Schlotter v. Leudt

• Decision Date: 17 September 1963
• Docket Number: No. 50935,50935
• Citation: 255 Iowa 640,123 N.W.2d 434
• Parties: Mary SCHLOTTER, Appellee, v. Richard A. LEUDT, Defendant, and Lucille's Pie Shop, Inc., Appellant.
• Court: Iowa Supreme Court

Page 434

123 N.W.2d 434

255 Iowa 640

Mary SCHLOTTER, Appellee, v. Richard A. LEUDT, Defendant, and Lucille's Pie Shop, Inc., Appellant.

No. 50935.

Supreme Court of Iowa.

Sept. 17, 1963.

Alfred G. McSwiggin, Williamsburg, and Hart, Shulman, Phelan, Tucker & Ivie, Iowa City, for appellant Lucille's Pie Shop, Inc.

Messer & Cahill, Iowa City, for defendant Richard A. Leudt.

Leff & Leff, Iowa City, for appellee.

THORNTON, Justice.

The principal question for determination is whether there is substantial evidence to sustain a jury finding defendant Leudt was an employee of defendant Pie Shop.

The Pie Shop is located in Milan, Illinois. It bakes pies and markets 90% of them through three route men or distributors. The other 10% is sold direct to retail trade. Defendant Leudt is one of the route men, he purchased his route and truck from two men for $3,500. The transfer was evidenced by a 'Pie Distribution Agreement,' Exhibit 'E'. It transfers to Leudt the truck and right to distribute pies in Iowa City and 21 customers in Rock Island and Davenport. The two transferors were restricted from selling pies to the 'above mentioned customers' for a period of two years. It does not appear in the agreement but from other evidence this transaction was subject to the approval of the Pie Shop. It controlled who was going to operate the route. Leudt had a written contract with the Pie Shop, Exhibit 'F'. Therein the Pie Shop agreed to sell pies to Leudt in such quantities as may be required for resale by him. The Pie Shop was given the right to fix the price at which it sold the pies to Leudt and at which Leudt could sell the pies to the trade. Such prices were subject to change by the Pie Shop on the first day of each month. We will consider the other provisions of this contract later.

Plaintiff's own testimony showed only that she recognized Leudt as the driver of the truck and it had 'Lucille's Pies' painted on it. She called Leudt as her witness and from his testimony, in addition to identification of Exhibits 'E' and 'F', it appears he purchased the pie route about two years before the accident. In operating the route, he owns his own truck, pays all of his own expenses, he bought the pies as the price fixed, paid for them within 48 hours, or settled up at the end of the week, he carried his own charge accounts, except in the case of some (how many does not actually appear) large accounts carried by the Pie Shop after such have been approved by the Pie Shop. If he purchased more pies than he could sell he suffered the loss. The only pies he could return were those unsatisfactory due to the fault of the Pie Shop. He sold doughnuts received from another supplier. In operating the route he had no schedule, regular hours, or list of customers as set up or directed by the Pie Shop. In actual practice he loaded pies at a certain time by agreement with the other drivers and made the route every day, six days a week. He could solicit new customers without regard to the Pie Shop, in this regard he had to receive approval from the other drivers in the Quad Cities but not on the route to and in Iowa City. He filed his income tax return as a self-employed individual. He received no compensation from the Pie Shop and it did not carry him as an employee on its records or make payroll deductions or payments of tax as if he were an employee. He made no report of sales to the Pie Shop, he merely settled for the pies he purchased and was given credit for the approved charge customers. In a few instances he used other help. He used a sales book with the name 'Lucille's Pies' on it, supplied by the Pie Shop. He sold the route and this transaction was approved by the Pie Shop. The Pie Shop furnished a few pies for promotional reasons but had no sales or route organization. This presents a general picture of Leudt's connection with the Pie Shop. More details will be considered separately as argued by counsel.

Mr. Leudt is either an employee or an independent contractor.

The most important consideration in determining whether a person giving service is an employee or an independent contractor is the right to control the physical conduct of the person giving service. If the right to control, the right to determine, the mode and manner of accomplishing a particular result is vested in the person giving service he is an independent contractor, if it is vested in the employer, such person is an employee. Daggett v. Nebraska-Eastern Express, Inc., 252 Iowa 341, 348, 107 N.W.2d 102, 107; Sanford v. Goodridge, 234 Iowa 1036, 1042, 13 N.W.2d 40; Norton v. Day Coal Co., 192 Iowa 160, 165, 180 N.W. 905; McDonald v. Dodge, 231 Iowa 325, 327-328, 1 N.W.2d 280; and citations in each of the above. The employer of an independent contractor does and may properly retain control necessary to see the result is obtained according to plan. Hassebroch v. Weaver Construction Company, 246 Iowa 622, 632, 67 N.W.2d 549; and Meredith Publishing Company v. Iowa Employment Security Commission, 232 Iowa 666, 673, 674, 6 N.W.2d 6.

Other considerations are, whether the one employed is engaged in a distinct business, whether in the locality the work is usually done under supervision or by a specialist without supervision, skill required, furnishing of tools and equipment, time limit of employment, method of payment, whether work is a part of regular business of employer, whether parties believe they are creating one or the other relationship, and whether the principal is or is not in business. Restatement, Agency 2d, § 220; and Mallinger v. Webster City Oil Co., 211 Iowa 847, 234 N.W. 254.

Ordinarily the construction of a written contract is for the court. However, plaintiff here is not a party to the contract and she is entitled to the benefit of all available evidence to show the actual relation of Leudt and the Pie Shop. And this is true where the contract does not cover the entire agreement. Daggett v. Nebraska-Eastern Express, Inc., 252 Iowa 341, 351, 107 N.W.2d 102, 108; Sanford v. Goodridge, 234 Iowa 1036, 1044, 13 N.W.2d 40, 45; and citations.

Plaintiff is entitled to the most favorable construction the evidence will reasonably bear on the question of defendant Leudt's status as an employee. Plaintiff in argument advances some eleven facts, including the contracts, as showing Leudt is an employee of the Pie Shop. These facts are undisputed, we are concerned with the inferences that may properly be drawn from them.

We will examine these, leaving the contracts until last. Leudt picked up the pies at the same time each day throughout the week and the same schedule (or perhaps time is a better word) was followed while Leudt worked for the Pie Shop. We fail to see how an inference of control can be drawn from this fact standing alone. Any route man would have to pick up his supplies. That this was done so as not to conflict with other route men or at a particular time so as to make his deliveries to his customers shows no more than this was for the convenience of his customers and to his profit. There is no suggestion he was required to load or start his route at any time by the Pie Shop.

The fact Leudt reported each day, paid for pies previously purchased and checked to see if complaints had been made does not lead to an inference of detailed control. An independent contractor would have to pay for the pies under some plan. The fact of complaints being made to the Pie Shop and his checking for such purpose, shows no more than a practical way to handle such. The evidence indicates some of these complaints would be taken care of by him, some by the Pie Shop, depending on who was at fault.

The fact the name 'Lucille's Pies' and the Pie Shop telephone number appeared on Leudt's truck as well as the use of sales books bearing the name of the Pie Shop indicates no more than advertising that would be beneficial to both and does not indicate detailed control. The evidence does not show Leudt was required or directed to use the books or paint the truck. The evidence is that he had the name painted on the truck at his expense after asking permission.

Handling of the larger charge accounts by the Pie Shop is simply a matter of financing. Leudt did receive payment in advance of the payment of these accounts. No evidence was introduced bearing separately on losses on these accounts, but plaintiff did introduce Leudt's testimony that he bore the losses generally.

The fact some 20 to 25 pies were furnished by the Pie Shop for promotional purposes shows only another advertising method mutually beneficial to Leudt and the Pie Shop. There is no showing of detailed control or requirement in this regard by the Pie Shop.

Adverting to the written agreements, Exhibits 'E' and 'F', a pertinent statement of law bearing on the construction of these agreements is found in Arne v. Western Silo Co., 214 Iowa 511, 517, 242 N.W. 539, 542. It is:

'In the construction of a contract involving a contractor's relationship, the contract must be construed from 'its four corners,' and not from an isolated paragraph. Courts must declare the intention of the parties from the language employed in the entire instrument, regardless of the classification of the parties as determined by themselves, bearing in mind that it is not the nomenclature which the contract uses, but the provisions which it makes for control of the details of the work that determine the status of the parties.'

It is clear the Pie Shop did control who was to operate the routes. Its apparent purpose was to obtain the service of competent, trustworthy men to handle the distribution of its pies, and thus gain maximum distribution. The record shows it or its predecessor, a single proprietor, now president and principal stockholder, had never distributed its pies in its own trucks by drivers carried on its payroll as employees. It did own a pie truck but the only use of this truck for route distribution was when rented...