Title: In Re All-State Construction Co.

State: washington

Issuer: Washington Supreme Court

Document:

70 Wn.2d 657 (1967) 425 P.2d 16 In the Matter of the Appeal of ALL-STATE CONSTRUCTION CO., INC. ALL-STATE CONSTRUCTION CO., INC., Respondent, v. JOHN F. GORDON, Appellant.[*] Nos. 38279, 38252. The Supreme Court of Washington, Department Two. March 9, 1967. The Attorney General, Richard M. Montecucco and Robert N. Gates, Jr., Assistants, for appellant. George R. Mosler, for respondent. DONWORTH, J. This is an appeal by the Commissioner of Employment Security from a superior court judgment setting aside an assessment against respondent, All-State Construction Company, for unemployment compensation fund contributions. On July 23, 1963, an order and notice of assessment for contributions to the unemployment compensation fund allegedly due under RCW 50.24.010, in the amount of $6,935.62, was served on All-State as provided in RCW 50.24.070. All-State appealed therefrom to the appeal tribunal under RCW 50.32.030, contending that the individuals whose wages or remunerations were covered by the assessment were not employees under the terms of the Employment Security Act and, consequently, no payment was due from All-State. A hearing was had before an appeals examiner for the appeal tribunal, who affirmed the assessment. Upon petition for review filed by All-State with the Commissioner of Employment Security, the commissioner reviewed the case and upheld the decision of the appeal tribunal. Respondent, All-State, then appealed to the Superior Court for King County from the commissioner's decision as provided in RCW 50.32.120 and 150. The superior court set aside the assessment, holding that the "applicators," who installed aluminum siding pursuant to respondent's contracts with homeowners, were "independent contractors," and not employees of All-State. *659 [1] We note that this is an administrative appeal. Under the statutory provision last referred to, the decision of the commissioner is to be considered as prima facie correct, and the burden of the proof is upon the party attacking it. The facts as found by the examiner and adopted by both the appeal tribunal and the commissioner are the established facts upon appeal to the superior court. Since that court expressly adopted those findings and no error is assigned thereto, this court is bound thereby. The facts, as found by the examiner for the appeal tribunal, are as follows: *662 The sole issue involved in this appeal is the legal question whether the applicators are employees or independent contractors under the statutory definition of the Employment Security Act (RCW Title 50). RCW 50.04.100 provides that: RCW 50.04.140 provides that: [2] The examiner concluded that the applicators met exceptions (1) and (2) above, but failed to meet exception *663 (3) of RCW 50.04.140. Since the three exception tests are stated in the conjunctive, if the applicators fail to meet any one of them they must be deemed to be employees under the act. The bases for the appeals examiner's conclusion that the applicators did not meet the requirements of subsection (3) above were stated by the examiner to be that: *664 The trial court, in its oral opinion, stressed two statements made by the appeals examiner in his written findings, that "After looking at the job, the applicator makes his bid for the labor costs on extra work," and "If the salesman thinks the price too high, he asks another applicator to bid." The trial court concluded: Essentially, for the reasons stated by the appeals examiner, we are of the opinion that the trial court's conclusion was incorrect. It must be kept firmly in mind that the test to be applied in determining the status of these applicators under the Employment Security Act is a statutory one. Common law distinctions between employees and independent contractors are inapplicable. In Skrivanich v. Davis, 29 Wn.2d 150, 158, 186 P.2d 364 (1947), this court pointed out that: In Unemployment Compensation Dep't v. Hunt, 17 Wn.2d 228, 236, 135 P.2d 89 (1943), we said: *665 [3] We must further keep in mind the applicable presumptions and burden of proof. First, an exemption in a statute imposing a tax must be strictly construed in favor of the application of the tax and against the person claiming the exemption, Unemployment Compensation Dep't v. Hunt, supra, and the burden of proof is upon the one alleging the exemption. In re St. Paul & Tacoma Lumber Co., 7 Wn.2d 580, 110 P.2d 877 (1941). Secondly, in an appeal such as we have here arising from the Employment Security Act, the "decision of the commissioner shall be prima facie correct, and the burden of proof shall be upon the party attacking the same." RCW 50.32.150. [4] To meet the exception test set forth in subsection (3) of RCW 50.04.140, the applicator's occupation must be an "independently" established one in which he is "customarily" engaged. The Oregon Supreme Court, in construing a similar provision, contained in ORS 657.040, reached the conclusion that applicators, under circumstances strikingly similar in many respects to the ones in the present case, were employees and not independent contractors falling within the exception. Baker v. Cameron, 240 Ore. 354, 362, 401 P.2d 691 (1965). The facts were summarized in that case as follows: The Oregon court then cites Willcox, The Coverage of Unemployment Compensation Laws, 8 Vand. L. Rev. 245, 264-265 (1955), for an analysis of the "independently established" provision: In discussing the factors to be considered in determining whether the individual is engaged in an "independently established business," the same author (Willcox) states, at 265: Also holding similarly situated "applicators" to be employees and not independent contractors under identical statutory provisions is the Michigan Supreme Court in O'Brian v. Michigan Unemployment Compensation Comm'n, 309 Mich. 18, 14 N.W.2d 560 (1944). In arriving at our decision in this matter, we have considered the decision of the Appellate Court of Indiana in *667 Alumiwall Corp. v. Indiana Employment Security Bd., 130 Ind. App. 535, 167 N.E.2d 60 (1960), which was cited by respondent in its additional authorities. The Indiana statute involved is substantially the same as our statute, and the business activities of the applicators were similar to those of the applicators involved in the case at bar except that their helpers received their pay from the Alumiwall Corporation, which deducted the amount thereof from the compensation earned by the applicators. However, we think that the logic of the decisions in the Oregon and Michigan cases cited above is more persuasive than that of the Indiana intermediate appellate court. We find no evidence in the record sufficient to support a finding that the applicators in this case meet the requirements of RCW 50.04.140 (3). The fact that they occasionally negotiate with the salesmen of respondent for the amount to be paid them as compensation for extra work to be done under the contract in addition to the installation of aluminum siding, does not suffice to meet the statutory requirements above referred to. The judgment of the trial court reversing the decision of the commissioner and ordering that the order and notice of assessment be struck is hereby reversed. [5] An ancillary question is posed by appellant in this case: Did the filing of the notice of appeal suspend and supersede the superior court judgment, thereby rendering the judgment entered by the superior court ineffective to exonerate and discharge the appeal bond posted by respondent on its earlier appeal to superior court, pursuant to RCW 50.32.130? We hold that it did not. Appellant earlier brought an "application for Writ of Supersedeas" to this court, Supreme Court File No. 38252, in an attempt to require respondent to maintain in full force and effect the appeal bond originally filed in its appeal to the superior court. A hearing was held before the Chief Justice on May 13, 1965, following which the Chief Justice signed an order denying the writ, and stating in part: Assuming that this issue is still available to appellant, we are of the opinion that the Chief Justice's order was correct. The contention made is without merit. HILL, ROSELLINI, and HAMILTON, JJ., and LANGSDORF, J. Pro Tem., concur. May 22, 1967. Petition for rehearing denied. [*] Reported in 425 P.2d 16.