EUGENE L. NICHOLS, JR.,
APPELLANT,
vs.
ADMINISTRATOR, OHIO BUREAU OF EMPLOYMENT SERVICES, APPELLEE
No. 87-J-21
COURT OF APPEALS OF OHIO, SEVENTH APPELLATE DISTRICT, JEFFERSON
COUNTY
1989 Ohio App. LEXIS 914
March 14, 1989, Decided
CHARACTER OF PROCEEDINGS: Civil Appeal from the Common Pleas Court,
Case No. 87-CIV-238
AUTHOR: COX
OPINION
COX, J.
Appellant, Eugene L. Nichols, Jr., was laid off as an employee of
Wheeling-Pittsburgh Steel Corporation on July 15, 1985. On July 17
he filed an application for unemployment compensation. In a written
statement, he notified the Ohio Bureau of Employment Services that
he owned and operated a karate studio where he spent about six
hours per week giving lessons. As stated he would report all
earnings and hours worked to the Bureau.
Appellant and his wife had operated the school since 1981. She
handled the books and the record keeping. There were no fixed fees
for the students; some paid what they could, and others did not pay
at all. Appellant did not collect a salary and claims he never knew
if he made a profit until his accountant prepared the year-end tax
returns. (Tr. 4-6).
Appellant received unemployment benefits for fifteen weeks at $
233.00 per week collecting a total of $ 3,495.00. On each bi-weekly
claim form during that period appellant listed the hours and dates
he worked at the karate school. In the space on the form marked
"Pay Before Deductions" he entered a zero.
In April of 1986, five months after he received his last benefit
check, an Unemployment Bureau investigator, Richard Kelty,
contacted appellant and ordered him to produce all ledgers, books,
cancelled checks and other documents of the karate school for
audit. Appellant complied. On April 30, 1986, Kelty examined these
documents and found the only disbursements made during the period
were operating expenses paid out by the appellant. Kelty reported
"no wages paid per audit 4-30-86."
On May 30, 1986, Kelty sent a letter to appellant's accountant, S.
R. Snodgrass, asking for a profit and loss statement and a copy of
appellant's tax return. Kelty received this material on June 12
which showed a net profit for the karate school of $5,311.00 for
the 1985 tax year.
On September 10, 1986, Kelty requested that appellant prepare a
profit and loss statement specifically for the period July through
November, 1985. Appellant had his accountant prepare this
statement, which Kelty received on September 24, 1986. The
statement showed that during this twenty-two week period, the
karate studio received a total net revenue of $ 1,453.00 (July,
1985 - $ 547.77; August, 1985 - $ 226.42; September, 1985 - $
581.24; October, 1985 - loss of $ 92.45; and November, 1985 - $
189.84), or an average of $ 66.05 per week.
Based on this information, the Administrator of the Ohio Bureau of
Employment Services issued an order finding that appellant had made
a "fraudulent misrepresentation with the object to obtain benefits
to which (he was) not entitled." All of appellants' benefits were
cancelled and he was ordered to repay the entire $ 3,495.00. In
addition, a thirty week neligibility penalty was imposed upon
appellant pursuant to R.C. 4141.35(A)(2), and his benefit rights
were suspended under R.C. 4141.29(D)(2)(d).
Upon request for reconsideration, the Administrator's order was
affirmed. Appellant appealed to the Board of Review, where an
evidentiary hearing was held before a referee. Kelty testified at
that hearing that he had no evidence of any fraudulent intent by
appellant (Tr. 16). However, the referee upheld the Administrator's
order and appellant's application for further appeal was
denied.
Appellant appealed to the Jefferson County Common Pleas Court,
which affirmed the decision of the Board of Review. The court
concluded appellant's answers on his claim forms raised an
"inference" that he intended to mislead the Bureau into paying him
benefits to which he "may not" have been entitled. Appellant then
filed a timely appeal to this court.
This court's standard for review of the decision of the
Unemployment Compensation Board of Review is set out in R.C.
4141.28(O) which states:
"* * * If the court finds that the decision was unlawful,
unreasonable, or against the manifest weight of the evidence, it
shall reverse and vacate such decision or it may modify such
decision and enter final judgment in accordance with such
modification; otherwise such court shall affirm such decision. Any
interested party shall have the right to appeal from the decision
of the court as in civil cases. * * *."
Reviewing courts cannot usurp the function of the trier of fact by
weighing evidence or assessing credibility from afar. Simon v. Lake
Geauga Printing Co. (1982), 69 Ohio St.2d 41. If the most that can
be said of the Board's decision is that reasonable minds might have
differed as to factual conclusions, the Board's decision must be
affirmed. Angelkovski v. Buckeye Potato Chips (1983), 11 Ohio
App.3d 159; University of Cincinnati v. Conrad (1980), 63 Ohio
St.2d 108.
As previously stated, the burden of proof in unemployment
compensation appeals mandates that the Board's decision not be
against the manifest weight of the evidence The "manifest weight of
the evidence" requires less than a preponderance of the evidence.
In C. E. Morris Co. v. Foley Construction Co. (1978), 54 Ohio St.2d
279, the Ohio Supreme Court held:
"Judgments supported by some competent, credible evidence going to
all the essential elements of the case will not be reversed by a
reviewing court as being against the manifest weight of the
evidence."
Moreover, the standard of review of an appellate court for
reviewing a decision of a common pleas court relative to the
manifest weight of the evidence standard was set forth in
Angelkovski, supra, at 161, 162 which stated:
"The role of an appellate court in reviewing a determination of a
court of common pleas on manifest weight of the evidence on appeal
from the board, is different. The function of the court of common
pleas, in determining whether the board's decision is against the
manifest weight of the evidence, necessarily involves the exercise
of sound discretion. Accordingly, an order of the court of common
pleas based upon a determination of the manifest weight of the
evidence, may be reversed only upon a showing that the court abused
its discretion. See Rohde v. Farmer (1970), 23 Ohio St.2d 82 [52
O.O. 2d 376]. In this context, the meaning of the term 'abuse of
discretion' connotes more than an error of judgment; it implies a
decision without a reasonable basis, one which is clearly wrong."
(Emphasis added)
Hence, this court may reverse the decision of the lower court
relative to the manifest weight of the evidence only where it finds
the lower court "abused its discretion," i.e. the lower court's
decision was lacking a reasonable basis; one which is clearly
wrong.
Appellant's first assignment of error alleges:
"The court erred in holding that there was injury, and thus fraud,
when the record clearly shows that appellant did NOT receive any
benefits to which he wasn't entitled."
This assignment of error is without merit.
Appellant's argument is based upon his "average" weekly profit
being $ 66.05. Then, had appellant reported 20% of this amount (a
percentage the State claims should be reported), or $ 13.21 per
week it would not have had any effect on his benefits.
Appellee claims this "average" is not a true picture of appellant's
wages because it is an average rather than actual wages.
The trial court found:
"Was there injury? Again, this must be answered affirmatively in
view of the fact that the Bureau paid benefits which it may not
otherwise have been required to pay resulting in a monetary loss to
the Bureau." (Journal Entry, November 17, 1987, page 3).
The record shows appellant received $ 66.05 per week on an average.
Pursuant to R.C. 4141.30(C), appellant could have received $ 46.60
per week (20% of his weekly benefit of $ 233.00) without affecting
his benefit entitlement. Therefore, appellant was not entitled to
receive the full $ 233.00 per week.
Appellant's second assignment of error alleges:
"The court erred, as a matter of law, in 'inferring' from the
circumstances that appellant knowingly made a false statement, and
then 'inferring' from that inference that appellant's intent in
making the false statement was to obtain benefits to which he 'may
not otherwise' have been entitled."
This assignment of error is without merit.
"The general rule that fraud is not presumed, but must be proved by
the party who alleges it, does not mean that it cannot be otherwise
proved than by direct and positive evidence. As the general
American authorities indicate, fraud in a transaction may be proved
by inferences which may reasonably be drawn from intrinsic evidence
respecting the transaction itself, such as inadequacy of
consideration, or extrinsic circumstances surrounding the
transaction. Fraud may be, and often is, proved by or inferred from
circumstances, and the circumstances proved may in some cases raise
a presumption of its existence.
"Thus, as Ohio cases hold, there is a presumption that every
reasonable person anticipates and intends the ordinary and probable
consequences of known cases and conditions. And this applies in
cases of fraud." 51 Ohio Jurisprudence 3d 103, Fraud & Deceit,
Section 240.
Appellant's third assignment of error alleges:
"The court erred, as a matter of law, in finding fraudulent
misrepresentation solely on the basis of an allegedly incorrect
answer on a claim form, where there was no other evidence of
fraudulent intent."
This assignment of error has merit.
As the trial court noted at page 2 of its entry:
"There are basically five elements that must be shown in order to
justify fraudulent misrepresentation. These are set forth in the
Powell case, supra, as well as in 50 OJur 3d 372, Fraud, Section
22. It must be shown that there was a false representation; given
with knowledge of the falsity of the representation; with an
intention to mislead; with reliance thereon; and with injury to the
person relying upon said representations. It is the opinion of this
Court that all of those elements are present in this case."
The evidence before the trial court was that on every bi-weekly
claim form appellant listed the hours he worked and checked the
space on the form marked zero. This set of facts does not rise to
the level of the test that the appellant made a false
representation, with knowledge of the falsity.
Appellant's fourth assignment of error alleges:
"The court erred in failing to comply with the mandatory provisions
of O.R.C. 4141.28(O) requiring reversal of an Administrator's order
which is unlawful, unreasonable, or against the manifest weight of
the evidence."
This assignment of error has merit.
Since assignment of error no. 3 has been found to have merit, this
assignment of error must also have merit.
The trial court erred in concluding that the decision of the Board
of Review was lawful, reasonable and not against the manifest
weight of the evidence.
The judgment of the trial court is reversed and cause remanded for
further proceedings consistent with this court's opinion.
Edward A. Cox, Judge, O'Neill, P.J., Donofrio, J., Concur