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EUGENE MICHNO v. COMMONWEALTH PENNSYLVANIA (10/14/87)

decided: October 14, 1987.

EUGENE MICHNO, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, UNEMPLOYMENT COMPENSATION BOARD OF REVIEW, RESPONDENT



Appeal from the Order of the Unemployment Compensation Board of Review, in case of In Re: Claim of Eugene Michno, No. B-248520.

COUNSEL

Ronald V. Santora, Hourigan, Kluger, Spohrer, Quinn & Myers, P.C., for petitioner.

John J. Aponick, Jr., with him, Joseph J. Musto, Griffith, Aponick & Musto, for respondent, Michno Motors.

Judges MacPhail and Barry, and Senior Judge Narick, sitting as a panel of three. Opinion by Judge MacPhail.

Author: Macphail

[ 110 Pa. Commw. Page 257]

Claimant Eugene Michno appeals from a decision of the Unemployment Compensation Board of Review (Board) which denied him unemployment compensation benefits pursuant to Section 402(h) of the Unemployment Compensation Law (Law), Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. ยง 802(h). Claimant's request for benefits was denied by the Office of Employment Security (OES) on the basis of its finding that Claimant was an unemployed

[ 110 Pa. Commw. Page 258]

    business person. Claimant appealed this denial to the referee and the referee affirmed the decision of OES on the same grounds. The Board affirmed the referee and adopted his findings of fact.*fn1 We reverse.

Claimant had been employed by the Appellee, Michno Motors, Inc., for approximately 27 years. Michno Motors is a family owned and operated business that was started by Claimant's father. Until February 13, 1985, Claimant was Vice-President, Treasurer, Manager, and 32% stockholder of Michno Motors. Claimant's brother, Florian Michno, also owned 32% of the stock in Michno Motors, and Claimant's mother, Anna Michno, owned the remaining 36% of the stock. A dispute arose between Claimant and his mother and brother. The result of this dispute was an agreement dated February 13, 1985 which relieved Claimant of active participation in the corporation. On at least two occasions Claimant attempted to visit the business premises and was denied admittance. Notes of Testimony at 13, Reproduced Record at 17a. According to the terms of the agreement, Claimant was to receive his usual weekly salary of $425.00 "less withholding, etc." until further notice. Claimant was also subject to recall by Michno Motors.

On November 26, 1985 a special shareholders' meeting was held. At that meeting action was taken to terminate Claimant in all of his official capacities.*fn2 Claimant's salary was discontinued at that time. Claimant is seeking unemployment compensation benefits for weeks beginning December 28, 1985.

[ 110 Pa. Commw. Page 259]

The question for this Court to decide is whether Claimant exercised a substantial degree of control over Michno Motors at the time of his termination, thereby disqualifying him from unemployment compensation benefits as an unemployed business person. The determination of whether the facts found by the Board support a finding that a person is self-employed is a question of law subject to the review of this Court. Friedman v. Unemployment Compensation Board of Review, 99 Pa. Commonwealth Ct. 369, 513 A.2d 560 (1986).

The decisions of OES and the Board were based on the holding in Starinieri Unemployment Compensation Case, 447 Pa. 256, 289 A.2d 726 (1972). Under Starinieri, a person "who through ownership of stock and his position in the corporation exercises a 'substantial degree of control' over its operation" is considered to be self-employed. Id. at 259, 289 A.2d at 727. Upon loss of such employment he is considered an "unemployed business man" and is not entitled to unemployment compensation under Section 402(h) of the Law. In Geever v. Unemployment Compensation Board of Review, 65 Pa. Commonwealth Ct. 491, 442 A.2d 1227 (1982), however, this Court held that even if a claimant did at one time have control over the business, he may still receive unemployment ...


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