Court Opinion

ID: 6698842
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:03:17.158112+00
Date Added: 2024-06-11T16:01:20.655073
License: Public Domain

Seawell, J.
Upon appeal from tbe Unemployment Compensation Commission tbe Superior Court is bound by tbe findings of fact made by tbe Commission where there is evidence to support it, and tbe same rule, of course, applies here.4 Where there is such supporting evidence our office is to determine whether tbe conclusions of law and subsequent orders of tbe Commission may be properly based or predicated upon tbe facts found.
Tbe pertinent sections of tbe Compensation Act in force during tbe period for wbicb tbe respondent Harvey & Son Company has been held liable for contributions on wages paid by Pate to bis employees have been quoted ante. Tbe respondent Harvey &- Son Company contends that the statute is inapplicable to it for that tbe facts in evidence only go so far as to show Pate to be a tenant of tbe Harvey & Son Company and not a contractor in carrying on or aiding any branch of tbe Harvey *296business. The proponents of the tax liability contend that the existing contract between the parties during the period of alleged liability and their course of dealing between themselves under it, give rise to legitimate inferences of a more intimate business association between them than ordinarily attaches to a rental contract, and point to various customary transactions and dealings between the parties as indicia of a contract within the meaning of the statute, rendering the Harvey Company liable for the tax. The status of Pate as an employing unit subsequent to the repeal of the statute will be further considered.5
Perhaps no one incident of the contract and dealings between the parties, however unusual between landlord and tenant, might be of sufficient significance to definitely establish the contention that the purpose and effect of the contract was to carry on any business in behalf of the Harvey Company or in connection with the merchandising activities of the latter, such as to be essentially a part thereof and within the coverage of the statute. But taken as a whole and in combination, they are impressive; and seemingly at variance with the explanations and reasons assigned for them in respondents’ testimony, or at least engendering contrary inferences.
The relation contended for by respondents is strongly challenged by a modus vivendi which would lead the public to believe that they were dealing with the Harvey & Son Company rather than Pate; which advertises the shoe business as still being carried on by L. Harvey & Son Company, not only in the newspapers, but even upon the wrapping paper and sales tickets used every day; which required Pate’s money and credits to be turned over to Harvey & Son Company immediately as received; puts Harvey in position to control the extension of credit to each customer; requires all credits' to belong to Harvey on the principle of immediate purchase; includes the payment by L. Harvey & Son Company of sales tax on merchandise it claims was sold by Pate independently ; and many other circumstances in evidence so at variance with the simple relation of landlord and tenant as to greatly over-burden that conception. On the other hand, these practices could hardly be satisfactorily explained on any theory other than that the business ivas really that of the Harvey & Son Company and that the limitations and restrictions imposed upon Pate were such as to classify him as a contractor within the meaning of the statute.
Court decisions under statutes which make the tax liability to depend upon the relation of master and servant, as we know it at common law, and which, therefore, make control of the person employed a criterion of the liability to be imputed to the alleged employer, may be found to put more emphasis on the indicia of such control than may be warranted in the present case.
*297Tbe statute under review is frankly predicated upon conditions arising out of contract, which in substance make the business carried on virtually that of the superior party to the contract. Since the statute openly deals with the subject of contract its application might be expected to pretermit some of the factors supposed to be insignia, of the relation of master and servant as distinguished from that of independent contractor. There is, in this jurisdiction at least, no question that in fixing the coverage of the Unemployment Compensation Act the Legislature may go much farther in imposing the contributions than the supposed limitations of master and servant, or employer and employee, as those terras are generally defined and dealt with in the common law; and may, if essential to the imposition of the tax, augment the meaning of the term “employer” beyond the popular definition. In Unemployment Compensation Commission v. Insurance Co., 219 N. C., 576, 14 S. E. (2d), 689, the Court said :
“The fact that the state has engaged in a cooperative scheme with the Federal Government does not necessarily imply strict uniformity in the incidence of the tax levied by the State and the Federal laws.”6
and
“We think it is evident that the Legislature, for the purpose of levying a tax may determine what shall constitute employment subject to taxation without regard to existing definitions or categories ... it may do this by direct definition, or, perhaps with greater exactness, by providing a reasonable administrational procedure by which such employment may be defined or ascertained.”7
There are many decisions supporting this view.8
The circumstances summarized, supra, from the evidence as incidents of the Contract and their mutual dealings, are not directed to showing these relations and making available their common law implications, but to the issue whether the contract was of the nature described in the statute. The judicial determination of that question must depend upon inferences fairly drawn from the evidence by those whose office it is to find the facts. We cannot say that the findings of the Commission are unsupported by evidence, or that they are inadequate to sustain the conclusions drawn from them.
*298The evidence tends to show that tbe whole business conducted by Pate was absorbed by L. Harvey & Son Company as fast as production occurred, under conditions which secured to that Company exclusive control of both cash and credit, and paid the Company a revenue based on its gross, rising and falling with its volume, without reasonable relation to the rental value of the space occupied by Pate in the store. Under these circumstances the outward forms or devices by which the result was accomplished are relatively immaterial to the purpose of the law. Apparently, the contract makes Pate an entrepreneur deriving his compensation from the difference which prudent management may effect between cost of production and a fixed 10 per cent gross on the Company’s business.
This contract between L. Harvey & Son Company and Pate continued in force after the amendment of the law concededly releasing L. Harvey & Son Company from further contribution with respect to wages paid Pate’s employees. Because of the continued existence of this contract the Commission contends that Pate was himself a “covered unit” and liable for contributions under Section 96-8 (f) (8) of the Act.9 It is conceded that by amendment to the Act, effective March 18, 1947, Pate is released from further contributions under this subsection. The demand' upon him is for contributions with respect to employment subsequent to March 13, 1945, while the law was in force. ¥e are of the opinion the contributions were currently required by the statute as it then stood.
The “contribution” imposed by the law is a tax.10 While under our decisions accrued taxes are not in all respects regarded as a debt, although sometimes treated similarly in remedial procedure,11 we have no doubt that the State has a vested interest in accrued taxes which is not destroyed by simple repeal of the statute currently imposing them, without any accompanying provision in the nature of expressed or implied release and where the procedure for their collection is not involved in the repeal.
The Unemployment Compensation Act presents a general scheme to secure current contributions from employers in furtherance of the purposes of the Act, provides for the determination thereof with right of appeal, and procedure for the enforcement of the law and the collection of the contributions, and all of the machinery for that purpose is left intact. We are of the opinion that it was not the purpose of the Legislature in amending the law to make it retroactive in the sense that it released any employer from the obligation of reporting and paying con*299tributions wbicb bad accrued in tbis connection. We conceive tbe law in tbis State to be as stated in Cooley on Taxation:
“Tbe rule favoring a prospective construction of statutes is applicable to statutes wbicb repeal tax laws. Accordingly it is beld tbat where sucb a statute is not made retroactive a tax assessed before tbe repeal is collectible afterwards; and where taxes are levied under a law wbicb is repealed by a subsequent act, unless it appears clearly tbat tbe legislature intended tbe repeal to work retrospectively, it will be assumed tbat it intended tbe taxes to be collected according to tbe law in force when they were levied.”12
We, therefore, conclude tbat tbe judgment of tbe trial court in affirming tbe determinations, orders, and decrees of tbe Unemployment Compensation Commission is free from error, and it is
Affirmed.

 Sec. 96-4 (m).

 Sec. 96-8 (f) (8) ante.

 Loc. cit. p. 586.

 Loc. cit. p. 587.

 U. C. C. v. City Ice, etc., Co., 216 N. C., 6, 3 S. E. (2d), 290; U. C. C. v. National Life Ins. Co., 219 N. C., 576, 14 S. E. (2d), 689; 139 A. L. R., 895; U. C. C. v. Jefferson Standard Life Ins. Co., 215 N. C., 479, 2 S. E. (2d), 584; See cases cited U. C. C. v. Ins. Co., supra, p. 587; c/p citations in respondents’ brief; annotation 147 A. L. R., 828; annotation 152 A. L. R., 525; McGruder v. Yellow Cab Co. (C. C. A. 4th), 141 Fed. (2d), 324, 152 A. L. R., 516.

 See Citation, note 2, ante.

 Prudential Ins. Co. of America v. Powell, 217 N. C., 495, 8 S. E. (2d), 619.

 Gatling v. Carteret County, 92 N. C., 536, 53 A. L. R., 432; State v. Georgia Co., 112 N. C., 34, 17 S. E., 10, 19 L. R. A., 485.

 Cooley on Taxation, 4th Ed., Vol. 2, sec. 538; Higgins Estate v. Hubbs, 242 Pac., 515; In re Moseley’s Estate, 164 Pac., 1073; In re Meinerts Estate, 213 N. W., 983; McDonald v. State Tax Commission, 158 Miss., 331, 130 S., 473; Moore v. Commonwealth (Va.), 155 S. E., 635; Trippett v. State, 149 Cal., 521, 86 Pac., 1084; Commonwealth v. Mortgage Trust Co. of Penna., 227 Pa., 153, 76 Atl., 5; Riley, State Comptroller v. Howard, et al. (Cal.), 226 Pac., 993.