Court Opinion

ID: 3988305
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:44:22.407052+00
Date Added: 2024-06-11T14:18:24.967056
License: Public Domain

I dissent. While the order to pay contributions into the Unemployment Compensation Fund was one which the employer was not compelled to obey because under Sec. 14, Laws of Utah 1936, Sp. Sess., c. 1, the Tax Commission has the duty to demand and collect contributions, it can be considered in the nature of a conclusion from the findings that the employer is one required under the act to contribute, and so construed may have some function as evidence in a proceeding by the Tax Commission to collect the contribution. At the most it is surplusage. I have stated my views in regard to this matter more fully in my opinion filed in the case of National Tunnel  Mines Co. v. IndustrialComm. of Utah, 99 Utah 39, 102 P.2d 508.
For further treatment of the question of a finding of one agency being a fact adjudicated for purposes of collection by another agency, see Sunshine Anthracite Coal Company v.Adkins, 60 S. Ct. 907, at page 916, 84 L. Ed. 825.
I cannot agree with the conclusion of the opinion as to the second question presented. I think the evidence sufficient to sustain a finding by the Commission that the relationship between the plaintiff and Holst was in part a representative one rather than one of vendor and vendee, or, to put it according to the classification laid down in Sec. 19(j)(1), the relationship was a service rather than a non-service relationship. This is one line which separates those subject to the act from those not subject to the act, in so far as the inclusion-exclusion test for relationship is concerned. I have in my opinion filed in the case of Logan-Cache Knitting Mills v. Industrial Comm., 99 Utah 1,102 P.2d 495 at 502, set out the three hierarchy of inclusion-exclusion tests under the act. The one regarding relationship *Page 108 
requires first, a determination between a service and a non-service relationship. If it is a service relationship it comes under the act, although it may be excluded by ensuing tests under the same hierarchy — for instance, under Sec. 19(j)(5) — (a), (b), and (c). But the first question under Sec. 19(j)(1) is whether it is a service or non-service relationship. And as to that question every "service performed for a remuneration whether that remuneration is a commission, a bonus and a gratuity or whether received in cash or other medium," constitutes a relationship which passes the test of Sec. 19(j)(1). Of course, not all of such relationships will entitle the one receiving the remuneration for the service to qualify for unemployment compensation. He may be excluded because under 19(j)(5)(a), (b), and (c), his relationship is one which takes him out of those service relationships which entitled him to participate or the services may not be of sufficient duration or amount under Sec. 4(e) of the act. But any services for "wages," as "wages" is defined by Sec. 19(p), however small, constitute a service relationship as distinguished from a non-service relationship. However, it must be a service relationship and it must be services performed for wages.
True vendor-vendee or a lessee-lessor relationships are not service relationships. They fall in the non-service category. Not the only test of a vendor-vendee or lessor-lessee relationship is the contract executed between the parties. This may in words
and form meet the tests of a vendor-vendee contract rather than a service contract, but facts aliunde of the contract may be taken into consideration to determine the real relationship between the parties. And this relationship for purposes of determining whether the applicant may participate in the fund and whether the other party to the relationship was an "employer" of the applicant, must be viewed in connection with the act and the purposes which it is to serve. This is not to say that what is not a service relationship under tests applicable, had this act never been passed, will become a service relationship because of the act. What is meant to be said is that the Commission and this *Page 109 
court will look behind the mere form of the relationship to determine what it actually is and not what it is called. If the relationship was to all intents and purposes one for the rendering of services by one party to another, the fact that it may assume the legal habiliments of another type of contract will not avail to defeat the applicant's right to share in the fund. This I understand to be the real meaning of National Tunnel Mines v. Industrial Comm., supra. The act was meant to cushion unemployment treated as an incident to the service relationship of employment. This objective was not only for the welfare of the individual entitled, but for the benefit of society. The individual needing work is in most cases required to contract in the manner which he who has the job to offer may desire. And if the net result of that contract is to provide what would ordinarily be a service performed for employer, it will be looked at in fact as indeed it is — as creating a service relationship.
What are the facts and circumstances surrounding this relationship? The sample case of brushes was charged to the so-called "dealer," but was returnable and credit given for the same. This is exactly the same procedure that is used by many employers to insure responsibility of their salesmen for samples furnished. The net result and the actual transaction is exactly the same whether the samples are loaned to the salesman and charged against him or a deposit required and credit given on return, or whether the transaction assumes the legal aspect of passing title to him for a payment or on credit, with a right to resell back to the "vendor" and to obtain back his payment or cancel the credit extended to him. The net result of this transaction is the same whatever legal form it assumes.
The goods "sold" by the "dealer" were sold to him for cash or on restricted credit, provided he furnished a bond to insure the credit. This has the aspect of a sale — a vendor-vendee transaction. He was not restricted to a selling price to the consumers but it was suggested to him. *Page 110 
We next come to the question of control. At the outset it must be kept in mind that we are now examining the record in respect to a determination of whether the relationship belongs in this service or non-service class under 19(j)(1). We are not yet concerned with the next test which occurs under 19(j)(5)(a), (b), and (c) which must be applied if we find the relationship under 19(j)(1) to be one of service for wages. At this phase of the examination, therefore, "control" is a one-way test. That is to say if there is control the relationship will be almost conclusively one of service rather one of non-service. We do not think of control in this sense applied to a lessor-lessee or vendee-vendor relationship. But on the other hand, lack of control or right to control does not necessarily make the relationship a non-service one. There are relationships in which the element of control is not present yet which under 19(j)(1) fall under the service rather than the non-service category. While the Act purposely avoids all reference to independent contractors because such nomenclature belongs in the field of tort, yet such relationship furnishes an example of one of service which under 19(j)(5), (a), (b) and (c) may or may not fall out of the operation of the act. Hence, in the case of testing under 19(j)(1), if we discover there is control, such element is fairly conclusive. If there is no control the examination must proceed. The main opinion in this respect is confusing and in error. The court says:
"The finding [of lack of control] being positive and definite that claimant in the performance of the personal service was free of all direction and control by plaintiff, both in fact and under his contract of hire, it must follow of necessity that he did not perform service for plaintiff under a contract of hire or for wages, and therefore the relationship was one that never camewithin the scope of the Act because he was not in employment that would bring him within the Act, to wit, rendering personal services for another under a contract of hire or for wages." (Italics added.)
This test is one under Sec. 19(j)(5)(a) and it was in that regard that the commission found it. But since Sec. 19(j)(5)(c) prevented the claimant from being excluded *Page 111 
he was still in. I think the opinion has misconceived the processes applied by the Commission. It states:
"The error came about through a misinterpretation of the law in holding that all personal services were within the Act unless excluded by the provisions of Sec. 19(j)(5), — whereas only those * * * services are within the act which are rendered for another for wages or under a contract of hire."
It seems to me that the court, not the commission, has made the misinterpretation. The commission certainly had no idea, for instance, that a lessee cutting the grass on his leased premises was doing services other than for himself. And the commission correctly interpreted the act making the dividing line under Sec. 19(j)(1) one of a service and a non-service relationship, the service relationship, of course, being one for "wages" as defined by Sec. 19(p). The commission tried to test the relationship along the lines of whether the remuneration was a price paid by a purchaser or a wage paid by one for whom a service was performed. It did not make the error of thinking that all services, whether performed for another or for oneself came under Sec. 19(j)(1). It would be difficult, in the first place, in conceiving of a service relationship with oneself. The idea of relationship in respect to service involves the idea of performing services for or to another. The statute says "for" another because services may be performed "for" one, yet directed to another party. The boy that shakes up the malted milk or the conductor that assists a passenger off or on the car performs services "for" his employers but "to" the customers. I think this court misconceives the commission's action. It did not think that personal services other than for "wages" as defined by Sec. 19(p) brought the plaintiff under the act. It did not think that personal services for oneself brought the claimant under the act. It was struggling with exactly the same question that occupies this court, that is, was the relationship one for services for "wages," or was it a relationship which did not involve services for another but a wholesaler-retailer relationship? *Page 112 
As a matter of fact, the plaintiff did have a means of control of Holst's conduct. While it is true that no right of control over the hours, order or method of Holst's work was stated in the contract, a right by indirection was retained, through the provision that the contract could be terminated at will. Such was, in effect, a Damocles' sword hanging over the head of Holst. If he did not follow the "suggestions" contained in the printed booklet or the "advice" to attend meetings such right could be exercised without giving a reason. In such relationships by some subtle prevading manner, these "suggestions" and "advices" may easily become metamorphosed in the mind of the one who needs the job as "orders" and "instructions" emanating from the one in the advantaged position, that is, the one who has the job to give and to take away. But perhaps for the test under 19(j)(1) we should treat the matter as if control did not exist and if the relationship, nevertheless, falls into the service class, consider the above remarks applicable to our analysis when we come to consider 19(j)(5), (a), (b), and (c). We proceed then with the examination of the evidence as to whether the relationship was a service or non-service one under 19(j)(1).
(1) Holst was selected by the company to be a "dealer." The Western States manager for the Fuller Company testified, "We don't take every Tom, Dick, and Harry that comes along and give him a territory * * * We are pretty sure a man is of good character and is a pretty good type of man before we agree to give him a territory." The duty of a branch manager is "to find the right type of men to appoint as `dealer.'" A wholesaler doesn't customarily select the retailers to which it will sell in this manner. Ordinarily a retailer with cash or credit can buy goods at wholesale.
(2) Holst was assigned a territory "mutually agreed upon." His territory was changed by the field manager. A retailer is ordinarily free to select the territory in which we will sell. He is not assigned territory which is under the *Page 113 
supervision of another from whom he receives "instructions and suggestions."
(3) Holst was required to give a bond in lieu of a money deposit to protect the company. But the branch manager arranged the application for a bond which was on a printed form especially designed for Fuller Brush Dealers. Moreover, the language of the bond refers to the Fuller Brush Company as "employer" (Ex. D). Requiring a bond from one to whom sales are to be made on credit and bonding an employee are both common practices. This instance smacks more of the latter.
(4) Although Holst "purchased" the brushes which he sold and used for demonstration, the company agreed to "repurchase" them. (Ex. A. par. 4). And Holst did return brushes. (Ex. G). While a wholesaler may agree to repurchase from a retailer, it is not common. It appears that Holst was demonstrating company owned brushes on behalf of the company; not his own brushes on his own behalf. He was "loaned" a demonstration case full of brushes.
(5) Holst never maintained a stock of brushes from which he sold. He purchased no brushes before attempting to sell them. He ordered from the company only those brushes for which he had orders. He paid for said brushes the week following. This appears to be more consistent with employer-salesman than with a wholesale-retailer relationship.
(6) Holst and other dealers were under the jurisdiction of field and branch and division managers who "helped" them and made "suggestions." They were instructed and helped in methods of selling. They were "advised" but not compelled to attend sales meetings which were held every morning and once a week in the evening. Holst sent in a daily report (Ex. C). at "request" of the branch manager. The district manager "advised" that it wouldn't be good practice to sell other articles, although another "dealer" did sell shoes along with brushes. Holst was instructed to give *Page 114 
certain gift brushes. Certain prizes and premiums were given for most sales and most demonstrations by an individual dealer in a given time. And a bulletin for "dealers" in branch or district was printed by the company. Such organization, instruction, attempts to build morale, etc., connote and reflect more an integrated sales organization of the company rather than a wholesaler selling to scattered retailers. Under an agreement of "employment" which the company can terminate at will, a "suggestion" or "some advice" from a supervisor over a territory in all probability constitutes, in effect, an order to a "dealer" who wishes to keep his territory and to continue to sell Fuller brushes. It is also noteworthy that the sales organization acknowledgingly extended down to the last link, including the consumer and the plaintiff — that is, the so-called "dealer." The field and branch managers were paid representatives. The "dealer" as representative salesman would complete the entire organization as a sales organization for distribution of the product from the factory to the consumer. Certainly in door-to-door selling as distinguished from a store or fixed locale for a dealer such is the customary manner for manufacturers to operate when they sell directly to the public.
(7) Holst described himself as a "salesman and dealer." He sold under the Fuller name, not his own. The order blank signed by customers refers to a "Fuller Dealer" and his rendering "Fuller Service" (not his own) (Ex. B). Calls were sometimes made to the Salt Lake office on sales negotiated by "dealers." Throughout all dealings and activities the idea prevails that "dealers" are representatives of Fuller Brush Company selling for Fuller Brush Company. Only in the use of certain terms and to some extent in the method of remuneration does the idea creep in that these "dealers" are retailers operating on their own. Though supervision and regulation of "dealers" is said to be non-compulsory, realistically it is binding on "dealers" who want to get along in their work. *Page 115 
Something is said in the opinion about Holst not turning in or being required to turn in a list of his customers. The explanation why this was not done or required lies very near at hand. The nature of the business was such as to make such a list practically useless, even more useless than would be a list of promiscuous customers who dropped into a fixed place of business and bought brushes. A new man taking the territory would be compelled to make a house-to-house canvas whether or not he had a list of those in the district who previously bought because, where one sells to the housewife brushes or brooms which have only limited life, the salesman's contact must articulate somewhat with the termination of the life of the broom or brush. A list of customers no longer living in the neighborhood because of removal would do little good. Such goods are bought not by deliberate order from a house but largely because a salesman strikes the customer at the happy time. And any good will generated would accrue by virtue of the name Fuller Brush and not by the name of the dealer. If a housewive bought later from a store and ordered a Fuller Brush ordinarily it would be because the brush sold itself and not because a particular man sold it to her at the door. Moreover, it is doubtful whether in such hand-to-mouth business a list of customers would be of value even to the "dealer." On any particular trip he might find his old customers still supplied and attempt to pick up the "in-betweens."
While the situation presents a case in which it is possible to take divergent views as to the nature of the relationship in the examination required by Sec. 19(j)(1), I think it must be held in fact to be a service relationship. And I thus conclude whether the question be a jurisdictional one in which we weigh the evidence or whether we ask ourselves whether there is any substantial evidence to support the inference of the commission. As to whether the fact is jurisdictional or non-jurisdictional, I need only refer the reader to the discussion contained in the opinions of Mr. Justice Pratt and myself in the case ofLogan-Cache Knitting Mills v. The Industrial Commission, supra. *Page 116 
Having passed the test under 19(j)(1), I come to examine the question as to whether the commission erred under Sec. 19(j)(5), (a), (b), and (c). Again admonition is advanced that the test under 19(j)(1) and 19(j)(5), (a), (b), and (c) are separate and must not be confused. The main opinion recognizes this and yet appears to me, nevertheless, somewhat to confuse them.
We must conclude that the claimant was free of control under his contract, and in fact, as far as required by 19(j)(5), (a) because the commission so found and in this regard there is evidence to support it. But this court might still be free to consider whether there was control such as would be an element to determine whether the relationship was one of service under 19(j) (1), especially if as regards that question the evidence comes before us, as in equity cases, according to the idea of Mr. Justice PRATT that such fact is jurisdictional.
The plaintiff, therefore, should prevail as to Sec. 19(j)(5) (a) and (b). The plaintiff should not prevail as to clause 19(j) (5)(c) for the reasons given in the main opinion.
Sec. 19(j)(5)(c) assumes that the test of 19(j)(1) has been met so far as the claimant is concerned — that is, that the relationship is one of service for wages. It then presents the further question as to whether this service rendered is part of, and in pursuance of, a business of the claimant, independently established, in which claimant is customarily engaged, or whether the service relationship under consideration is one which stands alone as the claimant's real business? This does not mean to say that claimant may not have other sources of income from an occupation. He may, for instance, play in an orchestra for remuneration or have a few clients whose books he periodically audits. These would be side issues augmenting his income and in a sense make him engaged in another and independent business, but 19(j)(5)(c) presents the question of whether the claimant's relationship with the alleged employing unit is one in *Page 117 
which he is engaging as a pursuit of a general business independently established in which he is customarily engaged, or does it stand by itself as the main or only business of claimant? Most service relationships generating from a business independently established would present what is called in the nomenclature of torts an independent contractorship which is a division of the service relationships. Such illustrations given in the opinion — shoe shiner, auto mechanic, plumber and barber are in point where the purveyor of the services is in business and such services emanate as part of that business. The business exists independent of the services under consideration in the sense that it is the whole — of which the particular service is a part, or the independently established business may be entirely separate and unconnected with the particular service, yet constitute the main business at which claimant customarily works. That certainly was not the case with Holst.
To pose the question under Sec. 19(j)(5)(c) as one to determine whether Holst was in business as a retailer having with plaintiff a wholesaler-retailer relationship and, if thus found, determine that he was in an independently established business, is to transport into Sec. 19(j)(5)(c) a question which should already have been passed upon under Sec. 19(j)(1).
To give the facts presented in this case the aspect of a wholesaler-retailer relationship will open the way to disenfranchise from the benevolent purposes of the Act, large classes of what otherwise would be employees. And by this it is not meant to reflect on the Fuller Brush Company which had set up the relationship here presented long before passage of our Unemployment Compensation Act and which can in no wise be said to have created such relationship for the purpose of avoiding the effects of the Act. Nevertheless, when two interpretations are possible — one of which will serve the purposes of the Act and the other militate against them, we should adopt the former. Thus, I conclude that the Commission was correct in not excluding *Page 118 
the relationship under Sec. 19(j)(1) nor under clauses of Sec. 19(j)(5)(a), (b), and (c) and hence, I must dissent.