Reed v. K.C. Wholesale Groc. Co. & Continental Cas.

• Court: Missouri Court of Appeals
• Writing for the Court: Boyer
• Citation: Reed v. K.C. Wholesale Groc. Co. & Continental Cas., 156 S.W.2d 747, 236 Mo.App. 402 (Mo. App. 1941)
• Decision Date: 03 November 1941
• Docket Number: No. 20033.,20033.
• Parties: H.E. REED, RESPONDENT, v. KANSAS CITY WHOLESALE GROCERY COMPANY AND CONTINENTAL CASUALTY COMPANY, APPELLANTS.

156 S.W.2d 747

H.E. REED, RESPONDENT, v. KANSAS CITY WHOLESALE GROCERY COMPANY AND CONTINENTAL CASUALTY COMPANY, APPELLANTS.

No. 20033.

Kansas City Court of Appeals, Missouri.

November 3, 1941.

Appeal from Jackson Circuit Court. — Hon. Allen C. Southern, Judge.

REVERSED AND REMANDED.

Henry M. Shughart, Harry P. Thompson, Jr., and Walter A. Raymond for appellants.

(1) The Missouri Workmen's Compensation Commission and the circuit court erred in holding claimant's automobile expense and other special expenses entailed on him by the nature of his employment should be included in computing the annual earnings of claimant. Sec. 3732, R.S. Mo. 1939; Thibeault v. General Outdoor Advertising Co., 114 Conn. 410, 158 Atl. 912, 84 A.L.R. 184, 186, 187; Maltz v. Jackoway-Katz Cap Co., 336 Mo. 1000, 82 S.W. (2d) 909, 912; Sec. 3710, R.S. Mo. 1939, Sub-secs. (a) and (g); Wahlig v. Krenning-Schlapp Grocer Co., 325 Mo. 677, 29 S.W. (2d) 128; Russell v. Ely & Walker Dry Goods Co., 332 Mo. 645, 60 S.W. (2d) 44, 46; Stapleton v. Gunn (Mo. App.), 69 S.W. (2d) 1104, 1105; Newman v. Rice-Stix Dry Goods Co., 335 Mo. 572, 73 S.W. (2d) 264, 269, 270; Heisey v. Tide Water Oil Co. (Mo. App.), 92 S.W. (2d) 922, 929; Toon v. David G. Evans Coffee Co. (Mo. App.), 103 S.W. (2d) 533, 538; McClintock v. Skelly Oil Co., 232 Mo. App. 1204, 114 S.W. (2d) 181, 185; American Surety Co. v. Underwood, 74 S.W. (2d) 551, 553; McKeller v. Harkins, 184 Iowa, 1378, 166 N.W. 1059, 1061; Beuhner v. Bowman, 81 Ind. App. 395, 143 N.E. 366, 367; 71 C.J., p. 809, Sec. 529; Sec. 444 of Schneider's Vol. 2, Workmen's Compensation, p. 1527; Moore v. Fleischman Yeast Co., 256 N.W. 589 (Mich. S. Ct., 1934).

Whitson Rogers for respondent.

The Missouri Workmen's Compensation Commission and the circuit court correctly held, in view of the contract of employment in evidence and under the Missouri statutes, that nothing should be deducted from the commissions paid claimant, in computing his annual earnings. Sec. 3710, R.S. Mo. 1939; Newman v. Rice-Stix Dry Goods Co., 335 Mo. 572, 73 S.W. (2d) 264, 270, 271; Springfield Coal Mining Co. v. State Industrial Commission, 291 Ill. 408, 126 N.E. 133, 22 A.L.R. 859, 864.

BOYER, C.

This case arose under the Workmen's Compensation Law. The appeal is by the employer and insurer from the judgment of the circuit court affirming the findings and the award made by the commission. There was never any issue in reference to the jurisdiction of the commission; nor that the plaintiff was injured in an accident arising out of and in the scope of his employment. On review before the commission it was admitted that the claimant was totally and permanently disabled.

The question contested during all the hearings and brought here is the proper method of computing the annual earnings of claimant during the year preceding the accident as a basis for the award to which he would be entitled under the law.

Claimant was a traveling salesman for the grocery company. Counsel agree that the contract of employment "provided in substance that Mr. Reed was to take over and travel a certain rural territory in the State of Kansas, and in doing that it was contemplated he would furnish an automobile and pay his own traveling expenses which would include whatever expense in addition to the automobile the traveling entailed, and that the employer was to allow him a commission at fifty per cent of his net profits, and that that was the only payment to be made by the employer; that the fifty per cent was to be used by Mr. Reed in the disbursement of expenses for whatever purpose; in other words, it was his money to pay as he saw fit, provided he did the job." There is but little evidence that would in any way change or modify this agreement. However, it is in some respects explained. It is made clear that claimant was to be paid 50 per cent of the net profits of the employer upon the total sales made by him as the consideration for his contract. He was to pay out of his commission whatever expense his work entailed, and the employer was not to be called upon to make any further payment on account thereof.

It was the custom of the company, after the end of each month, to render a statement to the salesman showing the amount of his total sales, the net profit thereon, the amount due the salesman, and send a check for that sum, less any amount for which the salesman might be indebted to the company. In addition to commissions thus transmitted to claimant, during the year preceding his accident, he received a further sum of $42.80 as a bonus on some special sale, which added to his commissions made the sum of $1722,91 as his total gross income for the year. During the year claimant traveled many thousands of miles and incurred a substantial amount of expense in the operation, maintenance and repair of his automobile, and other expenses incident to his work, including the purchase of drafts, stamps, meals, and estimated depreciation on his car, all of which amounted, according to his evidence, to $606.65. His testimony further shows other items of expense not included in this sum, amounting to $67.15. They cover the cost of tires, tubes, state license tag, and repairs on the car.

Claimant had been employed for a number of years operating in territory contiguous to Abilene, Kansas, and covered his territory in his automobile. He never made any report of his expenses until early in 1937, at which time the company sent letters to all of its salesmen in reference to the desirability and necessity of separating traveling expense from compensation. The letter stated:

"On account of the Social Security Act, it becomes necessary for us to, hereafter, separate on our books, your weekly traveling expense from your compensation, so that you will be paying the 1 % tax on your compensation, after this traveling expense is taken off, as the law allows this deduction. Of course, you will receive your usual check, less the amount of the tax."

After this letter others followed with forms of expense sheets and with directions how to prepare them; and in one of the letters it was suggested that the automobile expense be figured on a basis of four cents per mile, covering depreciation, insurance, oil, gas, tires, wrecks, etc.

Pursuant to this request, claimant prepared and submitted a traveling expense sheet covering each week. Such sheets show the mileage traveled each day and the cost thereof at four cents per mile, the amount of money spent for meals, postage and exchange. The summary of such expenses as shown by said reports from the beginning of June, 1938, to and including the month of May, 1939, amounts to $1389.89.

The employer and insurer contend that such automobile and other business expenses incident to the work of claimant should be deducted from the gross earnings of claimant in arriving at his average weekly wage as a basis upon which to compute the compensation due him. The claimant contends that no such expenses are deductible under the contract of employment, and that if expenses of that nature are to be considered at all, the deduction should be made according to the actual expenditures rather than on the basis of the reports of expenses of four cents per mile for the car as directed by the employer.

The commission found that there should be no deduction whatever for expenses in arriving at the annual earnings of the claimant, and its attitude is shown from the following paragraph quoted from its findings:

"We further find that employee's net profits for the year just prior to his accident and injuries herein, including a bonus of $42.80, was $1722.91, and that this amount represents his net profits on sales, including said bonus, without deducting any expenses; that such expenses as were incurred and paid by employee were matters with which employer had no concern under the contract of employment so long as they were taken care of by employee, as they in fact were; that said sum of $1722.91 gives an average weekly wage of $33.13 plus, with the compensation rate $20.00 for the 300 week period and $8.28 thereafter for life."

The award was made according to the above findings, less the amount already paid by the employer or insurer. The judgment of the Circuit Court approved the findings and award of the commission. There is but one point in the case, stated by the respective parties as follows:

Appellant says: "The Missouri Workmen's Compensation Commission and the Circuit Court erred in holding claimant's automobile expenses and other special expenses entailed on him by the nature of his employment should be included in computing the annual earnings of claimant."

Respondent says: "The Missouri Workmen's Compensation Commission and the Circuit Court correctly held, in view of the contract of employment in evidence and under the Missouri statutes, that nothing should be deducted from the commission paid claimant, in computing his annual earnings."

Both parties point to Section 3710, Revised Statutes of Missouri, 1939, paragraphs (a) and (g), as applicable provisions and upon which both parties rely, but their construction of such provisions is at complete variance. The portion of this section of the law is the following:

"The basis for computing the compensation provided for in this chapter shall be as follows:

"(a) The compensation shall be computed on the basis of the annual earnings which the injured person received as salary, wages, or earnings if in the employment of the same employer continuously during the year next preceding the injury.

"(g) In computing the annual earnings there shall be included in the reasonable value of board, rent, housing, lodging and fuel received from the employer as a part of the remuneration of the employee and which can be estimated in money, and the value of gratuities customarily received by consent of the employer, in the usual course of business from persons other than the employer, but there shall...