The opinion of the court was delivered by: KLOEB
These two suits are civil actions against the United States of America for the recovery of $ 4,080.21 and $ 5,511.79, with interest, alleged to have been erroneously assessed and collected from the plaintiff for the years 1943, 1944 and 1945 as income and victory tax required to be withheld, and Federal insurance contributions and Federal unemployment tax relating to the social security taxes.
The two actions were consolidated for the purpose of trial by agreement of the parties. The underlying question of law, viz., whether certain persons who unloaded merchandise, chiefly coffee, from freight cars spotted outside the plaintiff company's plant and moved this merchandise into the plant, were or were not employees of the company, is common to both of the cases. If these persons were not employees of the plaintiff company, then it follows that the taxes for the three years in question were erroneously assessed and collected, and plaintiff would be entitled to recover the respective amounts claimed in the complaints, with interest. The facts are in some instances in sharp disagreement.
The plaintiff company for some years had been, and still is, in the business of purchasing, processing, packaging and distributing coffee, tea and spices. These commodities were delivered to it in railroad cars that were spotted outside its plant. Merchandise, and we are concerned here chiefly with coffee, arrives in large bags of varying weight of from 132 to 180 pounds.
Prior to 1943, the work of unloading the merchandise from the railroad cars was performed by employees of plaintiff company. These men were under the direct supervision of the company's weighmaster, Fred Base. Mr. Base had been directing this work for many years. During the years 1943, 1944 and 1945, plaintiff discovered that it was unable to employ men necessary for the unloading process. Its business was declared by the War Man Power Commission to be a non-essential activity and it had no labor priority rating. It therefore found it extremely difficult to employ laborers who could unload the freight cars and with hand trucks move the bags of coffee into the plant to the post of the weighmaster for stenciling and weighing, and then for stacking in convenient warehouse space. In addition plaintiff was apprehensive lest it violate some war man power regulation, and so it contacted, through its plant superintendent, Mr. Louis G. Gongwer, one Harry A. Teal, who was hired by plaintiff to recruit a necessary number of the floater type of laborers found about the pool rooms and taverns each morning and bring them to plaintiff's plant. When Harry Teal was called into the service, he was succeeded by one of the men who had been fairly consistent in working as a member of his crew, one Joe Rockamore, who worked in this capacity for some six or eight weeks. When Joe Rockamore left he was succeeded by one Hugh Pierce, who also had been one of the crew members. When Harry Teal returned from the service in the Fall of 1946, Mr. Pierce gave way to him and he, Teal, resumed his operations until December of 1945, at which point the company concluded that it could recruit its own men without the assistance of Teal.
The exact duties and the extent of control exercised by Teal, Rockamore and Pierce daily over these laborers is in dispute. It is undisputed that some six, eight or ten men were recruited each morning from the highways and byways by Teal, Rockamore and pierce in the successive order named, and that these laborers were brought to the plant by Teal in his truck, and by Rockamore and Pierce on buses or streetcars. At the close of each day, the company paid to Teal or one of his successor a sum of money equal to 90 cents per hour for each of the laborers, including Teal and his successors, and out of this money so paid Teal or his successors, paid the men.
It is the claim of the Government that the taxpayer merely employed an additional man to hire from day to day a group of laborers wherever they could be found to do the work.
It is the claim of the taxpayer that it employed Teal, Rockamore and Pierce as independent contractors, and that the men who labored under them were the employees of Teal, Rockamore and Pierce, and not the employees of the company.
It is the contention of the Government that the finding and engaging of the laborers each morning, and paying them off each evening, were the only duties required of Teal or his successors, and that all direction and supervision was exercised, as it had been for many years prior to 1943, by Fred Base, the weighmaster and employee of plaintiff company. On the other hand, it is the contention of the taxpayer that Teal and his successors were in complete charge of these laborers each day during the three years in question that they worked. This contention is made by the company witnesses, Louis G. Gongwer, plant superintendent, Edward Hase, the assistant plant superintendent, and Fred Base, the weighmaster.
Mr. Gongwer puts the issue very succinctly in the following words: 'I gave no orders or directions to Teal's men nor did any other employee of Woolson's.'
The question for the Court to determine is whether the three men who were employed by plaintiff to recruit the laborers to work at its plant, and the men so recruited, were employees of plaintiff for tax purposes under the common law rules applicable in determining the employer-employee relationship. I am of the opinion, from a study of the record, that plaintiff has failed to sustain the burden of proof cast upon it, and that these men were employees of plaintiff for tax purposes.
These cases have presented a sharp divergence of testimony, and hence the Court has been presented with a difficult decision, but it appears that, taking all the evidence by its four corners and weighing it carefully, this is not one of those cases where the three men hired could properly be classed as independent contractors who, in turn, were liable to the Government for the payment of withholding taxes and social security taxes on account of the men recruited by them for service at the plant of plaintiff.
During the trial of the case, the Court took extensive notes in connection with the testimony of each of the numerous witnesses. These witnesses included not only Teal and Pierce but also four of the laborers who had worked at various times as members of these crews.
Witness Charles Durr had this to say: 'Fred (Base) gave us our orders as to which car to unload, when to go out to eat and when to be back. He would change us from one job to another. He told me how to stack and he told me where to pile sacks. Teal never gave us orders. After he picks us up he returns to pay us off. Several times Fred (Base) paid us off. I took all orders there ...