Globe Grain & Milling Co. v. Industrial Commission

• Decision Date: 20 June 1939
• Docket Number: 6050
• Citation: 91 P.2d 512,98 Utah 36
• Parties: GLOBE GRAIN & MILLING CO. v. INDUSTRIAL COMMISSION et al
• Court: Utah Supreme Court

91 P.2d 512

98 Utah 36

GLOBE GRAIN & MILLING CO. v. INDUSTRIAL COMMISSION et al

No. 6050

Supreme Court of Utah

June 20, 1939

Rehearing denied January 29, 1940.

For opinion on rehearing see 98 Utah 48, 97 P. 2d 582.

Original proceeding by the Globe Grain & Milling Company against the Industrial Commission of Utah and Albert E. Thomas to review the Commission's confirmation of an appeal tribunal's findings that defendant Thomas was entitled to unemployment benefits under the Unemployment Compensation Law by refusal to permit appeal from such tribunal.

Appeal tribunal's findings, as confirmed by Commission affirmed.

DeVine Howell & Stine and Neil R. Olmstead, all of Ogden, for plaintiff.

Joseph Chez, Atty. Gen., and A. N. Ferro, of Salt Lake City, for defendants.

WOLFE Justice. McDONOUGH and PRATT, JJ., concur. MOFFAT, Chief Justice, LARSON, Justice, dissenting.

OPINION

WOLFE, Justice.

Albert E. Thomas made application for unemployment benefits under what is called the Unemployment Compensation Law (Chapter 1, Laws of Utah 1936, Special Session, as amended by Chapter 43, Laws of Utah 1937). The special deputy charged with investigating and auditing the claim held that Thomas was not entitled to compensation. The appeal tribunal to which the deputy's findings were taken held that Thomas was entitled to compensation. The Industrial Commission refused to permit an appeal from the appeal tribunal. This action of the commission, treated by petitioner herein as a confirmation of the findings of the appeal tribunal, is brought to this court for review. No questions of correct procedure are raised and we raise none. The only question to be decided is: Was Thomas in the employ of petitioner as defined by the act so as to be entitled to share in the Unemployment Compensation Fund?

The Globe Grain and Milling Company claims he was excluded as a beneficiary because the concurrence of three tests for exclusion, hereinunder set out, took him out of the status of employment which is the foundation of a claim for benefits under the act.

Section 19 (j) (5) of the act reads as follows:

"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."

There was no question but that Thomas performed services for the petitioner and that he received "wages" as wages are defined by Section 19 (p) of the act. Section 19 is a section on definitions and provides a glossary which pertains to the act. These definitions may differ from the common law concepts designated by the same words. The above quoted Section 19 (j) (5) signifies a relationship entitled to benefits of the act beyond that of a mere master and servant relationship.

The idea of independent contractor grew out of the realization that one who engaged a contractor to build a structure or a chattel according to specifications and turn over the completed job for a named price without in any way controlling the means or methods of fulfilling the contract should not be subject to the rule of respondeat superior (Holmes, The Common Law, 231 et seq.; Holmes, History of Agency, Vol. 3 of Select Essays in Anglo American Legal History, 405), a tort principle which made negligence of a servant committed in pursuance of his employment the negligence of the master. That was on the theory that the negligent act of the servant done in pursuance of the master's business was in contemplation of law the act of the master. Fox v. Lavender, 89 Utah 115, 56 P.2d 1049, 109 A.L.R. 105. This principle was held not applicable to the independent contractor. But the principle on which the independent contractor was differentiated from the servant, i. e., freedom from control in methods and means, later was used to make what in reality was a servant an independent contractor in form. An old servant who knew his master's wants and desires as to how things should be done might be made an independent contractor in legal form. A negro cotton picker could be given the aspect of an independent contractor. In such cases the principle of respondeat superior might still apply. Certainly such relationships could be made subject to unemployment compensation benefits. Such was the purpose of requiring all of paragraphs (a), (b), and (c) to be proved before the applicant could be denied the benefit of the act.

The most independent of independent contractors therefore are not included in the class of individuals entitled to benefits, but a class of individuals, who under strict common law concept of independent contractorship were other than employees, are entitled we need not draw the line. It is drawn for us by the act. Cases appearing since this opinion was written but before publication hereof which treat of this aspect of the case are: Industrial Commission v. North Western Mutual Life Ins. Co., Colo., 88 P.2d 560; Unemployment Compensation Comm. v. Jefferson Standard Life Ins. Co., 215 N.C. 479, 2 S.E.2d 584. In the case of North Western Mutual Life Ins. Co. v. Tone, 125 Conn. 183, 4 A.2d 640, the statute expressly restricted the benefits to the relationship of master and servant.

The Commission in this case held that the employer prevailed in his proof of the (b) factor but not as to the (a) and (c) factors. Thomas had his office in the Cullen Hotel in Salt Lake City, and his services were performed by soliciting customers to buy pellets made by petitioner which service was performed outside and away from all the places of business of petitioner. Our task is to determine whether the evidence was such as to show that the commission was arbitrary or unreasonable in not finding that Thomas had been, at the time of his disseverance from petitioner's service, free from control; and also whether it had been arbitrary or unreasonable in not finding that he was customarily engaged in an independently established trade, occupation, profession or business. Unless the tests, (a), (b), and (c), all concurred he would not be excluded from the status of employment as defined by the act and would, so far as such employment was concerned, be entitled to benefits under the act.

There is some doubt as to whether or not the appeal tribunal was correct in holding that the evidence did not satisfactorily show that Thomas had been free from control in the performance of his services. The fact that the contract was one of continuous and current bilateral execution and could be terminated by either side at any time carries with it such potentialities for indirect control of performance as, coupled with other facts, may present a basis for argument that the appeal tribunal was correct in that finding. But it is unnecessary to determine that question because we have concluded that the evidence sustains the commission (appeal tribunal) in its finding that test (c) above has not been fulfilled and hence Thomas was not excluded from the cognizance of the commission as a beneficiary of the fund, at least so far as requirement of "employment" as defined by the act was concerned.

We now set out the evidence from which we conclude that the commission was not required in law to be convinced that Thomas was customarily engaged in an independently established business at any time during his incumbency with petitioner, and especially at the time his services terminated.

The material facts involved in this controversy are these: Some four or five years before the hearing in April, 1938, Albert E. Thomas met F. E. Clark, then occupying a managerial position with the Globe Grain and Milling Company, they entered into an arrangement whereby Mr. Thomas was to undertake to sell certain prepared sheep feed, referred to in the record as pellets, he to receive one dollar per ton for all pellets sold by him for the company. The company supplied Mr. Thomas with business cards, stationery, company order books, samples, and stamps, and paid the expense of telephone calls by him to the Ogden office. For a period of about three months he was permitted to use an automobile belonging to the company. Thereafter no such transportation was furnished.

The arrangement having been entered into, Thomas engaged a room at the Cullen Hotel. This hotel is generally recognized as a sort of headquarters for sheep and cattle men. There samples of feed were kept by Thomas for exhibition and for inspection by prospective purchasers. Thomas was to pay, and did pay, for his room and all other expenses. He was not required to operate from any particular place. In 1937 he moved to another hotel.

Advances were at times made to him upon orders submitted but not collected for when the purchaser's credit was regarded as good. The company fixed the price at which the pellets were to be sold and all sales made on credit were subject to approval by the company. Orders were taken on company order forms. Sales and shipments were direct to the purchaser from the company plant at Ogden, Utah. Thomas was restricted as to the territory in which he was permitted to operate. During the early part of his connection with the company he was assisted in making contacts and in his sales endeavors by a salaried representative of the...