Provident Institution for Sav. In Jersey City v. Division of Employment Sec., Dept. of Labor and Industry

• Decision Date: 06 June 1960
• Docket Number: No. A--102,A--102
• Citation: 32 N.J. 585,161 A.2d 497
• Parties: PROVIDENT INSTITUTION FOR SAVINGS IN JERSEY CITY, Petitioner-Appellant, v. DIVISION OF EMPLOYMENT SECURITY, DEPARTMENT OF LABOR AND INDUSTRY, State of New Jersey, Respondent.
• Court: New Jersey Supreme Court

Page 585

32 N.J. 585

161 A.2d 497

PROVIDENT INSTITUTION FOR SAVINGS IN JERSEY CITY, Petitioner-Appellant, v. DIVISION OF EMPLOYMENT SECURITY, DEPARTMENT OF LABOR AND INDUSTRY, State of New Jersey, Respondent.

No. A--102.

Supreme Court of New Jersey.

Argued March 8, 1960.

Decided June 6, 1960.

William E. Decker, Jersey City, argued the cause for petitioner-appellant.

Herman D. Ringle, Trenton, argued the cause for respondent.

The opinion of the court was delivered by

SCHETTINO, J.

This is an appeal from a ruling of the Division of Employment Security which held that certain individuals were employees of the petitioner and thus within the Unemployment Compensation Law. While appeal was pending in the Appellate Division, we certified the matter on our own motion.

On appeal the parties agreed to submit the matter for determination on a stipulation of facts in lieu of the record pursuant to R.R. 4:88--8. The following facts are contained therein. Petitioner is a registered employer under the New Jersey Unemployment Compensation Law and as the result of an audit made in 1957, respondent made an assessment against it for supplemental contributions for the years 1954, 1955, 1956, and for the second quarter of 1957. The appeal herein was then filed.

Petitioner was incorporated in 1839 under an act of the Legislature and since about 1870 it has been governed by the General Savings Bank Act and particularly the last statute on the subject known as the Banking Act of 1948, N.J.S.A. 17:9A--188 et seq. It is a mutual savings bank and has no stockholders as the assets of the bank are owned by the depositors. All of the earnings of the bank are distributed to the depositors as dividends or interest. Under the act of incorporation and under the statute, Provident's business affairs are managed by a Board of Managers which group is self-perpetuating. A vacancy is filled by an election held by the remaining Managers.

The present statute also provides for an Executive Committee. Each year the members of the Board of Managers designate four of their number to serve on the Executive Committee and those individuals and the bank president, who act Ex officio, constitute the Committee. The Board of Managers meets once a month. The Executive Committee meets once a week and, under the statute, between meetings of the Board of Managers exercises all the functions of the Board of Managers.

The issue presented is whether the services performed by the members of petitioner's Executive Committee constitute employment as defined by the Unemployment Compensation Law (N.J.S.A. 43:21--19(i)(1), (6) and (p))?

Each member of the Executive Committee receives $4,000 annually for his services on that Committee and receives $40 for attendance at each meeting of the Board of Managers. All members are engaged in businesses other than petitioner's when not performing services on the Executive Committee. They are paid by check of Provident every two weeks on the same day of the week. The Managers are paid their fee in cash at each meeting. Deductions are made from their Executive Committee checks for hospitalization and group life insurance in which the Committee members participate and for Christmas Club as directed. Petitioner contributes towards the group life insurance. All employees as well as the Committee members receive bonuses at the end of the year as determined by the Managers.

The duties of the Executive Committee include the operation of the bank between meetings of the Managers; the hiring and discharging of employees except officers; the management of the bank's real and personal property; the purchase and sale of investments on behalf of the bank; passing on and determining all loans, mortgages, and investments to be made; obtaining information relating to loan and mortgage applications; reviewing mortgage applications with the appraisal and mortgage department of the bank; examining the neighborhood where property is located hiring appraisers on mortgage applications of over $5,000 where property is located outside of Jersey City; examining properties on which applications are made for a loan on mortgages of $50,000 or more; obtaining information from bank employees as needed and from other bankers and investment services. All loans, mortgages and investments made by the Executive Committee are binding on the bank. In passing, we note that for its operation the Board of Managers must select from its membership a president and a vice-president. N.J.S.A. 17:9A--191.

Petitioner contended before respondent Board that the members of the Executive Committee are not employees but the employer itself and that there exists therefore no master and servant relationship. Respondent held that the Committee members performed 'services' for petitioner for which they received remuneration under a contract of hire within the meaning of N.J.S.A. 43:21--19(i)(1) and that their services are necessary to maintain petitioner as a bank. Respondent stated:

'* * * As managers they performed purely ministerial and directorial duties, but as executive committee members they did more than that. Their services were beyond the scope of managerial and directorial duties. They did more than merely attend and participate in meetings of the board. The services rendered by the executive committee members were not of a purely ceremonial or formal nature required only for the maintenance of the corporate organization. In performing the services of the executive committee the members were not acting for themselves but for the bank. Since they receive a stated annual salary, in additional to managerial fees, they should be counted as in employment in each week of the year.'

The pertinent statutory provisions of N.J.S.A. 43:21--19 (1956) read:

'As used in this chapter, unless the context clearly requires otherwise:

'(i) (1) 'Employment' means service, including service in interstate commerce performed for remuneration or under any contract of hire, written or oral, express or implied.

'(6) Services performed by an individual for remuneration shall be deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the division that

'(A) such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and

'(B) such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

'(C) such individual is customarily engaged in an independently established trade, occupation, profession or business.

'(p) 'Remuneration' means all compensation for personal services, including commissions and bonuses and the cash value of all compensation in any medium other than cash.'

The law (R.S. 43:21--1 et seq., N.J.S.A.) represents the policy of the State to further the welfare of the people by affording protection against the shocks and rigors of unemployment. Bogue Electric Co. v. Board of Review, etc., Dept. of Labor and Ind., 21 N.J. 431, 435, 122 A.2d 615 (1956). It is remedial and therefore should be liberally construed to accomplish its end, 'with the result that the relation of employer and employee may be deemed to exist under circumstances which would not lead to that determination under the common-law classification.' Gilchrist v. Division of Employment Security, 48 N.J.Super. 147, 153, 137 A.2d 29, 32 (App.Div.1957).

Similarly, in other jurisdictions we find broad meanings attributed to words used in this field. In Industrial Commission v. Northwestern Mutual Life Insurance Co., 103 Colo. 550, 88 P.2d 560, 563 (Sup.Ct.1939) the court observed that:

'* * * When defining or referring to 'wages,' 'employment,' 'employer' and 'benefits' in the act the legislature deliberately avoids the use of the word 'employee,' and uses the much broader term, 'individual.' That this indicates legislative intent as to who is covered, cannot be doubted. The terms 'independent contractor' or 'master and servant' nowhere appear. The act prescribes the statutory test * * * and we must not be led astray by any other criterion. * * * 'Here the statutory definition of 'employment' is broad and inclusive, and it cannot be so construed as to limit the meaning to the relationship of master and servant without violating the legislative intent.'

Our Legislature has defined the conditions which create an employment relationship and the test laid down in the statute is very broad. Exemption from coverage where services are performed for remuneration exists only where the cumulative provisions of (6) (A), (B) and (C), known as the ABC test, are complied with, for 'Unless all three tests are met, the service is to be considered employment subject to the...