Gilchrist v. Division of Employment Sec., Dept. of Labor and Industry

• Citation: 137 A.2d 29,48 N.J.Super. 147
• Decision Date: 20 December 1957
• Docket Number: No. A--511,O-C,A--511
• Parties: Thomas J. GILCHRIST, t/a Baby Service Center and Stroll-hair, Inc., Petitioners-Appellants, v. DIVISION OF EMPLOYMENT SECURITY, DEPARTMENT OF LABOR & INDUSTRY, State of New Jersey, Respondent. . Appellate Division
• Court: New Jersey Superior Court – Appellate Division

Page 147

48 N.J.Super. 147

137 A.2d 29

Thomas J. GILCHRIST, t/a Baby Service Center and Stroll-O-Chair, Inc., Petitioners-Appellants, v. DIVISION OF EMPLOYMENT SECURITY, DEPARTMENT OF LABOR &

INDUSTRY, State of New Jersey, Respondent.

No. A--511.

Superior Court of New Jersey.

Appellate Division.

Argued Dec. 9, 1957.

Decided Dec. 20, 1957.

Mathias D. Dileo, Trenton, argued the cause for appellant (Wilentz, Goldman, Spitzer & Sills, Perth Amboy, attorneys; Mathias D. Dileo, of counsel).

Herman D. Ringle, Trenton, argued the cause for respondent.

Before Judges GOLDMANN, FREUND and CONFORD.

The opinion of the court was delivered by

GOLDMANN, S.J.A.D.

The Director of the Division of Employment Security, Department of Labor and Industry, held that Thomas J. Gilchrist, t/a Baby Service Center on November 2, 1952, effective January 1, 1952, became an employer subject to the Unemployment Compensation Act, under N.J.S.A. 43:21--19(h)(1), and that Stroll-O-Chair, Inc., became such an employer on April 5, 1954, effective that date, under N.J.S.A. 43:21--19(h)(2). This decision having been affirmed by the Acting Commissioner of Labor and Industry, petitioners appeal to this court. Stroll-O-Chair concedes that it acquired the organization and business of Gilchrist on April 5, 1954, and that if the latter was a subject employer at that time, it too is subject under N.J.S.A. 43:21--19(h)(2).

The salient facts have been stipulated in an agreed statement presented by the parties in lieu of record on appeal. R.R. 4:88--8.

Gilchrist was the New Jersey distributor for a special type of baby furniture, a combination stroller and highchair, manufactured by Stroll-O-Chair Corp., by New York, and known and advertised as 'Stroll-O-Chair. He operated individually as Baby Service Center from February 1950 until April 5, 1954, with his place of business in Ridgefield, N.J., employing a bookkeeper and a deliveryman, and effecting sales through six or seven salesmen. On April 5, 1954 he formed Stroll-O-Chair, Inc., which took over his organization, assets and business. The company operated in the same manner as Gilchrist, and with the same salesmen. (Reference hereinafter to 'petitioner' will mean either Gilchrist or the successor company.)

Petitioner gave the salesmen a suggested price ($114.95) at which the Stroll-O-Chair should be sold. However, many of the men did not hold to that price, but gave customers discounts in order to effect sales. Petitioner did not object to such price reduction, since it did not affect the amount payable to it, but merely reduced the salesman's commission (about $30). Petitioner made delivery on each order and collected the balance due in cash or check.

Salesmen had specific territories assigned them. These were protected under a gentleman's agreement, but the men sometimes sold outside their territory. Sales were recorded in triplicate on serially numbered order forms, purchased by the salesmen from petitioner at 25cents a pad. One copy of the form was delivered to the customer, another to petitioner, and the third retained by the salesman, whose name was printed or stamped above the words 'Authorized Dealer for (petitioner's name)' appearing at the top. Near the bottom of the form there was printed 'For further information concerning delivery communicate with (petitioner's name, address and telephone number).' In making a sale the salesman would try to collect his commission by way of downpayment from the customer. If any part of the balance thereafter paid by the customer to petitioner represented commission, that money would be paid to the salesman when his account was settled at the end of the month.

Deliveries were made by petitioner direct to the customer and the cost charged to him. Occasionally the salesman himself delivered the baby chair. If any question arose regarding delivery, the customer was required to communicate with petitioner, but if it concerned defective merchandise, he was to get in touch with the salesman. In case of a customer's default, the downpayment was retained by the salesman and petitioner was left to collect the balance due in whatever way it could.

It is further stipulated that salesmen used their own cars and received no reimbursement for automobile expense. They did not perform services at the central office; they were furnished no tools, secretarial service, telephone service, printed materials or office space, nor were they paid salaries. Salesmen had to secure and pay for any required mercantile or solicitor's license.

The men usually operated from their homes. They had no separate business establishments, offices or special equipment. Their cars carried no commercial registration. The salesmen had no business telephone listing or business stationery. They were not required to work any set hours or days. The men reported to the central office about once a month to settle their accounts. From time to time there were salesmen's meetings at the office to discuss price changes or other business matters.

The only source of income of the salesmen was from handling petitioner's Stroll-O-Chairs, although they tried, on occasion, to supplement this with some other form of work. However, these activities lasted for only short periods of time. One salesman testified that he sold Stroll-O-Chairs for 5 1/2 years and, prior to that, a chair known as 'Wonder Chair.' Another salesman sold Stroll-O-Chairs for a period of six or seven years and, before that, the 'Baby Butler' and 'Baby Pride' chairs of other companies.

The single question presented is: Did the salesmen perform services in employment, as defined by the Unemployment Compensation Act, N.J.S.A. 43:21--19(i)(1) and (6)? For convenience, we reproduce the text of the statute, as well as the language of N.J.S.A. 43:21--19(p).

'(i) (1) 'Employment' means service, including service in interstate commerce performed for remuneration or under any contract of hire, written or oral, express or implied.

'(i) (6) Services performed by an individual for remuneration shall be deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the division that

'(A) such individual has been and will continue to be free from control or direction over the performance of such service, 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.

'(p) 'Remuneration' means all compensation for personal services, including commissions and bonuses and the cash value of all compensation in any medium other than cash.'

The Unemployment Compensation Act, N.J.S.A. 43:21--1 et seq., represents an exercise of the reserve police power of the State. Its purpose is to protect the welfare of the people by providing a cushion against the shocks and rigors of unemployment. N.J.S.A. 43:21--2, N.J.S.A.; Bogue Electric Co. v. Board of Review, etc., 21 N.J. 431, 435, 122 A.2d 615 (1956). Being remedial, it should be liberally construed to accomplish that end with the result that the relation of employer and employee may be deemed to exist under circumstances which would not lead to that determination under the common-law classification.

Since N.J.S.A. 43:21--19(i)(1) defines employment as 'service * * * for remuneration or under any contract of hire,' and subsection (p) defines remuneration as 'all compensation for personal services,' the first question to be determined is whether the salesmen performed personal services for petitioner for remuneration. It is only if this question is decided in the affirmative that resort is to be had to the provisions of N.J.S.A. 43:21--19(i) (6)(A), (B) and (C), the so-called ABC test. Fuller Brush Co. v. Industrial Commission of Utah, 99 Utah 97, 104 P.2d 201, 129 A.L.R. 511 (Sup.Ct.1940); Journal Publishing Co. v. State Unemployment Compensation Commission, 175 Or. 627, 155 P.2d 570 (Sup.Ct.1945); Henry Broderick, Inc. v. Riley, 22 Wash.2d 760, 157 P.2d 954 (Sup.Ct.1945). (The applicable provisions of the unemployment compensation statutes of these states are identical with the New Jersey act.)

No test as to what constitutes personal service has been precisely spelled out by the cases. Whether personal services are performed depends entirely upon the factual complex of a particular case. Counsel for petitioners concedes that the common-law definition of the term 'service' would not apply in the statutory context since the statute contemplates a broader definition. Indeed, the terms 'employment,' 'personal services,' and 'wages' have a much more comprehensive meaning and application than their common-law counterparts, and encompass in their coverage many persons and relationships not included in the common-law relationship of master and servant. Journal Publishing Co. v. State Unemployment Compensation Commission, above; Creameries of America, Inc. v. Industrial Commission, 98 Utah 571, 102 P.2d 300 (Sup.Ct.1940); Singer Sewing Machine Co. v. Industrial Commission of Utah, 104 Utah 175, 134 P.2d 479 (Sup.Ct.1943). Petitioners admit there must be something more than a lack of control over the operation of the salesmen in order to negate the performance of personal services.

In determining whether the relationship is within the act, the Division of Employment Security and the court will look behind the contract to the actual situation--the status in which the parties are placed by the relationship that exists between them. Singer Sewing Machine Co. v. Industrial Commission of Utah, above. The test is two-fold: Did the alleged employee render personal services for the alleged employer and, if so, was he entitled to...