Unemployment Compensation Commission v. L. Harvey & Son Co.

• Decision Date: 09 April 1947
• Docket Number: 379
• Parties: UNEMPLOYMENT COMPENSATION COMMISSION v. L. HARVEY & SON CO. et al.
• Court: North Carolina Supreme Court

42 S.E.2d 86

227 N.C. 291

UNEMPLOYMENT COMPENSATION COMMISSION v. L. HARVEY & SON CO. et al.

No. 379

Supreme Court of North Carolina

April 9, 1947

This proceeding was instituted in the Unemployment Compensation Commission for the purpose of determining the liability of the corporate respondent for contributions on wages paid by Pate to his employees down to March 13, 1945 and to determine a similar liability of Pate for contributions on wages paid his employees subsequent to that date. The liability of L. Harvey & Son Company, if any arose under Section 96-8(e) of the Unemployment Compensation Act of 1943, which was partly repealed by amendment effective March 13, 1945, which struck out the sentence currently imposing the tax. ^[1] The proceeding relates to contributions on taxes alleged to have accrued prior to that date. It is sought to hold respondent Alton Pate as a 'covered unit' liable for contributions subsequent to the effective date of the repeal. Referring to the cited statute it will appear that the liability or nonliability of the Harvey Company depends upon a proper determination of the contractual relation existing between the Company and Pate during the period covered by the then existing law, and the effect of its repeal. The status of Alton Pate subsequent to the repeal is a matter for further consideration. ^[2]

The inquiry went through its several procedural stages, including hearings before a Deputy Commissioner, the Chairman of the Commission and the Full Commission, until it reached Lenoir Superior Court on appeal from the Full Commission and the final determinations and orders of that Body with respect to the liability of each respondent. The procedure is unassailed and its history is not essential to an understanding of the case. ^[3]

The hearing before the Full Commission resulted in a determination that the respondents, respectively, were liable for the contributions as demanded, and an order was made that they report and pay them as required by law.

The review in the Superior Court involved the consideration of evidence before the Full Commission at the final hearing and respondents' exceptions taken on the hearing. The exceptions were to the findings of fact by the Commission as not being supported by evidence, and to the conclusions of law and determinations and orders predicated thereon, as erroneously made.

The evidence, as certified by the Commission on respondents' appeal, is summarized in its bearing on these exceptions:

The respondent L. Harvey & Son Company operated a department store in which they carried in stock and sold merchandise of a general character, including shoes. They had in all some eight or ten departments of classified merchandise. In September, 1942, the Company sold the stock of shoes on hand to a New York concern and contemplated discontinuing the business. However, it entered into a parole agreement with respondent Alton Pate who had been theretofore engaged in selling shoes, by which he was to occupy a space in the store about 10 feet wide and 100 feet long, exclusively devoted to the sale of shoes. There is evidence from the respondent that this space was rented to Pate for his own use at a rental of 10 per cent of his gross sales. The Company furnished janitor service, heat and lights. In the early days of his occupancy and dealing the stock of goods was bought from the wholesalers in the name and upon the credit of L. Harvey & Son Company. The manager of the Company explained that this was for the reason that wholesalers did not care to take on new accounts and it was in order that Pate might get his quota. The manager of the Company further testified that this was continued for a few months, after which purchases were made by Pate in his own name. Pate testified: 'I am operating in my name as far as buying is concerned everything is bought in my name with the exception of this--I'll say two or three. I have my own books, order books. Sometimes I send them in my name, sometimes in his, but it never goes to the office; I pay the bills myself. I am operating under my name. L. Harvey & Son does not have anything to do with the way I operate it.'

All the sales tickets are in L. Harvey & Son's name. The tickets go up to the bookkeeping department of L. Harvey & Son Company, through the distributor system, where the record is kept. The cash also goes up to the Harvey Company office, and if there is any change due it is sent back down.

The shoe business carried on by Pate is advertised in the papers in the name of L. Harvey & Son Company and Pate pays to the Harvey Company part of the advertising. L. Harvey & Son Company purchases the credit accounts of goods purchased from Pate without recourse on him. However, when a purchase is made on account a slip is sent up to L. Harvey & Son's office with a notation and if it is not approved the sale is not made. Respondents testify that this is to secure to the Harvey Company the collectability of the accounts they buy. The Company buys no other accounts and Pate sells accounts to no other person. About 90 per cent of Mr. Pate's business, as testified to by the investigating deputy, is accounts. Whatever interest or carrying charges due upon them go to L. Harvey & Son Company.

Respecting the manner of conducting the business the respondent Pate testified that 'as far as the general public is concerned they are dealing with L. Harvey & Son. ' The tickets and the wrapping paper used in Harvey's business had upon them the name of L. Harvey & Son Company, and not Pate's.

Respondents testify that L. Harvey & Son Company has nothing to do with the operation of Pate's shoe business. Pate hired his help and dismissed employees at his own will. The employees in the sale of shoes did not help in any other department. Pate alone was concerned with the payroll. C. F. Saville, manager of the Harvey store, testified, 'Pate keeps his own records and operates in his own name and L. Harvey & Son Company has nothing to do with the manner in which he operates his business.'

The findings of fact closely parallel and embody the evidence as above summarized, and as noted in the opinion. Exceptions were filed to six of the eight findings, and in two instances were, in part, sustained--(a) by the Commission upon certification of the appeal, and (b) by the Superior Court.

From finding of fact No. 8, with the parts stricken out enclosed in brackets is as follows: '8. It is further found that (Alton Pate, who operated the shoe department, and contracted with the said L. Harvey & Son Company, is in employment which is a part of the usual trade, occupation, profession or business of the said company); that the said L. Harvey & Son Company is an employing unit within the contemplation of the Unemployment Compensation Law, and also an employer within the terms of such law. It is further found that the said Alton Pate is a subcontractor of the said L. Harvey & Son Company for employment which is a part of the Company's business.'

From finding No. 3, the following was stricken out: 'That the money which was taken in by the said Alton Pate and which goes to the cashier's office of the company, is deposited in the company's bank account as any and all money which the Company itself takes in for sale of merchandise.'

The conclusion upon the findings follows: 'That the Company is responsible for the payment of contributions on the wages paid by Alton Pate to his employees, from the date that the company entered into its contract with Alton Pate, to March 13, 1945, the date that the section of the law was repealed; that subsequent to March 13, 1945, the said Alton Pate continued his contractual relationship with L. Harvey & Son Company and because of this contractual relationship the said Alton Pate, subsequent to March 13, 1945, is an employer within the contemplation of Section 96-8(f) (8) of the Unemployment Compensation Law as amended.'

With the exceptions noted the trial judge affirmed the findings of fact and conclusions of law made by the Full Commission and affirmed its determinations, orders and decrees.

The respondents appealed, assigning errors.

W. D. Holoman, Charles U. Harris and R. B. Billings, all of Raleigh, for plaintiff, appellee.

J. A. Jones, of Kinston, for defendants, appellants.

SEAWELL Justice.

Upon appeal from the Unemployment Compensation Commission the Superior Court is bound by the findings of fact made by the Commission where there is evidence to support it, and the same rule, of course, applies here. ^[4] Where there is such supporting evidence our office is to determine whether the conclusions of law and subsequent orders of the Commission may be properly based or predicated upon the facts found.

The pertinent sections of the Compensation Act in force during the period for which the respondent Harvey & Son Company has been held liable for contributions on wages paid by Pate to his employees have been quoted supra. The respondent Harvey & Son Company contends that the statute is inapplicable to it for that the facts in evidence only go so far as to show Pate to be a tenant of the Harvey & Son Company and not a contractor in carrying on or aiding any branch of the Harvey business. The proponents of the tax liability contend that the existing contract between the parties during the period of alleged liability and their course of dealing between themselves under it, give rise to legitimate inferences of a more intimate business association between them than ordinarily attaches to a rental contract, and point to various customary transactions and dealings between the parties as indicia of a contract within the meaning of the statute, rendering the Harvey Company liable for the tax. The status of Pate...