Life & Cas. Ins. Co. Of Tenn. v. Unemployment Comp. Comm'n Of Va.

• Decision Date: 10 September 1941
• Citation: 16 S.E.2d 357
• Court: Virginia Supreme Court
• Parties: LIFE & CASUALTY INS. CO. OF TENNESSEE. v. UNEMPLOYMENT COMPENSATION COMMISSION OF VIRGINIA.

16 S.E.2d 357

LIFE & CASUALTY INS. CO. OF TENNESSEE.

v.UNEMPLOYMENT COMPENSATION COMMISSION OF VIRGINIA.

Supreme Court of Appeals of Virginia.

Sept. 10, 1941.

Appeal from Hustings Court of Richmond; J. L. Ingram, Judge.

Action by the Unemployment Compensation Commission of Virginia, etc, against the Life and Casualty Insurance Company of Tennessee to enforce contributions by defendant under provisions of the Unemployment Compensation Act on earnings of soliciting agents of the defendant. From an adverse decree, defendant appeals.

Affirmed.

Argued before CAMPBELL, C. J, and HOLT, HUDGINS, GREGORY, BROWNING, EGGLESTON, and SPRATLEY, JJ.

Denny, Valentine & Davenport, of Richmond, for appellant.

Abram P. Staples, Atty. Gen, and Kenneth C. Patty, Asst. Atty. Gen, for the Commonwealth.

GREGORY, Justice.

Life and Casualty Insurance Company of Tennessee has appealed from a decree of the Hustings Court of the city of Richmond in which it was held liable under the provisions of the Virginia Unemployment Compensation Act for contributions on the earnings of one Ballowe and its other agents of the same grade or class operating within Virginia for the years 1937, 1938 and 1939.

This proceeding had its inception in the resignation of Ballowe requested by the appellant because of the former's misconduct. He had been, prior to his resignation, an industrial life insurance agent for the appellant. After resigning he filed his claim with the Virginia Unemployment Compensation Commission for benefits under the act. The commission held that Ballowe and all other agents of the appellant of the same grade or class were in the employment of the appellant, and, therefore, it was required to file with the commission a report of all wages paid these agents for the years named and to make contributions accordingly. The Hustings Court, upon appeal, affirmed the decision of the commission. The case has now reached this court for final disposition on appeal in accordance with the provisions of section 1887(98) (i), of the 1938 Supplement to the Virginia Code of 1936 (Michie).

The findings of fact by the Commission are as follows:

"1. The contract between the claimant and the company contains the following language in paragraph 14:

" 'The agent has been duly licensed by the State to follow the profession of Licensed Insurance Agent, and shall be construed to be an Independent Contractor, his compensation being what he can realize from his efforts under the above Schedule. Both the Company and the agent are interested only in the results to be produced by this contract. Any practices, or procedure adopted relating to the execution ofthis contract are solely for the purpose of a more efficient conduct of the business in order to produce results mutually beneficial.'

"2. The claimant was compensated on a commission basis, based upon a schedule set forth in the contract, with a drawing account of $20.00 per week, plus an allowance of $1.50 per week expense, which $20.00 per week was an advance against earned commissions, and not a salary in its ordinary meaning. However, the company makes no attempt to collect back any portion of this advance that may not be absorbed by earned commissions.

"3. Claimant was handed a 'debit' at the time he entered into his contract. A 'debit', as we understand the term, is a list of policyholders, showing the amount of weekly premium due by each, and the agent is responsible for the collection of the premiums shown on said list. New policies written by the agent are added to this list. The agent's success as a money maker depends upon his ability to increase the business shown on the debit--the premiums receivable. The debit assigns the territory to be worked by the agent. However, if a policyholder moves from that territory to another, the agent is free to continue to service the policy or transfer the debit to another agent. The agent is also at liberty to solicit business in territory in Virginia outside the area prescribed by the debit.

"4. There is attached to the Richmond office a District Manager, who is in charge of the company's business in the area served by said office, and, under his supervision, supervisors or superintendents are employed, available to the agents as advisors or assistants.

"5. The office of the company is open each morning at 8:00 a. m. and while it may not be compulsory by rule of the company for the agents to report at the office at that time, it is clear that a strong effort is made to induce them to report. The claimant stated, and it is not contradicted, that when he was unable to report at the office by 8:00 a. m., he would telephone the office and explain why he was detained.

"6. The agent is required to file, at least once each week, a report of business obtained and collections made.

"7. From time to time staff meetings are held at which the agents are urged to be present. It does not appear, however, that the agents are compelled to attend these meetings--that is, it is not shown that absence from these meetings is considered, by itself, sufficient ground to warrant a discharge from the service.

"8. When an agent resigns, or is otherwise separated from the company, he is required to make a final settlement and surrender to the company the 'debit' or list of accounts charged to him.

"9. Upon entering the service of the company the agent is required to post a bond of $100.00 to indemnify the company against loss or misappropriation of money collected by him.

"10. There is established and maintained in the agency a 'Boosters' Club' made up of the personnel of the agency, including agents of the grade and class as the claimant, and each member of this club is assessed a fine of ten cents by the club upon his failure to be at the office at 8:00 a. m. The 10¢ collected from each tardy individual does not go into the company's fund but is kept separately in the company's vault for the benefit of the club. This money is used to buy flowers for the sick, etc. This organization unquestionably has the sanction and approval of the company.

"11. The company furnishes the agent rate books, forms and all material necessary to carry on the business assigned to him.

"12. The agent is permitted to sell 'ordinary life' policies, and is required to collect premiums and renewal premiums on such policies sold by him.

"13. All applications for insurance must be approved by the home office of the company."

The appellant concedes that all of the findings of fact, except number 12, are supported by the evidence. We think number 12 is also supported by the evidence, but if not supported, it does not affect the ultimate decision of the case.

The act prior to the amendment of 1940 controls here. It was amended in 1938 (see Acts 1938, Chap. 446, page 1004), and the pertinent portion is carried in the 1938 Supplement to the Code of 1936 as section 1887(94) (j) (1). It reads in part as follows: "Subject to the provisions of this subsection (j) 'employment' means service, including service in interstate commerce, performed for remuneration or under any contract of hire, written or oral, express or implied".

The foregoing definition is qualified as follows (see Code, section 1887(94) (j) (6), 1938 Supplement): "Services performed by an individual for remuneration shall be deemed to be employment subject to this chapter unless; (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; or such individual, in the performance of such service, is engaged in an independently established trade, occupation, profession or business."

We have for determination under the Virginia Unemployment Compensation Act the relation existing between the insurance company and Ballowe and the other agents of the Life and Casualty Insurance Company of the same grade or class operating in Virginia during 1937, 1938 and 1939. If they were in the "employment" of the insurance company within the meaning of the Virginia Unemployment Compensation Act the insurance company is liable for the contributions or payroll taxes, as specified in the act, on the wages earned by these agents for the years mentioned.

Code Supp. section 1887(94) defines the meaning of many of the words and terms of the statute. "Contributions" means the taxes imposed and collectible under this statute. "Employing unit" means any individual or type of organization, including any partnership, association, trust, estate, joint-stock company, insurance company, etc. "Employer" means any employing unit which has had for a specified time, eight or more persons "in employment". We have already noted that "employment" means services performed by an individual for remuneration. "Wages" means all remuneration payable for personal services, including commissions, bonuses, etc.

The statute in express terms mentions and comprehends insurance companies as "employing units", and "commissions", the usual mode of compensating insurance agents, as wages.

The appellant contends that the Virginia Unemployment Compensation Act is nothing more than declaratory of the common law or rather a legislative definition of the common law concept of master and servant and independent contractor; that the statutory definition of "employment" is simply the adoption by the legislature of the common law definition of servant contained in the law of master and servant, and that the insurance agents involved here are not servants as defined by the common law, but independent contractors. With this we do not agree.

The agents have performed service for remuneration under a contract of hire and such service is deemed to be "employment" subject to the act,...