Court Opinion

ID: 9531136
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:07:54.244905+00
Date Added: 2024-06-11T13:28:21.263843
License: Public Domain

PRATT, Chief Justice
(dissenting).
Was Carl F. Johanson, Contractor, an employer in 1947-1948 under the Utah Employment Security Act? That is the issue of this case, and it arose in this way: Mr. Johan-son received notice from the chief of the Division of Insurance of the Department of Employment Security, assessing him with a deficiency contribution on unreported wages for the years of 1947-1948. Interest and penalty were also assessed.
The foundation for this claimed deficiency is this: In the early part of 1947, Carl F. Johanson and one Robert Clayton deciding to work together as a “brotherhood,” took out a contractor’s license as “Johanson Brothers Builders.” They took building work upon which Johanson acted as bricklayer and Clayton as mason tender. Johanson borrowed $250.00 from his brother and bought equipment. Out of the proceeds of jobs, 10 per cent was deducted to pay for equipment and the balance was divided upon a 3-2 basis. As Clayton became more experienced in brick work, they divided 50-50. They agreed that if others were asked to work with them, they would be taken in on a share-in-the-profits basis. Others were taken in on that basis, the person’s ability and experience governing the percentage he would draw for his share. Each would share in the profits of all the work, though he might not participate in all jobs. At one time they took in two teen-age boys who thought they were employees, but who admitted they were not paid a regular wage, but received money when received by the builders; and to whom it was explained that they were *398getting a percentage of what came in. Apparently, the prevailing opinion is very much influenced by the taking in of these boys. No doubt, had the Johansons been lawyers, they would have been more legalistic in their reasoning and made certain that the boys understood the setup. However, being working men, we have to judge their actions by the efforts they expended to carry out a certain plan of joint working arrangements; rather than measuring their actions by what we of the legal profession know should have been done to avoid a change-of-heart on the part of the Industrial Commission.
The group agreed by voice vote how long they should work. When asked what they would do if a member proved to be lazy, Johanson said they would have to do his work, but they would not discharge him. However, he denied having any such experience. They voted upon whom should be taken into the organization. Some who were taken in were inexperienced, and their share was small at first; but as they learned and increased in ability, their share was increased. Johanson was paid an extra percentage for such of his own equipment as was used. No one coming in contributed any funds to the group enterprise. They contributed only their labors, but they shared in the profits earned by all. The funds from which each share was drawn were kept in the bank account of Carl F. Johan-son; and he issued the checks. He made no effort to, nor did he indicate he would turn any of the equipment used as his, over to the group, as a partnership.
There is no contention in this case that this form of group enterprise was entered into to avoid the Employment Security Law. In fact, when it first started, Mr. Johanson consulted a representative of the commission, who informed him that he would not have to make contributions; and the decision of the Appeals Tribunal indi*399cates that belief of the group that contributions were not due was honestly and reasonably justified.
In October, 1948, a partnership was formed and on February 15, 1949, a written partnership agreement was drawn up and signed by the then members of the organization, who were Carl Johanson, two of his brothers, Willard and Einar, and Robert D. Clayton. Some of the provisions of that agreement are: that all contracts for $1000 or more shall be made only after consultation with other members, and approval by a majority; profits were to be equally divided between the partners and Carl was to keep the books and the partners were to furnish him the necessary data about contracts and work. There were other provisions; but the over-all picture of the functioning of the organization after the partnership agreement, was but slightly different from what was before. There is little or no dispute between the parties as to the facts recited above. Do these facts show that Carl F. Johanson was an employer?
The commission has invited our attention to Section 42— 2a — 10 (i), U. C. A. 1943, which reads:
“* * * In any judicial proceeding under this section the findings of the commission and the board of review as to the facts as supported by evidence shall be conclusive and the jurisdiction of said court shall be confined to questions of law. * *
They contend that as this question is one of fact, we are bound by the administrative tribunal findings of fact. I do not think that defendants have properly applied that section. What has been said above of the facts of this case, is not a listing of evidence pro and con upon the question, with a conclusion of fact found by the Board of Review. There is little or no controversy about the facts we have recited. The question is: Do these facts in the eyes of the law establish Carl F. Johanson to be an employer? I think not.
It seems clear from these facts that the parties were *400trying to establish some sort of a joint enterprise, into which each would put his services and out of which he would get a percentage of the profits. Each was to have his voice upon the manner of conducting the business as well as what business should be taken. Naturally, the more experienced members would direct and instruct the less experienced in what to do or not to do. This direction was consistent with the purpose of accomplishing the results desired for the benefit of all. It did not exclude that idea and point solely, to the relationship of employer-employee.
In the very recent case of Powell v. Industrial Commission 116 Utah 385; 1950, 210, P.2d 1006, we said that the first question for us to determine was that of whether or not a “service relationship” existed between Powell and his lessees; —in the present case, between Carl F. Johanson and the others who joined him in this work. If we should find that this service relationship did exist, then they are employees unless they fall within the provisions of Section 42 — 2a—19 (j) (5) (A) (B) and (C). We said in that case that we must look behind the contract to the actual situation.
What picture do we see when we look behind the contract in this case? We have a group of men, which group varies in personnel and size from time to time, trying to accomplish that which is usually done by those whom we ordinarily designate as building contractors. This group of men is made up of those we would usually find as employees of the building contractor doing for him the detailed work of such employees — but in this case, for whom? For an employer? For just one of them? No, for each and all of them. Each has his voice in the determination of the kind of work to be done, and how it should be done. Each shares in the profits of the work of all. If one quits, then, as he is not contributing any more to the services of all, he re*401ceives a share in that to which he has contributed. It seems a very reasonable conclusion at which to arrive, to say that they felt that if the contracting business was sufficiently lucrative to engage the interest of a contractor to the extent that he would employ others to perform the detail work for him and still make a profit, why could they not eliminate that employment status, and become the contractors themselves and have the benefit of the total amount that would go to make up salary and profit. It is such a conclusion that appears to have been the goal of this little enterprise. The joint control, in conjunction with the sharing of profits, are the outstanding features of the association that lead me to the belief that the “service relationship” does not exist in this set-up.
The decision of the commission should be vacated and set aside.