BEFORE THE
STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION

In the matter of the contribution liability,
or status, under Chapter 108, Stats., of

THOMAS R HOLTER, Appellant

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 288263-1, Hearing No. 8287, S


Pursuant to the timely petition for review filed in the above-captioned matter, the Commission has considered the petition and all relief requested. The Commission has reviewed the applicable records and finds that the Appeal Tribunal's findings of fact and conclusions of law are supported thereby. The Commission therefore adopts the findings and conclusions of the Appeal Tribunal as its own.

DECISION

The decision of the Appeal Tribunal is affirmed. Accordingly, Thomas R. Holter is personally liable for delinquent unemployment compensation contributions attributable to the second, third, and fourth quarters of 1986; and the first and second quarters of 1987; based on the defined payroll of Brodhead Venture, Inc., as stated on the contribution reports for those quarters which are a part of Exhibit No. 8. This case is remanded to a Department Deputy to calculate the amount of Mr. Holter's liability in accordance with this decision.

Dated and mailed April 4, 1990
105 - CD7566  ER 451

/s/ Kevin C. Potter, Chairman

/s/ CArl W. Thompson, Commissioner

/s/ Pamela I. Anderson, Commissioner

MEMORANDUM OPINION

The appellant asserts on appeal essentially that he did not actively participate in the day-to-day affairs of the corporation, that he thus was unaware unemployment tax contributions were not being made, and that he therefore should not be found personally liable for the delinquent taxes. For the following reasons, however, the Commission agrees with the Appeal Tribunal's finding of personal liability.

The critical finding by the Appeal Tribunal, and adopted by the Commission, is that the appellant, as president of the corporation, was charged with responsibility for filing the quarterly contribution reports. Section 108.22 (9) of the Statutes, of course, requires as a condition of liability that one have control or supervision of, or responsibility for, filing contribution reports or making payment of contributions. The appellant's argument is that, since he was president of the corporation "in name only," he thus was not responsible for the payments. This argument fails for two reasons.

First, the appellant's claim that he was president in name only is of no legal significance and does not relieve him of the responsibilities of his corporate office. See Burroughs v. Fields, 546 F.2d 215 (7th Cir. 1976). Responsibility is a matter of status, duty, and authority, and not necessarily of actual knowledge. See Mazo v. United States, 591 F.2d 1151, 1156 (5th Cir. 1979). That the appellant chose not to be involved in the activities of the corporation (his claim that he did not have the ability to tell anyone what to do, is self-serving in the extreme), therefore, does not relieve him from the consequences of that failure. If the responsibilities of the office include oversight of the payments in question, and as indicated below they do, then the appellant is personally liable for the delinquencies.

"The principle that directors of a corporation owe a fiduciary duty to the corporation and the stockholders thereof, to deal honestly in corporate affairs is hornbook law requiring no citation of authority." Borak v. J. I. Case Co., 317 F.2d 838, aff'd , 377 U.S. 426 (1964) rev 'd on different ground by Touche Ross & Co. v., Redington, 442 U.S. 560 1979 This fiduciary duty demands care, vigilance, and good faith on the part of the officers with respect to their relationships with the corporation. Boyd v. Mutual Fire Association of Eau Claire, 116 Wis. 155, 181, 90 N.W. 1086 1903. The Commission believes this fiduciary duty encompasses oversight of or, in other words, responsibility for the unemployment tax payments.

Second, the record belies the appellant's contentions that he had no participation in the corporation's business activities. The appellant, on April 8, 1986, signed as president a Debtor's Financial Disclosure Statement for the corporation's then-pending bankruptcy proceeding. In mid-May, 1986, the appellant signed as president a Debtor's Amended Plan of Reorganization for the bankruptcy proceeding. On September 8, 1986, he signed as president a Stipulation and Order in the bankruptcy proceeding. The Financial Disclosure Statement and Amended Plan of Reorganization each expressly provided that class III creditors, of which the Department was one, would receive in full, in quarterly installments, tax payments due them. This succession of documents renders suspect the appellant's claims he had no involvement in the affairs of the corporation.

The appellant asserts, finally, that any failure on his part to pay the taxes in question was not wilful. Adoption of the appellant's view, though, essentially would gut the substance of the statutory section at issue, 108.22 (9), since any officer could insulate him or herself from liability by either delegating responsibility for tax payments or simply ignoring the matter altogether. The wilfulness requirement is met where an officer either knows or reasonably should know of the failure to make the payments. Here, the appellant would have known of his responsibility and the failures to make payments had he exercised even a minimal amount of diligence in his capacity as president of the corporation. He thus cannot claim lack of wilfulness in his failures.

cc:
David P. Jenkins, Attorney
Enforcements Section

A. J. Feifarek, Attorney
Bakken, Feifarek & Taylor



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