the Mutual Life Insurance Company of New York v. State

• Decision Date: 21 June 1941
• Docket Number: 6686
• Citation: 298 N.W. 773,71 N.D. 78
• Court: North Dakota Supreme Court

298 N.W. 773

71 N.D. 78

THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, a Corporation, Respondent, v. STATE OF NORTH DAKOTA, P. B. Sullivan, R. H. Walker, and Adolph Michelson, as Members of the North Dakota Workmen's Compensation Bureau, Appellants

No. 6686

Supreme Court of North Dakota

June 21, 1941

Syllabus by the Court.

1. The relationship of employer and employee must exist in order to make the provisions of the Workmen's Compensation Act Article 11a of Chapter 5 of the Political Code, being sections 396a1-396a33, 1925 Supplement to the 1913 Compiled Laws (chapter 162, Session Laws 1919), and acts amendatory thereof applicable.

2. Whether the relationship of employer and employee exists so as to make the provisions of the Workmen's Compensation Act applicable, must be determined as in other cases.

3. The test in determining whether the relationship of employer and employee exists is, who has the right of control of the details of the work. If the person for whom the work is being done has the right of control, whether he exercise it or not, and is concerned not only with the result but also with the manner and method of its doing, he is an employer, and the person doing the work his employee; if he is concerned merely with the result of the work and has no control over the details of its doing the person doing the work is an independent contractor.

4. The complaint in the instant case is examined, and it is held, for reasons stated in the opinion, that under the facts alleged the relationship between the plaintiff and its agents was that of employer and independent contractors.

Appeal from District Court, Burleigh County; Fred Jansonius, Judge.

Action by the Mutual Life Insurance Company of New York, a corporation, against the State, P. B. Sullivan and others, as members of the North Dakota Workmen's Compensation Bureau, to recover money paid under protest to the Bureau. From an order overruling a demurrer to plaintiff's complaint, defendants appeal.

Affirmed.

Alvin C. Strutz, Attorney General, and Lynn G. Grimson, Assistant Attorney General, for appellants.

In determining whether a person is an employee, within a workmen's compensation act, or an independent contractor, the most frequently cited test is that of control, he being an employee if he is subject to control of the party for whom the work is done and an independent contractor if he is not. 71 CJ 449; Tuttle v. Embury Martin Lumber Co. 192 Mich. 385, 158 NW 875.

One person is not liable for injuries caused by the negligence of another, unless such person possessed power to control the acts of the other in respect to the transaction out of which the injury arose. State ex rel. Virginia & R.L. Co. v. District Ct. 128 Minn 43, 150 NW 213; Lilly v. Haynes Co-op. Coal Min. Co. 50 ND 465, 196 NW 557; State ex rel. Woods v. Hughes Oil Co. 58 ND 581, 226 NW 586.

It is the power of control, not the fact of control, that is the principal factor in distinguishing a servant from a contractor. Industrial Commission v. Bonfils, 78 Colo. 306, 241 P 735; Labree v. Dakota Tractor & Equipment Co. 69 ND 561, 288 NW 476; Janneck v. Workmen's Comp. Bureau, 67 ND 303, 272 NW 188.

No single fact is more conclusive as to the effect of the contract of employment, perhaps, than the unrestricted right of the employer to end the particular service whenever he chooses, without regard to final result of the work itself. Cockran v. Rice, 26 S.D. 393, 128 NW 583.

Fuller & Powers, for respondent.

That the employer has been given the right to terminate the contract is not conclusive proof that the relationship of independent contractor does not exist. Solberg v. Schlosser, 20 ND 307, 127 NW 91; Mountain v. Fargo, 38 ND 432, 166 NW 416; Mountain Meadow Creameries v. Industrial Acci. Commission, 76 P.2d 724.

A contractor is any person who, in the pursuit of an independent business, undertakes to do a specific piece of work for other persons, using his own means and methods, without submitting himself to their control in respect to its details. Shannon v. Western Indem. Co. 257 SW 522; Neece v. Lee, 129 Neb 561, 262 NW 1; Vert v. Metropolitan L. Ins. Co. 117 S.W.2d 252; American Nat. Ins. Co. v. Denke, 95 S.W.2d 370.

The vital factor to establish the status of employer and employee is that of direction and control. Hart v. Mammoth Copper Min. Co. 1 Cal Ind ACC Com (Part 1) 77; State v. St. Louis County, 128 Minn 43, 150 NW 211; Alexander v. Sherman, 86 Conn 292, 85 A 514.

Nuessle, J. Burr, Ch. J., and Burke, Morris, and Christianson, JJ., concur.

OPINION

NUESSLE

This action was brought to recover money paid under protest to the Workmen's Compensation Bureau. This payment was made on demand of the Bureau for assessments computed by it upon the amount of commissions paid by plaintiff to certain of its agents during 1938. Defendants demurred to the complaint on the ground that it failed to state facts sufficient to constitute a cause of action. This appeal is from an order of the trial court overruling the demurrer.

The sole issue is as to whether the agents on account of whose compensation the assessments were made, were employees within the meaning of that term as used in the Workmen's Compensation Act, article 11a of chapter 5, of the Political Code, being §§ 396a1-396a33, 1925 Supplement (chapter 162, Session Laws 1919), and acts amendatory thereof.

From the complaint it appears that plaintiff is a foreign corporation, licensed in the state of North Dakota to engage in the business of issuing and selling life insurance and annuity contracts. Plaintiff maintains a branch office at Fargo, North Dakota, in charge of its local manager. In this office records are kept covering the plaintiff's contracts outstanding in North Dakota and premiums are collected from policyholders within the state and remitted to the home office in New York. The manager is given authority to execute agency contracts with agents to be licensed by the state. Such agents are authorized to solicit applications for insurance and annuity contracts anywhere in North Dakota. These applications are submitted to the manager and by him transmitted to the plaintiff at its home office for acceptance or rejection. If accepted, contracts are issued to the applicants. The agents collect the initial premiums and receive commissions computed on the premiums thus paid. For and during the year beginning June 6, 1938, and ending June 6, 1939, plaintiff appointed soliciting agents, twenty-three in number, to procure applications for such contracts within the state. During the year the total of the commissions paid to these agents amounted to $ 2,589.64. These are the commissions on which the assessments here in question were computed. The largest amount paid to any one agent was $ 346.96; the smallest amount paid was $ 3.13. Three of the agents earned commissions of $ 300 or over; two between $ 200 and $ 300; six between $ 100 and $ 200; two between $ 50 and $ 100; two between $ 25 and $ 50; and eight less than $ 25 each. The relationship between the plaintiff and the soliciting agents is evidenced by a written contract. This contract, the same for all agents, fixes the rate of compensation by way of commission; provides that the terms of the contract shall be confidential, and that a violation of this confidence shall be cause for termination of the contract; forbids any rebates in premiums on penalty of dismissal of the agent; stipulates that the contract may be terminated by either party upon thirty days' notice and payment in full of any indebtedness due either party; provides that the agent shall represent no other life insurance company and shall devote his entire time to the interests of the plaintiff company; and, finally, paragraph fourteen of the contract stipulates that the company's book of Premium Rates and Rules, Regulations and Instructions, shall be loaned to the agent who is "to be governed by the rules now in force or amended or adopted from time to time." This book recites that "these rules, regulations and instructions, are promulgated to meet in part the present requirements of the company's business and are furnished to each agent to supplement his appointment. They are subject to addition, revision, and modification at the company's discretion. Whatever they do not contain regarding the agent's work, the manager will promptly supply." Rule 1 contained therein, reads: "An agent is required to transact his business in accordance with the rules of the Company, or as he may be directed from time to time by the Company or its Managers." Rule 3 makes it the duty of an agent to solicit applications for insurance, to collect initial premiums, and to remit the money to the manager as soon as collected. The rules in all number more than two hundred. They are concerned with the duties of the agent, with the character of the risks that will be acceptable to the company, and generally outline the requirements of the company with respect to the business to be solicited.

The plaintiff further alleges in paragraph nine of its complaint which we quote: ". . . that each of said agents has in fact adopted and at all times has followed his own individual method and means of transacting the business of soliciting agent with no actual supervision of his movements or of the details of his business on the part of plaintiff except as the plaintiff has approved or rejected applications procured and submitted by the agent to the plaintiff's manager, and except as said printed rules and regulations specifically direct the agent in the performance of the business of soliciting agent. That, at the time of the appointment of each of said agents, the parties so discussed and understood the contract, rules and...