Realty Mortgage & Sales Co. v. Oklahoma Employment Security Com.

OSBORN, J. This action was commenced on July 11, 1940, by the plaintiff, Realty Mortgage & Sales Company, a corporation, against W. A. Pat Murphy, Commissioner of Labor of the State of Oklahoma, and Carl B. Sebring, State Treasurer, to recover payments or contributions made to the Oklahoma Unemployment Compensation Fund from January 1, 1937, to December 31, 1938. The parties will be referred to as they appeared in trial court. The contributions so sought to be recovered were made under protest for certain real estate salesmen who were classified as employees of the plaintiff by the Labor Commissioner. On application of the Oklahoma Employment Security Commission, it was made a party defendant in lieu of the Commissioner of Labor. When the case came on for trial, both parties waived a jury, the cause was ■tried to the court, and judgment rendered denying the relief prayed for by the plaintiff. Plaintiff appeals. The essential facts are undisputed and were fully established by the evidence introduced in the trial court. From that evidence it appears that plaintiff is a real estate broker, having its own office and employing certain persons whose status is not questioned in this action. It is engaged in the real estate and loan business. In addition to its regular employees, it has associated with it certain salesmen whose status is in question here. All operate under a similar agreement, which is oral. The terms of the arrangement between plaintiff and the salesmen are substantially as follows: The salesmen are privileged to use the office of plaintiff, including- telephones and desks when not in use; they have access to the office listings of properties for sale, and at times are furnished with the names of prospective borrowers or purchasers. They are under no obligation to follow any lead given them by plaintiff, or to sell only properties listed with plaintiff, but are free to pursue any lead, or to sell any properties, which come to their attention. They have no office hours, make no reports, pay their own expenses, furnish their own cars, and work when they please. Information regarding properties, and forms to be executed when a sale or loan is effected, are furnished by plaintiff or may be procured elsewhere by the salesmen. Everything else is furnished by the salesmen. Sales meetings are held occasionally, but there is no obligation to attend them. When a contract for a sale is procured by a salesman it is usually taken in the name of plaintiff and delivered to plaintiff’s office, and plaintiff closes the deal and collects the commission. On loans the application is on forms furnished by the lender. The commissions are usually divided 50 per cent to the salesman and 50 per cent to plaintiff, and salesmen are paid their portion as soon as, but not until, the commission is collected. Salesmen may engage in other business if they wish; they may close deals if they wish; but on all sales plaintiff is entitled to its share of the commission collected. Either plaintiff or the salesmen may terminate their relationship at any time, and, in the event of termination, the salesman is entitled to his part of commissions earned by him and thereafter collected. Most of the salesmen were engaged in the real estate business before they associated themselves with plaintiff. Their only remuneration is their portion of commissions' earned by them. They have no drawing account or other advance of any kind. Plaintiff carries liability insurance on the salesmen’s cars to protect itself from any contingent liability, and includes them in its Workmen’s Compensation Insurance because of the requirement by the insurance company *310 that all persons connected with plaintiff’s business in any way be included in the policy. The parties agree that the plaintiff’s cause of action accrued while the Oklahoma Unemployment Compensation Law of 1936, Session Laws of 1936, Extra Sess. c. 52, p. 30, was in force, and that that act is the applicable law. Section 2 of the act states the public policy of the state to be the cushioning against involuntary unemployment by providing for an unemployment compensation fund to be used for the benefit of persons unemployed through no fault of their own. In the following sections it provides for payments of .benefits to those who are subject to involuntary unemployment computed upon a percentage of their full-time or part-time weekly wages, and provides for contributions from employers based on their annual pay rolls. It defines annual pay rolls as the total amount of wages payable by an employer for employment during a calendar year, defines an employing unit as an individual or any type of organization, including partnerships, corporations, and similar associations, having in its employ one or more individuals performing services for it within this state, and defines wages as “remuneration payable by employers for employment.” By an amendment, S. L. 1941, ch. (6) § 3 (f), p. 139, insurance agents and solicitors were expressly excluded. This amendment may be considered by us in arriving at the intent of the Legislature. Childers v. Paul, 177 Okla. 111, 57 P. 2d 872. Section 19 (g) (1) of said law defines employment as follows: “ ‘Employment’ means service including service in interstate commerce, performed for remuneration or under any contract of hire, written or oral, express or implied.” It defines remuneration as follows: “(o) ‘Remuneration’ means all compensation payable for personal services, including commission and bonuses and the cash value of all compensation, payable in any medium other than cash. Gratuities customarily received by an individual in the course of his employment from persons other than his employing unit shall be treated as remuneration, payable by his employing unit. The reasonable cash value compensation payable in any medium other than cash, and the reasonable amount of gratuities, shall be estimated and determined in accordance with rules prescribed by the Commissioner.” The decisive question presented is whether, under the definitions above set out, the salesmen are in the employment of plaintiff. If they are, plaintiff is liable for contributions in respect to them, and is not entitled to recover. If they are not, then plaintiff is entitled to recover such payments in this action. This is the first case in which the question involved has been before this court. Many decisions from other states are cited by counsel for the respective parties. They ate hopelessly conflicting. Plaintiff cites, among others, A. J. Meyer & Co. v. Unemployment Compensation Commission, 348 Mo. 147, 152 S. W. 2d 184 (real estate salesmen); Guaranty Mortgage Co. v. Bryant et al., 179 Tenn. 579, 168 S. W. 2d 182 (real estate salesmen); Washington Recorder Publishing Co. v. Ernest, Director, et al., 199 Wash. 176, 91 P. 2d 718, 124 A. L. R. 667 (newspaper delivery boys); Fuller Brush Co. v. Industrial Commission of Utah, 99 Utah, 97, 104 P. 2d 201, 129 A. L. R. 511 (brush salesmen), all holding that the parties therein involved were not “in employment”, or were excluded therefrom, under statutes similar to ours. Defendant cites Babb v. Huitt, Commissioner (Ga.) 21 S. E. 2d 663 (real estate salesmen); Rahoutis v. Unemployment Compensation Commission, 171 Ore. 93, 136 P. 2d 426 (real estate salesmen); Rozran v. Durkin, 381 Ill. 97, 45 N. E. 2d 180, 144 A. L. R. 735 (delivery service); Robert C. Buell & Co. v. Donaher, Commissioner et al., (Conn.) 18 Atl. 2d 697 (securities salesmen), and numerous other cases holding to the contrary. The divergent views expressed in these cases, and the *311 different theories upon which the decisions are predicated, render them of little value in the solution of the problem before us. Whether the statute applies only to those standing in the relation of master and servant, as held by some decisions, notably Meyer v. Unemployment Commission, supra, or includes relationships not embraced therein, as held in cases cited by defendants, need not be determined in the instant case, since it is apparent that the relationship of the salesmen and plaintiff was not that of master and servant. Analysis of the statute convinces us that the intent of the Legislature, in enacting the law, was to protect from the evils of unemployment those persons occupying the status of employees, as that term is commonly understood, that is, “persons who work for another for wages or salary.” Webster’s International Dictionary. The Legislature recognized that one might be an employee, although his compensation was paid in the form of commissions, bonuses, or even in gratuities. But it did not seek to protect those who performed services for another for which he was under no obligation to pay, or those who, while ostensibly or incidentally serving another, were in reality engaged in their own independent business. The term “in employment”, as used in the statute, when due consideration is given to the exclusionary amendment, above mentioned, necessarily implies a situation where one person is obligated, by an. express or implied agreement, to perform services for another, the performance of which must be the principal occupation of the person so obligated and his principal source of income, and an obligation on the person served to pay for such services. To extend its implications further would make a person who performs casual or incidental services for another, for remuneration or otherwise, the employee of such other. In the instant case there is no obligation on the salesmen to perform any service for plaintiff, nor is plaintiff obligated to pay them for any ■ service rendered. There is no contract of hire, express or implied. Rather the association of plaintiff and the salesmen is in the nature of a joint venture, in which each party to the arrangement makes certain contributions and performs certain services in order to produce a result mutually profitable to them. Plain-till contributes its offices,. office equipment and personnel, and such information as it may have, or such real estate listings as it may receive, and its efforts to close deals made by the salesmen, and to collect the commissions. The salesmen contribute their time and effort, the expense of seeking out prospective purchasers or borrowers and procuring from them contracts for the purchase of real estate or applications for loans. Each apparently considers that the arrangement is to their advantage. If it develops that it is not, either may terminate it at any time. Plaintiff is no more the employer of the salesmen than it is their employee. Neither is in the employment of the other. Each performs his function, and receives his remuneration, not from the other, but fiom a third party. Plaintiff collects the commissions, and turns over to the salesmen their proportion thereof, but in so doing it acts merely as a collecting agency pursuant to its agreement with the salesmen. If no commission is collected, the loss falls, not on plaintiff, but on both. Neither is performing the work of the other. Each is performing his allotted function in the joint enterprise. Therefore, the presumption stated in Ellis & Lewis v. Trimble, 182 Okla. 414, 78 P. 2d 312, does not apply. In Guaranty Mortgage Co. of Nashville v. Bryant, 179 Tenn. 579, 168 S. W. 2d 182, the Supreme Court of Tennessee, commenting on a similar situation, said: “The arrangement between the parties amounted to nothing more than that the salesmen were furnished free office space, telephone, etc., for which complainant received one-half the commission earned and actually collected on sales made by the salesmen, complainant closing the deals. Commissions were not paid by complainant, but by the parties *312 to the sale. Complainant did not pay, or promise to pay, any wages or commissions- to the salesmen. The situation was that the salesmen paid one-half of commissions earned by them to complainant, rather than that complainant was paying them commissions.” In Henry Broderick, Inc., v. Riley (Wash.) 157 P. 2d 954, the court, in passing upon a factual situation closely approaching the situation in this case, said: “In the instant case an association was formed between appellant and these brokers for the mutual benefit of both. What term the parties may have applied to the relationship is not binding upon us. Appellant contributed to such enterprise certain office facilities, and the brokers contributed their services. Each party, for his contribution to the enterprise, was to receive half of the commission coming in from the sale of real estate as the result of their joint efforts. The half of the commission to which the broker was entitled upon completion of the deal never was intended to and never did become the property of the appellant. It was the property of the broker from the time it was earned, and was so considered by both parties. Appellant never agreed to pay and never did pay the brokers any wages or remuneration as those terms are defined in the statute, and was not in fact an employer of these brokers under the act, nor was the contract here involved a contract of hire.” We consider the statements of the courts in the above cases applicable to the situation here involved and think that the courts in those cases correctly diagnosed the true relationship of the parties to an arrangement such as is presented in this case. We conclude that the salesmen whose status is questioned in this action are not in the employment of plaintiff and that plaintiff should recover its contributions to the unemployment fund in respect of such salesmen. Defendants assert that the evidence sustains the finding of the trial court, and that therefore the finding is conclusive, citing Lowe v. Hickory, 176 Okla. 426, 55 P. 2d 769, and other cases. We do not agree. In the instant case the evidence is undisputed, and therefore the question of the relationship of the parties is a question of law. Blackwell Cheese Co. v. Pedigo, 186 Okla. 159, 96 P. 2d 1043. Reversed, with instructions to render judgment for plaintiff. GIBSON, C.J., and BAYLESS, WELCH, DAVISON, and ARNOLD, JJ., concur. HURST, V.C.J., and RILEY, J., dissent.