Smith v. E.T.L. Enterprises

• Decision Date: 13 January 1978
• Citation: 382 A.2d 939,155 N.J.Super. 343
• Parties: Berkeley R. SMITH, Jr., Petitioner-Appellant, v. E.T.L. ENTERPRISES, Respondent-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 343

155 N.J.Super. 343

382 A.2d 939

Berkeley R. SMITH, Jr., Petitioner-Appellant, v. E.T.L. ENTERPRISES, Respondent-Respondent.

Superior Court of New Jersey, Appellate Division.

Argued Nov. 9, 1977.

Decided Jan. 13, 1978.

Malcolm A. Colton, Newark, for petitioner-appellant (Colton & Colton, Newark, attorneys).

Norman A. Doyle, Jr., Kearny, for respondent-respondent.

Before Judges LYNCH, BISCHOFF and KOLE.

The opinion of the court was delivered by

LYNCH, P. J. A. D.

In this case petitioner appeals from an order of the Division of Workers' Compensation which dismissed his petition on the ground that petitioner was an independent contractor at the time of the accident involved and was not an employee of respondent.

Because of the inadequate findings of fact in the Division we have determined to reverse and remand for specific findings of fact and conclusions.

The totality of findings made by the judge of compensation in dismissing the petition are contained in the following few lines in the transcript:

THE JUDGE: After considering the evidence presented and the testimony of the petitioner, cross-examination by the respondent, the exhibits presented I find that the petitioner in accordance with the equipment lease or rental equipment lease, R-1 in evidence, that the petitioner was an independent contractor.

Therefore, the respondent is not responsible for the accident in which the petitioner was involved in (sic ).

Obviously those "findings" are totally inadequate.

At the risk of repetition, yet with the hope of some educational value, we repeat what is required in making findings of fact.

In Application of Howard Savings Institution of Newark, 32 N.J. 29, 159 A.2d 113 (1960), the Supreme Court said:

It is axiomatic in this State by this time that an administrative agency acting quasi -judicially must set forth basic findings of fact, supported by the evidence and supporting the ultimate conclusions and final determination, for the salutary purpose of informing the interested parties and any reviewing tribunal of the basis on which the final decision was reached so that it may be readily determined whether the result is sufficiently and soundly grounded or derives from arbitrary, capricious or extra-legal considerations. New Jersey Bell Telephone Co. v. Communications Workers of America, 5 N.J. 354, 75 A.2d 721 (1950); cf. Grundlehner v. Dangler, 29 N.J. 256, 271-272, 148 A.2d 806 (1959). (at 52, 159 A.2d at 125)

In Van Realty, Inc. v. Passaic, 117 N.J.Super. 425, 285 A.2d 52 (App.Div.1971), the Appellate Division remanded a tax assessment case, noting that the decision below merely recited the expert testimony presented at the hearing and failed to make any independent findings. The court declared:

The reversals here may serve to alert the Division, and all quasi -judicial and administrative agencies, to their duty to make adequate findings of fact and to express the reasons for their decisions. There is a compelling need for such bodies to understand what constitutes an adequate finding of fact, the practical reasons why they are mandated, the distinctions between ultimate and basic facts, and the necessity that the findings have evidential support. It is equally necessary that such agencies understand why their reasons must be adequately expressed. See particularly, Davis, Administrative Law Treatise (1958), § 16.01 et seq. at 435-490, and 2 Cooper, State Administrative Law (1965), at 472-478. For New Jersey guidelines, see In re Erie Railroad System, 19 N.J. 110, 115 A.2d 89 (1955); D., L. & W.R. Co. v. Hoboken, 10 N.J. 418, 91 A.2d 739 (1952); In re Kresge-Newark, Inc., 30 N.J.Super. 489, 105 A.2d 12 (App.Div.1954), and Samuel Hird & Sons, Inc. v. Garfield, 87 N.J.Super. 65, 208 A.2d 153 (App.Div.1965). (at 429, 285 A.2d at 54)

Further, besides stating findings of fact, quasi -judicial administrative decisions must set forth an "analytical expression of the basis which, applied to the found facts, led to the holdings below." Benjamin Moore & Co. v. Newark, 133 N.J.Super. 427, 428, 337 A.2d 371, 372 (App.Div. 1975).

In the case at bar neither the judgment of dismissal nor the oral opinion rendered at the hearing reflect these standards. The briefest examination of them shows them to be conclusory and without reference to any of the testimony presented at the hearing. Nor is there any legal analysis of the contentions raised by the parties. This failure is particularly distressing because the testimony below is so unclear as to make the exercise of original jurisdiction on the appellate level unsatisfactory. R. 2:10-5. Indeed, several important factual issues may turn upon the credibility of the parties.

In the legal analysis of the evidence the judge of compensation on remand shall be guided by the following legal principles. In determining whether an individual is an employee within the provisions of the Act, the court must consider all of the circumstances attendant upon the relationship of the parties. Buchner v. Bergen Evening Record, 81 N.J.Super. 121, 128, 195 A.2d 22 (App.Div.1963); Biger v. Erwin, 108 N.J.Super. 293, 298, 261 A.2d 151 (Cty.Ct.1970), aff'd 57 N.J. 95, 270 A.2d 12 (1970). The term " employee" should be given neither a mechanical nor overly restrictive interpretation. Marcus v. Eastern Agricultural Ass'n, Inc., 58 N.J.Super. 584, 602, 157 A.2d 3 (App.Div.1959), rev'd, adopting Judge Conford's dissent, 32 N.J. 460, 161 A.2d 247 (1960). Rather, the term must be construed liberally in order to bring as many cases as possible within the coverage of the act. Hannigan v. Goldfarb, 53 N.J.Super. 190, 195, 147 A.2d 56 (App.Div.1958); see Rutherford v. Modern Transp. Co., 128 N.J.Super. 504, 509, 320 A.2d 522 (Law Div.1974).

Also, the court must bear in mind that the purpose of the Workers' Compensation Act is to pass on the cost of industrial accidents as part of the cost of the product. Marcus v. Eastern Agricultural Ass'n, Inc., supra, 58 N.J.Super. at 603, 157 A.2d 3; 1A Larson, Workmen's Compensation, § 43.51 (1973). And (quoting Larson ):

It follows that any workers whose services form a regular and continuing part of the cost of that product, and whose method of operation is not such an independent business that it forms in itself a separate route through which his own costs of industrial accident can be channelled, (are) within the area of intended protection. (58 N.J.Super. at 603, 157 A.2d 13).

There are a great variety of cases which deal with the question of whether an individual is an employee entitled to compensation benefits or an independent contractor who must provide his own protection. The courts have devised two tests for answering this question: the right to control test and the relative nature of the work test. Although the courts have lately placed greater reliance upon the latter test, Rutherford v. Modern Transport Co., supra, 128 N.J.Super. at 509, 320 A.2d 522, both tests are basically designed to draw a distinction between those occupations which are properly classified as separate enterprises and those which are in fact an integral part of the employer's regular business. See generally, Ehehalt v. Livingston Bd. of Ed., 147 N.J.Super. 511, 512, 371 A.2d 752 (App.Div.1977). Further, the control test is still a factor to be considered when reviewing a given relationship. Marcus v. Eastern Agricultural Ass'n, Inc., supra, 58 N.J.Super. at 597, 157 A.2d 3.

Under the control test, the actual exercise of control is not as determinative as the right of control itself. Mahoney v. Nitroform Co., Inc., 20 N.J. 499, 506, 120 A.2d 454 (1956). This is so because in many instances the expertise of an employee precludes an employer from giving him any effective direction concerning the method he selects in carrying out his duties. See Berkeyheiser v. Woolf, 71 N.J.Super. 171, 177, 176 A.2d 497 (App.Div.1961). Thus, the element of control is largely left to inference. 1A Larson, Workmen's Compensation § 44.32 (1973). However, where the "employer" supplies expensive machinery, the inference of control can become quite strong. For example, in Tofani v. Lo Biondo Brothers Motor Express, Inc., 83 N.J.Super. 480, 486-487, 200 A.2d 493, 499 (App.Div.), aff'd o.b. 43 N.J. 494, 205 A.2d 736 (1964), the court observed The owner of a five thousand dollar truck who entrusts it to a driver is naturally going (to retain the right) to dictate details in order to protect his investment. Moreover, he will also want to ensure that it is kept as busy as possible. For these reasons, it is not surprising that there seems to be no case on record in which the employer owned the truck but the driver was held to be an independent contractor.

An example of the "control" test is found in Piantanida v. Bennett, 17 N.J. 291, 111 A.2d 412 (1955). There, the plaintiff, who operated a landscaping business with his own truck, tractor, etc., was engaged by a wrecking company to clear debris from a demolition site. He was shown what debris to cart off, where it should be loaded and when loading should take place. 17 N.J. at 294, 111 A.2d 412. "Here the defendant not only directed what should be done but in a large measure how it should be done * * *." Id. at 296, 111 A.2d at 414. Cf. Wilson v. Kelleher Motor Freight Lines, Inc., 12 N.J. 261, 264, 96 A.2d 531 (1953). Thus, the test for control entails an assessment of the employer's right to determine how a particular job should be performed.

In the case at bar respondent E.T.L. itself owned the tractor leased by Smith, thereby giving rise to the substantial inference of control noted by the court in Tofani, supra. Also, the fact of control may be (we do not say it is) established because (a) Chaim Mizrahi, an E.T.L. officer, testified at the hearing that "we wanted to keep control because it's our equipment"; (b) lessee/drivers were required to call in after delivering outgoing loads; (c) Smith, at times, was required to permit...