July 1, 1937, the plaintiff and James R. Johnston, with whose status this proceeding is concerned, signed a contract which is quoted in the majority opinion. July 1, 1938, according to the express findings of the defendant Commission, that contract was "mutually cancelled." Upon the same day the parties effected a new agreement which they reduced to writing December 1, 1938. It, too, is quoted in the majority opinion. March 1, 1938, the Journal (plaintiff), pursuant to the privilege afforded by the eighth paragraph of the contract, canceled it. The validity of its action and the sufficiency of the grounds upon which it was based are not challenged.
Under the procedure pursued by the Commission, Johnston's base year began August 31, 1937, and ended September 30, 1938. Hence, three of the months, July, August and September of 1938, were covered by the contract which he and the Journal effected July 1, 1938. Therefore, unless in those three months he was an employee of the Journal within the contemplation of our Unemployment Compensation Act, §§ 126-701-126-729, O.C.L.A., the Journal is entitled to prevail in this proceeding. It is, of course, essential that he have been an employee in the other nine months of that base year; but, unless the contract of December 1, 1938, constituted him an employee, the Commission's finding, which held that Johnston was the Journal's employee throughout the above-mentioned base year, cannot be sustained. Therefore, the contract which the parties signed December 1, 1938, is of controlling importance.
The contract of December 1, 1938, reads as follows:
"The undersigned acknowledge receipt from The Journal, of Portland, Ore., of a list of subscribers *Page 670 who purchase The Journal and who live on a certain paper route near Corvallis, Oregon, which list of subscribers and paper route is hereby leased to me by The Journal, and in consideration thereof I hereby agree to and with The Journal, as follows:
"(1) That I will sell and regularly and promptly deliver The Journal to all said subscribers, at the rate therefor.
"(2) That I will not sell or deliver any other newspaper to any person without the written consent of The Journal.
"(3) That I will do all in my power to promote and extend the circulation of The Journal.
"(4) That prior to giving up said paper route I will give The Journal 30 days notice of my intention so to do.
"(5) That I will not turn over said list of subscribers to any person nor disclose the name of any subscriber for The Journal without first obtaining the consent of The Journal.
"(6) That I have not paid any money to any person for this list of subscribers, and that I will not sell it to any person or persons for any money. That I will make no attempt to collect in advance from any of my subscribers, but should any subscriber choose to pay in advance I will remit to The Journal immediately.
"(7) That I will regularly and promptly pay on the 10th day of each month for all copies of The Journal sent to me in accordance with my orders, at the wholesale rate of $1.50 per hundred for all daily weekday papers, and at the wholesale rate of $6.00 per hundred for all Sunday papers.
"(8) The Journal may cancel this lease at any time for good and sufficient reason, and when so cancelled I agree to forthwith turn over to The Journal, or its authorized representative, the names of all subscribers to whom I have been delivering The Journal, and I agree to keep a written list of *Page 671 all such persons, with their street addresses, and that such written list shall be the property of The Journal.
Carrier's Signature, J.R. Johnston. Accepted by M.H. Pflaum for The Journal Publishing Co."
The manner in which the parties discharged the contractual duties created by the contract is thus stated in the brief which the Commission's counsel filed in this court:
"Claimant from time to time ordered from appellant the amount of newspapers he currently needed, which amount appellant sent him until a change in number was ordered. Appellant charged claimant the agreed wholesale prices and claimant sold the newspapers at the retail price to the subscribers on his rural route, delivering the same into the paper boxes along the route, collected from the subscribers the retail prices and paid monthly to appellant any difference owing the appellant between the wholesale bill, the automobile allowance and other credits."
The findings entered by the Commission state:
"Claimant from time to time ordered from the Company the amount of newspapers he currently needed, which amount the Company sent him until a change in number was ordered. The company charged claimant with the agreed wholesale price and the claimant sold the newspapers at retail prices to the subscribers on his rural route, delivering the same into the paper boxes along the route, collected from the subscribers the retail price, and paid monthly to the Company on its bill any difference owing the Company between the wholesale bill and the automobile allowance and other credits * * *. The Company's district manager had on one or two occasions warned the circulator or carrier concerning being late in receiving the newspapers for delivery *Page 672 and had on at least one occasion demanded of the carrier that he redeliver a paper to some customer from whose paper box the paper had been taken by unauthorized persons. There is also some evidence to indicate that on one occasion the district manager had objected to claimant's wife taking over the deliveries. The Commission finds in these matters that any established exercise of material direction and control of such district manager did not actually go beyond the insistence that claimant fulfill the obligations of the written terms of his agreement * * *.
* * *
"The Commission finds from the examination of such accounts that the Company sold newspapers and charged the wholesale price against the claimant during his base year as follows: For daily week-day papers, a total of $338.54 and for Sunday papers a total of $308.64. In the event the claimant sold such papers at stipulated prices during such base year, his gross profit from such sales amounted to $446.10. There is further added to such gross profit the sum of $6.64 * * *.
* * *
"It is further found that since claimant was entitled to and did change his orders for newspapers from time to time as his subscribers grew or decreased in number, it cannot be assumed he had remaining any material number of newspapers unsold and upon which he may have suffered a loss.
"The Commission also finds that in such cases where the claimant had sold newspapers to some subscribers who did not pay for the same, no deduction can properly be made from the amount of remuneration credited as wages, since the claimant was then the owner of an account receivable which was a property right existing in him. * * *
"Claimant's net remuneration in the instant case is that amount of money representing the difference *Page 673 between the wholesale charges for the newspapers deducted from the retail value of the same * * *."
The above indicates that Johnston was at liberty to order any number of papers he wished delivered to him. He was charged their wholesale price and at the end of the month the Journal presented him with its bill. In turn, Johnston sold the papers which he had purchased to the people along his route. It is evident that Johnston was the owner of the papers in which he dealt, and, of course, was the owner of the vehicle in which he delivered his papers. The Commission even found that he, and not the Journal, was the owner of the account receivable which arose when a customer failed to pay for papers delivered.
The findings above quoted state that the Journal's district manager spoke to Johnston on a couple of occasions concerning the manner in which he was discharging his contractual duties. They mention the incidents and then conclude that the district manager asked of Johnston nothing more than that he "fulfill the obligations of the written terms of his agreement." I think that that is a finding of fact and not a mere conclusion of law. Therefore, the written agreement, and that alone, determines the nature of the relationship which existed between Johnston and the Journal.
The contract does not confine Johnston to any given area nor to any specific number of customers. He was at liberty to extend his route and increase the number of his customers to any extent that he wished. He could grant credit or withhold it as he chose. Some of his debtors failed to pay him, and in those instances he suffered the loss. The Journal charged him the wholesale price for all papers delivered to him (with *Page 674 the exception of Sunday issues which he returned Monday morning), whether his customers had paid him or not. From some of his customers he accepted, in lieu of money, farm produce, such as butter, eggs and firewood. Farmers remote from his route who wished to purchase the paper were rejected by him when he thought he could make no profit by delivering the paper to them. One or two of his customers were themselves dealers in the paper.
It is obvious that if Johnston accepted a pound of butter for papers which he had sold to a customer, the butter belonged to him, and the Journal had no claim upon it. If he accepted a dollar in payment of papers delivered, the money was his and he could not be prosecuted for embezzlement, regardless of what he may have done with the dollar. If a thief stole some papers from Johnston's car, Johnston, and not the Journal, was the victim of the theft. If, upon accepting a delivery of Journals, he destroyed them or gave them away, he could not be prosecuted for larceny by bailee. When those circumstances are features of a contract, it is normally interpreted as creating a vendor-vendee relationship, and not one of employer-employee.
The majority do not deny that Johnston was the owner by purchase from the Journal of the papers which he sold to his customers, but they say:
"It cannot be denied that the sale of the plaintiff's papers to its carriers has very unusual features. Ordinarily, when a person becomes the owner of personal property by purchase he may do with it what he chooses. He may use it himself, sell it to another for whatever price he pleases, or, if he be so minded, destroy it. But Johnston had no such rights in the papers he purchased from the plaintiff. He was not merely limited in his right of resale with *Page 675 respect to price and territory, as the automobile dealer may be, but he was bound by contract to sell and deliver the papers promptly to a list of subscribers which was the property of the plaintiff and to repeat the process daily. This, in our opinion, is the central meaning and purpose of the contracts. The circulation of a newspaper is its lifeblood; * * *."
Is there anything novel about the feature of the contract to which the majority attach great importance? Johnston, it must be remembered, was not a purchaser who bought for his own personal use. He was the type of retailer which is frequently identified as a distributor. Today many kinds of manufactured goods reach the ultimate consumer through distributors. Distributors and retailers own the goods which they vend. There are distributors of brushes, automobiles, electrical supplies, petroleum products, contractors' equipment, and so forth. None of them, regardless of whether or not it is so stated in their contracts, are at liberty to do as they please with the goods which they purchase from the manufacturer. Let us revert to the observation of the majority in which they say that an owner "may use it himself, sell it to another for whatever price he pleases, or, if he be so minded, destroy it." Mercantile practices have made vast strides since the test of ownership was defined by the words just quoted. Few retailers possess the privileges signified by the quoted expression. It is safe to say that no manufacturer of a well established line of goods would permit a dealer to destroy all products shipped to him, even if the dealer paid, month by month, for the goods he received. The reasons are obvious. Competitors would supply with their products the customers who previously had purchased from the product-destroying distributor. *Page 676 Good will would vanish and the manufacturer would soon lack a market for his product. The continued success of all manufacturers is dependent upon a repetition of sales to their customers. The statement made by the majority that "the circulation of a newspaper is its lifeblood" is, of course, true; but the distributor, whether he deals in mousetraps, automobiles or any other item, is equally the lifeblood of the industry. A glance at the display advertising placed over soda fountains which proclaims "the pause that refreshes" shows that the soda fountain is the lifeblood of a soft drink producer who sells his product for the same sum as The Journal, and which, like it, is dependent upon daily repeated sales.
Before going on, let us dispel all thought that the contract before us is a mere feat of legal engineering contrived to by-pass the Unemployment Compensation Act. Agreements between publisher and distributor, couched in words similar to those quoted above, are set forth in appellate court decisions announced long before social security legislation was thought of. It seems from the sums of money stated in decisions that contracts of the kind before us can acquire considerable value:Buzby v. Buzby, 13 Pa. Dist. 587; Boehn v. Spreckels,183 Cal. 239, 191 P. 5; State Compensation Insurance Fund v.Industrial Accident Commission, 216 Cal. 351, 14 P.2d 306; and Harlow v. Oregonian Publishing Co., 53 Or. 272, 100 P. 7. The authorities recognize that under contracts of this kind there is a property right in the business of selling and serving newspapers. Such contracts may be the subject of sale and assignment: 46 C.J., Newspapers, § 52, p. 35, and Harlow v.Oregonian Publishing Co., supra. *Page 677
Let us revert to the subject of the manufacturer's continued interest in his product after it leaves his premises. Regardless of what may have been the conditions when the law of sales first assumed form, today it is general practice for the producer to retain an interest in his product after it leaves his plant. The manufacturer wants to know the ultimate purchaser, his whims, his wishes and his experience with the product. He may prescribe the price at which the retailer shall sell the goods, restrict the distributor to a given territory or require him to take affirmative action for the development of good will for the product. It is a matter of every day observation that today's producer of goods retains an interest in his product after it leaves his plant, and that distributors are not permitted to deal with the product in any way that they please. See Williston on Contracts, Rev. Ed., § 1642.
When a person who wishes to market a product finds someone who is willing to help, there are several types of relationship which the law renders available to them; for instance, master and servant, employer and employee, owner and independent contractor. It may be, however, that they can so modify their methods that their relationship will not be affected by the respondeatsuperior doctrine. There are several of these other relationships, such as vendor and vendee, lessor and lessee, bailor and bailee. The law has no independent policy of its own which it imposes upon persons who contemplate entering into a relationship with each other. To the contrary, it leaves them free to choose any relationship they prefer. Freedom of choice is a right that ought to be preserved. The Unemployment Compensation Act does not undertake to limit that freedom. *Page 678
When the Journal and Johnston met on July 1, 1938, for the purpose of entering into a contract, the employer-employee relationship was available to them if they wished to choose it. When two persons so situated enter into that relationship, the employee has no title to the papers which he sells to subscribers. Title remains in the publisher. The debt arising out of each sale is due to the publisher and all profits belong to him. Wages, or possibly a commission, become due from the publisher to the employee and if not paid present the latter with a cause of action against his employer. Fundamental to the employer-employee relationship is the doctrine of qui facit peralium which deems the master chargeable for anything which his servant did while acting within the scope of his authority. The servant is regarded as the alter ego of his principal.
Upon the other hand, if a publisher does not wish to have employees be the medium through which his paper reaches its readers, he may, if he wishes, select retailers or distributors. If he chooses retailers, the publisher wholesales his paper to them and they, in turn, sell copies to those who wish to buy. A retailer is, of course, not an agent of the person from whom he buys. He works for profits, not wages. He is the owner of the product which he offers to the custom. If he injures someone through the negligent operation of his car, he, and not the publisher, is responsible for the injury. Unlike an employee, who is generally a creditor of his principal, a retailer is generally a debtor to the producer.
Unless we are required to place upon the above-quoted contract some new or novel interpretation, its language plainly contemplates that between the Journal *Page 679 and Johnston there should exist the vendor-vendee relationship. As already said, the contract bound Johnston to purchase at wholesale from the Journal a sufficient number of papers to take care of the custom along the route. After Johnston had made the purchase, he was the owner of the papers, and in turn became the vendor of each one he sold. The money paid to him for the papers belonged to him, as did likewise all accounts receivable arising out of the omission of vendees to pay at the time of delivery. In turn, Johnston, according to the plain words of the agreement, became debtor to the Journal for all papers delivered to him. It is evident that the contract contemplated that Johnston's reward would come in the form of profits, not wages or commissions. Since the car and the papers were his, anyone injured through his negligence had no right of action against the Journal: Gall v.Detroit Journal Co., 191 Mich. 405, 158 N.W. 36, 19 A.L.R. 1164;State Compensation Insurance Fund v. Industrial AccidentCommission, 216 Cal. 351, 14 P.2d 306; Bohanon v. JamesMcClatchy Publishing Co., 16 Cal. App. 2d 188, 60 P.2d 510; and Batt v. San Diego Sun Publishing Co., 21 Cal. App. 2d 429,69 P.2d 216. The provisions of the contract which bound Johnston to (1) deliver promptly the Journal to the custom along his route; (2) sell no other newspaper; (3) endeavor to promote the circulation of the Journal; (4) deliver to the Journal upon the termination of the agreement a list of all of his customers; and (5) charge for the paper "the established rate therefor", plainly were intended to stimulate the sale of the Journal and promote fair trade practices. Such provisions are frequently encountered in agreements whereby a manufacturer distributes *Page 680 his product through retail outlets. Provisions such as the fifth which fix retail price were once under the ban of the law, but now are deemed lawful.
Before determining whether the provisions of the Unemployment Compensation Act demand a holding that Johnston was an employee, let us determine whether, under commonly accepted legal principles, Johnston was an employee.
From Mechem on Agency, 2d ec., § 44, we quote:
"Agency is, further, to be distinguished from sale * * * 1. Is the party in question an agent to buy goods for the other or is he buying the goods on his own account and then himself selling them to that other? 2. Is the party in question an agent to sell goods for the other, or is he really buying the goods from that other to sell upon his own account?"
In § 48 the same eminent authority says:
"The essence of sale is the transfer of the title to the goods for a price paid or to be paid. Such a transfer puts the transferee, who has obtained the goods to sell again, in the attitude of one who is selling his own goods, and makes him liable to the person from whom he received them as a debtor for the price to be paid and not liable as an agent for the proceeds of the resale. The essence of agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as the property of the principal, who remains the owner of the goods and who therefore has the right to control the sale, to fix the price and terms, to recall the goods, and to demand and receive their proceeds when sold, less the agent's commission, but who has no right to a price for them before sale or unless sold by the agent."
In § 46 of his work on Sales, Professor Mechem states the fundamentals which determine whether a *Page 681 distributorship contract which borrows from both the law of sales and the law of agency constitutes the distributor a retailer or an agent. The section says:
"In construing these anomalous instruments, courts look chiefly at the essential nature and preponderating features of the whole instrument and not at the peculiar form of isolated parts of it. It matters very little what the parties have chosen to call their contract. Misfitting or misleading names may be very easily applied, but they cannot be permitted to conceal or change the legal nature of the instrument. If the parties have made a contract which really operates to transfer the title, it is a sale, * * *."
From 46 Am. Jur., Sales, § 18, p. 213, the following is taken:
"One of the most material considerations in determining whether a particular transaction is a sale or a consignment for sale on account of the consignor seems to be whether there arises at the time of the consignment the relation of creditor and debtor between the consignor and consignee. If no liability arises, the transaction is usually regarded as a consignment for sale. On the other hand, if a liability to pay a fixed price for the goods or their reasonable value arises at the time of the consignment, the transaction is usually regarded as a sale, transferring the title to the consignee, and the fact that the consignee's liability to pay for the goods is postponed until or contingent on his reselling them does not prevent the transaction from being a sale."
From the carefully reasoned decision entitled Mathews ConveyorCo. v. Palmer-Bee Co., 135 F.2d 73, I quote:
"While the agreement that defendant was to devote its best efforts to the sale of plaintiff's *Page 682 products may seem like an obligation of agency, there is no reason why a manufacturer may not require of all persons to whom it sells its goods, to do all that they lawfully can to make sales, to promote its interests. This does not necessarily show a relationship of agency; * * *. Whatever control may be said to have been exercised by plaintiff over defendant, is not here decisive on the issue of the agency. One may submit to a degree of control by another without being his agent; and one may control the conduct of another without being a principal, and without giving to the other authority to bind him. In this case, it can be said that plaintiff desired to sell its products in such a manner that its interests might be promoted, and required as part of the price in the making of the contract, that defendant, to whom it sold, should submit to certain restrictions."
In the much cited decision of Piper v. Oakland Motor Co.,94 Vt. 211, 109 A. 911, the court said:
"Whether an agency does in fact exist in a given case depends upon the contract or arrangement under which the business is conducted, and it is entirely immaterial that the parties denominate the arrangement as an `agency.' If one buys goods of another to sell on his account, it is a purchase, and not an agency, though called so by the parties."
Let us now take note of the provisions of the statute which Justice Lusk's opinion says demands a holding that the relationship between the Journal and Johnston was that of employer and employee. Before setting down the parts which his opinion quotes, I explain that the majority also cite parts of the statute which (1) define the meaning of the term "payroll"; (2) mention the elective features of the act; and (3) state the amount of benefits payable to unemployed. Those *Page 683 parts are not cited by Justice Lusk for the purpose of showing that Johnston was an employee. It is the following provisions of the statute which he quotes for the purpose of showing that Johnston was an employee:
"(f) `Employment' means service for an employer * * * performed for remuneration or under any contract of hire, written or oral, express or implied. * * *"(E) Services performed by an individual for remuneration shall be deemed to be employment subject to this act unless and until it is shown to the satisfaction of the commission that:
"(1) 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
"(2) Such individual customarily is engaged in an independently established business of the same nature as that involved in the contract of service."
I believe that the above part which is preceded by the letter (E) was not intended to bring within the act someone who was omitted by the part preceded with the letter (f), but that its purpose is to prevent the exclusion from the act of independent contractors who do not have independently established businesses of their own.
Although I concede that the legislature could have expanded the above definition so that it would embrace the relationship which existed between the Journal and Johnston, I do not believe that it has done so. I think that it is better to give to the words above quoted their natural meaning and await a legislative amendment before holding that these parties are subject to *Page 684 the act. I observe that after Washington Recorder Publishing Co.v. Ernst, 199 Wash. 176, 91 P.2d 718, 124 A.L.R. 667, had held that provisions similar to the above did not include a relationship which was virtually a counterpart to that created by the above contract, the legislature did not amend the Washington act so as to bring the relationship within it. To the contrary, it provided that "service as a newsboy selling or distributing newspapers on the street or from house to house" should not be deemed employment. 1939 Laws of Washington, Ch. 214, at p. 859; 1941 Laws of Washington, Ch. 253, at p. 922; and 1943 Laws of Washington, Ch. 127, at p. 341.
In the decisions which I shall shortly cite the courts held, under contracts substantially similar to the one before us, that a newspaper distributor was not an agent or employee of the publisher. It is true that this group of cases was not affected by unemployment compensation acts, but I shall quote the statutes which governed the decisions and it will be seen from the quoted language that the statute was equivalent substantially to the portion of our act upon which the majority depend. This group of decisions follows: State Compensation Insurance Fund v.Industrial Accident Commission, supra; Batt v. San Diego SunPublishing Co., supra; Rathbun v. Payne, 21 Cal. App. 2d 49,68 P.2d 291; Bohanon v. James McClatchy Publishing Co., supra; Hartford Accident Indemnity Co. v. Industrial AccidentCommission, 123 Cal. App. 151, 10 P.2d 1035; AssociatedIndemnity Corp. v. Industrial Accident Commission, 115 Cal. App. 754, 2 P.2d 51; New York Indemnity Co. v. Industrial AccidentCommission, 213 Cal. 43, 1 P.2d 12, 294 P. 707, 287 P. 368;Birmingham Post v. Sturgeon, 227 Ala. 162, *Page 685 149 So. 74; Philadelphia Record Co. v. Curtis-MartinNewspapers, 305 Pa. 372, 157 A. 796; Balinski v. PressPublishing Co., 118 Pa. Sup. 89, 179 A. 897; and Creswell v.Publishing Co., 204 N.C. 380, 168 S.E. 408. See also Buzby v.Buzby, supra; Call v. Detroit Journal Co., supra; and Tylerv. Mcfadden Newspapers Corp., 107 Pa. Sup. 166.
The first of the decisions just cited was decided under the California Workmen's Compensation Act which defined the word "employee" as including "every person in the service of an employer * * * under any appointment or contract of hire or apprenticeship, express or implied, oral or written." I can discern no difference of any consequence between those words and "`Employment' means service for an employer * * * performed for remuneration or under any contract of hire, written or oral, express or implied." (§ 126-702 (f), O.C.L.A.) The contract in that case was similar to the one before us. Throndson, the distributor, personally made the collections, but had the papers delivered by a boy named Mard. While performing his duties, Mard sustained an injury and, contending that Thorndson was an employee of the Examiner, argued that therefore he (Mard) was also an employee of the publisher. The Commission agreed with him. In reversing its award, the court held that the contract created no relationship of employer and employee. It said:
"As we have seen from the facts stated above, the Examiner Printing Company did not pay Thorndson any wages or compensation of any kind or nature. It sold outright to Thorndson the papers which he circulated to the subscribers throughout his route. Thorndson was not on the payroll of the Examiner Company. His profits came from the *Page 686 sale of the papers * * *. We think it would be an unwarranted extension of this definition of an employee to hold that one who is not hired but who simply purchases papers or other commodities of another for the purpose of reselling them comes within the terms thereof."
In the Bohanon case, in which the contract covering an automobile route was similar to the one before us, the distributor, while delivering his papers by automobile, collided with a car driven by the plaintiff. The action was based upon a contention that the distributor was the publisher's agent and that, therefore, the publisher was liable for the injury. The statute defined the term "employee" as
"one who is employed to render personal service to his employer, otherwise than in the pursuit of an independent calling, and who in such service remains entirely under the control and direction of the latter who is called his master."
That statute, I submit, cannot be differentiated in any substantial detail from the one before us. In holding that the contract created no relationship of master and servant or of employer and employee, the court said:
"Primarily, the contract is one of purchase and sale whereby appellant agrees to sell and Engebrecht agrees to purchase an indefinite number of appellant's newspapers at a specified price per hundred. * * * It is therefore obvious that the final result which was expected to be achieved from the work of distribution which Engebrecht was to perform was the sale to him by appellant of the largest possible number of its newspapers."
In the Batt case the plaintiff's minor son was killed in the collision of an automobile in which he was riding with a car driven by a route carrier who was collecting *Page 687 the price of papers previously delivered. The contract between the carrier and the publisher resembled the one before us. Based upon the authority of the Bohanon case, the court held that "young Cottrell was not the agent, servant or employee of appellant" and reversed a judgment which had been entered for the plaintiffs. The distributor in the Rathbun case, as in the case before us, was paid an automobile allowance. The facts and holding in that case are sufficiently indicated by the following headnote which precedes the decision:
"Evidence disclosing that automobile driver was route carrier of defendant's newspaper, that defendant owned route and paid weekly amount to route carrier based on route mileage as partial compensation for gasoline used and upkeep of automobile, that carrier furnished his own automobile and purchased papers from defendant which he sold and delivered to customers of whom no record was kept by defendant, and that defendant procured insurance of blanket life policy for benefit of employees including carrier, held insufficient to permit recovery for injury caused by carrier's negligence, on ground that carrier was in defendant's employ."
The New York Indemnity case received unusually extensive consideration from the court. One Eustace, 34 years of age, was a newspaper vendor who sold papers upon a street corner. While so engaged he was struck by a passing car. He purchased his papers at a fixed price and sold them at a profit. All vendors were assigned to street corners by the publisher, who refused to continue supplying them with papers if their conduct or sales did not meet his standards. Eustace, alleging that he was an employee of the publisher within the purview of the California Workmen's *Page 688 Compensation Act, claimed compensation for his injury. The California statute said:
"A servant is one who is employed to render personal service to his employer, otherwise than in the pursuit of an independent calling, and who in such service remains entirely under the control and direction of the latter who is called his master."
The California Workmen's Compensation Act said:
"The term `employee' as used in section six to thirty-one, inclusive, of this act shall be construed to mean: Every person in the service of an employer as defined by section seven hereof under any appointment or contract of hire or apprenticeship, express or implied, oral or written."
The Commission sustained Eustace's claim and made an award. In 287 P. 368 the award was annulled. The decision held that the term "contract of hire" called for personal service; that the word "hire" implies that "a reward or compensation shall be paid for the services performed"; and that "the `contract' contained no express stipulation that for the `services' to be performed by the newsboy any reward or compensation as such would be paid to him." The decision which we just reviewed was by the California District Court of Appeals. From that court the case made its way to the California Supreme Court. In 294 P. 707 the court just mentioned reversed the District Court of Appeals and held that the evidence was sufficient to support the decision rendered by the Commission; that is, that Eustace was an employee of the publisher. It affirmed the award the Commission had made. Thereupon a petition for a rehearing was filed. Several amicicuriae filed briefs. The decision rendered upon rehearing (213 Cal. 43, 1 P.2d 12) set aside the opinion reported in 294 P. 707, affirmed the decision *Page 689 rendered by the District Court of Appeals (287 P. 368) and annulled the award made by the Commission. In taking that course, the court held that the facts did not "constitute such newsboys the employees of the publisher of said newspaper so as to entitle them to receive compensation at the hands of the industrial commission." It is evident that the court bestowed extensive consideration upon the very problem which is before us. It was aided by the briefs filed by amici curiae and had the added interest which came from the pronouncement of previous decisions printed in the Reports. Although the statutes which controlled the decision were not entitled the same as ours, nevertheless, their phraseology was the substantial equivalent of our statutes, and the social objectives of the statutes were not dissimilar to ours.
The Birmingham Post case was a proceeding under the Alabama Workmens Compensation Act by the administrator of the estate of one Sturgeon, deceased. The latter, while vending papers at a street corner, was killed by an automobile. The Alabama act provided:
"The term `employer' as used herein shall mean every person not excluded by 7543 who employs another to perform a service for hire and to whom the `employer' directly pays wages. * * * The terms `employee' and `workman' are used interchangeably and have the same meaning throughout this chapter and shall be construed to mean the same. The terms `wages' and `weekly wages' and such expressions shall, in all cases, unless the context clearly indicates a different meaning, be construed to mean `average weekly earnings.'"
That act, I am sure, cannot be distinguished in any substantial way from the terms of our Unemployment *Page 690 Compensation Act upon which the majority depend. Sturgeon purchased his papers from the publisher and resold them at a price stated in the heading of the paper. At the end of the day he returned unsold copies. The court held:
"Measured by the rule of our decisions, we think the agreed facts disclose the relation of employer and employee did not exist between Sturgeon and the defendant but rather that of an independent contract."
It pointed out that Sturgeon worked for profits, not wages.
The above will suffice as a review of this group of cases. The decisions which we have not reviewed are in accord with the above.
In the present instance, when Johnston took into his possession papers which the Journal delivered to him as a result of his orders, he was their owner. Nothing remained to be done, after he had taken possession, to transfer title from the Journal to him. At that point he became debtor to the Journal for the wholesale price of the papers which he had in his hands. The fact that he had the privilege of returning surplus copies of the Sunday edition did not deny to the transaction the quality of a sale: 46 Am. Jur., Sales, §§ 480 to 486, and 55 C.J., Sales, § 592, page 585. At the end of the month the Journal mailed him a statement of account for all papers thus delivered in which he appeared as debtor and the Journal as creditor. Before the tenth of the month he paid the Journal the amount due. In order to have a profit for himself, it was necessary that the amount which he had received from his customers, plus the automobile allowance, exceed the total of the following expenses: (1) the sum due *Page 691 the Journal for papers delivered to him; (2) the amount he spent for gasoline, oil, tires, repairs and parts; and (3) depreciation on his car. Thus, he was working for a profit, not wages.
The circumstances that, concurrently with the signing of the contract, a list of persons "who purchased The Journal" was "leased" to Johnston and he promised "to sell and regularly and promptly deliver The Journal to all said subscribers" is not out of harmony, I believe, with the vendor-vendee relationship. The prevailing opinion employs the terms "the contracts of subscription" and "subscription contracts already in existence before Johnston took over the route." I know of nothing which warrants the use of those terms. No witness, pleading or finding mentions any contracts of that kind. Although the contract between the Journal and Johnston employed the term "said subscribers", it seems clear that subscribers was used as a synonym for customers or buyers. I know of no contractual relationship between the persons upon the list and the Journal. Nothing was due from them to the publisher, as is evident from the fact that they paid Johnston for the papers delivered to them. They paid him with butter, eggs and firewood when they lacked money. The fact that they had no contract with the Journal is again indicated by the findings of the Commission, which state that the Journal sold its papers to the plaintiff — not to the customers — and that he, in turn, sold them to the people along the route. In fact, the findings, which I previously quoted, refer to the customers as "his subscribers" — not the Journal's. When Johnston began to sell papers to those persons they, obviously, became his customers. The people to whom he sold papers were no more subscribers to the *Page 692 Journal than if they had purchased the paper at a newsstand or from a boy on the street. The requirement that, at the termination of the relationship, he was obliged to hand to the Journal a list of his customers would not have prevented him from selling to those same customers any other newspaper publication or product which he might then be vending. The facts in In reScatola, 257 A.D. 471, 14 N.Y.S.2d 55, 282 N.Y. 689,26 N.E.2d 815, and Salt Lake Tribune Publishing Co. v.Industrial Commission, 99 Utah 259, 102 P.2d 307, from which the majority quote, are fundamentally different from those before us, as I shall later show.
Before engaging in further analysis and considering the decision of other courts which applied unemployment compensation acts to newspaper cases, let us see how the majority construe the excerpt of our act which they quoted, and which I have requoted. Although the prevailing opinion quoted that part of the act, it places major stress only upon the following portion of the act: "`Employment' means service for an employer * * * performed for remuneration." In fact, a reading of the majority opinion inclines the mind strongly to the belief that the majority believe that only the words "service * * * performed for remuneration" are important. The segment of the act which they quoted leaves me wholly unsatisfied that a contract, which otherwise would create a vendor-vendee relationship, must now be construed as one which ushers in an employer-employee status. As we all know, the element, "service for an employer * * * performed for remuneration," is a part of the popular and also of the common law definition of employment. If that fragment is the tuning fork of the entire act, *Page 693 then everything done, except through mercy, charity, affection or friendship, is an act of employment.
After the prevailing opinion makes the above-mentioned quotation, it neglects the words "employment" and "employer" which are in the quoted section of the act. The manner in which those words are lost sight of is indicated by the following excerpts taken from Justice Lusk's opinion:
"The meaning of service for remuneration, it is said, was not determined by our prior decisions, * * *. The word `service' as counsel suggests, varies in meaning according to the context in which it is found, * * *. We agree with the statement in that case that the way `service' is used in the Act `indicates an intention on the part of the legislature to use the term in its broad general sense.' It is a broad term of description * * *. Whether the work done by Johnston was service for the plaintiff is a question that might well be considered settled on the authority of the Singer and Rahoutis cases, * * *."
Near the end of the decision the majority express their conclusions. It follows:
"We conclude that the plaintiff's contract with its carrier is a contract for the performance of service for remuneration. * * * In any event there is ample, substantial evidence to support the Commission's findings that Johnston performed services for remuneration for the plaintiff, * * *."
If the controlling language of the act is "service * * * for remuneration", then we have an extremely poor index to the law's meaning. A perusal of the Oxford dictionary will show that few words have ambits which exceed those of "service" and "remuneration". Everyone who earns his bread and butter, *Page 694 regardless of how he does so, must render service or his remuneration will cease. Creameries of America v. IndustrialCommission, 98 Utah 571, 102 P.2d 300, from which the majority quote, bestowed much attention upon the meaning of the word "service", but in the end left the meaning of the term as vague as before the decision was written. The majority frankly confess that the meaning of service is variable, and say: "* * * it would be impracticable, in our opinion, to attempt a definition by which to test every case that may arise." And yet they select that word as the cornerstone of the entire act. Referring to the word "service", they state: "It is a broad term of description * * *." Finally, they conclude: "The scope and limitation of the phrase `service for remuneration' must at the last be determined by the traditional method of judicial inclusion and exclusion." I know of no such rule of statutory construction. The decision cited by Justice LUSK, Noble StateBank v. Haskell, 219 U.S. 104, 55 L. Ed. 112, 31 S. Ct. 186, 32 L.R.A. (N.S.) 1062, Ann. Cas. 1912A 487, concerned the boundaries of the police power, and not the construction of a statute. It seems obvious that no court would embrace "the traditional method of inclusion and exclusion" if it knew of any test, rule, definition or formula which it could state. If this court cannot say what is included and what is excluded, how shall we be able to decide the next case? And how shall employers and employees know whether or not the act is applicable to them, if the best that we can say is that we will determine their cases by the inclusion and exclusion "method"? If the act itself suggests no rule, test, definition or formula by which anyone can know whether or not it is applicable, the authorities deem it *Page 695 unconstitutional: Lewis' Sutherland Statutory Construction, 2d ed., § 86; Menasha Woodenware Co. v. Coos Co., 66 Or. 431,134 P. 1037; 50 Am. Jur., § 472, p. 484; and 59 C.J., § 161, p. 605. Surely we would not deem the act valid if it itself said that the method for determining its application to any person or industry should be "the traditional method of judicial inclusion and exclusion."
Of course, the act is not unconstitutional. The majority, I believe, created the necessity of resorting to the inclusion and exclusion process by ignoring words of the act which are even more important than the term "service for remuneration." The very sentence from which they selected that term includes the two significant words "employment" and "employer". Other parts of the act abound in such expressions as "employee", "employing unit", "wages", "payroll", "labor" and "employment office". Those terms and others of like kind indicate that the legislature was concerned with "service for remuneration" only when performed by an employee for an employer, and not with the service rendered to a customer by a retailer. Therefore, since Johnston delivered his papers as an incident to his business as a vendor of newspapers, the service to which the majority refer was not rendered by him as an employee.
Now let us consider some of the decisions which have been rendered under unemployment compensation acts. Neither Rahoutisv. Unemployment Compensation Commission, 171 Or. 93,136 P.2d 426, nor Singer Sewing Machine Co. v. State UnemploymentCompensation Commission, 167 Or. 142, 103 P.2d 708,116 P.2d 744, 138 A.L.R. 1398, involved an individual who sold wares owned by himself and *Page 696 who was seeking to make a profit. In each of those cases the person whom we held to be an employee was selling something which he did not own. In each he was working for a commission and in each he would have a direct cause of action against the person who, we held, was his employer, in the event the commission was not paid. In the Singer case Justice KELLY said:
"The machines sold were consigned to the agent and remained the property of the Company until sold. * * * He was also required to make collections on conditional sales contracts and delinquent accounts, on which actual collections he was paid a commission * * *. The agent was also required to care for, repossess and deliver to the Company any property the Company desired repossessed."
In the companion case of Singer Sewing Machine Co. v.Industrial Commission, 104 Utah 175, 134 P.2d 479, the court said:
"The business shows it was the Company goods, the Company's accounts; the Company's risks of profit and loss; the Company's money; the Company's customers; the Company's goodwill; the Company's salesman."
In the days when sewing machine agents traveled about in horse-drawn vehicles, long before any thought of social security had entered anyone's mind, the fact that the agent owned neither the machines which he vended nor the accounts which he collected caused the courts to hold that he was the agent of the manufacturer: Singer Manufacturing Co. v. Rahn, 132 U.S. 518,10 S. Ct. 175, 33 L. Ed. 440.
Although, in our Singer case, the Company owned the machines which its representatives sold and the accounts which he collected, in the instant case the findings *Page 697 state that Johnston owned the papers which he sold, and "where the claimant (Johnston) had sold newspapers to some subscribers who did not pay for the same, no deduction can properly be made from the amount of remuneration credited as wages, since the claimant was then the owner of an account receivable which was a property right existing in him." The distinction between this case and the Rahoutis and Singer cases is patent. It is the distinction between marketing newspapers through a retail distributor and selling something through an agent.
Decisions such as Glielmi v. Netherland Dairy Co., 254 N.Y. 60, 171 N.E. 906, and Creameries of America, Inc. v. IndustrialCommission, supra, are, I believe, of no value in our present inquiry. In them the court found that the contract did not truthfully delineate the relationship between the parties. Neither the parol evidence rule nor the Unemployment Compensation Act (§ 126-702 (f) (E) subd. (1)) confines court or Commission to a writing signed by an alleged employer and an alleged employee when either court or commission undertakes to determine the status of the parties. A writing may be a mere facade contrived for the purpose of giving a false impression concerning a relationship. For instance, in the Glielmi case, the dairy company denied that Glielmi was its employee. The court, in sustaining the Commission and in referring to the written agreement, said: "The contract is adroitly framed to suggest a different relation, * * *." In the Creameries case the court found that the contract constituted "the dealer" (claimant) a mere puppet merchant. It pointed out that he was required to purchase a truck "which met the approval of the company" *Page 698 and which "had to be painted in a certain manner and bear the company's name thereon." He
"was required to keep his truck at the company garage, and repairs were made thereon by the company and charged to claimant without his knowledge or consent. Books of account were supposed to be kept by the claimant which books were required to be left at the offices of the company unless consent was obtained to take them home. The company maintained a special bank account for claimant, and deposited the money collected from customers. Claimant's check book, used to draw on said bank account, was required to be left at the office. The company had a right to inspect claimant's route and did so inspect it by maintaining a relief man who occasionally relieved claimant. This relief man, who was an employee of the company, made reports to the company on the condition of claimant's route. Some collections from customers on claimant's route were also made by a relief man who turned in to the company all sums so collected."
The difference between that set of facts and those before us is manifest. It will be recalled that, notwithstanding Johnston's efforts to show that he was required to do something beyond the contract's requirements, the Commission's findings say:
"The district manager did not actually go beyond the insistence that the claimant fulfill the obligations of the written terms of his agreement."
Hence, in the present instance, as previously said, we ought to go no further than the provisions of the writing in determining the nature of the relationship between the contracting parties.
The prevailing opinion several times refers to In re Scatola, supra. It says that the contract in that case was "similar to that with which we are now dealing." *Page 699 I cannot concur in that statement. The Scatola decision does not say whether or not a written agreement was in effect between Scatola and the newspaper publisher. It seems quite clear, however, that there was no writing. The Court of Appeals confined itself to the following decision: "Per curiam. Order affirmed without costs." Preceding that decision is a very brief statement of facts. Based upon what is said in Claim of Eckler, 261 A.D. 313,26 N.Y.S. 259, it seems that Scatola was a boy. The Appellate Division, from which Scatola's case made its way later to the Court of Appeals, rendered a decision which is only a little more than one page in length. According to it, "Scatola secured a position of route carrier by applying to an inspector * * *, who assigned him to a route upon which papers were to be delivered to about one hundred and twenty-five regular subscribers." Each day he was given the required number of papers and was charged for them. He collected from the subscribers twelve cents a week and, according to the decision, "the difference between that and the amount he paid was his compensation." Besides being supplied with one hundred and twenty-five papers for the subscribers, "He also received additional copies to be delivered to prospective subscribers. * * * The extra copies could not be sold to chance purchasers met upon the street. They were to be used in circularizing prospects." Scatola was paid a bonus for each new subscriber he obtained. If a subscriber quit or failed to pay, no deduction was made "until the readjustment," which occurred every three months. Scatola could be discharged at any time. According to the decision,
"The relation between this carrier and publisher differs from that of a newsboy who purchases papers and sells them on the street corner through *Page 700 crying his wares. While this carrier paid the appellant's inspector for the papers which he delivered, his ownership was qualified as they could be used only in fulfilling the publisher's contract with its subscribers and in furthering the effort of the publisher to obtain new subscribers."
The following is the decision:
"In determining whether a person is an independent contractor or an employee, the authorities deem the right to `hire' and `fire' of great importance. The facts proven justify the finding made by the Board of Appeals that claimant was an employee within the meaning of the Unemployment Insurance Law * * *."
Thus, through use of the familiar rule that the right to hire and fire is of great importance in determining whether or not one who renders service is an employee, the court affirmed the finding entered by the Commission. By reverting to the contract which the Journal and Johnston signed, it will be seen that Johnston could not be dismissed except "for good and sufficient reason." It seems logical to infer that if Scatola had possessed a written contract containing a similar provision, the court would have announced a different decision.
Let us take notice not only for the distinction just mentioned, but of others. Johnston, unlike Scatola, was furnished with no free papers. Copies which he ordered for circularizing prospective customers were charged to him at the same price as other copies. He was paid nothing for obtaining new subscribers, unless remuneration is indicated by the following parts of the record. One of the Journal's representatives testified:
"There are those commissions granted to little merchants in towns and in Portland, as well as auto *Page 701 route carriers, and to dealers in a town like Corvallis and the amounts may vary depending upon what type of contest they may have on or what would be going on at that particular time. There is no real set amount."
Johnston gave no testimony upon that subject. His contract, however, promised him nothing for obtaining new customers. He was asked, and answered, as follows:
"Q. Were you paid a commission?
"A. No."
He was also asked, and answered, as follows:
"Q. When you went to a new subscriber you got his subscription, did you make a report of that to the Journal Publishing Co.?"A. Well, you have to send in an increase card for an increase in your daily papers.
"Q. Do you send them the name of the customer?
"A. No, just send in the increase card for the month and the length to be increased."
Since Johnston, when he got a new customer, did not send his name to the Journal, but merely ordered delivery to himself of a larger number of papers, it seems clear that the new customer was his, not the Journal's.
Although Scatola's account was readjusted when a subscriber failed to pay, nothing of that kind occurred when one of Johnston's customers neglected his account. It will be recalled that the Scatola decision speaks for "the publisher's contract with its subscribers." In the present case, it is clear that the Journal had no contract with anyone to whom Johnston sold a paper. Since Scatola received payment for *Page 702 every new subscriber he secured, it seems likely that the new subscribers signed a subscription form, thereby creating a contractual relationship between them and the publisher. If that is so, we have a basis for the court's expression — "the publisher's contract with its subscribers." Since the publisher in that case had contracted with one hundred and twenty-five persons who lived in a given area to send his paper to them daily, it is clear that Scatola's status became that of an employee when he accepted the job of delivering the paper. Since the one hundred and twenty-five copies which were daily placed in Scatola's hands had already been sold to the subscribers, the act of putting them into his hands did not constitute him a vendee. The daily charge against him and his right to keep the collections were merely the methods selected for paying Scatola for his labor. Obviously, the court would have reached a different conclusion if (1) the customers had been Scatola's; (2) the publisher had had no contracts with the people on Scatola's route; (3) Scatola was required to pay for all papers, whether he sold them or not and whether his customers paid him or not; and (4) the contract was not terminable at will.
The majority say that the contract involved in Salt LakeTribune Publishing Co. v. Industrial Commission, 99 Utah 259,102 P.2d 307, was "similar to that with which we are now dealing." It may be that the contracts were similar, but, due to the fact that the publisher in the Salt Lake case went far beyond the contract, the resulting relationship was not similar to the one before us. In the Salt Lake case, the publisher, unlike the Journal, supplied the carriers with material useful in the prosecution of their work and issued to *Page 703 them instructions from time to time. He communicated directly with the subscribers by sending them "house cards." The publisher's district managers supervised the boys closely and helped them to secure subscribers as well as collect their accounts. Every carrier was required to keep (1) a list of his customers; (2) a route card for each of them; and (3) a separate account for each. Subscribers, in lieu of paying the boys, could pay their accounts at the company's office or mail the money to that place. Whenever a carrier obtained a new customer the publisher mailed to that individual a subscription card. The subscription card, the house card and the fact that all subscribers could pay directly to the publisher established a contractual relationship between the publisher and the subscriber. Whenever a subscriber became delinquent the publisher sent him a letter urging payment of the overdue account. If the letter failed to produce payment, another went forth. If a carrier lost a customer and sought to reduce "his draw" so as to escape payment for the unwanted paper, his request was not allowed unless it was accompanied with return of the route card and "detailed reasons for the stop." The Commission found that the boy involved in the proceeding was an employee of the publisher. In sustaining the resulting award, the decision under review said: "The evidence further shows that the subscribers were the customers of the company rather than of the individual carriers." That observation was, of course, warranted by the fact that the publisher's district managers (1) helped to get the subscribers; (2) supervised the boys in their work; (3) helped in the collection of subscribers' accounts. It was also justified by the fact that the publisher (1) mailed to new subscribers a confirmation of their subscription; (2) through his own letters *Page 704 urged delinquent subscribers to pay their accounts; and (3) subjected the carrier's request for reduction of his draw to the publisher's acquiescence. Those circumstances warranted the Commission in deeming the buyers subscribers to the paper and the boys, not as vendors, but as employees. In appraising the value of the paragraph from the Tribune decision which is quoted in the prevailing opinion, it must be borne in mind that that paragraph represented the views of only two members of the Utah court.
The attitude of the Utah court to a vendor-vendee case is shown in Fuller Brush Co. v. Industrial Commission, 99 Utah 97,104 P.2d 201, 129 A.L.R. 511. In that case the company entered into written contracts with dealers resulting in the latters' purchase of the products of the plaintiff for resale to householders. The dealer obtained remuneration for his services through the difference in the sum which he obtained for the goods and that which he paid. Each dealer operated in a given territory and could sell for cash or grant credit. The majority of the court held that the resulting relationship was one of vendor and vendee, and that it was not within the Utah Compensation Act. The court said:
"It covers only individuals who have been, or are in employment and who receive therefor wages as those two terms are defined in the act."
Even the dissenting opinion conceded that "true vendor-vendee or lessee-lessor relationships are not service relationships."
Washington Recorder Publishing Co. v. Ernst, 199 Wash. 176,91 P.2d 718, 124 A.L.R. 667, was an action for a declaratory judgment as to the application *Page 705 of the Washington Unemployment Compensation Act to the status of newspaper carriers who were governed by written contract. The latter was in all material respects similar to the one before us, except (1) it subjected the carrier to a greater degree of control; (2) it required the carrier to have at call "a satisfactory substitute"; (3) it could be cancelled at any time by the publisher; (4) the carrier was required to deliver, free of charge, advertising checking copies; (5) he was required to settle his account with the publisher weekly; and (6) he was confined to specific territory. The court, after an extensive analysis of the employer-employee and the owner-independent contractor relationships, held that the carriers were not employees. In doing so it pointed out:
"Under the contract between the publishing company and its carriers for distribution of the Daily Olympian, the carriers purchase the paper from the publishing company at an agreed rate per week per paper and pay therefor weekly. The carriers sell the papers to their customers in the route or territory designated and at the price stipulated in the contract. The money received from the sale of the papers by the carriers belongs to the carriers."
The Washington statute's definitions of "employment", "employer", "employee", and "wages" were substantially the same as ours. The Washington Recorder decision has been criticized on the ground that the court was overly influenced by common law standards. I observe, however, that in Mulhausen v. Bates, 9 Wash. 2d 264,114 P.2d 995, the same court which wrote the Washington Recorder decision said concerning it:
"The basis for the decision in the publishing company case was that the relation of vendor and *Page 706 purchaser existed between the publishing company and the paper carriers; that the carriers bought and became the owners of the commodity (newspapers) and sold it on their own account."
The words in italics appear in that form in the court's decision. I submit that the decision is correct, and that it was based upon sound grounds. As I have already indicated, the Washington legislature, in the same year that the above decision was announced, expressly excepted from the meaning of "employment" "services as a newsboy selling or distributing newspapers on the street or from house to house."
I am satisfied that no relationship is within our Unemployment Compensation Act except the employer-employee relationship. Before an injury is justified as to whether a given person rendered service, it must first be established that that person was an employee. The ambit of "service" is more inclusive than that of the word "employment". I submit that unemployment compensation acts are based primarily upon the employment relationship. Service is a secondary element.
In 3 Law and Contemporary Problems 7, the writer says:
"Like workmen's compensation laws unemployment compensation laws operate upon an employer-employee relationship; * * *."
In Carmichail v. Southern Coal Coke Co., 301 U.S. 495,57 S. Ct. 868, 81 L. Ed. 1245, 109 A.L.R. 1327, the Chief Justice indicated that the basis of state unemployment compensation laws is "those who employ labor in the processes of industrial production and distribution." *Page 707
In 16 Indiana Law Journal 469, the writer declares:
"The employment relation was chosen because, relatively better than any other group concept, it includes those sought to be protected. * * * They disclose that it was the Congressional purpose to extend the benefits of the act to the vast number of workers, primarily industrial, whose economic survival rests upon the continuance of an association with an entrepreneur assuring payment of wages as remuneration for services performed. * * *"The employment relation, then, was chosen, apparently, not because it was considered the best possible criterion of coverage, but because it appeared the best practicable standard then available."
Johnston was entitled to no compensation unless he was an employee of the Journal during his base year. In determining whether or not he was an employee, the definitions recited in the act are controlling. By reverting to the definition quoted by the majority, and requoted in a previous paragraph of this opinion, it will be seen that all are within the act between whom there exists a relation of employer and employee. That term includes (1) principal and agent; (2) master and servant; and (3) owner and independent contractor — unless the latter possesses an independently established business of his own.
Section 2-216, O.C.L.A., says:
"In the construction of a statute or instrument, the office of the judge is simply to ascertain and declare what is, in terms or in substance, contained therein, not to insert what has been omitted, or to omit what has been inserted."
It is true that the act must be liberally construed, but the liberality is to be employed, not in determining *Page 708 who are within the act, but in the administration of its beneficial features.
I know of nothing in the act which can justify a conclusion that a person who retails papers which he himself owns is an employee of the publisher from whom he bought the papers. Nor do I find any warrant in the statute for a conclusion that a publisher who sells papers to another upon the latter's orders, and bills him monthly for the total sales, is the employer of the buyer. Likewise, I find no support in the statute for a belief that profits earned by a person who resells a product at a price greater than cost, plus cost of operation, are wages.
For the above reasons, I dissent from the holding that Johnston was the employee of the Journal. It is my belief that he was a retail vendor of the papers published by the Journal.
I wish to dissent from still another conclusion announced in the prevailing opinion. The majority hold that Johnston's wages consisted of the total retail value of all the papers delivered to him by the Journal. No deduction whatever is made from that total. Some of the papers were never sold, but the prevailing opinion deducts nothing on that account. Some of his customers, Johnston swore, failed to pay their accounts. Nothing is deducted on account of that fact. Some of the customers gave Johnston farm produce in lieu of cash. The majority deal with those items as though they were cash. The total retail value of all the papers is deemed by the majority as Johnston's wages. Nothing is deducted on account of the expenses which Johnston incurred in handling the business. In the year and a half in which he dealt in The Journal, Johnston bought three used automobiles, several sets of *Page 709 tires, as well as gasoline, oil, repair parts and automobile licenses. He swore that he confined the use of the cars almost exclusively to the delivery of The Journal and the collection of accounts. Each of the cars, with the exception of the last, was turned in upon the succeeding one as a part of the purchase price. Nothing is deducted on account of any of these heavy expenses. It will be recalled that the Journal credited Johnston monthly with an automobile allowance. When he accepted the additional task of handling some bundles of the Albany Democrat-Herald, together with a sack of mail, the allowance became $78 per month. The prevailing opinion quotes a finding of the defendant Commission which deemed the allowance "in the nature of payment of rental for use of such vehicle, and not for services rendered." The finding continues:
"In the event the cost of operating the automobiles was either more or less than the allowance * * * such gain or loss was not in respect to wages for services performed since it was not predicated upon labor as service * * *."
The majority state that the findings just quoted "are not justified by anything in the evidence." They continue:
"If an employer pays his employe more than he otherwise would because of expense that the employe incurs in rendering services, the amount so paid is part of the employe's remuneration for his services."
I cannot subscribe to that statement. I do not believe that allowances granted to a traveling salesman to defray his railroad fare and hotel bills are "remuneration for his services." I think that the Commission was right when it deemed the automobile allowance *Page 710 as a sum awarded to Johnston to help him take care of the expenses of his automobile. But if the majority are right in deeming the monthly award of $78 as "remuneration for his (Johnston's) services," then they ought to be consistent and add that amount to all the other sums with which they credit Johnston. The total would, of course, be ridiculous. In that manner Johnston's "wages" would appear to be well in excess of $100 a month, although the chances are that his dealings in the paper earned him no net profit whatever. Johnston kept no records of any kind. As a witness, he had no idea as to the number of gallons of gasoline which he had purchased nor of the sums which he paid for it. Having no records, he was unable to state accurately the amounts which he had paid for tires, parts and oil. In fact, he did not swear that he made a net profit in selling The Journal. It is doubtful, to say the least, whether he made a net profit in the year and a half in which he dealt in The Journal. Therefore, to grant him compensation is unwarranted.
For the above reasons, I dissent.
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