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McClain v. Church

Supreme Court of Arizona

October 1, 1951

McCLAIN
v.
CHURCH et al

Judgment affirmed.

Robert & Price, of Phoenix, for appellant.

D. Kelly Turner, of Phoenix, for appellee.

Udall, Chief Justice. Stanford, Phelps, De Concini and La Prade, JJ., concur.

OPINION

Udall, Chief Justice.

Page 45

[72 Ariz. 355] The question presented by this appeal is whether under the provisions of the Employment Security Act of Arizona, Ch. 124, 1941 Session Laws is the governing statute, real estate salesmen are employees of the real estate broker under whom they are licensed to operate.

This action was brought by the Employment Security Commission of Arizona, plaintiff-appellee, under the provisions of sec. 56-1014 (a) (1) and (2), A.C.A.1939, as amended, to recover from Jesse F. McClain, defendant-appellant, contributions, interest and penalties alleged to be due from defendant to plaintiff. From a money judgment for plaintiff, defendant appeals. For convenience the appellee will hereafter be referred to either as plaintiff or the commission and the appellant as defendant or broker.

By stipulation of counsel at the pre-trial conference it was agreed that if any taxes and interest were found to be lawfully due the commission from defendant for the period (January 1, 1945 to February 19, 1947) that the correct amount of the principal tax was $ 1,193.45, with statutory interest thereon. Hence no question is now raised as to the specific amount for which judgment was entered.

The commission, acting through a referee, held a formal hearing on April 19, 1946, for the purpose of making findings of fact upon which a determination could be made as to whether the services performed by a salesman constituted employment by the broker within the meaning of the Act. On June 28, 1947, the commission by a unanimous decision held that such salesmen were "in employment" by the broker and therefore subject to the Act. It is agreed that the following findings of fact made at that time by the commission as a predicate for its decision substantially and correctly portray the modus operandi of the parties:

[72 Ariz. 356] "The salesmen are hired by the brokers under a verbal contract with no time limit specified either written or orally. The contract may be terminated at will by either party. The brokers provide office space, telephone service and stenographic services for the salesmen. They also provide stationery and standard forms for taking a deposit on sales. Listings of property for sale may be obtained either by the broker or a salesman. Regardless of where the salesmen obtain their leads for a sale, they must pay the broker his commission. The usual commission is 50% to the broker and 50% to the salesman. A broker may enter into an additional agreement whereby a salesman may receive an additional 10% commission on a listing he has himself secured but which has been sold by another salesman. The 10% additional commission is paid half by the selling salesman and half by the broker. There are other minor deviations from the usual 50-50 division of profit from a sale. Services rendered by the broker such as provision of office space, telephone, advertising, etc., are paid from the broker's portion of the profits.

"All salesmen have access to and the right to sell any listing of the broker. No particular working hours are required of the salesmen. Sales meetings are occasionally called but are not at specified intervals. The salesmen are not required to close their deals in the broker's office but frequently do. Commissions usually come in the form of a check ...


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