Court Opinion

ID: 6758978
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:29:46.015526+00
Date Added: 2024-06-11T16:02:32.338297
License: Public Domain

Dahling, J.,
dissenting. In my view, the appellee was a successor in interest to Famouse Coney Island, Inc. (“FCI”), and was therefore liable for the delinquent unemployment compensation taxes accrued by its predecessor in interest, FCI.
There are two methods of determining successor interest within R.C. 4141.24(F). The first method applies where there is a transfer of all thiifc assets of the corporation’s whole business. Under the second method, which provides for partial successorship, the following three requirements must be met: (1) a successor must acquire a clearly segregable and identifiable portion of an employer’s enterprise; (2) a successor must, promptly after acquiring such assets, employ substantially the same individuals who were employed in the separate unit of the employer’s enterprise immediately prior to the acquisition; and (3) an application for status as a successor in interest must be filed by both predecessor and successor.
The appellee, Ilias Makkas, maintains at the outset, that he is not a successor in interest to FCI under the statute in issue in any event. Appellee submits that he cannot be deemed as a successor under the second method of apportionment, since neither he nor FCI applied for such a *354status as required under the above unemployment compensation tax statute. Likewise, appellee argues he cannot be found to be a successor under the first method outlined in R.C. 4141.24(F) because he will be forced to assume the liabilities of the entire predecessor corporation where the assets and liabilities he purchased from it were clearly identifiable and segregable.
Appellant, board of review, contends that its prior determination of appellee as a successor in interest under the first method outlined in the statute should be reinstated. The appellant argues that if appellee is held not to be a successor to FCI, then the integrity of the Unemployment Compensation Fund would be threatened since the state would have no recourse in collecting delinquent taxes. As to the second method, the appellee simply did not meet the requirements of the statute. R.C. 4141.24 (F) states in part:
“* * * If an employer acquires substantially all of the assets in a trade or business of another employer, or a clearly segregable and identifiable portion of an employer’s enterprise, and immediately after the acquisition employs in his trade or business substantially the same individuals who immediately prior to the acquisition were employed in the trade or business or in the separate unit of such trade or business of such predecessor employer, then, upon application to the administrator signed by the predecessor employer and the acquiring employer, the employer acquiring such enterprise is the successor in interest. In the case of a transfer of a portion of an employer’s enterprise, only that part of the experience with unemployment compensation and payrolls that is directly attributable to the segregated and identifiable part shall be transferred and used in computing the contribution rate of the successor employer on the next computation date. * * *”
Appellant submits that placing the burden of the liability for the predecessor’s account on the transferee is not unreasonable, and that the rule of caveat emptor should apply in corporate transfers. Appellant also points out that R.C. 4141.24(F) is not intended to burden successors since, in the instant case, appellee will assume the favorable, established contribution rate of FCI.
Although Apex Smelting Co. v. Cornell (1955), 164 Ohio St. 369 [58 O.O. 153], was rendered under a prior succession statute, I believe its reasoning survives today and should be applied herein. As the court stated in that case at 371-372:
“* * * [I]t is apparent that, if, after the sale of its Grant Avenue plant to Apex and before the completion of its liquidation, National had transferred all its remaining assets and all its activities to a newly organized corporation, there would have been a ‘transfer’ of its ‘business’ by National as an ‘employer,’ and the transferee corporation would be the ‘successor in interest’ of National within the meaning of * * * the * * * statute.”
In my view, the court of appeals’ judgment should be reversed, and the *355decision of the board of review finding appellee to be a successor in interest under the first method outlined in R.C. 4141.24(F) should be reinstated.