No. 12530
I N THE SUPREME C U T O THE STATE OF M N A A
OR F OTN
1973
PAT GRIFFIN COMPANY,
G S M T SERVICE STATIONS,
AA A
P l a i n t i f f s and Respondents,
E P O M N SECURITY COMMISSION
ML Y E T
O T E STATE O M N A A e t a l e ,
F H F OTN
Defendants and A p p e l l a n t s .
Appeal from: D i s t r i c t Court of t h e Second J u d i c i a l D i s t r i c t ,
Honorable John B , McClernan, Judge p r e s i d i n g .
Counsel of Record :
F o r Appellants :
Moody B r i c k e t t argued, Helena, Montana
For Respondents:
Poore, McKenzie and Roth, B u t t e , Montana
Urban L. Roth argued, B u t t e , Montana
Donald C. Robinson argued, B u t t e , Montana
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Submitted: November 30, 1973
Mr. Chief Justice James T. Harrison delivered the opinion of
the Court.
The defendant Employment Security Commission (now
designated Employment Security Division, Montana State Depart-
ment of Labor and Industry), made and entered a decision holding
that individuals operating Gasamat stations were in fact employees
of the plaintiff Pat Griffin Company and that Pat Griffin Company
was liable for unemployment tax contributions.
Thereafter this action was filed by plaintiff Pat Griffin
Company in the second judicial district and as a result the deci-
sion of the Employment Security Commission was reversed. This
appeal from the ruling of the district court was taken by the
Employment Security Commission. Hereafter plaintiff will be re-
ferred to as Gasamat and defendant as the commission.
From the record it appears that Gasamat has its head-
quarters in Fort Collins, Colorado, and is in the retail gasoline
business, operating self-service gasoline stations, with outlets
in Montana at Billings, Great Falls, Helena, Butte, Missoula and
Bozeman. The customer at a Gasamat station serves himself through
token operated pumps for which the customer obtains tokens or cbange
from the "change window" at the office-residence of the operator.
Gasamat owns the service stations, pumps, storage tanks and build-
ings involved at each location. Each station location consists
of two buildings, an office-living quarters and an oil warehouse.
The Gasamat stations are leased by individual operators
under a lease agreement. The operator pays $90.00 per month for
the property. This amount is deducted from his commission. Ten
days notice is required to terminate the lease. The lease agree-
ment also provides that the property cannot be sublet without the
permission of Gasamat and " * * * no rights and privileges as
herein granted to lessee shall be sold, transferred or assigned
without first obtaining the written consent of lessor. * * *"
Gasamat insures the property, insurance covering both
the property itself and public liability. The personal property
owned by the operator is insured by the operator.
The operator sells the products under a consignment
contract made with Gasamat. Gasamat provides the gasoline to the
station. The operator is not required to pay for the gasoline.
He derives a commission on sale of gasoline of 3/4 of a cent per
gallon on the first 4 0 , 0 0 0 gallons sold and 1/2 cent thereafter
per month. When gasoline is low, the operator calls a number
supplied by Gasamat. Gasoline is then delivered by common carrier,
and is charged to Gasamat. The operator pays nothing. Title to
the gasoline remains in Gasamat. The tax on the gasoline is paid
by Gasamat.
Gasamat offers two brands of oil to the operators, but the
operators may buy other brands of oil from other oil companies.
An oil warehouse is located on the station premises which houses
the oil products. If the operator removes any oil from the ware-
house which is from Gasamat, he must pay that company for it at
that time and include the purchase of that oil in his next report,
together with cash money from the purchase. The operator is under
no obligation to buy oil products from Gasamat.
The operator is required to make daily deposits at a local
bank account in the name of Gasamat. He is required to make re-
ports to Gasamat three times a week. The reports would include
such things as the amount of gas that has been delivered to the
station, the amount of sales and the amount of supplies on hand.
Gasamat provides and pays for a bond for the operator.
Gasamat pays for radio advertising, but the operator is
free to advertise in other ways at his expense. The telephone
and electricity are paid for by Gasamat. Heat is paid for by the
operator. Gasamat pays for the major repairs to the property.
Minor repairs are made by the operator.
The operator reports his own federal income tax and
pays and withholds his own tax. He also pays his own social
security and workmen's compensation taxes.
Representatives of Gasamat visit the premises every
four or five weeks to assist the operator in any way they can and
" * * * to help him sell gasoline and oil." The representatives
write reports following visits, which are filed with Gasamat
headquarters in Colorado.
The operator can sell other retail products which he
choosest0 carry, and he is free to miss work (or close) any day
he chases. The operator is free to hire relief personnel.
The question presented for review is whether there is
substantial evidence to support the Commission's findings that
individuals engaged by Gasamat are employees for the purpose of
determining whether Gasamat is liable for the payment of unemploy-
ment compensation taxes.
Determinative of the issue presented is section 87-148(j)(5),
R.C.M. 1947, which provides:
"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 satisfac-
tion of the commission 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 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 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."
The term "wages" is defined in section 87-149 (c),
R.C.M. 1947:
"'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. * * * "
In St. Regis Paper Co. v. U.C.C. of Mont., 157 Mont.
548, 550, 487 P.2d 524, a case involving an operator-driver, this
Court in considering section 87-148(j)(5), R.C.M. 1947, said:
"The above cited so-called 'ABC Test' is the
statute to determine whether an employer-employee
relationship exists for unemployment tax purposes.
The statute provides that all three of the stated
conditions must exist, or service performed will
be deemed to be employment. The statute must be
reasonably applied."
In addition, in our analysis of the question and statute we said
in St. Regis at 552:
" * * * We feel that whether a person performing
services is an employer (sic) or an independent
contractor is the question before us, and statutes
used as guides in making such determination must not
be distorted to allow persons who are truly independ-
ent in their operation to be held employees merely
for tax purposes and resulting benefits derived from
an employer-employee relationship."
The question before us in St. Regis is the question before
us here, that is, whether the operators of Gasamatsin the perform-
ance of services are employees or independent contractors. In
St. Regis we concluded that by reason of the written contract
between the employer and the operator-driver and the uncontro-
verted fact that the operator-driver was an independent contractor,
the conditions of the "ABC Test" were satisfied.
In their briefs both Gasamat and the Commission have
cited numerous authority in support of their respective positions.
There has been much discussion and illustration of the facts of
each of the cited cases. It is the view of this Court that the
facts of the instant case establish the relationship of employer-
employee between Gasamat and its operators for purposes of the
Montana Unemployment Compensation Law.
While section 87-148(j) (5), R.C.M. 1947 is used as a
guide in the determination of the relationship between an employer
and an individual performing services, the well-established test
in determining whether an individual is an employee or an inde-
pendent contractor is also a guide to be used. As we did in
St. Regis, we here reiterate this test as expressed in Shope v.
City of Billings, 85 Mont. 302, 306, 278 P. 826:
"'An independent contractor is one who renders
service in the course of an occupation, and
represents the will of his employer only as the
result of his work, and not as to the means
whereby it is accomplished, and is usually paid
for the job.' (And see Nayrnan v. Pincus, 82 Mont.
467, 267 Pac. 805.)
"The vital test in determining whether a person
employed to do a certain piece of work is a
contractor or a mere servant, is the control over
the work which is reserved by the employer. Stated
as a general proposition, if the contractor is under
the control of the employer he is a servant; if not
under such control, he is an independent contractor."
The first provision of the "ABC Test" requires that the
individual be free from control, "both under his contract and
in fact". An operator of Gasamat does not have freedom of con-
trol over the means, methods and details of his business when he
is required to make three reports weekly and daily bank deposits
to Gasamat accounts. Particularly, the operator is not truly
independent when he is required to order gasoline from a distri-
butor named by Gasamat and where the total control of the gasoline
lies with Gasamat.
Gasamat is in the retail gasoline business and it exer-
cises control over its operators as to the means of the sale of
gasoline and as to the results of the operator's work. Therefore,
the first provision of the "ABC Test" has not been met.
Mr. Justice Castles dissenting:
I d i s s e n t , b u t no u s e f u l p u r p o s e would be s e r v e d by a
d i s c u s s i o n of whether o r n o t Gasomat " c o n t r o l s " i t s c o n t r a c t
o p e r a t o r s t o such a d e g r e e t h a t t h e y become s e r v a n t s and t h u s
employees. I would h o l d them t o be what t h e y a g r e e t o be--
independent c o n t r a c t o r s .