Chaiken v. Commonwealth

Opinion by Judge Kramer, This is an appeal filed by Maurice D. Chaiken (Chaiken) from an order of the Unemployment Compensation Board of Review (Board) dated August 10, 1973, wherein the Board affirmed the adjudication of its ref [536] eree denying unemployment compensation benefits to Cbaiken. Cbaiken was last engaged as president and manager of National Factors, Inc., a family-owned corporation, from August 1958 to November 3, 1972. Tbe corporation was engaged in tbe business of factoring wbicb involves tbe purchase of accounts receivable at a discount, and tbe ultimate collection of such accounts usually at something more than tbe price paid by tbe factor. Tbe record indicates that tbe stock of tbe corporation is owned by Chaiken’s wife (10,000 shares) and by Chaiken’s son (3,000 shares). At tbe time of bis last date of employment, Cbaiken was receiving a salary of $200 per week. Cbaiken became separated from bis employment because of a loss of business by tbe corporation. However, bis wife and son still continue to operate tbe business on a part-time basis. Tbe Board concluded that Chaiken was not entitled to benefits because upon tbe termination of bis relationship with tbe corporation, be became an unemployed businessman and not an unemployed worker. In bis appeal to this Court, Cbaiken contends that be is an unemployed worker because be owned no stock and bis son controlled tbe business. “Our scope of review in these cases, absent fraud, is confined to questions of law, and a determination as to whether tbe Board’s findings are supported by tbe evidence. Tbe credibility and weight to be given evidence are questions for tbe Board. Tbe party victorious below is to be given tbe benefit of any inferences wbicb can reasonably and logically be drawn from tbe evidence.” Starr v. Unemployment Compensation Board of Review, 10 Pa. Commonwealth Ct. 265, 267-268, 309 A. 2d 837, 839 (1973). Tbe State Unemployment Compensation Law, Act of December 5, 1936, Second Ex. Sess., P. L. (1937) 2897, §402, as amended, 43 P.S. §802(h), in pertinent [537] part provides: “An employe shall be ineligible for compensation for any week. ... (h) In which he is engaged in self-employment: . . .” The Superior Court has stated that: “The Unemployment Compensation Law was not enacted to compensate individuals who fail in their business ventures and become unemployed business men: . . . .” Freas Unemployment Compensation Case, 201 Pa. Superior Ct. 150, 152, 191 A. 2d 740, 741 (1963). The Pennsylvania Supreme Court dealt with the question of a corporate officer’s eligibility for unemployment compensation in Starinieri Unemployment Compensation Case, 447 Pa. 256, 289 A. 2d 726 (1972). In Starinieri, Chief Justice Jones reviewed the development of the law on this point and stated the current rule: “[T]he proper test is whether the employee ‘exercises a substantial degree of control over the corporation;’ if so, he is a business man and not an employee.” 447 Pa. at 260, 289 A. 2d at 728. Starinieri also teaches us that the corporate officer-employee need not hold a majority of the corporation’s stock in order to be ineligible for benefits. This Court has followed the Starimeri decision in at least four recent cases. See Starr, supra; Medoff v. Unemployment Compensation Board of Review, 9 Pa. Commonwealth Ct. 466, 308 A. 2d 185 (1973); Mandel v. Unemployment Compensation Board of Review, 8 Pa. Commonwealth Ct. 477, 303 A. 2d 583 (1973) and Gilbert v. Unemployment Compensation Board of Review, 7 Pa. Commonwealth Ct. 406, 299 A. 2d 695 (1973). Our careful review of the record made in this case permits us to conclude that there is sufficient evidence in this record to support a finding that Chaiken exercised a substantial degree of control over this corporation. Therefore the referee and the Board correctly concluded that Chaiken was an unemployed businessman and thus was not entitled to benefits. We therefore [538] Order And Now, this 2nd day of April, 1974, it is ordered that the appeal of Maurice D. Chaiken is hereby dismissed, and the Order of the Unemployment Compensation Board of Beview is hereby affirmed.