McKinley v. R. L. Payne & Son Lumber Company

• Decision Date: 08 July 1940
• Docket Number: 4-6091
• Citation: 143 S.W.2d 38,200 Ark. 1114
• Parties: MCKINLEY, COMMISSIONER OF LABOR, v. R. L. PAYNE & SON LUMBER COMPANY
• Court: Arkansas Supreme Court

143 S.W.2d 38

200 Ark. 1114

MCKINLEY, COMMISSIONER OF LABOR, v. R. L. PAYNE & SON LUMBER COMPANY

4-6091

Supreme Court of Arkansas

July 8, 1940

Appeal from Hot Spring Chancery Court; Sam W. Garratt, Chancellor reversed.

Reversed and cause remanded.

Walter L. Pope, for appellant.

Glover & Glover, for appellee.

Rowell Rowell & Dickey, amicus curiae.

OPINION

MEHAFFY, J.

This action was instituted by the appellee, R. L. Payne & Son Lumber Company, against the appellants, alleging that appellee is a partnership located at Malvern, Arkansas; that on September 7, 1939, Eli W. Collins, director of Unemployment Compensation Division of the State Department of Labor, of the State of Arkansas, without right or authority of law had placed upon the records of Hot Spring county, Arkansas, by the circuit clerk, W. W. Beeson, the following certificate of assessment of unemployment compensation contributions, and declaring same to be a judgment against appellee:

"To the Clerk of the Circuit Court of Hot Spring County, Arkansas:

"I, Eli W. Collins, Director of the Unemployment Compensation Division of the Department of Labor of the State of Arkansas, hereby certify:

"That on the 9th day of June, 1939, I certified to the Commissioner of Labor of the State of Arkansas, an assessment of delinquent unemployment compensation contributions past due and unpaid by R. L. Payne & Son Lumber Company of Malvern of the county of Hot Spring, State of Arkansas; and on said date delivered a copy of said assessment to said R. L. Payne & Son Lumber Company.

"I further certify that ten days has expired since said certification to said commissioner and delivery to said delinquent taxpayer, and I now hereby certify to you, as clerk of the said circuit court, that the amount of the said delinquent unemployment compensation contributions due by the said R. L. Payne & Son Lumber Company is $ 175.23.

"Witness my hand as such director on the 4th day of August, 1939.

"Eli W. Collins, Director,

Unemployment Compensation Division

Department of Labor of the State of

Arkansas."

Appellee further alleges that it was never notified, either by Collins or McKinley, Commissioner of Labor, that it was due them any assessment, and denies that on the date stated there was delivered a copy of said assessment to it; denies that they owe anything, and alleges that Collins and McKinley, wrongfully and without any right or authority, charged to it compensation which, if due at all, was due from the independent contractor, George Bailey; that said George Bailey was an independent contractor and the said appellee had nothing whatever to do with controlling his labor, the hiring or firing of them, and that it was only interested in carrying out the independent contract, and that appellee is not responsible for any tax whatever. Appellee further alleges that § 15 of act 200 of 1939 and § 14 of said act, being § 8562 of Pope's Digest as amended by adding § (e), is unconstitutional and void. It is further alleged that the act of the director would be in violation of art. 2, § 7, of the bill of rights of the Constitution of the State of Arkansas; that act 200 of 1939 and each section and subdivision is unconstitutional and void; that the judgment is void and should be canceled and set aside. The prayer is for the court to set aside the judgment and declare the same void.

Appellants filed motion to dismiss, and without waiving their rights under said motion, they filed an additional motion to dismiss for failure to comply with § 15 of act 200 of the Acts of 1939. Also appellants filed the certificate of assessment of unemployment compensation contributions. Appellants then filed answer and cross-complaint. In the answer they deny all material allegations of the complaint, and for cross-complaint state that they are entitled to recover from the appellee the amount of unemployment compensation set out in the certificate of assessment filed in the court. They pray for judgment that the complaint of plaintiffs be dismissed and that they have judgment for any and all amounts that are due and unpaid. An amendment to the cross-complaint was thereafter filed; that, in addition to compensation tax set out in the certificate, there was due from appellee the sum of $ 18.58, tax on the wages paid to George Bailey for services performed as an employee.

The appellee filed answer and cross-complaint denying the allegations of appellants' cross-complaint.

The court entered a decree which recited that upon oral testimony heard before the court, it found all the issues of fact and law in favor of the appellee and against the appellant. The court overruled the motions of appellants, and dismissed them; that the judgment against the appellee for $ 175.23 be set aside and declared void and of no effect. The case is here on appeal.

The first unemployment compensation law was passed by the Arkansas Legislature in 1937, and is found in §§ 8549 to 8569 of Pope's Digest. This act was amended by act 200 of the Acts of 1939.

The appellee contends that he is not liable, and says: first, that no notice was ever given; second, that George Bailey was an independent contractor; third, that the act is unconstitutional because it violates art. 14 of the United States Constitution, as taking property without due process of law; fourth, that the act is unconstitutional because it violates art. 2, § 7, of the Bill of Rights; fifth, the act is unconstitutional because it violates art. 2, § 17, of the Constitution of the State of Arkansas.

The evidence shows that the Payne Lumber Company had notice. It is undisputed not only that letters were written, but that the director had several conversations with Mr. Payne, the owner of the lumber company, and the undisputed proof shows that he contended all the time that he was not liable because he said George Bailey was an independent contractor, and that he did not intend to pay unless he had to do so.

George Bailey, the evidence shows, was an ignorant colored man, and Mr. Payne testifies that Bailey had no education, and other testimony shows that he was "just an ordinary lumber stacker." The employee who had charge of the stacking of lumber before Bailey was employed was a white man named Parker, and Mr. Payne testifies that he had the same kind of contract that Bailey had; that he discharged him, and afterwards he discharged Bailey. It is true Mr. Payne said that if he had any complaint he went to Bailey and not to the men. The master would do that if Bailey had been a foreman, which it appears from the evidence he actually was. Payne not only retained the right to discharge him, but he controlled the manner of his work so as to prevent the lumber from getting blocked and close to the mill; he would order Bailey to keep it going. The bookkeeper for the Payne Lumber Company kept the books and the payroll for Bailey and his men and there was no charge for this service.

While Mr. Payne calls Bailey an independent contractor, the evidence conclusively shows that he was a mere employee, and that Payne had the right not only to control him so as to prevent lumber being blocked, but had the right to discharge him. But whether he would be classed as an independent contractor under the common law, we think, is immaterial because under the Unemployment Compensation Act he was an employee.

Section 8550 of Pope's Digest provides that the term "employment," subject to the other provisions of this subsection, means ...