Schwartz v. Maine Unemployment Insurance Commission

STATE OF MAINE SUPERIOR COURT

HANCOCK, ss CIVIL ACTION

DOCKET NO. AP-2003-028

ANN T. SCHWARTZ,

Petitioner

v. DECISION AND

ORDER

MAINE UNEMPLOYMENT

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INSURANCE COMMISSION )

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and

MAINE SEA COAST MISSIONARY

SOCIETY,

S&F 8 = mn

Respondents

This matter is before the Court on appeal pursuant to 5 M.R.S.A. §§11001-11008

and Rule 80C of the Maine Rules of Civil Procedure from a decision of the Maine

Unemployment Insurance Commission (herein, “Commission”), in which the

Commission held that Ann T. Schwartz’s (herein, “Claimant’’) former employer, Maine

Seacoast Missionary Society (herein, “Mission’’) is exempt from the Employment

Security Law, thereby rendering the Claimant ineligible to collect unemployment

benefits. The Claimant filed this appeal.

Background

The Mission is a non-denominational 501(c)(3) non-profit organization that

serves coastal communities in a four-county area from Monhegan / Matinicus to the

Canadian border. (R. at 48). The Mission has twenty-five members on its Board of

Directors, all of whom are Christian. (R. at 49). Gary DeLong, an ordained minister, is

the executive director of the Mission. (R. at 32-33). Prior to working for the Mission,

Mr. DeLong was a minister for the First Church of Christ in Massachusetts for twenty-six

years. (R. at 32-33). The Mission has twenty-nine staff members, seven or eight of

which are ordained members of the clergy. (R. at 12, 126, 163-64). The Mission

provides financial and spiritual support and oversight for these island ministers who serve

as pastors for island congregations. (R. at 35-36, 45, 111-12). All employees’ retirement

and healthcare benefits are administered under the United Church of Christ pension plan.

(R. at 34).!

Since the Mission was first started in 1905, it has provided programs to the

community in order to “reach out to show God’s love and compassion to marginalized

people in the area [the Mission] serve[s].” (R. at 49). The Mission has always been

“rooted in an inclusive Christian ministry of compassion and justice,” and has never tried

to downplay or hide its Christian roots. (R. at 41, 86). More than fifty percent of the

Mission’s income is from its endowment made up mostly of individual donors. (R. at 44,

62). These individuals are consciously giving to a Christian faith-based organization. (R.

at 61). The Mission receives support in the form of money contributions, as well as in-

kind support from 96 churches. (R. at 42). The Mission has a voluntary affiliation with

the United Church of Christ and the American Baptist Congregation. (R. at 44). The

Mission attends and participates in the annual meeting of the United Church of Christ.

(R. at 45).

The Mission provides a variety of programs, both religious and secular, to the

coastal communities. For instance, the mission owns a boat called the Sunbeam, which

provides programs and services to island residents, including the telemedicine program

that brings a nurse to the island with equipment to allow island residents to be examined

by doctors on the mainland. (R. at 38, 90-91, 116). The Sunbeam also delivers a boat

minister to visit the islanders and their pastor, lead worship services, and provide pastoral

' The only exception is if there is an American Baptist clergy person that the Mission hires for one of the

island churches. Under those circumstances the clergy person may maintain their benefits in the American

Baptist System.

counseling. (R. at 39). The Mission also Sponsors an after-school program called the

Edge, which operates in Washington County. (R. at 92-93). No religious teaching is

conducted in the after-school program. (R. at 57, 60). The Mission also has a used-

clothes “recycle shop,” and a food pantry. (R. at 117). Mr. DeLong described these

programs as being “completely at the very heart of the essence of the religious

enterprise.” (R. at 42). Mr. DeLong, and many of the employees at the Mission see their

work as a form of ministry and believe they are doing the work of the church (“God’s

work”’) in serving the social aspect of the community. (R. at 34, 59).

The Mission (as an employer) has never paid unemployment contributions. (R. at

37). The employee handbook distributed on July 1, 2001,’ erroneously stated that

employees were covered for unemployment benefits. (R. at 10, 37). This mistake was

corrected in a letter, dated June 5, 2003, to the staff recognizing the Mission’s error and

stating the handbook was changed to reflect the policy that employees would not be

eligible for unemployment benefits because the Mission is a religious organization

exempt from the Employment Security Law. (R. at 128).

The Claimant came to work for the Mission in May 2000 as the Director of

Development. (R. at 10, 25). The Mission discharged the claimant from employment on

December 2, 2002. (R. at 10). The claimant filed an application for unemployment

benefits in January 2003, which was administratively denied because the Mission was

exempt from paying unemployment contributions. (R. at 10). On the claimant’s request,

the Tax Division for the Bureau of Unemployment Compensation (herein, “Tax

* The employee handbook was issued approximately one year after the Claimant began working for the

Mission.

* The Mission notified their employees of this mistake in the employee handbook approximately six months

after the Claimant was discharged from her position.

Division”’) investigated the Mission’s status as exempt from paying unemployment

contributions. (R. at 12).

In April 2003, Field Supervisor and Examiner Gary McKeen determined that the

Mission should not be exempt from unemployment taxation. (R. at 157, 161). The

Mission appealed this determination on April 30, 2003. (R. at 152). On May 15, 2003,

the Tax Section Manager, Judy Fearin g, issued a new determination stating that the

Mission was entitled to the exemption allowed for religious organizations. (R. at 148).

Accordingly, the Claimant was not monetarily eligible for benefits because she had

insufficient wages for insured work. (R. at 279, 309).

The Claimant appealed this determination to the Division of Administrative

Hearings. (R. at 275). Following a hearing on July 1, 2003, the Hearing Officer stated

that he did not have jurisdiction to rule on a tax determination and confirmed that the

Claimant had not earned sufficient wages to be eligible for benefits. (R. at 279-281,

291).

The Claimant appealed this decision to the Commission. (R. at 303). Following a

hearing at which the Claimant and the Mission appeared on July 14, 2003, the

Commission issued a decision upholding the Mission’s exemption from unemployment

taxation and the determination that the Claimant is ineligible for benefits due to

insufficient wages.* (R. at 1-4). The claimant appealed this decision to this Court.>

* Specifically, the Commission found that the Mission did not meet the definition of an “employer” under

the Employment Security Law because the Mission was (1) operated primarily for religious purposes; (2) a

church organization; and (3) principaliy supported by a church or convention or an association of churches.

(R. at 3-4).

> At the outset the claimant argues that the testimony of the executive director of the Mission, Gary

DeLong, was improper unsworn testimony, which is fatal to the Commissioner’s decision, The basis of the

Petitioner’s assertion is on page 8 of the record, which describes Mr. DeLong as being “nonresponsive” to

the Commission Chairman’s request to taking the oath.

Discussion

A. Standard of Review

In reviewing a decision of the Maine Unemployment Insurance Commission, this

Court reviews the administrative record to determine whether the Commission’s findings

are supported by the record and whether the Commission has correctly applied the law.

McPherson v. Maine Unemployment Insurance Commission, 1998 ME 177, 96, 714 A.2d

818. The scope of judicial review of an administrative agency’s factfinding is strictly

limited; such a finding may be overturned only upon a showing by a challenger that it

was “unsupported by substantial evidence on the whole record.” Clarke v. Maine

Unemployment Insurance Commission, 491 A.2d 549, 552 (Me., 1985) (citation

omitted). “This standard of review of an administrative finding of fact is identical to the

‘Clear error’ standard used by the Law Court.” Id. (quoting Gulick v. Board of

Environmental Protection, 452 A.2d 1202, 1207-08 (Me. 1982)). The reviewing court

must examine the entire record to determine whether on the basis of all the testimony and

exhibits before the agency it could fairly and reasonably find the facts as it did, Clarke,

491 A.2d at 551 (citing In re Maine Clean Fuels. Inc., 310 A.2d 736, 741 (Me. 1973)).

The court will not substitute its judgment for the Commission’s where there may be a

reasonable difference of opinion. Clarke, 491 A.2d at 552 (citing Seven Islands Land Co.

v. Maine Land Use Regulation Commission, 450 A.2d 475, 479 (Me. 1982)).

The Commission provided an affidavit of the Commission Chairman, John B. Wlodkowski, affirming that

Mr. DeLong agreed to take the oath to give truthful testimony. It is likely that the recording equipment

simply failed to record Mr. DeLong’s response. The Chairman stated that he would not have proceeded

with the hearing without Mr. DeLong taking the oath or affirming his testimony.

The Court finds that the Commission properly relied on Mr. DeLong’s testimony in making its decision.

See Sewall v. Spinney Creek Oyster Co., 421 A.2d 36, 40 (Me. 1980) (noting cases where courts have

found that it was not clear from the record that there was a failure to swear a witness, and therefore the

regularity of proceedings is presumed).

In an 80C appeal, the court must determine whether the Commission abused its

discretion, committed error of law, or made findings not supported by substantial

evidence in the record. McGhie v. Town of Cutler, 2002 ME 62, 95, 793 A.2d 504.

Substantial evidence is evidence that a reasonable mind would accept as sufficient to

Support a conclusion. Bath Iron Works v. Maine Unemployment Insurance Commission,

docket no. AP-01-066 (Me. Super. Ct., June 17, 2002) (Crowley, J.).

B. Applicable Law.

I. Legal Background of the Employment Security Law.

The United States Government imposes a tax on certain classes of employers. See

26 U.S.C. §§ 3301-3311. In the Federal Unemployment Tax Act (herein, “FUTA”),

Congress has authorized a cooperative federal-state scheme to provide benefits for

unemployed workers. FUTA requires employers to pay an excise tax on wages paid to

employees in “covered” employment, but entitles them to a credit of up to 90% of the

federal tax for contributions they have paid into federally approved state unemployment

compensation programs. See 26 U.S.C. §§ 3301-3302. One of the requirements for

federal approval is that the state programs cover certain broad categories of employment.

Until 1970, 26 U.S.C. §3306(c)(8) excluded from the definition of covered

employment “service performed in the employ of a religious, charitable, educational, or

other [tax exempt] organization.” California v. Grace Brethren Church, 457 U.S. 393,

397 (1982) (citation omitted). Asa consequence, such organizations were not required to

pay either federal excise taxes or state unemployment compensation taxes. In 1970,

Congress amended FUTA to require state programs to cover employees of nonprofit

organizations, state hospitals, and state institutions of higher education, thus eliminating

the broad exemption available to non-profit organizations. Id. at 397 (citing Employment

Security Amendments of 1970). At the same time, Congress enacted 26 U.S.C. $3309(b)

to exempt from mandatory state coverage a narrow Class of religious and educational

employees. To maintain compliance with FUTA, the States promptly amended their

corresponding state programs.

The language of the Maine Employment Security Law mirrors provisions in the

FUTA. Since the Federal and State statutes compromise a single scheme, the

construction of the State law should be consistent with that of its federal counterpart.

Bethania Association v. Jackson, 635 N.E.2d 671, 674 (Ill. App. Ct., 1994) (citations

omitted).

2. Maine’s Employment Security Law.

To be eligible under the Maine Employment Security Law to receive

unemployment benefits, the claimant must have earned wages for “insured work.” 26

MLR.S.A. §1192(5). “Insured work” is defined in the statute as “employment by

employers.” 26 M.R.S.A. §1043(15). “Employment” is defined broadly by the statute to

include services “performed for wages or under any contract of hire, written or oral,

expressed or implied.” 26 M.R.S.A. §1043(1 1).

The statute, 26 M.R.S.A. §1043(1 1)(F)(21)(a), goes on to provide exemptions

from the definition of employment, including “services performed in the employ of a

church.” 26 M.R.S.A. §1043(1 1)(F)(21)(a),° and its Federal counterpart, 26 U.S.C.

§ §1043(1 1)(F) provides the term employment shall not include:

(21) Service performed in the employ of any organization which is excluded from the term

“employment” as defined in the Federal Unemployment Tax Act solely by reason of section

3306(c)(7) or (8) if:

(a) Service performed in the employ of a church or convention or association of churches, or an

organization which is operated primarily for religious purposes and which is operated,

§3309(b)(1)(B),’ require that organizations separately incorporated from a church, like

the Mission, operate “primarily for religious purposes” and be “operated, supervised,

controled, or principally supported by a church or convention or association of churches”

in order to qualify for exemption from unemployment compensation taxes.

As a general rule, exemptions to unemployment taxation are strictly construed.

Outdoor World Corp. v. Maine Unemployment Ins. Comm'n, 542 A.2d 369, 372 (Me.

1988) (applying the real estate brokers or salesperson exemption, 26 M.R.S.A.

§1043(11)(F)(19)) (citations omitted); see also Bethania Association, supra, 635 N.E.2d

at 674-75 (stating the unemployment compensation act is remedial in nature and

exemption provisions must be strictly construed with uncertainties resolved in favor of

inclusion). In the case of exemptions for religious organizations, however, courts apply a

more expansive reading for exemptions: “‘[T]he rule of strict construction is superseded

in instances where there is a strong possibility that the statute in question infringes upon a

parties’ right to free exercise of religion.’” Kendall y. Director of the Division of

Employment Security, 473 N.E.2d 196, 199 (Mass. 1985) (quoting Christian School

Ass'n v. Commonwealth Dept of Labor & Indus., 423 A.2d 1340, 1344 (Pa. 1980)).

a. The Mission is Not a “Church” for Purposes of 26 M.R.S.A.

§$1043(11)(F)(21)(a).

Neither Maine’s Employment Security Act nor its Federal Counterpart defines the

term “church” contained in §1043(1 1)(F)(21)(a). This is an issue of first impression in

supervised, controlled or principally supported by a church or convention or association of

churches[.]

? §3309(b) provides that the States are not required to provide coverage of services

performed for nonprofit organizations:

(1) in the employ of (A) a church or convention or association of churches, (B) an organization

which is operated primarily for religious purposes and which is operated, supervised,

controlled, or principally supported by a church or convention or association of churches... .

Maine. The Commission secondarily found that the Mission is a church organization, in

and of itself.’

In St. Martin v. South Dakota, 451 U.S. 772 (1981), the Supreme Court

confronted the question of whether a church-run school qualified as a “church” for the

purposes of a South Dakota statute (S.D. Codified Laws $61-1-10.4) that is identical to

the statute before this Court. The Supreme Court held that the word “church” refers “to

the congregation or hierarchy itself, that is, the church authorities who conduct the

business of hiring, discharging, and directing church employees.” St. Martin, supra, 451

U.S. at 784. The Court went on further to state that “the word ‘church’ in 26 U.S.C.

§3309(b) must be considered as the ‘employer,’ and not as a building that is a house of

worship. ...” Id. at 784, n. 15.

The Court reasoned that since the school was not separately incorporated from the

church, the church employed the school’s employees. St. Martin, supra, 451 U.S. at 785.

The Supreme Court found that Congress intended a distinction between churches and

association of churches, and separately incorporated organizations. Id. at 778-79; see

also Bethania Association, supra, 635 N.E.2d at 778. Separately incorporated

organizations are subject to the dual requirements of the second prong of the exemption

provision while churches and associations are exempt without qualification under the first

® The Commission relied on the following facts (R. at 4):

Employer’s Exhibit No. 1 states that the Mission has 29 staff members, eleven of which are in an

administrative capacity. However, eight of the Mission’s staff members are clergy, who have been drawn

from the Baptist and congregational traditions. The executive director, who five years ago joined the

Mission after spending the previous 14 years as a senior minister at another church, credibly testified that

his reason for joining the Mission was that he “wanted it to be an active ministry.” Further, the executive

director’s ministry at the Mission has been fully authorized as a ministry of Maine Conference of the

United Church of Christ.

prong of the provision. Bethania Association, supra, 635 N.E.2d at 778-79 (citing St.

Martin, supra, 451 U.S. at 782).

The St. Martin case makes it clear that incorporation is a highly significant fact in

determining which prong of the exemption provision is applicable to our analysis of

Whether the Mission is exempt. Bethania Association, supra, 635 N.E.2d at 779 (citing

St. Augustine’s Center for American Indians, Inc. v. Department of Labor, 449 N.E.2d

246, 248 (Ill. App. Ct. 1983) (applying the second prong to a separately incorporated

religious organization)). This Court’s analysis does not require a statutory definition of a

“church” because the Mission is a distinct legal entity. Although the Mission has a

voluntary affiliation with the United Church of Christ and the American Baptist

Congregation, it is still a separate legal entity. The Mission is a non-denominational

501(c)(3) non-profit organization.

SANRAT PAN EAL

Furthermore, in reference to section 3309(b)(1)(A) of the FUTA,’ the House

Report offers further guidance with the following explanation:

This paragraph excludes services of persons where the employer is a

church or convention or association of churches, but does not exclude

certain services performed for an organization which may be religious in

orientation unless it is operated primarily for religious purposes and it is

operated, supervised, controlled, or principally supported by a church (or

convention or association of churches). Thus, the services of a janitor of a

church would be excluded, but services of a janitor for a separately

incorporated college, although it may be church related, would be covered.

A college devoted primarily to preparing students for the ministry would

be exempt, as would a novitiate or a house of study training candidates to

become members of religious orders. On the other hand, a church related

(separately incorporated) charitable organization (such as, for example, an

orphanage or a home for the aged) would not be considered under this

paragraph to be operated primarily for religious purposes.

” The Court notes that the Supreme Court in St. Martin expressly limited its decision to the first prong of

the exemption provision. See St. Martin, 451 U.S. at 783 (stating “[b]ecause we hold petitioners exempt

under §3309(b)(1)(A), we leave the issue of coverage under $3309(b)(1)(B) for the future.”).

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St. Martin, supra, 451 U.S. at 781 (quoting H.R. Rep. No. 91-612, p. 44 (1969)).

Accordingly, the Court finds that the Commission committed an error of law in

finding that the Mission is a church organization and exempt from employer

contributions under the first prong of section 1043(1 1)(F)(21)(a)."° If the Mission is

exempt, its exemption must be based on the second prong."

b. The Mission is Operated Primarily for Religious Purposes and it is

Principally Supported by an Association of Churches.

I) Religious Purpose.

The Commission and the Mission relied on the legal analysis as laid out in Nampa Christian Schools

Foundation, Inc. v. Department of Employment, 719 P.2d 1 178 Udaho 1986), for its determination that the

Mission constitutes a church organization. Tne Court in N ampa applied factors considered by the Eighth

Circuit in Lutheran Social Service of Minnesota v. United States, 758 F.2d 1283, 1286-87 (8" Cir. 1985), in

defining the term “church” for purposes of a statute that dealt with information that must be filed by tax-

exempt organizations. The Eight Circuit stated that what is and is not a church is dependent on a

consideration of the following factors:

(1) A distinct legal existence; (2) a recognized creed and form of worship; (3) a definite

and distinct ecclesiastical government; (4) a formal code of doctrine and discipline; (5) a

distinct religious history; (6) a membership not associated with any church or

denomination; (7) an organization of ordained ministers; (8) ordained ministers selected

after completing prescribed studies; (9) a literature of its own; (10) established places of

worship; (11) regular congregations; (12) regular religious services; (13) Sunday schools

for religious instruction of the young; [and] (14) schools for the preparation of its

ministers.

Lutheran Social Service of Minnesota, supra, 758 F.2d at 1286-87 (citations omitted). The Supreme Court

of Idaho stated that the facts of each case are to be considered in their respective contexts and considered in

light of the above factors. Nampa Christian Schools Foundation, supra, 719 P.2d at 1182 (applying the

factors and finding that Nampa Christian was not a “church” for the purposes of Idaho’s unemployment

compensation statute).

Even if this Court were to engage in this analysis, the Court is convinced that the Mission would still not

qualify as a “church” for purposes of the first prong of section 1043(11)(F\(21)(a). The purpose behind the

Mission is not so much to declare a specific body of doctrine, as it is to provide programs to the community

to marginalized people in the area the Mission serves. Likewise, there is no evidence in the record of a

detinite ecclesiastical government nor of a membership unassociated with other churches. Although, the

Mission does have ordained ministers of the clergy on its staff, the fact is the Mission remains

nondenominational.

"The Claimant indicates throughout her brief that the fact the Mission is given status under the Federal

and State income tax statutes is controlling (or at least relevant) in determining whether the Mission is

entitled to an exemption under Maine’s Employment Security Law. The Court finds that exemption status

from income tax is not conclusive as to unemployment exemption. See Concordia Association v. Ward,

532 N.E.2d 411, 414 (Il. App. Ct. 1988) (citation omitted).

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The second prong of 26 MRS.A. §1043(11)(F)(21)(a) contains two

requirements, the first of which, requires that organizations separately incorporated from

a church, like the Mission, operate “primarily for religious purposes” in order to qualify

for exemption from unemployment compensation taxes. The Commission found that the

Mission satisfies this statutory requirement because its programs are done for religious

purposes and are a part of the Mission’s essential function of performing what it calls

“God’s work” in providing care and services to the more marginalized members of

society. (R. at 3). The Petitioner argues that the Legislature intended to focus on the

activities of an organization, rather than the organization’s motivation or purpose for the

activities, in determining whether the Mission is “operated primarily for religious

purposes.” See Petitioner’s Brief, pp. 9-20.

The Law Court has long recognized that absent ambiguous phrasing, the Court

does not need to look beyond the plain language of the statute when the legislative intent

is clear from the statute. Cook v. Lisbon School Committee, 682 A.2d 672, 676 (Me.

1996). In this Court’s process of construing the meaning of the primary purpose

limitation with organizational entities incorporated separately but religiously motivated,

the Supreme Court has provided some guidance. Terwilliger v. St. Vincent Infirmary

Medical Center, 804 S.W.2d 696, 698 (Ark. 1991) (citing Lemon v. Kurtzman, 403 U.S.

602 (1971). With reference to separate parochial schools the Supreme Court in Lemon v.

Kurtzman, noted that church related schools have a “significant religious mission and that

a substantial portion of their activities is religiously oriented.” 403 U.S. 602, 616 (1971).

In Meek v. Pittenger, 421 U.S. 349, 365-66 (1975), the Supreme Court stated:

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[I]t would simply ignore reality to attempt to separate secular educational

functions from the predominantly religious role performed by many .. .

church-related ... schools... .

[R]eligion is so pervasive that a substantial portion of its functions are

subsumed in the religious mission.

“In recognition of the religious orientation of even separately incorporated entities courts

have routinely exempted religious schools.” Terwilliger, supra, 804 S.W.2d at 630

(citing Nampa Christian Schools Foundation, Inc. v. State, 719 P.2d 1178 (Idaho 1986)).

Where the religion pervades the operation of the organization, exemption of the

organization as one operated primarily for a reli gious purpose may be had. Unlike the

cases cited by the Petitioner, the Commissioner found and this Court agrees that the

evidence did establish that. The evidence in the record makes it clear that the Mission is

operated primarily for religious purposes.

The Mission provides a variety of programs, both religious and secular, to the

coastal communities. For instance, the mission owns a boat called the Sunbeam, which

provides programs and services to island residents, including the telemedicine program

that brings a nurse to the island with equipment to allow island residents to be examined

by doctors on the mainland. (R. at 38, 90-91, 116). The Sunbeam also delivers a boat

minister to visit the islanders and their pastor, to lead worship services, and to provide

pastoral counseling. (R. at 39). Mr. DeLong described these programs as being

“completely at the very heart of the essence of the religious enterprise.” (R. at 42). Mr.

DeLong, and many of the employees at the Mission see their work as a form of ministry

and believe they are doing the work of the church (“God’s work’) in serving the social

aspect of the community. (R. at 34, 59). Since the Mission was first started in 1905, it

has provided programs to the community in order to “reach out to show God’s love and

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compassion to marginalized people in the area [the Mission] serve[s].” (R. at 49). The

Mission has always been “rooted in an inclusive Christian ministry of compassion and

justice,” and has never tried to downplay or hide its Christian roots. (R. at 41, 86).

The Court’s review of the Mission’s intent and Operations reveals that it is an

organization with a religious mission and purpose. See Kendall v. Division of

Employment Security, 473 N.E.2d 196, 198-99 (Mass. 1985) (stating, “the fact that the

religious motives of the Sisters of St. Francis of Assisi also serve the public good by

providing for the education and training of the mentally retarded is hardly reason to deny

the Center a religious exemption.”). Accordingly, the Court finds the Mission qualifies

as an organization “operated primarily for religious purposes.”

2) The Mission is Principally § upported by an Association of

Churches.

The second requirement for exemption under the second prong of 26 M.R.S.A.

§1043(11)(F)(21)(a) is that the employer be operated, supervised, controlled or

principally supported by a church.” The Commission found that the Mission is

principally supported by a church, convention, or association of churches. (R. at 4),

Substantial evidence exists on the record supporting the Commission’s findings.

More than fifty percent of the Mission’s income is from its endowment made up

mostly of individual donors. (R. at 44, 62). These individuals are consciously giving to a

Christian faith-based organization. (R. at 61). The Mission receives support in the form

of money contributions, as well as in-kind support from 96 churches. (R. at 42). The

Mission has a voluntary affiliation with the United Church of Christ and the American

Baptist Congregation. (R. at 44). The Mission attends and participates in the annual

meeting of the United Church of Christ. (R. at 45).

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The Petitioner argues that because only a small fraction of the Mission’s revenue

comes from local churches, the Mission is not “principally supported” by these churches.

The Petitioner’s argument is unpersuasive. Even if the Court were to accept the

Petitioner’s argument, financial support alone is not the governing factor:

The statutory language [of the exemption] does not require a church’s or

group of churches’ support to be financial in order for that to be

recognizable under the statute. The statute merely states “support.” While

a contribution of money is a strong indicia of one’s support, it cannot be

held, statutorily, to be the only way in which to support an organization.

There is no logical reason to differentiate between the types of support an

organization may receive. Likewise, there is no Statutory command to do

so. The key is the quality of the support.

Nampa Christian Schools Foundation, Inc.., supra, 719 P.2d at 1184 (finding Nampa

Christian could not exist as a private school without the moral support of several

churches).

Not only is the Mission supported financially by 96 different churches, but it also

receives in-kind support from these churches in many different forms, such as the

donation of Christmas gifts for people in the community the Mission serves, Mr. Delong

gave the following testimony in reference to the $26,000.00 donated to the Mission by 96

different churches:

If you could go to the Wells Congregational Church about now, you

[would] see a huge dory in their fellowship hall. It starts to get filled up

with very fine brand new expensive Christmas gifts until its overflowing

and then on a day just before Christmas several vans arrive from that

Church. They show up as one line in this annual report — Wells

Congregational Church; but if you knew the level of interest, the level of

caring, that goes into filling that dory with Christmas gifts for kids that

don’t have much, you would think it was a pretty significant piece of, of

Support.

(R. at 43). Such support is necessary for the religious organization’s continued operation.

Substantial and competent evidence is in the record to support that finding. Accordingly,

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the Court affirms the Commission’s decision that the Mission is not required to pay

unemployment taxes under 26 M.R.S.A. §1043(11)(F)(21)(a).

CONCLUSION

For the foregoing reasons, the Court affirms the Commission’s decision that the

Mission is not required to pay unemployment taxes under 26 M.R.S.A.

§ 1043(11)(F)(21)(a).

Accordingly, the entry is:

Appeal DENIED. Decision of the Maine Unemployment Insurance Commission

AFFIRMED.

The Clerk may incorporate this Decision and Order into the docket by reference.

amen: Ftygast 24, 261 (di Ke

J ustfee, Maing Superior Court

FILED &

ENTERED

AUG 25 2004

SUPERIOR COURT

HANCOCK COUNTY

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