No. 89-354 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

BERGLUND and BERGLUND, INC., 

Petitioner and Appellant, 

-VSCONTRIBUTIONS BUREAU, UNEMPLOYMENT INSURANCE 

DIVISION, MONTANA STATE DEPARTMENT OF LABOR 

AND INDUSTRY, and BOARD OF LABOR APPEALS, MONTANA 

STATE DEPARTMENT OF LABOR & INDUSTRY, 

Respondents. 

APPEAL FROM: District Court of the Fourth Judicial ~istrict, 

In and for the County of Missoula, 

The Honorable Jack L. Green, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Brian L. Delaney; Mulroney, Delaney & Scott, is sou la, 

Montana 

For Respondent : 

 avid Scott, Dept. of Labor & Ind.ustry, Helena, Montana 

Submitted on ~riefs: Dec. 1, 

Decided: January 9, 1990 

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. Clerk 
Chief ~ustice J. A. Turnage delivered the Opinion of the Court. 

Berglund and Berglund, Inc. (Berglund), appeals a memorandum 

and order of the District Court for the Fourth Judicial District, 

Missoula County. That memorandum and order affirmed a decision of 

the Board of Labor Appeals (Board), which in turn affirmed a 

hearing officer's decision that compensation paid for travel 

expenses to Berglund's employee truck driver constituted wages 

reportable to and taxable by the Unemployment Insurance Division 

(Division) . We affirm. 

The issue is whether the District Court abused its discretion 

in affirming the administrative decision. 

Berglund is a long-haul trucking company located in Missoula, 

Montana. It owns one truck and employs one driver. 

According to the record, Berglund's truck driver is paid 10 

cents per mile, plus 7% cents per mile for travel expenses. The 

driver is not required to itemize travel expenses because the 

travel allowance is based upon the miles he drives. The 10 cents 

per mile is reported to the Internal Revenue Service as income to 

the driver and the 7% cents per mile is reported as non-employee 

compensation. Mrs. Berglund, one of the incorporators, testified 

that Berglund believed that it had structured this pay plan so that 

the travel expenses would not be taxed for purposes of unemployment 

insurance. 
After a field audit, an auditor for the Division determined 

that the compensation Berglund paid its driver for travel expense, 

at 75 percent of the wages paid, "does not appear reasonable." He 

noted that Berglundls system of payment required no documentation 

of travel expenses at all and decided that the travel expenses must 

be included in the wages reportable to and taxable by the Division. 

Berglund appealed to the Appeals Bureau of the Department of 

Labor and Industry and a hearing was held. The hearing officer 

concluded that travel expenses were within the definition of 

wwagesll in 5 39-51-201(17), MCA (1985) (now subsection (18) of the 

same statute). He reasoned that the 74 cents per mile for travel 

expenses should be included as wages, thereby increasing unemployment benefits in the event of unemployment. He cited the duty to 

construe the Unemployment Insurance Act in favor of the allowance 

of benefits. See Scott v. Smith (1962), 141 Mont. 230, 241, 376 

P.2d 733, 739. The Board adopted the hearing officer's findings 

and decision. 

Berglund next appealed to the District Court for the Fourth 

Judicial District. The court recited its limited standard of 

review of administrative decisions. It found substantial evidence 

to support the Board's decision and affirmed. 
Did the District Court abuse its discretion in affirming the 

administrative decision? 

Our standard for review of administrative findings of fact is 

whether they are supported by substantial evidence. In reviewing 

questions of law, we will reverse if there has been an abuse of 

discretion. City of Billings v. Billings Firefighters (1982), 200 

Mont. 421, 430-31, 651 P.2d 627, 632. 

Berglund's objections are based on the hearing officer's 

reliance, in his findings and conclusions, upon 5 39-51-201, MCA, 

and ARM 24.11.808. Neither the statute nor the administrative rule 

was discussed at the hearing. At the hearing, the parties referred 

instead to a three-criteria test set out in Division guidelines for 

whether a travel allowance was subject to unemployment contributions tax. That test had been discussed in correspondence from 

the Division to Berglund. 

The statute and rule relied upon by the hearing officer 

provide the definition of ltwagesl' for purposes of unemployment 

insurance. The statute contains a list of items which are excluded 

from wages. Because travel expenses are not listed as exclusions 

from wages, the hearing officer concluded that they must be 

included. 

Berglund argues that it was denied its constitutional right 

to due process because it was not given notice of the criteria 

which would ultimately be relied upon in making this decision. But 
both the statute and rule are published. Furthermore, Berglund had 

several weeks to review the hearing officer's proposed findings and 

conclusions, including their legal theories, between the time they 

were issued and the hearing before the Board. 

Berglund argues that the court should have reversed the Board 

because the Board failed to apply the proper criteria (the three 

criteria listed in the Division guidelines) in determining whether 

the travel allowance constituted wages. However, it is undeniable 

that the statute and administrative regulation apply. If a statute 

and a rule adopted in conformity therewith conflict, the statute 

governs. Michels v. Dept. of Social & Rehab. Services (1980), 187 

Mont. 173, 177-78, 609 P.2d 271, 273. Therefore, Berglund must 

ultimately comply with the statute. We conclude that the Board 

used the correct laws and regulations in determining whether the 

travel expenses were wages. 

Next, Berglund contends that the Board should have been 

reversed because it "failed to comply with [its] duty to promulgate 

and make known clear and concise rules and guidelines which would 

put the public on adequate notice of what is expected of it in 

order to comply with [defendant's] policies." By promulgating the 

guidelines which Berglund argues would allow its driver's travel 

expenses to go untaxed, Berglund maintains that the defendants 

waived their right to or are equitably estopped from relying on the 

statute and administrative rule. 
Estoppel is not favored and will only be sustained upon clear 

and convincing evidence. Kenneth D. Collins Agency v. Hagerott 

(1984), 211Mont. 303, 310, 684 P.2d 487, 490. Here, Berglund has 

not shown by clear and convincing evidence the element of equitable 

estoppel requiring reliance upon a misrepresentation to the 

relierfs detriment. (See Sweet v. Colborn School Supply (1982), 

196 Mont. 367, 372-73, 639 P.2d 521, 524, for the elements of 

equitable estoppel.) Berglund has not demonstrated by clear and 

convincing evidence that if the guidelines were applied, it would 

be in a better position, because Berglund has not shown that it met 

criteria no. 3 under the guidelines. That criteria required that 

the amount of travel reimbursement approximated actual expenses as 

documented on a reasonable basis. Berglundfs truck driver was 

required to keep no records of travel expenses whatsoever. It is 

immaterial whether, as Berglund contends, the amount of its 

payments for travel expenses was within Internal Revenue Service 

parameters. 

The District Court found substantial evidence to support the 

Board's findings. It concluded that there had been no abuse of 

discretion in the law applied. We agree. 

Affirmed. 
We concur: