Opinion
November 27, 1964 —
January 5, 1965.
APPEAL from a judgment of the circuit court for Dane county: EDWIN M. WILKIE, Circuit Judge. Affirmed.
For the appellant there were briefs by Spohn, Ross, Stevens Pick, and oral argument by Frank A. Ross, Sr., and Thomas D. Zilavy, all of Madison.
For the respondent Industrial Commission there was a brief by Arnold J. Spencer, chief counsel of the unemployment compensation division, and Max J. Peltin of Madison, and oral argument by Mr. Spencer.
Action to review a decision of the Industrial Commission that Jane E. Wessels was an employee of National Guardian Life Insurance Company and is accordingly eligible for unemployment compensation benefits.
Mrs. Wessels was a secretary in the office of Peter J. Ciulla, a "General Agent" of the company. Ciulla discharged her as of September 15, 1961, and she applied for benefits as an employee of the company. The company denied she was an employee of the company. A commission deputy determined that Ciulla and his predecessor Beebe were employees of the company and that Mrs. Wessels was therefore an employee of the company.
The company appealed and an appeal tribunal, after hearing, made findings of fact and affirmed. On petition for review, the commission modified one sentence in the findings and affirmed. Judgment confirming the decision was entered May 19, 1964, and the company appealed.
The findings of the appeal tribunal, as modified, were in part, as follows:
". . . The Insurance Company sells life insurance through a general agency system under which it has appointed some twenty or more individuals as `General Agents' in several mid-western states. The two General Agents involved herein, and who are hereinafter referred to as `General Agent B' [Beebe] and `General Agent C', [Ciulla] worked under a written contract designated as a `General Agent's Contract'. The contract was of indefinite duration and continued during the will and pleasure of the parties and was terminable at the will of either party upon the giving of at least thirty days notice.
"The claimant involved herein worked as a secretary and office girl for both `General Agents B and C' who were not employers subject to the contribution provisions of the unemployment compensation act. She was hired by `General Agent B' effective September 15, 1960, and continued to work under his direction and control until January 1, 1961, when `General Agent C' was appointed by the employer upon the resignation of `General Agent B'. She continued to work under the direction and control of `General Agent C' through September 15, 1961 (week 37), the effective date of her discharge.
". . .
"The written contract entered into between `General Agents B C' and the Insurance Company prescribes the duties and the territory involved, as follows:
"` Section One (a) The Company hereby appoints the second party as General Agent:
"`(1) To procure applications for (Insurance Company) policies on the lives of persons acceptable to the Company and to collect first premiums on such policies and remit same to the Company; all subject to the underwriting practices of the Company and the provisions hereof, and
"`(2) To appoint, train and supervise agents in the territory described in Paragraph (b) of this Section, but no contract with any such agent shall be complete or effective until approved and executed by the Company as a third party thereto. Subject to the terms of the respective contracts concerned and approved by the Company, the General Agent may cancel and terminate agency contracts of his agents.
"`(b) This appointment is not exclusive and is limited to Madison, Wisconsin and vicinity . . . .'
"The contract provides for the payment to the General Agent of an agency expense allowance by the Insurance Company as well as a schedule of commissions to be paid on premiums collected for the Company and on policies sold by the General Agent.
"`General Agent B' was under written contract with the Insurance Company from May 26, 1952 to January 1, 1961. Beginning with the effective date of his contract his office was located in a building that was adjacent to and owned by the Insurance Company. He was not required to pay any rent, heat, utility or maintenance charges, all of which were paid by the Insurance Company. Office equipment, including several desks, desk chairs, other chairs, tables, typewriter and a filing cabinet were owned by the Insurance Company on which city personal property taxes were paid by the Insurance Company. The secretary and office girl, who preceded the claimant in employment, was paid $240 a month by payroll check sent directly to her by the Insurance Company.
"Sometime prior to April 1, 1959, the Insurance Company informed `General Agent B' that the office quarters he was then using were needed for its own use and that he should secure other office space. He looked for other office quarters and discussed the matter with officials of the Insurance Company, including the President thereof, and secured approval as to the new location and the rental to be paid. The Insurance Company agreed to pay $500 a month rent on the new quarters and its President and Secretary signed the lease as principals representing the Insurance Company as lessee. The lease was for a two year period extending through March 31, 1961.
"The claimant was interviewed for employment as agency secretary and office girl by `General Agent B'. `General Agent B' sought the advice and counsel of the Insurance Company as to hiring the claimant and she was interviewed by the President of the Insurance Company, Subsequently, the claimant was hired at a salary of $325 a month and an agent or agents of the Insurance Company informed `General Agent B' that the Insurance Company would pay $300 a month toward the salary and that `General Agent B' would have to pay the additional $25 each month out of the monthly expense allowance given to him by the Insurance Company. This proposed arrangement was abandoned before it was ever instituted and it was decided that `General Agent B' should pay the claimant's entire salary directly and the Insurance Company would increase the monthly expense allowance to `General Agent B' by $300 to cover payment of the claimant's monthly salary. The claimant worked in the main Insurance Company office for about the first week of her employment to be trained for work in `General Agent B's' office.
"From September 15, 1960, which was the claimant's hiring date, to January 1, 1961, the claimant worked under the control and direction of `General Agent B' who paid her salary of $325 a month from a general monthly expense allowance given to him by the Insurance Company. Effective January 1, 1961, `General Agent B' terminated his General Agency Contract, but remained as an insurance agent in the agency office, and `General Agent C' then supervised and controlled claimant's services in the agency office and paid her $325 monthly salary from a general monthly expense allowance from the Insurance Company.
"When `General Agent C' became a General Agent effective January 1, 1961, the Insurance Company agreed to give him $440 a month as an expense allowance which was used by him to pay for claimant's services and other incidental expenses such as postage, telephone, pencils and similar items.
"Before `General Agent C' became a General Agent he had been employed by the Insurance Company as a supervisor on a part time basis on a monthly salary and also as an insurance agent on a commission basis selling life insurance policies issued by the Insurance Company. Both before and after becoming `General Agent C' he had discussed the matter of securing new office quarters with officials of the Insurance Company and had secured approval for a contemplated move to quarters in a new building. It appeared, furthermore, that the President of the Insurance Company was the one who originally suggested to `General Agent C' that new office quarters be obtained. `General Agent C' would not have moved to new office quarters without Insurance Company approval. Sometime in January 1961, `General Agent C' was signatory to a lease, as lessee for a five year period, on new office quarters effective April 1, 1961, at a monthly rental of $500, the same monthly rental that had been paid on the old office quarters. However, the monthly rental payments on the old office quarters had been paid directly to the landlord each month by check from the Insurance Company. On these new quarters `General Agent C' agreed to pay $500 each month to the landlord but before becoming signatory to the lease he had secured a commitment from authorized representatives of the Insurance Company that his monthly expense allowance effective April 1, 1961, would be increased from $440 to $940, an increase of $500 a month, a sum sufficient to cover the monthly rental charge on the new office quarters.
"When `General Agent C' moved his office quarters from the old location to the new location he was reimbursed by the Insurance Company for moving expenses incurred by him. This reimbursement for moving expenses was in addition to the regular monthly expense allowance of $940. In addition thereto some pieces of additional office furniture were provided by the Insurance Company concurrently with the move to new office quarters.
"On or about July 31, 1961 (week 31), `General Agent C' notified the claimant that her services were being terminated at the end of thirty days and that a consideration for terminating her employment was her high wage and that it was contemplated that a less experienced person with lower salary would be sought in her place. Because of some personal consideration the claimant wanted to have continued employment for a consecutive one-year period and, when this was denied by `General Agent C', she contacted the President of the Insurance Company to secure his help in assuring that she would remain employed until September 15, 1961 (week 37) which was one year after having been hired. The President of the Insurance Company informed her that he would see to it that she would continue in employment for at least a year. She then continued to work as secretary and office girl to the end of the one year period, until September 15, 1961 (week 37), and was replaced by another worker who was paid a salary of $270 a month. `General Agent C' thereby reduced monthly salary expense by $55 but this did not result in a corresponding reduction of the $940 monthly expense allowance granted to him by the Insurance Company.
"The contract between `General Agents B and C' and the Insurance Company provided that the General Agent secure applications for the Insurance Company on lives of persons acceptable to the Company; that the General Agent collect the first premium on such policies and remit same to the Company all subject to the underwriting practices of the Company and the provisions of the contract; that the General Agent is to appoint, train and supervise insurance agents in a specified territory; that no contract between the General Agent and any insurance agent shall be complete or effective until approved and executed by the Company; that no insurance agent's contract may be cancelled or terminated by the General Agent without approval by the Company; that the General Agent agrees not to share commissions with more than one insurance agent; that for purposes of retirement at age 65 or older after 15 years of service with the Company or under provisions of a company pension plan all commissions and expense allowances are fully vested in the General Agent, his heirs, administrators, or assigns; that the General Agent shall submit to the Company immediately upon receipt thereof all applications obtained by him and shall account to the Company for the premiums thereon; that the General Agent must collect the first premium on or before delivery of any policy; that the General Agent must deliver all policies and pay for them or return them to the Company within sixty days from the date of such policy; that all records, documents, papers material and equipment of any kind furnished the General Agent by the Company are and shall remain the property of the Company; and that the agency contract may be terminated by either party upon at least thirty days notice.
"In addition to the terms of the written contract under which `General Agents B and C' performed services for the Insurance Company they were required to submit weekly reports as to their activities during each week and the proportion of each day that they devoted to each separate activity. The weekly report was entitled; `weekly Activity Record' and listed each day of the week except Sunday and asked the General Agents to indicate opposite each day the number of calls made; old and new seen; number of interviews conducted; number of new prospects seen; number of hours spent in the field; number of direct mail sent; list of names of people called on each day; names of insurance agents called, seen and interviewed; amount of recruiting activity done each day with respect to recruiting new insurance agents and a listing of names of the best prospective insurance agents interviewed each week.
"If this weekly report was not submitted each week, an Insurance Company representative would send a letter or memorandum asking for submission of the report.
"Supervisors employed by the Insurance Company on a salary basis were assigned to `General Agents B and C' to help and assist them in training newly hired insurance agents; the Insurance Company's General Counsel made periodic trips to General Agency offices to conduct schools to train insurance agents;General Agency conferences were held about two times a year and the Insurance Company paid meal and room expenses incurred by the General Agents in attending such conferences; letterhead stationery with Insurance Company's name and General Agent's name embossed thereon was furnished by the Insurance Company without cost to the General Agents; office furniture repairs and equipment repairs were paid for by the Insurance Company; and the cost of a city directory listing of the Agency office address and telephone number was paid for by the Insurance Company.
"Although the Insurance Company contended that `General Agents B and C' were not required to devote their full efforts under their contracts to performing services for it and that they could perform services for other insurance companies, it appeared that `General Agents B and C' devoted all their services exclusively to promoting the interests of the Insurance Company within the terms of their contracts throughout the period of claimant's employment as secretary and office girl. Office signs identifying the General Agents office carried just the names of the Insurance Company and the General Agency name and did not carry the name or names of any other insurance company.
"It was further contended at the hearing that the General Agent's Contract contained a clause specifically reciting that it was agreed that the General Agent was not an `employe' of the Insurance Company. Such clause, of course, cannot be deemed to be controlling or determinative of the issue involved herein. Furthermore, the conditions of eligibility of a claimant for unemployment benefits are not subject to collective bargaining contracts or other private agreements. Roberts v. Industrial Comm. (1957), 2 Wis.2d 399.
"`General Agents B C' performed services for the Insurance Company, they were paid commissions by the Insurance Company on insurance policies sold by them in a specific territory, and they were paid expense monies by the Insurance Company with which to operate an office wherein the business interests of the Insurance Company were exclusively promoted. Each of them, therefore, must be deemed to have been an `employe' of the Insurance Company within the meaning of the Unemployment Compensation Act. In order to overcome such presumption, it was the employer's burden to offer satisfactory proof that both of the conjunctive conditions set out by section 108.02(3)(b)(1) (2) supra, were met. This the Insurance Company has failed to do.
"Under the circumstances the employer failed to establish that `General Agents B C' were free from its control or direction over the performance of their services both under their respective contracts of employment and in fact and that such services were performed in an independently established trade, business or profession in which they were customarily engaged.
"`General Agents B C' having been deemed to be `employes' of the Insurance Company and not employers in their own right subject to the contribution provisions of the unemployment compensation act, it follows, under section 108.02(3) supra, that the claimant was, herself, an `employe' of the Insurance Company for benefit purposes."
The word "employee" as used in ch. 108, Stats., is defined in sec. 108.02(3), as follows:
"Employe. (a) `Employe' means any individual who is or has been performing services for an employing unit, in an employment, whether or not he is paid directly by such employing unit; except as provided in par. (b). If a contractor performing services for an employing unit is an employe under this subsection and not an employer subject to the contribution provisions of this chapter, a person employed by the contractor in fulfilment of his contract with the employing unit shall be considered the employe of the employing unit.
"(b) Paragraph (a) shall not apply to an individual performing services for an employing unit if the employing unit satisfies the commission as to both the following conditions:
"1. That such individual has been and will continue to be free from the employing unit's control or direction over the performance of his services both under his contract and in fact; and
"2. That such services have been performed in an independently established trade, business or profession in which the individual is customarily engaged.
"(c) This subsection shall be used in determining an employing unit's liability under the contribution provisions of this chapter, and shall likewise be used in determining the status of claimants under the benefit provisions of this chapter.
"(d) Any individual who is, under this subsection, an `employe' of a given employing unit shall be deemed `employed' by that employing unit for the purposes of this chapter."
The ultimate question is whether Mrs. Wessels, the applicant, was an employee of the company under the definition just quoted. As will be seen, the question readily narrows down to whether Ciulla was an employee under that definition.
The company is concededly an "employing unit.' Ciulla (and Beebe before him) were contractors, performing services for the company for pay. Neither of them were employers subject to the contribution provision. At least it has not been claimed nor been found that they were so subject. Mrs. Wessels was employed by them in fulfilment of their contracts with the company. Thus, under the definition, she was an employee of the company if they were its employees.
See sec. 108.02(5)(a), Stats., defining "employment" as service performed by an individual for pay.
Under the statutory definition Beebe and Ciulla were employees of the company under paragraph (a) unless the company satisfied the commission as to both conditions 1 and 2 of paragraph (b). The commission has found that the company failed to establish either condition. Unless the evidence compels the finding that both have been met, the commission's decision was properly confirmed by the circuit court.
Apparently the company concedes that its contentions as to Mr. Beebe's relationship are not so well supported as in the case of Ciulla, and that if Ciulla was its employee under the statute, Beebe was likewise.
The company does not attack in any respect those findings which describe in detail the relationship between Ciulla and the company. They appear to be fully supported by the evidence. We consider that these findings clearly show that the company reserved to itself and exercised a very substantial degree of control over Ciulla's performance of services for it. We cannot decide upon this record that as a matter of law, Ciulla was free from the company's control or direction of the performance of his services.
Since the commission declined to find that condition 1 of sec. 108.02(3)(b), Stats., was fulfilled and was not obliged to find that it was, it is unnecessary to deal at length with the application to this case of condition 2. We observe, however, that many of the facts which tend to demonstrate the company's right to control and direct Ciulla also help to establish that Ciulla's was not "an independently established trade, business or profession." We express no opinion as to whether or under what circumstances a general agent whose principal business consists of representing a single life insurance company could fulfil both conditions 1 and 2 so as not to be an employee of the company represented.
Paragraph (g) of sec. 108.02(5), Stats., defining "employment" lists 16 types of service which shall not be deemed "employment" under the act. The company points out that Bill No. 762, A., 1963 session, would have created a 17th exclusion, of service performed by an individual as an insurance agent, for commissions. The bill was passed by both houses, but vetoed. The favorable vote may indicate that there is a considerable body of opinion supporting a change in the law, but the recognition of such an exclusion in the existing law would far exceed the legitimate scope of interpretation.
By the Court. — Judgment affirmed.
WILKIE, J., took no part.