Ben v. United States, Civ. No. 5528.

• Decision Date: 09 January 1956
• Docket Number: Civ. No. 5528.
• Citation: 139 F. Supp. 883
• Parties: Lesile R. BEN, doing business as Ben Construction Company, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Northern District of New York

139 F. Supp. 883

Lesile R. BEN, doing business as Ben Construction Company, Plaintiff, v. UNITED STATES of America, Defendant.

Civ. No. 5528.

United States District Court N. D. New York.

January 9, 1956.

I. Gerald Pliskin, Syracuse, N. Y., for plaintiff.

Theodore F. Bowes, U. S. Atty., Syracuse, N. Y., H. Brian Holland, Asst. Atty. Gen., Andrew D. Sharpe, Anthony T. Dealy, Attorneys, Dept. of Justice, Washington, D. C., Bernard Burdick, Asst. U. S. Atty., Syracuse, N. Y., for U. S.

BRENNAN, Chief Judge.

This action is brought to recover taxes paid by the plaintiff under the provisions of the Federal Insurance Contributions Act, Title 26 U.S.C.A. § 1400 et seq. and the Federal Unemployment Tax Act, Title 26 U.S.C.A. § 1600 et seq. The period involved in this litigation extends from July 1, 1948, through December 31, 1951. The taxes, for which recovery is sought, were computed and paid upon the earnings of certain workers who are termed "applicators" in this litigation. The crux of the litigation is contained in the plaintiff's contention that the taxes, above mentioned, were paid under the mistaken impression that said applicators were employees as defined in Title 26 U.S.C.A. § 1426(d) and § 1607(i) when in fact they were independent contractors. The status of several employees is involved in this suit. It seems to be conceded however that the evidence offered is to be applied as to each person upon whose earnings taxes were paid and that the decision will apply to each of them. In other words, the decision will define the status of the workers collectively rather than individually. Any computations made necessary by the decision are reserved to be agreed upon by the parties or determined by the Court.

A similar action was tried before this Court and decided in October 1954. The decision is reported under the name of Silver v. United States, D.C., 131 F.Supp. 209, 210, and the following paragraph is borrowed therefrom as an introduction to the findings herein.

"It is obvious that the decision here will require that the plaintiff's business methods and the facts pertaining to the business relationship of plaintiff and the applicators be examined and appraised. The evidence offered raises no serious factual dispute, and the findings of the Court are set out below in narrative form".

Plaintiff has been engaged in business at Syracuse, N. Y., since 1948. The business may be referred to generally as a roofing and siding business; that is the furnishing and affixing of materials to the roofs and sidewalls of frame structures in need of repair. Contracts are solicited from property owners by canvassers who obtain prospects and refer them to salesmen known as "closers". The closers actually obtain a written contract which is executed by the owner and by the plaintiff which in general terms describes the materials to be furnished and the labor to be performed, together with a total price to be paid therefor. No time is set out in the contract as to when the work is to be performed. Estimates of the amounts of materials required are computed by the salesmen and the unit used in such computation is known as a "square" which contains 100 square feet. The required materials are delivered to the job site by truckmen hired by the plaintiff. The majority of the contracts, above referred to, are financed through a banking institution and it is apparent that the plaintiff receives the consideration set out in the contract from such institution after the owner's credit has been approved and a completion slip, signed by the owner, is presented to the bank.

At about the time of the delivery of the materials to the work site, workmen, herein referred to as "applicators", enter the picture. An applicator is the person who performs the labor of affixing the roofing or siding materials to the roofs or walls of the structures in accordance with the contract. During the time period involved here, a number of applicators appeared to depend upon the plaintiff for such employment especially during those seasons of the year when such work could be advantageously performed. Some of them, who might be termed "regulars", have performed such service for the plaintiff from 1948 to the time of the trial.

The separate arrangements between Ben and the several applicators were entirely oral and lacked the formality of the ordinary contract. The pay of the applicators was fixed by a unit price per square which price appeared to be fixed by the trade rather than by individual negotiation between the applicator and the plaintiff. When the applicator desired to offer his services, he entered Ben's office and, without more ado, he was handed a work sheet which had written upon it the instructions necessary for the performance of the contract heretofore obtained from the owner. The work sheet contained no particular details but the amount of the material necessary to be applied (the number of squares) appeared thereon and of course the location where the work was to be performed. No further discussion took place between Ben and the applicator. It appeared to be understood that payment was to be made to the applicator upon the presentation of the completion slip, signed by the owner, which in effect certified that the contract had been performed satisfactorily. No time was agreed upon or discussed within which the applicator would start or complete the work. The applicator was free to decline the work sheet offered. In such an event, however, Ben would not generally offer him additional work. It was expected that he would take each job offered. Ordinarily it is apparent that the applicator would take the work sheet and depart from the office, using his own transportation to the place of performance of the labor required. H...