Goldmann, Freund and Foley. The opinion of the court was delivered by Goldmann, S.j.a.d.
Claimant Elaine M. Lazar appeals from a decision of the Board of Review in the Division of Employment Security holding that the claims she filed on November 7, 1958 and November 9, 1959 for unemployment compensation benefits were invalid because she was not "in employment" during the base years of the claims. Accordingly, she was not entitled to the benefits she received, totalling $1,592.50, and was liable for their refund.
Claimant is the wife of William Lazar, who had operated the Paramount Toy and Gift Shop at 1237 Boardwalk, Atlantic City, N.J., in partnership with his uncle from 1937 until the latter's death in March 1952. Lazar continued
the business as sole owner. The Paramount premises were occupied under a lease calling for payment of rent in a fixed sum plus a sliding percentage based on gross sales.
In February 1953 a corporation was organized under the name of Seashore Toy & Gift Shop, Inc., for the purpose of operating the same type of business as Lazar conducted under the Paramount trade name. The stockholders of record were Lazar's mother-in-law, 10 shares; claimant, 9 shares; and the company attorney, 1 share. The mother-in-law and Lazar each contributed half of the capital; claimant and the attorney contributed none. The reason Lazar placed his 10 shares of stock in the name of his wife and the attorney was that he did not want the landlord of the Paramount premises to know of his interest in the Seashore operation; if it knew of the other venture, it might claim that Lazar was diverting business there from the Paramount premises, with consequent loss of rent to it. The Seashore shop opened for business in March 1953 at 1605 Boardwalk. Since Seashore did not have the required number of employees for the required period of time to be subject to the Unemployment Compensation Law (see N.J.S.A. 43:21-19(h)(1)), in May 1953 it filed a voluntary election to come under the act, pursuant to N.J.S.A. 43:21-19(h)(6).
In April 1956 Lazar bought out his mother-in-law's interest in the Seashore business. Instead of taking her ten shares in his own name, he placed nine in his wife's name, and took one share for himself. The result was that claimant then held 18 shares of Seashore, Lazar 1, and the attorney 1, although this last share was actually assigned to claimant. Just before the Seashore lease at 1605 Boardwalk expired at the end of 1957, Lazar, acting on the advice of his attorney and accountant, arranged to have Seashore buy the assets of his Paramount operation and relocate at the Paramount premises at 1237 Boardwalk. No money passed; the transaction was strictly a paper one, accomplished by accounting procedures.
Claimant began work at the Seashore store on January 1, 1958 as a salesperson, although her husband also classified her as an assistant buyer of jewelry. The only other employee was a Mrs. Hyatt, who had been with Lazar since 1946 as jewelry buyer and salesperson. Claimant's pay was not calculated on the basis of a given number of hours; she was carried on the books at a fixed weekly take-home salary of $50. The shop was open the year 'round. On September 28, 1958 claimant ceased work because business was allegedly "very slow." Mrs. Hyatt, however, was not laid off. On November 7, 1958 claimant filed a claim for unemployment benefits, stating that her last employer was the Paramount Toy & Gift Shop. In a signed statement given by her on November 25, 1958 she changed the name of her last employer to Seashore Toy & Gift Shop, Inc., and stated that she was definitely laid off until April 1959. Claimant received weekly benefits at the rate of $35, commencing with the week ending November 13, 1958 and through the week ending May 7, 1959 -- 26 weeks totalling $910, the maximum payments available. She returned to the Seashore shop on May 11, 1959 and worked until November 8, 1959, when she again stopped work. The next day she filed another claim for benefits, describing her unemployment as a "seasonal lay-off." On this claim she received benefits at the weekly rate of $35, beginning with the week ending November 15, 1959 and through the week ending March 27, 1960 -- 19 1/2 weeks totalling $682.50 -- at which time available benefits were exhausted. She returned to work on April 3, 1960.
On September 29, 1960 a representative designated by the Director of the Division of Employment Security made a determination and demand for refund of the $1,592.50 in unemployment benefits received by claimant, pursuant to N.J.S.A. 43:21-16(d). The determination stated that investigation had revealed that as president and chief stockholder of Seashore Toy & Gift Shop, Inc., which was open throughout the year, claimant could have been employed if she so desired. (It is to be remembered that at that time 18
of the 20 shares of outstanding Seashore stock stood in claimant's name.) Claimant appealed to the Appeal Tribunal of the Division which, after a hearing, affirmed the determination and held that she had to repay the benefits paid under her two claims.
On further appeal the Board of Review affirmed the Appeal Tribunal after holding a hearing. However, the Board assigned a different reason for claimant's liability to make a refund. It held that her husband had been the sole owner of the Seashore shop, so that claimant was in fact working for him. To be eligible for benefits, claimant had to show that she had earned her base year wages "in employment." Since N.J.S.A. 43:21-19(i)(7)(C) specifically excluded from the term "employment" service performed by an individual in the employ of a spouse, the Board concluded that claimant had not been "in employment" during the base years of the claims she had filed, and could not use the wages she had earned while ...