United States v. Vogue, Inc.

• Decision Date: 13 November 1944
• Docket Number: No. 5264.,5264.
• Citation: 145 F.2d 609
• Parties: UNITED STATES v. VOGUE, Inc.
• Court: U.S. Court of Appeals — Fourth Circuit

145 F.2d 609 (1944)

UNITED STATES v. VOGUE, Inc.

No. 5264.

Circuit Court of Appeals, Fourth Circuit.

November 13, 1944.

Robert R. Reynolds, Jr., Sp. Asst. to Atty. Gen. (Samuel O. Clark, Jr., Asst. Atty. Gen., Sewall Key, Sp. Asst. to Atty. Gen., Frank S. Tavenner, Jr., U. S. Atty., of Woodstock, Va., and R. Roy Rush, Asst. U. S. Atty., of Roanoke, Va., on the brief), for appellant.

John L. Abbot, of Lynchburg, Va., for appellee.

PARKER, Circuit Judge.

This is an appeal by the United States in a suit instituted under the Tucker Act, 28 U.S.C.A. § 41(20), to recover insurance contributions and unemployment taxes in the amount of $2,116.64, paid for the years 1936 to 1941 inclusive. Plaintiff is The Vogue, Incorporated, a Viriginia corporation which at that time operated in Lynchburg a retail store for the sale of women's clothing. The question in the case is whether seamstresses who worked in the alterations department of plaintiff's store were employees of plaintiff within the meaning of the Social Security Act, as amended. The court below, answering this question in the negative, gave judgment in favor of the plaintiff and the United States has appealed.

The facts are not disputed and are fully set forth in the findings and opinion of the court below. They need not be repeated at length here. Briefly stated, they are as follows: A Mrs. Fulton and after her a Mrs. Woodfin occupied a room in plaintiff's store and made alterations in garments sold by plaintiff. They made other alterations also when they had the opportunity, but the bulk of the work done by them was in connection with sales made by plaintiff. For this work a charge was made at rates which they fixed in accordance with custom, and this was collected by plaintiff and a fixed portion thereof was paid to them weekly, whether collected by plaintiff or not, 75% of such charge being paid to Mrs. Fulton when she occupied the position and 70% to Mrs. Woodfin. Both women made the alterations in accordance with their own judgment without supervision or direction, but they were subject to call by plaintiff and handled such matters as were turned over to them. Mrs. Woodfin worked a while for plaintiff at weekly wages, and during this time handled the alterations in the same way as they were handled when paid for on the piece work basis. Mrs. Fulton used her own sewing machine, but in the case of Mrs. Woodfin sewing machines were furnished by plaintiff. Both furnished their own shears, needles and thread when working on the piece work basis. An assistant was employed from time to time; and this assistant was paid by Mrs. Fulton and Mrs. Woodfin when proceeding under the piece work basis, but by plaintiff when Mrs. Woodfin was being paid a weekly wage. Both women not only worked in plaintiff's store building, but gained access to their working quarters through the store, to which they were not given a key. It appears that they had charge of the room in which they worked and had the key to it. Except in dull seasons, they observed the same working hours as other persons working in the store. While they had the right to work for persons other than those who purchased goods from plaintiff, the plaintiff collected for such services and paid them a percentage of collections as in other cases. An alterations department such as the women conducted in the store was essential to the carrying on of a first class retail store of the sort that plaintiff was operating.

On the above facts, we think it perfectly clear that Mrs. Fulton and Mrs. Woodfin were not independent contractors, but employees within any fair meaning of that term and certainly within the meaning of the Social Security Act. If a valuable garment had been ruined by their negligence, plaintiff would hardly have attempted to throw the loss on the shoulders of a customer by a plea that they were independent contractors; and certainly no court would have given serious consideration to such a plea. As little attention would have been paid to the plea if one of their assistants had been injured by a defective tool or machine. They were engaged in work which was an important part of the work of plaintiff's store; they occupied premises over which plaintiff exercised control; they were subject to call by plaintiff; they did work which plaintiff gave them to do; they were paid for their work by plaintiff; and when they worked for a weekly wage and were unquestionably subject to plaintiff's orders they handled the work in precisely the same way as when working on the piece work basis.

The law of independent contractors has an important place in the law, but surely it was never intended to apply to humble employees of this sort, so completely subject to the domination and control of the employer. To allow the employer to escape the consequences or to deny the employee the benefits of the employer-employee relationship because of agreement that payment be made on the piece work basis or because the employee exercises the judgment with respect to the work that is expected of any skilled worker, is to lose the substance of the relationship in attempting to apply certain rule of thumb distinctions in the law of independent contractors. The fact that one having an independent calling, such as a cook, gardener or chauffeur, exercises a judgment as to the work done free of detailed direction by his employer does not make him an independent contractor (27 Am.Jur. 498; note Ann.Cas.1918C, p. 653 et seq.); and we think there can be no question here but that there was such general right of control by plaintiff over these women, who were making repairs in the store on goods sold to its customers, as to establish beyond question the employer-employee relationship with the incidents thereto pertaining. Cf. Gulf Refining Co. v. Brown, 4 Cir., 93 F.2d 870, 116 A.L.R. 449; H. E. Wolfe Const. Co. v. Fersner, 4 Cir., 58 F.2d 27.

Whatever conclusion might be drawn, however, as to whether Mrs. Fulton and Mrs. Woodfin were or were not independent contractors under the rules of the common law as applied in the several states, we think there can be no question that they and their assistants should be held to be employees of plaintiff within the meaning of the Social Security Act, as amended. 26 U.S.C.A. Int.Rev.Code, §§ 1400, 1410. The purpose of that act was to provide old age, unemployment and disability insurance for workers in industry; and certainly a seamstress who works in a store making alterations on garments sold and is paid by the storekeeper for work done falls clearly within the class it was intended to protect; and we think it equally clear that she falls within the language of Treasury Regulation 90, promulgated under the Act, the pertinent portions of which are as follows:

"Art. 205. Employed individuals. — An individual is in the employ of another within the meaning of the Act if he performs services in an employment as defined in section 907(c). However, the relationship between the individual who performs such services and the person for whom such services are rendered must, as to those services, be the legal relationship of employer and employee. The Act makes no distinction between classes or grades of employees. * * * The words `employ', `employer', and `employee', as used in this article, are to be taken in their ordinary meaning. * * * Whether the relationship of employer and employee exists, will in doubtful cases be determined upon an examination of the particular facts...