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MESC v Allied Supermarkets, Inc 2.07

Section 22

LIABILITY, Successorship, Transfer of rating account

CITE AS: MESC v Allied Supermarkets, Inc., 10 Mich App 650 (1968).

Appeal pending: No

Claimant: NA

Employer: Allied Supermarkets, Inc.

Docket No: L64 4148 1251

COURT OF APPEALS HOLDING: When a chain store sells 3 of 126 stores and the purchaser continues to employ 90% of the seller's former employees, there is a transfer of business, and that part of the seller's rating account pertaining to the employees of the 3 stores must be transferred, pursuant to Section 22 of the Act, to the purchaser.

FACTS: Allied Supermarkets had a chain of 126 supermarkets. It sold 3, located in Bay City to Vay Foods. The sale included the furniture, fixtures, and equipment of all 3 stores. The beer, wine, and liquor licenses were also transferred together with merchandise. Allied retained 10% of the total merchandise. Allied assigned the leases on the stores to Vay. Allied closed the stores on Saturday. Vay opened them on Monday, manning them with former employees of Allied. The 3 former Allied managers continued in the same capacity with Vay. In the interim all identity of an Allied "Wrigley" store was removed and replaced with a Vay's "Vescio Supermarket" designation.

DECISION: There was a transfer of the business of Allied to Vay in the sale of the stores and that part of the ratings account transferred to Vay pursuant to Section 22.

Rationale: "We cannot agree with the finding of the referee that the only 'business' of Allied is the entire operation of 126 supermarkets in the State of Michigan and that a local market in the chain must be considered to be an integral part of the whole and not a singular business for purposes of this act. The logical extension of such reasoning could permit Allied to dispose of practically all of its chain store operations without affecting any change in the computation of its employment rating accounts, although it is clear that the employment situation would be quite different...."



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