State v. Bartley

• Decision Date: 09 July 1943
• Docket Number: 29039.
• Parties: STATE v. BARTLEY et al.
• Court: Washington Supreme Court

139 P.2d 638

18 Wn.2d 477

STATE v. BARTLEY et al.

No. 29039.

Supreme Court of Washington

July 9, 1943

Department 2.

Action by State of Washington against A. J. Bartley and Jane Doe Bartley, his wife, and A. J. Bartley & Company, to recover unpaid industrial insurance premiums and penalties. From a judgment for plaintiff, the defendants appeal.

Affirmed.

Appeal from Superior Court, Pacific County; Hon. John I O'Phelan, judge.

Fred M Bond, of South Bend, for appellants.

Smith Troy and Rudolph Naccarato, both of Olympia, for respondent.

GRADY Justice.

Prior to April 30, 1940, A. J. Bartley had been engaged in the business of logging off lands owned by others and using his own machinery and equipment. He contracted to log two tracts of timber lands. He anticipated the possibility of labor difficulties, and, also finding the payment of industrial insurance premiums to the state burdensome conceived the plan of entering into an arrangement with workmen whereby they would be paid the going wage for their particular kind or class of work and, under certain circumstances, share in any profits which might be made. It was believed by Bartley that, by such an arrangement, the union labor problem, with attendant strikes and other labor difficulties, could be avoided, the workmen would be more interested in the work and its success, and the legal result would follow that the workmen would not be affected by the Workmen's Compensation Act.

To carry out this plan, a verbal agreement was had on April 30 1940, between Bartley and certain workmen for the logging of one of the tracts, and a written agreement was made in March, 1941, relative to the other tract. The two contracts were so similar in their terms that, for the purpose of our decision, they may be treated together, though the workmen who operated under each contract were substantially different.

Before the completion of the work covered by the written contract, the state brought suit against A. J. Bartley and wife and A. J. Bartley and Company to recover unpaid industrial insurance premiums and penalties, upon the theory that the relationship between Bartley and the workmen engaged in the logging operations was that of employer and employees. The defense set up by the defendants was that defendant A. J. Bartley and Company was a partnership composed of A. J. Bartley and the various workmen involved, hence no such premiums were owing to the state.

The case was tried Before the court, and it was found and adjudged that the workmen were the employees of Bartley, and a judgment was entered against him and his wife, both as a community and under the firm name of A. J. Bartley and Company, for the amount of the unpaid premiums and penalties, from which an appeal has been taken by them.

The contracts provided that the appellant Bartley would contribute his logging equipment and the workmen their labor in a partnership enterprise, and conduct the logging operations under the name of A. J. Bartley and Company. No working capital was provided, but this was later derived from money borrowed by appellants on their own credit and by the sale of logs cut under the two contracts. Appellant Bartley was to receive the sum of three hundred dollars a month as rental for his equipment, each workman was to be assigned, by mutual agreement, to the kind or class of work for which he was best fitted, and the workmen were to be paid the reasonable and prevailing wage each month. The cost of maintaining the equipment and replacements, the rental, a reasonable amount to Bartley for his services as manager, and the compensation to be paid to the workmen, were to be paid first, and the balance of money on hand, if any, was then to be divided equally. Under the verbal agreement, the division of profits was to be when the job was finished, but it is to be inferred from the written agreement that this was to be done monthly. If at any time any of the workmen desired to withdraw from the enterprise, he could do so, but this was not to interfere with the contracts being continued by the others. When there was a withdrawal, such person was to be paid his earned wages and, by the terms of the written contract, his share of the then accrued net profits, if any.

The foregoing is the substance of the written agreement made in March, 1941, but the testimony shows that there were other contractual terms of the verbal agreement of 1940 carried forward into the former, though not set forth therein. The course of dealing throughout also indicates that all parties assumed, and took for granted, the existence of the additional contractual terms of the oral agreement and, along with these, we shall refer to some of the course of dealing which we consider had an important bearing on the true relationship of the parties.

It was agreed that each workman would secure accident insurance from some insurer of his own choosing, he to pay one half of the premium and the other one half to be paid out of the funds of the enterprise. Appellant Bartley reserved the right to manage the work and to hire and discharge temporary employees. He kept the bank account in his own name. Mrs Bartley kept the books and signed the checks, and the general conduct of the business affairs was substantially the same as when appellant Bartley operated prior to April 30, 1940. When the verbal agreement was made, some of the former employees of Bartley's were parties to it, along with additional...