Taylor v. Employment Division

• Jurisdiction: Oregon
• Citation: Taylor v. Employment Division, 597 P.2d 780, 286 Or. 711 (Or. 1979)
• Docket Number: No. 77-S-3100,77-S-3100
• Parties: Charles C. TAYLOR, Petitioner, v. EMPLOYMENT DIVISION, State of Oregon, and C & J Cutting, Inc., Respondents. ; CA 10445; SC 25864. . *
• Court: Oregon Supreme Court
• Decision Date: 19 June 1979

Page 780

597 P.2d 780

286 Or. 711

Charles C. TAYLOR, Petitioner, v.EMPLOYMENT DIVISION, State of Oregon, and C & J Cutting Inc., Respondents.

No. 77-S-3100; CA 10445; SC 25864.

Supreme Court of Oregon, In Banc. ^*

Argued and Submitted March 6, 1979.

Decided June 19, 1979.

Alan L. Ludwick, Eugene, argued the cause for petitioner.With him on the brief was Donald K. Armstrong, P. C., Eugene.

Al J. Laue, Asst. Atty. Gen., Salem, argued the cause for respondentEmployment Division.On the brief, were James A. Redden, Atty. Gen., Walter L. Barrie, Sol.Gen. and Gregory Parker, Asst. Atty. Gen., Salem.

No appearance by respondentC & J Cutting, Inc.

LENT, Justice.

Plaintiff appeals from a decision of the Court of Appeals¹ that he is not entitled to unemployment benefits for a two-week period from October 23, 1977 to November 5, 1977.The Court of Appeals opinion upheld decisions by an administrator ^1A and referee of the Employment Division and an affirmance, on a 2-1 vote, by the Employment Appeals Board denying benefits.We reverse.

The decisions of the administrator, referee and Employment Appeals Board were based on almost identical grounds.The referee's findings of fact, conclusion, and decision were the most detailed:

"FINDINGS OF FACT based upon the hearing record, and entered by the referee are: (1)Claimant and his wife are the sole share holders in C & J Cutting, Inc.(2)Claimant is the president of the company which does timber cutting on a contract basis.(3)Claimant receives no salary as president, but works for wages as a timber cutter and supervisor.(4)Claimant spends approximately one day per week on corporation business, which includes consulting with the company accountant, inspecting timber land and contacting potential customers.(5) During the period in issue (October 23 through November 5, 1977)claimant made approximately eight employer contacts.(6) Four of these contacts were made in behalf of the corporation in an attempt to obtain cutting contracts.(7)Claimant is responsible for the overall operation of the business and the maintenance of corporation equipment.

"CONCLUSION: Claimant was not unemployed, nor sufficiently available for work, or actively seeking and unable to obtain suitable work during the period October 23, 1977 through November 5, 1977.

"As president of C & J Cutting, Inc.claimant performed services for the company which were both ongoing and substantial.Claimant's services included not only the essential, routine business affairs of the company, but also a continuous concerted effort to solicit business for the corporation.During those times when claimant was seeking employment he was simultaneously engaged in selling the corporation's services.

"ORS 657.100 provides, in part:

" 'An individual is deemed "unemployed" in any week during which he performs no services and with respect to which no wages are payable to him, or in any week of less than full-time work if the wages payable to him with respect to such week are less than his weekly benefit amount. * * * '

"In an almost identical case, Anttonen v Morgan, 9 Or.App. 169(496 P.2d 733)(1972), the Oregon Court of Appeals found that the president of a corporation, performing essential services, as claimant has, cannot be considered as unemployed even though he is not immediately compensated for those services.

"During the period in issue claimant was acting primarily as an officer of the corporation and was only secondarily a member of the labor force.

"DECISION: The administrators (sic) decision served November 4, 1977 is affirmed.Claimant is not eligible for benefits under ORS 657.100 and 657.155(1)(c) for the period October 23, 1977 through November 5, 1977."

Further elaboration on the referee's findings is helpful as background to this case.Claimant incorporated C & J Cutting, Inc., with his wife in February of 1975.Apparently the advantage of the corporation was that claimant could seek employment as a logger both individually and in his corporate capacity.He also hired other employees for the corporation.

Since the formation of the corporation, claimant worked "11 or 12 months" for companies other than C & J Cutting, Inc., and "18 to 20 months" for his own company.He at all times maintained the records and continued to look for contracts for the corporation.He performed various services for the corporation, such as contacting potential employers, making inspections, maintaining equipment, and turning records over to an accountant for bookkeeping and payroll activities.Claimant, however, was not paid for these services he rendered to the corporation, but only as a logger-employee of the corporation when it was hired to do logging.

Prior to October 23, 1977, claimant was employed by Ira Mann Logging, Cottage Grove, Oregon, but was laid off when that company finished the job for which he was hired.He testified that during the two-week period in question, he looked for work either as an individual or as a contract cutter with his corporation, and he looked for work in the evenings because it was impossible to contact the potential customers who were working during the day.He did not receive or turn down any job offers during that two-week period.

The primary issue presented by the parties in this case is whether a shareholder and officer of a corporation who performs services for his corporation without compensation is disqualified from receiving unemployment benefits because of those uncompensated services.ORS 657.100 provides:

"An individual is deemed 'unemployed' in any week during which he performs no services and with respect to which no wages are payable to him, or in any week of less than full-time work if the wages payable to him with respect to such week are less than his weekly benefit amount.The assistant director shall prescribe such regulations as he deems necessary with respect to the various types of unemployment."

An initial question to be decided is the scope of judicial review of this administrative decision.McPherson v. Employment Division, 285 Or. 541, 591 P.2d 1381(1979).This in turn is dependent on whether an agency's decision poses a question of law or fact, and as applied to a statutory term, whether the agency has an initial responsibility for defining it.285 Or. at 548, 591 P.2d 1381.

The last sentence of ORS 657.100 apparently addresses this question: "The assistant director shall prescribe such regulations as he deems necessary with respect to the various types of unemployment."Despite the "shall prescribe" language, the sentence leaves the decision to make regulations to the discretion of the assistant director because of the phrase "as he deems necessary."The parties did not address this provision in their briefs, but in oral argument before this courtclaimant's counsel suggested that the "as he deems necessary" language is controlling.Defendant's counsel did not express an opinion to the contrary.

Aside from the last sentence of ORS 657.100, it is also helpful to consider the nature of the term to be defined, in this case"unemployment," to determine whether the agency has an initial responsibility for defining it.In McPherson, 285 Or. at 549-550, 591 P.2d at 1386, we discussed the situations in which the agency is to provide such a definition:

"Distinct from such agency 'expertise' in giving meaning to a technical or specialized terminology is the question how far the statutory term entrusts to the agency some range of choice in carrying out the legislative policy.We do not regard the Employment Division as the kind of 'expert agency' that has special knowledge of the meaning of such statutory terms as 'employment,''direction or control,''independently established business,' and the like.SeeBaker v. Cameron(240 Or. 354, 401 P.2d 691), Supra;Republic Dev. Co., Inc. v. Emp. Div.(284 Or. 431, 587 P.2d 466), Supra.In those phrases, the legislature refers to relationships that meet certain definable legal tests, though applying the tests to the facts of any given arrangement may sometimes be a close question.But the phrase 'good cause' is not that kind of a statutory term.Like standards such as 'fair' or 'unfair,''undue' or 'unreasonable,' or 'public convenience and necessity,''good cause' in its own terms calls for completing a value judgment that the legislature itself has only indicated: evaluating what are 'good' reasons for giving up one's employment and what are not.Judicial review of such evaluations, though a 'question of law,' requires a court to determine how much the legislature has itself decided and how much it has left to be resolved by the agency.For an agency decision is not 'unlawful in substance,'ORS 183.482(8), Supra, if the agency's elaboration of a standard like 'good cause' is within the range of its responsibility for effectuating a broadly stated statutory policy."

The term "unemployment" does not call "for completing a value judgment that the legislature itself has only indicated," and unlike "good cause" under ORS 657.176(2)(c), it is not singled out as a determination to be made by the assistant director.Further, the issue presented by this case focuses on the actual definition given to "unemployment" by the legislature in ORS 657.100, and involves questions of statutory construction including the use of the phrase "performs no services," the use of the conjunction "and" between that phrase and the phrase "with respect to which no wages are payable," and the relationship between the two parts of the first sentence of the statute.

The Court of Appeals focused on the first part of the statute and the use of the word "and" between the performance of no services and existence of payable wages.The court interpreted both phrases as requirements to be met before one can be considered "unemployed" and reasoned that "one is not unemployed unless he'performs no services.' "The case of ...