STATE EX REL. ESC v. Paul's Young Men's ShopAnnotate this Case
231 S.E.2d 157 (1977)
32 N.C. App. 23
In the Matter of STATE of North Carolina ex rel. EMPLOYMENT SECURITY COMMISSION of North Carolina v. PAUL'S YOUNG MEN'S SHOP, INC. (Employer No. 56-67-043), et al.
Court of Appeals of North Carolina.
January 5, 1977.
Certiorari Denied March 7, 1977.
*160 Howard G. Doyle, H. D. Harrison, Jr., Garland D. Crenshaw, and Thomas S. Whitaker, Raleigh, for Employment Security Commission of North Carolina, appellant.
Atkins, Harrell, Mann & Pike, by Bernard A. Harrell, Raleigh, for defendant appellees.
Certiorari Denied by Supreme Court March 7, 1977.
Appellant's first assignment of error is directed to following language in the judgment of the Superior Court from which this appeal has been taken:"While the Court is aware that it is bound by such findings of fact of the Commission as are supported by competent evidence (G.S. Sec. 96-4(m)), and while the Court makes no additional findings of fact, it is observed that, according to the evidence, the method of reporting the employee contributions of the three employing units involved was originally established with the advice of the Commission employees. Further, it appears from the evidence that the taxpayer, while paying and reporting under an erroneous method, nevertheless paid the taxes due on all employees. Regular review and audits by the Commission did not disapprove the method of paying all employees through Ricky's."
Appellant contends that by including this language in its judgment the Superior Court, despite its disclaimer, made an independent finding of fact which it had no power to do and that it thereby committed reversible error. We do not agree.
The Employment Security Commission has been vested by statute with "the power and authority to determine any and all questions and issues of fact" arising under the Employment Security Law. G.S. 96-4(m). The same statute provides that on appeal to the Superior Court from a decision of the Commission in a matter over which it has jurisdiction, the decision or determination of the Commission "shall be conclusive and binding as to all questions of fact supported by any competent evidence."
Interpreting similar provisions in our Workmen's Compensation Act, our Supreme Court has held that in appeals from the Industrial Commission the reviewing court may determine upon proper exceptions whether the facts found by the Commission were supported by competent evidence and whether the findings so supported sustain the legal conclusions and the award made, but in no event may the reviewing court consider the evidence for the purpose of finding the facts for itself. Byers v. Highway Comm., 275 N.C. 229, 166 S.E.2d 649 (1969); Pardue v. Tire Co., 260 N.C. 413, 132 S.E.2d 747 (1963); Brice v. Salvage Co., 249 N.C. 74, 105 S.E.2d 439 (1958). "If the findings of fact of the Commission are insufficient to enable the Court to determine the rights of the parties upon the matters in controversy, the proceeding must be remanded to the end that the Commission make proper findings." Pardue v. *161 Tire Co., supra, 260 N.C. p. 416, 132 S.E.2d p. 749. The same principles govern the scope of judicial review on appeal from decisions of the Employment Security Commission. See, Employment Security Com. v. Kermon, 232 N.C. 342, 60 S.E.2d 580 (1950).
Applying these principles in the present case, we find that, although there was uncontradicted evidence from which the Employment Security Commission could have found as a fact that "the method of reporting the employee contributions of the three employing units involved was originally established with the advice of the Commission employees," and that "[r]egular review and audits by the Commission did not disapprove the method of paying all employees through Ricky's," the Commission made no such findings. Indeed, the Commission made no findings, one way or the other, with regard to these matters. If findings as to these matters were necessary for a proper determination of this case, the case should have been remanded to the Commission to the end that the Commission make proper findings. In our opinion, however, factual findings with respect to the matters referred to in that portion of the Superior Court's judgment to which appellants' first assignment of error is directed are not necessary for a proper determination of this case. All parties recognize that for many years an erroneous method of reporting and paying contributions was followed by the several defendants. The essential problem presented by this case concerns what measures may now be lawfully applied to correct the error, now that it has been recognized. To solve that problem it is not necessary that the source of the original error be determined. Therefore, the language in the Court's judgment which is the subject of appellant's first assignment of error may be treated as surplusage. The inclusion of this language in the judgment, even if it be viewed as constituting an independent factual finding which the Court had no authority to make, was at most harmless error. Accordingly, appellant's first assignment of error is overruled.
Although, as above noted, it is not necessary to determine the source of the erroneous method of reporting and paying contributions, which was for so many years followed by the defendants in this case and was for an equally long time accepted without question by the plaintiff, we do feel it pertinent to observe that there was no finding by the Commission, nor was there any evidence to support a finding, that defendants ever acted in bad faith. Indeed, the evidence is quite to the contrary, for it shows without question, and the Commission found as a fact, that two of the defendants, Diamond Outlet, Inc., and Gems, Inc., reported wages paid to their employees and contributions on account of such wages were paid to the Commission through the medium of Ricky's account number for the years 1967 and 1968, even though neither of those corporations had a sufficient number of employees for the requisite number of weeks to be liable for payment of contributions during those years. All of the defendants here were owned and controlled by the same interest, Mr. Paul C. Capps and the members of his family. Under the Unemployment Compensation Law as originally enacted, all of the defendant collectively would have constituted but one "employing unit." Sec. 19(f)(4), Ch. 1, Extra Session, 1936. Thus, the method of reporting and paying contributions which was for so many years followed by the defendants in this case would not only have been proper, but would have been required, by the law as previously written. Unemployment Compensation Com. v. Coal Co., 216 N.C. 6, 3 S.E.2d 290 (1939). The statute was later changed, but suffice it to say that nothing in this record even suggests any improper motives on the part of the defendants in failing to comply with the changes made.
This brings us to the essential question presented by this appeal, which is: What steps may now be taken to correct the error in reporting and paying contributions which all parties now recognize occurred? The Commission in its order and through its attorneys on this appeal has taken the position that the only thing which *162 it has legal authority to do under the controlling statutes is to deal with the several defendants, Paul C. Capps, trading as Ricky's, Paul's Young Men's Shop, Inc., Diamond Outlet, Inc., and Gems, Inc., each as a completely separate and unrelated entity; to recognize that Mr. Capps, trading as Ricky's, has erroneously reported wages paid to persons who were not his employees and that he is entitled to a refund of the erroneously paid contributions, going back, however for a period of only five years; and then to deal with each of the three corporate defendants as though each was a delinquent employing unit which had never reported any wages paid to any of its employees and had never paid any contributions to the Commission on account of such wages. In taking this position as to the three corporations, the Commission is deliberately ignoring, as being without legal significance, the fact that every penny of taxable wages paid to every employee of each of the corporations was actually fully reported to the Commission and contributions were paid to the Commission on account of such wages, though the reporting and payment was, by error, made under the account number of Ricky's. We find nothing in the governing statutes which requires such a harsh result. In Unemployment Compensation Comm. v. Nissen, 227 N.C. 216, 41 S.E.2d 734 (1947), our Supreme Court, in reversing a judgment of the Superior Court which had affirmed an order of the Commission, found nothing in the statutes to prevent the Commission from transferring a reserve account which was incorrectly standing in the name of a mortgagee, when it was later determined that the account should have been in the name of and the contributions should have been paid on the account of the mortgagor, for whom the mortgagee was acting simply as an agent in managing the mortgaged property. Accordingly, the Supreme Court held in that case that the reserve which had been created and credited to the mortgagee, the Metropolitan Life Insurance Company, by the Unemployment Compensation Commission (now the Employment Security Commission), by reason of contributions made by the Metropolitan on wages of employees employed at the Nissen Building in Winston-Salem should be transferred to the credit of Mrs. Nissen. Although the factual situation presented by that case is somewhat different from that presented in the present case, it did involve a situation where a reserve account had been mistakenly built up in the name of one employing unit, which had erroneously reported as its own employees persons who in reality were employees of another and had mistakenly paid to the Commission contributions on account of wages paid to such persons. Our Supreme Court found nothing in the statutes to prohibit correction of the error and ordered transfer of the reserve account. Similarly, in the present case we agree with the conclusion reached by Judge Lanier that "there is nothing in the Statutes to prohibit the Commission from going back and making a proper allocation of the contributions erroneously paid." Moreover, we find nothing in the statutes which prevents the Commission, under the circumstances of this case, from going back and setting up accounts retroactively in the names of each of the three corporations, allocating to each account the contributions heretofore paid (erroneously throughout the medium of Ricky's) on account of wages of employees of each particular corporation, and making charges against each account of all amounts which would properly have been chargeable thereto had the account been in existence from the time when each corporation became subject, as a separate employing unit, to the provisions of the Employment Security Law. This accomplished, the Commission should then compute the appropriate rate at which each of the three corporate defendants should have paid contributions, year by year, and thus arrive at the total amount properly payable by each, after each is given credit for the contributions heretofore paid on the taxable wages of its employees through the medium of Ricky's. This, essentially, is what Judge Lanier's order directed. There are, however, certain ambiguities in that order to which the appellant's brief directs attention. For example, the order appealed from directs the *163 Commission to make the proper allocations and computations "as set forth in taxpayers Exhibit 2." The exhibit referred to was a computation prepared by a certified public accountant employed by the defendants. In its brief the appellant points out that the accountant, in preparing the exhibit, did not have access to the amounts of the administrative costs or of benefits charged, both of which would be needed to make proper allocations and computations as to each account. However, the Commission itself does have access to those figures, and it can now make the proper retroactive allocations and computations. We hold that the statutes do not prohibit, and justice requires, that it should.
Accordingly, the judgment of the Superior Court should be modified to direct the Commission retroactively to set up the separate accounts, to make proper allocations of contributions and charges to each, and to compute the correct rates of contribution which should have been paid by each separate employing unit. As so modified, the judgment of the Superior Court is affirmed.
This cause is remanded to the Superior Court for judgment in accord with this opinion.
Modified and remanded.
BRITT and CLARK, JJ., concur.