Court Opinion

ID: 4141401
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:10:17.783751+00
Date Added: 2024-06-11T14:37:32.639108
License: Public Domain

Dr. Geore Y. 00x
State Health Offloor
Stab Board of-Heal+&
AueJtln, exam

Dear sir:                                  opinion Ho. o-4935
                                           Rer Should deductions      be me&
                                                 from the salariee    of employeea
                                                 of the Saltwater     Control
                                                 offioe for Social    Seonrliq* ~
                                                 purposesl

            Your request for an opinion as to whether a stenographer      and
clerk employed in the Tyler field a?fice of the Governing CamnIttes far
SaZtUater Control setup       in e~pliance  with an agr!33IItent between ths
plaintiffs    and the defendants In the case of the State of Term ve. Stzu
Oilccmgany,     HO. 46,%5-F in the District Court of Dallas County, Texas,
1.l6t.b Judloial District,   is subject to Federal Social Security taxee, has
be,m received.

              The laquag    of the plan !3ubmittedpumlantto       the agre~t
setting     up the governing ocmimittee ie ae follow:

          "The plalnti.ff    Stat.8 of Texas is represented by the AttornsJ
     General'e Department, the State Board of Health, the Board of
     Water Engineers and the State Game, Fish & Oyster Ccmulsslon.               ;I
     These four departments will constitute          a governing omittee     tc3
     supervise    and. enforce the administration      of the agreement op,
     b@iklf of the plaintiffi        Dr. George U. Cm, State Health Of'f$jer;
     will serve aa chainnan of the committee, and he shall have the
     respousiblllty     of administering    the plan umber the direction     of
     thb ccamittee.      All plane and reports required by this lnetrtwmt
     to be filed witi the plaintiff        ehallbear    an identification  file
     Ho. AG 385, and ehallbe        forwarded to the State Health Officer,
     Austin, ~Texae.

           The field office   was eetabliehed  at Tyler in caiplianoe with the
provlsiona  of the plan under the direction    of a field engineer for the
purpose of a&klnieterlng    the plan.   The general terms of the plsn agreed
upon are a8 follows:
                                                                           -   -

Dr, George U. Cox, Page 2 (O-4935)

           "(1)  To provide adequate storage In pits or other
     containwe,   80 construoted a8 to pmiveat maepage euch a8
     would reeult in the pollution  of public watere.

           “(2)  To oontraot with salt water holding oanpanies
     or ooneervatiou dletriota,    whioh have adequate and approved
     etorage faoilitier   for handling the ralt water p&duoed
     by the dlaoharglng wells, pro~lded there faailtier    oonfo~
     to the requirmentm’and     objeotlres of thin lmtmaent;    or

           "(3)  To proride lnjeotlon well8 adequate 3n oapacity
     to dlepoee of the ealtwater   produoed on their reepeotive
     lea.sen and with adequate lmpenlonm etoauge oapacl+g to
     hold the saltwater   during necessary nhutdowne.

           “(4)   To employ my other method or oombiaation of
     methodm to effect   the objeotlvee and intmmlmente of this
     instrcment."

          With this preliminary &et& and year letter,    which we quote
below ae a baels of the facts, we have reached the oonclurtion that this
employee ie not subject to FederalSocialSeourlty   tax.   We quoti your
letter a8 followet

           *I&e. Katherine Drumwright, nee Williams, haa been ermployed
     ae etenographer and clerk in ae Tyler field office    of Salt
     Water Control under the Governing Costimittee for about 11 or
     l2konthe   at a ealary of $112~50 permonth.    During this time
     no deductions have been made fram her salary for Social Security.

           "The fund6 fran which her sal&ry ie paid are derived
     fram fees collected  frcp oil operators, defendante in the
     above named oause. !&em feea are paid into the treasury of
     the 116th District  Court, Dallae County, Texas, at a rate of
     $1.50 per well that is produoing 5 per oent or more of salt
     water o

           "The budget of the field office   is itied by the Governing
    Camnfttee on Salt Water Cent&-o1 ccmsgosed of Dr. George Ii. Cox,
    State Health Officer,    ae Chai-,     and Honorable,Mrald  C. Menu,
    Attorney General of Texas, b!r. C. 5. Clark, Chairman, State
    Board of Wster~Engineere, and Mr. Willicun J. Tuoker, Executfve-
    Secretary,Oame, Fish,& Oyster Ccpmalesion. When the budget fa
    fixed,   It la tranemltted to tha Judge of the 1~6th District
    Court for approval, and if it is approved by him an Order ie
    directed to the Clerk of the court to pay the emount of the
    monthly budget to the engineer in charge of the field office.
‘.   1

         Dr. George W. Cox, Page 3 (O-4935)

                     "l&en these funds are received by the engineer
               from the Clerk of the court he deposits &em in a local
               bank to his owu credit and draws checke a&nst       the
               account for payment of salaries   and other of-floe and
               operating expermes. * * *”

                    Every pereon le an mployer under Tltla 42&b-Title       VIII,
         Vol. 40-42, U.S.C.A. of the Booial Security Aot with whloh we are here
         oouoerued, if he employa 0110 or more employeee, but it doe6 not follow
         that all eervloes performed for tie employer are subject to tar. Certain
         eervioes me epeolfically    exempt mder the Social Security Act.     lie need
         here be ooucerned with only or&e of theee exoeptlm,      for tmlees this
         employee falb within the purview of this exoeption,      her employment aud
         services  16 subject to the Act> and, therefore,   texable.   Roue of the
         other exceptima    expressed in tbe Act could possible have any applicatiou.
         This exceptiou ia ae follows:

                     %ervice performed in the employ of a state, a political
               subdivisiou  thereof,   or au imtmmentality  of one or more
               statee or political    subdivisions.” Title 429ub-section   VIII,
               loll U.S.C.A.,   Vols. 40-42, page 239.

                      If the service of the stenographer aud clerk is performed in
         the employ of the state, or au ilLstrmentallty            thereof, her aervioe is
         specifically    exempt under the provisloua        of the Act noted above and need
         not be reported.      She Is, in our opinion, an employee of au iustrumentality
         of the state; ncwnely~ the Goveruiug Committee 011 Salt Water Control ccm-
         posed of the Attorney General08 Departamut, the State Board of Health,
         the Board of Water Engineers and the State Game, Fish & Oyster Comuissiou,
         a8 provided in the plau uader the headiug of ‘Governing Committee”.                  You
         are Oonditutea, under the plau, Chairmu of the Cmmlttee aad ves,tea wi&
         the reeponelbiPfty     of admirnfetering t&e plan under the dire&ion            of the
         Cmuittee . The Attorney GeueralOs DepaPlxneut is established                by the Consti-
         tution, end hiti office       is, therefore,   a constitutional    office.     The State
         Board of Health, (Art. 4415A9 Vernon% Revised Civil Statutes),                 the
         Board of Water Engineers, (Art, 7477$ 74.88, Vernon’s Revised Civil Statutes),
         aa the State Game, Fish & Oyster &emuiasion, (Art. 4016-4018, Vernon’s
         Revised Civil Statutes),         are oreated and their duties aud activities         are
         prescribed by statute.         The StateBoard    of Health, theBoard of Water
         Engineers and the State          Game, Fish & Qyater Cam~iesion are all
         appointed by the Governor and confirmed              by   the Senate, and you,
         ae State Heal%       Officer,      are,   of eouree,    appointed by a majority
         vote of the State Board of Health.            The Attorney General is the legal
         representative     of the State in all litigation        in whioh the state ia a
         party in eonnectlou with the admiuiatratim              of the affaira      of these
         atate departmenta, parties to the plau.            We a0 not aearn it necessary to
         cover in detail the work and activities           of ,theee various deparizuents to
         supportthe     statemeut that they are imtrmeutallties            of the state.      Artiole
         4444 of Vernon's Revised Civil Statutee haa a direct bearing upon the work
         perforaedby     the Eltate Board &Health        and the Game,Fieh&         OyeterCcvn-
         mission in oonnection with pollutlou          of public bodies of water.         It
Dr. George W. &IX, Pcge k (O-4935)

read6 aa foYPaopf3:

            “Ho pereon, firm a- e~rporatfm~       private or iumlofpal,
     ahalP   pollute my water couree br other public b&y of
     water, by t&reving, caatirmg or depositing        or cauelng to
     be thrown, oaet or depoeited any made petmUumt oil or
     atier like rubetdmoe tierein,       or pollute any water OQU~~C,,
     or other public body of water fxxaa which water la taken
     for the u,eee of farm Piveetoak, drinking end dc-meatic
     purpoeee, in this State> by the dieclharge, direotly          or
     iriabeat3.yy, of any eewage or mlean        water or unohua
     Or pOtitbg      matter or thing   ~&IePeina,or iu euch prOXi-
     mity tiersto    that it will probablyma&, 6nd po3.lut.e the
     watem of au& water OQUEU~or a tier publtfc body of water
     from whfeh water ie taken, for said woes- Drab di&hefl,
     where waste oil finds ifs way f~to water course6 ox
     public bodies of water, &all be equipped with trap of
     mfYiefent     oapcclty to arrest t&e flm of oil,        InaoP~
     a0 emeems      the protection   of ffah and oysters9 tie
     Gsme, FPsh & Oyster Ccmmfsaioner or hfs deputies, may
     have jurledfctlon     in the enforceme& hereof.       * * *
     Upon the conviction     of aany percon for violating     this paw,
     the court or judge themof in whfeh sppeh eonviatkm            is
     had, shall. issue a rrft of in$unction enjoining and
     restraining    the person 01”eorporat.ion responsible      for
     ew.& poPlIlt Ion.0 For A vi~I.aat%on of e-it& ,tijunotion,
     the said court an& the jwlge thereof’ shal.1 have tie
     power of fine and impr~ieo~~~& as Par ~x3ntempt of court
     within the Lirnfts preserihe~ by 3md in other oases,
     ma ttnfs re~~edy by ti~~tm;r;r~~ ~3. p~~f~$nasrat for vblati0n
     therecf shall. be ewmalcctPre 0P tie fire Smposed. The
     state maPa Qf HeaEth k&a:%&      enrfraB:c thAQa3iOnE!-z
                                     -~~%*-.                          thfs
     artielea,

            We do not quote thfs provfsion      of the sta%uts upon the aesump-
tion you are not fadifar      with 02, but as an sid fn mpport of our
conclusion.    The preveotiou of poUwt$on 0f ~oumee of water supply such
as rivers,   lakes, mr.c9.3~, reserooim 9 etos ,9 if3 Q:Pvital fntereat to the
public welf’are and health of the s,&t.e ana, .se wf9,1 be obeerved from.
Arti,ole @&4, the eontzol au& preven~+Lon thereof is espeefally         delegated
to your department.     Iti is true +ihat the salmq OP this3 emp3lo~ee is not
paid frmn state funds, but by .the operatcra far. the fieLB upon a prorate
baais, the details   of which are ee,t acxt, in your Letter,     But this, in
OUT opfifom., in not a con.ta~ll.lf~~g facstor,   The Committee Es a feasible
end convenfent Ins~exgtalfty        to aceomp:%f& a p&lfe     servfee,   Bo one
derives any prfvcte OF personal benefft from ftdl cotiv8ities.         The
operatore exe;Ps:fse no contzol, whatsoever o+er the operat,fons Wf the offfce
or its ermployees. The Federal So&al Seawrity Beard has mlaa in a ease
in which the Licensed Carrrmfseion of 8, eEty, stationed. polfoe officers       at
a place of amusement, fixing +&e r3munerstian for the services          of the
Dr. Oeorge W. Cox, Page 5 (o-4935)

offloem    whhieh MB paid by the muaement ocmpany, that such policemen
are employeea of tlae oity and are exempt under the Soolal Seourity
Aot.    They WBM subjeot to the oontrol of the Pollee Departnmnt of the
city not only aa rem          the resulta to be acmaupliaheb, but also ae to
tie detalle and meam by which the reenlte were to be 8oocmpllahecL
!Fhe fact that euoh offloera     were pai& by the amusamnt ormpany wa@ held
not euffiolent    to oonatltuta   them employees of the company. (Opinion
Sooial Security Tax Division,      Bureau of InternalRevenue,  327).

             In a case involving the employment of utility   inepeotors where
the utilities    are required under their franohise from the city to pay
for the inspection    of all their construction  work, and where the inepeotors,
thou&~ paid by the utltpfty are appointed by the mayor and subjeot to the
control of the city,     it wa8 held that such inepeetom were exempt under the
statute9 (Opinion, Social Security Tax Division,       Bureau of Internal
Revenue 9 339) o

           Inaoaae   involving inJletnzotom teaching olaseea in industrial
plants under the Ohio VooationaP Education System (Estebliahed   under the
Smith-Hughes Aot), the inatruuetom were fomer employeea of the ocnnpany
and were reoasmnerndedby it but in this work they were held to be employed
by the Board of Education and not by the oanpany. The Board controlled
their services end had the Bole right to &fs&arge them if their services
were unsatfsfaetory,   The Board ffxed the salary, although the oompany
paid half of such salary,    The ruling of the Social Seourity Board in this
inetanoe wa8 that the Board of Education wae an instrumentality   of the
State of Ohio.

           There hae been little     @dieial   determination of this question,     s
hence we have had to rely main3.y upon, rulinsngs of the Social Security Board
a8 you wfll note above.      One PaBe, however, hae: ~QW uncier our observation,
not b cdl mespecta pm?wlLeP %o the faota here under considaratian,           but
we think with enough aualogy to be helpful.          This ia the case of Cayne,
Colleetir   of Internal Revenue ~8~ Brueh, in re CuUen Hardware Corporation.
30 Federal Supplement, paga 71ke The Cullen Hardware Corporation wae
adjudged a bankrupt upon an tivoluutary       petftion   filed by ita creditors.
Larkin M. Brush was appointed by the Referee ti Bankruptcy truetee and he
duly qualified   a8 such+ Mica Isabel1 E. Shea, a former employee of the
Cullen Hardware Corporation,      was by pernisafon of the Court, engaged in a
clerical  capacity to assist the truetee in 0olPeoting the aooounts.           Her
wages were paid out of funds belonging       to the bankrupt estate in the hands
of the trustee.     The eolleotcr   of Internall Revenue filed with the Referee
in Bankruptcy a claim for taxes on aocount of the employment of Mrs. Shea.
The Court ruled t&at the Clerk06 salary was exempt under the Social Security
Act sirme the trustee wae ex~ instrumen~lity         of the United States, the
Clerk employed to help him was likewiaeiexempt.
           The ScmlaB Seeurlty Tax Division,         in Qpiaion Bo. 127, found
in Unemnp~oyment Ccmq3emsation &umf85ion Serviffie, Volume 3> Ilo. 2>
April 15, 1939, page 2.224, ruled that the Lower CcJ.ora&o River Authority
in tbia eta% is an innstrumenta;Pty of the State of Texas within the
meauing of the exoeptiona      expressed in the Section of the Act, eupra,
that neither the Iower Colorado RSvar authority or i@ employee8 were
eubjeot to the tax Imposed by ,thneSocial Seourity Aot.          True, the
CoPomdo River Authbnority 18 create& by I). eeparate a& of the LegieLatnre,
end the 0cmrpePPeationof the o%fi”ioera ati employeea ie paid fran State
fundu, md ie mom 01LIBppLy      an Inatnaeeutaalif;~ of the etatxi ~tban the
Qavemlng Camittee,        but no more ded’inibly    0~0 fn&rwnentaaPity of the
state than the State Board 0 FLaaEth, the State Board of Water Engineers
and the State &wne, Fdeh b Qyster @~snalesi,mn, We are of tie opinion that
this Goveruing Cmmfttee, aetirng within tke mope of the work of all three
of tbeee instzuaental%t%ea of the state ia PtsebP none the Pees an fnetru-
mentality of the stats,

           Im the ir&~~ee we have here “t$is etenogrqnher ami clerk is
employed by the @-ittee      ~&VU& i% Ezeoutive Searetary and dire&or,
the resident engineer, who is m employee of the Stati Boar& of Health,
Her salary is fixed by “the dIrector    and tinbJect at al1 timea to the Cover-
ning Camn&tb?e mder the direc,ti,m of the Exeeutfve Dfreetor Bnd: could be
dfsoharge~ br tie acmn&ttee or t&e Executive Director at any time.       In
other WQP&~~the f.hvsmXr~ @cllmnl.L:es aud Exeeutfve Dereetcr have oomplete
and absolute eontr~l ov.sr ,&la smp:Lo~ee, and her services fall within the
exemption expressed ti!. ,tke Soe:ial Security Act, ff we are correct in our
statement that thi.8 Gwern~g C~nnafttee is an fnLst.runentalitg of the state,
aud we th4nak it 1.~~