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Eutectic Alloys Corp. v. Rauch





APPEAL from the Circuit Court of Cook County; the Hon. HARRY M. FISHER, Judge, presiding.


This is an appeal from an order of the circuit court of Cook County confirming a decision of the Board of Review of the Illinois Department of Labor which held that Francis Johlie, hereinafter called claimant, was eligible for benefits under the Illinois Unemployment Compensation Act, based upon his earnings for the year 1946. The action was brought in the circuit court of Cook County by the appellant, a New York Corporation, under the Administrative Review Act. The corporation appeals, bringing its cause directly to this court for review under the provision of that act. Ill. Rev. Stat. 1951, chap. 48, par. 520.

The appellant is a corporation organized under the laws of New York. During the year 1946 it was engaged in the business of manufacturing and distributing welding rods and fluxes. These were sold in Illinois during that year by a staff of sales representatives designated as field engineers. There were from nine to eleven of such representatives operating in Illinois during that year, one of whom was the claimant. Each was employed under the terms of a written contract which, in its terms and conditions of employment set forth therein, was the same for all the field engineers working in Illinois, during the year 1946.

The question for determination here is whether the services rendered during 1946 for appellant by the claimant and the other field engineers, which were similar in nature and character, and all under identical contracts, exempted them from employment as defined by the provisions of section 2(f)(5) of the Illinois Unemployment Compensation Act, (Ill. Rev. Stat. 1945, chap. 48, par. 218(f)(5),) and if any six or more of them were not so exempted, whether the appellant was an "employer" subject to either section 2(e)(1)(B) or section 2.1 of the act. Ill. Rev. Stat. 1945, chap. 48, par. 218.

Section 2(d) of the act defines an employing unit as an individual or any type of organization which had in its employ one or more individuals performing services for it. What is meant by the terms "employ" and "services" must be determined from other provisions of the act. In order that an employer may be an employing unit subject to the act, under section 2(e)(1)(B) it must have in its employment six or more individuals who were performing services which constitute employment within each of twenty or more calendar weeks. Section 2(f)(5) defines "services" which shall constitute "employment" under the act. The exceptions contained in section 2(f)(5) take out of the term "employment" those services rendered under the concurrent conditions specified in subparagraphs (A), (B), and (C). Under this exception, in order to bring services performed within the exception, the conditions specified in subparagraphs (A), (B), and (C), must all concur. Concrete Materials Corporation v. Gordon, 395 Ill. 203.

Section 2(f)(5) of the act provides that "Service performed by an individual for an employing unit * * * shall be deemed to be employment subject to this Act unless and until" these things are proved: "(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 engaged in an independently established trade, occupation, profession, or business."

The evidence discloses that eleven individuals performed services in Illinois for appellant for more than 20 calendar weeks, exactly in the same manner and under contracts identical in their provisions to that of the claimant's during 1946, and unless the services rendered by them were excepted from employment as defined by the Unemployment Act it is clear that the appellant would be an employer.

The appellant here contends, however, that the services rendered by the claimant and the other 9 to 11 persons were rendered in connection with independently established trades, occupations, professions or businesses as field engineers and that such services were not under contract or in fact in employment for the appellant as defined under the Illinois Unemployment Compensation Act.

It is readily apparent that the term "employment" as used in the Unemployment Compensation Act is very inclusive except for certain exemptions and exclusions contained in the statute. The only exclusions with which we are here concerned are those embodied in that portion of section 2(f)(5) above set out, and which are the basis for the contention of the appellant that the claimant was not during the year 1946 in its employment.

This court has held in a number of cases that the Unemployment Compensation Act defines the class of individuals who are entitled to receive benefits, the statutory provisions being different, however, from the common-law concepts of employment where the relation of master and servant exists. Under the provisions of the act a member of the defined class is an employee unless he is excepted by the concurrence of three conjunctive subparagraphs (A), (B), and (C) of paragraph (5) of subsection (f) of section 2. (Miller, Inc. v. Murphy, 379 Ill. 524; Parks Cab Co. v. Annunzio, 412 Ill. 549.) This court has held that the Unemployment Compensation Act is not a taxing act, but is one passed to alleviate the perils of unemployment under the police powers of the State, and should receive a liberal construction. Zehender & Factor, Inc. v. Murphy, 386 Ill. 258; Zelney v. Murphy, 387 Ill. 492.

In order to determine whether or not the claimant is eligible for benefits, it is necessary to apply the statute to his contract of service and to the facts, as the statute provides. If Johlie, the claimant, and the other field engineers are not free from control or direction of the appellant in the performance of their services either under their contract of service, or in fact, they are eligible to benefits. If they are free from the control or direction of appellant, the first of the three requirements for exemption from "employment," section 2(f)(5) (A), is thereby satisfied. An examination of the contracts discloses the following provisions pertinent to the inquiry here: (1) the claimant was restricted in his services to certain restricted and specifically described territory in north Chicago; (2) the claimant was restricted as to the price for which he could sell the appellant's products; (3) he was obligated not to handle any other lines of products, and if he did that would be just cause for cancellation of the contract; (4) all orders taken by the claimant were subject to acceptance by the appellant; (5) the claimant agreed that during the term of the agreement and for two years thereafter he would not render service for any competing employment or engage on his own account in dealing in competing products or business; (6) claimant also agreed that he would not hire any person to assist him unless said person also agreed to abide and be governed by the provision of (5) above; (7) the contract also provided that if the claimant secured orders aggregating $2000 per month then the contract would remain in force for another year, provided orders during the second year amounted to $5000 per month; (8) appellant agreed to furnish claimant with advertising material concerning its products, including cuts; (9) claimant agreed that said contract could not be assigned without the consent of the appellant; and (10) claimant agreed that the appellant could cancel the contract any time he or his representative were guilty of conduct detrimental to the best interest of the appellant.

The contract remained in full force during the time the claimant acted as the sales representative of the appellant. It provided that no amendments, modifications, or additions thereof or thereto should be valid unless in writing signed by both parties and specifically stating an intent to amend, modify, or add to. There is nothing in the record to indicate that any modifications were made in the contract. Therefore, nothing can be added to nor taken from it to ascertain what the parties intended. (John Gabel Mfg. Co. v. Murphy, 390 Ill. 455.) It is certainly not to be contended but that the purpose of the provisions of the contract was the exercise of certain elements of control over the claimant and the other field engineers.

The first item, defining the area for claimant to work, did limit and serve as some control over Johlie. That this court has in some instances at least regarded such a provision as an item of control is disclosed in the opinion of this court in Murphy v. Daumit, 387 Ill. 406, where the court mentioned that such restriction was one item of control. In that case the area in question, assigned to a vacuum cleaner salesman, was much larger, comprising the entire city of Chicago. However, in Aluminum Cooking Utensil Co. v. Gordon, 393 Ill. 542, where the territory included Cook and Du Page Counties, Illinois, and Hammond and Whiting, Indiana, and East Chicago, Indiana, this court did not consider the limitation as to territory any deciding element of control.

The second item set forth in the contract was that of price control. By it the claimant was restricted in his sales of the appellant's products to the prices set by the appellant. This court in Van Ogden, Inc. v. Murphy, 390 Ill. 133, regarded such a provision as an item to be considered in determining whether the salesmen of ...

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