Singer Sewing Mach. Co. v. State Unemployment Compensation Commission

• Decision Date: 09 September 1941
• Citation: 167 Or. 142,116 P.2d 744
• Parties: SINGER SEWING MACH. CO. v. STATE UNEMPLOYMENT COMPENSATION COMMISSION et al.
• Court: Oregon Supreme Court

116 P.2d 744

167 Or. 142

SINGER SEWING MACH. CO. v. STATE UNEMPLOYMENT COMPENSATION COMMISSION et al.

Supreme Court of Oregon

September 9, 1941

Appeal from Circuit Court, Clackamas County; Earl C. Latourette Judge.

On rehearing.

Prior opinion adhered to.

For prior opinion, see 103 P.2d 708.

H Lawrence Lister, Asst. Atty. Gen., I. H. Van Winkle, Atty Gen., and Ralph H. Campbell, Asst. Atty. Gen., for appellants.

RAND J., dissenting on rehearing.

Walter L. Tooze, of Portland, for respondent.

Green, Boesen & Landye, of Portland, for Oregon State Federation of Labor, amici curiae.

Hart, Spencer, McCulloch & Rockwood, of Portland, amici curiae.

John W. Reynolds, A. F. Flegel, Jr., and A. S. Vosburg, all of Portland, amici curiae.

KELLY, Chief Justice.

It is with regret that the determination of this case on rehearing has been so long delayed. Sickness and death have prevented a hearing by the full bench. It was deemed desirable by the writer, if possible, to have such a hearing and hence the delay. When further delay appeared to be futile, the case was set for argument and a hearing was had. Thereupon, both parties sought, and were granted, permission to file supplemental briefs. The last memorandum tendered was offered by plaintiff on July 24, 1941. This is said by way of explanation and not as a reflection upon the course taken by anyone.

There are five major grounds assigned for asking that the original opinion herein be overruled.

1. The findings of fact are erroneous and insufficient upon which to grant claimant's demand for compensation.

2. The statute, O.C.L.A. § 126-701 et seq., upon which the claim for compensation herein is based, is a taxing statute and must therefore be strictly construed.

3. That inasmuch as the state law was enacted in compliance with the provisions of the federal statutes imposing a tax, the state could not extend the scope of the relief afforded so that it would benefit others than those so affected by the federal act.

4. A proper construction of such statute necessarily results in holding that the common law relationship of master and servant must be shown to exist in order to entitle one performing services for the benefit of another to recover compensation under such statute; and

5. The overwhelming weight of authority is to the effect that under such statute and the circumstances attending claimant's services, claimant is merely an independent contractor and not entitled to prevail.

These grounds have been elaborated in the briefs of three amici curiae, and the plaintiff-respondent.

Omitting the title, the introductory paragraph and the decision, the findings of the commission are as follows:

"The Commission having examined the records, transcript of evidence and all exhibits filed with said commission, and being fully advised finds:

"Claimant had been for some nine years acting as a salesman for the alleged employer, selling sewing machines, vacuum sweepers and other products of the manufacturer. The contract for the services, after the unemployment compensation law became effective, provided claimant should sell sewing machines, etc. on a commission basis.

"The machines sold were consigned to the agent and remained the property of the company until sold. The agent was confined to a distinct territory in which he had exclusive sales rights, except as to schools and the like, with respect to which he was ordered or requested to make contracts and lay the groundwork for sales, but was allowed no commission. He was also required to make collections on conditional sales contract and delinquent accounts, on which actual collections he was paid a commission. The price of the merchandise was fixed as were the terms on which it was sold. The agent was authorized to purchase and sell accessories and attachments and to take in second hand machines which were retained and resold by him, the price allowed for such trade in machine being deducted from his cash commission. The contract provided the company had the right to establish the sales price of the trade in machines, although it appears it did not exercise that right in the instant case. The sales agent was directed to make collections upon the terms and conditions set forth and specifically ordered in each individual collection and he was allowed no discretion whatsoever in this respect. Weekly written reports on the forms of the company, giving a full and complete account of all business transacted by him in its behalf were required. The agent was also required to care for, repossess and deliver to the company any property the company desired repossessed.

"Furthermore the company made certain directions in respect to sales campaigns and in other respects, especially as to following up mailed advertisements. It is true the company insists these were merely suggestions; but as testified by the agent and corroborated by the sales supervisor, any material refusal on the part of the sales agent to follow such suggestions would have resulted in his dismissal. The sales agent was required to expend sufficient time and energy to secure sales sufficient to satisfy the company, or he would have been dismissed. The right of discharge existed.

"The company insists the sales agent performed no services for such company in an employment subject to the unemployment compensation law, but on the contrary was an independent contractor.

"Section 2(f) (E) of the Unemployment Compensation law of this state departs from the common law definition of an independent contractor in a very material respect. This subsection of the law reads:

"Sec. 2(f) (E). 'Services performed by an individual for remuneration shall be deemed to be employment subject to this act unless and until it is shown to the satisfaction of the commission that:

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

"'(2) Such individual customarily is engaged in an independently established business of the same nature as that involved in the contract of service.'

"The preponderance of the testimony, both of the sales agent and of the sales

supervisor is that a definite and material control and direction over the performance of sales agents' services existed. This is enough. He was not a free agent.

"The testimony, moreover, has failed to show to the reasonable satisfaction of the commission that the sales agent was, at the time he performed such services for the company, engaged in an independently established business of the same nature as that involved in the contract of service.

"While it may be true the sales agent may have had the right to engage in an independently established business in addition to his contract of service for the company, the fact remains that he did not do so.

"The Commission therefore finds from the evidence that as to fact and law the claimants' services performed for the employer were in employment subject to the Act as defined by the statute."

With due respect for those who differ, the writer thinks that there is testimony of a substantial nature supporting the findings of the commission, and that such findings are sufficient upon which to base the relief granted to claimant by the commission.

The writer is also of the opinion that the taxing feature of the unemployment compensation legislation is incidental rather than controlling; that the paramount purpose is one of relief under the police power.

As to the effect of the federal legislation upon the construction to be given to a state statute, such as the one under consideration, the writer is indebted to Mr. Justice Seawelll of the Supreme Court of North Carolina for the following ruling:

"The fact that the State has engaged in a cooperative scheme with the Federal Government does not necessarily imply strict uniformity in the incidence of the tax levied by the State and Federal laws. Conformity in that respect is not a condition of approval of the State law under Title III, Section 303, of the Federal Act, 42 U.S.C.A. § 503. The so-called 'draft bills' present the minimum of requirement for such approval, but it is made clear that the several States are under no compulsion as to 'just what type of legislation it desires and how it shall be drafted'. In fact, under the decision of the highest Federal Court, the State was not coerced or compelled to pass any law at all, but presumably was induced to do so both because of a recognized social necessity, the offer of the Government of a gift in aid of the enterprise, and the advantage of credit on payment of the Federal taxes. Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279, 109 A.L.R. 1293; Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 57 S.Ct. 868, 81 L.Ed. 1245, 109 A.L.R. 1327. The Federal contribution is in the nature of a gift in aid which might as well have come from any other source of taxation and, correlatively, the employment tax collected by the Federal Government might have been expended for any other legitimate Federal purpose. Considering the social security intended to be afforded by the State and Federal laws in their joint adventure, these laws are sufficiently coordinated, provided there is within the State sufficient reciprocity between the employment upon which the tax is levied and those who receive its benefits. In the construction which the Court has given the State Unemployment Compensation Law, this balance is not disturbed.

"Once having entered the field of social security of this kind, the State Legislature was not required to conform in every respect to the national ideology on the subject as expressed in the...