IN THE COMMONWEALTH COURT OF PENNSYLVANIA 


Borough of Grove City, : 
Petitioner : 

: 
v.

Unemployment Compensation 
Board of Review, 
Respondent : 

BEFORE: HONORABLE JAMES GARDNER COLINS, Judge 

 HONORABLE DAN PELLEGRINI, Judge 

 HONORABLE ROCHELLE S. FRIEDMAN, Judge 

OPINION BY JUDGE FRIEDMAN FILED: June 6, 2007 

The Borough of Grove City (Borough) petitions for review of the 
August 16, 2006, order of the Unemployment Compensation Board of Review 
(UCBR), which reversed the decision of a referee and granted benefits to Michael 
E. Cooney (Claimant). We reverse. 

Claimant was elected tax collector for the Borough, beginning in 
January 2002, and he served in that position until December 31, 2005. Under 
section 1086 of The Borough Code (Code),1 Claimant was responsible for the 
collection of various taxes levied within the Borough, but, as the elected tax 
collector, Claimant could “not collect any tax levied and imposed under [The Local 
Tax Enabling Act2 (LTEA)] unless the ordinance imposing such tax … provide[d] 
that he shall be the collector of the said tax.” 53 P.S. §46086. (UCBR’s Findings 
of Fact, Nos. 1-3, 5.) 

The only tax levied within the Borough under the LTEA is the local 
earned income tax. After Claimant was elected tax collector, although the 
ordinance did not require it, the Borough appointed Claimant to be Borough 
Receiver of Taxes (Receiver), whose duty it is to collect the local earned income 
tax. The Borough gave Claimant some training and paid Claimant a 5% 
commission on all earned income taxes that he collected. The Borough also paid 
for the office supplies, forms and postage necessary for Claimant to perform his 
Receiver duties.3 (UCBR’s Findings of Fact, Nos. 4, 8-10, 14-15, 23, 25.) 

The Borough had entered into an agreement with the Grove City Area 
School District and the County of Mercer under section 10 of the LTEA, 53 P.S. 
§6910, to use a single Receiver to collect the local earned income tax. Section 
10(b) of the LTEA allows school districts and political subdivisions that levy, 
assess and collect earned income taxes to select “the same person or agency to 
collect such tax upon earned income….” 53 P.S. §6910(b). Thus, once the 
Borough appointed Claimant as the Borough’s Receiver, the Grove City Area 
School District and the County of Mercer also appointed Claimant to be their 
collector of earned income taxes. (UCBR’s Findings of Fact, Nos. 14-16.) 

Claimant did not have a job description for the Receiver position and, 
as Receiver, did not participate in the Borough’s health or pension plans and did 
not accrue leave time. Claimant had his own office, which he rented from a private 
landlord, and paid his own rent and utilities. However, it is not clear if Claimant 
paid these expenses as the elected tax collector or as Receiver. Claimant hired two 
of his children to work part-time in his office. However, it is not clear if Claimant 
was acting as the elected tax collector or as Receiver when he hired them. 
(UCBR’s Findings of Fact, Nos. 11-13, 17-20.) 

One of Claimant’s duties as Receiver was to distribute earned income 
tax monies received from non-residents who worked in the Borough to the proper 
home taxing authorities. An issue arose as to when unclaimed monies should be 
sent to home taxing authorities, and the Borough ordered Claimant to retain the 
monies until the taxing authorities specifically requested it. (UCBR’s Findings of 
Fact, Nos. 27-29.) In addition, Claimant once asked the Borough’s solicitor for 
permission to perform outside employment involving income tax returns, and the 
solicitor refused to grant him permission. (UCBR’s Findings of Fact, Nos. 7, 12, 
26.) 

When Claimant was not re-elected for the term beginning in January 
of 2006, Claimant applied for unemployment benefits in connection with his 
position as the Borough Receiver. Claimant’s application was granted, and the 
Borough filed an appeal. After a hearing, a referee reversed that determination. 
Claimant then appealed to the UCBR, which reversed the referee and granted 
Claimant benefits, concluding that the Borough failed to prove that Claimant, as 
the appointed Receiver, was self-employed where the Borough restricted his 
outside work and controlled his handling of non-resident taxes. The Borough now 
petitions this court for review.4 

I. Hearsay 

The Borough first argues that the UCBR erred in relying solely on 
inadmissible hearsay evidence to find that the Borough refused to permit Claimant 
to do outside work. We agree. 

Claimant testified as follows: 

CL While you were acting as the Receiver of Taxes, 
could you perform any outside work? 

C I asked the Solicitor several times about various 
subjects and I was always turned down…. 

EL I’m going to object. This is hearsay. 

4 Our scope of review is limited to determining whether constitutional rights were 
violated, whether the adjudication is in accordance with the law and whether the necessary 
findings of fact are supported by substantial evidence. Section 704 of the Administrative 
Agency Law, 2 Pa. C.S. §704. 

R I’ll honor that objection. 

C I attempted to do earned income tax returns for 
people by request. I was informed I could not. 

EL I’m going to object. I don’t – by whom and … 

C By whom? The Solicitor. 

EL I’m going to object on the basis of hearsay. 

(R.R. at 52a-53a.) 

A finding of fact based solely on hearsay will not stand. Kilpatrick v. 
Unemployment Compensation Board of Review, 429 A.2d 133 (Pa. Cmwlth. 1981). 
However, the admission of a party is an exception to the hearsay rule and is 
competent to sustain a finding of fact. Id. Statements made by an agent, employee 
or other representative of a party are admissible as evidence if the representative 
had express or implied authority to make them. Estate of Fells by Boulding v. 
Unemployment Compensation Board of Review, 635 A.2d 666 (Pa. Cmwlth.), 
appeal denied, 538 Pa. 651, 647 A.2d 905 (1994). 

The party offering a statement has the burden of proving agency and 
the authority to make the statement. Volunteer Fire Company of New Buffalo v. 
Hilltop Oil Company, 602 A.2d 1348 (Pa. Super. 1992). Express authority is 
authority that is directly granted by the principal to bind the principal as to certain 
matters; implied authority binds the principal to those acts of the agent that are 
necessary, proper and usual in the exercise of the agent’s express authority. Id. 

In this case, Claimant presented no evidence to meet his burden of 
proving that the solicitor acted as the agent of the Borough in refusing to allow 
Claimant to perform outside work. A borough solicitor has a statutory duty to 
furnish legal opinions in writing upon questions of law submitted by a borough 
council, its committees, the mayor or the head of a department in their official 
capacities. Section 1117 of the Code, 53 P.S. §46117. However, absent express or 
implied authority, a borough solicitor does not have any authority to restrict the 
outside employment of an appointed official. Therefore, the UCBR erred in 
finding, based solely on hearsay testimony, that the Borough restricted Claimant’s 
outside employment.5 

II. Section 4(l)(2)(B) 

The Borough next argues that it met its burden of proving that 
Claimant, in the performance of his Receiver duties, was free from the Borough’s 
control and direction and that Claimant was customarily engaged in an 
independently established trade. We agree. 

Section 402(h) of the Unemployment Compensation Law (Law), Act of 
December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(h), 
states that a claimant is ineligible for benefits for any week in which he was engaged 
in self-employment. An individual is self-employed if: (1) the individual is free 
from control or direction over the performance of services; and (2) the individual is 
customarily engaged in an independently established trade, occupation, profession or 
business. Section 4(l)(2)(B) of the Law, 43 P.S. §753(l)(2)(B).6 

A. Free from Control 

With respect to the first element, the question of control concerns the 
work to be done and the manner of performing it. Beacon Flag Car Co., Inc. v. 
Unemployment Compensation Board of Review, 910 A.2d 103 (Pa. Cmwlth. 2006). 

In this regard, section 13 of the LTEA sets forth how local earned 
incomes taxes are to be imposed, paid and collected. 53 P.S. §6913. Thus, in large 
measure, the statute controls the work to be done and the manner of performing it. 
For example, under section 13(IV) of the LTEA, employers register with the income 
tax officer, i.e., the Receiver; make earned income tax deductions from employee 
compensation; file returns with the Receiver containing specified information; and 
forward the tax deductions to the Receiver. 53 P.S. §6913(IV); see section 13(I) of 
the LTEA, 53 P.S. §6913(I) (defining “income tax officer” as the person designated 
to collect and administer the earned income tax). 

However, in this case, an issue arose as to when unclaimed monies 
deducted from the compensation of non-residents should be sent to home taxing 
authorities. The Borough ordered Claimant to retain the monies until the taxing 
authorities specifically requested it, but Claimant believed that this was contrary to 
law. Section 13(V)(h) of the LTEA provides: 

The [income tax] officer shall distribute earned income 
taxes to the appropriate political subdivisions within sixty 
days of the deadline for payment by an employer…. The 
political subdivisions shall not be required to request 
the officer to distribute the funds collected…. If the 
officer, within one year after receiving a tax payment, 
cannot identify the taxing jurisdiction entitled to a tax 
payment, he shall make payment to the municipality in 
which the tax was collected. 

53 P.S. §6913(V)(h) (emphasis added). Claimant testified as follows: 

CL Did you collect non-resident earned income taxes 
for the Borough? 

C Yes. 

CL What was your understanding of what was to occur 
with these taxes? 

C The Borough’s understanding differed from [the 
LTEA] and I discussed this with the Borough…. [The 
LTEA] requires non-resident funds to be distributed 
quarterly as collected. In other words, the non-resident tax 
district does not have to invoice us for those taxes. We are 
to voluntarily submit them. I approached … [certain] 
Councilmen and asked them if they wanted me to do that 
and they said no, I was to continue the office as I had been 
doing. I took my wife, who is a Councilperson … one 
time because this was … bothering a lot of us. It was 
putting Receivers of Taxes in a bad position because we 
were in the middle, apparently. And said we need to 
comply with this. Our Auditors have talked about this. 
Everyone seems to know it but nobody’s doing it. And … 
I was told no, continue to do it. A lot of non-resident 
money was being turned in to the Borough and remaining 
unclaimed. Over $2 million dollars since 1974 was turned 
in to the Borough and was unclaimed. I understood the 
[LTEA]. I read the [LTEA]. I knew what we were 
supposed to do and I was told no, don’t do that. 

(R.R. at 53a.) 

In other words, the only evidence that the Borough controlled the 
manner in which Claimant performed his work involved a legal dispute. In that 
instance, Claimant evidently was trained by the Borough to retain monies received 
from non-residents until their taxing districts requested it. Claimant approached the 
Borough after he became familiar with section 13(V)(h) of the LTEA, and, according 
to Claimant, the Borough ordered Claimant to ignore that law. However, the 
Borough had no authority to do so. Thus, although it appeared to Claimant that the 
Borough controlled the manner in which Claimant handled non-resident tax monies, 
the LTEA actually controlled Claimant’s performance of those duties. 

B. Independent Business 

With respect to the second element, courts have identified two factors 
for determining whether an individual provides services as an independently 
established business: (1) whether the individual held himself out to, or was capable 
of performing the activities in question for, anyone who wished to avail themselves 
of his services; and (2) whether the nature of the business compelled the individual to 
look to only a single employer for the continuation of such services. Applied 
Measurement Professionals, Inc. v. Unemployment Compensation Board of Review, 
844 A.2d 632 (Pa. Cmwlth. 2004). 

 Here, Claimant testified that the solicitor denied him permission to do 
outside work involving income tax returns, but we concluded above that the solicitor 
was not an agent of the Borough. Thus, there is no competent evidence showing that 
the Borough prevented Claimant from performing outside work. Moreover, 
Claimant actually performed Receiver services for the Grove City Area School 
District and the County of Mercer under section 10 of the LTEA, which specifically 
allows a Receiver to collect earned income taxes for multiple taxing authorities. 
Thus, Claimant could have held himself out as available to perform Receiver services 
for anyone who would appoint him as the income tax officer. Finally, because LTEA 
places no limit on Claimant’s ability to perform Receiver services for multiple taxing 
authorities, the nature of collecting such taxes did not compel Claimant to look to 
only the Borough for his continuing such services. 

Accordingly, we reverse. 

_____________________________ 
ROCHELLE S. FRIEDMAN, Judge