Aladdin Oil Corp. v. Perluss

• Decision Date: 13 November 1964
• Parties: ALADDIN OIL CORPORATION, a California corporation, Plaintiff and Appellant, v. Irving PERLUSS, as Director of the Department of Employment of the State of California and Department of Employment of the State of California, Defendants and Respondents. Civ. 27620.
• Court: California Court of Appeals Court of Appeals

Page 239

41 Cal.Rptr. 239

230 Cal.App.2d 603

ALADDIN OIL CORPORATION, a California corporation, Plaintiff and Appellant, v. Irving PERLUSS, as Director of the Department of Employment of the State of California and Department of Employment of the State of California, Defendants and Respondents.

Civ. 27620.

District Court of Appeal, Second District, Division 2, California.

Nov. 13, 1964.

Rehearing Denied Dec. 2, 1964.

Hearing Denied Jan. 27, 1965.

Milton A. Krug, Los Angeles, Marvin A. Freeman and Ivon B. Blum, Beverly Hills, for plaintiff and appellant.

Thomas C. Lynch and Stanley Mosk, Attys. Gen., Dan Kaufmann, Asst. Atty. Gen., and Richard S. Cohen, Deputy Atty. Gen., for defendants and respondents.

HERNDON, Justice.

Plaintiff corporation appeals from the judgment of the superior court in favor of the defendants and respondents, Irving Perluss, former Director of the Department of Employment of the State of California, and the Department of Employment of the State of California, rendered in an action brought by appellant to recover unemployment insurance contributions, interest and penalties totaling $3,066.15 which it had paid under protest following an assessment made for the period April 1, 1956 through March 31, 1958.

Appellant's claim for refund is based upon its contention that its relationship to certain 'leasemen' engaged by it was not such as to bring it under the provisions of the Unemployment Insurance Code relating to employer contributions, and that the sums paid to its vice president were not wages but were either in the nature of advance royalties or trust funds which were not subject to tax under the Code.

Appellant does not assert that the findings of fact made by the trial court do not support the judgment although it is critical of the wording of certain of them and feels that certain other findings requested by it should have been made. We deem it unnecessary to engage in any extended discussion of these subsidiary arguments for it is apparent that the findings provide a sufficient determination of the ultimate facts necessary to support the judgment.

Essentially, appellant's basis for urging a reversal herein is his contention that the findings are not supported by the evidence and the reasonable inferences to be drawn therefrom, and that this court must hold as a matter of law that the disputed status of its vice president and its 'leasemen' was not that of employer and employee as this relationship has been defined by controlling decisions.

We shall first consider the status of the challenged 'leasemen.' A 'leaseman' appears to be simply a person who engages in negotiating and acquiring oil and gas leases from various landowners. Since appellant asserts that there are only fifty 'contract' leasemen in all of California, it is apparent that most persons engaged in this line of work are employed by major oil companies as employees. Appellant describes a contract leaseman as a person who engages in the acquisition of oil and gas leases for the account or accounts of various independent producers and, in addition thereto, also negotiates and acquires oil and gas leases for his own account which he then sells to a producing oil and gas company at a profit. It is, therefore, apparent that whether the relationship of a person engaging in this line of work to the company using his services is that of an employee, an independent contractor or a wholly private entrepreneur is dependent upon the factual circumstances surrounding the particular engagement.

The evidence presented in the instant case on this subject, viewed in the light most favorable to the judgment, may be summarized as follows: Appellant corporation was an independent oil producer engaged in the business of acquiring oil and gas leases, drilling wells and producing crude oil. During the period involved herein, appellant was interested in acquiring oil and gas leases on a large number of individual properties located in two specific areas or districts of the City of Los Angeles. In order to accomplish its objective appellant entered into similar oral arrangements with various oil and gas leasemen. The substance of these arrangements was as follows:

Appellant gave each leaseman a supply of oil and gas leases in respect to which the leaseman's sole assignment was to acquire for the appellant merely the signature of the individual landowner designated on the particular lease. The oil and gas leases were acquired in the name of Hilo Oil Company, which company was the agent of the appellant. The leases acquired by the leasemen were transferred immediately from the Hilo Oil Company to appellant.

The various leasemen had no right or privilege, under their oral arrangement with appellant, to vary the terms of the lease in any way whatsoever and had nothing to do with the drafting of the lease forms. In fact, appellant had filled in on each lease the legal description of the property and the name and address of the landowner. The only blank left on a lease when it was given to a leaseman was the place where the landowner was to sign. The appellant had the right under the terms of its oral arrangements with its various leasemen to terminate their work at any time without notice, without cause, and without incurring financial responsibility and, likewise, the leasemen had the right to terminate their relationship with appellant without notice and without cause.

Under their oral arrangements with appellant, each leaseman was paid $25 per day, and reimbursed by appellant at the rate of eight cents per mile for the use of his automobile, and all costs expended by him for dinner, telephoning, parking, using the services of a public stenographer and purchasing fiberboard filing cabinets in which he kept the oil and gas leases assigned to him. In order to be reimbursed by appellant for the costs incurred by each leaseman in securing the signatures on the uniform oil and gas leases it was required that he submit to appellant a statement setting forth specifically the expenses incurred by him.

One of appellant's leasemen testified that, pursuant to his oral arrangement with appellant, he was required to make a written report to appellant every three or four months with respect to the status of the oil and gas leases in his possession. A number of the leasemen thought that their oral arrangements with appellant made them the appellant's employees.

The oral arrangements between appellant and its leasemen were to run for an indefinite period of time. They provided that the leasemen could acquire leases for their own accounts or for the accounts of other third persons. However, the leasemen were not allowed under their oral arrangements with appellant to acquire leases for themselves or other third parties in the same area and at the same time as they were acquiring leases for appellant.

Leasemen testified that in their conversations with appellant's vice president regarding their employment as leasemen there were no conversations as to what control would be exercised over their activities by appellant or its officers, that there was no mention in these conversations of the minimum number of hours per day or the average number of hours per day they should spend working for appellant, nor was there any mention in the conversations as to the number of signed leases they were required to have. In this regard, one of appellant's leasemen answered the following question on respondent's questionnaire:

'12. Is the individual required: (a) To report in person to the firm or its representatives? (b) To report in writing or by telephone to the firm or its representatives? Answer: 'Either'.'

The evidence with respect to the conduct of the parties is as follows: Each leaseman was supplied with a business card by appellant. The leasemen used this card when they called on a landowner in behalf of appellant. An example of a card furnished to a leaseman by appellant is as follows:

'Representing

'HILO OIL COMPANY

'Land Department

'CHARLES DUKE

CR 62609

Suite 309, 232 North Canon

Drive

Beverly Hills, California.'

Invariably an introductory letter was sent by the appellant to each of the various landowners informing him that a representative of its Land Office would be calling on him in the near future with respect to the acquisition of an oil and gas lease on his property. An example of such a letter follows:

'October

'Twenty-second

'1958

'Mr. J. Miller

'629 South Sycamore

'Los Angeles, California

'In re: Lot 354, Tract 5049

'Dear Mr. Miller:

'This company, in association with the Universal Consolidated Oil Company of Los Angeles, is presently engaged in acquiring subsurface oil and gas leases in the vicinity of the above noted property.

'A representative of our Land Office will call upon you shortly in this regard, and we should appreciate any courtesy you may extend him.

'Yours truly,

'Hilo Oil Company

'By ________

'M. METZENBAUM--Land Dept.'

One of appellant's leasemen answered the following question in this manner: '14. Is there a foreman, supervisor, manager, etc., responsible for directing, supervising, verifying, or reviewing the individual's services for the firm? [A]: 'Manager, Land Department--'If, so, please identify by name and title of position.' [A.]: 'Murray Metzenbaum.'

Another of appellant's leasemen testified that while he was working for appellant he regarded appellant's vice president as being the manager or supervisor of its Land Department. Another of the leasemen testified that he personally returned his signed leases to the office of appellant every three, four or five days. Another of appellant's leasemen testified that he dropped into the office of appellant every day or two or three days in order to pick up telephone calls he might have received.

Each leasemen testified that when he was in the office of appellant he was asked by appellant's vice president what conditions were like in the...