No. 12530 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1973 

PAT GRIFFIN COMPANY, 

GASAMAT SERVICE STATIONS, 

Plaintiffs and 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 : 

For Appellants : 

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, 1973 
Mr. Chief Justice James T. Harrison delivered the opinion of 

the Court. 

The defendant Employment Security Commission (now 

designated Employment Security Division, 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 Pat Griffin 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 "change window" 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 oil warehouse. 

The Gasamat stations are leased by individual operators 

under a lease agreement. The operator pays $90.00 per month for 

the property. This amount is deducted from his commission. Ten 

days notice is required to terminate the lease. The lease agreement also provides that the property cannot be sublet without the 

permission of Gasamat and " * * * no rights and privileges as 

herein granted to lessee shall be sold, transferred or assigned 
without first obtaining the written consent of lessor. * * *" 

Gasamat insures the property, insurance covering both 

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 is not required to pay for the gasoline. 

He derives a commission on sale of gasoline of 3/4 of a cent per 

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 operator pays nothing. Title to 

the gasoline remains in Gasamat. The tax on the gasoline is paid 

by Gasamat. 

Gasamat offers two brands of oil to the operators, but the 

operators may buy other brands of oil from other oil companies. 

An oil warehouse is located on the station premises which houses 

the oil products. 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 cash money from the purchase. The operator is under 

no obligation to buy oil products from Gasamat. 

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 reports would include 

such things as the amount of gas that has 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 are paid for by Gasamat. Heat is paid for by the 
operator. Gasamat pays for the major repairs to the property. 

Minor repairs are made by the operator. 

The operator reports his 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 five weeks to assist the operator in any way they can and 

" * * * to help him sell gasoline and oil." The representatives 

write reports following visits, which are filed with Gasamat 

headquarters in Colorado. 

The operator can sell other retail products which he 

choosest0 carry, and he is free to miss work (or close) 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 issue presented is section 87-148(j)(5), 

R.C.M. 1947, which provides: 

"Services performed 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 is performed 

outside of all the places of business of the 

enterprise for which such service is performed; 

and 

"(C) Such individual is customarily engaged in 

an independently established trade, occupation, 

profession or business." 
The term "wages" is defined in section 87-149 (c) , 

R.C.M. 1947: 

"'Wages,' means all remuneration payable for 

personal services, including commissions and 

bonuses and the cash value of all remuneration 

payable in any medium 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 for unemployment tax purposes. 

The statute provides that all three of the stated 

conditions must exist, or service performed will 

be deemed to be employment. The statute must be 

reasonably applied." 

In addition, in our analysis of the question and statute we said 

in St. Regis at 552: 

" * * * We feel that whether 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 determination must not 

be distorted to allow persons who are truly independent in their operation to be held employees merely 

for tax purposes and resulting benefits derived from 

an employer-employee relationship." 

The question before us in St. Regis is the question before 

us here, that is, whether the operators of Gasamatsin the performance of services are employees or independent contractors. In 

St. Regis we concluded that by reason of the written contract 

between the employer and the operator-driver and the uncontroverted fact that the operator-driver was 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 respective positions. 

There has been much discussion and illustration of the facts of 

each of the cited cases. It is the view of this Court that the 

facts of the instant case establish the relationship of employeremployee between Gasamat and its operators for purposes of the 
Montana 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 individual performing 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 Shope v. 

City of Billings, 85 Mont. 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 his work, and not as to the means 

whereby it is accomplished, and is usually paid 

for the job.' (And see Nayrnan v. Pincus, 82 Mont. 

467, 267 Pac. 805.) 

"The vital 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 

the work which is reserved by the employer. Stated 

as a general proposition, if the contractor is under 

the control of the employer he is a servant; if not 

under such control, he is an independent contractor." 

The first provision of the "ABC Test" requires that the 

individual be free from control, "both under his contract and 

in fact". An operator of Gasamat does not have freedom of control over the means, methods and details of his business when he 

is required to make three reports weekly and daily bank deposits 

to Gasamat accounts. Particularly, the operator is not truly 

independent when he is required to order gasoline from a distributor named by Gasamat and where the total control of the gasoline 

lies with 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 results of the operator's work. Therefore, 

the first provision 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" its contract 

operators to such a degree that they become servants and thus 

employees. I would hold them to be what they agree to be-- 

independent contractors.