author: HAYES, Judge. WILHOIT, Judge,

text:
    CLINTON SHIRT CORPORATION, Appellant, v. KENTUCKY BOARD OF TAX APPEALS and Commonwealth of Kentucky, Department of Revenue, Appellees.
    Court of Appeals of Kentucky.
    Nov. 3, 1978.

      Rudy Yessin, Frankfort, for appellant.
    William S. Riley, Asst. Atty. Gen., Thomas A. Duke, Atty., Legal Staff Dept, of Revenue, Frankfort, for appellee, Dept, of Revenue.
    Before, COOPER, HAYES and WIL-HOIT, JJ.
   HAYES, Judge.

This appeal is from a judgment of the Franklin Circuit Court which affirmed the order of the Kentucky Board of Tax Appeals, which in turn affirmed a ruling of the Kentucky Department of Revenue, assessing the appellant additional corporation income taxes in the amount of $25,617.44 and corporation license tax in the amount of $1,291.02 for the fiscal years ending September 30, 1967 through September 30, 1970.

The Kentucky Department of Revenue had determined that Clinton was doing business solely in Kentucky and therefore KRS 141.010(14)(a) was applied to Clinton’s taxable net income.

Clinton contends that its business activity was partly in Kentucky and partly in New York, and therefore, KRS 141.120(2) should have been applied by the Department of Revenue.

The Board of Tax Appeals found the following facts from the evidentiary hearing before it:

Clinton Shirt Corporation (“Clinton”) is a manufacturing company with a plant located in Clinton, Kentucky, engaged principally in the manufacturing of girls’ clothes. Clinton was incorporated in New York in 1961 and all of its stock is owned by its parent, Garan, Inc. (“Gar-an”). Garan started out as a manufacturing company and, as its business expanded and new facilities were opened, each facility was incorporated as a separate corporation with Garan, as the parent corporation, owning all the stock of each subsidiary corporation. During the period in question, Garan owned all the stock of 18 such subsidiary corporations. Garan’s officers are also the officers of Clinton and all the other subsidiaries.
Offices are maintained in the Empire State Building in New York City for the officers and management of Garan, who are also the officers of the subsidiaries. Clinton’s name appears on the building directory, however, the lease for the office space is held by Garan and Garan pays the rent to the landlord. Besides the officers of Garan, there are in New York designers, production personnel, sales personnel and office personnel who design and sell and are concerned with the products manufactured by Garan and its subsidiaries. All of the employees in the New York office, including corporate officers, are paid with checks drawn upon Garan. Employee benefits for New York employees are established in Garan’s name; taxes are withheld and social security contributions are reported for these employees in Garan’s name.
Sales of the products of Garan and its subsidiaries are made by salesmen in the New York Office. Salesmen who sell Clinton products also sell the products of other subsidiaries within the same manufacturing “division” and are not limited to selling products manufactured only by Clinton. All salesmen are paid with checks from Garan. All of the cash resulting from sales of the products of Gar-an and its subsidiaries is deposited in one bank account; credit checks of new customers are conducted by the New York credit department which conducts credit checks for all the subsidiary corporations.
With the exception of some samples of [sic] New York, the bulk of Clinton’s inventory is located in Kentucky. Clinton’s products are shipped directly from the plant in Clinton, Kentucky to the customer. Also, goods purchased by Clinton are shipped directly to Clinton at Clinton Kentucky.
Through entries on company ledgers, Garan charges Clinton and its other subsidiaries for an allocated portion of the office rent and salaries of the officers and other New York office personnel who are paid by Garan. Also, sales are credited to each of the subsidiaries through a ledger entry.
Based upon the foregoing, we conclude that the New York office is maintained and controlled by Garan, Inc. and not by Clinton Shirt Corporation. Clinton is merely charged, by means of a ledger entry, with an allocated portion of the costs of maintaining its office. Furthermore, the appellant did not offer proof that Clinton had activities other than those activities which it contends were carried on in New York. Thus, since the New York office was not being maintained and controlled by Clinton, and no proof was offered that Clinton was doing business in any state other than New York and Kentucky, we conclude that Clinton Shirt Corporation was doing business solely in Kentucky.

The Board then concluded that taxable net income in the ease of Clinton Shirt Corporation is defined by the provision of KRS 141.010(14)(a) because Clinton owns or leases no property outside Kentucky; has no payroll outside Kentucky; and, the New York office is not maintained and controlled by Clinton. The Board applied the rule in Luckett v. Heaven Hill Distilleries, Inc., Ky., 336 S.W.2d 584 (1960). The Board reasoned that since KRS 141.010(14)(a) applied therefore there could be no allocation and apportionment under KRS 141.120.

An appeal from a Board of Tax Appeals ruling to the circuit court is governed by KRS 131.370(3), which states:

(3) No new or additional evidence may be introduced in the circuit court except as to the fraud or misconduct of some person engaged in the administration of the revenue laws and affecting the order, ruling or award, but the court shall otherwise hear the cause upon the record as certified by the board and shall dispose of the cause in summary manner, its review being limited to determining whether or not:
(a) The board acted without or in excess of its powers;
(b) The order, decision, or award was procured by fraud;
(c) The order, decision, or award is not in conformity to the law; and
(d)If findings of fact are in issue, whether such findings of fact support the order, decision or award.

Obviously, (a) and (b) do not apply here, and, after reviewing the transcript of evidence, we are of the opinion that (d) does not apply, in as much as the finding of facts by the Board is supported by substantial evidence. Trimble County Board of Supervisors v. Mullikin, Ky., 438 S.W.2d 524 (1968).

There remains the question of whether the decision of the Board is in conformity to the law.

The trial court found, and we agree, that the Board correctly applied the Luck-ett, supra, case. In that case it was determined that to avoid allocation of out-of-state sales to Kentucky, the taxpayer must not only negotiate the sales outside Kentucky, but must in addition thereto, negotiate. them from offices, agencies and places of business maintained and controlled by the taxpayers outside of the state.

Based upon the transcript of evidence, the conclusion is obvious that the parent corporation, Garan, Inc., maintained and controlled the office, or place of business, in New York and Clinton had no control in any manner.

We are left with appellant’s contention that KRS 141.120(2) and (3) apply because it was determined that Clinton paid a yearly franchise tax to the State of New York for the privilege of doing business. That tax, under Article 9A, New York Corporation Franchise Tax Law, is levied merely because Clinton is incorporated in New York State.

KRS 141.120(2) states, “[a]ny corporation having income from business activity which is taxable both within and without this state shall allocate and apportion its net income as provided in this section.”

KRS 141.120(3) states that a corporation is taxable in another state if, in that state, it is subject to a franchise tax for the privilege of doing business.

It is difficult to compare and rationalize KRS 141.010(14)(a) with KRS 141.120(2) and (3); however, it is apparent that if there is no business income from activity outside the state of Kentucky as found under KRS 141.010(14)(a) then KRS 141.120(2) and (3) would have no effect for there would be nothing to allocate and apportion under the scheme as outlined in KRS 141.-120, even though, as in the present case, the corporation in question may come within the provisions of KRS 141.120(3) by merely paying a franchise tax to another state just because the corporation is incorporated in that other state. So, even if Clinton were permitted to allocate under KRS 141.120, since there is no business income derived by it in the State of New York, Kentucky would still receive 100% of Clinton’s state corporation income tax obligation. The result to Clinton is the same as if only KRS 141.010(14)(a) is applied. It is noted that the percentage of business allocation in New York State listed on Clinton’s corporation income tax return filed in New York, and made a part of the record in the present case, is zero.

Obviously, the Kentucky legislature recognized the apparent conflict that could arise from the application of KRS 141.-010(14)(a) and KRS 141.120(2) and (3) for in 1976 that body deleted the provisions of KRS 141.120(2) and (3).

In conclusion, we note the “loaned servant doctrine,” which appellant argues in his brief, was not presented to the Board or the trial court; however, the Board did determine this issue against the appellant and their finding was supported by sufficient evidence.

The judgment is affirmed.

COOPER, J., concurs.

WILHOIT, J., dissents.

WILHOIT, Judge,

dissenting.

I respectfully dissent from the majority opinion which I believe is contrary to the clear and unambiguous legislative intent embodied in KRS 141.120 as it was written when this dispute arose. Section 2 of that statute provided for the allocation and apportionment of net income by a corporation having “income from business activity which is taxable both within and without this state.” Section 3 then stated unequivocally that “a corporation is taxable in another state if, in that state it is subject to . a franchise tax measured by net income [or] a franchise tax for the privilege of doing business.” The evidence in this case indicates that in 1967 and 1970 Clinton Shirt Corporation was subject to a franchise tax by the State of New York. Cinton thus falls squarely within these statutory provisions entitling it to assert the allocation provisions of KRS 141.120. It may well be that such allocation will result in no change in its tax but that is yet to be determined.

Luckett v. Heaven Hills Distilleries, Inc., Ky., 336 S.W.2d 584 (1960), has no application to this case. In Luckett, the Court was concerned with whether the taxpayer carried on its business activity entirely within this state, not whether that activity was taxable by another state, a different proposition altogether. Similarly, KRS 141.010(14)(a) has no application since that section deals with “corporations having income taxable only in this state” and Clinton is manifestly not such a corporation.


source: Caselaw Access Project

author: HOGGE, Judge.

license: Public Domain

text:
    Donna R. KIDD, Appellant, v. Bruce MONTGOMERY, Commissioner, Department of Parks, Commonwealth of Kentucky, W. Gayle Faust, Director, Division of Personnel, Department of Parks, Commonwealth of Kentucky, Addie Stokley, Commissioner, Department of Personnel and Secretary to the Personnel Board, Dallas Wade, Jr., Superintendent, Lake Cumberland State Resort Park, Appellees.
    Court of Appeals of Kentucky.
    April 27, 1979.
    As Modified June 15, 1979.

      Joel R. Smith, Wilson & Smith Law Offices, Jamestown, for appellant.
    Eugene D. Attkisson, Dept, of Parks, Frankfort, Max M. Smith, Frankfort, for appellees.
    Before LESTER, HOGGE and VANCE, JJ.
   HOGGE, Judge.

The appellant in the case now before us is Donna R. Kidd, who was dismissed from a merit system position with the Commonwealth of Kentucky. The appellees are officers and employees of the Department of Parks and the Department of Personnel. Mrs. Kidd brought suit against the appel-lees seeking damages and reinstatement to her position as a clerk typist at Lake Cumberland State Resort Park. Mrs. Kidd’s complaint was dismissed by a summary judgment of the Russell Circuit Court and she appeals. Among the questions to be considered in this proceeding are whether Mrs. Kidd followed the appropriate remedies in challenging her dismissal, and whether certain statutes and regulations pertaining to merit system personnel are unconstitutional as applied to Mrs. Kidd.

On October 29, 1976, W. Gayle Faust, Personnel Director of the Department of Parks, sent a letter to Mrs. Kidd informing her that she was suspended from her position for a period of thirty (30) days. The reason given for the suspension was that an auditor’s investigation revealed a loss of cash by theft at Lake Cumberland State Resort Park “for which the evidence strongly indicates that you [Mrs. Kidd] are responsible.” Mrs. Kidd was notified that a pre-termination hearing was set for November 4, 1976. She was also notified that a warrant had been issued for her arrest.

Mrs. Kidd did not appear for her preter-mination hearing. However her attorney, Robert Wilson, wrote Mr. Faust on November 8, 1976, stating that he had informed Mrs. Kidd it would not be in her interest to appear at any hearing until a resolution of the criminal charges was made. Mr. Wilson requested that no action as to firing be taken yet and that Mrs. Kidd be granted the opportunity to defend herself at the proper time and place. Mr. Wilson asked that the letter be considered an appeal of any actions of suspension or firing. A copy was sent to Mrs. Addie Stokley, the Commissioner of Personnel.

On December 2, 1976, Mr. Faust wrote Mrs. Kidd a letter, notifying her of her dismissal. The reason cited for her dismissal was that the auditor’s investigation had revealed a loss of cash by theft for which the evidence indicated that Mrs. Kidd was responsible, or had knowledge as to who the responsible party was. The letter noted that Mrs. Kidd did not appear for a preter-mination hearing, which would have afforded an opportunity to correct any mistaken impression, and that she did not offer any explanation at the examining trial. Mr. Faust stated to Mrs. Kidd that under the circumstances, they had no choice but to dismiss her.

A separate letter, dated December 16, was sent to Mr. Wilson, also indicating that Mrs. Kidd had been dismissed because of the evidence of her guilt, and since no explanation had been offered. This letter explained the procedure for appeal.

Mrs. Kidd was acquitted on June 23,1977, of all criminal charges pending. Mr. Wilson then wrote the Commissioner of Personnel requesting a hearing on the matter of Mrs. Kidd’s dismissal. On August 16, 1977, an order denying Mrs. Kidd’s attempted appeal was signed by Addie Stokley, Commissioner of the Department of Personnel and Secretary to the Personnel Board. The ground on which the appeal was denied was that Mrs. Kidd had failed to appeal the disciplinary action taken against her within the thirty (30) days required by law. On August 23, 1977, Mrs. Kidd filed suit against the appellees in Russell Circuit Court.

In this appeal from the dismissal of her suit, Mrs. Kidd argues that she is being penalized for the exercise of her constitutional rights and that the statutes and administrative regulations requiring her to respond to the allegations against her prior to her trial on criminal charges are unconstitutional as applied to her. This Court is aware that the principle that public employees cannot be dismissed for invoking and refusing to waive their constitutional right against self-incrimination is well established in the law. Gardner v. Broderick, 392 U.S. 273, 278, 88 S.Ct. 1913, 1916, 20 L.Ed.2d 1082, 1087 (1968); Uniformed Sanitation Men Association v. Commissioner of Sanitation, 392 U.S. 280, 283, 88 S.Ct. 1917, 1919, 20 L.Ed.2d 1089, 1092 (1968). However, the statutes and administrative regulations of this Commonwealth have provided a forum and a procedure whereby such arguments are to be raised.

KRS 18.270 provides that any classified employee who is dismissed or suspended may, within thirty (30) days after such dismissal or suspension, appeal to the personnel board for review. The final order of the personnel board may, within thirty (30) days of its entry, be appealed to Franklin Circuit Court. KRS 18.272. 101 K.A.R. 1:130(7) states that the appeal to the board shall be through the commissioner, shall be in writing, and shall set forth the basis of the appeal.

The only attempt which Mrs. Kidd made to appeal either her suspension or dismissal within the thirty (30) day limit was the correspondence of her attorney with Mr. Faust, Personnel Director of the Department of Parks, with a copy being sent to Mrs. Stokley, Commissioner of the Department of Personnel and Secretary to the Board. The correspondence was not directed to the Board, and did not set forth the specifics of Mrs. Kidd’s argument. The November 8 letter merely stated that “it was not in Mrs. Kidd’s interest to appear” until the matter of criminal charges was resolved and requested that action be deferred until Mrs. Kidd had “the opportunity to defend herself at the proper time and place.” Although appellant attempts to have this considered as an appeal, we do not believe it meets the requirements of an appeal under the applicable statutes and regulations, which we have just discussed.

It is our opinion that Mrs. Kidd has failed to exhaust her administrative remedies. A litigant will ordinarily be required to exhaust his administrative remedies before resorting to the courts for relief. Tharp v. Louisville & N.R. Company, 307 Ky. 322, 210 S.W.2d 954 (1948); Goodwin v. City of Louisville, 309 Ky. 11, 215 S.W.2d 557 (1949). We are aware of the rule that direct judicial relief is available without exhaustion of administrative remedies where a statute is charged to be void on its face, Goodwin, supra, but nowhere in the complaint filed in circuit court did appellant allege that any particular statute or regulation was void on its face. The thrust of the argument in circuit court was a grievance regarding “individuals here involved violating [Mrs. Kidd’s] . . constitutional privilege against self-incrimination.” Appellant made no effort to follow the procedures for a merit system appeal, where at a hearing before the personnel board, she might have sought delay of the proceedings or asserted her right to remain silent without forfeiting her job as a penalty for exercise of that right.

We hold that there was no genuine issue of material fact in this case and that the appellees were entitled to summary judgment as a matter of law. New Amsterdam Casualty Company v. Allen, Ky., 446 S.W.2d 278 (1969).

The judgment of the circuit court is affirmed.

All concur.


author: LESTER, Judge.

text:
    KENTUCKY REGISTRY OF ELECTION FINANCE, Appellant, v. J. J. JORDAN, Appellee. KENTUCKY REGISTRY OF ELECTION FINANCE, Appellant, v. Stephen E. GILMORE, Appellee. KENTUCKY REGISTRY OF ELECTION FINANCE, Appellant, v. John R. OLIVERIO, Appellee. KENTUCKY REGISTRY OF ELECTION FINANCE, Appellant, v. Aubrey WILLIAMS, Appellee. KENTUCKY REGISTRY OF ELECTION FINANCE, Appellant, v. Michael E. KEPLINGER, Appellee. KENTUCKY REGISTRY OF ELECTION FINANCE, Appellant, v. Ellen B. EWING, Appellee.
    Court of Appeals of Kentucky.
    June 8, 1979.

      Allen Prewitt, Jr., Frankfort, for appellant.
    Grover D. Adkins, Louisa, for appellee, J. J. Jordan.
    Donald L. Frailie, II, Ashland, for appel-lee, Stephen E. Gilmore.
    Kenneth Williams, Jr., Gray, Woods & Cooper, Ashland, for appellee, John R. Oli-verio.
    Robert P. Benson, Jr., Louisville, Thomas L. Hogan, Louisville, for appellee, Aubrey Williams.
    W. E. Quisenberry, Jr., Quisenberry & Quisenberry, Calhoun, for appellee, Michael E. Keplinger.
    James C. Hickey, Ewen, Mackenzie & Pe-den, P. S. C., Louisville, for appellee, Ellen B. Ewing.
    Before GANT, LESTER and VANCE, JJ.
   LESTER, Judge.

These consolidated cases involve appeals by the Kentucky Registry of Election Finance from the adverse granting of summary judgment, with the central issue being the late filing of financial reports pursuant to the provisions of. the Corrupt Practices Act.

Five of the cases found their origin in the failure to promptly comply with KRS 121.-180(2)(a)(3), which calls for a 30-day post-primary report, and one concerns the late filing of the 12-day preprimary report required by KRS 121.180(2)(a)(2). The basis for all of the summary judgments was a finding by the respective circuit court that each candidate had substantially complied with the Corrupt Practices Act. That conclusion came from the courts’ belief that even though the requirement that the reports be filed was mandatory, the filing deadline provisions were directory.

At the outset, we wish to point out that there is not even the slightest indication that any of the appellees had committed any “corrupt practices,” for even the appellant is candid when it says “certainly we do not contend that the tardy filings involved here constitute moral turpitude . . . ”

J. J. JORDAN

This appellee was the successful Democratic candidate for County Judge/Executive in the Lawrence County Primary held May 24, 1977. The county board of elections certified Judge Jordan's election, but appellant Registry did not, and appellee brought this action for a determination that he substantially complied with KRS Chapter 121, commonly known as the “Corrupt Practices Act,” even though his 12-day pre-primary report was not received by the appellant until three days after the nominating election. The Registry took the position that Jordan’s election was void because under no circumstances could he be relieved of the requirements of KRS 121.-180(2)(a)(2).

The trial court detailed the facts of the case and we quote its resume:

In accordance with its expressed view, the Registry presented no evidence at the hearing. Plaintiff testified at length, frankly admitting his failure to strictly comply with the statute. Plaintiff did, however, offer in mitigation the fact that his wife of forty-five years became seriously ill approximately two and one-half weeks before the May 24, 1977, primary and that she underwent major surgery and remained in intensive care until after the primary election. Plaintiff testified that he remained at her bedside almost constantly from her admission to the hospital at Huntington, West Virginia. She was, on the date of the hearing some three months later, still confined to a hospital bed. Plaintiff testified that he had received a letter from the Registry postmarked May 23, 1977, one day before the election, reminding him that his “12 day pre-primary report” had not been received, but that he did not receive such communication until May 25, 1977. Plaintiff stated that he for the first time, realized that due to the illness of his wife, he had neglected to file the “12 day pre-primary report”. Plaintiff then phoned the Registry and was told by the Executive Director that the circumstances seemed reasonable, but that the Registry could not receive his report until the Commonwealth’s Attorney certified by letter that no willful violation of KRS Chapter 121 had occurred. Plaintiff then contacted the Commonwealth’s Attorney who so certified. Plaintiff then mailed his report, which was received and filed by the Registry on May 27, 1977, three days after the primary. A few days later, Plaintiff discovered by reading a front page story in the “Huntington Herald-Dispatch” newspaper that the Registry sought to withhold his certificate of election and to void his election. Other than the May 24, 1977, form letter, the Registry has not communicated with Plaintiff directly at all. Counsel for the Registry frankly admits that the Registry cannot in good faith justify criminal proceedings against Plaintiff under KRS 121.990.
The Lawrence Circuit Court concluded: The salutary purposes of the Act were not affected. But are the Plaintiff’s reasons for failure sufficient to avoid forfeiture of his election? This Court is of the opinion they are. A man does not lightly toss aside his wife and constant companion of forty-five years. When she is at death’s door, his presence and thoughts will not be elsewhere, but at her side. It is entirely reasonable and perhaps even proper that he will forget, over-look, and neglect matters of far more importance than the report involved herein. That is one of the highest attributes of human nature. The Legislature cannot change it. This Court does not believe that it is [the] intent of the Legislature to punish it or defeat the will of the more than seventeen hundred voters who expressed their confidence in Plaintiff.
On the basis of the facts in this case, the Court is of the opinion that Plaintiff, J. J. Jordan, has substantially complied with the mandate of the Corrupt Practices Act.

JOHN R. OLIVERIO AND STEPHEN E. GILMORE

Appellees, Oliverio and Gilmore, were both candidates for the nonpartisan nomination to the office of city commissioner of the City of Ashland. Each man had duly designated a campaign treasurer.

After the May 24,1977 primary and prior to June 28, 1977, the deadline for filing a final report, Oliverio inquired of his treasurer if all reports had been completed and filed and he was assured that they had been. However, by letter dated July 8, 1977, and received prior to July 11,1977, the appellant notified Oliverio that the 30-day post-primary report had not been filed, and on this last mentioned date, the treasurer completed the document and it was in the Registry’s offices three days later. What had occurred was that after May 24, 1977, the treasurer had been out of the city on business for a period of time and had failed to realize that the report had not been filed until the candidate notified her of the appellant’s letter.

Appellant’s executive director wrote to the Boyd County Commonwealth’s Attorney to the effect:

Should you conclude that the violation was not willful and that prosecution is not warranted, and if the reports are submitted promptly, the Registry will accept such reports as in substantial compliance. If you conclude otherwise the Registry will cooperate in any action you deem appropriate.

The prosecutor replied that he had concluded that Oliverio had not willfully violated KRS 121.180 and that legal action was not warranted. On July 20, 1977, the appellant’s executive director again wrote to the Commonwealth’s attorney stating:

Re: John R. Oliverio-Candidate
Ashland City Commission
Dear Mr. Williams:
The above named candidate has now filed his 30 day post-primary report. It was received on July 14,1977. In view of your conclusion that there was no willful intent to evade the law, the Registry will accept the report as in substantial compliance.

Prior to the primary, Stephen Gilmore’s treasurer notified him that business would require him to be absent from Ashland on the day of the nominating election but that with a few minor entries, the final report was completed and would be filed. On July 10,1977, the treasurer completed the statement not realizing the deadline for filing had passed. Meanwhile, Gilmore had left on vacation, and upon his return he found a letter from the Registry informing him the report was late. The document was filed July 19, 1977, and on the following day, the executive director of the Registry wrote the Commonwealth’s attorney as follows:

Re: Stephen E. Gilmore-Candidate
Ashland City Commission
The above named candidate has now filed his 30 day post-primary report. It was received on July 19,1977. In view of our conclusion that there was no willful intent to evade the law, the Registry will accept the report as in substantial compliance.

The Boyd Circuit Court made a thorough examination of all the applicable statutes, and after observing that after a candidate designates a treasurer, all report forms thereafter are furnished by appellant to that official and not the candidate, wrote:

The Registry takes the position that the failure of the designated treasurer to file the required report, even though such failure be unknown to the Candidate is, by virtue of KRS 121.990(10) a violation of KRS 121.180, and voids the nomination of the Candidate. The Registry argues that the Candidate is responsible for the failure of the treasurer to file the required report, relying upon the wording of KRS 121.180(2)(a)(4), and ignoring KRS 121.990(10).
To determine the soundness of the Registry’s position we must examine all of present Chapter 121.
First, KRS 121.160 requires each Candidate to designate a campaign treasurer at the time he files as a Candidate, upon a duplicate form prescribed and furnished by the Registry, and until he does so he shall be listed as his own treasurer and accountable as such. The phrase “accountable as such” is significant .
The Candidate may appoint himself as treasurer in which [case] he is accountable as such, or he may appoint any registered voter in Kentucky as his treasurer.
As a result, the Statute authorizes:
1. A Candidate who is his own treasurer, (one person)
or
2. A Candidate and a treasurer, (two persons).
Turning to KRS 121.180(2) we find that it is the mandatory duty of the campaign treasurer of a Candidate, or a campaign committee, to make full reports upon a prescribed form, to the Registry, of all money, loans or other things of value, received by him from any source since the date of the last report, including the name, address and occupation of each person or group in excess of $100.00, the amount contributed by each and the date of the contribution with a complete statement of all expenses. KRS 121.180(2) sets forth when the reports are to be made and provides a grace period of five, (5), days from each filing deadline.
Prior to 1966 it was the obligation of the Candidate to file statements of receipts and expenditures and accompany the same with a prescribed oath, (old KRS 123.060). HOWEVER, NOW IT IS THE OBLIGATION OF THE CAMPAIGN TREASURER.
I believe that a correct construction of KRS 121.180(2)(a) would be that such refers to the filing of the reports by the campaign treasurer. It is he who has the information and it is he who must file the reports.
If the Candidate is also his own treasurer, we have no problem, KRS 121.990(10). If the treasurer is not the Candidate, but the Candidate knows that the Treasurer if failing, or has failed, to file the required reports and takes no action to get them filed, we have no problem. KRS 121.990(10).
To sustain the position of the Registry a successful Candidate could be deprived of his nomination by the unknown act, or failure to act, intentional or unintentional, of the treasurer to file the required report, and even though such treasurer may have represented to the candidate that he had filed such report. Certainly the Legislature has the power to enact legislation to penalize a candidate for the unknown default of the treasurer. In my opinion the present law does not, and is not intended to so do, unless the Candidate, after ascertaining the failure of the treasurer to file the report, fails to promptly take steps to see that such report is made. If the Candidate does promptly take steps to see that the report is made and a report made within a reasonable time, then substantial compliance has been accomplished and certainly this is the opinion of the Executive Director of the Registry as heretofore indicated by written letter.

Although KRS 121.120(1) authorizes the appellant to appoint a full-time executive director, it does not spell out his duties and powers, but we find it somewhat incongruous that the director can take the position that these two appellees were in substantial compliance with the law and then the registry can seek to void their nominations.

The sound reasoning of Judge Fanning is such that we would find it difficult to disagree therewith and we therefore, affirm his opinion.

AUBREY WILLIAMS

This appellee was a successful candidate for representative to the General Assembly from the 42nd Legislative District. He had designated a treasurer who had filed two preprimary financial reports as well as the postprimary statement, but did so some twenty days late. On June 17, 1977, Williams gave his treasurer, one Haney Jones, the necessary information for the final report and Jones marked his calendar to complete and file it on June 24, 1977. However, two days prior to the 24th Jones lost his job causing great anxiety and frustration which caused him to forget his treasurer’s duties. Williams was unaware of Jones’ oversight until he and his family returned from a trip on July 13, 1977, at which time he received the late filing note from appellant. Jones filed the statement the next day.

Without further elaboration, we believe the basic principles enunciated by the Boyd Circuit Court in the Oliverio and Gilmore litigation are equally applicable to the Williams case because we have designated treasurers who shoulder the reporting responsibilities, rather than the candidates. We, therefore, affirm the Jefferson Circuit Court, but for the reasons set forth in Judge Fanning’s opinion.

MICHAEL E. KEPLINGER

Perhaps the most resourceful of all the appellees was Michael Keplinger, an unopposed candidate for the Democratic nomination for sheriff of McLean County. Kep-linger was his own treasurer, but he had no receipts or expenditures. Although it is unclear from the record, it was probably for that reason that he felt it was unnecessary for him to file a report. Upon notification by appellant, appellee forwarded the appropriate forms on July 15,1977, and by letter dated July 20, 1977, from the Registry’s executive director to the Commonwealth Attorney for the 45th judicial district, the appellant said in part “the Registry will accept the report as substantial compliance.” Again, we wonder why this case was filed.

Not wanting to leave anything to chance, the McLean County Democratic Party Executive Committee, being aware of their candidate’s potential plight, met on August 15, 1977, and nominated and elected Kep-linger as the one to fill the vacancy in the sheriff’s race if one did in fact become a reality by virtue of this litigation. Needless to say, Michael Keplinger was elected sheriff the following November.

In the lower court, appellee answered the complaint by pleading the vagueness of appellant’s regulations with reference to a' candidate having no receipts or expenditures; that the Registry was estopped from bringing the action because its own rules and regulations contributed to his failure to comply with the law; that the cause is moot by virtue of the action of the Democratic Executive Committee; and that he was in substantial compliance with the law. The trial court rendered judgment for appellee based upon his last enumerated defense.

ELLEN B. EWING

Appellee Ellen Ewing was a candidate for District Judge, 30th Judicial District, 9th Division, and acted as her own treasurer. Judge Ewing forgot to file her final report on June 28,1977, and it was not until the 20th of July while on vacation in Florida that she became aware of her omission when a relative telephoned and told her of a newspaper article listing her as delinquent. She immediately completed the report and mailed it to appellant.

Even though appellee presented several defenses, the court below, in granting her judgment, found her to be in substantial compliance and in so doing, noted that albeit the appellant took the position that the statutory filing timetable was mandatory, nevertheless, it arbitrarily chose to extend the postprimary deadline to July 7,1977, for other candidates.

In the majority of these appeals, the appellant received letters from the local Commonwealth Attorney advising that the alleged violations were not willful and prosecution was not warranted. In several situations, the appellant went on record by replying to either the state’s representative or the candidate that it would treat the nominees as being in substantial conformity with the law, yet it violated its own delineations and refused to certify the elections. In two other cases, without the knowledge of the candidate as to the omission, the treasurer and not the office-seeker failed to timely file the required reports. In the Ewing situation, the Registry extended the post-primary filing deadline to other similarly situated candidates, but not to her.

We take the view that in these particular cases, the appellants either accepted the substantial compliance theory; sought to void a candidate’s election for an act attributable to another; or treated like candidates in a dissimilar fashion. We hasten to point out that in the appeals involving the treasurers’ dereliction of duty, if there had been any evidence that the candidates were aware of the failure to comply with the Act on the part of his financial officer, then we would reach a different conclusion. In other words, lack of knowledge is the key in two of these cases.

Since we consider this the first major test by the Registry to bring some semblance of order to our election process, as well as to make an effort to restore the faith of the people in the election process, we will affirm the judgments in each of these cases for the reasons assigned herein, but insofar as future litigation is concerned, we deem an opposite result to be appropriate.

A Corrupt Practices Act is nothing new to the law of this jurisdiction for its first enactment was by the 1916 General Assembly and was codified as §§ 1565b-l through 1565b-21. This early statute contained provisions for the filing of pre-election reports of receipts and expenditures (§ 1565b-4) as well as those for postelection (§ 1565b-6). Moreover, if a candidate violated any of the several provisions of the act, his nomination or election could be voided (§ 1565b-ll).

The earliest case of any significance was Sparkman v. Saylor, 180 Ky. 263, 202 S.W. 649 (1918), which was relied upon by all appellees herein for their position that the statute is mandatory in requiring a candidate to file a pre-election and postelection statement of expenditures, but is merely directory as to the time when such statements must be filed. However, the current statutes are significantly different from those in effect at the time Sparkman was decided.

The early statutes, which required the filing of the statements at designated times, did not provide that the election or nomination of the candidate shall be void upon failure of the candidate to comply with the filing requirements. Kentucky Statutes 1565b-7 and 1565b-9 provided the penalty for failure to file the statements. The penalty was that no person could be issued a certificate of election nor be permitted to qualify for the office until the statements had been filed.

Before the 1972 amendments, KRS 123.-090 provided as follows:

Failure to file statements; effect of. No officer or board authorized to issue certificates of nomination or election shall issue a certificate of nomination to any person until he has filed the statements required by KRS 123.060, nor a certificate of election to any person until he has filed the statements required by KRS 123.070. Neither the Secretary of State nor the county clerk shall certify the name of any candidate to be placed on the ballot in the regular election until the statements required by KRS 123.060 have been filed. No person shall be permitted to qualify as an elective officer until he has filed the statements required by KRS 123.060 and 123.070, and no officer shall receive any salary or emolument for any period prior to filing the statements.

If a candidate who failed to file the statements on time could not take office until he filed them, it seems to follow naturally that he could take office upon compliance, and therefore the intent of the legislature was not to void the election, but only to require compliance.

In contrast with the old statutes, the new Corrupt Practice Act, KRS 121.990(10) provides:

The nomination for, or election to, an officer of any candidate who violates any provision of KRS 121.100 to 121.200 . shall be void, and the office or candidacy shall be filled as provided by law for the filling of a vacancy.

The only provision for voiding the election in the early statutes was found in a section dealing with election contests. It provided that any party contesting an election could plead that the contestee had violated the provisions of the Corrupt Practice Act, and if such allegations were proved, the election should be declared void, providing the contestant had not himself violated the Act. These provisions are substantially carried over into KRS 120.015.

Under these statutes an election could be voided only at the instance of a defeated candidate in a contest, and not even then if the defeated candidate had also violated the Act. The incentive for a defeated candidate to bring a contest action was considerably lessened by the decision in McKinney v. Barker, 180 Ky. 526, 203 S.W. 303 (1918). Many abuses of the Corrupt Practice Act will not be challenged in an election contest, and therefore such abuses would not result in voiding the election under the statutes as they existed prior to 1972.

Under the present statutes a Registry of Election Finance is created to be a watchdog, over election practices, the reports are required to be filed with the Registry, and the Registry, as well as any candidate for the office or any qualified voter, can bring an action to declare a vacancy. It is not left to the choice of a defeated candidate alone to determine whether a penalty shall be exacted for failure to comply with the statute.

The penalty provision of the present Corrupt Practice Act clearly states that an election is void if the Act is violated by the successful candidate. The old statute merely withheld the right to take office until the reports had been filed. Because of this significant difference in the two statutes, we do not believe Sparkman, supra, is controlling or even applicable.

We will interpret the Act as it is written. Shall is a word which is generally given a mandatory interpretation. The Act says an election shall be void if the Act is violated. We would so hold.

The judgments below are affirmed.

All concur.


text:
    PRUDENTIAL RESOURCES CORPORATION, Appellant, v. Mack K. PLUNKETT, Appellee.
    Court of Appeals of Kentucky.
    June 8, 1979.

      Phillip D. Scott, Greenebaum, Doll & McDonald, Lexington, for appellant.
    Paul E. Hieronymus, McKee, for appellee.
    Before HOGGE, LESTER and VANCE, JJ.
   LESTER, Judge.

Prudential Resources Corporation sought a judgment pursuant to KRS 418.005 et seq. declaring that it had not lost the right to exercise an option to purchase an oil and gas leasehold held by Mack K. Plunkett. The Jackson Circuit Court dismissed the suit when it determined that Prudential was obligated to comply with a forum selection clause in the agreement between Prudential and Plunkett, which designated Dallas County, Texas, as the site for any litigation concerning the contract. Prudential, in this appeal, urges that we permit resolution of the controversy in the Jackson Circuit Court by either invalidating the forum selection clause as against public policy, or by striking down the clause as unreasonable under the circumstances of this case.

Plunkett, a resident of Dallas, Texas, acquired two oil and gas leases in tracts located in Jackson County, Kentucky. Plunkett entered into the first lease dated March 25, 1977, with William Bond of St. Petersburg, Florida. The notary certificates establish that Bond signed the lease on April 11th in Pindlas County, Florida, while Plunkett added his name on May 10th in Dallas County, Texas. Plunkett obtained the second lease dated August 31, 1977, from the Warford Land Company, a West Virginia Corporation. Plunkett executed the lease before a notary on July 21, 1977, in Dallas County, Texas. The Warford Land Company completed the agreement on July 26th in Cobell County, West Virginia.

By an instrument effective August 15, 1977, Plunkett and Prudential Resources Corporation contracted as to Prudential’s operating oil wells on both tracts. This agreement granted Prudential an option to purchase the oil and gas leases upon the condition that Prudential “drilled and completed, or abandoned as a dry hole” eight specified test holes on or before April 15, 1978.

Although Prudential did not meet the contract deadline of April 15th, it still wished to maintain the right to buy the leases through an extension of time to comply with the clause. Prudential, in its complaint, grounded its assertion of entitlement to the additional time upon the allegation that Plunkett had falsely represented that the National Park Service would promptly issue permits allowing Prudential to drill in the Daniel Boone National Forest, and upon the allegation that the harsh winter weather of 1977 and 1978, as well as the park service’s delay in granting the permits, brought into effect the force majeure provision of the agreement which states:

In the event PRUDENTIAL shall be rendered unable in whole or in part, by force majeure to carry out any covenant, agreement, obligation or undertaking hereunder to be kept or performed by such party, other than to make payment of amounts due hereunder, such covenant, agreement, obligation or undertaking, insofar as the same shall be affected by such force majeure shall be suspended during the continuance of any inability so caused, and such default shall be remedied with all reasonable dispatch. The term “force majeure” as employed in this paragraph shall be acts of God, (excepting normal or average weather conditions), strike, lockouts, or other industrial disturbances, acts of a public enemy, war, blockades, riots, epidemiés, earthquakes, explosions, accidents, or repairs to machinery or pipes, or inability by reason of governmental regulation to obtain materials, acts of public authorities, or other causes, whether or not of the same kind as enumerated herein, not within the control of the party claiming suspension and which by the exercise of due diligence or the payment of money such party is unable to overcome.

Plunkett entered a special appearance for the purpose of objecting to the jurisdiction and venue of the Jackson Circuit Court upon the basis of the following clause in the contract:

In the event of any dispute, or disagreement, between the parties hereto with respect to this agreement, it is agreed that venue for any action at law brought by any party to this agreement shall be in Dallas County, Texas.

The trial court determined that public policy would not prevent enforcement of a forum selection clause so long as the clause did not operate to force a party into a nonconvenient forum. The court dismissed Prudential’s complaint after concluding that Dallas County, Texas, was a convenient forum for both parties.

Both Prudential and Plunkett have informed us that no reported Kentucky case has answered whether choice of forum agreements can take effect in this Commonwealth. While we agree that this precise issue remains one of first impression, Fite & Warmath Construction Co., Inc. v. MYS Corporation, Ky., 559 S.W.2d 729 (1977), supplies clear guidance on the direction we should take. Fite, supra, established that Kentucky public policy does not prohibit enforcement of a contract to submit a future dispute to arbitration. The court in arriving at its opinion on binding arbitration agreements for prospective controversies compared the similar rationale used to invalidate forum selection clauses: that endorsement of such a clause would oust the courts of jurisdiction. The court rejected the ouster justification in regards to contractual provisions for arbitration by noting that the Supreme Court of the United States in Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974), treated arbitration clauses as a subcategory of choice of forum agreements, and by pointing out the position of the American Law Institute on forum selection clauses. We read Fite, supra, as mandating adoption of § 80 of the Restatement (Second) of Conflict of Laws (1971). Section 80 states:

The parties’ agreement as to the place of the action cannot oust a state of judicial jurisdiction but such an agreement will be given effect unless it is unfair or unreasonable.

As the comment to § 80 explains, a court not specified does not lose its jurisdiction as a result of the clause, but such a court declines to exercise its jurisdiction in recognition that the parties by their consent have designated the most convenient forum for their litigation. However, if suit in the selected forum would be unfair or unreasonable, the clause will not be enforced.

Although public policy will not void a forum choosing clause, such a provision still must withstand the test of reasonableness. Prudential argues that forcing it to bring its action in Dallas, Texas, would be unreasonable under the circumstances of this case. The primary factors which Prudential has presented to show unreasonableness relate to the difficulty of developing proof outside Kentucky, of the delay of the park service in issuing permits, and of the harsh winter weather conditions of 1977 and 1978. While many of the witnesses who would testify as to the late permits and the weather probably reside in Kentucky, the location of these witnesses would not unduly burden institution of the action in Texas. Weighing the credibility of these witnesses would not be an important aspect of the sort of information that Prudential would hope to elicit from them. Prudential could gather evidence as to the closing of roads and as to why it took a certain amount of time to receive a permit, by deposition, without incurring any disadvantage because the witnesses did not appear personally. A Texas court can accord Prudential an effective remedy.

Prudential does not undergo any inconvenience by appearing in the courts of Texas. Prudential has an office in Houston. Another portion of the contract stated that “[f]or purposes of this agreement, payments to be made, notices to be given and material to be supplied shall be addressed, or delivered” to either Prudential at its Houston office or to Plunkett at his Dallas address. All correspondence between Plunkett and Prudential was to take place in Texas. It would work a greater hardship on Plunkett for him to have to defend the suit in Kentucky than for Prudential to live up to its bargain and file proceedings in Dallas. We have no doubt that a Texas court will have the expertise to interpret an oil and gas contract.

We do not have a situation here of overreaching by Plunkett. Prudential engaged in the business of extracting oil and gas. Plunkett dealt with Prudential at arms length from Dallas and they entered into a sophisticated drilling contract. We see no disparity of bargaining power. Prudential, at the time it executed the contract, expressed its approval of Dallas as a site to litigate any contract controversy, although it must have realized that an event which might trigger the force majeure clause would in all likelihood occur in Kentucky. Prudential has not supplied us with an adequate explanation as to why it should escape its promise as to the appropriate forum when it had knowledge all along that a legal dispute might center on facts which happened in Kentucky. Fite, supra, at 735.

Finally, we observe that Kentucky has a minimal interest in this lawsuit. Assuming that Kentucky had a substantial interest to protect because of its having the most significant relationship to the transaction and the parties, the Jackson Circuit Court would have been warranted in refusing to enforce the forum selection agreement if the application of Texas law would have subverted an important policy of Kentucky and if the choice of law rule of Texas would have been in favor of its own laws. See Lewis v. American Family Ins. Group, Ky., 555 S.W.2d 579 (1977). However, here, nonresidents entered into a contract out of state for the purpose of removing resources in Kentucky. Prudential does do business in Kentucky, but we can perceive no interest unique to Kentucky at stake which the courts of this Commonwealth can better protect. Basically, the question involves whether Prudential should get an extension of its option to purchase because of occurrences which excuse its not meeting the drilling deadline. We are confident that Prudential can get a fair hearing in Dallas, Texas.

The judgment is affirmed.

All concur.

      . For a thoughtful analysis of the various considerations see Gilbert, Choice of Forum Clauses in International and Interstate Contracts, 65 Ky.L.J. 1 (1976).


author: WHITE, Judge.

text:
    The MURRAY OPERATION OF the TAPPAN COMPANY, Appellant, v. KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION, Commonwealth of Kentucky, Martha H. Clapp, Jerry C. Ray, Frances M. Swift, Preston Orr, Clayton W. Adams, Jerilyn A. Colson, James A. Thomas, James M. Williams, Elizabeth M. Gargus, Jimmy D. Kimbro, Ada L. Richardson, Sandra M. Hughes, Elijah H. Balentine, John Flood, Terry E. Hopkins, and Charles D. Duncan, Appellees.
    Court of Appeals of Kentucky.
    June 8, 1979.

      John A. Gregory, Jr., Hughes, Gregory & Haverstoek, Murray, for appellant.
    August Winkenhofer, Jr., Dept, for Human Resources, Frankfort, for appellee, Kentucky Unemployment Ins. Commission.
    Before WHITE, REYNOLDS and VANCE, JJ.
   WHITE, Judge.

The Murray Operation of the Tappan Company (Tappan) appeals from an order of the Calloway Circuit Court affirming the right of certain Tappan employees to collect unemployment insurance benefits. Tappan contends that these employees are disqualified from obtaining such benefits because they were “voluntarily unemployed.” The case is one of first impression in Kentucky, calling for the court’s evaluation of several provisions of our unemployment insurance act.

The facts in this case are undisputed. All of the employees — appellees herein — are employed by Tappan and are members of Local 1068 of the United Auto Workers Union, with which Tappan has a collective bargaining agreement. This agreement was originally left out of the record but has since been added upon this court’s motion. Under the terms of the agreement, Tappan was required to shut down production for one week to enable the employees to take vacations. There is evidence that this one-week shutdown was also used for certain management objectives, such as maintenance and repair. On May 20,1977, Tappan posted notices informing its employees of the vacation shutdown from June 27 to July 5, 1977. In accordance with the agreement, Tappan posted sign-up sheets for those employees desiring to work during the shutdown. This notice, posted around June 17, stated that approximately 70 positions were available for the one-week shutdown.

Although all of the appellee-employees were aware of the list, none of them signed up to work. The reasons for such failure varied, although it does appear that more than 70 workers signed the list within a short time of its posting. Witnesses for Tappan did testify, however, that a later list was posted indicating the availability of more jobs during the shutdown.

None of the appellees were entitled to vacation pay. The record discloses that some of the appellees had only recently begun to work for Tappan, and thus were not eligible for vacation, while others, longtime employees of Tappan, had lost their vacation eligibility due to a 13-month strike which had ended several months before the shutdown period. This led the appellees to file for unemployment benefits for the one week of shutdown.

Tappan protested the claims filed against its account. The basis of this protest was that the employees were disqualified from unemployment insurance compensation due to KRS 341.370(l)(a) for failure to accept the work offered by the notices. After a hearing, however, the referee held that KRS 341.370(l)(a) was inapplicable because the bargaining agreement did not require the employees to accept substitute work in lieu of shutdown. On appeal, the Kentucky Unemployment Insurance Commission (Commission) affirmed the referee’s decision and adopted its findings.

Tappan then appealed to the Calloway Circuit Court asserting that the agency decision incorrectly applied the law. It was Tappan’s contention that the employees were disqualified not only under KRS 341.-370(l)(a), but also because their union membership made them voluntarily unemployed during the shutdown. KRS 341.370(2)(e). It was further asserted that the employees had failed to make a reasonable effort to obtain suitable work and were thus barred from collection of benefits under KRS 341.-350(4). After evaluation of these arguments, however, the circuit court affirmed the Commission’s decision on the basis that the record disclosed adequate evidence to support eligibility.

On appeal to this court, Tappan argues that the decision below is clearly erroneous, not because the findings of fact were in error, but because the law was incorrectly applied to those facts. While that assertion does appear to be correct, infra, the initial problem is whether Tappan has waived certain theories of relief.

The transcript of the hearing before the referee indicates that Tappan’s theory of the case was based upon KRS 341.370(l)(a) as it related to the posted notices. Further, all of the documents filed at the administrative level reflect that Tappan’s ground of protest was that the appellees had refused an offer to work. The only indication of the other grounds now asserted by Tappan was the filing of the bargaining agreement. Upon such a record, it could be argued that Tappan has waived any arguments under KRS 341.350 and KRS 341.370(2). Cooper, State Administrative Law, Vol. 2 at 599 (1965). See also, Kentucky Unemployment Insurance Commission v. General Electric Company, Ky., 473 S.W.2d 808, 810 (1971).

The record does indicate, however, that the legal issues may ha ve been narrowed by the referee, rather than by counsel for Tappan. In any event, the issues presented under KRS 341.370(2) and 341.350 were briefed before the trial court, and the Commission has responded to those issues herein. These additional factors indicate that Tappan has properly put all of its arguments into issue. Cf., Kentucky Unemployment Insurance Commission v. General Electric Company, supra. Thus, all of the issues raised by Tappan in its brief to this court will be discussed below.

Tappan contends that unemployment benefits should be denied because ap-pellees were never unemployed. Tappan argues that the employment relationship continued to exist during the shutdown and appellees retained all benefits of employment; their status was merely that of employees on vacation without pay. Although we find appellant’s argument persuasive, we feel constrained by the holding in Kentucky Unemployment Insurance Commission v. General Electric Company, supra, to find the shutdown period as it related to these appellees to be a period of unemployment. Based on KRS 341.080(3), which defines the term “week of employment,” the Court in General Electric, supra, held that shutdowns result in unemployment where no vacation pay is awarded. However, the issue of whether such unemployment is voluntary and thus excluded from unemployment insurance coverage under KRS 341.370(2)(c) was left undecided.

KRS 341.370(2)(c) recites: “A worker shall be disqualified from receiving benefits for the duration of any period of unemployment with respect to which: (c) He has left his most recent suitable work voluntarily without good cause.” The argument under this section is basically that since the shutdown was required by the bargaining agreement, the appellees voluntarily agreed to unemployment by virtue of their union membership.

This is a case of first impression in Kentucky. There appears to be a split of authority among those jurisdictions that have addressed the question. Annot., 30 A.L. R.2d § 7. In those jurisdictions holding that unemployment compensation is unavailable for such employees, the judicial reasoning is summarized in Mississippi State Employment Security Commission v. Jackson, 237 Miss. 897, 116 So.2d 830, 832 (Miss.1969):

The shutdown for Christmas week was in accordance with the union contract and the union represented all the appellees. It cannot be said that appellees were unemployed within the meaning and purpose of the statute. They were not laid off; their employment had not been terminated, and the relationship of employer and employee continued during the week the plant was closed for the purposes stated. It is true that the proof showed appellees were willing to work during the vacation week if they could have obtained employment. But this does not mean that their absence from their regular employment during Christmas week was other than voluntary. Our view of the case is in accord with the weight of authority.

It appears that those courts examining this issue have turned the result upon specific language in the bargaining agreement. For example, the annotation, supra, lists four cases in which the court permitted employees in similar circumstances to collect benefits. In three of those cases, however, it appears that the holding was based upon agreements which provided that the shutdown was to be a vacation period for “employees of the department eligible for vacations.”

The supplement to the annotation reveals that the split of authority has grown more pronounced in recent years. It also appears that in several jurisdictions the legislature has enacted statutes which abrogate judicial holdings denying benefits to employees. 30 A.L.R.2d § 9 (Supp.1970).

In Kentucky, there are two cases which should be evaluated even though they are not precisely on point. In Kentucky Unemployment Insurance Commission v. Kroehler Manufacturing Company, Ky., 352 S.W.2d 212 (1961), an employee was held not to be entitled to unemployment benefits where he had voluntarily agreed to retire at age 65. Closer to the instant case is Kentucky Unemployment Insurance Commission v. Reynolds Metals Company, Ky., 360 S.W.2d 746 (1962), where the same result was reached on the basis of a collective bargaining agreement. In discussing the effect of such agreement the Court stated:

The only difference between the facts of Kroehler and those in the instant case concerns the method by which the involved pension plans were negotiated. In Kroehler, employees were permitted to participate in the retirement system by making written requests. In the instant case employees participated in the retirement plan pursuant to a collective bargaining agreement negotiated for them by their labor union and ratified by their vote. This difference is not significant because in both cases the employees voluntarily accepted plans which provided for a termination of their employment. Consequently, Driskell’s retirement constituted a voluntary termination of his employment and he was not entitled to unemployment benefits. Id. at 747.

As the above discussion indicates, a logical standard in such cases would be to turn the result solely upon an interpretation of the controlling bargaining agreement, and this approach we accept. This rule merely entails an application of general contract law to determine whether the unemployment incurred was contemplated by the agreement. If so, the employees are disqualified from collecting benefits.

This standard for determining “voluntariness” is in harmony with the purposes of unemployment compensation legislation.

The purpose of the General Assembly in the enactment of such legislation was to provide benefits for only those employees who have been forced to leave their employment because of forces beyond their control and not because of any voluntary act of their own. Kentucky Unemployment Insurance Commission v. Kroehler Manufacturing Company, supra, 352 S.W.2d at 214.

Applying such a standard to this case leads to the conclusion that the appel-lee-employees are voluntarily unemployed and thus not entitled to benefits. This result is due to several provisions set out in the agreement. First, Article XII of the agreement, which requires the company to shut down, recites:

Section 12.2. Vacation Period. Every effort shall be made to shut down the entire factory for vacation periods from June 1 through August 21 of each year and to make such shutdown periods the vacation period for employees who are not scheduled to work during the shutdown period. Such shutdown period may be for one (1), two (2) or three (3) weeks at the discretion of management, thereby permitting employees to take their vacations at the same time. However, there shall be a shutdown for vacation purposes for a minimum of one (1) week during the above vacation period.

Secondly, by listing eligibility requirements for vacation, the agreement recognizes that some employees will not be compensated during the shutdown. See Article XII, Section 12.1. This interpretation is bolstered by Article IX, Section 9.3, E.(l)(a), which recites:

E. Employment During Shut-down.
(1) During periods of shut-down such as vacation periods and Christmas holidays:
(a) Work list will be posted in each major department indicating in general the work to be done. Men signing these lists will indicate their preference of weeks and known shifts and any special skills. Men will be called in by seniority with due regard to special skills and qualifications, however, during vacation shut-down only, qualified employees who are not entitled to any vacation shall be given preference for the available work.

Churchill Downs, Inc. v. Kentucky Unemployment Insurance Commission, Ky., 454 S.W.2d 347 (1970), also indicates that the employees herein were voluntarily unemployed. In that case, the Court found that certain pari-mutuel employees were entitled to unemployment compensation when Churchill Downs closed for the season. The decision was based upon the Court’s holding that, where the closing is not negotiable because it is mandated by law or the nature of the business, the unemployment is involuntary. Conversely, the Court noted that in Kentucky Unemployment Insurance Commission v. Kroehler Manufacturing Company, supra, and Kentucky Unemployment Insurance Commission v. Reynolds Metals Company, supra, the employees’ union had a choice in agreeing to retirement ages. The test of voluntariness is whether the employee, or his agent, has elected between a choice of alternatives. See also, McFadden v. Kentucky Unemployment Insurance Commission, Ky.App., 25 Ky.L. Summ. 13 (September 22,1978).

The second point for consideration is whether these appellees should be disqualified from benefits due to KRS 341.370(l)(a), which recites:

(1) According to the circumstances in each case, a worker shall be disqualified from receiving benefits:
(a) For not less than one (1) nor more than sixteen (16) weeks immediately following the commission of the disqualifying act, if, subsequent to his most recent work, he has failed without good cause either to apply for available, suitable work when so directed by the employment office or the secretary or to accept suitable work when offered him, or to return to his customary self-employment when so directed by the secretary.

This section is closely akin to KRS 341.-350(4), which requires the claimant to make a reasonable effort to obtain suitable work. The Commission has combined both of its arguments under this section, so for purposes of clarity Tappan’s arguments will also be considered together.

Tappan’s basic contention in this regard is that the posted notices constitute an offer of suitable work, and that by not responding to that notice, the appellees failed to make “such reasonable effort to obtain such work as might be expected of a prudent person under like circumstances.” KRS 341.350(4).

“Suitable work” is defined under KRS 341.100. Applying that section to the instant case leads to the conclusion that these workers are, in fact, disqualified from unemployment insurance benefits. Although it is true that the bargaining agreement placed no duty upon employees to apply for such work or to accept it if offered, it is the agreement itself which directs the posting of the list. That being the case, it cannot be said that an individual offer must be made to each employee. Further, since the agreement sets out the wages to be paid for such work, it cannot be said that the work offered was “unsuitable” merely because some employees may have been paid a lower hourly rate than their regular jobs. Finally, the Commission’s argument that there were not enough jobs for all willing to work is without merit. By providing that the jobs be awarded first to employees ineligible for vacations, the agreement appears impliedly to recognize the situation where only a limited number of employees will be able to work during the shutdown period.

In addition to the existence of an offer of suitable work,.the statutes require that the employee reject such work to be disqualified from receiving benefits. Such rejection under KRS 341.370(l)(a) is a failure to accept such work without good cause. In KRS 341.350(4), the rejection is by a failure to make reasonable efforts to obtain suitable work. There is evidence of both grounds in this case. For example, some of the employees stated that they declined to sign the list either because they didn’t like the type of work offered or because they felt they needed a vacation. Neither reason would appear to be “good cause.” In addition, such actions have been held to amount to a failure to obtain suitable work. Kentucky Unemployment Insurance Commission v. Day, Ky., 451 S.W.2d 656 (1970).

A slightly closer question is presented by the employees who stated they did not sign the lists because the lists were full when they saw them. However, even this reason amounts to a rejection under these facts. The agreement clearly spells out that notices would be posted and that first priority would be given to those employees ineligible for vacation pay. Further, there was some evidence that Tappan later increased the number of available positions but that the appellees failed to inquire as to that possibility.

While the facts found by the Commission are correct, it appears that the law has been incorrectly applied. Southern Bell Telephone and Telegraph Company v. Kentucky Unemployment Insurance Commission, Ky., 437 S.W.2d 775 (1969).

Therefore the judgment of the Calloway Circuit Court is reversed and remanded with instructions to direct the Commission to reverse its award and relieve the reserve account of appellant for any charges for benefits paid these employees.

All concur.