State Ex Rel. Mulhausen v. Superior Court

Blake, J. The main issue presented on this appeal is identical with that decided by this court in Mulhausen v. Bates, 9 Wn. (2d) 264, 114 P. (2d) 995: whether appellant is an employer in contemplation of the unemployment compensation act (Rem. Rev. Stat. (Sup.), §§ 9998-101, 9998-123 [P. C. §§ 6233-301, 6233-323]), of certain individuals serving him in the sale of oleomargarine in this state. ] Appellant, doing business as R. W. Mulhausen Company, is a distributor of oleomargarine. His principal place of business is in Portland, Oregon. His principal field of distribution is in the state of Washington. At the time the unemployment compensation act became effective in 1937, and since, he. has had numerous agents, or distributors (eight or more persons), located at various points in this state, who have been engaged in taking orders for, and making delivery of, oleomargarine. These persons did not handle oleomargarine exclusively. They also handled other food products for other manufacturers or producers. They paid their own expenses and performed services for Mulhausen as and when their own convenience was best subserved. For their services, they were compensated by a commission based upon the purchase price of the oleomargarine sold. The territory in which they worked was defined only in a general way. In getting oleomargarine to the ultimate consumers, these agents, or distributors, would make arrangements with retail grocers to act as “grocer agents.” The latter would take orders from the ultimate consumers on order blanks furnished by Mulhausen. The distributors would pick up these *813 orders with a “deposit” from the grocer agents. This deposit was in an amount of the purchase price to the ultimate consumer, less a commission held out for himself by the grocer agent. The distributor would transmit the orders and deposits (less a commission held out for himself) to Mulhausen at Portland. Mulhausen would fill the orders in separate parcels with the name of the ultimate consumer on each. A number of such parcels would usually be shipped at the same time — consigned either to the distributor or to the R. W. Mulhausen Company as consignee. In either case, the distributor would receive the consignment and deliver the parcels to the grocer agents to whom the ultimate consumers had given their orders. The latter received the oleomargarine from the grocer agents in the “original package” shipped by Mulhausen from Portland. This complex method of distribution was designed to, maintain the integrity of the transaction as a shipment in interstate commerce. The purpose was to escape the payment of the excise tax of fifteen cents a pound upon the sale of butter substitutes under the Laws of 1931, chapter 23, p. 77, § 2 (Rem. Rev. Stat., § 8358-2 [P. C. § 1880-2]). The necessity for maintaining the interstate character of the shipments and the consequences of failure to do so is best told by Mulhausen himself. He testified: “A. We did get out order forms and when any agents started handling oleomargarine in any capacity or in any territory, we furnished him these order forms to use so that the orders could come in and that was for the purpose, of course, of keeping the business in accordance with the rules of the interstate commerce shipments . . . ” Q. I will ask you . . . if it is not a fact that Regulation 9 of the Bureau of Internal Revenue specifies in some considerable detail the manner in which oleomargarine may be handled without incurring a tax liability to the handlers, save and except the original seller. A. It does. There is a possible chance of the agent handling oleomargarine in the territory but if we don’t keep our orders in shape they may be questioned and fined by the Internal Revenue Department “Q. What has been the experience of your company in respect to merchandise, if any, which was returned or per *814 haps held for a period of time by the representatives? . . . A. Well . . . we went over that very carefully with the Internal Revenue Department and in cases where an agent . . . failed in any way to deliver to a consumer, that merchandise has been returned to our office at our expense . . . For the purpose of protection on our interstate commerce requirements, it is our merchandise until it reaches the ultimate consumer. Q. And you so consider it? A. Yes. Q. Then the money collected, whether picked up by [from] the ultimate consumer or whether it is picked up from the grocer agent, that money represents the price that is to be paid to you, it is considered your money? A. It is considered our money, yes, the money that is to be for us is considered our money. . . . “Q. If that representative had walked off with that money and had not accounted for it, he would be taking your money, would he not? A. I think I would be the loser, naturally. Q. It was not, then, a matter of debit and credit on account, it was a matter of collecting your money for you for the merchandise that was shipped? A. Well, probably you are right there.” In Mulhausen v. Bates, supra, we held that one Farmer, who had been employed by Mulhausen under circumstances and conditions essentially the same as the agent distributors in this case, was, after being discharged, entitled to unemployment compensation. Such holding was necessarily predicated upon the assumption that the commissioner’s findings that Mulhausen was an “employer,” as defined by Rem. Rev. Stat. (Sup.), § 9998-119 [P. C. § 6233-317] (f) (1) (now amended by Rem. Supp. 1943), and that the service rendered by Farmer constituted “employment,” in contemplation of Rem. Rev. Stat. (Sup.), § 9998-119 (g) (5) (Laws of 1937, chapter 162, p. 609, §19), were supported by substantial evidence; otherwise, Farmer would not have been entitled to unemployment compensation. In this case, the issue is the same as in that. It arises, however, upon Mulhausen’s appeal from a notice of assessment made by the commissioner for contributions to the unemployment compensation fund. The assessment was in the amount of $2,007.96. It was based .on commissions paid agent distributors, as shown by Mulhausen’s own rec *815 ords, and covered the period from March 16, 1937, the effective date of the unemployment compensation act, to September 30, 1941. At the hearing before the appeal tribunal, evidence was adduced by Mulhausen showing that the assessment was based on remuneration paid to one person who operated with him (Mulhausen) on a partnership basis and to certain others who either were not under contract with him or who resided in Idaho and operated exclusively in that state. The appeal tribunal accordingly reduced the assessment in so far as it was based on remuneration to these persons; so reduced, the assessment stands at $1,869.80. Mulhausen appealed from the decision to the superior court for Thurston county, which affirmed the decision of the appeal tribunal and entered judgment for $1,869.80. If the statutory definitions of employer and employment are accepted at face value, it is clear that Mulhausen is liable for contributions to the unemployment compensation fund in the amount found due by the appeal tribunal — $i,869.80. The appellant contends, however, that the relationship of employer and employee, as defined by the statute, was circumscribed and limited by this court in the decision of the case of Washington Recorder Pub. Co. v. Ernst, 199 Wash. 176, 91 P. (2d) 718, to the common-law concepts attending the relationship of master and servant. It is quite true that language was used in that decision upon which such contention may well be made; however, the language used was out of harmony with the interpretation of the statutory definition of employer and employment as laid down by this court in the prior case of McDermott v. State, 196 Wash. 261, 82 P. (2d) 568. In that case, we expressly stated that the statutory definitions embraced relationships which were outside of and beyond the common-law concepts of the relationship of master and servant. In Mulhausen v. Bates, supra, we reverted to the statutory definitions of employer and employment as interpreted in McDermott v. State, supra. Since then, we have accepted the statutory definitions at their face value in a number of cases. In re Foy, 10 Wn. (2d) 317, 116 P. (2d) 545; Sound *816 Cities Gas & Oil Co. v. Ryan, 13 Wn. (2d) 457, 125 P. (2d) 246; In re Hillman Inv. Co., 15 Wn. (2d) 452, 131 P. (2d) 160; Unemployment Compensation Department v. Hunt, 17 Wn. (2d) 228, 135 P. (2d) 89. In the case last cited, we said, p. 236: “We have upon a number of occasions held that our unemployment compensation act does not confine taxable employment to the relationship of master and servant, but brings within its purview many individuals who would otherwise have been excluded under common-law concepts of master and servant, or principal and agent.” In view of these decisions, it is apparent that the court is not committed to the doctrine of the Recorder case in so far as it would limit the relationship of employer and employee, as defined in the unemployment compensation act, within the bounds of common-law concepts relating to master and servant. In so far as the decision in the Recorder case does so limit the statutory definitions of employer and employee, the case should be overruled. The appellant challenges the power of the trial court to enter judgment for the amount of the assessment ($1,869.80) as found due by the appeal tribunal. Among other provisions, Rem. Rev. Stat. (Sup.), § 9998-106 (i) (Laws of 1939, chapter 214, p. 829, § 4 (i)), contains the following: “If the court shall determine that the commissioner has acted within his power and has correctly construed the law, the decision of the commissioner shall be confirmed; We think the judgment of the trial court amounts to nothing more than a confirmation of the decision of the commissioner. For the decision of the appeal tribunal is, in contemplation of the statute, the decision of the commissioner. Rem. Supp. 1941, § 9998-114c (Laws of 1941, chapter 253, p. 906, § 11), provides: “At any time after the Commissioner shall find that any contribution or the interest thereon have become delinquent, the Commissioner may issue a notice of assessment specifying the amount due, which notice of assessment shall *817 be served upon the delinquent employer in the manner prescribed for the service of summons in a civil action, except that if the employer cannot be found within the state, said notice will be deemed served when mailed to the delinquent employer at his last known address by registered mail. If the amount so assessed is not paid within ten days after such service or mailing of said notice, the Commissioner or his duly authorized representative shall collect the amount stated in said assessment by the distraint, seizure and sale of the property, goods, chattels and effects of said delinquent employer. There shall be exempt from distraint and sale under this section such goods and property as are exempt from execution under the laws of this state.” The judgment of the court adds nothing to the power conferred by the statute upon the commissioner to assess and collect the amount due. Appellant contends, however, that the procedure provided for in the above-quoted statute is a denial of due process of law in so far, at least, as it affects the contributions sought to be collected under the assessment made by the commissioner in this instance. This contention is grounded upon the statutory method of collection provided for in the original act — which was by a civil action. The contention is untenable. The contributions required to be paid by employers into the unemployment compensation fund are excise taxes. Bates v. McLeod, 11 Wn. (2d) 648, 120 P. (2d) 472; Steward Mach. Co. v. Davis, 301 U. S. 548, 81 L. Ed. 1279, 57 S. Ct. 883, 109 A. L. R. 1293. It is inherent in the exercise of sovereign power to require taxes to be paid under summary process. Miller v. Henderson, 50 Wash. 200, 96 Pac. 1052; Scottish Union & Nat. Ins. Co. v. Bowland, 196 U. S. 611, 49 L. Ed. 619, 25 S. Ct. 345. The taxpayer has no vested right in any particular process: If, at some stage of the proceedings, he is given notice and has an opportunity to be heard, and if the procedure established by existing law is substantially followed in assessment and collection, the requirements of the due process clause of the constitution are satisfied. 1 Cooley on Taxation (4th ed.) 329, § 143; 3 Cooley on Taxation (4th ed.) 2263, 2264, *818 §§ 1118, 1119; Reese v. Thurston County, 154 Wash. 617, 283 Pac. 170; Miller v. Henderson, supra; Scottish Union & Nat. Ins. Co. v. Bowland, supra; Palmer v. McMahon, 133 U. S. 660, 33 L. Ed. 772, 10 S. Ct. 324; McMillen v. Anderson, 95 U. S. 37, 24 L. Ed. 335. In the case last cited, it was said, p. 41: “The mode of assessing taxes in the States by the Federal government, and by all governments, is necessarily summary, that it may be speedy and effectual. By summary is not meant arbitrary, or unequal, or illegal. It must, under our Constitution, be lawfully done. “But that does not mean, nor does the phrase ‘due process of law’ mean, by a judicial proceeding. The nation from whom we inherit the phrase ‘due process of law’ has never relied upon the courts of justice for the collection of her taxes, though she passed through a successful revolution in resistance to unlawful taxation. We need not here go into the literature of that constitutional provision, because in any view that can be taken of it the statute under consideration does not violate it. It enacts that, when any person shall fail to refuse or pay his license tax, the collector shall give ten days’ written or printed notice to the delinquent requiring its payment; and the manner of giving this notice is fully prescribed. If at the expiration of this time the license ‘be not fully paid, the tax-collector may, without judicial formality, proceed to seize and sell, after ten days’ advertisement, the property’ of the delinquent, or so much as may be necessary to pay the tax and costs.” And in Palmer v. McMahon, supra, the court said, p. 669: “The power to tax belongs exclusively to the legislative branch of the government, and when the law provides for a mode of confirming or contesting the charge imposed, with such notice to the person as is appropriate to the nature of the case, the assessment cannot be said to deprive the owner of his property without due process of law.” Appellant’s contention that the judgment — merely confirming, as it does, the action of the commissioner — violates the due process clause of the constitution, is without substance. The judgment is affirmed. Mallery and Grady, JJ., concur.