Creameries of America, Inc. v. Industrial Commission

Decision Date04 May 1940
Docket Number6093
Citation102 P.2d 300,98 Utah 571
CourtUtah Supreme Court
PartiesCREAMERIES OF AMERICA, Inc., v. INDUSTRIAL COMMISSION et al

Original proceeding by the Creameries of America, Inc., to review the Industrial Commission's confirmation of an appeal tribunal's finding that Robert L. Foss was entitled to unemployment benefits under the Unemployment Compensation Act.

Order of the Industrial Commission awarding unemployment benefits affirmed.

Jesse R. S. Budge, of Salt Lake City, for plaintiff.

Joseph Chez, Atty. Gen., S.D. Huffaker, Asst. Atty. Gen., and A. N Ferro and F. F. Dremann, Sp. Counsel, both of Salt Lake City for defendants.

McDONOUGH Justice. WOLFE, J., MOFFAT, Chief Justice, LARSON, Justice PRATT, Justice, concurring.

OPINION

McDONOUGH, Justice.

This is an original proceeding by Creameries of America, Inc., to review defendant Commission's confirmation of an appeal tribunal's finding that defendant Foss is entitled to unemployment benefits under the Unemployment Compensation Act (Chapter 1, Laws Utah 1936, Special Session, as amended by Chapter 43, Laws of Utah 1937).

Plaintiff is engaged in the manufacture, processing, and sale of milk and milk products. In May 1938 it entered into a contract called a "Franchise Agreement" with defendant Foss, denominated "dealer" therein, under which it granted to him the exclusive right to sell its products at retail in a defined franchise area in Salt Lake City. Under its provisions the Company agreed to sell such products to Foss at a price fixed at a discount from "the retail price posted on the Company's bulletin board" or if no price be posted then "a reasonable price shall be used, as determined by the Company for similar products in the same neighborhood." The company by a provision of the contract loaned to the dealer a list of names, addresses and requirements of the persons who at the date of the contract were purchasing its products at retail within the franchise area. The company reserved to itself the good will of the retail trade within the area, a provision being made by the agreement for the "purchase" from the dealer, upon the termination of the contract, of any customers or business acquired by the latter during the life of the contract after deducting any loss thereof suffered during such period. The contract term was for one year and "thereafter from year to year, unless otherwise cancelled or terminated." The agreement was terminable by either party upon giving the other two weeks' written notice.

The dealer agreed not to handle products other than those of the company, within the area, and not to handle any such products therein, or in any wise deal with the customers relative to sale of such products, for a period of two years after termination of the contract. Upon the dealer's failure to carry out any of the provisions of the contract, the company reserved the right to terminate the agreement upon twenty-four hours' written notice thereof.

The agreement was not assignable without the written consent of the company. It provided that it should not be construed to create any co-partnership between the parties, nor the relationship of principal and agent, or employer and employee or any relationship other than buyer and seller. Other provisions of the agreement will be referred to in the opinion where deemed necessary.

The briefs herein were filed prior to our decision in the case of Globe Grain and Milling Co. v. Industrial Commission, 98 Utah 36, 91 P.2d 512, rehearing denied, 98 Utah 48, 97 P.2d 582, in which we held that the Act did not restrict the benefits thereof to those coming strictly within the common law concepts of servants or employees. For that reason, perhaps, plaintiff's brief is devoted wholly to the question of whether the findings and the evidence in support thereof are sufficient to support a decision that Foss was an employee. However, plaintiff's statement of errors relied on, raises two questions: (1) Whether the applicant Foss performed "services for wages" for plaintiff within the meaning of Section 19(j) (1) of the Act; and (2) whether, if Foss did perform "services for wages," he nevertheless came within the provisions of subdivisions (a), (b), and (c) of Section 19(j) (5), and is therefore not entitled to benefits under the Act.

Subsection (j) of Section 19 of the Unemployment Act sets out what constitutes employment under the Act. Part (1) of Subsection (j) defines the term "employment" as follows:

"'Employment' subject to the other provisions of this subsection, means service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied."

Subdivision (5) of subsection (j) provides, that,

"Services performed by an individual for wages shall be deemed to be employment subject to this act unless and until it is shown to the satisfaction of the commission that--

"(a) such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and

"(b) such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

"(c) such individual is customarily engaged in an independently established trade, occupation, profession or business."

From the above provisions it seems clear to us that the legislature has endeavored to define by the Act itself a classification of individuals entitled to employment benefits. Hence, the statutory definition, rather than any common law concepts, if differing therefrom, govern--insofar as they are applicable. The fact that neither the term "employee" nor the term "independent contractor" is used anywhere in the Unemployment Compensation Act is itself indicative that the legislature did not intend to use the relationships of "independent contractor" or "employer-employee," as defined by the common law, as the criteria to determine who are entitled to benefits under the Unemployment Compensation Act. The word "individual" is used throughout the Act to refer to the person seeking unemployment benefits. While the terms "employer" and "employing unit" are used, they are specifically defined by the Act so that they have a distinct meaning which may or may not coincide with the ordinary conception of "employer." Where words are defined in a particular statute, and it is clear that the legislature intended to give to such words a different meaning than the one generally and ordinarily given to such words, the statutory definition is the one to be applied. Fox v. Standard Oil Co., 294 U.S. 87, 55 S.Ct. 333, 79 L.Ed. 780 (where the word "store" was given a special meaning under the state statute so as to include service stations); Comer v. State Tax Commission, 41 N.M. 403, 69 P.2d 936 (where the word "agent" was given a special meaning different from ordinary usage); Levitt v. Faber, 20 Cal.App.2d Supp. 758, 64 P.2d 498 (where the court held that the words "labor" and "personal service" had a special meaning as used in the particular statute).

That "Section 19(j) (5) signifies a relationship entitled to benefits of the act beyond that of a mere master and servant relationship" as stated in our opinion in Globe Grain & Milling Co. v. Industrial Commission, supra , is borne out by the fact that at the 1939 session of the state legislature amendments were offered in the Senate to so modify the definitions of Section 19 as to confine the benefits of the Act to a strict master and servant relationship. [1] Such amendments were rejected.

Plaintiff company cites the recent case of Washington Recorder Pub. Co. v. Ernst, 199 Wash. 176, 91 P.2d 718, 124 A.L.R. 667, in support of its contention that what was intended by the legislature in passing the Unemployment Act was to apply the common law concepts of "employee" and "independent contractor" in determining who were eligible for benefits thereunder. Under such a construction of the statute the case of Mountain Meadow Creameries v. Industrial Accident Commission, 25 Cal.App.2d 123, 76 P.2d 724 (cited by plaintiff in its brief), might be persuasive that the applicant in the instant case is not entitled to unemployment compensation benefits as not being an "employee." In that case, which arose under the California workmen's compensation statute, the court held that a contract similar to the one involved in the instant case, created a relationship of "independent contractor" rather than "employee." However, see the cases of Beatrice Creamery Co. v. State Industrial Commission, 174 Okla. 101, 49 P.2d 1094; and Spears Dairy v. Bohrer, Tex. Civ. App. 54 S.W.2d 872, where the operator of a milk truck who delivered milk on a commission basis--somewhat similar to the facts in the instant case--was held to be an "employee."

In view of what has heretofore been said with respect to the evident purposes and intent of our Unemployment Compensation Act, we are not constrained to follow the Washington court in its interpretation of the Washington Unemployment Compensation Act. The Ernst case, decided by Department of the Washington Supreme Court, is not in harmony with the previous case of McDermott v. State, 196 Wash. 261, 82 P.2d 568, decided by Department 1 of such court. In the McDermott case the court stated that in passing the Unemployment Compensation Act the legislature defined "employment" to cover more than the relationship of master and servant as viewed by the common law. Although only a few cases have been decided in other states under similar statutes, yet the various courts seem to have adopted a view of...

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