The opinion of the court was delivered by: GANEY
This is a suit for the recovery of the sum of $280.98 alleged to have been erroneously assessed and collected from the plaintiff under Title IX of the Social Security Act, 49 Stat. 620, 42 U.S.C.A. § 1101 et seq. As originally drawn the complaint contained three counts, but leave was granted to the plaintiff to dismiss the first and third counts, and the case was heard with respect to the second count only.
With respect thereto, the Court makes the following findings of fact:
(1) This is a suit to recover internal revenue taxes in the sum of $280.98 alleged to have been erroneously paid by McMillan, Rapp & Company (now bankrupt) under the provisions of Title IX of the Social Security Act, c. 531, 49 Stat. 620, for the period January 1, 1937 to December 31, 1939.
(2) On March 8, 1941, the plaintiff in his capacity as trustee in bankruptcy for McMillan, Rapp & Company filed a claim for refund alleging that the taxes here in question were erroneously collected for the reason that the salesmen of the bankrupt were not its employees, but were independent contractors.
(3) The claim for refund was disallowed by the Commissioner on July 5, 1941, for the reasons that the evidence presented did not establish that the salesmen were independent contractors during the period in question.
(4) The bankrupt during the period between January 1, 1937, and December 31, 1939, was a corporation engaged in the brokerage business and dealing in securities.
(5) It maintained its principal place of business in Philadelphia, Pennsylvania, where it employed bookkeepers, stenographers, telephone operators, statisticians, cashier and a person who executes the orders which it receives for the purchase or sale of securities.
(6) At some time during the period in question the bankrupt employed some 27 salesmen, most of whom worked for it during the entire period.
(7) The contracts of hire between the bankrupt and the salesmen were oral and terminable at will by either party.
(8) Under the working arrangement between the parties, the salesmen were expected to devote the normal working day to producing orders for the purchase or sale of securities by the bankrupt.
(9) The salesmen were expected to report regularly to the main office of the bankrupt if working the Philadelphia metropolitan area and to attend sales conferences and meetings.
(10) Those salesmen working in territories outside of the metropolitan area were expected to keep in close contact with the main office and to attend sales meetings from time to time.
(11) Each salesman working in the metropolitan area was furnished with a desk at the main office, telephone, statistical information and reports, order blanks and office supplies in the same manner as such facilities were rurnished to employees on a salary basis.
(12) The business cards used by the salesmen carried the name of McMillan, Rapp & Company together with the salesman's name.
(13) All letters written by the salesmen in connection with the securing of orders for securities were placed on the stationery of McMillan, Rapp & Company and were subject to inspection and approval, or revision, by an officer of the bankrupt.
(14) All orders taken by the salesmen were required to be turned in to the bankrupt. If for credit, or other reasons, the order was unsatisfactory to the company it was rejected. On a rejected order the salesmen were not permitted to place the order with any other company.
(15) The bankrupt was not a member of the New York Stock Exchange. All orders which customers wished to place for securities listed on the New York Stock Exchange were expected to be taken by the salesmen and turned in to the bankrupt, even though no commissions were payable to the salesmen for such services.
(16) The salesmen were paid on a commission basis, each receiving 50 per cent, of the gross profit on such business as he was ...