The court did not err in sustaining the demurrer to the defendant's plea, and in finding in favor of the plaintiff.
DECIDED JULY 5, 1940. REHEARING DENIED JULY 30, 1940. The Bureau of Unemployment Compensation of the State of Georgia, by Ben T. Huiet, commissioner of labor, as administrator of the Georgia unemployment-compensation law, brought suit in the civil court of Fulton County against Johnson S. Young, to collect certain sums alleged to be due to the plaintiff by the defendant on the basis of reports made and submitted to the plaintiff by the defendant as an employer under the Georgia unemployment-compensation act. It was alleged in the petition that while the defendant admitted his liability under the act, he has failed and refused, after repeated demands, to pay the amount due by him thereunder. The plaintiff prayed for judgment in the amount claimed to be due by the defendant, with interest at the rate of one per cent. per month, as provided in the act. Attached to the petition as an exhibit appears a statement of the account of Johnson S. Young, purporting to show payments made by him under the act, and the amount of the balance claimed to be yet due, and sued for.
The defendant admitted that he had made a report, but denied *Page 131 that he had admitted any indebtedness. Further answering, he alleged, in substance, that he is not indebted to the plaintiff, for the reason that he does not operate his business on an employer and employee basis; that the operators in his barber-shop are independent operators, in that they "merely lease" space in his shop in which to conduct their own individual businesses; that their relationship with him is that of lessor and lessees, and that because of this relationship he is not indebted as an employer for the unemployment tax the plaintiff attempted to levy on him. Attached to the answer is a copy of an agreement purporting to be a lease contract entered into between the defendant and one of his operators, as follows:
"This agreement entered into this 1st day of July, 1938, between Johnson S. Young Marguerite C. Young, trading as Artistic Barber Beauty Shop, of Atlanta, Fulton County, Georgia, hereinafter designated as lessor, party of the first part, and Fisher Thornton of Atlanta, County, Georgia, hereinafter designated as lessee, party of the second part, witnesseth: 1. Subject to the terms and conditions hereinafter set forth, lessor does hereby lease and grant to the lessee the privilege of using certain space, to wit, section No. 8 in the said shop of lessor, located at 53 Decatur Street S.E., Atlanta, Fulton County, Georgia, for the purpose of allowing lessee to practice his/her profession as a barber in common with other lessees who might be granted the same privilege by virtue of other leases, said lessor reserving the right to designate the number of lessees using the said shop, so-called. 2. The terms of this lease shall be from the 1st day of July, 1938, to and including the 30th day of June, 1943, unless either party gives written notice, on or before the last day of any month during the term of said lease, of his election not to continue after the last of the following month, in which event this lease and agreement shall terminate on said date. 3. The space leased shall be used by lessee solely for the following purposes, and no other, to wit: the conduct of a barber-shop and to give service in said shop as is customarily given in said shops, including hair-cutting, shaving, shampooing, and facials, etc. 4. The lessee agrees to furnish all the tools and equipment necessary to practice his/her profession. 5. Lessee agrees to pay lessor, as compensation for the lease and privileges hereby granted, a sum equal to forty (40%) per centum *Page 132 on all sales, howsoever made. 6. Lessor shall supply lessee with electric current for ordinary lighting, and to operate the electric motors and vibrators installed by lessee in the operation of his/her business, and will furnish the ordinary water for consumption upon the premises. 7. Lessee agrees not to hold or claim lessor responsible in any manner whatsoever for any damages, loss, or destruction of any property of lessee, whether or not kept in the space or spaces hereinbefore stated, or in any other space of the premises occupied by lessor, or in his/her charge or care, or in the charge or care of his/her employees or agents, unless caused by the gross negligence or wilful misconduct of lessor or his/her representatives. If said premises shall be unusable and unused by lessee for one (1) month by reason of fire or the gross negligence of lessor, and continuing for ten (10) days after notice, then lessee shall have the right and option to terminate this agreement by giving lessor five (5) days written notice of lessee's election to terminate same. 8. Lessee agrees to hold lessor harmless of and from all claims arising out of injuries to customers and employees or damages to property upon the aforesaid premises, or for violation of agreements made with customers or employees in said shop, and/or for all claims of every kind or nature whatsoever, whether or not of the aforesaid classes, made by third persons and arising from the dealings of lessee, and all expenses with relation thereto or having reference to the investigation of any claims or the defense of any action or proceeding, unless caused by the gross negligence or wilful misconduct by lessor and his/her representatives. Lessor is expressly granted the right to defend, compromise, or settle any claims made against him/her, growing out of any transaction in said shop through his/her attorneys, after conference with lessee and his/her attorneys, and lessee expressly agrees to repay and reimburse lessor for any such payments and expenses incurred. 9. Lessee agrees to comply with, observe, and obey all laws, ordinances, statutes, rules, regulations and orders of the Federal, State and Municipal authorities and of the Board of Firemasters, and of any Health Department or other department performing the functions of a Health Department, that may be applicable to said shop and the space or spaces leased hereunder from time to time, and lessor shall have the right after ten (10) days' notice to lessee, to cause such rules, laws, orders, statutes, ordinances, regulations, or *Page 133 demands to be complied with, charging the same thereof (including penalty, if any) to lessee, the same to be deductible from any funds then or thereafter coming into possession of lessor. 10. Lessee agrees not to make any changes, additions, or alterations to or in the said department or space leased, or of any of the fixtures or fittings at any time therein, without first obtaining the written consent and approval of lessor, and to permit lessor to enter upon the aforesaid department and the aforesaid space or spaces, to make repairs, inspections, alterations, or improvements thereto at any time. 11. Customers and employees of lessee shall have ingress and egress to other departments in other parts of the shop of lessor during usual business hours. 12. Lessee shall have the right to remove his/her tools, equipment, and other property at the termination of this lease. 13. The covenants and agreements herein contained shall be binding upon and enure to the benefit of the lessor, his/her successors and assigns, and of the lessee and his/her legal representatives; but this provision shall not give or be deemed to give lessee any rights of assignment of this agreement."
The defendant demurred to the petition on the ground that it failed to set out a cause of action against him, and especially on the ground that the petition nowhere alleges that the defendant is an employer of eight or more employees, within the meaning of the Georgia unemployment-compensation act, and therefore subject to the act. Also on the ground that the petition sets out in the same count causes of action for 1937, 1938, and 1939 taxes. It was requested that the plaintiff be ordered to amend and set out these causes of action in separate counts. Later the general demurrer was withdrawn. On November 21, 1939, the judge overruled the special demurrers, and the defendant excepted pendente lite. The plaintiff moved to strike the answer, on the ground that no legal defense was set forth, in that the contract relied on as one of lessor and lessee constituted a contract of employment, within the terms of the unemployment-compensation act. On December 14, 1939, the defendant's answer was stricken, and a judgment for the plaintiff was rendered. The defendant excepted pendente lite to the striking of his answer. On December 24, 1939, he filed a motion for new trial, on the grounds that the judgment was contrary to law and the principles of justice and equity, and that the order and judgment striking his answer was contrary to law, for that *Page 134 such answer set out a legal defense. The motion was overruled, and the defendant excepted to that judgment, assigning error also on the rulings complained of in his exceptions pendente lite. In 1937 the legislature enacted the unemployment-compensation law (Ga. L. 1937, p. 806). It was amended (Ga. L. Ex. Sess. 1937-38, p. 356). Section 2 is as follows: "As a guide to the interpretation and application of this act, the public policy of this State is declared to be as follows: Economic insecurity due to unemployment is a serious menace to the health, morals, and welfare of the people of this State. Involuntary unemployment is therefore a subject of general interest and concern, which requires appropriate action by the legislature to prevent its spread and to lighten its burden which now so often falls with crushing force upon the unemployed worker or his family. The achievement of social security requires protection against this greatest hazard of our economic life. this can be provided by encouraging employers to provide more stable employment, and by the systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment, thus maintaining purchasing power and limiting the serious social consequences of poor relief assistance. The legislature therefore declares that in its considered judgment the public good and the general welfare of the citizens of this State require the enactment of this measure, under the police powers of the State, for the compulsory setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own." This act makes provision for, and requires employers subject thereto to contribute to, what is known as "an unemployment-compensation fund;" such contributions to be equal to certain percentages of the wages paid by the employer with respect to employment, so that when workers become unemployed because of economic conditions or otherwise, through no fault of their own, such persons shall receive benefits, the amount of which, based on the amount of wages earned by them when employed, is payable out of such unemployment-insurance fund, during such periods of unemployment. This act provides for the creation of a Bureau of Unemployment Compensation within the Department of Labor, *Page 135 which bureau, by and through its director, who shall be subject to the supervision and direction of the commissioner of labor, is charged with the administration of the unemployment-compensation law. The act further provides that upon default in the payment of contributions or interest thereon, civil action may be brought for their collection in the name of the commissioner. The courts, as well as the administrator of the unemployment law, in construing and applying the provisions of such law must liberally construe and apply such law in the light of the public policy of this State, as declared in section 2 of the act. The courts shall be guided by the fact that the unemployment-compensation law is intended to provide some income for persons who are, without fault of their own, temporarily out of employment. See Park Floral Co.v. Industrial Commission, 104 Colo. 850 (9 P.2d 492); Re Sadowski, 257 A.D. 529 (13 N. Y. Supp. 2d, 553); Re Kinney, 257 A.D. 496 (14 N. Y. Supp. 2d, 11); Susquehanna Collieries Co. v. Unemployment Compensation Board, 137 Pa. Super. 110 (8 A.2d, 445); Slocum Straw Works v. Industrial Commission, 232 Wis. 71 (286 N.W. 593); Taylor v. McSwain, 54 Ariz. 295 (95 P.2d 415).
The present case arose out of a suit instituted by the Bureau of Unemployment Compensation against Johnson S. Young, an alleged employer, under the employment-compensation act, to recover certain unpaid contributions, with interest. The defendant denied that he was an employer under the act. The question therefore is, do the provisions of the unemployment-compensation law apply to the defendant? This presents the question whether, within the meaning of this act, the relation of employer and employee exists between the defendant, as owner and operator of the "Artistic Barber and Beauty Shop," and the barbers operating therein. The act of 1937, supra (p. 844, sec. 19(h), 6) provides as follows: "Services performed by an individual for wages shall be deemed to be employment subject to this act, unless and until it is shown to the satisfaction of the commissioner that: (A) Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and (B) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business *Page 136 of the enterprise for which such service is performed; and (C) Such individual is customarily engaged in an independently established trade, occupation, profession or business." Since the above matters are stated conjunctively and not disjunctively, all three of these elements must be established in order that an employer working an individual for wages may be exempted from the unemployment-compensation act. When it is shown that an individual works for wages, he comes under the act unless "it is shown to the satisfaction of the commissioner" that his employment falls within the three classes designated in A, B, and C, quoted above. Where the commissioner treats an individual working for wages as coming under the act, as he did in this case by proceeding against the employer of such person to collect the contributions required under the act, it presumably was not established "to the satisfaction of the commissioner" that the employment of the individual working for wages falls within the three classes designated A, B, and C. The burden is upon the defendant to show that the services performed came within these three classes. See Globe Grain Milling Co. v. Industrial Commission (Utah), 91 P.2d 512.
The case is to be decided solely upon the sufficiency of the allegations in the defendant's plea and answer, and particularly of the provisions of the contract between the defendant employer and the individual barbers working in his shop. Under the terms of that contract, whereby the individual barbers worked in the defendant's shop, they furnished their own tools and paid to the defendant forty per cent. of their collections, they were receiving wages in contemplation of the act. The sixty per cent. which they received out of the proceeds of the collections were in contemplation of the act, wages. As provided in the act (Ga. L. 1937, p. 847), "`Wages' means all remuneration payable for personal services, including commissions and bonuses and the cash value of all remuneration payable in any medium other than cash." It appears from the contract that the individuals working in the defendant's barber shop under the foregoing contract worked for the defendant for wages. Therefore they came under the act, unless it appeared that they fell within the exceptions provided in clauses A, B, and C. It does not appear anywhere in the contract or in the allegations of the defendant's plea and answer that they came within these exceptions. The court did not err in striking the defendant's plea *Page 137 and answer, and in rendering judgment for the plaintiff. It appears from the contract that it is contemplated that the individual barber is not free from control or direction by the defendant over the performance of his services, and that the services performed are not outside of the usual course of the business or outside of the place of business or enterprise for which the services are performed, and the individual is not customarily engaged in an independently established trade, profession, or business. It is immaterial whether the parties come within the relation of master and servant or independent contractors. The act itself fixes the status of their employment which brings them within the terms of the act, and renders the employer liable for the contributions required by the act. As stated by the Supreme Court of Washington in McDermott v. State,196 Wash. 261 (82 P.2d 568), in construing an act similar to the Georgia act, "It is unnecessary to determine whether the common-law relation of master and servant exists between respondent and the barbers and other operatives in his shop, because the parties are brought within the purview of the unemployment compensation act by a definition more inclusive than that of master and servant."
There is no insistence by the defendant upon the exceptions to the judgment overruling his demurrer to the plaintiff's petition, and such exceptions will be treated as abandoned. The court did not err in striking the defendant's plea and answer, in giving judgment for the plaintiff, and in overruling the defendant's motion for new trial.
Judgment affirmed. Sutton, J., concurs. Felton J.,concurs in the judgment.