Nancy W. Bayley, Inc. v. Maine Employment Sec. Com'n

• Decision Date: 06 March 1984
• Citation: 472 A.2d 1374
• Parties: NANCY W. BAYLEY, INC. v. MAINE EMPLOYMENT SECURITY COMMISSION.
• Court: Maine Supreme Court

Page 1374

472 A.2d 1374

NANCY W. BAYLEY, INC. v. MAINE EMPLOYMENT SECURITY COMMISSION.

Supreme Judicial Court of Maine.

Argued Nov. 15, 1983.

Decided March 6, 1984.

Preti, Flaherty & Beliveau, Thomas R. Kolb (orally), Martin R. Johnson, Portland, for plaintiff.

James E. Tierney, Atty. Gen., Susan P. Herman (orally), Rufus E. Brown, Thomas W. Saturley, Peter H. Stewart, Asst. Attys. Gen., Augusta, for defendant.

Before McKUSICK, C.J., and NICHOLS, ROBERTS, WATHEN, GLASSMAN and SCOLNIK, JJ.

SCOLNIK, Justice.

The petitioner, Nancy W. Bayley, Inc., appeals from a judgment in the Superior Court (Cumberland County), affirming a decision by the Maine Employment Security Commission that the corporation owed $4,318.35 for wages paid in employment during the period from July 1, 1978, to June 30, 1979. The corporation owned a fishing vessel that required the services of a captain and crew, as well as stevedores, known as "lumpers," to off-load the catch. The Commission determined that the captain, crew, and lumpers were all employees of the corporation for the purposes of assessing the corporation's unemployment compensation tax liability. On appeal, the corporation argues, inter alia, that the captain and crew were engaged in a joint venture with the corporation. Because we conclude that the Commission failed to employ the appropriate standard for determining the existence of a joint venture, we vacate the judgment and remand to the Superior Court for remand to the Commission for additional findings of fact.

Nancy W. Bayley, Inc., is a Delaware corporation with a place of business in Cape Elizabeth. Its principal asset is a seventy-nine ton fishing vessel called the Nancy W. Bayley. On October 19, 1979, a Field Advisor and Examiner for the Unemployment Compensation Tax Division determined that the corporation was a subject employer pursuant to 26 M.R.S.A. § 1043(9)(B). ¹ By assessment, the Division then determined that the corporation owed $4,318.35 in contributions, based upon taxable wages paid from July 1, 1978, to June 30, 1979. The corporation filed a timely appeal to the Commission, and an evidentiary hearing was held on February 24, 1981.

Before the Commission, the corporation argued, as it does on appeal, that the captain and crew were engaged in a joint venture with the corporation, and that the lumpers were independent contractors. In its decision, the Commission found that there was a division of responsibility with respect to the vessel. The corporation was responsible for maintenance and repair, and for selecting the captain for each trip. The captain selected the crew, and had complete command of the vessel once it was underway. He determined where the vessel would fish, what the catch would comprise, and where the catch would be sold. He was responsible for engaging lumpers at the wharf to off-load the catch.

The Commission determined that the captain and crew were compensated by a share arrangement with the owner. Fifty percent of the gross receipts for each trip went to the owner, and fifty percent, less the costs of the trip, was divided between captain and crew. Compensation was not guaranteed, and if the costs exceeded the portion allocated to the captain and crew, those costs would be carried forward to succeeding trips. The lumpers were paid by the purchasers of the catch, who would deduct that amount from the price paid for the catch.

The Commission ruled that there was no joint venture, observing that the captain and crew did not formally lease the vessel from the corporation, that neither the captain, the crew, nor the corporation filed partnership tax returns, and that no formal written joint venture agreement had been signed. The Commission then determined that the vessel did not come under the "small boat exemption" provided under 26 M.R.S.A. § 1043(11)(F)(32), ² since the weight of the vessel exceeded the ten ton maximum. It subjected the captain, crew, and lumpers to the so-called ABC test provided for under 26 M.R.S.A. § 1043(11)(E), ³ and concluded that the services performed by all three were performed in "employment" for the corporation. It therefore affirmed the assessment of a tax liability of $4,318.35.

The corporation appealed the decision to the Superior Court pursuant to 5 M.R.S.A. § 11001 and M.R.Civ.P. 80B. ⁴ The court adopted the findings of fact of the Commission, ruling that they were fully supported by the evidence, and proceeded to review its conclusions of law. It found that, although the captain and crew were compensated on a share basis, it was undisputed that the Nancy W. Bayley exceeded ten tons, and therefore it was not exempt under section 1043(11)(F)(32). Unlike the Commission, the court did not subject the captain and crew to the ABC test, but instead ruled that their services automatically constituted employment under 1043(11)(F)(32). It did subject the lumpers to the ABC test, finding that the corporation had failed to carry its burden with respect to the "control" prong of the test, 26 M.R.S.A. § 1043(11)(E)(1). It therefore affirmed the decision of the Commission, and the corporation appeals.

Since the Superior Court based its ruling solely on the agency's record without receiving additional evidence, we will review the agency's decision and not that of the Superior Court. Keith v. Saco River Corridor Comm'n, 464 A.2d 150, 153 (Me.1983); Driscoll v. Gheewalla, 441 A.2d 1023, 1026 (Me.1982). Our standard of review is the same as that employed by the Superior Court. Driscoll, 441 A.2d at 1026. "[O]ur role on appeal is 'limited to assuring that the [commission's] factual findings are supported by competent evidence, that [its] decision involved no misconception of applicable law and that the application of the law to the facts was neither arbitrary nor without rational foundation.' " Comeau v. Maine Coastal Services, 449 A.2d 362, 368 (Me.1982) (quoting Hall v. State, 441 A.2d 1019, 1021 (Me.1982)). Thus, a misapplication of the law to the facts will constitute reversible error, Wright v. Superintending School Comm., City of Portland, 331 A.2d 640, 646 (Me.1975), and if an agency fails to make adequate findings of fact, the Court may remand for findings that would permit meaningful judicial review, Harrington v. Inhabitants of the Town of Kennebunk, 459 A.2d 557, 561 (Me.1983); see also P.H. Chadbourne & Co. v. Inhabitants of the Town of Bethel, 452 A.2d 400, 406-08 (Me.1982) (Carter, J., dissenting).

The petitioner maintains, as it did before the Commission, that the captain and crew of the Nancy W. Bayley were engaged in a joint venture with the corporation. A joint venture is an association between two or more individuals or entities who agree to pool their efforts and resources to jointly seek profits. Honeycomb Systems, Inc. v. Admiral Ins. Co., 567 F.Supp. 1400, 1409 (D.Me.1983); Simpson v. Richmond Worsted Spinning Co., 128 Me. 22, 29, 145 A. 250, 253 (1929). It is similar to a partnership, although it is generally more limited in scope and duration. Honeycomb, 567 F.Supp. 1409; Simpson, 128 Me. at 29-32, 145 A. at 254-55. Like a partnership, a joint venture is ex contractu, and its existence may be established by proving the elements of a contract. Simpson, 128 Me. at 29-30, 145 A. at 254. Such a contract may be express or implied, and the finder of fact must consider the conduct of the parties and the surrounding circumstances before reaching a conclusion as to their intent. "The whole scope of the arrangement must be examined and each of its parts considered in relation to all the other parts to ascertain the real intent of the parties." Simpson, 128 Me. at 30, 145 A. at 254.

The Commission heard testimony from two of the captains that had worked on the Nancy W. Bayley that would support the conclusion that the captain and crew were engaged in a joint venture with the corporation. The chief and the assistant chief of the Unemployment Compensation Tax Division testified that, although joint venture status would put the corporation beyond the reach of 26 M.R.S.A. § 1043, it was Division policy to concede the existence of a joint venture only where there is written evidence of the arrangement, and that, typically, such evidence would be in the form of a lease of the corporation's vessel or the filing of partnership income tax returns.

Under Maine law, a writing is not indispensable to the creation of a joint venture. See Simpson, 128 Me. at 30, 145 A. at 254. The policy of the Division, as articulated at the hearing before the Commission, is therefore not in accordance with Maine law. Yet the Commission, in rendering its decision, cites only the lack of written evidence to support its finding that there was no joint venture. Without evaluating the credibility of the captains' testimony, it stated that "[t]here is no formal legal entity such as a partnership, or joint venture partnership, between the Corporation and the captain and crew. There is no formal lease between the Corporation and the captain and crew. There are no partnership tax returns filed by the corporation and the captain and crew. There is no separate account for the disbursement of compensation for the captain and crew. The crew members sign no formal joint venture agreement with the captain, nor do the captain and crew sign any formal joint venture agreement with the Corporation." As we observed in Simpson, the paramount issue is the intent of the parties, and "[t]he whole scope of the arrangement must be...