2. One whose income is determined by the profit and loss which he derives from his individual business is not rendering services for wages within the purview of the Employment Security Law even though he is contributing his personal services to the enterprise.
3. Under the allegations of the affidavit of illegality, the individuals, claimed by the Commissioner of Labor to be employees of the defendant in fi. fa., were independent contractors and not employees, and such individuals did not perform services for wages so as to bang them within the scope of the Employment Security Law.
On March 21, 1962, C. Dixon Oxford, Commissioner of Revenue, issued a fi. fa. for the use of Ben T. Huiet, Commissioner of Labor, against National Trailer Convoy, Inc., in the amount of $7,617.70 claimed to be due the State of Georgia as delinquent contributions on wages allegedly paid to employees of the defendant company under the provisions of the Georgia Employment Security Law (Code Ann. 54-601 et seq.). The fi. fa. was recorded on the General Execution Docket of Fulton Superior Court on March 26, 1962; and on August 7, 1962, certain described personal property of the defendant company was levied upon. The company on August 7, 1962, thereupon filed its affidavit of illegality in which it attacked the fi. fa., execution and levy on the grounds (1) that the individuals claimed as employees of the company for whom contributions under the Employment Security Law had not been paid were independent contractors and not employees of the company and were not paid wages for personal services by the company within the purview of said law; and (2) that said individuals, even if they were in the employment of the company, were exempt from coverage under the Employment Security Law under the provisions of Code Ann. 54-657 (h 6).
The company alleged in the affidavit of illegality facts showing the nature of its business and the relationship with the company of said individuals claimed to be employees of the company by the Commissioner of Labor. These allegations disclosed that the company was in the business of transporting new and used house trailers to all points in the United States and operated under authority granted by the Interstate Commerce Commission and the Georgia Public Service Commission; and that to facilitate said operation, the company entered into lease agreements with the individuals claimed to be its employees under which agreements said individuals (who were denominated "Operators" therein) agreed to furnish the company (the Carrier) "such vehicles as may be required by the Carrier of said Operator; to handle the transportation or such portions of the transportation of the Carrier over authorized routes, and under the above authorities, during the term of this agreement, and to operate same, or to provide and furnish competent drivers for the same, as employees of the Operator, the wages or compensation of said drivers to be provided and paid by Operator." Under said agreements the Operators were required (1) to keep and maintain in good repair at their expense all vehicles furnished for the use of the Carrier, and to furnish all supplies, including fuel, lubricants and other materials needed in connection with the operation and maintenance of said vehicles, it being provided that the Operators would bear and pay all costs and expenses for the repair of the vehicles and the replacement thereof due to damage or destruction of said vehicles; (2) to indemnify, protect and hold harmless the Carrier from and against all sums, fines, costs, fees, damages, claims, special permits or licenses; and (3) to comply with all applicable state requirements with reference to employer's liability, workmen's compensation, unemployment insurance, withholding, workmen's insurance or other benefits, and when required by the Carrier to furnish proof of said compliance, and to indemnify the Carrier from and against any and all loss, liability, damages, claims, demands, costs, labor problems and expenses due to or arising from the existence of any such relationship of the Operator with his employees furnished the Carrier or resulting from any claim or subrogation provided in such enactment or relationship.
The lease agreements further provided that "as between the Operator and the Carrier, the Carrier shall have the entire supervision concerning direction and control over the transportation of traffic under agreement, such as designation of points of origin and destination, and issuance of general instructions to be observed and carried out by Operator for the proper handling of the Carrier traffic in compliance with the rules and regulations of the Interstate Commerce Commission." The operators were to be compensated for the equipment and services furnished under the terms of the leases on a mileage rental based upon the size of trailers transported by the operators and on the most direct route between points of origin and destination under a schedule contained in the agreement. The agreements were for a term of one year unless sooner terminated by either party after 30 days written notice or upon violation of the provisions of the same, and contained provisions for automatic renewal for additional terms of one year.
It was alleged in the affidavit of illegality that the individuals who enter into said lease agreements operate on a dispatch system and, when they are ready to tender their services and equipment, they are put on a dispatch board and dispatched in rotation in the order in which they appear on said board; and that, if they are offered a move from a designated point of origin to a designated point of destination, they may accept this move and proceed with it and, if they elect not to accept this move, they are placed at the bottom of the dispatch board to take their turn in the next order as it comes about. It was further alleged that the operators select their own routes over which they would move and that no time schedules or routes are prescribed by the company; that the operators are not guaranteed any specific number of moves or any period of employment and may at their option haul for other concerns or hold an independent certificate from the Public Service Commission and haul directly for their own account without any lease or contractual agreement; and that an operator's lease contract is not canceled because of his refusal of any particular haul tendered to him.
On February 12, 1963, Hiram K. Undercofler, as State Revenue Commissioner, was made plaintiff in fi. fa. in lieu of C. Dixon Oxford.
1. The general allegations of the affidavit of illegality that the individuals claimed by the Commissioner of Labor to be in the employment of the defendant company were independent contractors and not employees of the company and were not paid wages for personal services within the scope of the Employment Security Law were allegations of ultimate fact and were sufficient to set forth an issuable defense to the fi. fa., execution and levy as against general demurrer unless, as contended by the Commissioner, the specific facts alleged in said affidavit showed as a matter of law that said individuals were in the employment of the company within the purview of the Employment Security Law and subject to the coverage afforded by the Act.
The term "employment" is defined in the Act as follows: " 'Employment' means any service performed prior to December 31, 1940, which was employment as defined in this section prior to such date, and, subject to the other provisions of this subsection, service performed after December 31, 1940, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied." Code Ann. 54-657 (h 1).
" 'Wages' mean all remunerations for personal services, including commissions and bonuses and the cash value of all remuneration paid in any medium other than cash." Code Ann. 54-657 (h 7 O n). A contract of hire is defined in Code 12-201 as follows: "Hiring is a contract by which one person grants to another either the enjoyment of a thing, or the use of the labor and industry of himself, during a certain time, for a stipulated compensation, or where one contracts for the labor or services of another about a thing bailed to him for a specified purpose"; and under this definition, services "performed for wages or under any contract of hire," are as a matter of law, one and the same.
"(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 of service 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." Code Ann. 54-657 (h 6).
In determining whether an individual comes within the scope of the Employment Security Law under the above provisions, it is first necessary to establish that the individual in question performs services for wages, or the equivalent of the same, and this major premise must be established before the exceptions enumerated in Code Ann. 54-657 (h 6) of the law become material. Huiet v. Great A. & P. Tea Co., 66 Ga. App, 602, 607 (18 SE2d 693). It is not the purpose of the "A, B, C" tests to widen the scope of the term "employment" as used in the statute so as to include therein persons not otherwise included, but their function is to exclude from the definition of the term "employment" persons who might, except for the application of these tests, be included therein. "These tests serve to exclude persons who perform incidental service and who, but for such limitations, might be classed as employees of the person for whom such incidental service is rendered." Commercial Motor Freight v. Ebright, 143 Ohio St. 127, 136 (54 NE2d 297).
2. The relationship between the defendant company and the individuals claimed by the Commissioner to be the employees of the company was, according to the allegations of the affidavit of illegality, created and controlled by the contracts of lease executed by the parties; and under the facts alleged, including the terms of said agreements, the status of these individuals, when viewed in the light of common law principles, was clearly that of independent contractor and not that of employee. These individuals owned their own tractors, hired their own drivers and assistants, paid the wages of their employees and the other expenses of operating and maintaining their vehicles; and were free to contract with anyone for their services as truckers or to hold an independent certificate as a public carrier from the Public Service Commission. Having entered into the contracts of lease with the defendant company, they were under the allegations of the affidavit still free to reject hauls tendered to them without penalty other than being displaced in order of rotation with other truckers, and to haul for others; and having accepted a haul, they were not subject to specific control by the company as to the time and manner in which they performed their services, the company having only the right of general supervision of traffic and transportation, such as designation of points of origin and destination of hauls and enforcement of the rules and regulations of the Interstate Commerce Commission.
Under these alleged circumstances, we think it clear that these individuals were independent businessmen and that the income ultimately derived by them from the consideration provided for under the lease agreements constituted profit from the conduct of their own business and not wages or remuneration for personal services within the purview of the Employment Security Law. The degree of participation in the lease and the payments received under the lease depended upon the voluntary individual efforts of the tractor owners. Suppose a lessor-owner made only one trip per month or even one trip per year, would he be an employee for the entire period? Would he be unemployed during the periods he was not engaged in hauling under the lease? What would be his benefits and how could they be determined? The difficulty in answering such questions under the conditions here existing negatives the normal relationship of employer and employee.
It is our opinion, therefore, that, as held by the Supreme Court of Arkansas in McCain v. Crossett Lumber Co., 206 Ark. 51, 61, supra: "One whose income is determined by the profit or loss which he derives from his individual business cannot be said to be rendering 'services for wages,' even though he is contributing his personal services to the enterprise."
3. Accordingly, we hold that under the allegations of the affidavit of illegality, these individuals were not employees of the defendant company but were independent contractors and that they were not performing services for wages so as to bring them within the scope of the Employment Security Law. McCain v. Crossett Lumber Co., 206 Ark. 51, supra; Commercial Motor Freight v. Ebright, 143 Ohio St. 127, supra; United States v. Silk, 331 U. S. 704 (67 SC 1463, 91 LE 1757); State Emp. Security Comm. v. Hennis Freight Lines, 248 N.C. 496 (103 SE2d 829); Florida Industrial Comm. v. Orange State Oil Co., 155 Fla. 772 (21 S2d 599); Pazan v. Michigan Unemployment Compensation Comm., 343 Mich. 587 (73 NW2d 327); State Employment Security Board v. Motor Exp., Inc., 117 Ind. App. 113 (69 NE2d 603).
Under these circumstances, the relationship of these individuals with the company, as determined by the dominion, supervision and right of control possessed by the company over them, even when viewed in the light of common law principles, was that of employer and employee; and presumptively the remuneration received by such employees for their personal services constituted wages within the scope of the Employment Security Law. The decision of the court in the Refrigerated Transport case was primarily concerned with the issue of whether or not the owner-drivers were excluded from the coverage afforded by the Act under the provisions of Code Ann. 54-657 (h 6), which issue is not reached here.
The affidavit of illegality stated an issuable defense to the fi. fa., execution and levy and the trial court erred in sustaining the general demurrer thereto.
Judgment reversed. Bell, P. J., and Eberhardt, J., concur.