O'Neill v. Martori

• Decision Date: 27 December 1949
• Docket Number: No. 5203,5203
• Parties: O'NEILL et al. v. MARTORI et al.
• Court: Arizona Supreme Court

Page 994

212 P.2d 994

69 Ariz. 270

O'NEILL et al. v. MARTORI et al.

No. 5203.

Supreme Court of Arizona.

Dec. 27, 1949.

H. S. McCluskey, Phoenix, attorney for appellant The Industrial Commission of Arizona, Robert E. Yount, Phoenix, and Donald J. Morgan, Phoenix, of counsel.

Jennings, Strouss, Salmon & Trask, J. A. Riggins, Jr., Henry S. Stevens, Rex H. Moore, Phoenix, attorneys for appellees.

UDALL, Justice.

The Industrial Commission of Arizona (appellant-defendant) has appealed from a judgment of the Superior Court of Maricopa County in which the court set aside and vacated certain findings of fact and orders theretofore entered by the Commission in re policy No. 12452 issued to appellees, Martori Bros., Distributors.

The appellees (plaintiffs below), a copartnership, are growers and shippers of agricultural products and as such are employers subject to the Arizona Workmen's Compensation Act. A.C.A. 1939, § 56-901 et seq. Their agricultural operations were fully covered by a continuing policy of insurance (0006 classification) issued to them by the Commission some three years prior to the commencement of this action. The Commission, being dissatisfied with pay roll reports submitted and premiums paid by appellees, made an investigation of their books whereupon it issued an order, dated December 17, 1947, assessing additional premiums in the sum of $11,761.23 against said employer. These premiums were assessed upon the theory that the employer had in its employ additional employees whose wages had not been reported for premium purposes. The employer denied that it was liable for this additional premium, insisting that the pay roll used by the Commission was made up of employees of independent contractors who were expressly excluded from coverage under the terms of the policy of insurance. The issue, therefore, was whether the pay roll classifications used were those of its employees or the employees of independent contractors.

The employer resisted the order and under the provisions of Section 56-908, A.C.A. 1939, moved for a rehearing asserting that the Commission had exceeded its jurisdiction. A hearing was granted and certain minor items of the billing were eliminated, following which the Commission, on April 30, 1940, reaffirmed its previous order, entered a further order demanding payment of premium and made findings of fact and an order in relation thereto. Appellees, on May 13, 1948, commenced an action in the Superior Court to vacate both of said orders; the Commission filed an answer and the parties then stipulated that the cause should be submitted to the Court for decision upon the pleadings and the transcript of the record as heretofore submitted to the Superior Court and filed in the cause by the defendants, together with the supplemental record filed in said cause by the defendants. After the matter had been fully briefed and argued, judgment was entered for appellees, setting aside the Commission's findings and orders. This appeal followed.

The rather voluminous record presented to the Superior Court consisted of the Commission's complete file, including the transcript of the testimony of the only three witnesses interrogated, i.e., Joseph Martori and Frank Condello, two members of the partnership, and Paul E. Plummer, an auditor and investigator for the Commission. Both the trial court and the Commission had the benefit of numerous pronouncements of this court as to the proper legal tests to apply in distinguishing independent contractors from employees, Industrial Commission v. Meddock, 65 Ariz. 324, 180 P.2d 580, and Blasdell v. Industrial Commission, 65 Ariz. 373, 181 P.2d 620, being two of the latest decisions. We see no occasion to either restate these legal principles or to set out at length the evidence adduced at the hearing.

The Commission takes the position that it had the right to, and did, reject the testimony of the employer that the persons for whom the Commission is now claiming the additional premiums were employees of independent contractors. It asserts that its findings, conclusions of law and orders were based upon the statutes, rules and orders of the Corporation Commission, rules incorporated in its policy of insurance, the testimony of its auditor, its audit reports, certain claims for compensation benefits theretofore paid under said policy, and the reasonable inferences to be drawn from the whole thereof. It contends that the findings of fact of the Commission, if supported by competent evidence, must be affirmed by the Superior Court unless the trial court can say as a matter of law that the findings and the order of the Industrial Commission are unreasonable and unlawful and without reasonable support in the evidence, regardless of the fact that the Court may entertain different views as to the weight of the evidence. Obviously the Commission is seeking to invoke the rule used by us in deciding the validity of its awards in compensation cases.

Appellees, on the other hand, maintain that the evidence shows, if not conclusively at least by a great preponderance, that the relationship between the appellees and the persons for whom premiums are now claimed due was not that of employer-employee, but that of an independent contractor. Under such circumstances appellees assert that the Superior Court in this statutory proceedings is not bound by any presumption as to the correctness of the Commission's findings, but is at liberty to decide the matter in accordance with its own best judgment as to the evidence presented. The question presented then is whether, when the validity of an 'order' of the Commission is involved, the judgment of the Commission, or the judgment of the trial court shall control. This presents a question of first impression in this jurisdiction. The answer to the problem must necessarily be found in an interpretation of our own statutes.

Before setting forth and considering the statutes it might be well to point out that there is a well recognized distinction between an 'order' of the Commission, such as that involved in the instant case, and an 'award'. The latter term, as defined by Section 56-930, A.C.A.1939, is applied to the finding or decision of the Commission of the amount of compensation or benefit due an injured employee or the dependents of a deceased employee, while an 'order', within the meaning of that word as used in Sections 56-907, 56-908, 56-914 and 56-916, A.C.A.1939, is defined by Section 56-930, supra, as

'* * * 'Order' shall mean and include any rule, regulation, direction, requirement, standard, determination or decision of the commission; * * *.'

See Murphy v. Industrial Commission, 52 Ariz. 343, 80 P.2d 960, for a good discussion of the distinction. Furthermore the method of obtaining a court review is entirely different. An 'award' is reviewable only through certiorari proceedings initiated in the Supreme Court. Section 56-972, A.C.A.1939. In such proceedings we have universally followed the rule that findings of the Industrial Commission are to be given the same consideration as those of a jury or the trial court, and when there is reasonable evidence to support the Commission's award, or facts are such that reasonable men might draw either of two inferences therefrom, the Commission's findings must be sustained, but where there is no evidence to support the Commission's findings or conclusions or where they are clearly erroneous they will be reversed. Blasdell v. Industrial Commission, supra; Federal Mutual Liability Ins. Co. v. Industrial Commission, 31 Ariz. 224, 252 P. 512. Whereas with an 'order', Section 56-914, supra provides:

'Action to vacate orders, procedure.--Any person in interest, dissatisfied with an order of the commission, may commence an action in the superior court of the county where the property, plant or place of employment affected by such order may be situate, against the commission as defendant, to set aside, vacate or amend such order, on the ground that the order is unreasonable or unlawful, and the superior court shall have exclusive jurisdiction thereof. The commission shall be served with summons as in civil actions. The answer of the commission shall...