to the different factual situation in this case.
The case at bar belongs, in my opinion, to another line' of cases applying a different set of criteria. Representative of these cases is Martin Unemployment Compensation Case, 174 Pa. Superior Ct. 412, 101 A. 2d 421 (1953), upon which Mrs. Finn urges us to rely here. Martin, who worked five hours a day in a bar which he owned jointly with his wife, was allowed benefits on the grounds that he was available for other work and was unemployed (i.e., not self-employed). The availability of claimant for out-side work and the minimal extent of Ms ownership were crucial factors in that case. The Board, in support of its contention that claimant was self-employed, cites Wax Unemployment Compensation Case, 189 Pa. Superior Ct. 196, 149 A.2d 191 (1959), in which the claimant was found not entitled to benefits by reason of testimony from witnesses that he took “an active part in the operation of his hotel.” Both cases predate the 1959 amendments which added Section 402(h) and are therefore not directly applicable. However, cases coming after the 1959 amendments have, like Wax, supra, found the extent of active participation in a business to be important in determining whether the claimant was self-employed. In Alick Unemployment Compensation Case, 194 Pa. Superior Ct. 28, 166 A.2d 342 (1960), the claimant was denied benefits because he was admittedly self-employed as an air conditioner serviceman, advertised his services, and listed himself in the telephone book as a repairman. He also received $500 in income from his work. Obviously, he had taken an active part in his business.
*521This Court also has had prior occasion to determine whether a claimant was self-employed. In Edelman v. Unemployment Compensation Board of Review, 10 Pa. Commonwealth Ct. 275, 310 A.2d 707 (1973), the Board found active participation by Edelman, who had taken space in a law office in downtown Philadelphia, had listed himself as a lawyer in the yellow pages, and who worked about three hours a day in his office. More recently, in Leary v. Unemployment Compensation Board of Review, supra, we found that the claimant, who had formed a corporation and was elected president after being laid off by his previous employer, had, by the act of incorporation,1 performed a “positive but not final act in the establishment of an independent business enterprise” which rendered him self-employed.
In the ease at bar, the referee found that “claimant [Mrs. Finn] does not directly participate in the operation of the business.” He based this finding on testimony by Mrs. Finn that she did not keep books, make beds, or in fact engage in any activity with regard to the operation of the hotel.
Therefore, the close question before us is whether Mrs. Finn is self-employed solely by virtue of having her name on the liquor license and deed of real estate. Applying what I feel is the correct test — whether claimant has performed a positive act in the establishment of a business or taken an active part in the operation of a business — to the facts in this case, I would conclude that the referee erred as a matter of law in finding that Mrs. Finn was self-employed during the weeks in question.
Judge Rogers joins in this dissent.

 Inferences as to other activities undertaken in furtherance of the business were also present.