Opinion
No. 21294.
January 9, 1950.
APPEAL FROM THE CIRCUIT COURT, COLE COUNTY, SAM C. BLAIR, J.
Ruby D. Garrett, Kansas City, Garrett Ruark, Kansas City, Lewis H. Cook, Jefferson City, for appellant.
John L. Porter, Jefferson City, George Schwartz, Jefferson City, for respondents.
The National School of Aeronautics, Inc., plaintiff, instituted this suit to secure a judicial review of a decision by defendants wherein it was held that one Ralph Blaco, who sold scholarships in plaintiff's training trade school, was an employee of plaintiff within the meaning of Section 9423, R.S.Mo. 1939, Mo. R.S.A., of the Unemployment Compensation Law. The object of the proceeding was to collect a tax from plaintiff on wages paid salesmen engaged in selling such scholarships. From a circuit court judgment affirming the decision of the Commission plaintiff has appealed.
Plaintiff, a trade school, was organized by Mr. Price, who became its president, in June, 1940. Prior to its incorporation a Mr. Lanham, who died prior to this hearing, entered into a verbal contract with plaintiff, through Mr. Price, whereby he was to sell scholarships and was to receive therefor an overall commission for each scholarship sold. Lanham was then engaged in selling scholarships for the Great Plains School of Aeronautics, at Wichita, and had a crew of salesmen under him. He brought a number of salesmen with him, and others were employed. This contract continued in effect until the government took over the school for members of the armed services, in February, 1942.
Blaco, defendants' only witness, testified to the effect that: he answered an advertisement, was interviewed by Mr. Lanham at plaintiff's school, and was employed by him to sell scholarships; he received training from a Mr. Saxton, a lead man, while on the road; leads to prospective students were furnished to him by plaintiff, in envelopes bearing plaintiff's name; he was supplied with a sales kit, including a certificate stating that he was an appointed and authorized representative of plaintiff, the certificate being signed by Mr. Price and attested by Mrs. Sharp, plaintiff's secretary; he was furnished with a business card showing him to be a "personnel officer" of plaintiff, and with receipts to be given to students who paid him all or part of the tuition charge; student checks were made payable to plaintiff and cash so paid was remitted to plaintiff; Lanham told him he was working for plaintiff; the school kept his accounts and paid him; he was not required to work any given hours, or on any particular days, but was required to follow up leads furnished to him, to report thereon, and to get the work done within a reasonable time; no social security deductions were ever made from his checks; he furnished his own car and paid his own expense; had no drawing account and paid own telephone tolls; worked at own convenience and could quit when he wanted; worked entirely outside of plaintiff's building; had no social security number.
Plaintiff offered the testimony of a number of witnesses, Mrs. Sharp testified to the effect that she opened all mail coming to the school, including that of Lanham unless marked personal; neither Lanham, nor any of his salesmen, were carried on plaintiff's payroll, and no social security deductions were ever made from their commission checks; she kept a record of sales and commissions by Lanham and the salesmen, and of payments made to them; Lanham occupied offices in the school building, which his salesmen also used, but he furnished the offices at his own expense, hired his own secretary, and paid rent for 2 months but, thereafter, paid no rent; Lanham received an overall commission on scholarships and paid salesmen as he saw fit; both Lanham and Price were, at the beginning of this arrangement, selling scholarships for the Great Plains School, and both continued that connection for some time after they made the contract here involved; when Lanham terminated his employment here he took his force of salesmen to Great Plains; neither Lanham nor his salesmen had a drawing account; they furnished their own cars, paid own expenses, including telephone and advertising; fifty-per cent of Lanham's salesmen had other employment, such as selling insurance, monuments, laundry, art collections, auditing, operating a filling station, sleight of hand, scholarships in another (rival) trade school, etc. She identified exhibits, which were introduced in evidence, tending to prove that the U.S. Treasury Department, after full investigation, declared plaintiff exempt from Federal unemployment compensation tax, insofar as scholarship salesmen are concerned.
Mr. Price stated that, he verbally agreed with Lanham to pay him a commission for all scholarships obtained; that he, Price, closed no contracts for scholarships but referred them to Lanham's office; Lanham worked as he saw fit, under no orders from Price; that Lanham was on the road a lot and paid his own travel and hotel expense, advertising, etc.; that Mrs. Lanham acted as his secretary while on the road, and was never on plaintiff's payroll; plaintiff did some general advertising and paid for it but Lanham advertised wherever and whenever he chose, sometimes paying for it himself and at others dividing the cost with his salesmen; that Lanham's title was "general sales manager" and that his employees were called "personnel" officers; that he had nothing to do with what Lanham paid salesmen or whom he employed.
Mr. Lanham's affidavit, made in connection with another matter, was introduced into evidence, without objection, although defendants' examiner commented that it was received for what it was worth. In it Lanham stated, in effect, that neither he nor his salesmen were under the control or supervision of plaintiff; that he was paid a commission for all scholarships obtained by him or his salesmen; that they procured scholarships in any way they saw fit and were under no one's control but acted independently and on their own initiative.
Mr. Wasson stated that he accepted employment from Lanham, as his assistant, in February, 1941; that prior thereto Lanham had worked for Wasson; that he, Wasson, sought a contract with Price to sell scholarships, but Price told him he would have to work for Lanham if he sold scholarships for plaintiff; that he was not under the supervision or control of any other person; that he was paid a commission by Lanham and no deductions were ever made from his checks for social security payments; that he had worked for trade schools for 14 years prior thereto, selling scholarships, and had never had a social security number; that all salesmen and lead men were hired, instructed, and discharged by Wasson and Lanham, who paid their own secretary for full time work; that after the government took the school over he went to work for plaintiff, was given a social security number, and deductions were made from his checks; that checks to salesmen were handed to Lanham who mailed them to salesmen; that Lanham received no orders from any one, paid his own advertising, and offered prize money to salesmen, which he himself paid.
In reviewing the findings and decisions of the Commission we are required to determine whether or not it is supported by the whole record. Scott v. Wheelock Bros., 357 Mo. 480, 209 S.W.2d 149. Decisions by the Commission are reviewed in the same manner as are judgments in non jury cases. Seabaugh's Dependents v. Garver Lumber Mfg. Company, 355 Mo. 1153, 200 S.W.2d 55, loc.cit. 62. We should give due deference to the findings of the Commission, when based on controverted parol evidence; but if we find, on the whole record, that the decision is clearly contrary to the overwhelming weight of the evidence we should reverse the judgment affirming the decision and award. Wood v. Wagner Electric Corp., 355 Mo. 670, 197 S.W.2d 647, 649; Coleman v. Brown Strauss Corp., Mo.App., 210 S.W.2d 537, 539; Cheek v. Durasteel Company, Mo.App., 209 S.W.2d 548. The burden of proof, of establishing the fact that he comes within the provisions of the statute, is on the claimant. Parker v. Unemployment Compensation Commission, Mo.App., 223 S.W.2d 22. The statute is a taxing law and it must be strictly construed against the taxing authority. A. J. Meyer Co. v. Unemployment Compensation Commission, 348 Mo. 147, 152 S.W.2d 184, loc.cit. 191.
Plaintiff contends that it is not liable for the tax because Lanham was an independent contractor, not an employee within the meaning of the Act, and that Blaco worked under Lanham and was also an independent contractor as to plaintiff. It rests its contention chiefly on the authority of A. J. Meyer Co. v. Unemployment Compensation Commission, 348 Mo. 147, 152 S.W.2d 184. Defendants contend that the court, in the last cited case, did not exonerate Meyer from liability for the tax on the ground that the alleged employee was an independent contractor; and it also contends that plaintiff is liable for the tax even if it be conceded that claimant was an independent contractor as to plaintiff.
A close reading of the Meyer case discloses that the decision was reached on the grounds that the alleged employee was not an employee, as that term was understood at common law, but was, in fact, an independent contractor as to Meyer. Defendants say that the decision in that case rests on the court's misinterpretation of Fuller Brush Company v. Industrial Commission of Utah, 99 Utah 97, 104 P.2d 201, 129 A.L.R. 511, and Wisconsin Bridge and Iron Company v. Ramsay, 233 Wis. 467, 290 N.W. 199, 202. While the court did discuss those cases at length, yet the decision rests, primarily, on the common law meaning of the words, "employer," "employee," "employment," etc., as those terms are used in the title of our law, and in various other sections and parts thereof. In any case, the court held that an independent contractor is not entitled to claim benefits under the Unemployment Compensation Law of Missouri.
Defendants criticise that decision, but they have not cited any later decision on the question. They say that there is an essential difference between the facts in this case and those in the Meyer case in that, in the latter, the commodity sold was real estate, which was the property of third parties; that the service rendered was not for Meyer, but was for the owners of the property. The court made no mention of that circumstance, and the inescapable inference to be gleaned from the language used in the opinion is that if the alleged employee had been under the direction and control of Meyer as to the manner and method of obtaining the result, sales, the decision would not have been as it was.
In Atkisson v. Murphy, 352 Mo. 644, 179 S.W.2d 27, loc. cit. 29, the court decided the case on the theory that claimant was an employee, as distinguished from an independent contractor, and approvingly quoted the following: "`* * * an "independent contractor" is one who, exercising an independent employment, contracts to do a piece of work according to his own methods, and without being subject to the control of his employer except as to the result of his work.' And following the quote the court said ([Ross v. St. Louis Dairy Co., 339 Mo. 982] 98 S.W.2d [717] loc. cit. 723): `The right of control as to the mode of doing the work is generally held to be the principal consideration in determining the relationship, but "retention of the right to supervise as to results, as distinguished from the right to supervise as to the means by which the intermediate results should be obtained, does not affect the relationship".'"
In Hartwig-Dischinger Realty Co. v. Unemployment Compensation Commission, 350 Mo. 690, 168 S.W.2d 78, 79, the court held that an independent contractor was not an agent whose employees would thereby be the employees of the alleged agent's principal under the law. The court reiterate its adoption of the following definitions, 168 S.W.2d loc. cit. 81. "A servant is a person employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master. An independent contractor is a person who contracts with another to do something for him, but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking."
The overwhelming weight of the evidence, as obtained from the whole record in the case at bar, discloses that: (a) Blaco was not subject to the control of plaintiff in the performance of his duties; (b) he did not perform his duties, or any of them, on plaintiff's premises; and, (c) he was engaged in carrying on an independent trade, occupation, profession or business, that of a salesman. The overwhelming weight of the evidence was also to the effect that a large number of the salesmen who were engaged in selling scholarships were, at the same time, selling other things or engaged in other independent enterprises; and that plaintiff paid no part of their expense, furnished no car, telephone, advertising, and was interested only in the number of scholarships sold and money collected.
The U.S. Treasury Department reached the same conclusion that we have reached, on substantially the same facts, as to plaintiff's liability for Federal tax. While such a decision is by no means binding on us, yet it may be noticed in this case. A. J. Meyer Co. v. Unemployment Compensation Commission, supra, 152 S.W.2d 190.
The facts in the Meyer case are so similar to those involved in this case that they cannot be distinguished.
The judgment should be reversed and the cause remanded with directions that the circuit court enter a judgment consistent with our ruling. A. J. Meyer Co. v. Unemployment Compensation Commission, supra, 152 S.W.2d 192.
BOUR, C., concurs.
The foregoing opinion of SPERRY, C., is adopted as the opinion of the court. The judgment is reversed and the cause remanded with directions that the circuit court enter a judgment consistent with our ruling.
All concur.