(44) The work performed by the salesmen in each instance was a part of the regular business of the bankrupt.
(45) The parties, at the time the salesmen were engaged and during the period in question, believed they were maintaining a relationship in which the bankrupt possessed the right to direct not only what should be done but how it should be done and the salesmen were obligated under the arrangement to follow the bankrupt's instructions to the best of their ability.
Conclusions of Law
(1) The salesmen of the bankrupt from the period of January 1, 1937 to December 31, 1939 were employees of the bankrupt and engaged in its employment within the meaning of the applicable provision of Sub-chapter IX of the Social Security Act, c. 531, 49 Stat. 620.
(2) The taxes sought to be recovered by the plaintiff were properly collected from the bankrupt and its salesmen.
(3) On the pleadings and stipulations submitted in this case the defendant is entitled to judgment dismissing the plaintiff's complaint with prejudice at plaintiff's costs.
The narrow question here posed is whether or not certain salesmen were employees of the bankrupt taxpayer. The pertinent provisions of the Act are as follows:
Social Security Act, U.S.C.A., Title 42, § 1101:
"Section 901. On and after January 1, 1936, every employer (as defined in section 907) shall pay for each calendar year an excise tax, with respect to having individuals in his employ, equal to the following percentages of the total wages (as defined in section 907) payable by him (regardless of the time of payments) with respect to employment (as defined in section 907) during such calendar year: * * *."
42 U.S.C.A. § 1107:
Section 907. When used in this title --
"(a) The term 'employer' does not include any person unless on each of some twenty days during the taxable year, each day being in a different calendar week, the total number of individuals who were in his employ for some portion of the day (whether or not at the same moment of time) was eight or more.
"(b) The term 'wages' means all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash.
"(c) The term 'employment' means any service, of whatever nature, performed within the United States by an employee for his employer, except -- * * *."
In determining the question here in issue it seems to me the term "employee" as used in the Act should be given a meaning as broad as may be necessary to carry out the intent and purpose of Congress as expressed in the Act as a whole. There can be no question but that the Act was intended as being remedial to provide for the comfort and needs of the working man and his family in old age, as well as in times of economic distress. Its scheme contemplated not alone a contribution from the worker himself but from society as a whole to be dispensed when the worker was unable to gain a livelihood either through lack of work or for want of ability to longer work. Therefore it seems to me that it is essential to understand the objectives and scheme of the Act in order to determine the congressional intent. Accordingly when we consider when the Act came into existence, the humanitarian purposes it sought to attain, and the evils it sought to correct, one is impelled to adopt a liberal construction of the terms.
It seems to me clear therefore that Congress intended that one whose livelihood is dependent on another and is himself powerless to shift to society the economic burden of unemployment should be covered by the Act. General Wayne Inn v. Rothensies, D.C., 47 F.Supp. 391. The term employee is used generally to distinguish one who performs services for another from one who serves the public at large, and it is accordingly that in deciding cases involving social security laws, some courts have emphasized the importance of the rights to discharge and the question of whether the person whose status was in question was engaged in an independent enterprise for profit. Williams v. United States, 7 Cir., 126 F.2d 129; Texas Co. v. Higgins, 2 Cir., 118 F.2d 636.
Accordingly the term "employee", as used in the Act, is inclusive of the status of the salesmen of the bankrupt.
Judgment is entered for the defendant at plaintiff's costs.
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