Moore v. Idaho Employment Sec. Agency

• Decision Date: 18 December 1961
• Docket Number: No. 8996,8996
• Citation: 84 Idaho 1,367 P.2d 291
• Parties: Carl C. MOORE and/or Allied Mutual Funds, Inc., Plaintiff-Appellant, v. IDAHO EMPLOYMENT SECURITY AGENCY, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 291

367 P.2d 291

84 Idaho 1

Carl C. MOORE and/or Allied Mutual Funds, Inc., Plaintiff-Appellant, v.IDAHO EMPLOYMENT SECURITY AGENCY, Defendant-Respondent.

No. 8996.

Supreme Court of Idaho.

Dec. 18, 1961.

Eli Rapaich, Lewiston, for appellant.

John W. Gunn, Boise, Legal Counsel for Employment Security Agency.

McQUADE, Justice.

This appeal is taken from an order of the Industrial Accident Board which concluded from the uncontroverted facts of the case that as a matter of law agents of the corporation were employees and not independent contractors.

Allied Mutual Funds, Inc., which will be abbreviated herein as 'AMFI,' is a Washington corporation engaged in the business of selling shares in mutual funds.Being engaged in interstate commerce, AMFI is supervised by the Securities and Exchange Commission under federal laws and regulations.

Pursuant to federal laws and regulations, AMFI is required to be a member of the National Association of Security Dealers.Each broker or dealer, as a member of this association, must have each agent, employee, salesman, or other person handling money or securities of a patron or client registered as a representative of the association, and requires its of the association, and requires its salesmen to be registered as representatives.

Although the corporation has an ambitious structural division for its operation, we are concerned with its organization under which it is currently operating.

In 1959, Carl C. Moore acquired all of the corporation stock except two shares, and became president.One of the shares is in the name of his wife, who was elected secretary-treasurer, and the other is held by Everett Kytonen, who is vice president.These three constitute the board of directors.Moore is now designated as division manager of the Lewiston, Idaho, division, under whom there is one active salesman.

At the time of the Industrial Accident Board hearing, no officer of the corporation was receiving a salary.Moore represented that all he could expect as a benefit from the corporation itself would be dividends on the common corporate stock.Commissions were received and distributed by the corporation according to a written agreement.A six per cent commission was received by AMFI on all consummated sales of shares in mutual funds.Subject to some modification, the division manager receives a four and one-half per cent commission on all sales he makes, and one per cent on all sales made by individual salesmen.A full-time salesman receives a three and one-half per cent commission on all sales which he makes.After these remunerations, the one and one-half per cent balance of the six per cent commission is used by the corporation for its expenses.Any sum over expenses is subject to control of the directors.The relation between AMFI and its salesmen is defined in a written agreement.Pertinent portions of this agreement are as follows:

A.Basic agreement.The salesman agrees to act as a sales representative in a prescribed territory and to pursue this representation diligently.

B.Remuneration by commissions.The commission for sales is to be paid on the tenth and twenty-fifth of each month.

C.Limited authority.Under the agreement, the salesman has no authority to do any act not specifically authorized.

D.License fees and bond.The salesman pays $50 in consideration of his application for membership in the National Association of Security Dealers for his license and bond.

E.Agreement with distributor.A selling agreement which AMFI negotiates with the distributor of mutual fund shares is made a part of the AMFI sales agreement.

F.Company and governmental regulations.The salesmen and representatives must comply with the AMFI information manual, rules of the National Association of Security Dealers, rules and regulations of the S. E. C., applicable federal laws, and state regulatory statutes.The salesmen and representatives agree to make no representations other than those authorized by the listed mutual funds, by AMFI, and any other permissible representations.

G.Sales training program.To a slight degree, AMFI makes available a sales training program.This was represented by Moore to be largely for compliance with rules, regulations, and laws.

H.Sales information and supplies.AMFI supplies some sales material and provides lists of prospects, all without charge.Some sales assistance may be provided under certain circumstances.

I.Bookkeeping.All moneys collected are transmitted to AMFI, which keeps records of all sales and commissions.

J.Employment of others.The salesmen or representatives shall have no authority to employ others.

K.Termination of agreement.This agreement may be canceled by either party, and revocation is mandatory when a representative or salesman is in violation of any rules, regulations, or laws applicable to the conduct of AMFI's business.

Other than the assistance outlined in the sales agreement, no further aid is rendered to AMFI representatives or salesmen by way of stenographic aid, car expenses, advancements, office space, or other items.There is no regulation as to hours of employment, persons to be contracted, nor quota of sales to be consummated within any given period.Customer accounts developed belong exclusively to the developing representative during the period of his employment with AMFI.

The Industrial Accident Board found that Carl C. Moore and the one salesman were employees of AMFI and not independent contractors.

There is no controverted issue of fact in the record, thus presenting the question as to whether the exhibits and testimony support the findings of the Industrial Accident Board that Carl C. Moore and the one salesman are employees of AMFI.

In determining...