Opinion
Rehearing Denied May 13, 1930.
Hearing Granted by Supreme Court June 12, 1930.
Proceeding for compensation under the Workmen’s Compensation Act by Claude Eustace, employee, opposed by the Los Angeles Evening Herald, a corporation, and another, employers, and the New York Indemnity Company and another, insurance carriers. To review an award of compensation by the Industrial Accident Commission, the insurance carriers bring certiorari.
Award annulled. COUNSEL
E. Herbert Herlihy and F. George Herlihy, both of Los Angeles, for petitioners.
Edward O. Allen, of San Francisco, for respondent Industrial Accident Commission.
Flint & MacKay, of Los Angeles (Edward L. Compton, of Los Angeles, of counsel), for respondent Los Angeles Evening Herald.
OPINION
HOUSER, J.
By this proceeding petitioner seeks the annulment of an order made by the respondent commission by which an award of compensation was made to one Eustace for injuries admittedly received by him while engaged in the occupation of selling newspapers on a street corner within the city of Los Angeles. The question to be here determined is whether at the time Eustace sustained the injury, which resulted in the award of compensation to him, he was an employee of each of the respective proprietors of the newspaper business whose newspapers Eustace was selling. As at once it is apparent that consequences which might follow from a final determination that the relationship of employer and employee exists as between the publisher of a newspaper and each of the several newsboys engaged in selling his product might be far-reaching, the question presented is worthy of serious consideration. For example, if in law a newsboy, who is selling a newspaper, is to be regarded as an employee of the publisher of such newspaper, it is not impossible that such publisher would be liable in damages arising from tort, or, in fact, from any act of negligence, which might be committed by the newsboy while operating within the scope of his employment.
Although not without contradictions in many particulars, from the evidence adduced at the hearing of the application presented by Eustace to the respondent commission for an adjustment of compensation to be paid to him for his injuries and as a basis for its finding that Eustace was "employed as a news vendor," the respondent commission was authorized to accept as established the following pertinent facts: Eustace was a newsboy who was engaged in the occupation of selling each of two certain evening newspapers, known respectively as the Los Angeles Evening Herald and the Los Angeles Record. Instead of obtaining his supply of newspapers directly from the office of the publisher thereof, Eustace procured his supply from a wholesaler of such newspapers, known as a district manager, who purchased them in large numbers from their respective publishers and furnished them in suitable lots to Eustace and other newsboys. Eustace was obliged to buy from the district manager at least 130 Heralds each day; but neither daily, nor otherwise, was he required to purchase any specified number of Records. The price paid by Eustace for Heralds was two cents each; but the Records were sold to him at the rate of $1.25 per hundred. He was required to sell each of the respective newspapers at a price fixed and determined in advance by the publisher thereof, but all moneys received from their sale, whether in exact payment of such price, or given to and received by Eustace as a "tip" or gratuity, were considered as his property. If he was unable to sell all the Heralds purchased by him, or if any of them were lost or destroyed, the loss fell on Eustace; but he was permitted to return all unsold Records to the district manager and to receive credit for them at the rate at which they had been purchased. As to the place of sale of both the Heralds and the Records, Eustace was restricted and confined to a designated street corner, except that he was also privileged to sell newspapers in unoccupied territory, such as between street corners. The penalty for violation of either of such conditions was that he would not be permitted to purchase any more newspapers from the district manager; although the evidence further showed that he would not be precluded from purchasing an additional supply directly from the office of the publisher. Payment for all newspapers purchased by Eustace was made by him "at the end of every day," although, had he wished to do so, he might have paid for them at the time they were purchased. He "was not carried on the payroll of either newspaper. He received no checks, nor cash, nor bonus from the publisher of either newspaper or their agents."
As far as applies to this proceeding and as defined by sections 7 and 8(a) of the Workmen’s Compensation, Insurance, and Safety Act (St.1917, p. 831, as variously amended), an employee is one who is in the service of another under a contract of hire. It is manifest that, ordinarily and generally speaking, one of the duties of determining whether such relationship existed as between Eustace and the proprietor of either or both of the newspapers which Eustace was selling primarily rested upon the respondent commission. It is also clear that, in a given state of foundational facts, a determination of the question might involve nothing more than a plain conclusion of an ultimate fact; while in different circumstances, perhaps complicated, and intermingled with various and sundry preliminary legal problems, a final determination as to the existing relationship between the interested parties might present for consideration, as an ultimate conclusion, an unmistakable question of law. When the former situation is presented, the authorities are unanimous that a finding of pure fact by the commission is final and conclusive; but manifestly where the determination of whether the relationship of employer and employee exists between contending parties depends either wholly or principally upon a question of law, the conclusion reached thereon is subject to review.
In the case of Southern Pacific Co. v. Pillsbury, 170 Cal. 782, 151 P. 277, 278, L.R.A.1916E, 916, it was ruled that whether one was engaged in interstate commerce work or was in intrastate employment presented a question of law, and consequently that a purported finding of fact on that issue by the Industrial Accident Commission was reviewable in a certiorari proceeding. In part, the court said:
"*** The industrial accident commission concluded from these facts that the deceased at the time he sustained his injury, while in the employ of petitioner, was not engaged in interstate commerce work.
"No question is here presented as to the finality of this last finding of the commission. But, indeed, that finding is not, in strictness, a finding of pure fact, but rather is it a conclusion of law drawn from a consideration of the admitted facts, to which consideration have been applied principles of law of more or less intricacy. In this respect it may be compared to a finding of ownership of land. It may be, and often it is said that it is, a mere statement of fact to declare that one owns a piece of land. But, after all, it is the ultimate conclusion arrived at from the consideration of many facts, such as written instruments and their recordation, which facts necessarily have to be considered in connection with principles and propositions of law often abstruse and difficult of determination, such as the sufficiency of the recordation and the legal meaning of the instrument asserted to convey title. Savings & Loan Society v. Burnett, 106 Cal. 514, 538, 39 P. 922. In this case all of the facts touching the nature of the deceased’s employment, the character and use of the instrumentality in the repair of which he was engaged at the time of his death, being beyond controversy and fairly found by the commission, the one important legal question is that of the jurisdiction of the commission to retain and consider the application for relief. ***"
In the case of Hines v. Industrial Accident Commission, 184 Cal. 1, 192 P. 859, 860, 14 A.L.R. 720, where a similar situation was involved, the ruling in the case of Southern Pacific Co. v. Pillsbury, 170 Cal. 782, 151 P. 277, L.R.A.1916E, 916, was approved. After quoting a part of the language of that opinion, the court said:
"*** This language [referring to that taken from the opinion in the other case] is clearly applicable to the finding under consideration, which must therefore be regarded as a conclusion of law and as presenting the question of the jurisdiction of the commission to make the award— a question which may be considered on certiorari." See, also, 27 Cal.Jur. 576, and authorities there cited.
However, in what of first impression might appear to be in seeming opposition in part to the principle announced in each of the cases just cited, it has been indicated, if not directly decided, that when the finding of fact involving the existence of the relationship of employer and employee depends upon the solution of a question of mixed law and fact, it is "to be proved like any other question," and that unless there is such an "entire absence of evidence in the record as to render the finding unreasonable, or in excess of the powers of the commission, the court is not empowered to set it aside." Hillen v. Industrial Acc. Com., 199 Cal. 577, 580, 250 P. 570, 571. But it is clear that the relationship of employer and employee must be present before the commission may acquire jurisdiction of a proceeding; and that, however apparently supported by quasi foundational facts, the commission cannot by its erroneous conclusion of law thereon, to the effect that such a relationship exists, confer jurisdiction upon itself; furthermore, that if, basing jurisdiction upon its erroneous conclusion of law, it assumes to act and to order an award in the premises, such award is "in excess of the powers of the commission." It thus becomes apparent that where the controlling so-called finding of fact in a given case is dependent upon a correct conclusion of law to be drawn from a "consideration of many facts, *** which facts necessarily have to be considered in connection with principles and propositions of law often abstruse and difficult of determination" (Southern Pacific Co. v. Pillsbury, 170 Cal. 782, 784, 151 P. 277, 278, L.R.A.1916E, 916), such "finding of fact," although consisting of "mixed law and fact," and which is "to be proved like any other question" (Hillen v. Industrial Acc. Com., 199 Cal. 580, 250 P. 570, 571), possesses no binding force when called in question by a writ of certiorari. The duty, then, of this court, in this proceeding, is to determine, not a question of fact, but one of law arising from the facts adduced in evidence before the commission, and which, notwithstanding the many contradictions and inconsistencies appearing in the testimony of the several witnesses, may be assumed to have been hereinbefore correctly summarized. Reduced to a legal proposition, the inquiry may be limited to a determination of whether the relationship of employer and employee exists between the publisher of a newspaper and a newsboy, where the latter purchases newspapers from the former for the express purpose of making resales of such newspapers to the public at a profit over the cost price, and which newsboy assumes all risk of loss from whatever cause and is under no control of the publisher, except as to the price at which and the place where such newspapers are to be sold, upon penalty for violation of such regulation that thereafter the publisher may refuse to sell any newspapers to the newsboy.
An identical situation arises from the management and operation of many different commercial enterprises, including the sale of books, magazines, periodicals, and various and sundry agricultural implements, as well as patented articles of food and clothing. Perhaps the best-known illustration of the practice is that connected with the manufacture and distribution throughout the United States of any one of the many different makes of automobiles. It is common knowledge that ordinarily, the custom is that the manufacturer of any given automobile enters into a contract with each of his or its several so-called "sales agents," by which in effect the "sales agent" is obligated to purchase outright from the manufacturer a stated number of automobiles each year, which automobiles the "sales agent" is bound to sell at a predetermined price fixed by the manufacturer, and only within a specified and definite territory— all loss, if any, arising from such arrangement to be borne and paid by the "sales agent."
It would now appear opportune to consider, if not the essentials of a contract of employment, at least some of the incidents by which such a contract possibly may be distinguished from other relations which may exist as between different respective individuals. The word "servant" is generally synonymous with the word "employee"; and by the provisions of section 2009 of the Civil Code a servant is defined as "one who is employed to render personal service to his employer, otherwise than in the pursuit of an independent calling, and who in such service remains entirely under the control and direction of the latter. ***" Western Indemnity Co. v. Pillsbury, 172 Cal. 807, 810, 159 P. 721, 723, and authorities there cited. As hereinbefore pointed out, an employee is one who is in the service of another under a "contract of hire" (sections 7 and 8(a), Workmen’s Compensation, Insurance and Safety Act); and as far as the compensation law is concerned, that such a contract necessarily calls for personal service is emphasized by the fact that compensation to be awarded to an employee who is injured while performing service within the scope of his employment is based upon the amount of wages earned by such employee. Western Indemnity Co. v. Pillsbury, 172 Cal. 807, 810, 159 P. 721, 723; Press Publishing Co. v. Industrial Acc. Com., 190 Cal. 114, 119, 210 P. 820. In the former case, among other things, it is said:
"*** Doubtless there could be a contract of service without stipulated wages, but there could be no employee unless his personal services were rendered to the employer, and since wages are generally paid for personal services, wages or salary are made the criteria of compensations given to injured employees. ***" It will thus be noted that the element of personal service is judicially recognized and accentuated as an essential in the legal relation of employer and employee, from which it may be inferred that in accomplishing the ultimate object of the arrangement between the parties thereto, if, either expressly, impliedly, or by custom, the one who agrees to perform service for the other is at will privileged to substitute some other person in his place, the contract in that particular will not measure up to the statutory requirement. In the instant proceeding it appears that, although a newsboy might purchase from the district manager any number of newspapers, in no way was he obligated to render a personal service in effecting their sale to the general public. Indeed, it was a common practice for one newsboy to sell newspapers to another, who in turn disposed of them by sale to any one who would become a purchaser thereof. Another illustration of the absence of the requirement of personal service is shown by the custom which prevailed in hiring, by the original purchaser, of other newsboys who would be compensated for their work, either by a commission for the newspapers which such newsboys actually sold, or by the payment of an agreed sum of money for the performance of a certain amount of work.
Another characteristic element noticeable in the statute to which attention has been directed (section 2009, Civ.Code) is that the one who performs the service for the other "remains entirely under the control and direction of the latter." Nor is the substance of such statute exceptional in regard to such requirement. The authorities generally are unanimous in demanding that before the relation of employer and employee may be said to exist, it must appear that the person for whom the service is to be performed has the right of exercising control over the manner in which the work is to be done. In volume 1 of Labatt’s Master and Servant many pages of text and footnotes are devoted to a consideration of the single essential element of "control" in the master; and volume 39 of Corpus Juris is likewise replete in its discussion and illustration of the same feature. But it is apparent that the word "control" in itself is a generalization which may not be entirely dependable as a guide to a correct conclusion in a situation in which either clear or ambiguous acts or conduct are involved; and so in section 160, volume 1, of Shearman & Redfield on the Law of Negligence (6th Ed.), may be found the declaration that "he is to be deemed the master, who has the supreme choice, control and direction of the servant, and whose will the servant represents, not merely in the ultimate result of his work, but in all its details. ***" And, in effect, such construction of the word is recognized by the Supreme Court of this state in Western Indemnity Co. v. Pillsbury, 172 Cal. 807, 810, 159 P. 721, where, in determining its significance in the statute (section 2009, Civ.Code), it is said: "*** It is true that many authorities specify ‘control’ of the person performing work as the means of differentiating service from independent employment. The test of ‘control,’ however, means ‘complete control. ***’ "
Reverting to the situation presented by the facts in the instant proceeding, as well as to such other facts as are common knowledge, it becomes patent that, as to many of the details connected with the sale of newspapers by newsboys on the streets of the city of Los Angeles, it would approach an absurdity to contend that the publisher of any newspaper could possibly exercise complete control as to details. Whether the newsboy must sell his newspaper for not more than the exact price theretofore fixed by the publisher, or whether to the contrary, he may accept or even solicit a "tip" or gratuity in advance of such price; whether in making a sale, or offering for sale, an alluring or lurid "extra," the newsboy shall remain on the sidewalk in comparative safety, or, at will, may leave that position, dart suddenly and unexpectedly hither and yon in the crowded street, thereby endangering his life or limb, for the purpose of approaching some possible purchaser of his newspaper who may be traveling either in a street car or in an automobile; whether the newsboy shall be seated and remain silent and statuesque, or vociferously and raucously shout his wares and race in a simulated excitement or pretended frenzy from one prospective customer to another; or whether by suavity and polite speech he conduct himself in an insinuating and gracious manner, or by rudeness and roughness and the veritable tactics of a French gamin he proclaim the advisability, if not the absolute and undeniable necessity of the general public acquainting itself at first hand with the latest news of the day— while either or some of such methods of effecting sales may represent the acme of the art of the vocation of a newsboy, dependent upon the temperament or deliberate and studied choice of the individual salesman— the compliance by the newsboy with any of such details apparently would be quite beyond the "remote control" or even the suggestion of the publisher of the newspaper.
Again adverting to sections 7 and 8(a) of the Workmen’s Compensation, Insurance, and Safety Act, it will be noted that the relationship of employer and employee involves "a contract of hire." That the word "hire," when used in connection with a contract of employment, implies that a reward or compensation shall be paid for the services performed is indicated in the case of McCluskey v. Cromwell, 11 N.Y. 593, 599, where it is said that "*** to employ, is ‘to engage in one’s service; to use as an agent or substitute in transacting business; to commission and intrust with the management of one’s affairs; ’ and when used in respect to a servant or hired laborer, is equivalent to hiring, which implies a request and a contract for a compensation, and has but this one meaning when used in the ordinary affairs and business of life. ***" To the same effect are: Carter-Mullaly Transfer Co. v. Angell (Tex.Civ.App.) 181 S.W. 237, 238; Commonwealth v. Radocchia, 205 Mass. 455, 91 N.E. 856. As far as concerns any compensation to be paid to the newsboy, the contract here under consideration was to the effect that the newsboy would purchase from the publisher of the newspaper, and the latter would sell to the former, newspapers at a fixed price, and that if practicable the newsboy would resell each of such newspapers, also at a predetermined price. The "contract" contained no express stipulation that for the "services" to be performed by the newsboy any reward or compensation as such would be paid to him. To the contrary, the reward, if any, to which the newsboy might become entitled depended, not upon the time diligently expended by him in his efforts to resell the newspapers, but rather depended upon the profits which might be derived from sales actually made, and which profits, as far as the Herald was concerned, were entirely dependent upon his success in disposing of a sufficient number of newspapers to more than offset in money received therefor the amount which the newsboy was obligated to pay each day for the newspapers which he was required to purchase. For example, if in accordance with the requirements of the publisher of the Herald newspaper, the newsboy purchased 130 Heralds at two cents each, and after working many hours succeeded in selling any number of such newspapers less than 87 at three cents each, it is apparent that, as far as profit, or reward, or compensation was concerned, his labor would have been in vain. He might even operate at a loss. In effect, the only difference between his "contract" with the Herald and that with the Record was that for such Records as he did not sell he was reimbursed at the same price for which they were sold to him, which, of course, guaranteed him against actual money loss, but did not insure any reward or compensation for his work, except in proportion to the newspapers which he actually sold.
In some of the authorities which relate to the method or rule by which the relation of master and servant may be determined, the power of dismissal or discharge of the employee by the employer is suggested, not at all as conclusive, but as an incident which should be taken into consideration. If the force of such suggestion be recognized as at all indicative, the presence in the instant case of the power of dismissal, if discernible, is so negligible and so uncertain that it cannot be adopted as a controlling or deciding feature in determining the relationship which existed between the interested parties. For any violation of any material condition under which the newsboy was to operate, his discharge as an employee apparently never was thought of or contemplated. Like any other "sales agent," notably that of an automobile, who disregarded his covenant in that he sold his merchandise at a price less than that authorized by its producer, or who operated in a territory other than that to which he had been assigned, he was punishable by not being thereafter permitted to purchase his wares from the producer or publisher. As it would seem clear that by no stretch of the suggested rule could a "sales agent" of an automobile be regarded as an employee of the manufacturer thereof, and, hence, under the provisions of the Workmen’s Compensation, Insurance, and Safety Act, be entitled to compensation for injuries received by him in the course of his employment, so here, under similar contractual conditions, the newsboy or "sales agent" of the publisher of the newspaper may not be held to be an employee of such publisher and entitled to the benefits arising from the provisions of the statute.
Because Eustace "was not carried on the payroll" of either newspaper; because, by the terms of the contract, he was to render no personal service; was not under the "complete control" of the publisher; was to receive no assured compensation for his labors, and was not subject to "discharge" as an employee; this court is of the opinion that the relationship of employer and employee did not exist in favor of the applicant for adjustment of compensation before the respondent commission, and, consequently, that the award of compensation therein should be annulled. It is so ordered.
We concur: CONREY, P.J.; YORK, J.