No. 12530 INTHE SUPREME COURT OF THE STATE OF MONTANA 1973

PAT GRIFFIN COMPANY, GASAMAT SERVICE STATIONS, Plaintiffsand Respondents,

EMPLOYMENT SECURITY COMMISSION OF THE STATE OF MONTANA 

### et ale, Defendants and Appellants.

Appeal from: District Court of the Second Judicial District, Honorable John B, McClernan, Judge presiding. Counsel of Record: ForAppellants: Moody Brickett argued, Helena, Montana For Respondents: Poore, McKenzie and Roth, Butte, Montana Urban L. Roth argued, Butte, Montana Donald C. Robinson argued, Butte, Montana

-- Submitted: November 30, 1973Mr. Chief Justice James T. Harrison delivered the opinion of the Court. The defendant Employment Security Commission (now designated Employment SecurityDivision,Montana State Department of Labor and Industry), made and entered a decision holding that individuals operating Gasamat stations were in fact employees of the plaintiff PatGriffin Company and that Pat Griffin Company

was liable for unemployment tax contributions. Thereafter this action was filed by plaintiff Pat Griffin Company in the second judicial district and as a result the decision of the Employment Security Commission was reversed. This appeal from the ruling of the district court was taken by the Employment Security Commission. Hereafter plaintiff will be referred to as Gasamat and defendant as the commission. From the record it appears that Gasamat has its headquarters in Fort Collins, Colorado,and is in the retail gasoline business, operating self-service gasoline stations, with outlets in Montana at Billings, Great Falls,Helena, Butte,Missoula and Bozeman. The customer at a Gasamat station serves himself through token operated pumps for which the customer obtains tokens or cbange from the "changewindow" at the office-residence of the operator. Gasamat owns the service stations,pumps, storage tanks and buildings involved at each location. Each station location consists of two buildings, an office-living quarters and an oilwarehouse. The Gasamat stations are leased by individual operators under a lease agreement. The operator pays $90.00 per month for the property. This amount isdeducted from his commission. Ten days notice is required to terminate the lease. The lease agreement also provides that the property cannot be subletwithout the permission of Gasamat and 

### " 

## * * * no rights and privileges as herein granted to lessee shall be sold, transferred or assignedwithout first obtaining thewritten consent of lessor. 

## * * *" Gasamat insures the property, insurance coveringboth the property itself and public liability. The personal property owned by the operator is insured by the operator. The operator sells the products under a consignment contract made with Gasamat. Gasamat provides the gasoline to the station. The operator isnot required to pay for the gasoline. He derives a commission on sale of gasoline of 3/4 of a centper gallon on the first 40,000 gallons sold and 1/2 cent thereafter per month. When gasoline is low, the operator calls a number supplied by Gasamat. Gasoline is then delivered by common carrier, and is charged to Gasamat. The operatorpays nothing. Title to the gasoline remains in Gasamat. The tax on the gasoline ispaid by Gasamat. Gasamat offers two brands of oil to the operators,but the operatorsmay buy other brands of oil fromother oil companies. An oilwarehouse is located on the stationpremises which houses the oilproducts. If the operator removes any oil from the warehouse which is from Gasamat,he must pay that company for it at that time and include the purchase of that oil in his next report, together with cashmoney from the purchase. The operator isunder

no obligation to buy oil products fromGasamat. The operator is required to make daily deposits at a local bank account in the name of Gasamat. He is required to make reports to Gasamat three times a week. The reportswould include such things as the amount of gas thathas been delivered to the station, the amount of sales and the amount of supplies on hand. Gasamat provides and pays for a bond for the operator. Gasamat pays for radio advertising,but the operator is free to advertise in other ways at his expense. The telephone and electricity arepaid forby Gasamat. Heat ispaid for by theoperator. Gasamat pays for themajor repairs to the property. Minor repairs are made by the operator. The operator reportshis own federal income tax and pays and withholds his own tax. He also pays his own social security and workmen's compensation taxes. Representatives of Gasamat visit the premises every four or fiveweeks to assist the operator in any way they can and 

### " 

### * * 

## * to help him sell gasoline and oil." The representatives write reports followingvisits,which are filedwith Gasamat headquarters in Colorado. The operator can sell other retailproducts which he choosest0 carry, and he is free to miss work (orclose) any day he chases. The operator is free to hire relief personnel. The question presented for review is whether there is substantial evidence to support the Commission's findings that individuals engaged by Gasamat are employees for the purpose of determining whether Gasamat is liable for the payment of unemployment compensation taxes. Determinative of the issuepresented is section 87-148(j)(5), R.C.M. 1947,which provides: "Servicesperformed by an individual for wages shall be deemed to be employment subject to this act unless and until it is shown to the satisfaction of the commission that: "(A) Such individual has been and will continue to be free from control or direction over the performance of such services,both under his contract and in fact;and 

### "(B) Such service is either outside the usual course of the business for which such service is performed, or that such service isperformed outside of all the places of business of the enterprise forwhich such service isperformed; and "(C) Such individual is customarily engaged in an independently established trade, occupation, profession or business."The term "wages"isdefined in section 87-149(c)

## , R.C.M. 1947: "'Wages,'means all remuneration payable for personal services, including commissionsand bonuses and the cashvalue of all remuneration payable in anymedium other than cash. 

## * * *"

In St. Regis Paper Co. v. U.C.C. of Mont., 157 Mont. 548, 550, 487 P.2d 524,a case involving an operator-driver,this Court in considering section 87-148(j)(5), R.C.M. 1947, said: "The above cited so-called 'ABC Test' is the statute to determine whether an employer-employee relationship exists forunemployment tax purposes. The statuteprovides that all three of the stated conditions must exist, or service performed will be deemed to be employment. The statutemust be reasonably applied." In addition, in our analysis of the question and statutewe said in St. Regis at 552: 

### " 

## * * * We feel thatwhether a person performing services is an employer (sic) or an independent contractor is the question before us, and statutes used as guides in making such determinationmust not be distorted to allowpersons who are truly independent in their operation to be held employees merely for tax purposes and resulting benefits derived from an employer-employeerelationship." The question before us in St. Regis is the question before us here, that is,whether the operatorsof Gasamatsin theperformance of servicesare employeesor independent contractors. In St. Regis we concluded that by reason of thewritten contract between the employer and the operator-driver and the uncontroverted fact that the operator-driverwas an independent contractor, the conditions of the "ABC Test"were satisfied. In their briefs both Gasamat and the Commission have cited numerous authority in support of their respectivepositions. There has been much discussion and illustration of the factsof each of the cited cases. It is theview of this Court that the factsof the instant case establish the relationship of employeremployee between Gasamat and its operators forpurposes of theMontana Unemployment Compensation Law. While section 87-148(j)(5), R.C.M. 1947 is used as a guide in the determination of the relationship between an employer and an individualperforming services, the well-established test in determining whether an individual is an employee or an independent contractor is also a guide to be used. As we did in St. Regis,we here reiterate this test as expressed in Shopev. City of Billings, 85Mont. 302, 306, 278 P. 826: "'An independent contractor is one who renders service in the course of an occupation,and represents the will of his employer only as the result of hiswork, and not as to themeans whereby it is accomplished,and is usually paid for the job.' (And seeNayrnan v. Pincus, 82Mont. 467, 267 Pac. 805.)

"Thevital test in determining whether a person employed to do a certain piece of work is a contractor or a mere servant, is the control over thework which is reserved by the employer. Stated as a general proposition, if the contractor isunder the control of the employer he is a servant; if not under such control,he is an independent contractor." The firstprovision of the "ABCTest" requires that the individual be free from control, "bothunder his contract and in fact". An operator of Gasamat does not have freedomof control over the means, methods and details of his business when he is required tomake three reportsweekly and daily bank deposits to Gasamat accounts. Particularly,the operator isnot truly independentwhen he is required to order gasoline from a distributor named by Gasamat and where the total control of the gasoline lieswith Gasamat. Gasamat is in the retail gasoline business and it exercises control over its operators as to the means of the sale of gasoline and as to the resultsof the operator'swork. Therefore, the firstprovision of the "ABC Test"has not been met.Mr. Justice Castles dissenting: I dissent, but no useful purpose would be served by a discussion of whether or not Gasomat "controls" itscontract operators to such a degree thatthey become servants and thus employees. I would hold them tobe what they agree tobe-- independent contractors.