Opinion
Argued June 2, 1980
June 30, 1980.
Unemployment compensation — Self-employed businessman — Corporate control — Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897 — Payment of unemployment compensation tax — Bankruptcy.
1. A stockholder in a corporation holding the position of Secretary and exercising a substantial degree of control over its operation is a self-employed businessman and ineligible for benefits under the Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897, when the company ceases operations, and it is immaterial that the corporation paid unemployment compensation taxes on his wages or that the company's cessation of activity was necessitated by economic conditions beyond its control which resulted in the filing of a petition in bankruptcy. [448]
Argued June 2, 1980, before Judges MENCER, ROGERS and BLATT, sitting as a panel of three.
Appeal, No. 1148 C.D. 1979, from the Order of the Unemployment Compensation Board of Review in case of In Re: Claim of Samuel Losito, No. B-171790.
Application to the Office 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.
John A. Wetzel, Wessel Carpel, for petitioner.
Stephen B. Lipson, Assistant Attorney General, with him Richard Wagner, Chief Counsel and Edward G. Biester, Jr., Attorney General, for respondent.
Samuel Losito has appealed from a decision of the Unemployment Compensation Board of Review declaring him to be ineligible for unemployment compensation benefits as a self-employed businessman.
Losito last worked for Losito Mushroom Corporation, a mushroom grower. Losito was the Secretary and the owner of one-third of the stock of the corporation. He has agreed that he participated in the running of the corporation on a day to day basis, having power over all operations of the corporation, including the hiring and firing of employees. In February 1979, the corporation ceased operation by reason of business difficulties. Shortly thereafter the corporation filed a petition in bankruptcy.
Losito's application for unemployment compensation benefits was denied by the Office of Employment Security on the ground that Losito was a self-employed person. See Section 402(h) of the Unemployment Compensation Law, Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P. S. § 802 (h). That determination was essentially upheld by a referee after a hearing. The Board of Review in turn disallowed Losito's appeal from the referee's decision.
This case falls squarely within the holding of Starinieri Unemployment Compensation Case, 447 Pa. 256, 289 A.2d 726 (1972) that "one who through ownership of stock and his position in the corporation exercises a 'substantial degree of control' over its operation" ( 447 Pa. at 259, 289 A.2d at 727) is a self-employed businessman and therefore ineligible for benefits upon the loss of his employment. Losito's testimony and his statements to the Office of Employment Security place him squarely within the definition of a self-employed businessman for this purpose. See also Kerns v. Unemployment Compensation Board of Review, 28 Pa. Commw. 48, 367 A.2d 334 (1976).
Losito's assertion that the unemployment authority may not refuse him compensation because the corporation paid unemployment compensation taxes on his wages is ineffective. We have rejected this argument, holding that there is no relationship between the payment of unemployment compensation tax and the eligibility for unemployment compensation benefits of persons in the appellant's position with his employer. LaFond v. Unemployment Compensation Board of Review, 41 Pa. Commw. 428, 399 A.2d 460 (1979).
We are unable to understand how Losito's final contention — that the corporation did not file a petition in bankruptcy because it wanted to but because it was forced to this end by economic conditions beyond its control — can effect his ineligibility for benefits because he was self-employed.
Order affirmed.
ORDER
AND NOW, this 30th day of June, 1980, the order of the Unemployment Compensation Board of Review denying unemployment benefits to Samuel Losito is affirmed.