Singer Sewing MacHine Co. v. State Unemployment Compensation Commission ( 1940 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] In Banc. Proceeding by the Singer Sewing Machine Company against the State Unemployment Compensation Commission of the State of Oregon and another, to review a decision of the Unemployment Compensation Commission holding that defendant John B. Stradford was entitled to benefits under the Unemployment Compensation Law of Oregon, by virtue of his having been in plaintiff's employment. From a judgment of the circuit court ordering the Unemployment Compensation Commission to enter an order finally denying benefits to John B. Stradford, the Unemployment Compensation Commission appeals.

REVERSED. ORIGINAL OPINION ADHERED TO ON REHEARING. On or about the 6th day of January, 1938, John B. Stradford filed a claim dated January 3, 1938, for benefits at the employment office maintained by the State Unemployment Compensation Commission at Oregon City, Oregon, and thereafter continued his claim for benefits. This claim was asserted by Stradford by virtue of the provisions of the Unemployment Compensation Law, chapter 70, Oregon Laws 1935, Special Session, as amended by chapter 398, Oregon Laws 1937. The claim is based upon his alleged employment by the Singer Sewing Machine Company, plaintiff herein, for the last five completed calendar quarters prior to the said date upon which his claim was filed as above stated, it being alleged in said claim, dated and filed aforesaid, that he the said Stradford was totally unemployed; that his unemployment was not due to a labor dispute in which he participated or which he assisted in financing, or in which he assisted; that said claimant, Stradford, was able to work and available for work and had registered for work at Employment Office No. 18.

A claim determination was made by a claim deputy pursuant to the provisions of said Unemployment Compensation Law, finding that said claimant, Stradford, was eligible to receive benefits under the provisions of said Unemployment Compensation Law; that his weekly benefit was $15 and that the maximum amount of benefits within his benefit year was $233.92.

Following the receipt of a copy of the claim determination, the plaintiff, Singer Sewing Machine Company, submitted information to the commission and its Claim Division and the claim was redetermined and benefits denied.

The claimant then appealed for a hearing pursuant to the provisions of Section 9, (b), of the Unemployment Compensation Law; and, after due notice to the interested parties, such hearing was conducted and a decision rendered by the commission referee affirming the redetermination on the claim as made by the claim deputy.

The claimant then filed an application for review by the commission in conformity with the provisions of section 10 of the law. Upon the review of said claim, after consideration of the testimony, the commission entered its findings of fact, conclusions of law, and decision reversing the decision of the referee and allowing benefits to the claimant Stradford in conformity with the first determination on the claim.

In conformity with the provisions of section 11 of said law, in order to secure judicial review of said last mentioned decision, the Singer Sewing Machine Company instituted this proceeding by filing its complaint as plaintiff, against said commission and said Stradford as defendants in the circuit court of Clackamas county. Issues were joined by said commission filing an answer to said complaint. After presentation of said cause, the circuit court of Clackamas county handed down an opinion, entered its findings of fact and conclusions of law and rendered a judgment reversing and setting aside the decision of the commission and ordering said commission to make and enter of record herein an order finally denying benefits to claimant, John B. Stradford, for and on account of his claim herein. From this judgment of the circuit court the State Unemployment Compensation Commission prosecuted this appeal. The controlling question herein is whether the services of claimant, Stradford, for plaintiff should be deemed to be employment subject to the terms of the Unemployment Compensation Law as amended by Oregon Laws 1937, chapter 398, p. 581, et seq., and further amended by Oregon Laws 1939, chapter 515, p. 1062, et seq.

The record discloses that on the 19th day of November, 1936, a contract in printed form was executed by plaintiff and claimant, which contract is known to this record as respondent's exhibit A. It is also shown that services were required of claimant by plaintiff not mentioned in such contract.

The Unemployment Compensation Law, as amended, among other things, provides that —

"``Employment' means service for an employer, including service in interstate commerce within the United States, performed for remuneration or under any contract of hire, written or oral, express or implied." Subdiv. (f), Sec. 1, Chap. 515, Oregon Laws 1939, at p. 1065.

Subdivision (E), subsecs. (1) and (2) of the Unemployment Compensation Law, as amended, provides that —

"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 commission that:

(1) Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and

(2) Such individual customarily is engaged in an independently established business of the same nature as that involved in the contract of service."

The subdivision of the printed contract executed by plaintiff and defendant, which is designated therein as Fifth, D., contains the following provision:

"The Second Party (claimant) agrees:

* * * * *

D. To account at the request of the Company for all merchandise owned by the Company and consigned or entrusted to the Second Party; to ascertain at the request of the Company the location of any merchandise sold or leased hereunder for which full payment shall not have been received by the Company and to inform the Company of such location; to ascertain at the request of the Company the address of any purchaser or lessee obligated for payments on accounts entrusted to the Second Party for collection, and to inform the Company of such address and to do any act or thing that the Company may consider necessary oradvisable for the protection of its interests and enforcement of its rights under any sale or lease effected by the Second Party or with respect to an account entrusted to the Second Party for collection." (Italics supplied.)

In explanation of exhibit 1, the claimant testified as follows:

"This time of the year on August 13, 1937, just prior to that time, the Singer Sewing Machine Company inaugurated the advertising campaign that we mail advertising matter on various routes wherever the men were employed in selling their products. These were sent apparently on April 13th. I have this letter on that date, stating that their bulletins were mailed today, so this was an advertising plan to sell machines to the country, paid for by the Singer Sewing Machine Company with all postage paid and sent out to help the men in the territory to produce sales. You will note in this letter it says, ``Report all sales and repairs and prospects to be obtained. Send this to me as soon as the route has been gone over.' Well, it so happened I did not cover this entire route which was forty or fifty miles. I hadn't quite finished the route when I quit working for the Singer Sewing Machine Company."

Exhibit No. 1, to which the foregoing testimony refers, is written upon the printed stationery of the Singer Sewing Machine Company, dated 8-13-1937, and the pertinent part thereof is as follows:

"Mr. Stradford:

Roto Bulletins mailed today. They will be distributed by mail carrier Saturday morning.

Plan to start working the route Tuesday morning, Aug. 17 1937. Please make a report of all sales and repairs prospects obtained, send this to me as soon as you have finished the route.

Paul L. Dies."

There is no requirement in the printed contract, respondent's exhibit A, that claimant should distribute advertising material or make a report upon the results obtained by such a course.

In the face of the foregoing excerpts of the record herein, we think that the plaintiff has not shown that claimant has been "free from control or direction" over the performance of his services either under the contract or in fact.

The record discloses that claimant had no place of business, that such work of repairing, as he performed, was done at his residence. There is no showing that claimant was customarily engaged in an independently established business of the same nature as that involved in the contract of service.

The Unemployment Compensation Law, as amended, defines "employe" as follows:

"``Employe' means any person, including aliens and minors, employed for remuneration or under any contract of hire, written or oral, express or implied, by an employer subject to this act in an employment subject to this act." Sec. 1, subdiv. (c) Chap. 515, Oregon Laws 1939, p. 1063.

We are of the opinion that the foregoing statutory definitions are controlling, although they differ from the meaning formerly attributed to the terms so defined: 25 R.C.L. 1049.

In re Monrovia Evening Post, 199 Cal. 263, 248 P. 1017; DeWitt v. State, 108 Ohio St. 513, 141 N.E. 551; O'Boyle Parker-Young Co., 95 Vt. 58, 112 A. 385; Fisk v. Bonner TieCo., 40 Idaho 304, 232 P. 569; Chicago E.R. Co. v. Kaufman,78 Ind. App. 474, 133 N.E. 399; McDowell v. Duer,78 Ind. App. 440, 133 N.E. 839; Industrial Commission v. Continental Inv.Co., 78 Colo. 399, 242 P. 49; Fox v. Standard Oil Co. of N.J.,294 U.S. 87, 55 S. Ct. 333, 79 L. Ed. 780.

The authorities are not harmonious upon the question whether such services as those performed by claimant herein come within the statutory definition of employment, but we think that the weight of authority and those cases, which employ the better reasoning, support the commission's contention that the performance of such services brings claimant's case within the purview of the Unemployment Compensation Law. The following cases announce the rule here upheld: Industrial Commission v.Northwestern Mut. Life Ins. Co., 103 Colo. 550, 88 P.2d 560;Globe Grain and Milling Co. v. Ind. Com., 98 Utah 36,91 P.2d 512; In re Mid America Co., In re National Union Loan Soc.,Inc., In re National Union Thrift Soc., Inc., 31 F. Supp. 601;McDermott v. State of Washington, 196 Wash. 261,82 P.2d 568; Unemployment Comp. Com'n v. Jefferson S.L. Ins. Co.,215 N.C. 479, 2 S.E.2d 584.

The contrary has been held in Washington Recorder Pub. Co. v.Ernst, 199 Wash. 176, 91 P.2d 718, 124 A.L.R. 667, and inWisconsin Bridge Iron Co. v. Ramsay, 233 Wis. 467,290 N.W. 199. Each of these cases has a dissenting opinion which supports the rule we announce herein.

The case of Texas Co. v. Wheeless, 185 Miss. 799, 187 S. 880, cited by plaintiff, holds that where contracts between an oil company and consignees for distribution of petroleum products did not create master-servant relation and many consignees were firms or corporations and most of them were engaged in other businesses; the arrangement was not a contract of hire within the statutory definition of "employment" and the oil company was not required to contribute to the unemployment compensation fund. There, the supreme court of Mississippi hold that the correct test, as to who is a servant, is whether the service is rendered by one whose physical conduct, time and activities in the performance of his duties are controlled, or are subject to the right of control by the alleged master under the contract of employment or hire. The record of the Wheeless case is therein distinguished from that of Texas Co. v. Mills, 171 Miss. 231,156 So. 866, 869. In the Mills case the decision was predicated upon the fact that the duties of the distributor in that contract were expressly fixed by "the rules and practices of the company and by instructions issued * * * from time to time", the distributor being required by the contract itself to "strictly observe and obey the company's instructions" in the performance of his duties. The court in the Mills case applied the test whether the alleged servant's physical conduct in the performance of the services in the affairs of his employer is controlled, or is subject to the right of control, by the alleged master, and held that the foregoing quoted provisions of the contract subjected him to the appellants' control with respect to his physical conduct in the performance of his duties, citing SingerMfg. Co. v. Rahn, 132 U.S. 518, 10 S. Ct. 175, 33 L. Ed. 440.

In Texas Co. v. Wheeless, supra, the court also referred to the case of Texas Co. v. Jackson, 174 Miss. 737, 165 So. 546, and said that there the Mississippi court had again construed the provisions of a contract similar to those construed in the Mills case giving the same effect as given in the Mills case. Those provisions were not in the contract involved in the Wheeless case. Neither were the quoted provisions of the contract in the instant case involved in the Wheeless case.

In Northwestern Mutual Life Ins. Co. v. Tone, 125 Conn. 183,4 A.2d 640, 121 A.L.R. 993, also cited by plaintiff, a distinction is noted between the contract involved in that case and the contract involved in Hall v. Sera, 112 Conn. 291,152 A. 148. In Hall v. Sera, supra, the agent devoted all his time to the work entrusted to him; each week he was given a list of collections to be made, and it was his duty to make those collections and turn the proceeds into the company at a definite time. There was no such provision in the contract involved in the Tone case. While the contract involved in the instant case does not contain a specific provision that the claimant should devote all of his time to the work entrusted to him, it does have a provision very similar to that which is above quoted from the contract under consideration in Hall v. Sera, supra, with reference to making collections and turning the proceeds into the company at a definite time.

Moreover, there is a distinction between the definition of the term, "employment", in the Connecticut statute and the definition of that term in the Oregon statute. The Connecticut act defines "employment" as used in it to mean, so far as the issues germane to the issues before us, "any service including service in interstate commerce, performed under any express or implied contract of hire creating the relationship of master andservant". General Statutes, Supp. 1937, Chap. 280a, Sec. 803d. (Italics supplied.)

Under the definition set forth in the Oregon statute, "employment" means service for an employer, including service in interstate commerce within the United States, performed for remuneration or under any contract of hire written or oral, express or implied. Oregon Laws 1939, Chap 515, Sec. 1, (f). It will be noted that the italicized clause, "creating the relationship of master and servant", which appears in the Connecticut statute is omitted from the Oregon statute.

We are not impressed with the argument that the title of the Unemployment Compensation Act is so restrictive that its provisions could not be made to apply to any case where an unemployed independent contractor is seeking to enforce a claim thereunder, for the reason that the title of the act refers only to unemployment and contains no reference to anyone occupying the status of independent contractor. Following the argument to its logical conclusion, the act cannot be made to apply even to a case where the relationship is admittedly that of a master and servant, for the reason that the title of the act contains no reference to one sustaining the relationship of servant or employe to a master or employer. In saying that, we do not mean to recede from our holding herein that the relationship defined in the act in question must be shown in order to justify the allowance of a claim for compensation thereunder. We think such a relationship appears in this case.

The judgment of the circuit court is reversed and the decision of the commission allowing benefits to the claimant is reinstated.

RAND, C.J., and BELT, J., dissent.

BEAN and BAILEY, JJ., not sitting.