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WILLARD SUGAR CO. v. GENTSCH

March 3, 1944

WILLARD SUGAR CO.
v.
GENTSCH, Collector of Internal Revenue



The opinion of the court was delivered by: FREED

Recovery is sought by the plaintiff in this action of Social Security taxes on compensation of individuals who performed services for it.

The only question for determination by this court is whether, for the period from Jan. 1, 1937, through Sept. 30, 1942, under Section 811(b) of Title VIII of the Social Security Act, 42 U.S.C.A. § 1011(b), and Section 1426(b) of the Internal Revenue Code, Federal Insurance Contributions Act, 26 U.S.C.A.Int.Rev.Code, § 1426(b), and for 1937 through 1941, under Section 907(c) of Title IX of the Social Security Act, 42 U.S.C.A. § 1107(c), and Section 1607(c) of the Internal Revenue Code, Federal Unemployment Tax Act, 26 U.S.C.A.Int.Rev.Code, § 1607(c), John Porubsky and Philip Kolb, who were performing services for the plaintiff, were its employees or were independent contractors.

 The evidence discloses that the plaintiff was engaged in the business of selling sugar at wholesale.

 For a period of 20 years, Porubsky and Kolb made all deliveries to the plaintiff's customers. Each of these men owned his own truck, which he maintained at his own expense. Each hired and paid a helper from time to time.

 On regular work days they reported to the plaintiff's place of business with their trucks. There the trucks were loaded with the assistance of employees of the plaintiff, and delivery instructions were furnished.

 On occasions they were directed by the plaintiff to transport sugar from railroad sidings to the plaintiff's place of business. In addition to making deliveries, they made collections from the plaintiff's customers, and, at times, made deposits in the bank on behalf of the plaintiff.

 One of the men, on rare occasions, used his truck to transport goods for his acquaintances. Aside from such casual services rendered for others, they devoted their entire time to the business of the plaintiff. The plaintiff, in turn, had no other facilities than that provided by these men, to make its daily deliveries to its customers.

 Neither of these men had a place of business, nor solicited business from others than the plaintiff, or in any manner held himself out as being in the trucking business.

 It appears that the plaintiff requested Porubsky and his helper to join the trucker's union and paid their dues for them. The arrangements for the hire of Porubsky were made orally.

 A written agreement, dated 1942, with Kolb was introduced into evidence, which agreement specified that he is to provide trucking and delivery services to the plaintiff for a stated amount, and recites that such delivery service shall not be subject to the control or supervision of the plaintiff.

 It appears from the evidence that similar written agreements were in existence prior to 1942 with Kolb and that they were executed at the behest of the company which carried liability insurance on Kolb's trucks.

 The record also shows a written contract in 1938 on a printed form provided by the Public Utilities Commission of Ohio reflecting what purports to be the agreement between Kolb and the plaintiff. That contract recites that Kolb is an independent contractor.

 Both Porubsky and Kolb were paid a fixed sum each week regardless of the volume of goods delivered, and the record further discloses that neither was held accountable for any damage ever done to the goods he transported for the plaintiff.

 The evidence reveals that the compensation paid to Kolb and Porubsky was increased by the plaintiff during the period in question without any apparent oral or written ...


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