Unemployment Compensation Div. of Workmen's Compensation Bureau v. People's Opinion Printing Co.

• Decision Date: 06 January 1941
• Docket Number: 6700
• Citation: 295 N.W. 656,70 N.D. 442
• Court: North Dakota Supreme Court

295 N.W. 656

70 N.D. 442

UNEMPLOYMENT COMPENSATION DIVISION OF THE WORKMEN'S COMPENSATION BUREAU, a Department of the State of North Dakota, Appellant, v. PEOPLE'S OPINION PRINTING COMPANY, a Corporation, Respondent

No. 6700

Supreme Court of North Dakota

January 6, 1941

Syllabus by the Court.

1. A non-compensated president of a corporation, whose acts are only such as are required for maintaining the defendant as a corporation, as distinguished from those necessary to the management and conduct of its business, is not to be treated as an employee for the purpose of determining whether the corporation is liable for contributions under the North Dakota Unemployment Compensation Act. Chapter 232, Session Laws 1937, as amended by Chapter 215, Session Laws 1939.

2. A suit to collect contributions under the North Dakota Unemployment Compensation Act is an action for the recovery of money. In event the defendant prevails, he is entitled to a judgment for taxable costs.

Appeal from District Court, Barnes County; M. J. Englert, Judge.

Suit by the Unemployment Compensation Division of the Workmen's Compensation Bureau, a Department of the State of North Dakota, against the People's Opinion Printing Company, a corporation, to recover contributions claimed to be due under the Unemployment Compensation Act, Laws 1937, c. 232, as amended by Laws 1939, c. 215. From an adverse judgment plaintiff appeals.

Affirmed.

W. Ray Reichert, for appellant.

The common-law definition of "employee" and "employer" was completely disregarded by the legislature in enacting the Unemployment Compensation Statute. Equitable Ins. Co. v. Industrial Commission, 95 P.2d 4; Northwestern Mut. L. Ins. Co. v. Industrial Commission, 103 Colo. 550, 88 P.2d 560; Industrial Commission v. Continental Inv. Co. 78 Colo. 399, 242 P. 49.

The legislature has the power to define terms used by it and statutory definitions control judicial interpretation. Fox v. Standard Oil Co. 294 U.S. 87, 79 L. ed. 780; Steinberg v. United States, 14 F.2d 564.

The phrase "contract of hire" means merely a contract for personal services. Western Indem. Co. v Pillsbury, 172 Cal. 807, 159 P. 721; Press Pub. Co. v Industrial Acci. Commission, 190 Cal. 114, 210 P. 820.

Anything which benefits the promisor or which constitutes a legal detriment to the promisee may serve as legally adequate consideration for a contract. 1 Williston, Contracts, rev. ed. § 102A.

That some contractual relationship exists is reflected in the frequent references to officers of a corporation as the agents or servants thereof. Gantt v. Cox, 199 Pa. 208, 48 A. 992.

It is well established that an issue is not justiciable unless there is substantial injury or damage suffered or about to be suffered by those who seek judicial relief. Jeffrey Mfg. Co. v. Blagg, 235 U.S. 571, 59 L. ed. 364, 35 S.Ct. 167, 7 N.C.C.A. 570; Gorieb v. Fox, 274 U.S. 603, 71 L. ed. 1228, 47 S.Ct. 675, 53 AL.R 1210.

Ritchie & Ritchie, for respondent.

In order to have one classed as an employee for the purpose of the Workmen's Compensation Act, the relation of employer and employee must exist. 18 R.C.L. 490.

There is no necessary distinction between the terms "servant" and "employee." Flickenger v. Industrial Ace Commission, 181 Cal. 425, 184 P. 851, 19 A.L.R. 1150; Robinson v. Baltimore & O.R. Co. 237 U.S. 84, 59 L. ed. 849, 35 S.Ct. 491, 8 N.C.C.A. 1; Hull v. Philadelphia & R.R. Co. 252 U.S. 475, 64 L.Ed. 670; Atlantic Coast Line R Co. v. Tredway, 120 Va. 735, 93 S.E. 560, 10 A.L.R. 1411.

An employee is such a person as is engaged in the service of another, under contract for hire, express or implied, oral or written. Home Sav. & Loan Asso. v. Carrico, 123 Neb. 25, 241 N.W. 763; Minneapolis Iron Store Co. v. Branum, 36 N.D. 355, 162 N.W. 543; State ex rel. Gorczyca v. Minneapolis, 174 Minn. 594, 219 N.W. 924.

Nelson A. Mason and Doherty, Rumble, Butler, Sullivan & Mitchell, amici curiae.

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

OPINION

MORRIS

This is a suit by the Unemployment Compensation Division of the Workmen's Compensation Bureau of the state of North Dakota to recover from the People's Opinion Printing Company, a corporation, for contributions claimed to be due under the North Dakota Unemployment Compensation Act. This act is chapter 232, N.D Session Laws 1937, as amended by chapter 215, N.D. Session Laws 1939. The controversy in this case involves the number of individuals on the pay roll of the defendant.

The plaintiff contends that in 1936, 1937, and 1938, the defendant had in its employ eight or more individuals performing services for it within the state of North Dakota, and that such services were performed for some portion of a day in each of twenty different weeks within each of these years, and that the defendant therefore became liable for the contributions prescribed by the statute. On the other hand, the defendant contends that it employed less than eight individuals and is, therefore, not liable to pay the contributions.

The determination of the number of individuals employed depends upon whether the president of the corporation is to be considered an employee within the terms of the act. If he was such an employee, the number of employees was eight and the defendant is liable. If he was not such an employee, then the number is not sufficient to bring the defendant within the purview of the act.

The Unemployment Compensation Act states that an "employer" means, "Any employing unit which for some portion of a day in each of twenty 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 or more individuals." (§ 2 (f) (1)).

Section 2 of the act further states:

"(g) 'Employee' means every individual, whether male, female, citizen, alien, or minor, who is performing, or subsequent to January 1st, 1936, has performed services for an employer in an employment subject to this Act.

"(h) (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."

No contention is made that the president of the defendant corporation received wages. It is contended, however, that he did perform services under a contract of hire within the meaning of the act. The word "service" is not defined.

In order to determine whether the president of the corporation was employed by it, we must next examine the facts. They disclose through uncontradicted testimony that he did not have anything to do with the active management and conduct of the business. He had no personal knowledge of the various employees and did not hire or fire them. He received no compensation of any kind for work done for the defendant, as its president or otherwise. His entire working time was devoted to employment in other businesses. He owned fifty per cent of the defendant's stock. The by-laws of the defendant corporation required him to attend and preside at meetings of the directors and stockholders, countersign checks and certificates of stock, sign all notes or other evidence of debt, and perform, generally, the various duties which ordinarily fall upon the president of a corporation. During the time in controversy, the president signed various monthly and quarterly reports to the plaintiff. He also signed a protest in behalf of the corporation, objecting to being required to submit these reports.

From these facts we deduce that the acts, which the president performed in behalf of the corporation, were gratuitous and were only formal in nature. They were such acts as were required for maintaining the defendant as a corporation, as distinguished from acts necessary to the management and conduct of the corporation's business.

The plaintiff contends that "it seems clear that the legislature intended in the Unemployment Compensation Law to cover all individuals performing a service for others, unless such service is specifically excluded from the Act."

We cannot agree with this contention. Had the legislature so intended, it could have stated that intention in language as clear and broad as that used by the plaintiff. Instead, the legislature saw fit to employ many paragraphs in describing the scope of the act with respect to individuals and employments to be covered.

The case of Davie v. J.C. Mandelson Co. N.H. , 11 A.2d 830, is in point. In that case, the president of the defendant corporation gratuitously acted and presided at the meetings and signed stock certificates. The court said "We do not think that the words 'service . . . performed . . . under any contract of hire, written or oral, expressed or implied,' construed according to 'the common and approved usage of the language' describe the services gratuitously rendered by Mrs. Mandelson to the defendant. The acts performed by her as president of the corporation are of a purely ceremonial or formal nature required only for the maintenance of the corporate organization of the defendant and are in no way connected with the conduct of the business in which it is engaged. It has not been suggested that the words of the statute have acquired any 'peculiar . . . meaning in law.' We therefore hold that she is not a person in the 'employment' of the defendant within the meaning of...