Larry's Post Co., Inc. v. Unemployment Ins. Div., Contributions Bureau, 88-510

• Decision Date: 18 July 1989
• Docket Number: No. 88-510,88-510
• Citation: 238 Mont. 190,777 P.2d 325,46 St.Rep. 1193
• Parties: LARRY'S POST COMPANY, INC., Appellant, v. UNEMPLOYMENT INSURANCE DIVISION, CONTRIBUTIONS BUREAU, Respondent.
• Court: Montana Supreme Court

Page 325

777 P.2d 325

238 Mont. 190

LARRY'S POST COMPANY, INC., Appellant, v. UNEMPLOYMENT INSURANCE DIVISION, CONTRIBUTIONS BUREAU, Respondent.

No. 88-510.

Supreme Court of Montana.

Submitted on Briefs Feb. 3, 1989.

Decided July 18, 1989.

C. Eugene Phillips, Murphy, Robinson, Heckathorn and Phillips, Kalispell, for appellant.

Karl Nagel, Dept. of Labor & Industry, Helena, for respondent.

HUNT, Justice.

Larry's Post Company, Inc. appeals from a judgment of the District Court of the Eleventh Judicial District, Flathead County, which affirmed the determination of the Board of Labor Appeals that services performed by individuals who contracted with Larry's to harvest timber constituted employment within the meaning of the unemployment insurance laws. We affirm.

Larry's raises the following issues on appeal:

1. Were the facts found by the appeals referee and adopted by the Board of Labor Appeals supported by the evidence?

2. Do the facts substantiate the finding of an employment relationship for the purpose of unemployment insurance?

Appellant Larry's Post Company, Inc. operated a post yard in Flathead County near Columbia Falls. It was engaged in the business of procuring, cutting, pointing, curing, treating and selling fence posts, poles and rails.

Larry's arranged with landowners to cut and remove timber from certain private properties. In exchange for the right to harvest timber, Larry's paid each landowner a stumpage fee.

When the right to harvest a particular tract was procured, Larry's contracted with woodcutters to cut and remove the timber. Tom Finch, whose claim for unemployment insurance benefits initiated this matter, contracted with Larry's to cut timber for approximately four weeks in 1986. Finch performed services for Larry's after quitting his job at the Superior Lumber Mill and while awaiting the completion of contractual arrangements with the state of Montana to begin harvesting timber on state lands.

Although Larry's usually executed written contracts with its woodcutters, a written contract was not entered into with Finch. The evidence indicates, however, that Larry's dealt with Finch on the same terms that it dealt with woodcutters who signed written agreements.

Each cutting agreement granted the woodcutter the exclusive privilege of cutting post and pole timber from areas designated by Larry's. The woodcutter was required to conform to performance specifications stipulated by the contract, the landowner and statutes. Any failure to conform to these specifications constituted cause for termination.

The woodcutters were allowed to set their own hours. They could also provide services to others, although no evidence was submitted showing that any woodcutter was under contract with any other firm while under contract with Larry's.

The woodcutters were permitted to hire assistants or subcontract out all or part of the work. Tom Finch was assisted by his son, whom he paid for that assistance. However, no evidence was introduced regarding whether Finch or any other woodcutter paid employment taxes or whether they withheld taxes from the earnings of their assistants or subcontractors.

The woodcutters were permitted to sell to other buyers the timber cut under the contract with Larry's. When a woodcutter sold his posts and poles to another, he was obliged to pay stumpage fees to Larry's.

Larry's paid the woodcutters on a regularly scheduled basis--every two weeks--for cut posts and poles. All contractors were paid the same rate. The woodcutters did not negotiate prices, nor was the work awarded on the basis of competitive bids. Certain costs, including stumpage fees paid to the landowner, were deducted from each woodcutter's paycheck.

The woodcutters provided their own transportation to and from the cutting site. They also furnished their own tools and equipment, usually a chain saw and other tools common to the woodcutting trade. However, if a woodcutter did not own the appropriate tools, he could rent them from Larry's. The rental cost was deducted from his paycheck.

Other than equipment and transportation, the woodcutters did not make a significant investment in the job. They did not purchase stumpage prior to harvest; they paid only for the stumpage they cut; they were under no liability if they were unwilling or unable to complete their contracts; they faced little opportunity for profit or loss other than their success or failure in performing efficiently.

Each contract provided that the agreement could be terminated at any time by either party. Tom Finch's agreement with Larry's ended in June, 1986, when the property on which he was working was sold by the landowner and was no longer available for timber harvesting. From that time until September, 1986, Finch was self-employed, buying stumpage and cutting timber on state lands.

In October, 1986, Finch filed a claim for unemployment insurance benefits. His claim was denied because he left the Superior Lumber Mill to engage in self-employment. In November, 1986, he sought a redetermination of the claim, this time including his earnings from Larry's as requalifying wages. The Unemployment Insurance Division then initiated an investigation, resulting in the Division's determination that, as the services performed by Finch for Larry's constituted employment, he was eligible for unemployment insurance benefits.

In May, 1987, Larry's appealed the decision. A hearing was held before an appeals referee from the Department of Labor and Industry. The appeals referee also concluded that the work performed by Finch constituted employment.

In August, 1987, Larry's again appealed, this time to the Board of Labor Appeals. In the absence of a request for oral argument, the Board reviewed the matter and affirmed the referee's decision.

Larry's then sought judicial review of the determination. After briefing, the District Court dismissed the petition and affirmed the agency decision. Larry's appeals to this Court.

The standard of review of decisions by the Board of Labor Appeals is set out in § 39-51-2410(5), MCA, which provides in pertinent part:

(5) In any judicial proceeding under 39-51-2406 through 39-51-2410, the findings of the board as to the facts, if supported by evidence and in the absence of fraud, shall be conclusive and the jurisdiction of said court shall be confined to questions of law.

Thus, as mandated by statute, we are bound by those facts found by the Board of Labor Appeals that are supported by the evidence. "Supported by the evidence" means supported by substantial evidence, that is, more than a scintilla of evidence but less than a preponderance. Gypsy Highview Gathering Sys. v. Stokes (1986), 221 Mont. 11, 15, 716 P.2d 620, 623.

Larry's argues that several of the findings made by the appeals referee and adopted by the Board are not supported by the evidence. Specifically, Larry's refers to those findings in which the appeals referee stated that no evidence was presented regarding certain matters. Larry's argues that "no evidence" is not the same as "substantial evidence" and cannot be the basis of any finding of fact.

The so-called "non-findings" that Larry's challenges are:

[T]here was no evidence...