State v. Kenyon, Inc.

Decision Date14 May 1941
Docket NumberNo. 9108.,9108.
Citation153 S.W.2d 195
PartiesSTATE et al. v. KENYON, Inc.
CourtTexas Court of Appeals

Appeal from District Court, Travis County; J. D. Moore, Judge.

Action by the State of Texas and others against Kenyon, Incorporated, for taxes allegedly due under the Texas Unemployment Compensation Act, Vernon's Ann. Civ.St. art. 5221b-1 et seq. From the judgment, the plaintiffs appeal.

Affirmed.

Gerald C. Mann, Atty. Gen., and Morris Hodges, Asst. Atty. Gen., for appellant.

David M. Stiles, of Cuero, for appellee.

R. E. Underwood, R. C. Johnson, J. B. Dooley, R. A. Wilson, and W. M. Sutton, all of Amarillo, amici curiae.

BLAIR, Justice.

Appellant, State of Texas, sued appellee, Kenyon, Inc., for taxes alleged to be due under the Texas Unemployment Compensation Act. Vernon's Ann.Civ.St. Art. 5221b—1 et seq. The case was tried upon an agreed statement of facts which showed that appellee corporation employed five full time salaried employes, and in addition had three officers, namely, K. F. Wilkinson, president and manager, who was paid a full time salary; David Stiles, vice-president and assistant secretary-treasurer, who acted with the president, and who was compensated as the attorney for appellee corporation; and Mrs. K. F. Wilkinson, who was secretary-treasurer, but was paid no salary. She did not regularly attend the offices of the appellee corporation, but was there on some occasions, and executed some of the social security returns and other papers for the corporation. She was available at all times to fulfill the office of secretary-treasurer, if her services as such officer were needed. She did not receive any remuneration for her services, and there was no specific contract of hire; her only relationship to the corporation being secretary-treasurer thereof.

The trial court held that Mrs. Wilkinson, the secretary-treasurer, was not "in employment" of appellee Kenyon, Inc., under the terms of Art. 5221b—1 et seq., and decreed that the State take nothing by its suit.

The Attorney General contends that under the above agreed statement of facts, Mrs. K. F. Wilkinson, secretary-treasurer of the Kenyon, Inc., was "in employment" of the corporation under the provisions of the Texas Unemployment Compensation Act, the material portions of which read as follows:

Sec. 5(a) of Art. 5221b: "On and after January 1, 1936 contributions shall accrue and become payable by each employer for each calendar year in which he is subject to this Act, with respect to wages payable for employment occurring during such calendar year. * * *"

Sec. 17 of Art. 5221b:

"(f) `Employer' means

"(1) Any employing unit which for some portion of a day, but not necessarily simultaneously, in each of twenty (20) different weeks, whether or not such weeks are or were consecutive, within either the current or the preceding calendar year, has or had in employment eight (8) or more individuals (irrespective of whether the same individuals are or were employed in each such day). * * *

"(g) (1) `Employment' subject to the other provisions of this subsection, means service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied. * * *

"(o) `Wages' means all remuneration payable for personal services, including commissions and bonuses and the cash value of all remuneration payable in any medium other than cash. Gratuities customarily received by an individual in the course of his employment from persons other than his employing unit shall be treated as wages payable by his employing unit. The reasonable cash value of remuneration payable in any medium other than cash, and the reasonable amount of gratuities, shall be estimated and determined in accordance with rules prescribed by the Commission."

We have reached the conclusion that Mrs. Wilkinson was not "in employment" of the corporation, and since the exclusion of her reduces the number of employes to less than eight, appellee is not required to pay the taxes sued for.

According to the definition of the term "employment" as used in the Act, it is necessary that the employe or individual who performs services must be paid wages, or must be employed under a contract of hire, which necessarily presupposes remuneration for such services rendered. The term "hire" has always been construed, both in this jurisdiction and others, to refer to payment or receipt of compensation, as distinguished from a gratuitous service or non-remunerative service. Texas Life Ins. Co. v. Roberts, 55 Tex.Civ. App. 217, 119 S.W. 926; Carter-Mullaly Transfer Co. v. Angell, Tex.Civ.App., 181 S.W. 237; Neel v. State, 33 Tex.Cr. 408, 26 S.W. 726; Shannon v. Western Indemnity Co., Tex.Com.App., 257 S.W. 522; American Employers' Ins. Co. v. Williams, 127 Tex. 466, 94 S.W.2d 1147; Cook v. Millers' Indemnity Underwriters, Tex. Com.App., 240 S.W. 535. The courts of Texas have uniformly recognized that remuneration is a necessary element in a contract of hire, in construing our Workmen's Compensation Act, Vernon's Ann. Civ.St. art. 8309, § 1, which defines "employe" to include "every person in the service of another under any contract of hire, expressed or implied, oral or written." Millers' Mutual Casualty Co. v. Hoover, Tex.Com.App., 235 S.W. 863; Maryland Casualty Co. v. Kent, Tex.Civ. App., 271 S.W. 929, affirmed Tex.Com. App., 3 S.W.2d 414; Beeman v. Georgia Casualty Co., Tex.Com.App., 41 S.W.2d 39. See also Coviello v. Industrial Comm. of Ohio, 129 Ohio St. 589, 196 N.E. 661.

The exact question presented here has been decided by the highest courts of three states in the construction of their unemployment compensation statutes, which are either identical or virtually identical with the Texas Act. Davie, Com'r of Labor, v. Mandelson Co., N. H., 11 A.2d 830; Brannaman v. Richlow Mfg. Co., 106 Colo. 317, 104 P.2d 897; and State ex rel. Murphy v. Welch & Brown, 187 Okl. 470, 103 P.2d 533, 534. This last case cites the first two and determines under statutes identical with or similar to ours that an officer of a corporation who receives no wages, salary or remuneration is not included in determining the number of persons "in employment" of a corporation; and from which we quote as follows:

"It is clear that the secretary was not an employee for `remuneration' as that term is defined since she received no compensation for her services. Was she then, an employee under a contract of hire as that term is used in the statute? We think not. Since the statute does not define the term `contract of hire', we are required to apply Sec. 24, O.S.1931, 25 Okl.St.Ann. § 1, which provides that `words used in any statute are to be understood in their ordinary sense, except when a contrary intention plainly appears'. Webster defines the noun hire as `the price, reward, or compensation paid, or contracted to be paid for * * * personal service, or for labor'. It is also defined as `the price or compensation for labor and services'. 29 C.J. 756. The definition as given by Webster was applied to the Ohio Workmen's Compensation Act, Gen. Code Ohio, § 1465-61, which used the term `contract of hire'. Coviello v. Industrial Commission, 129 Ohio St. 589, 196 N.E. 661. See also Western Indemnity Co. v. Pillsbury, 172 Cal. 807, 159 P. 721.

"In the case of Davie v. J. C. Mendelson Co., N. H., 11 A.2d 830, the court construed the Unemployment Compensation Act of New Hampshire, Laws 1937, c. 178, § 1, Par. 1, which defined `employment' as...

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  • Henderson v. State
    • United States
    • Alabama Court of Criminal Appeals
    • April 12, 1988
    ...service, or for labor." It is also defined as "the price or compensation for labor and services." 29 C.J. 756.' " State v. Kenyon, Inc., 153 S.W.2d 195 (Tex.Cir.App.1941). See also State v. Welch & Brown, 187 Okl. 470, 471, 103 P.2d 533, 534 " 'The element of price or reward is inherent in ......
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