In re Wilson Sullivan Co.

• Decision Date: 15 October 1942
• Citation: 289 N.Y. 110,44 N.E.2d 387
• Parties: In re WILSON SULLIVAN CO., INC.
• Court: New York Court of Appeals Court of Appeals

289 N.Y. 110

44 N.E.2d 387

In re WILSON SULLIVAN CO., INC.

Court of Appeals of New York.

Oct. 15, 1942.

Appeal from Supreme Court, Appellate Division, Third Department.

Proceeding by Frieda S. Miller as Industrial Commissioner against Wilson Sullivan Company, Incorporated, to determine liability for unemployment insurance contributions under article 18 of the Labor Law, Consolidated Laws, chapter 31. A determination of a referee that the company was liable for payment of the unemployment insurance contributions based on earnings of real estate salesmen was affirmed by the Unemployment Insurance Appeal Board. From an order of the Appellate Division of the Supreme Court in the Third Judicial Department, entered January 16, 1942, 263 App.Div. 162, 33 N.Y.S.2d 203, which reversed decision of the board and held that the salesmen were independent contractor, the Industrial Commissioner appeals.

Affirmed.

DESMOND, J., and LEHMAN, C. J., and LOUGHRAN, J., dissenting. John J. Bennett, Jr., Atty. Gen. (Francis R. Curran, of Poughkeepsie, and Henry Epstein, of Albany, of counsel), for appellant.

Ellis J. Staley, Ellis J. Staley, Jr., and Eugene J. Steiner, all of Albany, for respondent.

FINCH, Judge.

This appeal presents the question whether respondent, a corporation doing business as a real estate broker in the city of Albany, is liable under the unemployment insurance law (Labor Law, art. 18, Cons. Laws ch. 31) to make contributions with respect to commissions earned by its salesmen. The Unemployment Insurance Appeal Board has held that the salesmen are employees and, consequently, that respondent is subject to liability under the law with regard to their earnings. The Appellate Division has unanimously reversed the Appeal Board upon the facts, holding that the evidence shows respondent's salesmen to be independent contractors.

The scope of judicial review in a proceeding such as this is very limited, being confined solely to a determination as to whether or not there is any substantial evidence to support the conclusion of the Appeal Board. Matter of Morton, 284 N.Y. 167, 30 N.E.2d 369. However, upon the record in this case it cannot be seriously contended that there are any facts sufficient to show that the respondent exercises control over either the results produced by its salesmen or the means employed by them to achieve the results. In the absence of evidence to prove control there can be no finding that the relationship between respondent and its salesmen is one of employment. Matter of Beach v. Velzy, 238 N.Y. 100, 103, 104, 143 N.E. 805.

The sole testimony in this case was given by Mr. Wilson Sullivan, president of respondent. From his testimony it appears that the corporation plays the following part in assisting its salesmen to achieve results. The company supplies office and desk space and telephone service, the latter service being paid for from corporation finances. Prospect leads are furnished the salesmen by direction of a sales manager of the corporation. The salesmen are also furnished with stationery and office supplies, and blanks for closing sales.

The salesmen themselves may list property for sale. They have no specific hours, no definite routine to follow, nor calls to make during the day. Reports are not required of them. But they merely submit to the company a record of the sales they actually make, and have the privilege of listing with the company so-called ‘prospect cards' whereby other salesmen are put on notice not to approach a particular man's prospect. Salesmen may operate in a particular territory or not, as they choose, and may engage in other occupations at the same time. One of the salesmen, Casey, is licensed to work not only for respondent but for another broker at the same time. The salesmen are bonded as independent contractors, and their only instructions come from the owners of the property with whom they deal directly.

As already noted, the Department of State has seen fit to license the salesman Casey to work for more than one broker at the same time. Furthermore, the State Insurance Fund has ruled that respondent is not subject to the Workmen's Compensation Law, Cons. Laws, ch. 67, with respect to these salesmen. Finally, by a ruling of the United States Treasury Department, respondent has been held not to be subject to unemployment contributions with respect to salesmen having positions similar to Casey's.

Upon this state of the record there is no substantial evidence upon which to sustain the findings of the Appeal Board. Indeed, a reading of the opinions of the referee and the Appeal Board show that they relied not upon the evidence produced before them, but upon an interpretation of sections 440, 442-a and 442-b of article 12-A of the Real Property Law, Cons. Laws, ch. 50, relating to the licensing of real estate brokers and salesmen. These sections provide that: ‘s 440. * * * ‘Real estate salesman’ means a person employed by a licensed real estate broker to list for sale, sell or offer for sale, * * * to buy or offer to buy or to negotiate the purchase or sale or exchange of real estate, or to negotiate a loan on real estate, or to lease or rent of offer to lease, rent or place for rent any real estate, or collects or offers or attempts to collect rent for the use of real estate for or in behalf of such real estate broker.'

‘s 442-a. No real estate salesman * * * shall receive or demand compensation * * * from any person, other than a duly licensed real estate broker regularly employing the salesman, * * *.’

‘s 442-b. Discontinuance of salesman's employment * * *. The broker shall also return the salesman's license to the department when the salesman's employment terminates by mutual agreement or otherwise, * * *.’

It is the contention of appellant that by referring to salesmen as ‘employees' in the statutes above-quoted, the Legislature has outlawed the common law relationship of independent contractor between broker and salesman and has provided that to obtain a license a man must either be an independent broker or else a salesman in the employ of a broker. It was upon this interpretation of the statute that the Appeal Board found the existence of an employer-employee relationship in this case. It would seem, however, that this statute, even though we could regard it as evidence, is not susceptible of the construction given to it by the appellant and the Appeal Board.

It is a principle of statutory construction that the court should look at the old law, the mischief and the proposed cure and construe the act in question so as to suppress the evil and advance the remedy. People ex rel. Jackson v. Potter, 47 N.Y. 375, 379;Wiley v. Solvay Process Co., 215 N.Y. 584, 588, 109 N.E. 606, Ann.Cas.1917A, 314. The purpose of article 12-A was to assure by means of licensing competency and the observance of professional conduct on the part of real estate brokers and salesmen. As was said by this court in Roman v. Lobe, 243 N.Y. 51, 54, 55, 152 N.E. 461, 462, 50 A.L.R. 1329: ‘The real estate broker is brought by his calling into a relation of trust and confidence. Constant are the opportunities by concealment and collusion to extract illicit gains. We know from our judicial records that the opportunities have not been lost. With temptation so aggressive, the dishonest or untrustworthy may not reasonably complain if they are told to stand aside. Less obtrusive, but not negligible, are the perils of incompetence. The safeguards against incompetence need not long detain us, for they were added to the statute after the services were rendered. We recall them at this time for the light that they cast upon the Legislature's conception of the mischief to be remedied. The broker should know his duty.’

It is quite apparent that to effectuate the purposes of the statute as set out in the above opinion, it is not necessary that we should go so far as to hold that the recognized common law relationship of independent contractor has ben outlawed by the statute. No reason appears why the standards of competency and honesty among real estate salesmen cannot be maintained even though brokers have no control over the salesmen's selling methods. If the statute and the common law rule can stand together, the statute should not be so construed as to abolish the...