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Gladstone Cab Co. v. Donnelly





APPEAL from the Circuit Court of Cook County; the Hon. WILLIAM V. BROTHERS, Judge, presiding.


Defendant Director of Labor, assessed plaintiff $1,705.76 for contributions and interest due under the Unemployment Compensation Act (Ill. Rev. Stat. 1955, chap. 48, par. 680) based upon wages paid plaintiff's drivers in 1957, 1958, 1959 and the first two quarters of 1960. After a hearing on plaintiff's protest to the assessment, defendant's representative affirmed the assessment and plaintiff then filed its complaint for administrative review. The circuit court of Cook County reversed the findings of the Director, who brings this direct appeal under section 2205 of the Unemployment Compensation Act. Ill. Rev. Stat. 1961, chap. 48, par. 685.

Plaintiff is an Illinois corporation owning a taxicab business in the village of Elmwood Park. It furnishes taxicab service to the public as the licensee of various municipalities including Elmwood Park and owns certain automobiles used as taxicabs under those licenses. It maintains telephone listings in the alphabetical and classified sections of the telephone directories for the communities where it is licensed, provides waiting rooms, dispatchers' offices, and cab stands subject to municipal regulations, provides radio dispatching service and provides oil, repairs, anti-freeze and general maintenance for the cabs at its own garage. It also pays for car washes and provides public liability and property damage insurance. From 1957 through 1960 plaintiff employed from 8 to 11 employees as mechanics, grease-monkeys and dispatchers. It maintains payroll records for these employees and also maintains informal records of the drivers shares of receipts so that each driver would know how much to report for income tax purposes, but plaintiff did not maintain a company payroll for them.

Before taking out a cab, each driver entered into an "automobile rental contract" with plaintiff which designates the plaintiff as a bailor and the driver as a bailee and the transaction is described in the contract as one of rental or leasing of the automobile. The driver, by the contract, agrees to pay an undesignated sum per mile that the cab is operated while in his possession, actual or constructive with a minimum payment of one dollar per day or part thereof. He supplies his own gasoline, and agrees to deliver the cab back to the company at the end of each 12 hours in as good condition, reasonable wear and tear excepted, as the cab was when received by him. The company agrees to carry all property damage insurance and personal injury insurance as may be required by the statutes of the State of Illinois covering the operation of the automobile. It bears the risk of damages which are not caused by the gross, willful or wanton negligence of the driver or while the driver is under the influence of intoxicating liquors. The driver agrees to comply with the rules and regulations of the police department and city ordinances of the municipalities in which the cab is operated and further agrees that he will not rent or otherwise engage or use the cabs of any other company operating in competition with the company in any way.

Section 6 of the rental agreement further provides specifically that the relationship of employer and employee does not exist between the parties and the company accepts no responsibility for injuries to the driver resulting from the use or operation of the automobile or while the automobile is in the possession, either constructive or actual, of the driver. The agreement further recites that the driver is at all times free from control or direction of the company and the company is not to exercise or attempt to exercise any supervision over the services performed by the driver.

At the hearing before the defendant's representative, plaintiff introduced testimony of officers and drivers of the company to substantiate its position that an employer-employee relationship between the company and the drivers did not exist and to establish that the drivers were, in fact, independent contractors. The uncontroverted testimony establishes that the drivers are not carried as employees on the company's books or payroll records; that every driver signs the contract above referred to before he takes a cab or starts working and that the contract is also signed by an officer of the company; that the arrangement for payment that exists between the company and the driver is for the driver to get 50% of the meter charges, from which he pays for his gasoline, and the remaining 50% is turned over by the driver to the company when the cab is returned. The drivers pay for none of the services such as telephone, offices, waiting room and cab stands. The only regulations of the company affecting the driver relate to his being neat and courteous to a customer and forbid drinking on the job. Two officers of the company testified that the drivers are not compelled to use the cab stands and are not required to accept calls relayed by the dispatcher. The driver has his option to accept the call or refuse it, to park in the cab stand or other places or to cruise. Two drivers who had driven plaintiff's cabs for over two years and who entered into the automobile rental contract above referred to testified that they operated under the contract and all other drivers that they knew about operated without any control from the company. Neither of them knew of any driver who had been fired for any cause. The evidence further established that all of the cabs are the same color and that only the driver who signs the contract is permitted to drive the cab. Unless the cabs operate, the company has no income. Defendant introduced no evidence.

The application of the Unemployment Compensation Act to taxicab operations has been considered twice by this court in recent years. Plaintiff contends that the present case is controlled by Parks Cab Co. v. Annunzio, 412 Ill. 549, where we held that taxicab drivers owning their own cabs who entered into written leases with the owner of cab stand licenses for $60 per week rental, rendered no services for the lessor of cab licenses, and hence no employer-employee relationship existed within the meaning of the Unemployment Compensation Act. On the other hand, defendant Director stresses the similarity between the facts here and those in Myers v. Cummins, 9 Ill.2d 582, where we held that an owner of a licensed taxicab who leased the cab to a driver for one-half of the fares collected, maintained cab stands, waiting rooms and telephone listings, accepted and relayed calls, assumed all expenses of insurance and repairs, and who required the driver to join a cab drivers union and abide by all the operating rules and regulations of the owner, was an employer of the driver within the meaning of the act.

This case, as did Parks and Myers, involves the following sections of the Illinois Unemployment Compensation Act (Ill. Rev. Stat. 1961, chap. 48, pars. 316, 322, 344, 350 and 550, respectively):

"§ 206. Subject to the provisions of Sections 207 to 233, inclusive, and of subsection B of Section 245, `employment' means any service performed prior to July 1, 1940, which was employment as defined in this Act prior to that date, and any service after June 30, 1940, performed by an individual for an employing unit, including service in interstate commerce and service on land which is owned, held or possessed by the United States, and including all services performed by an officer of a business corporation, without regard to whether such services are executive, managerial, or manual in nature, and without regard to whether such officer is or is not a stockholder or a member of the board of directors of the corporation."

"§ 212. Service performed by an individual for an employing unit, whether or not such individual employs others in connection with the performance of such services, shall be deemed to be employment unless and until it is proven in any proceeding where such issue is involved that —

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."

"§ 234. Subject to the provisions of Sections 235 and 245 C, `wages' means every form of remuneration for personal services, including salaries, commissions, bonuses, and the reasonable money value of all remuneration in any medium other than cash. The reasonable money value of remuneration in any medium other than cash shall be estimated and determined in accordance with rules prescribed by the Director. Such rules ...

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