Opinion
Argued June 6, 1975
October 16, 1975.
Unemployment compensation — Unemployed businessman — Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897 — Control of business — Involuntary cessation of business.
1. A self-employed person, who becomes an unemployed businessman when his business fails, is ineligible for benefits under the Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897.[368-9]
2. A person, who has exercised a substantial degree of control over a corporation and becomes unemployed when the business ceases, is ineligible for unemployment compensation benefits whether the termination of business was voluntary or involuntary. [369]
Argued June 6, 1975, before Judges CRUMLISH, JR., KRAMER, and BLATT, sitting as a panel of three.
Appeal, No. 1383 C.D. 1974, from the Order of the Unemployment Compensation Board of Review in case of In Re: Claim of Robert J. Miller, No. B-123157.
Application to Bureau of Employment Security for unemployment compensation benefits. Application denied. Applicant appealed to the Unemployment Compensation Board of Review. Denial affirmed. Applicant appealed to the Commonwealth Court of Pennsylvania. Held: Affirmed.
Robert J. Miller, appellant, for himself.
Charles G. Hasson, Assistant Attorney General, with him Sydney Reuben, Assistant Attorney General, and Robert P. Kane, Attorney General, for appellee.
Robert J. Miller (claimant) appeals from a decision of the Unemployment Compensation Board of Review (Board) denying him benefits. He had previously been denied benefits by both the Bureau of Employment Security and a referee.
The claimant testified that he had been the president, director, and sole stockholder of Prefabco, Inc. for four years until February 22, 1974. On that date, the Internal Revenue Service seized all the assets of the corporation and on April 12, 1974 sold them at a public sale. On April 15, 1974 the claimant applied for benefits, listing Prefabco, Inc. as his employer.
In Starinieri Unemployment Compensation Case, 447 Pa. 256, 289 A.2d 726 (1972), our Supreme Court has clearly construed Section 402(h) of the Unemployment Compensation Law, 43 P. S. § 802 (h) as providing that a self-employed person who becomes an "unemployed businessman" is ineligible to receive unemployment compensation. The Court there also indicated that the Unemployment Compensation Law was not enacted to compensate individuals who fail in their business ventures and become unemployed businessmen. We have followed the Starinieri case in a number of more recent decisions: Chaiken v. Unemployment Compensation Board of Review, 12 Pa. Commw. 534, 317 A.2d 345 (1974); Starr v. Unemployment Compensation Board of Review, 10 Pa. Commw. 265, 309 A.2d 837 (1973); Medoff v. Unemployment Compensation Board of Review, 9 Pa. Commw. 466, 308 A.2d 185 (1973); Mandel v. Unemployment Compensation Board of Review, 8 Pa. Commw. 477, 303 A.2d 583 (1973); and Gilbert v. Unemployment Compensation Board of Review, 7 Pa. Commw. 406, 299 A.2d 695 (1973).
Act of December 5, 1936, Second Ex. Sess., P. L. (1937) 2897, as amended, 43 P. S. § 751 et seq.
The claimant advances before us, however, an interpretation of the Unemployment Compensation Law which would not preclude "unemployed businessmen" such as himself from the receipt of benefits. He attempts to distinguish Starinieri because the cessation of business there was due to the corporation's filing of a voluntary petition in bankruptcy, whereas here the claimant's corporation was apparently forced out of business involuntarily. Such a distinction is, in our view, untenable for, as we pointed out in Medoff, supra, the unemployed businessman doctrine is not based on the voluntary nature of the cessation of business. Rather, the test is simply whether or not the claimant "exercises a substantial degree of control over the corporation." Starinieri, supra, 447 Pa. at 260, 289 A.2d at 728. If so, he is a businessman and is ineligible for benefits. The record establishes, without a doubt, that the claimant here held the requisite degree of control.
We, therefore, issue the following
ORDER
AND, NOW, this 16th day of October, 1975, the order of the Unemployment Compensation Board of Review is affirmed and the claimant is denied benefits.