Utah Hotel Co. v. Industrial Commission

• Decision Date: 28 August 1944
• Docket Number: 6648
• Citation: 107 Utah 24,151 P.2d 467
• Court: Utah Supreme Court
• Parties: UTAH HOTEL CO. v. INDUSTRIAL COMMISSION et al

151 P.2d 467

107 Utah 24

UTAH HOTEL CO. v. INDUSTRIAL COMMISSION et al

No. 6648

Supreme Court of Utah

August 28, 1944

Original certiorari proceeding by the Utah Hotel Company against the Industrial Commission and others to review an order of the commission holding petitioner liable for certain contributions to the Unemployment Compensation Fund.

Order affirmed.

Order of Commission affirmed.

Judd Ray, Quinney & Nebeker, of Salt Lake City, for plaintiff.

Grover A. Giles, Atty. Gen., Fred F. Dremann, of Salt Lake City, and Zar E. Hayes, Asst. Atty. Gen., for defendants.

WOLFE Chief Justice. McDONOUGH and WADE, JJ., concur. LARSON Justice (dissenting). MOFFAT, Justice, deceased.

OPINION

WOLFE, Chief Justice.

Certiorari to review an order of the Industrial Commission holding the petitioner liable under Title 42, Chapter 2a, U. C. A. 1943, for certain contributions to the unemployment compensation fund.

The petitioner, Utah Hotel Company, operates the Hotel Utah at Salt Lake City. In connection with the hotel and in the same building, the petitioner operates various dining rooms which are equipped for dancing. For the entertainment of its guests and others, it conducts dancing as well as serving meals and refreshments. In the operation of the dining services and dancing facilities, it furnishes bands, orchestras, and other entertainers for the pleasure of its patrons. These bands usually fall into two groups or classifications. Some made up of local musicians were called "local bands." Others known as "name bands" or "traveling bands" were made up and organized outside of the state and had acquired a degree of prominence and notoriety extending outside of their home state. These latter bands or orchestras performed under a trade name, usually the name of their leader, who had attained national or near national reputation as a leader and conductor of dance orchestras.

The arrangements for the appearance of these bands or orchestras, usually for periods of one to three month stands, were made by the hotel management. In addition, the hotel occasionally brought in special entertainers or features, usually traveling artists for a one night stand. For convenience, these various types will be referred to hereafter as "local bands," "name bands" and "specialty features." The hotel paid the salary or earnings of each of these groups during their stands. About 1938 some difference arose between the hotel company and the Industrial Commission regarding liability for unemployment taxes on the amount paid these musicians and entertainers, with the result that in 1939 lawsuits were pending between them in the District Court of Salt Lake County, and in the State Supreme Court and some matters were still pending before the Industrial Commission. In that year the hotel company and the Industrial Commission, through its Department of Employment Security, entered into an oral agreement by way of settlement of the suits and matters then pending in the courts and before the Commission. The substance of the agreement was that plaintiff was to pay unemployment taxes on all members of "local orchestras" made up of local talent--or what might be called intrastate orchestras, but would not be required to pay any taxes on "name bands"--or what might be considered interstate orchestras. Until the filing of the claims involved in the present action, the parties operated under this agreement.

In 1941, the manager of the hotel company, while in California, engaged Freddy Nagel's orchestra for a four weeks stand at the Hotel Utah. This is admittedly a "name band." The agreement was made with Nagel or with his booking agency. None of the other members of the orchestra were contacted personally or consulted by the hotel manager. Nagel's orchestra filled its engagement at the hotel. The hotel company paid over the agreed price to Nagel and he in turn paid the players their portions. Roy Edward Crawford, a member of the orchestra, subsequently being unemployed, filed a claim for unemployment benefits, which the Industrial Commission allowed and called upon the hotel company to pay into the unemployment compensation fund, payroll taxes covering the amount paid to Nagel's orchestra. The company disputed liability and this presents case number one.

Another matter arising at about the same time involves what are called "specialty features" procured by the hotel company for the entertainment of its guests. Contracts for these attractions are made through a local booking agency, and there is no contract between the hotel company and the performers until they arrive. These are usually one night stands, the performers being on tour through the country under direction of booking managers. The Industrial Commission ordered the hotel company to remit to it payroll taxes on all these acts, which the hotel company contests, and presents case number two. The order of the commission in both cases was retroactive to the third and fourth quarters of 1940. By stipulation of the parties the two matters are consolidated and presented as a single case.

The petitioner raises the point that it was not required under the Employment Security Act, Title 42, Chapter 2a, U. C. A. 1943, to pay contributions into the Unemployment Compensation Fund money paid either to the "name bands" or to the "speciality features." Under the holding of this court in Singer Sewing Machine Co. v. Industrial Comm., 104 Utah 175, 134 P.2d 479 (on petition for rehearing, 104 Utah 196, 141 P.2d 694, 695), it cannot be successfully contended that the "name bands" or the "speciality features" were not performing "services" for "wages" as those terms are defined by the act. The interpretation and construction of the act as set forth in the Singer Sewing Machine case are controlling here. In the opinion written on petition for rehearing, supra, we said that the Employment Security Act includes relationships not within the common law relationship of master and servant; that a service relationship exists whenever personal services are performed for wages; and that once such service relationship is found to exist, the provisions of Sec. 19 (j) (5) invoked "to determine whether or not the service relationship found to exist is one which is included within or one which is excluded from the operations of the Act. If such service relationship is one which meets, conjointly, the provisions of (a), (b) and (c) of Sec. 19 (j) (5) the employment is filtered or culled out from the operations of the act, and benefits cannot be received, nor does tax liability exist. If, however, the service relationship is one that does not meet conjointly the provisions of (a), (b) and (c) of 19 (j) (5) it remains as employment within the act and the employer is liable for the tax or contribution thereon."

Sec. 19 (j) (5) reads:

"Services performed by an individual for wages or under any contract or hire * * * shall be deemed to be employment subject to this act unless and until it is shown to the satisfaction of the commission that--

"(A) such individual has been and will continue to be free from control or direction over the performances of such services, both under his contract of hire and in fact; and

"(B) such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

"(C) such individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service."

The service relationships involved herein meet the requirements of both (A) and (C). But the Act requires that the service relationships meet the requirements of (A), (B) and (C) conjointly. Singer Sewing Machine case, supra. The Commission's decision is based on the finding that the services herein involved did not meet the requirements of subsection (B).

It must be admitted that the services here performed were not "outside of all the places of business" of the petitioner, since the contracts all specifically provided that service should be rendered in the hotel. Nor were the services performed outside the usual course of the petitioner's business. The record abounds with evidence that it was usual and customary for the hotel to furnish entertainment in connection with the operation of its dining rooms and to furnish dance bands in connection with the operation of its dancing facilities. It thus appears that there was a service relationship, for wages, and that such relationship did not meet, conjointly, the requirements of Section 19 (j) (5). The Commission correctly held "name bands" and "speciality features" to be service relationships within the Act and that the hotel company was liable thereon for contributions to the unemployment compensation fund.

The petitioner next contends that the agreement between the Commission and the petitioner in settlement of similar disputes in 1939 was and is binding on the Commission and prevents recovery by the Commission in this case. This argument is not tenable. The agreement is at the most merely an administrative interpretation of the Act and of the petitioner's liability thereunder. The Commission had the authority to interpret the Act, for such is a necessary condition precedent to its administration, but such interpretation was not binding. This is pointed out by Von Baur, "Federal Administrative Law," Sec. 73, 74, wherein it is stated:

"The nature of the administrative process in executing a statutory scheme requires that administrative agencies not only determine the administrative questions involved, but apply the law in the first instance...