The opinion
Mallery, J.
(dissenting) — I dissent for two reasons:' First, because the majority opinion reinstates the rule of the case of
Washington Recorder Pub. Co. v. Ernst, supra,
by a process unknown to the law, viz., by interpreting it to mean something entirely different from what it says and second, because it judicially repeals Rem. Rev. Stat. (Sup.), § 9998-119 [P. C. § 6233-317] (5) by reading it out of the unemployment compensation act.
All of the cases that have come before this court seeking an interpretation of the term “employment” as defined in the unemployment compensation act have presented one basic issue: Shall the statutory definition or the common-law concepts' of master and servant prevail? There is no confusion as to the issue. It is crystal clear. Unfortunately, as much cannot be said for our decisions. I agree with the statement of the writer of the
Washington Recorder Pub. Co. v. Ernst, supra,
in his opinion concurring with the majority opinion in the case at bar, that:
“. . . in
Mulhausen v. Riley, supra,
which is in irreconcilable conflict with the case at bar, and
Curtis v. Riley, post
p. 951, that the doctrine of
Washington Recorder Pub. Co. v. Ernst, supra,
limiting the relationship of employer and employee, as defined in the unemployment compensation act, within the bounds of common-law concepts relating to master and servant, had been overruled.
“The position of respondent commissioner on the facts and in principle logically must be accepted or rejected in all three of the following cases: The case at bar,
Curtis v. Riley, supra,
and
In re Coppage, post
p. 802. Those three cases, in principle, are indistinguishable from
Washington Recorder Pub. Co. v. Ernst, supra.
Any attempted distinction is
quibbling
and accentuates
the confusion now in the minds of bench and bar
as to what we may hold when another unemployment compensation case is brought to this court.” (italics mine.)
*787
The supreme court of the state of Oregon also agreed in this language in the case of
Singer Sewing Mach. Co. v. State Unemployment Compensation Commission,
167 Ore. 142, 174 , 103 P. (2d) 708 , 116 P. (2d) 744 : “The two Washington cases cited in the opinion disclose an unsettled state of the law there.”
Whence comes this confusion? That it centers around
Washington Recorder Pub. Co. v. Ernst, supra,
is clear if the decisions on the question of what “employment” means are followed in the order in which they were handed down. Starting with
McDermott v. State,
196 Wash. 267 , 82 P. (2d) 568 , in which the respondents, in seeking exclusion from the act, contended that the relationship involved was that of landlord and tenant and not master and servant, the court said:
“It is unnecessary to determine whether the common law relation of master and servant exists
between respondent and the barbers and other operatives in his shop, because the parties are brought within the purview of the unemployment compensation act by a definition more inclusive than that of master and servant.” (Italics mine.)
This made it clear that the statutory definition was given effect and that the common-law concepts of master and servant were disregarded.
Thus stood the law when
Washington Recorder Pub. Co. v. Ernst, supra,
came before this court. In that case it was contended that the newsboys were independent contractors. The trial court so held, and this court affirmed it. The court said:
“The extension of the term ‘employment’ to include independent contractors and others not within the employer-employee relationship, which is one of the positions taken by the attorney general, invites a challenge to the constitutionality of the act, as the tax exacted of the employer would be a tax upon the naked right to contract.”
The gist of the case is found in the following quotation from it:
“In drafting the statute, the legislators attempted to codify the common law. They intended that the common law
*788
test of employment relationship should likewise be the test under the unemployment compensation act.”
Thus, for the first time, the common-law concepts of master and servant were made the test of the applicability of the act rather than the statutory definition of employment. That is to say, the statutory definition was held not to mean what it said but that it meant all that is said in the books on the law of master and servant. This holding being irreconcilable with the
McDermott
case, it was logically impossible to arrive at it without overruling it. This was not done specifically, and confusion was made inevitable unless the court was to hold thenceforth that the
McDermott
case had been overruled
sub silentio.
In every subsequent case, the employers relied upon the
Recorder
case to sustain their contentions that the relationships involved were not those of master and servant under the common law, but were instead landlord and tenant, joint adventure, independent contractor, principal and agent, or vendor and vendee; and that, therefore, the statutory definition did not include them because it had been held to include only the master and servant relationship under the common law.
In the next case to come before the court,
In re Farwest Taxi Service, Inc.,
9 Wn. (2d) 134, 114 P. (2d) 164 , the conflicting principles of the
Recorder
case and the
McDermott
case were not discussed other than to say:
“Whatever relationships are excluded from the scope of the term ‘employment/ as defined by the act, it seems clear that the act covers such contractual relationships as would be held to constitute employer and employee, or master and servant, at common law.
McDermott v. State,
196 Wash. 261 , 82 P. (2d) 568 ;
Washington Recorder Pub. Co. v. Ernst,
199 Wash. 176 , 91 P. (2d) 718 , 124 A. L. R. 667.”
This did not hold that the
McDermott
case had been overruled
sub silentio,
but it has been asserted by some individuals to hold that both of these irreconcilable cases were in effect. This marks the beginning of the confusion.
This case was followed by
Mulhausen v. Bates,
9 Wn. (2d) 264, 114 P. (2d) 995 , in which effect was given to the stat
*789
utory definition rather than the common law. The
Recorder
case was distinguished on the ground that, in'that case, the relationship of vendor and vendee in fact existed.
Next came the case of
In re Foy,
10 Wn. (2d) 317, 116 P. (2d) 545 , in which the court said:
“Several recent decisions from other jurisdictions have been cited and thoroughly reviewed in the briefs of counsel for the respective parties to this proceeding and in the briefs filed by
amici curiae.
While recognizing the divergent views of different courts upon this question, we are convinced that our statute was correctly construed in the
Mulhausen
case.
“It must be held, then, that claimants are within the
purview of the act, unless from the record it should be held that the existence of all three of the elements defined in subdivisions (i), (ii), and (iii), have been established.” (Italics mine.)
This overruled the
Recorder
case
sub silentio
by adhering to the statute rather than the common law.
The next case was
Sound Cities Gas & Oil Co. v. Ryan,
13 Wn. (2d) 457, 125 P. (2d) 246 . The court again overruled the
Recorder
case
sub silentio
and went back to the
McDermott
case in these words:
“The opinions of this court, just cited, with the exception of
Washington Recorder Pub. Co. v. Ernst, supra,
commit this court to the view that our unemployment compensation act, which is similar to those of the majority of the states where this form of social security obtains, does not confine taxable employment to the relation of master and servant.
If the common-law relationship of master and servant was to obtain, the legislature would have so stated.
That the legislatures, in passing unemployment compensation acts, intended to draw away from the old definition is illustrated by the following statement contained in
Unemployment Comp. Commission v. Jefferson Standard Life Ins. Co.,
215 N. C. 479 , 2 S. E. (2d) 584 :” (Italics mine.)
This court said in
State v. Goessman,
13 Wn. (2d) 598, 126 P. (2d) 201 , the next case to come before the court:
“The cases of
In re Farwest Taxi Service, Inc.,
9 Wn. (2d) 134, 114 P. (2d) 164 ;
Mulhausen v. Bates,
9 Wn. (2d) 264, 114 P. (2d) 995 ;
Virginia Mason Hospital Ass’n v. Larson,
9 Wn. (2d) 284, 114 P. (2d) 976 ; and
In re Foy,
10
*790
Wn. (2d) 317, 116 P. (2d) 545 , as stated in the recent case of
Sound Cities Gas & Oil Co. v. Ryan, ante
p. 457, 125 P. (2d) 246 , have committed
“
‘. . .
this court to the view that our unemployment compensation act, which is similar to those of the majority of the states where this form of social security obtains,
does not confine
taxable employment to the relation of master and servant.’
“In the cases just cited, we adhered to the following rule announced in
McDermott v. State,
196 Wash. 261 , 82 P. (2d) 568 :
“ ‘It is unnecessary to determine whether the common law relation of master and servant exists between respondent and the barbers and other operatives in his shop, because the parties are brought within the purview of the unemployment compensation act by a definition more inclusive than that of master and-servant.’ ” (Italics mine.)
The
McDermott
case was reaffirmed and again the
Recorder
case was overruled
sub silentio.
These last two cases were too clear to admit of any doubt as to the status of the
Recorder
case. The confusion was cleared away.
Notwithstanding these decisions subsequent to the
Recorder
case, in the next case to come before this court,
In re Hillman Inv. Co.,
15 Wn. (2d) 452, 131 P. (2d) 160 , this court recognized the
Recorder
case as not being overruled
sub silentio
by distinguishing it. The confusion was back again.
The last case, involving the present question, that came before this court previous to the present term of court, was
Unemployment Compensation Department v. Hunt,
17 Wn. (2d) 228, 135 P. (2d) 89 . In that case, the court said:
“From the time of the adoption of the original unemployment compensation act in 1937 and the subsequent amendments thereto, we have repeatedly held that the administrative determination of the facts involved in a proceeding instituted pursuant to the act is conclusive on the courts, unless such determination is wholly without evidential support, or is wholly dependent upon a question of law, or is clearly arbitrary or capricious.
In re St. Paul
&
Tacoma Lbr. Co.,
7 Wn. (2d) 580, 110 P. (2d) 877 ;
In re Farwest Taxi Service, Inc.,
9 Wn. (2d) 134, 114 P. (2d)
*791
164;
Mulhausen v. Bates,
9 Wn. (2d) 264, 114 P. (2d) 995 ;
Virginia Mason Hospital Ass’n v. Larson,
9 Wn. (2d) 284, 114 P. (2d) 976 ;
In re Foy,
10 Wn. (2d) 317, 116 P. (2d) 545 ;
In re North River Logging Co.,
15 Wn. (2d) 204, 130 P. (2d) 64 ;
In re Hillman Inv. Co.,
15 Wn. (2d) 452, 131 P. (2d) 160 ;
Knestis v. Unemployment Compensation & Placement Division,
16 Wn. (2d) 577, 134 P. (2d) 76 . . . .
“We have upon a number of occasions held that our unemployment compensation act does not confine taxable employment to the relationship of master and servant, but brings within its purview many individuals who would otherwise have been excluded under common-law concepts of master and servant, or principal and agent.
McDermott v. State,
196 Wash. 261 , 82 P. (2d) 568 ;
Mulhausen v. Bates, supra; In re Foy, supra; Sound Cities Gas & Oil Co. v. Ryan,
13 Wn. (2d) 457, 125 P. (2d) 246 ;
In re Hillman Inv. Co., supra.
“Construing § 19(g) (5), above quoted, we have also repeatedly held that services performed by an individual for remuneration must be deemed ‘employment’ under the act
unless the person challenging the relationship of employer and employee
establishes all three of the exceptions enumerated in the foregoing section of the statute, for the reason that these exceptions, sometimes referred to as ‘tests,’ are stated conjunctively, not disjunctively.
Mulhausen v. Bates, supra; In re Foy, supra; Sound Cities Gas & Oil Co. v. Ryan, supra; In re Hillman Inv. Co., supra.”
(Italics mine.)
This language was too clear to leave any doubt or confusion as to the status of the
Recorder
case. It was again overruled
sub silentio.
The writer of the
Recorder
decision concurred in it.
Thus the law, as it stood at the beginning of the present term of this court, as gathered from the foregoing cases, was: “The administrative determination of the
facts
involved in a proceeding instituted pursuant to the act
is conclusive on the courts,
unless such determination is wholly without evidential support, or is wholly dependent upon a question of law, or is clearly arbitrary or capricious.” “It is unnecessary to determine whether the common-law relation of master and servant exists.” “If the common-law relationship of master and servant was to
*792
obtain, the legislature would have so stated.” “The act does not confine taxable employment to the relation of master and servant.” “. . . because the parties are brought within the purview of the unemployment act by a definition more inclusive than that of master and servant.”
In other words, the factual determination of the commissioner, without regard to common-law concepts, was conclusive upon the courts unless the person challenging the determination established all three of the conjunctively stated “tests” of the statute. Indeed, any other construction, such as the one announced in the
Recorder
case, would leave the words “to the satisfaction of the commissioner” without any meaning whatever, and would give the administrative finding no standing in court as a
prima facie
case nor place any burden on the complaining party. The language of the act is too clear to bear such a construction. Rem. Rev. Stat. (Sup.), § 9998-119a (g) (5) [P. C. § 6233-317] reads as follows:
“Services performed by an individual for remuneration shall be deemed to be employment subject to this act
unless and until it is shown to the satisfaction of the commissioner that:
“(i) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and
“(ii) 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 enterprises for which such service is performed; and
“ (iii) Such individual is customarily engaged in an independently established trade, occupation, profession or business, of the same nature as that involved in the contract of service.” (Italics mine.)
Thus all of our cases, except the
Recorder
case, hold that the statutory definition embraces a field more inclusive than common-law master and servant; indeed, they state that for this reason it is not necessary to inquire as to the common-law nature of the service. They simply followed and applied the statutory definition of service or em
*793
ployment to determine whether or not there was an employment under the act. That is to say, every service, without reference to common law, was deemed to be employment subject to the act unless it met the test of the three conjunctively stated exclusion clauses.
In contrast with the holding of the foregoing cases, the rule of the
Recorder
case held that Rem. Rev. Stat. (Sup.), § 9998-119a (g) (5) in effect codified and restated the common-law tests for determining the existence of the relationship of independent contractor, leaving only the common-law relationship of master and servant as within the purview of the act and excluding therefrom all other common-law relationships of employment.
This conflicts with our other cases because it limits the application of the act to a restricted and smaller field of service than defined by the statute. It excludes from the purview of the act all common-law relationships of employment such as principal and agent, independent contractor, etc., except only that of master and servant. The wide difference in the fields covered demonstrates the impossibility of harmonizing the two rules. The
Recorder
case never has been followed by this court. It is in conflict with our other cases and has been repeatedly overruled
sub silentio.
Notwithstanding, in the instant case the majority opinion says:
“In view of the litigation which has followed the
Mc-Dermott
case,
supra,
and the contentions that have been made in each case as to the relationship of the parties involved, and particularly because of what is claimed we said in
Washington Recorder Pub. Co. v. Ernst, supra,
it would seem that there is still doubt in the minds of some members of the bar as to whether or not the rules applicable to the common-law relation of master and servant, should be applied in determining whether or not one is in ‘employment’ of another under the unemployment compensation act.
“In
Mulhausen v. Bates,
9 Wn. (2d) 264, 275, 114 P. (2d) 995 , we distinguished the
Recorder
case,
supra,
and apparently this distinction has been accepted in the cases subsequently decided, and as a result the decision in the
*794
Recorder
case has not been considered as antagonistic to the rule announced in the
McDermott
case,
supra .”
The writer of the majority opinion said in his concurring opinion to
Mulhausen v. Riley, post
p. 811:
“I am further of the opinion that it is not necessary to overrule the case of
Washington Recorder Pub. Co. v. Ernst,
199 Wash. 176 , 91 P. (2d) 718 , in order to arrive at the conclusion reached in the majority opinion.
We accepted the interpretation placed upon the Recorder
case in
Mulhausen v. Bates,
9 Wn. (2d) 264, 114 P. (2d) 995 , in practically every case decided subsequent to the last cited case, and, if
such interpretation be now accepted,
the
Recorder
case,
supra,
in my opinion, does not conflict with the result reached herein.” (Italics mine.)
Heretofore we have been familiar with the process of interpreting a statute, overruling a case, and distinguishing a case. To these must now be added the process of interpreting a case. Persons citing the
Recorder
case in the future will remember that, whereas it said the newsboys were independent contractors, we have now held that the opinion intended to say, and will be taken as having said, that the newsboys were vendees until such a time as this interpretation is further interpreted.
By what process an opinion is interpreted is unknown to me, but in any event it is ingenious enough to harmonize the statements from the
Sound Cities
case that — “If the common-law relationship of master and servant was to obtain, the legislature would have so stated” — and the statement from the
Hunt
case,
supra,
that:
“We have upon a number of occasions held that our unemployment compensation act does not confine taxable employment to the relationship of master and servant, but brings within its purview many individuals who would otherwise have been excluded under common-law concepts of master and servant, or principal and agent.
McDermott v. State,
196 Wash. 261 , 82 P. (2d) 568 ;
Mulhausen v. Bates, supra; In re Foy, supra; Sound Cities Gas & Oil Co. v. Ryan,
13 Wn. (2d) 457, 125 P. (2d) 246 ;
In re Hillman Inv. Co., supra.
“Construing § 19(g) (5), above quoted, we have also repeatedly held that services performed by an individual
*795
for remuneration must be deemed ‘employment’ under the act unless the person challenging the relationship of employer and employee establishes all three of the exceptions enumerated in the foregoing section of the statute, for the reason that these exceptions, sometimes referred to as ‘tests,’ are stated conjunctively, not disjunctively.
Mulhausen v. Bates, supra; In re Foy, supra; Sound Cities Gas & Oil Co. v. Ryan, supra; In re Hillman Inv. Co., supra.”
with the rule from the
Recorder
case, that:
“In drafting the statute, the legislators attempted to codify the common law. They intended that the common law test of employment relationship should likewise be the test under the unemployment compensation act.”
I am not prepared to assent to this process of interpretation, whatever it may be; I therefore dissent.
Second: The appellant corporation derives its income from the services of the agents here involved, who are not stockholders and therefore receive none of the profits of the business. Hence, by no stretch of the imagination can they be said to be donating their services to the corporation in order to participate in its earnings, or that their activities in furthering the company’s business are not services. Under the act, we need not inquire what the common-law label for the service relationship may be. We have held this repeatedly. I agree with Judge Grady’s analysis of what their common-law relationship is, but that is not the test and it is immaterial what it is. The test is that the appellant must meet the conjunctively stated exclusion clauses, once it has been administratively determined to be under the act, in order for us to exclude it therefrom. It does not meet a single one of the tests, and no one claims that it has done so. Appellant claims, before this court, that it is in a joint adventure. That can avail it nothing. The first test of the statute, “control,” would then be presumed to exist as a matter of law. There can be no joint adventure without the element of “control.” See
Poutre v. Saunders,
19 Wn. (2d) 561, 143 P. (2d) 554 .
However, the majority opinion does not depend on a finding that there is a joint adventure. It is based upon
*796
the proposition that there was no employment. Since under the statute “services performed . . . for remuneration shall be deemed to be employment . . .,” it must necessarily take the next step and also hold that there were no services. The appellant corporation was, of course, quite remarkable in being able to conduct a real estate business without rendering any services through any mortal agency. If the commissioner was wrong in finding to the contrary, the statute requires the appellant to meet the test of the definition of employment in order to establish his error and thus be excluded from the act. Every case has so held, including the
Recorder
case. (It -purported to apply the tests, but only on the basis that they were a codification of the common-law principles of master and servant and hence did not mean what they said.)
Now, for the first time, and without overruling the other cases, the majority opinion judicially repeals the statutory tests contained in the definition of employment under the act by holding that they do not apply and that the appellant need not meet them. This is set out in the language of the majority opinion as'follows:
“If the question [of whether or not there was service performed for remuneration] be answered in the negative, then these brokers would not be in employment under the act, and Rem. Supp. 1943, § 9998-119 g (5) would have no application, and would not be considered, for subsection (5) is an exception provision, applying
and applicable only after it has been determined
that one is in employment under the act.” (Italics mine.)
The appellant was
determined
by the commissioner to be under the act. That is why it is before this court contending that the “determination” was erroneous. Any other interpretation makes this court a court of original jurisdiction, supplanting the appeal examiner and performing' administrative functions. We have held the exact contrary to be the law. As was said in
MacVeigh v. Division of Unemployment Compensation,
19 Wn. (2d) 383, 142 P. (2d) 900 :
“The right to unemployment compensation is founded upon the statute, not upon the comon law. In determining
*797
questions involving unemployment compensation, the courts exercise appellate jurisdiction as provided by the statute, and in accordance with the procedure outlined therein. The situation is analogous to that presented by the industrial insurance laws. In the case of
Maddox v. Industrial Ins. Commission,
119 Wash. 21 , 204 Pac. 1057 , this court said: ‘The jurisdiction of the superior court over such controversies is appellate only, and not original.5 The cases of
Tennyson v. Department of Labor & Industries,
189 Wash. 616 , 66 P. (2d) 314 , and
Ivey v. Department of Labor & Industries, 4
Wn. (2d) 162, 102 P. (2d) 683 , are to the same effect.
“In the case of
Puliz v. Department of Labor & Industries,
184 Wash. 585 , 52 P. (2d) 347 , we said:
“ ‘It has been repeatedly held that the courts have no original jurisdiction in the administration of the workmen’s compensation act, and that matters connected with the administration thereof must first be heard and determined by the department of labor and industries.5
“The right to proceed under such a statute as that relied upon by appellant is a statutory, and not a common-law, right.
Mattson v. Department of Labor & Industries,
176 Wash. 345 , 29 P. (2d) 675 .
“In the case of
LeBire v. Department of Labor & Industries, 14
Wn. (2d) 407, 128 P. (2d) 308 , we again called attention to the fact that in hearing an appeal from that department the court ‘acts only in an appellate capacity and does not exercise original jurisdiction in such controversies.5 55
This ruling completely deletes the tests from the act for all purposes. It holds that the appellant does not need to meet the tests to the satisfaction of the commissioner, nor are they to be applied to it when it comes before this court.
1 Washington and Lee L. Rev. 232, 238-9 (1939-40), in referring to
Washington Recorder Pub. Co. v. Ernst,
199 Wash. 176 , 91 P. (2d) 718 , said:
“In support of its decision the court quoted verbatim that comment of the Restatement of Agency which was favorable to its position. Had the court read a paragraph further it would have found that ‘. . .
The context and purpose of the particular statute controls the meaning
[of the term “servant55]
which is frequently not that which the same word bears in the Restatement of this subject!
By this process of judicial legislation the court, violating the
*798
well-established rule of statutory interpretation that the legislative definition must prevail, held that a concurrence of the three items in the statutory definition of ‘employment’ was not essential for exemption under the act. Since the purpose of this broad statutory definition was to prevent the evasions which arise from the refined distinctions attendant upon common law concepts, it would appear that the decision merely raised additional problems of tax avoidance.”
Can the
Recorder
case rule that the tests of the statute codified the common-law principles of master and servant, be “interpreted” as harmonious with our other cases, now that the “codified” statute has been judicially repealed? I give you the answer of the writer of this majority opinion in his concurring opinion to
Mulhausen v. Riley, post
p. 811:
“I am further of the opinion that it is not necessary to overrule the case of
Washington Recorder Pub. Co. v. Ernst,
199 Wash. 176 , 91 P. (2d) 718 , in order to arrive at the conclusion reached in the majority opinion. . . .
“Regardless of my personal views of whether or not it would have been more logical for this court to hold that the common-law concepts of the relationship of master and servant were applicable in determining whether or not one was an employer under the unemployment compensation act, we have so definitely stated that such concepts were not applicable that it seems to me we must accept the statutory definitions of employer and employment as they are written and
apply them, as best we can to the facts in each case.
If this is done
in the manner outlined in the Broderick case, supra,
then, in my opinion, the requirements of the statute will have been met and the claimed employer will not be placed in a position where it is practically impossible for him to show that he is not within the act.” (Italics mine.)
I take it that, in our new administrative function of making the determination in each case of employment, we will apply the statute by judicially repealing it as per the majority opinion. At least, it will no longer be “practically impossible for him [an employer] to show that he is not within the act.”
In deleting the statutory definition of the subject of the act, how will anyone know what, if anything, is left in the
*799
act? As was said in
Unemployment Compensation Commission v. Jefferson Standard Life Ins. Co.,
215 N. C. 479 , 2 S. E. (2d) 584 :
“The scope and purpose of the present act are exceptional in breadth. The draftsmanship of the definition section, which gives flesh and sinew to the whole, shows a carefully considered and deliberate purpose to leap many legal barriers which would halt less ambitious enactments. As far as language will permit it, the act evinces a studied effort to sweep beyond and to include, by redefinition, many individuals who would have been otherwise excluded from the benefits of the act by the former concepts of master and servant and principal and agent as recognized at common-law. In the words of the late
Justice Holmes,
in
Johnson v. U. S.,
163 Fed., 30 (32), (C. C. A. 1st): ‘The legislature has the power to decide what the policy of the law shall be, and if it has intimated its will, however indirectly, that will should be recognized and obeyed. The major premises of the conclusion expressed in a statute, the change of policy that induces the enactment, may not be set out in terms, but it is not an adequate discharge of duty for the courts to say: We see what you are driving at, but you have not said it, and therefore we shall go on as before.’ ”
The results of the decision in the case at bar are: It unsettles the entire question of administrative law, it judicially repeals the statutory definition of the subject of the act, it continues the confusion caused by the
Recorder
case.
Blake, J., concurs with Mallery, J.