Kellogg v. Murphy

164 S.W.2d 285, 349 Mo. 1165, 1942 Mo. LEXIS 460
CourtSupreme Court of Missouri
DecidedSeptember 8, 1942
StatusPublished
Cited by28 cases

This text of 164 S.W.2d 285 (Kellogg v. Murphy) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kellogg v. Murphy, 164 S.W.2d 285, 349 Mo. 1165, 1942 Mo. LEXIS 460 (Mo. 1942).

Opinion

*1170 ELLISON, J.

This appeal from the Jackson county circuit court presents the question whether the appellant Clara E. Kellogg is an “employer” within the meaning of subsection (h) secs. 1, 4, of Sec. 9423, R. S. 1939, Mo. R. S. A. sec. 9423 (h) 1, 4, of the State Unemployment 'Law. The constitutionality of these provisions also is attacked, as being violative of the 14th Amendment, Constitution of the United States, and Sec. 30, Art. II, and Sec. 3, Art. X, 'Constitution of Missouri. The respondent members of the Unemployment Compensation Commission awarded Ross C. Wilson, an employee, monetary “benefits,” entailing the payment of an excise tax, called “contributions,” by the appellant employer under Sec. 9427, R., S. 1939; Mo. R. S. A., sec. 9427, as against her defense that she was not within the Act.- On review the circuit court affirmed the decision of the Commission.

The undisputed facts were that the appellant solely owned and operated an unincorporated general printing business, conducted under the name Kellogg-Baxter Printing Co. at 301 Admiral Boulevard, Kansas City, Missouri. It had seven employees, of whom the claimant Ross C. Wilson was or had been one. She also owned 70% of the capital stock of the Creel Publishing Company, a corporation, located at the same address. That company’s sole business was the composition, publication ánd circulation of a weekly society newspaper called The Independent. It had four employees, making eleven in the two establishments. The Creel company owned no printing machinery. The Kellogg-Baxter Company printed the newspaper for it, receiving pay therefor. For many years there had been no other connection between the two companies. They had separate employees and kept separate books. Mrs. Martha Nichols Gaylord managed the Creel company, or at least was responsible for the publication of The Independent, as appellant’s personal representative.

Referring always to. said Sec. 9423, subsection, (g) provides as follows (italics and parentheses in quotations hereafter are ours):

“ ‘Employing unit’ means any individual or type of organization, including any partnership, association, trust, estate, joint-stock com *1171 pany, insurance company or corporation, whether domestic or foreign, or the receiver, trustee in bankruptcy, trustee or successor thereof, or the legal representative of a deceased person, which has or subsequent to January 1, 1936, had in its employ one or more individuals performing services for it within this state. All individuals performing services within this state for any employing unit which maintains two or more separate establishments within this state shall be deemed to be employed by a single employing unit for all the purposes of this law. ’ ’

The mooted subsection (h), paragraphs 1 and 4, further provide:

“ ‘Employer’ means:

“(1) Any employing unit which for some portion of a day, but not necessarily simultaneously, in each of twenty different weeks, whether or not such weeks are or were consecutive, within either the current or the preceding calendar year, has or had in employment, eight or more individuals irrespective of whether the same individuals are or were employed in each such day; . . .

“ (4) Any employing unit which, together with one or more other employing units, is owned or controlled by legally enforceable means or otherwise, directly or indirectly, by the same interests, or which owns or controls one or more other employing units by legally enforceable means or otherwise, and which, if treated as a single unit with such other employing units or interests, or both, would be ah employer under paragraph (1) of this subsection;”

The referee for the Commission found, and the Commission adopted the finding, that: “The employer (appellant) maintains and proved that the ownership and separate entity of the two organizations have been in existence for many years and was not created for the purpose of avoiding the tax payments or contributions under the Social Security Act and the Missouri Unemployment Compensation Laws.” Nevertheless the Commission made this finding' in its decision:

“In this case the testimony shows, and it is admitted, that appellant owned 70% of one corporation and is the owner of the entire interests in the other corporation (the Kellogg-Baxter company was not a corporation) and that the two are operated at the same address and on the same premises; and the publishing company publishes a weekly paper which is printed by the printing company and paid for by the publishing company; and the printing company carries on a general printing business in addition to printing the publication of the publishing company. These two lines of business are conducted by the same interests and owned and controlled by the same interests md are operated practically as one business.

“The Commission is of the opinion that it was certainly within the power of the Legislature to declare that under conditions existing in this case, these two corporations should be treated as a single unit *1172 for the purpose of carrying ont the objects of the "Unemployment Compensation Act of Missouri.”

Under Sec. 9432 (i), R. S. 1939; Mo. R. S.'A., sec. 9432 (i), we are bound by the findings of the Commission as to the facts, if supported by competent evidence. But we think and hold there was no factual evidence whatever to support the Commission’s finding that the two businesses were “operated practically as one business.” That conclusion is directly contrary to the finding of its referee, which it adopted. Further, the refereee’s conclusion in his report to the Commission did not rest on the theory that the two businesses had been fused and operated as one. He found that in spite of their long continued, bona fide and complete separation the appellant was within the act because the ownership and control of both were fixed in her,

Appellant further contends here that there was no competent evidence showing she owned and controlled the Creel company, although she admittedly held 70% of the capital stock. This contention is based on the theory that a corporation is a legal entity separate and apart from its stockholders; that they have no title to the corporate property; and do not control the corporation because the statute, Sec. 5346, R. S. 1939; Mo. R. S. A., sec. 5346, vests that power in the board of directors. We cannot uphold that contention. It was not made before the Commission. On the contrary, when one of the Commissioners asked appellant’s counsel this question: “She admits the fact that she had control of the one (the Creel company) and owns the other (the Kellogg-Baxter company);” the attorney replied, “That’s right.” There is also substantial evidence in the record that appellant did actually control the Creel company. Furthermore, the owner of a majority of the stock in an ordinary corporation has potential control and can obtain actual control by legally enforcable means. 1

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Bluebook (online)
164 S.W.2d 285, 349 Mo. 1165, 1942 Mo. LEXIS 460, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kellogg-v-murphy-mo-1942.