Macintosh v. Director of Employment

McMURRAY, J. pro tem.* This is an appeal from a judgment of the superior court of Sacramento which awarded respondents Macintosh the sum of $3,011.14 plus interest which represented unemployment insurance taxes paid by the respondents after an assessment by the Director of Employment.

This case involves the meaning of certain sections of the Unemployment Insurance Act as it was in effect during the calendar year 1950 and resolves itself into a question as to whether or not the amounts paid by a predecessor employing unit in reaching the $3,000 limit upon which wages are considered taxable under the Unemployment Insurance Act, might be tacked on by the successor employing unit. Specifically, [629]in this case a 1936 partnership consisting of four general partners was formed. The business was conducted under the name of “Macintosh Studio Clothes.” In June of 1950, Walter Macintosh, one of the partners, died intestate, his wife succeeded to his interest, and his brother Richard acted as administrator of the estate which passed to Walter’s wife. No change in the conduct of the business resulted from Walter’s death nor did the partnership formally dissolve. The business was continued exactly as it had been before except that Walter was no longer a partner. The business had employed about 80 persons prior to his decease and the same number afterwards. Many of these employees earned over $3,000 during the year 1950. The partnership only paid unemployment insurance taxes on the first $3,000 paid to each employee during that year.

The Director of Employment made an assessment against the plaintiffs for the sum of $2,522.82, plus penalties, which sum was the tax alleged due from the successor partnership on the first $3,000 in wages paid by the successor to each employee during the year 1950. It was the Director of Employment’s contention that after the death of Walter Macintosh, “Macintosh Studio Clothes” constituted a new employing unit and was liable for the tax on the first $3,000 of wages paid by it to each employee. The main question here is whether the death of this general partner resulted in such a new employer or employing unit as is contemplated by the tax statute. There can be little doubt that the death of Walter resulted in a new entity being created, but whether or not that entity is such as to constitute a new employing unit is the matter here for determination.

Section 11, subdivision (a) of the California Unemployment Insurance Act, 3 Deering’s General Laws, Act 8780d, section 11, here under consideration, provided that contributions be made by employers to the defendant based on wages paid by the employer. The statute excluded from the definition of the term wages remuneration in excess of $3,000 paid to every individual by an employer in any calendar year. The cited section read in part: