United States v. Butler

• Decision Date: 17 April 1931
• Docket Number: No. 5876.,5876.
• Citation: 49 F.2d 52
• Parties: UNITED STATES v. BUTLER.
• Court: U.S. Court of Appeals — Fifth Circuit

49 F.2d 52 (1931)

UNITED STATES v. BUTLER.

No. 5876.

Circuit Court of Appeals, Fifth Circuit.

April 17, 1931.

W. P. Hughes, U. S. Atty., of Jacksonville, Fla., Raymond F. Brown, Sp. Atty., Bureau of Internal Revenue, of Miami, Fla., and Eugene E. Angevine, Bureau of Internal Revenue, of Washington, D. C., for the United States.

J. Turner Butler and J. Robert Sherrod, both of Washington, D. C., for appellee.

Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.

FOSTER, Circuit Judge.

Appellee sued to recover income taxes amounting to about $2,000, which had been assessed on compensation received by him as attorney for Duval county, Fla., for the years 1919, 1920, 1921, and 1922, paid under protest. From an adverse judgment the United States appeals.

The findings of fact of the District Court are not objected to. The following material facts appear from the record: Appellee was employed February 4, 1919, by the board of commissioners of Duval county, Fla., to represent it as its legal advisor. His term was to run as long as his services were satisfactory, and it extended through the year 1922, until the then board went out of office. His salary was fixed by resolutions of the board and covered compensation for attendance at all meetings of the board, preparation of resolutions and contracts, legal advice, and services in litigated matters of an ordinary nature. He was carried on the pay roll of the board and was paid his salary monthly. In addition he was allowed extra compensation for services in connection with certain litigated cases and bond issues. During the entire period of his employment he was continuously under the direction and control of the board. He frequently advised with and received instruction from them. He was employed to represent the county in all matters of a legal nature and was expected, without express orders from the board, to represent and defend the county in all such matters. He was not employed in each particular instance. He maintained his private law office but devoted 75 per cent. of his time to attending to his duties as attorney for the board, which he did not allow his private practice to interfere with.

This case is identical as to its facts with the case presented in Blair v. Mathews, 29 F.(2d) 892, in which we held in favor of the taxpayer. However, the government relies upon the leading case of Metcalf & Eddy v. Mitchell, 269 U. S. 514, 46 S. Ct. 172, 70 L. Ed. 384, and subsequent decisions, applying the principles announced in that case to various other combinations of facts.

We may assume that under the ruling in the Metcalf & Eddy Case that appellee was not an officer, as his position was not created by express statute, he did not take an oath, and his tenure of office, emoluments, and duties were not fixed by law. We may also pass without decision the question as to whether the tax upon his compensation was an interference with the governmental functions of the board of commissioners. The question therefore presented for decision is whether appellee was an employee of a political subdivision of a state and whether as such his compensation was exempt from taxation, under the provisions of section 1211 of the Revenue Act of 1926 (26 USCA § 1065 b), and similar taxing statutes. The decision of this question depends upon whether the facts in the case at bar are so similar to those appearing in the Metcalf & Eddy Case as to require a reversal.

In the Metcalf & Eddy Case it was held that they were independent contractors and not either officers or employees. The opinion does not review the facts in detail but the following clearly appears: Metcalf and Eddy were consulting engineers. They were employed by various subdivisions of different states under contracts for their services in connection with particular projects. None of their engagements was for work of a continuous character. Their compensation was fixed by their contracts for each separate project. They were at liberty to engage in other concurrent employment. They were expected to use their judgment and skill in doing their work and were not subject to the control of the subdivisions employing them.

Except that appellee was required to use his judgment and skill as a lawyer in serving the board, there is no similarity between his employment and that of Metcalf and Eddy. Unlike Metcalf and Eddy, he was continuously employed by one political subdivision to render any and all legal services that might be required. The board of commissioners had first call upon his services and the right to demand and use all his time. He was not at liberty to take other employment if his services were required by the board. That he indulged to some extent in private practice is immaterial. It is quite usual for attorneys occupying a public position to engage in private practice if time and opportunity permit. It is also immaterial that he was allowed extra fees for certain services. That was merely a method of measuring his compensation.

The government also relies upon the case of Howard v. Commissioner (C. C.) 29 F. (2d) 895, reversed on the authority of Metcalf & Eddy v. Mitchell, 269 U. S. 526, 46 S. Ct. 172, 70 L. Ed. 384. In that case we did not consider whether Howard was an officer or an employee of a political subdivision of the state of Texas. He had been employed in four separate suits by cities in Texas, and we held that in representing them he was exercising governmental functions as their agent which were in no sense remote. That case may be differentiated the same as the Metcalf & Eddy Case.

The conclusion reached on the facts in this case is that appellee was an employee of a political subdivision of the state of Florida within the meaning of the statute and his compensation as such was exempt from federal income taxes.

Affirmed.

HUTCHESON, Circuit Judge (concurring).

That appellee was an employee of Duval county as to the regular routine work covered by and performed under the resolution of the board of county commissioners fixing the salary of the county attorney, and that his regular monthly compensation for the duties of such employment was exempt from taxation as moneys received as such employee, I think there can be no doubt.

In law the word "employee" is chameleon-like; it takes color and meaning not only from the words with which it is associated, but from the subject-matter with which the statute or order in which it is found is concerned. 15 Cyc. 1032, 1033; Campfield v. Lang (C. C.) 25 F. 128; Millers' Indemnity Underwriters v. Cook (Tex. Civ. App.) 229 S. W. 598; Gay v. Hudson River (C. C.) 178 F. 499, 500; Gurney v. Atl. Ry. Co., 58 N. Y. 358; Latta v. Lonsdale (C. C. A.) 107 F. 585, 52 L. R. A. 479.

While it is true that it is most often used of those employed in less important positions in contradistinction to officers, managers, superintendents etc., it is also true that where the purpose of the statute under investigation requires it, it has a fuller and broader meaning, and will include persons employed in practically every grade, so that the nature of the work performed is no longer a distinguishing mark of an employee. Shields v. Grace, 91 Or. 187, 179 P. 265, 270; Smith v. Bowersock, 95 Kan. 96, 147 P. 1118, 1121; Clark v. New England Tel. Co., 231 Mass. 546, 121 N. E. 497; Burnap v. U. S., 252 U. S. 518, 40 S. Ct. 374, 64 L. Ed. 692.

For at common law, and unless controlled by the context, the subject-matter or the purpose of the statute, whether one who works or performs service for another is an employee is not determined by the rank or importance of the position which he holds, or the character of service rendered, and the term many include attorneys, physicians, etc., whether privately or publicly employed. Gurney v. Atlantic Ry. Co., 58 N. Y. 358; Cyc. 15, p. 1032-1033; Fisher v. City of Mechanicville, 225 N. Y. 210, 121 N. E. 764, 765 (attorney employed by a village on a small yearly salary).

Nor does the question whether one is an employee or a contractor depend upon the nature of the work performed, or the character of the person performing it; rather it is determined by the conditions under which the work is performed; that is, whether it has regularity and continuity, and is performed under the control and direction, though general, of the employer. If the employment is for a single act, or for a series of isolated acts the employment being specific as to each act, the person employed, whether an attorney in legal matters or a layman in others, is not an employee, but an independent contractor. Hand v. Cook, 29 Nev. 518, 92 P. 3; Clark v. Renninger, 89 Md. 66, 42 A. 928, 44 L. R. A. 413; Louisville, E. & St. L. R. Co. v. Wilson, 138 U. S. 505, 11 S. Ct. 405, 407, 34 L. Ed. 1023.

Perhaps the best statement of the distinction is found in the Wilson Case, supra, where it is said: "The terms `officers' and `employees' both alike refer to those in regular and continual service. Within the ordinary acceptation of the terms, one who is engaged to render service in a particular transaction is neither an officer nor an employee. They imply continuity of service, and exclude those employed for a special and single transaction."

The facts established and found in this case are that appellee was both regularly and continuously employed, and that this work was performed by him under the general direction and control of his employer, the board of county commissioners. Vane v. Newcombe, 132 U. S. 233, 10 S. Ct. 60, 33 L. Ed. 310; R. R. v. Wilson, 138 U. S. 505, 11 S. Ct....