Court Opinion

ID: 4133808
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:42:26.088265+00
Date Added: 2024-06-11T12:06:03.656391
License: Public Domain

THE     AITORNEY             GENERAL
                         OF   ?t-EXAS

Hon. Joe Christie               Opinion No. M-860
The Senate of Texas
Nominations Committee          Be:   Qualification of Mr. Richard
Capitol Building                     Penn as employer's representa-
Austin, Texas 78711                  tive on the Industrial Accident
                                     Board under Art. 8307, Sec. 2,
Dear Senator Christie:               Vernon's Civil Statutes.

          You ask our opinion whether Mr. Richard Penn, at the
time of his appointment as the employer representative on the
Industrial Accident Board, was qualified un8er the provisions
of Article 0301, Section 2, Vernon's Civil Statutes. *

          Our opinion is that he was not,

          While this office is without authority to determine
controverted fact questions, Attorney General Opinion No. M-047
(19711, the facts submitted to us are uncontradicted. Although
they are sparse they apparently comprehend the relevant facts
developed at the hearing held on April 15, 1971, before the
Senate Committee on Nominations to consider confirmation of the
appointment of Mr. Penn. The records submitted to us reveal the
following controlling facts. On the afternoon of Friday, October 3,
1969, Mr. Penn and Mr. T. P. Flahive, President of Flahive-Ogden
company, entered into a verbal contract whereby the Company agreed
to employ Mr. Penn, effective the next day, Saturday, October,4,
1969. On the afternoons of these two days these two gentlemen
discussed the duties Mr. Penn would discharge. Theee related to
a proposed re-codification of a book on Workman's Compensation
which the Company proposed to draft and sell. We quote from Mr.
Flahive's letter to us dated~Apri1 26, 1971, as follows:

          "In connection with these plans, we had
     decided to start seminars explaining workmen's

* All references to Articles are to Vernon's Civil Statutes.
                            -4172-
                                                 .   .

Eon. Joe Christie, page 2                      (M-860)

     compensation and we went into these matters with
     Mr. Penn, assigning him at that time the job of
     arranging necessary facilities in Houston and
     in Dallas as well as takinq,care of all the tech-
     nica,lend such as programs, rlame tags, luncheons,
     advertising and promotion that we might get into.

          "We had made arrangements with Mr. Penn to
     report for his'full assumption of duties on Monday,
     October 6. Fortunately, or unfortunately. it was
     that same date that the Gwernor nominated him as
     a member of the Industrial Accident Board. This,
     of course, of necessity, terminated immediately
     any employment he might have with our company."

          Also submitted to us for our consideration is the affi-
davit of Senator A. R. Schwartz, dated Way 4, 1971, which reads
in part:
         8,. . . On April 15, 1971, in the Senate
    Committee on Nominations, meeting to consider
    the nomination of Mr. Richard Penn to the position
    of employer member of the Industrial Accident Board,
    or. Penn stated that he took employment with a printing
    company solely for the purpose of qualifying for the
    aforementioned position. Wr. Penn said his title was
    executive vice president, but when asked what he did,
    Penn replied, 'Nothing.'"

          The Minutes of a special called meeting of the Company
held on September 15, 1969, state that Mr. Penn was named as
Executive Vice-President of the company at a compensation of
81,OOO.OO per month: that the effective date of his employment
would be upon his resignation of his present employment with the
State of Texas. Also, a letter statement, accompanied by a sup-
porting copy of Wage and Tax Statement for Federal Income Tax
Information, show that m. Penn was paid by the Company for one
day's services in the gross amount of $46.15. The Company was a
qualified carrier of Workmen's Compensation insurance on its
employees.

                            -4173-
-,   -

         Hon. Joe Christie, page 3                   (M-860)

                   The Company was an 'employer' under the definition of
         that term in Article 8309, Section 1.

                   The required qualifications for members of the Industrial
         Accide,ntBoard are stated in Article 8307, Section 2, as follows:

                  "At the time of each appointment one member
             of the Industrial Accident Board shall be an em-
             ployer of labor in some industry or business covered
             by this law: . . .*I

                   We find no decision of any court or of this Office inter-
         preting the relevant portion of this statute. under the relevant
         canons of statutory construction we must construe the statute in
         accordance with the legislative intent and purpose in enacting it,
         and to effect that purpose.  53 Tex.Jur.28 Statutes, 180-187, Sec.
         125, and 237-245, Sec. 163-165.

               Article 8307, Section 5, of the Workmen's Compensation
     Act deals generally with the powers of the Industrial Accident
     Board in considering and awarding of claims before it. This
     Section 5 provides, in part:

                  "All questions arising under this law, if not
             settled by agreement of the parties interested therein
             and within the provisions of this law, shall, except
             as otherwise provided, be determined by the Board .*.
             If any party to such final ruling and decision of the
             Board, after having given notice as abwe provided,
             fails within said twenty (20) days to institute and
             prosecute a suit to set the same aside, then said
             final ruling and decision shall be binding upon all
             parties thereto: ..."

     The prwisions of this Section make clear that the Board is a
     quasi-judicial body. Accord: 63 Tex.Jur.2d 251-254, Workmen's
     Compensation, Sec. 291-292, et seq. Further, as to the nature
     of the Workmen's Compensation Act itself, the case of Brooks v.
     State, 68 S.W.Zd 534, 535 (Texxv.App.   1934, error ref.) holds
     that the Act was obviously'intended to apply to industrial

                                     -4174-
Hon. Joe ChriStie, page 4                      (M-860)

employment. Accord: 62 Tex.Jur.28 543, Workmen's Compensation,
Sec. 17. With these established statements as to the nature of
the Board and of the Act, and in the absence of decisions of our
Texas courts, we look to the decisions of,courts of other juris-
dictions~to aid us in determining the qualification of Mr. Penn
under our Texas Act.

          In Talbert v. Owen-Ames-Kimbel Co., 9 N.W.28 572 (Mich.
Sup. 1943)~the court made the,following holding with reference to
the qualifications of a member of its state agency exercising
similar powers to our Texas Industrial Accident Board:
         11 ... The duties and powers aonferred upon
    a deputy commissioner are such that he definitely
    occupies a quasi-judicial position. He is the
    trier of the facts and his findings as to those
    facts, if affirmed on review of the department,
    are conclusive and bind this court on appeal, if
    supported by any competent evidence. The same
    hiqh standards required of iudses and courts should
    be applied to quasi--judicialofficers, such as com-
    missioners and denutv commissioners in the denart-
    ment of labor and industrv. ...I' (Emphasis added.)
    (at p. 573).

          In National Labor Relations Board v. E. C. Atkins & Co,,
331 U.S. 398 (1947) the Supreme Court of the United States con-
sidered the facts and circumstances requisite under the National
Labor Relations Act for qualification as an employee. The Court
made reference to the Act and said:

           ... In contrast, Sec. 2(2) states that ‘The
          I,

    term 'employer' includes any person acting in the
    interest of an employer, directly or indirectly,
    ... ' As we recognized in the Hearst case ZNational
    Labor Relations Board v. Hearst Publications, 322
U.S. 111 (1944u, the terms 'employee' and 'employer'
    in this statute carry with them more than the tech-
    nical and traditional common law definitions. They
    also draw substance from the policy and purposes of
    the Act, the circumstances and background of particu-
    lar employment relationships, and all the hard facts
    of industrial life.
                            -4175-
Hon. Joe Christie, page 5                     (M-860)

         "And so the Board, in performing its delegated
    functions of defining and applying these terms, must
    bring to its task an appreciation of economic reali-
    ties, as well as a recognition of the aims which
    Congress sought to achieve by this statute. This
    does not mean that it should disregard the techni-
    cal and traditional concepts of 'employee' and 'em-
    ployer.' But it is not confined to these concepts.
    It is free to take account of the more relevant
    economic and statutory considerations. And a de-
    termination by the Board based in whole or in part
    upon those considerations is entitled to great
    respect by a reviewing court, due to the Board's
    familiarity with the problems and its experience,
    in the administration of the Act.”  (at p. 403-484).

          In Ohio Power Co. v. N.L.R.B., 176 F.2d 385, 287 (6th
Cir. 1949) the Court held that responsibility of an industrial
employer,
          II... includes judgment, skill, ability,
     capacity, and integrity, and is implied by
     power. ...'I (at p. 387).

          Based upon the undisputed facts before us and the legal
authorities and principles enunciated set forth, we are of the
opinion that t&. Penn did not legally qualify at the time of his
appointment as representative of the employer class of persons
eligible for membership on the Industrial Accident Board. Article
8307, Section 2, surely contemplates more than a de minimis of
experience, background and acts as an employer. We do not find
any of this of which a court would recognize in Mr. Penn's record
before us. under the undisputed facts he had only a contract of
employment, under which he might have qualified as an employer.
He had no prior experience as an employer: he performed no act
under his contract as an employer: he testified he "did nothing."
He was paid for one day only by his employer, apparently for
Saturday. Nothing was expected of him until the following Monday:
he was not on a "stand-by" basis for the performance of any duty
until Monday, the day upon which he terminated his contract, with-
out pay apparently for Monday.

                            -4176-
.   .    -

        Hon. Joe Christie, page 6                      (M-860)

                   The post of a director or executive officer of a cor-
        poration-necessarily carries with it certain duties contemplated
        to beg performed as to the corporate affairs and custody and use
        of corporate accounts. Such an officer is necessarily under an
        obligation of trust and confidence to the corporation or its
        stockholders-and must act in good faith and for the interests
        of the corporation, with due care and diligence and withinthe, .
        scope of his authority. 13 Am.Jur. 939, Corporations, Sec. 985.

                  We do not find these necessary elements present'in the
        appointment of Mr.,Penn to the post of Executive Vice-President
        of the corporation, sinae from the facts presented sych appoint-
        ment and acceptance was done solely for the purpose of qualifying.
        him for appointment to the Industrial Accident Board. Admittedly,
        it was done under circumstances and at a time when he would have
        no duties to perform over the weekend. He was not instructed to
        do anything and he did not do anything. Neither he nor the cor-
        poration can be deemed to have possessed the qualifications to
        meet the legal requirements of a corporate director or executive
        officer. The requirement of legal responsibility is not shown.
        As stated in McFarland v. Georqe. 316 S.W.28 662, 671 (St. Louis
        Ct. of App. 1958),
                     ,I
                      ... Legal responsibility is the state of one
             who is bound or obliged in law and justice to do
             somethinq. Behinke v. New Jersey Highway Authority,
             13 N.J. 14, 97 A.2d 647, 654. In Crockett v. Village
             of Barne, 66 Vt. 269, 29 A. 147. the Court said:
              'One's duty is what one is bound or under obligation
             to  80.    One's responsibility is its liability, ob-
             ligation, bounden duty.' The word 'responsibility'
             ... means the doing of something, any other meaning
             would render the rule meaningless. ...'I

                  Since Mr. Penn did nothing it cannot be said that he
        ever exercised the duties and responsibilities requisite for
        qualification as an employer. A court will look through form
        to substance and disregard all forms of pretense. Whatever con-
        versation Mr. Penn had or agreements he had, his service must
        therefore be considered only "de minimis" or insufficient in law,
        since under this test the law will take no notice of and not con-
        cern itself with such small or trifling matters.
                                    -4177-
                     .
.   .   -

            Hon. Joe Christie, page 7                     (M-860)

                                     SUMMARY

                      Mr. Richard Penn was not legally qualified
                 for membership on the Industrial Accident Board
                 as the employer's representative on the Board when
                 he was appointed by the Governor'on October 6;1969.
                 Under the undisputed facts he performed no act, and
                 was not authorized to perform any act and was not on
                 a stand-by basis, for the one day for which he was
                 paid and which constitutes the      basis for his
                 qualification.

            Prepared by W. E. Allen
            Assistant Attorney General

            APPROVED:
            OPINION COMMITTEE

            Kerns Taylor, Chairman
            Arthur Sandlin
            Lewis Jones
            Scott Garrison
            Max Hamilton

            NBADE F. GRIFFIN
            Staff Legal Assistant

            ALFRED WALKER
            Executive Assistant

            NOLA WHITE
            First Assistant

                                         -4178-