New York Life Ins. Co. v. Murphy

• Decision Date: 22 November 1944
• Docket Number: No. 27437.,27437.
• Citation: 388 Ill. 316,58 N.E.2d 182
• Parties: NEW YORK LIFE INS. CO. v. MURPHY, Director of Labor.
• Court: Illinois Supreme Court

388 Ill. 316

58 N.E.2d 182

NEW YORK LIFE INS. CO.

v.MURPHY, Director of Labor.

No. 27437.

Supreme Court of Illinois.

Nov. 22, 1944.

Appeal from Circuit Court, Cook County; Michael Feinberg, judge.

Proceedings by New York Life Insurance Company against Francis B. Murphy, Director of Labor, to review a decision of the Director making an assessment for contributions alleged to be due under the Unemployment Compensation Act. From a judgment affirming the decision, New York Life Insurance Company appeals.

Affirmed.

Scott, MacLeish & Falk, of Chicago, and Ferdinand H. Pease, of New York City (Joseph W. Townsend, Wendell J. Brown, and John A. O'Neil, all of Chicago, of counsel), for appellant.

George F. Barrett, Atty. Gen. (William C. Wines, of Chicago, of counsel), for appellee.

GUNN, Justice.

This case involves determination of an assessment in the amount of.$48,956.01 against the New York Life Insurance Company, appellant, made by the Director of Labor under the Unemployment Compensation Act, for contributions alleged to be due under the act on account of commissions paid by appellant to soliciting agents during the period from July 1, 1937, to December 31, 1939. The act was amended July 1, 1941, to exclude services of an insurance agent paid solely by commission, so the question to be determined is governed by the act prior to such amendment. The Director of Labor found the soliciting agents were in ‘employment,’ as defined by the act, and that their services were not excluded under any of the provisions thereof. The circuit court of Cook county affirmed the decision of the Director of Labor and entered judgment on the assessment, and, under the provisions of the statute, appellant has appealed directly to this court.

While some point is made by the parties as to the character or manner in which insurance agents perform their services, it is quite clear that, aside from details, they worked for the purpose of procuring persons to purchase policies of insurance, and received, as compensation for their services, a commission, which might be received wholly in one payment or part of it at the time the policy is delivered and another part each year for a period of years. The details we deem unimportant. These solicitors reported to an agency and the agency, in turn, had its connection with the company itself.

Appellant takes the broad position that such insurance agents or solicitors are independent contractors, and that independent contractors are not in ‘employment’ within the meaning of the act. Numerous authorities are cited to show that such solicitors or agents are independent contractors at common law, and hence it is claimed the decisions in Ozark Minerals Co. v. Murphy, 384 Ill. 94, 51 N.E.2d 197, and Toplis & Harding, Inc., v. Murphy, 384 Ill. 463, 51 N.E.2d 505, are controlling, and exempt appellant from the operation of the act. They also contend that the soliciting agents were not in ‘employment’ under the act because of the provisions of section 2(f)(5) discussed later.

We have also construed different provisions of the act in relation to other types of employment in Miller, Inc. v. Murphy, 379 Ill. 524, 42 N.E.2d 78,Rozran v. Durkin, 381 Ill. 97, 45 N.E.2d 180, 144 A.L.R. 735;Peasley v. Murphy, 381 Ill. 187, 44 N.E.2d 876, 143 A.L.R. 414, and Smith v. Murphy, 384 Ill. 34, 50 N.E.2d 844, which have quite comprehensively touched upon the leading features of the Unemployment Compensation Act. In the declaration of public policy, the evil sought to be eliminated by this statute is ‘involuntary unemployment.’ It is not limited to unemployment of the servant of a master in the customary sense of the word, but involuntary unemployment generally. The scope of this statutory purpose is so broad that it necessarily includes all types of the unemployed, and all the relations through which compensation for services is made, without regard to the legal designation of the relations under which, previously, pay had been made for such services, the consequence of which is that the act is not designed as applying to any particular occupation, business, profession or relation, but is an original piece of legislation which creates a framework that makes parties subject to its provisions, measured by the definitions and specifications set forth in the statute. The fact that these specifications and definitions may properly embrace an employment as it is customarily understood does not prevent its including within the statutory terms those who, before its enactment, might not have been regarded as being in ‘employment,’ or as being employers, or those bearing the relation of independent contractors, or other relations different from that strictly of employee at common law.

To effect the purpose of the statute, section 2 (Ill.Rev.Stat.1937, chap. 48, par. 218,) is given up entirely to definitions, and these definitions govern the application of the act. Thus, among other things, section 2 defines (d) employing unit; (e) employer; (f) employment; (g) wages; and others not necessary for the decision of the question here involved. After section 2, defining every relationship which brings about employment or unemployment and naming the specific relations not constituting employment, section 3 (par. 219) provides: ‘Any employing unit which is or becomes an employer subject to this Act within any calendar year shall be subject to this Act during the whole of such calendar year.’ And then follow various provisions of the operative sections of the statute. It is noticeable that the term ‘independent contractor’ is not mentioned in the statute and is not defined, although words were used exempting certain persons from the operation of the act who could probably otherwise be described as independent contractors.

Looking, then, at the definitions, we find that two elements are essential to the operation of the statute: (1) there must be an employing unit; and (2) services must be performed by an individual for an employing unit. Having created new relationships for the purpose of the statute, it became necessary to define precisely what constituted an employing unit, and what constituted services under the statute, and by so defining, it necessarily follows that those who are not ‘employing units' and those who are not regarded as ‘rendering service’ may be readily ascertained by applying the statutory definitions. The act does not apply to one who is not an employing unit, and, likewise the act does not apply to one not rendering service or who, being within the exceptions of the act, is not regarded as rendering service.

We have distinctly held that the concept of employment set out in the act, rather than the common-law conception of such applying to master and servant, is controlling. Miller, Inc. v. Murphy, 379 Ill 524, 42 N.E.2d 78;Rozran v. Durkin, 381 Ill. 97, 45 N.E.2d 180, 144 A.L.R. 735. However, it is apparent that certain situations may exist which take the parties from under the operation of the act. Those situations are described specifically in the statute and apply in particular (1) to the employing unit; and (2) as to what services by an individual shall be deemed employment. Both are specifically described, one in section 2(d) and the other in section 2(f) (1 to 5). The definitions contained in section 2 of the statute are the measure to be applied in deciding whether any particular facts bring the parties under the statute, and the common law, or application of the common law to such situations, is not controlling.

Generally speaking, there must be an employing unit before there can be an application of the act. ‘Employing unit’ is defined in the first sentence of section 2(d), and includes any ‘type of organization, * * * which has or subsequent to January 1, 1936, had in its employ one or more individuals performing services for it within this State.’ The balance of this long paragraph has nothing whatever to do with the definition of employing unit. It pertains to situations deemed within or without the definition specifically set out for the purpose of clarity. Thus, the contractor-subcontractor sentence in section 2(d), referred to in Ozark Minerals Co. v. Murphy, 384 Ill. 94, 51 N.E.2d 197, is for the purpose of ascertaining the employing unit where there are contractors or subcontractors performing the work of the employing unit, and to make such person employing them liable unless two events concur, viz., (1) the subcontractor, at the time of his doing the work, is doing like work for others, or is available to do like work for others; and (2) is...