Court Opinion

ID: 3555913
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:06:57.278744+00
Date Added: 2024-06-11T14:06:47.990692
License: Public Domain

The opinion of the court will apparently lead to unfortunate results, since it rests the right to continuity of merit rating upon the continuity of a form. Consistently it would appear to follow that if the Lund family, sole owners of the stock of the corporation, had sold all of their stock to utter strangers, there being no change in the formal corporate entity, it would result that the corporation would continue, for at least a year, to pay contributions upon the basis of prior experience. That the Legislature could have intended thus to continue the rating for the benefit of such utter strangers, while denying it to those who, for all we know, are substantially the same as those who created the employment experience, rests apparently upon attaching emphasis to form, rather than to realities.
If a corporation be the employing unit and the experience of *Page 284 
employment in its manufacturing plant be such as to create a merit rating, that rating is not the creation of a cold, formal corporate entity (though for convenience we call the corporation a person) but of the actual men and women who own and have interest in the plant through stockholding, and control, and management. The continuity of that merit rating (that is, the continuity of the employment experience) does not depend upon the continuity of the formal corporate entity, but rather upon the substantial continuity of the men and women mentioned. To say that the Legislature did not have this principle in mind and that the act is not to be interpreted accordingly, is to charge the Legislature with adopting a theory of the real nature of corporations that has not been recognized in New Hampshire during the mature life of any member of the Legislature that passed the act.
There is no conclusive evidence that the change here made could affect substantially the continuity of the employment experience of the Laconia concern. To be sure, in the old corporation two of the four present partners seem to have been voting trustees for of the stockholders, but we have no information as to the extent, if any, that the voting trustees were controlled by or answerable to the other members of this family concern, one of whom, C.A. Lund, though owning nearly 65 per cent of all the stock, was not a trustee. Nor do we know the terms upon which the owners of less than 10 per cent of the stock voted the rest of it. On the other hand, it is agreed that since the date the partnership acquired the plant "no changes have been made in the personnel or type of merchandise manufactured except such as normally occur in the operation of any manufacturing business." It thus appears that it is neither agreed nor found (1) that any substantial change was made affecting continuity of employment experience, or (2) that no such change was made.
The Act of Congress, U.S.C.A., Tit. 26, s. 1602, indicates a decided caution that reduced rates shall depend upon continuity of employment experience, and the interpretation placed upon it by the Social Security Board provides that reduced rates shall not be permitted when the basic experience factor has been so impaired by factors "unrelated to the employer's experience that such employer's own experience is no longer the basic determinant." This is the background of our act — that there shall be a realistic approach to the problem presented here, and the act ought so to be interpreted, rather than adopting the technical approach which may in one case admit *Page 285 
impairing influences, without affecting continuity of merit rating, while in others denying continuity when substantial impairing influences are absent.
It would seem preferable to have sent the case back for the determination of the question whether the changes made in organizational form, in view of all the circumstances, resulted in substantial threat to the employment experience of the concern. If they did, of course, the order made by the defendant should be sustained; if they did not, the result would seem properly to favor the plaintiff.
BURQUE, J., concurred in the foregoing opinion.