Wanatah Stone Co. v. Indiana Employment Sec. Bd.

• Decision Date: 03 May 1968
• Docket Number: 20758,Nos. 20757,No. 2,s. 20757,2
• Citation: 142 Ind.App. 590,236 N.E.2d 514
• Parties: WANATAH STONE CO., Inc., Wanatah Trucking Co., Inc., Appellants, v. The INDIANA EMPLOYMENT SECURITY BOARD (Members: Albert L. Summers, Dr. I. Lynd Esch, Robert B. Stoner, Dallas Sells, Albert H. Cole, Jr., Lawrence F. Nicolini, Ex Officio Secretary to the Board), and John C. Castelli, Liability Referee for the Indiana Employment Security Board, Appellees
• Court: Indiana Appellate Court

Page 514

236 N.E.2d 514

142 Ind.App. 590

WANATAH STONE CO., Inc., Wanatah Trucking Co., Inc., Appellants, v. The INDIANA EMPLOYMENT SECURITY BOARD (Members: Albert L.

Summers, Dr. I. Lynd Esch, Robert B. Stoner, Dallas Sells,

Albert H. Cole, Jr., Lawrence F. Nicolini, Ex Officio

Secretary to the Board), and John C. Castelli, Liability

Referee for the Indiana Employment Security Board, Appellees.

Nos. 20757, 20758.

Appellate Court of Indiana, Division No. 2.

May 3, 1968.

Matthew E. Welsh, Henry E. Bradshaw, Grace M. Curry, Indianapolis, Bingham, Summers, Welsh & Spilman, Indianapolis, of counsel, for appellants.

John J. Dillon, Atty. Gen., William E. Matheny, Deputy Atty. Gen., Indianapolis, for appellees.

BIERLY, Judge.

Appellants filed protest to assessments for delinquent contributions, interest and penalty allegedly due under the Indiana Employment Security Act. The proceeding was held before the Liability Referee of said board.

Two cases were involved. The Indiana Employment Security Board issued notice to and demand for payment to each appellant. Objections to each assessment were made.

The issues were identical in each case and concerned the question whether 'certain individual truck owners who contracted with appellants to haul stone and other commodities on a unit-haul basis were employees of the appellants within the meaning of the Indiana Employment Security Act.'

Inasmuch as the cases involved common questions of law and fact, they were consolidated by the Liability Referee for hearing and decision.

The Liability Referee rendered findings against both appellants and made an assessment of $3,519.34 against appellant Wanatah Trucking Co., Inc., for delinquent contributions, interest and penalty, and made an assessment of $1,440.46 against the appellant, Wanatah Stone Co., Inc., for the same alleged delinquencies.

Both appellants, within time permitted by statute to give notice of intention to institute judicial review of proceedings, gave such notice on March 14, 1967, and the sole error assigned by both appellants was that the decision of the Liability Referee is contrary to law.

Both appellants filed petitions with this court to consolidate the causes on appeal, which were granted by the court on the 18th day of April, 1967.

Inasmuch as the issue involved in this appeal is concerned with an interpretation of the term 'employment' as used in the Indiana Employment Security Act of 1947, we quote the pertinent statutory definition of that term as follows:

"Employment', subject to the other provisions of this section, means service, including service in interstate commerce performed for remuneration or under any contract of hire, written or oral, express or implied.' (Emphasis supplied)

Services performed for remuneration as distinguished from those performed under contract of hire are presumptive or statutory employment unless such services meet the test set forth in Burns' Indiana Statutes § 52--1532(a), which provides:

'(a) Services performed by an individual for remuneration shall be deemed to be employment subject to this act unless and until it is shown to the satisfaction of the board that (A) such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and (B) such individual, in the performance of such services is engaged in an independently established trade, occupation, profession or business; or is an agent who receives remuneration solely upon a commission basis and who is the master of his own time and effort.'

From the foregoing statutory definition of 'Employment', there are two conditions, (A) and (B), which must be met before service performed or remuneration received can be excluded from coverage under the Act. The Liability Referee held that 'the conditions of the test for determining employment under the statute are conjunctive and both conditions specified in the law must coexist. When the service and relationship fails to meet the test statutory employment results.'

The Liability Referee also found that:

'While the protesting employers herein have proved that they exercised little or no control over the service rendered, and over the owner-operator therein involved, they have not proven that the right of control did not exist. As a matter of record the right of direction and control is expressly provided the employers therein pursuant to the executed written lease arrangement between the said employers and the individual owner-operators as found in the Referee's Finding #5.' (Emphasis supplied)

The Referee in his findings cited the following three Appellate Court cases in construing the provisions of § 801(a) of the Indiana Employment Security Act. These decisions do not support the Referee's decision. The cases cited are: Alumiwall Corp. v. Indiana Employment Security Board (1960) 130 Ind.App. 535, 167 N.E.2d 60; News Publishing Co. v. Verweire (1943) 113 Ind.App. 451, 49 N.E.2d 161; State Emp. Security Board v. Motor Express (1946) 117 Ind.App. 113, 69 N.E.2d 603.

The appellant, Wanatah Stone Co., Inc., located at Wanatah, LaPorte County, Indiana, conducts the business of buying and selling stone and other materials essential to road or highway construction. The Public Service Commission of Indiana issued a certificate of public convenience and necessity to said company authorizing it as a common carrier to engage in both intrastate and interstate commerce. The appellant, Wanatah Trucking Co., Inc., as a subsidiary corporation, is engaged in the work of transporting such material by motor vehicle, and operates as a truck carrier for hire by virtue of a contract carrier's permit issued by said P.S.C.I.

According to the evidence, Wanatah Stone Co., Inc., owns no trucks; but Wanatah Trucking Co., Inc., does own trucks, and employs approximately 30 operators. When needed, additional transportation facilities are leased from other transportation companies or from third persons who are paid on the same basis, from the same account, and are subject to the same form of equipment lease.

The controversy involved in this appeal arose when an alleged employee seeking a claim for unemployment compensation presented the claim at the Michigan City office of the Employment Security Division. Wanatah Trucking Company had not reported this claimant as an employee. Through investigation, it was discovered that the claimant, Eugene Howard, had worked for one of the company's contract haulers, a Mr. Bass. This situation led to an audit by a field examiner of the Division. The field examiner placed said contract haulers into three classifications: common carriers, truck brokers, and individual truck owners without authority to operate as carriers or brokers. The examiner excluded the first two classes as being exempt from the statutory definition of employee, but held that the individual truck owner-operators were subject to an assessment as employees of the appellants. The Liability Referee confirmed the report of the examiner. Appellants contend, as heretofore pointed out, that such truck owners of contract haulers are not employees within the meaning of the Employment Security Act.

The evidentiary facts concerning the operation of the truck owners or contract haulers in the case at bar and in support of appellants' claim for exemption from the tax may thus be summarized:

Trucks were bought and paid for by the haulers, without financial assistance from either of the appellants;

Some of the haulers owned more than a single truck;

These trucks were either operated by the owners or by someone hired by the owner;

They furnished their own tools, their own equipment; and bought and paid the fees for their own license, and they paid the personal property tax on the trucks;

While haulers carried no authority issued by the P.S.C.I. to operate either as a common or contract carrier, the usual procedure was for the haulers to operate under the authority issued to appellant, Wanatah Stone Company;

Haulers used appellant's (Wanatah Stone Company) authority as evidenced by a P.S.C.I. decal affixed to their trucks when hauling for said company.

Haulers bought and paid for oil and gasoline used in their trucks, at service stations selected by them;

Haulers provided and paid for the repairs and maintenance on their trucks without any financial assistance from appellants;

Haulers provided public liability, property damage, and all other necessary insurance at their own expense;

Haulers bore the responsibility for safely transporting cargo on their trucks and were liable for any cargo damages;

Haulers were required to pay out of their own funds any fines for speeding and overweight violations;

Haulers, by use of the telephone, and by distribution of postcards showing their home address and telephone numbers, solicited other business; however, they placed no advertisement in the yellow pages of the telephone book or any trade publications advertising their business...