Read v. Warkentin

• Decision Date: 10 July 1959
• Docket Number: No. 41438,41438
• Citation: 185 Kan. 286,341 P.2d 980
• Parties: N. C. READ, d/b/a Yellow and City Cab Company, Appellee, v. R. L. WARKENTIN, State Labor Commissioner, Appellant.
• Court: Kansas Supreme Court

Page 980

341 P.2d 980

185 Kan. 286

N. C. READ, d/b/a Yellow and City Cab Company, Appellee, v. R. L. WARKENTIN, State Labor Commissioner, Appellant.

No. 41438.

Supreme Court of Kansas.

July 10, 1959.

Syllabus by the Court.

In an appeal from a judgment of the district court, reversing and setting aside a decision of the State Labor Commissioner holding the owner and operator of a taxicab company to be a liable employer under the Kansas Employment Security Law, the record is examined and, under the facts, conditions and circumstances set forth in the opinion and the decisions therein cited, it is held: (1) The Commissioner's findings of fact were supported by evidence and by statute (G.S.1949, 44-710b[b]) are conclusive; (2) such findings were sufficient to warrant and uphold the Commissioner's conclusion of law that under the contract between the drivers and the owner such drivers were employees, rather than independent contractors; (3) the district court erred in holding (a) that the Commissioner erred in finding the relationship between the owner and his drivers to be that of employer and employee, (b) that the legal relationship between the owner and his drivers was one of contract and bailment, and (c) that the owner was not liable as employer under the employment security law.

Chas. H. Cory, Topeka, argued the cause, and Starr Calvert, Jr., Topeka, was with him on the briefs for appellant.

Jack L. Goodrich, Parsons, argued the cause and was on the briefs for appellee.

PARKER, Chief Justice.

This appeal, authorized by G.S.1949, 44-710b(c), is from a judgment by the district court which, after the judicial review permitted by G.S.1949, 44-710b(b), reversed a decision of the State Labor Commissioner holding N. C. Read d/b/a Yellow and City Cab Company to be a liable employer under the Kansas Employment Security Law (G.S.1949, 44-701 et seq., as amended.)

The facts and proceedings giving rise to the appeal are not only informative but important to its decision and should be detailed.

Following classification of Read as a liable employer under the employment security law administrative proceedings were had before the Commissioner. After a hearing, pursuant to G.S.1949, 44-710b(a), where evidence was adduced, the Commissioner made findings of fact. Such findings read:

'N. C. Read does business as a sole proprietor engaged in the taxicab business in the City of Parsons, Kansas, doing business as Yellow and City Cab. Read owns six taxicabs, which are painted yellow on top and have painted on the doors in yellow 'Yellow Cab, Phone 266.' Said taxicabs are equipped with two-way radios, and Read maintains a taxicab office in which he has a waiting room for passengers in which there is a bench and some chairs for the customers' convenience in waiting for a taxi. Also, at said office is a room for the dispatcher and another office that drivers use for a standby room. Read admits to the employment of two regular and one relief dispatchers. In addition to these employees, Read has written contracts with ten individuals who drive the taxicabs owned by Read. Each of these contracts contain the same provisions and are entitled 'Rental Agreement.'

'Without detailing all of the provisions of said agreement, these contracts provide for the furnishing of a taxicab by Read to the individual driver, and in addition Read agrees to furnish dispatching service and maintain and pay all expenses necessarily incurred in connection with the maintenance and operation of said taxicab. Each driver agrees to pay to Read the equivalent of 60% of all receipts accruing from the operation of said taxicab, and each driver retains the balance of 40% of receipts received. These contracts are terminable at the will of either party and, under the provisions of said agreement, no taxicab driver is liable to Read for the usual and ordinary wear and tear of said taxicab resulting from its operation and no taxicab driver is liable to Read for any damage which is caused by collision or accident.

'Read requires the drivers to be shaved, properly dressed and not use intoxicating liquor. None of the individuals with whom Read has contracts are listed in the Parsons telephone directory as being taxicab drivers. Drivers are required to keep their cabs subject to call or pay a charge of $3.50 per hour when they go 'on time.' The drivers are also instructed to get their gas and repairs at certain service stations, all of which is charged by said drivers to Read's credit account with said stations. Drivers for all practical purposes get their passengers through the dispatcher, although occasionally they might have a pickup. Read extends credit to Southwestern Bell Telephone, Western Union and a drug store, for which deliveries are made. These companies give individual taxicab drivers a charge ticket which he turns into the office, on checking the cab in, for cash.

'Drivers are required to maintain way-bills, and dispatchers maintain a record of calls to drivers and these records are cross checked to determine that the driver accounts for each fare. No driver has any right to acquire any interest in taxicabs owned by Read. The drivers operate in what is generally considered two shifts. The morning shift comes on at 5:00 A. M. These drivers are required to release their cabs to the drivers for the later afternoon and night shift at 4:00 P. M. Each driver accounts to Read for Read's 60% of the day's receipts on a daily basis.'

After making the foregoing findings the Commissioner made conclusions of law which, so far as here pertinent, are that the taxicab drivers under their contract with Read were employees, rather than independent contractors; that the portion of the daily receipts, i.e., forty per cent of gross revenues from fees collected and retained by such drivers from the operation of Read's taxicabs under the contract, constituted 'commissions' and therefore wages within the definition of the term 'wages' used in the law (G.S.1957 Supp. 44-703[o]); that said drivers were in employment as that term is defined in the law (G.S.1957 Supp. 44-703[i]); and that there being a sufficient number of individuals in employment for a sufficient time Read was a liable employer within the definition of the term 'employer' as defined in such law (now G.S.1957 Supp. 44-703[h]).

Thereupon, based on the foregoing findings and conclusions, the Commissioner rendered his decision wherein he held Read was a liable employer under the employment security law and liable for contributions at his assigned rate on the percentage of gross revenue, derived from the operation of taxicabs owned by him, which was retained by the taxicab drivers.

Soon after rendition of the Commissioner's decision, and within the time prescribed by G.S.1949, 44-710b(b), Read sought judicial review of such decision in the district court by filing a petition wherein he alleged the decision was contrary to the evidence in that he was not an employer within the meaning of the employment security law; that by contract all drivers of his taxicabs were independent contractors; and that the decision was contrary to such employment security law in that there was no legal liability for contributions under its terms for money earned by an independent contractor. Based upon these allegations, and others not here important, he prayed that such decision be reversed and set aside and that the court make a determination that he was not an employer within the provisions of such law.

By way of answer, to which he attached a full and complete copy of the involved decision, the Commissioner alleged the findings of fact contained in his decision were supported by evidence and that the jurisdiction of the district court was confined solely to questions of law, all as prescribed by G.S.1949, 44-710b(b); denied such decision was contrary to the evidence and that the taxicab drivers were independent contractors under their contract with Read; and prayed that his decision be affirmed.

With issues joined as related the full and complete record before the Commissioner at the time of his hearing was certified to the district court and filed of record with the clerk of such court. This, it is to be noted, included, among other things, a transcript of the evidence taken by the Commissioner at the hearing; samples of the daily way-bills Read required the drivers to prepare and file, showing the beginning and ending of trips, number of passengers carried, and the amount of fares collected; and a copy of the contract entered into between Read and each driver, titled 'Rental Agreement', which, for all practical purposes it may be said, contained provisions similar in substance to those set forth in the second paragraph of the Commissioner's findings, as heretofore quoted.

Thereafter the district court heard the review proceeding in a summary manner without additional evidence, all as contemplated by the section of the statute last above mentioned, and, after oral argument and submission of briefs by respective counsel, rendered its decision holding, on the basis of record before the Commissioner as certified, that: (1) The findings of fact made by the Commissioner were considered as conclusive upon the court (G.S.1949, 44-710b[b]); (2) the Commissioner erred in finding the relationship between Read and his taxicab drivers to be that of employer and employee, or master and servant; (3) the legal relationship between Read and his taxicab drivers was one of contract and bailment; (4) where a question existed as to the nature of the relationship, such question must be resolved in favor of the taxpayer; (5) Read was not liable as employer under the employment security law. Thereupon the trial court reversed the Commissioner's order and set it aside.

Subsequently, and after the overruling of his motion for a new trial, the Commissioner perfected the instant appeal in which, under proper specifications of error, he is...