Unemployment compensation — Scope of appellate review — Error of law — Findings of fact — Sufficient evidence — Unemployed businessman — Control of corporation — Unemployment Compensation Law, Act 1936, December 5 (1937) 2897.
1. In an unemployment compensation case review by the Commonwealth Court of Pennsylvania is limited to questions of law, and findings of facts of the unemployment compensation authorities supported by the evidence are binding on the court. [544]
2. A president and director of a corporation who owns twenty-five percent of the corporate stock and exercises a substantial degree of control over the corporation is a businessman and not an employe, and, when unemployed, is ineligible for benefits under the Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897. [544-5]
OPINION BY JUDGE MENCER, March 4, 1976:
E. Franklin Bohl (appellant) was last employed by Allentown Converting Co. Since 1959, appellant held the office of president of the company; he was also a director of the company and owned approximately 25 percent (27,001 shares) of the stock in the company. His day-to-day duties consisted of managing production of the corporation's textile processing. The majority stockholder of the corporation was Leland Smith, who at various times owned up to 65 percent of the stock.
Early in 1974, the board of directors decided to liquidate the corporation. This was accomplished, and appellant's last day of work was September 30, 1974. Appellant applied for and was denied unemployment benefits by the Bureau of Employment Security on the grounds that he had become an unemployed "businessman" rather than an unemployed "worker." On appeal, the referee and the Unemployment Compensation Board of Review (Board) upheld the Bureau's determination.
Our scope of review in an appeal from the Board is defined in Section 510 of the Unemployment Compensation Law (Law):
"[T]he findings of the board or referee, as the case may be, as to the facts, if supported by the evidence and in the absence of fraud, shall be conclusive, and in such cases the jurisdiction of the court shall be confined to questions of law. . . ."
Act of December 5, 1936, Second Ex. Sess., P. L. [1937] 2897, as amended, 43 P. S. § 830.
Appellant alleges that the Board erred as a matter of law in concluding that he was ineligible, as an unemployed businessman, to receive benefits under Section 402(h) of the Law. Section 402(h) provides in pertinent part:
43 P. S. § 802(h).
"An employe shall be ineligible for compensation for any week —
. . . .
"(h) In which he is engaged in self-employment . . . ."
On the question of what constitutes a businessman, our Supreme Court has held in Starinieri Unemployment Compensation Case, 447 Pa. 256, 260, 289 A.2d 726, 728 (1972):
"[T]he proper test is whether the employee 'exercises a substantial degree of control over the corporation'; if so, he is a businessman and not an employee."
Appellant contends that, although he held the position of president and was a director and 25 percent shareholder, as well as being general manager of production in the corporation, the corporate decisions were functionally controlled by Leland Smith, the majority stockholder. This Court has held in a long line of decisions following Starinieri, supra, that persons situated similarly to appellant fall within the category of "unemployed businessmen." Notwithstanding appellant's assertions, we find the Starinieri case to be controlling here.
See, e.g., Unemployment Compensation Board of Review v. Miller, 21 Pa. Commw. 367, 346 A.2d 367 (1975); 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); Gilbert v. Unemployment Compensation Board of Review, 7 Pa. Commw. 406, 299 A.2d 695 (1973).
Accordingly, we enter our
ORDER
Now, this 4th day of March, 1976, the order of the Unemployment Compensation Board of Review denying benefits to E. Franklin Bohl is affirmed.