Source: http://masscases.com/cases/sjc/341/341mass661.html
Timestamp: 2019-04-18 10:33:15+00:00

Document:
A carpenter, who was one of two trustees and one of three beneficiaries of a trust, not having transferable shares, formed to acquire and hold property and to engage in business, with power in the beneficiaries to appoint successor trustees, to join with the trustees in terminating the trust, and to alter the terms thereof, and who worked for the trust for a weekly wage under the direction of his cotrustee and did not participate in the management of the trust business, was not a "person in the service of another" within G. L. c. 152, Section 1 (4), and was not entitled to be paid workmen's compensation by the trust's insurer upon sustaining an injury arising out of and in the course of his work.
The case was heard by DeSaulnier, J.
Alfred L. Morin, (John P. Mulvihill with him), for the claimant.
Daniel A. Canning, for the insurer.
SPALDING, J. On July 26, 1955, James W. Ryder, hereinafter called the claimant, fell from a roof on which he was working, and was injured. That his injury arose out of and in the course of his work is not in issue. The sole question is whether he was an employee within the intendment of G. L. c. 152. The single member ruled that he was, and awarded compensation; the reviewing board ruled that he was not, and denied compensation. The Superior Court entered a decree in accordance with the reviewing board's decision, from which the claimant appealed.
The facts, as to which there is virtually no dispute, are these. On February 25, 1954, the claimant, together with a son, Elvin C. Ryder, and the latter's wife, assumed to enter into a business association under a "Declaration of Trust." By its terms "they purported to form, and did subsequently operate, the Ryder Realty Trust," of which they were the sole beneficiaries. Two of them (the claimant and his son, Elvin) were named trustees, to whom in such capacity and for the purposes set forth in the declaration "certain funds, credits and other assets" would thereafter be conveyed. The trust was not one with transferable shares subject to G. L. c. 182. The instrument was recorded in the appropriate registry on March 5, 1954.
In May or June, 1955, Elvin C. Ryder talked with one Corcoran, an insurance agent and broker, with a view to obtaining workmen's compensation insurance for the trust. Ryder informed Corcoran of the nature of the trust and asked him if "the trustee, James Ryder [the claimant], would be covered." Corcoran stated that he "would check with the Travelers [the insurer] to make sure." Thereafter Corcoran consulted with officials of the Travelers Insurance Company and it issued a policy of workmen's compensation insurance for the period of July 1, 1955, to July 1, 1956. The insured named in the policy was "Ryder Realty Trust, Elvin C. Ryder and James W. Ryder, Trustees."
The premiums were based on an annual payroll of $7,000, the estimated wages of the claimant and his son.
Prior to the formation of the trust, Elvin was in the business of buying land, and building homes on speculation and under contract. The same business was carried on under the trust. The claimant, who had been employed as a carpenter by his son prior to the formation of the trust, continued to work for the trust in the same capacity after its formation, for which he was paid a weekly wage of $50. The claimant took orders from his son and did not participate in the management of the business.
The reviewing board, after analyzing the provisions of the declaration, concluded that it created what was in legal effect a partnership and that the claimant, as one of the partners, could not be an employee of the partnership.
successor trustees, share in the income from the trust (except that the one-half share allocated to the claimant was to terminate on his death), join with the trustees to terminate the trust prior to the end of its declared five year life, and "alter, change or amend the terms and conditions of this Trust . . .."
The claimant was not in the service of another when working for himself and another under this declaration of trust. There is no basis for holding that the instrument created an entity independent of the claimant.
(1929). Note, 97 U. of Pa. L. Rev. 52 (1948). The entity theory with respect to partnerships has been applied primarily in limited aspects, such as in the areas of taxation and jurisdiction. Generally "the pluralistic notion of the firm" prevails. Helvering v. Smith, 90 F. 2d 590, 591 (2d Cir.) (L. Hand, J.). Williston, The Uniform Partnership Act, 63 U. of Pa. L. Rev. 196, 208 (1915). We think, however, that there is no basis for applying the entity theory to this case.
partnership as an entity in order to effectuate its beneficient purposes. . . . It is a much heavier task to segregate the partnership entity to such an extent that the same person can be both employer and employee." Larson, Workmen's Compensation Law, Section 54.31. With these views we are in agreement.
We assume that there are also circumstances in which a trust may be deemed an entity independent of the trustees or beneficiaries, but that does not help the claimant. That the claimant worked under the direction of his son, a cotrustee, did not make him an employee. He had all the powers of management that his son had and in contemplation of law was no less an employer. We intend no suggestion as to the status under Section (4) of c. 152 of an employee of trustees of such a trust who is a beneficiary but not a trustee.
The claimant argues that since the insurer was paid a premium on the basis that he was an employee, "it would be manifestly unjust not to require the insurer to pay him compensation." But questions of whether the insurer is estopped to deny liability and of its right to retain the premiums are not presented and we do not pass on them.
As the claimant was not a "person in the service of another" within the intendment of Section 1 (4) of c. 152, it follows that the decision of the reviewing board was right and the decree in accordance with that decision must be affirmed.
[Note page664-1] General Laws c. 108A, Section 18 (e), provides: "All partners have equal rights in the management and conduct of the partnership business."
[Note page665-1] Ohio Drilling Co. v. State Industrial Commn. 86 Okla. 139.
[Note page665-2] Cooper v. Industrial Acc. Commn. 177 Cal. 685. United States Fid. & Guar. Co. v. Neal, 188 Ga. 105. In re W. A. Montgomery & Son, 91 Ind. App. 21. Wallins Creek Lumber Co. v. Blanton, 228 Ky. 649. Dezendorf v. National Cas. Co. 171 So. 160 (La. App.). Pederson v. Pederson, 229 Minn. 460. Chambers v. Macon Wholesale Grocer Co. 334 Mo. 1215. Rasmussen v. Trico Feed Mills, 148 Neb. 855. Matter of Lyle v. H. R. Lyle Cider & Vinegar Co. 243 N. Y. 257. Gebers v. Murfreesboro Laundry Co. 159 Tenn. 51. Millers' Indem. Underwriters v. Patten, 238 S. W. 240 (Tex. Civ. App.). Rockefeller v. Industrial Commn. of Utah, 58 Utah, 124. Ellis v. Joseph Ellis & Co.  1 K. B. 324 (approved by implication, Emery's Case, 271 Mass. 46, 48). See Auten v. Unemployment Compensation Commn. 310 Mich. 453. Compare Albertini v. Hull Lease, 54 Idaho, 30 (involving a mining partnership similar to a corporation); Carle v. Carle Tool & Engr. Co. Ltd. 36 N. J. Super. 36 (involving a limited partnership similar to a corporation). By statute, working partners receiving wages beyond their share in the profits are employees in California (Cal. Labor Code Ann. Section 3359 ), Michigan (Mich. Comp. L. c. 411.7  as amended), and Nevada (Nev. Rev. Sts. Section 616.055).

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