State ex rel. Unemployment Compensation Commission v. National Life Insurance

Sea well, J.

The question presented to us for decision is whether the National Life Insurance Company, the appellant, is, upon the record in the case, liable for unemployment compensation contributions demanded by the plaintiff. That question, however, is resolved into several minor inquiries which require attention.

The appellant concedes that unless the case at bar can be distinguished from Unemployment Compensation Commission v. Jefferson Standard Life Ins. Co., 215 N. C., 479, 2 S. E. (2d), 584, the decision of the Commission must be upheld or the cited case must be overruled before relief can be extended to it. While it contends that there are factual differences which distinguish the Jefferson Standard case from the case at bar, the main argument is addressed to the propriety of overruling that case, reviving the controversy over coverage of the act and the meaning of taxable employment within its intent. The questions presented are identical, the arguments are the same. The only difference *586seems to be in the more formidable array of definitions and illustrations collected on the subject. These are focused on the proposition that “employer and employee” and “master and servant” are interchangeable terms, and that the Unemployment Compensation Act is confined to the strict master-servant relation,- as understood at common law, in its demands for contributions.

The fact that the State has engaged in a cooperative scheme with the Federal Government does not necessarily imply strict uniformity in the incidence of the tax levied by the State and Federal laws. Conformity in that respect is not a condition of approval of the State law under Title III, section 303, of the Federal Act. The so-called “draft bills” present the minimum of requirement for such approval, but it is made clear that the several states are under no compulsion as to “just what type of legislation it desires and how it shall be drafted.” In fact, under the decision of the highest Federal Court, the State was not coerced or compelled to pass any law at all, but presumably was induced to do so both because of a recognized social necessity, the offer of the Government of a gift in aid of the enterprise, and the advantage of credit on payment of the Federal taxes. Steward Machine Co. v. Davis, 301 U. S., 548; Carmichael v. Southern Oil Co., 301 U. S., 495. The Federal contribution is in the nature of a gift in aid which might as well have come from any other source of taxation and, correlatively, the employment tax collected by the Federal Government might have been expended for any other legitimate Federal purpose. Considering the social security intended to be afforded by the State and Federal laws in their joint adventure, these laws are sufficiently coordinated, provided there is within the State sufficient reciprocity between the employment upon which the tax is levied and those who receive its benfits. In the construction which the Court has given the State Unemployment Compensation Law, this balance is not disturbed.

Once having entered the field of social security of this kind, the State legislature was not required to conform in every respect to the national ideology on the subject as expressed in the Acts of Congress.

The exhaustive opinion in Unemployment Compensation Commission v. Jefferson Standard Life Ins. Co., supra, commits this Court to the view that our Unemployment Compensation Act, which is similar to those of the majority of the states where this form of social security obtains, does not confine taxable employment to the relation of master and servant. “The scope and purpose of the present act are exceptional in breadth. The draftsmanship of the definition section, which gives flesh and sinew to the whole, shows a careful, considered and deliberate purpose to leap many legal barriers which would halt less ambitious enactments. As far as language will permit it, the act evinces a studied *587effort to sweep beyond and to include, by re-definition, many individuals who would have been otherwise excluded from the benefits of the act by the former concepts of master and servant and principal and agent as recognized at common law.” Unemployment Compensation Commission v. Jefferson Standard Life Ins. Co., supra; Industrial Commission of Colorado v. Northwestern Mutual Life Ins. Co., 88 P. (2d), 560; McDermott v. State, 82 P. (2d), 568; Globe Grain & Milling Co. v. Industrial Commission, 91 P. (2d), 512; In re Mid-American Co., 31 Fed. Supp., 601 (citing Jefferson Standard case, supra) ; National Tunnel & Mines Co. v. The Industrial Commission of Utah, 102 P. (2d), 508; In the matter of Schomp and Board of Review v. The Fuller Brush Company (N. J.), 12 Atl. (2d), 702; Equitable Life Insurance Company of Iowa v. Industrial Commission of Colorado, 95 P. (2d), 4.

How much wider may be its scope is a matter to be determined in the particular case.

We think it is self-evident that the Legislature, for the purpose of levying the tax, may determine what shall constitute employment subject to taxation, without regard to existing definitions or categories. Unemployment Compensation Commission v. Jefferson Standard Life Ins. Co., supra; Industrial Commission of Colorado v. Northwestern Mutual Life Ins. Co., supra; Supply Co. v. Maxwell, 212 N. C., 624, 626, 194 S. E., 117; Fox v. Standard Oil Co., 294 U. S., 87. It may do this by direct definition or, perhaps with greater exactness, by providing a reasonable administrational procedure by which such employment may be defined or ascertained. In its opinion above cited this Court has expressed the opinion that such provision is found in the section devoted to definitions, as section 19 (g) (6) (A), (B), and (C).

This provision is not regarded as a mere method of distinguishing between'the master-servant-relation and independent contract, on the theory that choice must be confined to one or the other of these alternatives, but taken with the other subdivisions of the section, particularly 19 (g), as defining or circumscribing the employment with respect to which contribution is demanded. As thus ascertained, employment will include the master-servant relation and frequently more. This should occasion no surprise. It is the privilege of the Legislature, by a more particular expression of its policy than may be found in the preamble, to find room and reason for extending the relief which the law is intended to afford into this field.

On facts similar in significance to those determining the issue in Unemployment Compensation Commission v. Jefferson Standard Life Ins. Co., supra, the application of the statutory method in the case at bar resulted in the inclusion of appellant as employer with respect to its state or general agent and the local agents appointed under the type of *588contract exhibited in the record. We think the law was properly applied and cannot find that the Commission acted unreasonably or arbitrarily or without giving proper consideration to the evidence. There is no exception to the findings of fact.

It has not been our purpose to elaborate or enlarge on the opinion in Unemployment Compensation Commission v. Jefferson Standard Life Ins. Co., supra, in which the Court decided the points at issue in the case at bar contrarily to the view contended for by appellant. We only restate its conclusions in view of the renewed assault. Many courts have relied on its authority and adopted its views. We see no reason to overrule a decision so carefully considered and so recently made.

2. The appellant points to certain facts in the record upon which it is thought the Jefferson Standard case, supra, should be distinguished from the case at bar, and questions its applicability. Mainly, the contention is that appellant operates under the general agency plan, while the Jefferson Standard Life Insurance Company, operates under the managerial plan, under which closer connection between the company and its agents is maintained. The difference seems to us unsubstantial in view of the facts.

The licenses of State Agents are procured or paid for by the company. The State Agent, Wimbish, under the findings of the Commission — justified as we think by the evidence- — is an employee within the meaning of the statute — not an independent contractor — and his power to appoint sub-agents is referable to this relation. Such a position in the organization would scarcely serve to insulate the local agents from some measure of control on the part of the superior. Looking at the contracts and the set-up under them, and the functions performed by the local agents which render service in the production of business, there is seen a substantial line of authority reaching back to the company, with more than a suggestion of the important element of control in certain aspects of the service. Effective control over the personnel of local agencies is retained. The company approves or disapproves, as it will, of the appointment of these local agents. Also, the manner in which they conduct the business is of concern to the Insurance Company. In dealing with the public they are required to conform to the manual of instructions issued by the company. The nature of the service rendered by these agents is hardly consistent with the ordinary conception of independent contract.

Not resting decision alone upon this point, but referring to the relations which are ordinarily understood to exist between an insurance company and the public, necessarily affected by the activities and behavior of its agents, doubtless it seemed to the Commission inconsistent with the commendable restrictions in that regard appearing in the evidence that an insurance company, the nature of whose business with the public *589involves relations of trust and confidence, should view itself as operating on the principle of independent contract — both powerless and indifferent with regard to the details of service, or the manner in which the local “agent” got the business. On the contrary, the contracts and the manner in which performance is required show that the Company had a proper conception of its duty to the public and undertook to maintain the high standard of ethical service required in discharging it- by retaining adequate control over these details. Such control is evidenced with respect to these persons who have been found to be “soliciting agents and general agents engaged in the usual trade, occupation, or business of the National Life Insurance Company” without exception to the finding.

There are no exceptions to the findings of fact by the Commission.' Section 6 (i); section 11 (m) (n). In our opinion, they are supported by the evidence, and the conclusions of law based thereupon are justified.

The judgment of the court below sustaining them is

Affirmed.