State ex rel. Mulhausen v. Superior Court for Thurston County

• Citation: 22 Wn.2d 811,157 P.2d 938
• Decision Date: 13 April 1945
• Docket Number: 29322,29339.
• Court: United States State Supreme Court of Washington
• Parties: STATE ex rel. MULHAUSEN v. SUPERIOR COURT FOR THURSTON COUNTY et al. MULHAUSEN v. RILEY, Com'r of Unemployment Compensation and Placement.

157 P.2d 938

22 Wn.2d 811

STATE ex rel. MULHAUSEN v. SUPERIOR COURT FOR THURSTON COUNTY et al.

MULHAUSEN v. RILEY, Com'r of Unemployment Compensation and Placement.

Nos. 29322, 29339.

Supreme Court of Washington, En Banc.

April 13, 1945

Rehearing Denied June 23, 1945.

Proceeding by R. W. Mulhausen, an individual, doing business as R. W Mulhausen Company, against E. B. Riley, as Commissioner of Unemployment Compensation and Placement of the State of Washington, for review of an assessment for contributions to the unemployment compensation fund. To review that part of the judgment permitting a recovery by commissioner, the State of Washington, on relation of R. W. Mulhausen, etc., brought certiorari against the Superior Court of the State of Washington for Thurston County and the Honorable John M Wilson, one of the Judges thereof, which certiorari proceeding was consolidated with the appeal by R. W Mulhausen from judgment confirming the Commissioner.

Affirmed.

MILLARD STEINERT and SIMPSON, JJ., dissenting.

Appeal from Superior Court, Thurston County; John M. Wilson, judge.

C. P. Borberg, of Seattle, for appellant.

Smith Troy and George W. Wilkins, both of Olympia, for respondent.

BLAKE Justice.

The main issue presented on this appeal is identical with that decided by this court in Mulhausen v. Bates, 9 Wash.2d 264, 114 P.2d 995: Whether appellant is an employer, in contemplation of the Unemployment Compensation Act, Rem.Rev.Stat. (Sup.), §§ 9998-101, 9998-123, of certain individuals serving him in the sale of oleomargarine in this state.

Appellant, doing business as R. W. Mulhausen Company, is a distributor of oleomargarine. His principal place of business is in Portland, Oregon. His principal field of distribution is in the state of Washington. At the time the unemployment compensation act became effective in 1937, and since, he has had numerous agents, or distributors (eight or more persons), located at various points in this state who have been engaged in taking orders for, and making delivery of, oleomargarine. These persons did not handle oleomargarine exclusively. They also handled other food products for other manufacturers or producers. They paid their own expenses and performed services for Mulhausen as and when their own convenience was best subserved. For their services, they were compensated by a commission based upon the purchase price of the oleomargarine sold. The territory in which they worked was defined only in a general way.

In getting oleomargarine to the ultimate consumers, these agents, or distributors, would make arrangements with retail grocers to act as 'grocer agents.' The latter would take orders from the ultimate consumers on order blanks furnished by Mulhausen. The distributors would pick up these orders with a 'deposit' from the grocer agents. This deposit was in an amount of the purchase price to the ultimate consumer, less a commission held out for himself by the grocer agent. The distributor would transmit the orders and deposits (less a commission held out for himself) to Mulhausen at Portland. Mulhausen would fill the orders in separate parcels with the name of the ultimate consumer on each. A number of such parcels would usually be shipped at the same time--consigned either to the distributor or to the R. W. Mulhausen Company as consignee. In either case, the distributor would receive the consignment and deliver the parcels to the grocer agents to whom the ultimate consumers had given their orders. The latter received the oleomargarine from the grocer agents in the 'original package' shipped by Mulhausen from Portland.

This complex method of distribution was designed to maintain the integrity of the transaction as a shipment in interstate commerce. The purpose was to escape the payment of the excise tax of fifteen cents a pound upon the sale of butter substitutes under the Laws of 1931, chapter 23, p. 77, § 2, Rem.Rev.Stat. § 8358-2.

The necessity for maintaining the interstate character of the shipments and the consequences of failure to do so is best told by Mulhausen himself. He testified:

'A. * * * we did get out order forms and when any agents started handling oleomargarine in any capacity or in any territory, we furnished him these order forms to use so that the orders could come in and that was for the purpose, of course, of keeping the business in accordance with the rules of the interstate commerce shipments * * *.

'Q. I will ask you * * * if it is not a fact that Regulation 9 of the Bureau of Internal Revenue specifies in some considerable detail the manner in which oleomargarine may be handled without incurring a tax liability to the handlers, save and except the original seller. A. It does. There is a possible chance of the agent handling oleomargarine in the territory but if we don't keep our orders in shape they may be questioned and fined by the Internal Revenue Department * * *.

'Q. * * * what has been the experience of your company in respect to merchandise, if any, which was returned or perhaps held for a period of time by the representatives? * * * A. Well * * * we went over that very carefully with the Internal Revenue Department and in cases where an agent * * * failed in any way to deliver to a consumer, that merchandise has been returned to our office at our expense * * *. For the purpose of protection on our interstate commerce requirements, it is our merchandise until it reaches the ultimate consumer.

'Q. And you so consider it? A. Yes.

'Q. Then the money collected, whether picked up by [from] the ultimate consumer or whether it is picked up from the grocer agent, that money represents the price that is to be paid to you, it is considered your money? A. It is considered our money, yes, the money that is to be for us is considered our money. * * *

'Q. * * * If that representative had walked off with that money and had not accounted for it, he would be taking your money, would he not? A. I think I would be the loser, naturally.

'Q. It was not, then, a matter of debit and credit on account, it was a matter of collecting your money for you for the merchandise that was shipped? A. Well, probably you are right there.'

In Mulhausen v. Bates, supra, we held that one Farmer, who had been employed by Mulhausen under circumstances and conditions essentially the same as the agent distributors in this case, was, after being discharged, entitled to unemployment compensation.

Such holding was necessarily predicated upon the assumption that the commissioner's findings that Mulhausen was an 'employer,' as defined by Rem.Rev.Stat. (Sup.), § 9998-119(f)(1), now amended by Rem.Supp.1943, and that the service rendered by Farmer constituted 'employment,' in contemplation of Rem.Rev.Stat. (Sup.), § 9998-119(g)(5), Laws of 1937, chapter 162, p. 609, § 19, were supported by substantial evidence; otherwise, Farmer would not have been entitled to unemployment compensation.

In this case, the issue is the same as in that. It arises, however, upon Mulhausen's appeal from a notice of assessment made by the commissioner for contributions to the unemployment compensation fund. The assessment was in the amount of $2,007.96. It was based on commissions paid agent distributors, as shown by Mulhausen's own records, and covered the period from March 16, 1937, the effective date of the Unemployment Compensation Act, to September 20, 1941.

At the hearing Before the appeal tribunal, evidence was adduced by Mulhausen showing that the assessment was based on remuneration paid to one person who operated with him (Mulhausen) on a partnership basis and to certain others who either were not under contract with him or who resided in Idaho and operated exclusively in that state. The appeal tribunal accordingly reduced the assessment in so far as it was based on remuneration to these persons; so reduced, the assessment stands at $1,869.80.

Mulhausen appealed from the decision to the superior court for Thurston county, which affirmed the decision of the appeal tribunal and entered judgment for $1,869.80.

If the statutory definitions of employer and employment are accepted at face value, it is clear that Mulhausen is liable for contributions to the unemployment compensation fund in the amount found due by the appeal tribunal--$1,869.80. The appellant contends, however, that the relationship of employer and employee, as defined by the statute, was circumscribed and limited by this court in the decision of the case of Washington Recorder Publishing Co. v. Ernst, 199 Wash. 176, 91 P.2d 718, 124 A.L.R. 667, to the common-law concepts attending the relationship of master and servant.

It is quite true that language was used in that decision upon which such contention may well be made; however, the language used was out of harmony with the interpretation of the statutory definition of employer and employment as laid down by this court in the prior case of McDermott v. State, 196 Wash. 261, 82 P.2d 568. In that case, we expressly stated that the statutory definitions embraced relationships which were outside of and beyond the common-law concepts of the relationship of master and servant.

In Mulhausen v. Bates, supra, we reverted to the statutory definitions of employer and employment as interpreted in McDermott v. State, supra. Since then, we have accepted the statutory definitions at their face value in a number of cases. In re Foy, 10 Wash.2d 317, 116 P.2d 545; Sound Cities Gas & Oil Co. v. Ryan, 13 Wash.2d 457, 125 P.2d 246; In re Hillman Investment Co., 15 Wash.2d 452, 131 P.2d 160; Unemployment Compensation Department v. Hunt, 17 Wash.2d 228, 135 P.2d 89. In the case last cited, we said, 17 Wash.2d at page 236, 135 P.2d at page 93:

'We have upon a number of...