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Valley Metal Company v Employment Security Commission 2.02

Section 22

LIABILITY, Transfer of rating account, Due process

CITE AS: Valley Metal Company v Employment Security Commission, 365 Mich 297 (1961)

Appeal pending: No

Employer: Valley Metal Products Company

Docket No: L57 2347 1040

SUPREME COURT HOLDING: Transferred account means the rating account which the transferee has after the transferred account has been merged with its prior rating account.

FACTS: Valley Metal Products Company (Vampco) purchased assets from Industrial Machine Tool Company (Industrial). The Commission determined that a transfer of business within Section 22 had taken place. The rating account balance of the transferror, Industrial, was transferred to Vampco. Industrial had 2 divisions of operation - one was the manufacture of windows, the other, tools. Vampco bought all of the window business.

DECISION: The increased contributions which necessarily must be made in order to meet the benefit payments must of necessity fall upon the transferee.

RATIONALE: We believe the legislature had in mind devising a pro rata formula which would as between the parties, divide all the rate making factors involved on an identical basis. The unfavorable experience cannot be translated into increased contributions against Industrial since it has disposed of the business. Neither party could know at the time of the transfer the exact future experience. The party purchasing may protect itself by contract or by adjustment of the purchase price against such a contingency.



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