Hargis v. Wabash Railroad Co.

163 F.2d 608, 1947 U.S. App. LEXIS 3003

• Court: Court of Appeals for the Seventh Circuit
• Decided: January 16, 1947
• Docket: 8956
• Status: Published

Opinions

HOLLY, District Judge.

The complaint in this case consists of two counts. In the first count plaintiff alleged that at the request of defendant he entered into a written contract of which he failed to understand the import to perform janitor service at the defendant’s passenger station at Taylorville, Illinois, as an independent contractor and that he performed such services until January 9, 1943; that he was in fact not an independent contractor but a mere employee of defendant; that defendant conceived the scheme of denominating him an independent contractor in order to evade the effect of a certain agreement entered into between defendant and its employees represented by the Brotherhood of Railway and Steamship Clerks, Freight Handlers, Express and Station Employees fixing the wages of various employees, including janitors and that he is entitled to the benefit of such contract as a third party.¹

In the second count he asks for compensation and damages under the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq.

Defendant filed a motion for summary judgment denying liability on two grounds, first, that plaintiff was not an employee but an independent contractor and had been paid the full amount due him under his contract and, second, that plaintiff had submitted his claim to the Third Division of the National Railroad Adjustment Board under the terms of the Railway Labor Act, 45 U.S.C.A. § 151 et seq., a hearing was had at which he was represented by representatives of the union of which he was a member, that the said Division of the Board made an award finding it had jurisdiction of the dispute, and that plaintiff was not entitled to the benefit of the contract made by the union on behalf of the employees for the reason that he was a sub-contractor and not an employee.

Defendant supported its motion for summary judgment by affidavits showing that plaintiff had entered into a written contract with defendant which provided that plaintiff as an independent contractor would do the janitor work to be performed in its freight and passenger station at Taylor-ville, Illinois, including the firing of the heating plant in the passenger station. By the terms of the contract plaintiff agreed that he was an independent contractor and assumed all risk of and liability for loss or destruettion of or damage to any property, and for personal injury to or death of any person whomsoever caused by any act or omission of him or his agents, servants or employees and agreed to hold the defendant harmless from and indemnify it against any loss or liability caused by any act of him or his servants. For these services it was agreed he should be paid $35 per month.

It was also stated in the motion for summary judgment that plaintiff, through the representative of the depot janitor employees of defendant, presented his claim to the management of defendant, that the claim “progressed” through the various officials of the defendant as prescribed by the Railway Labor Act and was finally submitted to the National Railway Adjustment Board, Third Division, where plaintiff, through such representative, presented his claim seeking an award from said Board that the services performed by him for defendant as provided in said contract were covered by an agreement between defendant and its employees and that (a) the Railway Company violated the contract entered into by defendant and the representatives of the depot employees when it employed Hargis on a contract basis purporting to class him as an independent contractor rather than an employee of the railroad, and (b) that Hargis should be compensated for the difference between the contract rate and the established daily rate for such service under the contract between defendant and the representative of the employees. A hearing was held in which plaintiff was represented and defendant appeared and made a statement of facts which recited the circumstances leading up to the making of the written agreement between Hargis and the Railroad Company and asserted that, “As provided by the contract effective February 6, 1937, George Hargis was an independent contractor and not an employee of the Receivers of the Wabash Railway Company² * * * ” and that the services performed were rendered as an independent contractor and no relationship of employer and employee existed between defendant and Hargis at that time. The position taken by the defendant on the hearing was that the dispute was “not a dispute such as falls within the purview of Section 3(j) of the Railway Labor Act as amended, and, therefore, is not properly before or subject to a decision by the National Railroad Adjustment Board, and, accordingly should be dismissed for lack of jurisdiction.”

The Board in its opinion accompanying its award said, inter alia, that the work performed by Hargis was clearly within the scope of the agreement between the railroad and its employees but that instead of assigning the work to an employee entitled to it the defendant (or rather its predecessor, the receivers) had entered into a formal written contract with Hargis and that he became and was an independent contractor, performing work under his contract with the carrier which belonged to employees under the agreement with the representatives of the employees. Hargis, it said, not being an employee held no rights under the clerk’s agreement. The agreement was negotiated for the benefit of defendant’s employees and Hargis, as an independent contractor, simply had no rights under the agreement. The Board made formal findings as follows:

"That the carrier and employe involved in this dispute are respectively carrier and employe within the meaning of the Railway Labor Act, as approved June 21, 1934:

“That this Division of the Adjustment Board has jurisdiction over the dispute involved herein; and

"That one who contracts with a Carrier to do work already reserved to employes under the terms of a collective agreement, is bound by the terms of his contract and can claim no benefits granted under the Carrier’s agreement with its employees.

“Award.

“Claim (a) sustained as to the extent indicated in this opinion.

“Claim (b) and (c) denied.”³

The District Court sustained defendant’s motion for a summary judgment giving as reasons therefor in a memorandum opinion that plaintiff was an independent contractor not an employee of defendant and that the award of the Board barred recovery in this action.

The material facts set out in the motion for summary judgment and the supporting affidavits were not controverted. We come then to the question whether the award by the Board is a final determination of plaintiff’s rights and, if that question is answered in the negative, was plaintiff an independent contractor or was he an employee of the defendant.

First, as to the finality of the award of the Board. By the terms of the Railway Labor Act, U.S.C.A. Title 45, § 153(m) it is provided that in cases involving disputes between a railroad company and its employees coming before the Board the award of the Board shall be final and binding upon both parties except in so far as it shall contain a money award. But it has been held that the award under certain circumstances may be reviewed by a court.

The question of the finality of the award was presented to the Court in Dahlberg v. Pittsburgh & L. E. R. Co., 3 Cir., 138 F.2d 121, 122. Petitioners brought their action to enforce an order of the Board which, by the Board’s interpretation of the contract between the Railroad company and its employees, gave certain seniority rights to petitioner. Defendant urged that the construction of the contract by the Board was clearly wrong and the court should refuse to enter an order of enforcement, while petitioners contended that the order was final and binding on the parties and the court was not authorized to review it. The Court held that the provisions in Sec. 153(m) of the Act that the awards of the Board should be final and binding upon the parties to the dispute should be construed in the light of the plan Congress had in mind in enacting the statute and that “The general plan of the statute clearly discloses an intention to use the words in the sense that the award is a definitive act of a mediative agency, binding until and unless it is set aside in the manner prescribed, and that it was intended that the Court should exercise broader powers than merely directing coercive process to issue if satisfied that the proceeding was authorized by law.” The court refused to be bound by the construction given under the contract by the Board, held it was erroneous and affirmed the judgment of the District Court refusing to enter an order of enforcement.

In Washington Terminal Co. v. Boswell, 75 U.S.App.D.C. 1, 124 F.2d 235, 244, the court held that the decisions of the Board were not final in a legal sense either as to facts or law; that the Board could not enforce its awards but they could be enforced only in a suit de novo and in such actions the court is not concluded by the finding of the Board nor is the railroad limited in any way as to its defenses or the evidence it may wish to present. “Its day in court in the enforcement suit is a full one.”

But, conceding that the award should not be reviewed in a case where the relationship of employer and employee is an undisputed fact, here we have a different situation. The defendant took the position on the hearing by the Board that plaintiff was not an employee but an independent contractor, and the Board should dismiss the complaint for lack of jurisdiction. In that contention the defendant was right. The facts were undisputed. A pure question of law was presented, a question for the courts to answer not the Board. Or, if the Board retains jurisdiction, then its award is certainly open to review by the Courts. Section 10(e) of the Administrative Procedure Act, 5 U.S.C.A. § 1009(e), expressly provides that any person adversely affected by the action of any administrative agency shall be entitled to judicial review thereof and the reviewing court shall decide all relevant questions of law. This provision is merely declaratory of the law as it was before the passage of the Act.

The Board found, in the formal findings, that the parties were, respectively carrier and employee, but that “one who contracts with a Carrier to perform work already reserved to employees under the terms of a collective agreement, is bound by the terms of his contract and can claim no benefits granted under the Carrier’s agreement with its employees.” The Board here determined as a matter of law that if a railroad can induce an employee to sign a contract concerning the terms of his employment such as that presented in this case the employee puts himself outside of the terms of the contract entered into between the railroad and the representatives of the employees, a device which, especially in times of low employment would enable the railroad to evade the obligations it entered into with reference to wages, working conditions, etc.

The Board’s findings are somewhat ambiguous. It is not clear from the opinion of the Board and its formal findings whether it intended to find that Hargis was an independent contractor and therefore not entitled to the compensation provided in the general agreement of the railroad with the employees, or that, though an employee, by having entered into a separate contract he was not entitled to the benefits of the general contract. In either case, I think the Board was in error and the District Court erred in sustaining defendants motion as to the first count. In this conclusion neither Judge Sparks nor Judge Major concurs and the judgment of the District court as to this count is affirmed.

Second: Assuming as Judge Major does, and as I think we may, that the Board passed only on the question of the right of plaintiff to share in the benefits of the general contract of the employees we come to the question of whether he is entitled to recover under the second count. In that count he bases his right to recover on the provisions of the Fair Labor Standards Act, while defendants position is that taken on the hearing before the Board, that he is an independent contractor, not an employee, and not entitled to the benefits of that Act. Judge Major and I are of the opinion that he is an employee and not an independent contractor.

In Kchrer v. Industrial Commission, 365 Ill. 378, 382, 6 N.E.2d 635, 637, the court said: “It is impossible * * * to lay down a rule by which the status of men working and contracting together can be accurately defined in all cases as employees or independent contractors. Each case must depend on its own facts and ordinarily no one feature of the relation is determinative but all must be considered together.”

Certainly the nature of the relationship cannot be determined alone by the use of the term “independent contractor” in the agreement of the parties. If it could employers might in many cases easily escape the responsibility imposed upon them by employer liability acts through the simple device of requiring each employee to enter into a contract such as that used in this case. Moreover the Wabash Railroad owed the duty to its travelling public to keep its depot in a reasonably safe condition. Could it escape responsibility for injury resulting from Hargis’ negligence by writing into a contract with him a provision that he was independent contractor and that he assumed all risk of liability for personal injury to or death of any person whomsoever caused by his negligence or that of his agents, servants or employees and that he would hold the Wabash Railroad harmless from and to indemnify it against all liability so arising. The mere recital of these provisions seems sufficient evidence that the writing was not meant to be taken seriously as establishing the relationship between the parties or that the Wabash Railroad expected a $35 a month janitor to indemnify it against damages resulting from his negligence in the care of the station.

Hargis was doing work that is ordinarily done by a mere unskilled laborer, sweeping the floor, washing windows and tending furnaces. His so-called contract did not run for a definite term, but could be terminated by the railroad or Hargis upon 10 days notice, and the railroad could, of course, terminate it at any time he did not perform his duties properly.

Tested by the ordinary common law rules, we think the court should not have held, merely because of the language of the written instrument, that the relationship between Hargis and the Wabash Railroad was that of independent contractor and not that of employer and employee. Moreover, it has been held, National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170 and Walling v. American Needlecrafts, 6 Cir., 139 F.2d 60, that in construing the provisions of the Fair Labor Standards Act, whose benefits Hargis seeks in this case, the scope of the Act is not limited to those who come within the definition of servant in master and servant law. Sec. 203(e) of the Act, Title 29, U.S.C.A. defines employee as including any individual employed by an employer and subsection (g) says that “ ‘Employ* includes to suffer or permit to work.”

In our opinion the District court erred in sustaining defendant’s motion as to the second count.

The judgment of the District Court is reversed as to the second count and the cause remanded.

Reversed and remanded.

1 While plaintiff here states his claim as that of a third party beneficiary he is not and could not be a third party beneficiary. The contract does not provide for third party beneficiaries. It is a contract between the railroad and the employees, represented by the Brotherhood. Plaintiff could claim the benefit of it only as an employee of defendant.

2 The Wabash Railway Company was then in the process of reorganization. Defendant is its successor and assumed the obligations of the Receivership.

3 Claim (c) is not involved in this case.