Williams v. United States

• Decision Date: 27 February 1942
• Docket Number: No. 7788.,7788.
• Citation: 126 F.2d 129
• Parties: WILLIAMS v. UNITED STATES.
• Court: U.S. Court of Appeals — Seventh Circuit

126 F.2d 129 (1942)

WILLIAMS v. UNITED STATES.

No. 7788.

Circuit Court of Appeals, Seventh Circuit.

February 27, 1942.

J. Albert Woll, U. S. Atty., of Chicago, Ill., Samuel O. Clark, Jr., Asst. Atty. Gen., J. P. Wenchel, Bureau of Internal Revenue, of Washington, D. C., and Carl J. Marold, J. Louis Monarch, and Gerald L. Wallace, Sp. Assts. to Atty. Gen., for appellant.

Samuel T. Ansell and Wm. S. Tarver, both of Washington, D. C., and Chas. O. Rundall and Horace A. Young, both of Chicago, Ill., for appellee.

Before SPARKS, MAJOR and MINTON, Circuit Judges.

MAJOR, Circuit Judge.

This is an appeal from a judgment in favor of the plaintiff, entered May 2, 1941, in an action to recover social security taxes with interest, paid by plaintiff (the taxpayer) for the calendar year 1938. Such taxes were imposed under Title VIII, Section 804 of the Social Security Act of 1935, as amended, 42 U.S.C.A. § 1004, upon the theory that plaintiff was an employer.

The court below made rather voluminous findings of fact upon which it concluded that plaintiff was not an employer within the meaning of the Act and, therefore, the taxes had been illegally assessed and collected. Hence the judgment appealed from. While the findings made by the District Court are material — in fact, binding upon us if substantially supported, — we regard it as unnecessary to set them forth in toto for the reason that they are reported in 38 F.Supp. 536.

Briefly, it appears from the non-controverted findings that plaintiff, during the taxable year, was the leader of a dance orchestra known as "Griff Williams and His Orchestra," which consisted of from twelve to fourteen male musicians. It was assembled by plaintiff in San Francisco during the year 1934, and, since 1935, has been booked and known as "Griff Williams and His Orchestra." During the taxable year, the orchestra performed at some twenty-two establishments, ranging from the West coast of the United States to as far East as Chicago, Illinois. These performances consisted of playing popular dance music at both "steady engagements," (those for one week or longer) and "single engagements" (those for one night only) at hotels, restaurants, night clubs, ballrooms, amusement parks, clubs, colleges and civic organizations. (The place of performance is sometimes referred to as "the establishment" and the orchestra as "the attraction.") The members of the orchestra, known in the trade as "sidemen," were selected and trained by plaintiff, with an oral agreement that each individual sideman would receive for his services a certain stipulated compensation which, in no event, was or could be less than the scale of wages fixed by the local union in whose jurisdiction the engagement was performed. The establishment had no voice in fixing the compensation of the sidemen, nor in their selection.

In 1934, plaintiff entered into an agreement with the Music Corporation of America, a booking agent, making this corporation his exclusive agent for the purpose of booking engagements for the orchestra, for which services the agent was paid a commission. All of the engagements during the year 1938 were booked by this corporation. Written contracts, typical examples of which are included in the findings of the court, were entered into between the Music Corporation and the management of the various establishments. The latter, in making the contracts, were not concerned with, and did not know, the names or identities of the individual musicians. They were familiar with the reputation and special quality of music of plaintiff's orchestra and they relied on him to supply an organization composed of musicians selected, rehearsed and capable of performing the orchestra's special quality of music. Plaintiff exercised his skill as a musician to interpret the music in such a manner as to produce certain musical effects, and to do so, had his own library of sheet music from which he customarily made selections for a performance.

By the terms of the contract, the Music Corporation agreed to furnish the establishment with the attraction designated as "Griff Williams and His Orchestra," at a certain time and place for an agreed price. The hours of performance were stated. In some of the contracts the number of sidemen was stated — in others it was not. Each of the contracts incorporated by reference the laws, rules and regulations of the American Federation of Musicians. By such rules and regulations, certain restrictions were placed upon the contracting parties with respect to prices for performance, the number and length of rehearsals and intermissions, cancellation of contracts and conduct of the leader and sidemen. The establishment is referred to in the contracts as the "employer" and in the same manner, in the by-laws of the Federation, although in the latter, plaintiff is also referred to as "employing the sidemen." The sidemen owned both formal and informal dress and furnished their own instruments other than the piano which was furnished by the establishment. Plaintiff owned music racks and a public address system for use where this equipment was not supplied by the establishments. The latter owned and controlled the premises on which the services were performed and designated the particular room on the premises where the orchestra was to rehearse and perform. Occasionally the orchestra played special music for floor shows promoted by the establishments. On such occasions the selections to be played were made by the establishments, or by the participants in the floor shows. This called for special rehearsals with the other talent, at times and places fixed by the establishment within the limit of the Federation rules. The time of regular rehearsals, however, was fixed by plaintiff. As stated, this is a brief synopsis of the non-controverted findings.

There is some controversy concerning Finding No. 11 to the effect that plaintiff, upon receiving the contract price from the establishments, "distributed and paid" to the sidemen the compensation due them. It is urged by the defendant that the word "distributed" indicates plaintiff was acting as the agent of the establishment in making such distribution. Such a construction, so it is argued, leaves the finding unsupported. We think that such is the case. Plaintiff testified that the contract price was paid to him by check and that he in turn paid the sidemen by his own checks in accordance with his agreement with them. The record discloses conclusively that there was no agreement between the establishments and the sidemen, and that the former were without knowledge as to the agreements between the latter and plaintiff. More than that, there is no question but that plaintiff was liable, in accordance with his agreement with the sidemen, irrespective of whether he received the contract price from the establishments.

The chief controversy, however, relates to Finding No. 19, consisting of 21 paragraphs, each purporting to show some element of control exercised by the establishments over plaintiff and the orchestra. It is not practical to discuss the numerous elements of this finding, and furthermore, we do not think it is necessary. The finding reads: "The establishments for which plaintiff and the orchestra of which plaintiff was the leader performed during the year 1938 at times did the following things: * * *" (Then follows 21 paragraphs.) Thus, the control disclosed by such a finding has little, if any, probative effect. For aught that is found, such acts might have represented isolated incidents and not the usual and ordinary relation existing between plaintiff and the establishments. A finding as to what was done "at times" is of such indefinite and uncertain meaning as to furnish little, if any, support for a conclusion predicated thereon. Furthermore, we are of the view that any acts of control "at times" exercised by the establishments are relatively unimportant when compared with other facts found by the court and disclosed by plaintiff's contracts with the establishments, as well as with the usual manner in which the services of the orchestra were performed.

There is also a controversy concerning the right to hire and discharge the sidemen. Concerning this matter, the court found:

"* * * The association of the `sidemen' with the orchestra of which Plaintiff was the leader could be, and was at times, terminated at the instance of the Plaintiff. * * *"

There is no occasion to repudiate this finding. It is true as far as it goes, and we accept it. Notwithstanding plaintiff's insistence that the establishments had the right to hire and discharge, the court made no such finding and we are convinced there is no evidence to support such an argument. We think the record discloses without question that the right to hire and discharge was the sole prerogative of plaintiff. The By-Laws of the Federation, made a part of the contract between plaintiff and the establishments, provide:

"Members of the Federation are only permitted to accept, solicit or negotiate engagements to play in bands or orchestras from members who contract to furnish bands or orchestras, never from the employers or the agents of such to whom the band or orchestra is furnished. * * *"

Thus the sidemen were prohibited from accepting engagements with the establishments or their agents. It would seem to follow that no...