Opinion
No. 46431.
April 7, 1947.
Guy W. Knight, of Philadelphia, Pa. (R. Aubrey Bogley, of Washington, D.C., Richard N. Clattenburg, of Philadelphia, Pa., and Cleary, Gottlieb, Friendly Cox, of New York City, on the brief), for plaintiff.
J.A. Rees, of Washington, D.C., and Sewall Key, Acting Asst. Atty. Gen. (Richard N. Anderson and Andrew D. Sharpe, both of Washington, D.C., on the brief), for defendant.
Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
Action by the Pennsylvania Railroad Company against the United States to recover taxes wrongfully collected under the Carriers Taxing Act.
Judgment for plaintiff in accordance with opinion.
This case having been heard by the Court of Claims, the court, upon the evidence and the report of a commissioner, makes the following:
Special Findings of Fact.
1. Plaintiff is and at all times hereinafter mentioned was a Pennsylvania corporation having its principal office in Philadelphia, and is a common carrier subject to the Act of Congress approved February 4, 1887, 24 Stat. 379, and amendments thereto, commonly known as the Interstate Commerce Act, 49 U.S.C.A. § 1 et seq.
2. On or about November 30, 1937, plaintiff filed a return pursuant to the Carriers Taxing Act of 1937, 45 U.S.C.A. § 261 et seq., reporting so much of the compensation of each of its employees as was not in excess of $300 for any calendar month during the quarterly period January 1 to March 31, 1937, and paid the amount of tax shown to be due on account thereof, but did not include therein any of the compensation paid during that period by the Jersey Contracting Corporation, hereinafter described, to the employees of the Jersey Contracting Corporation.
3. On or about December 31, 1943, plaintiff filed under protest a supplemental return reporting so much of the compensation paid by the Jersey Contracting Corporation to each of that corporation's employees as was not in excess of $300 for any calendar month during the quarterly period January 1 to March 31, 1937. That return showed an employer's tax of $2,615.46 and an employees' tax in the same amount, each representing 2¾ percent of the total compensation paid of $95,107.73. On the same date plaintiff paid under protest the sum of $5,230.92, the amount of tax under the Carriers Taxing Act shown by that supplemental return to be due on account of that compensation. No portion of the tax so paid by plaintiff was deducted from the compensation of the employees of the Jersey Contracting Corporation and plaintiff has not been reimbursed for any portion of that tax by those employees or by anyone else.
4. On or about December 31, 1943, after the filing of the supplemental return referred to in finding 3, plaintiff filed a claim for refund of $5,230.92 (the amount paid when the supplemental return was filed) upon the grounds among others, that the Jersey Contracting Corporation (hereinafter sometimes referred to as the "contractor") was an independent contractor performing certain services for plaintiff under a contract dated December 29, 1933, therein described, and that the employees of that contractor were not employees of plaintiff.
5. The claim referred to in finding 4 was disallowed in full by letter dated July 28, 1944, addressed to plaintiff by an Acting Deputy Commissioner of Internal Revenue on the ground that individuals employed by the contractor to perform services under the contract were employees of plaintiff within the meaning of Section 1(b) of the Carriers Taxing Act of 1937 and Section 1532(b) of Subchapter B of Chapter 9 of the Internal Revenue Code, 26 U.S.C.A. Int.Rev. Code, § 1532(b).
6. The contract of December 29, 1933, between plaintiff and the Jersey Contracting Corporation appears in the record on pages 15 to 26, inclusive, of the petition as a part of Exhibit B attached thereto and it is incorporated herein by reference. Under that contract the contractor agreed, among other things, to load and unload cars and vessels and to transfer between cars, vessels and platforms all freight arriving at or leaving from certain piers and docks owned by plaintiff at or near Jersey City, New Jersey, for which service plaintiff agreed to pay the contractor at certain rates therein set forth. In the performance of that work it was agreed that the contractor would use freight handling machinery and appliances owned by plaintiff, part of such machinery and appliances to be maintained at the expense of plaintiff and a part thereof at the expense of the contractor. Certain provisions of that contract read as follows:
"Eleventh:
"(a) Employees of the Contractor shall be satisfactory to the Railroad; shall conform to the general rules and regulations of the Railroad while on duty; and shall be subject to removal from any service rendered under the terms of this agreement, upon demand by the Railroad.
"(b) The work of the Contractor shall be under its supervision, subject to the general direction of the Superintendent of the Railroad, or his accredited representatives. It is distinctly understood and agreed, however, that the Contractor is not the Agent of Railroad in any sense, and that the work will be performed, as aforesaid, by the Contractor's employees under its supervision and management, subject to general direction of and performance satisfactory solely to the Railroad."
7. On or about August 30, 1942, plaintiff filed a return pursuant to Subchapter B of Chapter 9 of the Internal Revenue Code reporting therein so much of the compensation of each of its employees as was not in excess of $300 for any calendar month during the quarterly period April 1 to June 30, 1942, and paid the amount of tax shown to be due on account thereof. Plaintiff did not include therein any of the compensation paid during that period by the contractor to its employees.
8. On or about September 19, 1944, plaintiff filed under protest a supplemental return reporting therein so much of the compensation paid by the contractor to each of its employees as was not in excess of $300 for any calendar month during the quarterly period from April 1 to June 30, 1942. That return showed an employer's tax of $11,122.05, representing 3 percent of the total compensation paid by the contractor of $370,735.14. On the same date, plaintiff paid under protest the sum of $11,122.05, the amount of tax under Subchapter B of Chapter 9 of the Internal Revenue Code shown by that supplemental return to be due on account of that compensation. No employees' tax was reported or paid.
9. On or about October 3, 1944, plaintiff filed a claim for refund of the foregoing sum of $11,122.05 upon the grounds, among others, that the Jersey Contracting Corporation was an independent contractor performing certain services for plaintiff under the contract dated January 2, 1940, and that the employees of the contractor were not employees of plaintiff.
10. The claim for refund referred to in finding 9 was disallowed in full by a letter dated February 12, 1945, addressed to plaintiff by a Deputy Commissioner of Internal Revenue upon the ground that individuals employed by the contractor to perform services under the contract were employees of plaintiff within the meaning of Section 1532(b) of Subchapter B of Chapter 9 of the Internal Revenue Code.
11. The contract of January 2, 1940, between plaintiff and the Jersey Contracting Corporation, and referred to in the preceding findings, appears in the record on pages 35 to 51, inclusive, as a part of Exhibit E of the petition and it is incorporated herein by reference. Under that contract the contractor agreed, among other things, to load and unload cars and vessels, and to transfer between cars, vessels, and platforms in a manner satisfactory to plaintiff all freight arriving at or leaving from certain piers and docks owned by plaintiff at or near Jersey City, New Jersey, for which services plaintiff agreed to pay the contractor at certain rates therein set forth. In the performance of that work it was agreed that the contractor would use freight handling machinery and appliances owned by plaintiff, part of such machinery and appliances to be maintained at the expense of plaintiff and a part at the expense of the contractor. One provision of that contract read as follows:
"Eleventh: The work covered by this agreement is to be performed by the Contractor promptly and adequately in all respects, and in the performance of such work so to be done by the Contractor, the Contractor will furnish all labor of every kind except as may be covered by Article Third of this agreement. And it is expressly understood and agreed that the Contractor shall be and remain an original private and independent contractor hereunder, and shall employ, pay from its own funds, and discharge all persons engaged in the performance of the work to be done by the Contractor hereunder, and all such persons shall be and remain the sole employees of the Contractor, and subject to its exclusive direction and control."
12. In addition to the action of the Commissioner of Internal Revenue on the claims for refund heretofore referred to, the Railroad Retirement Board also held that the individuals engaged by the Jersey Contracting Corporation in the performance of the two contracts were employees of plaintiff for the purpose of federal unemployment insurance and retirement benefits.
13. Under the provisions of both of the contracts (that of December 29, 1933, referred to in finding 6, and that of January 2, 1940, referred to in finding 11) plaintiff agreed to maintain at its expense the machinery and appliances at the Manhattan Piers and at the Greenville Covered Pier except for repairs made necessary by the negligence of the contractor, and the contractor agreed to maintain at its expense the machinery and appliances at the Greenville Open Dock and Ground Storage Yard provided that if such maintenance expense exceeded an average annual sum of $20,000, and such average excess resulted in a cost to the contractor for maintenance in excess of 3.3 cents per ton of freight handled at the Greenville Open Dock and Ground Storage Yard, plaintiff was to assume such excess cost which was not to include any repairs made necessary by the negligence of the contractor.
14. By reason of physical location plaintiff had no direct rail connection for freight destined to or from New York City and it therefore became necessary to unload incoming freight on the New Jersey side and transfer it by boat or lighter or barge across the Hudson River and New York Bay to New York City, except in some instances when loaded freight cars moved on car floats from railroad tracks in New Jersey to railroad tracks in New York City. Likewise freight originating in New York City or points in Manhattan Island were similarly transferred to the New Jersey side. The handling of such freight from cars to piers to boats and from cars to platforms to ground; or from boats to piers to cars; or from boats to piers to ground, is commonly known as stevedoring or ship-freight handling work. The work just described was an integral part of the shipment of freight from its point of origin to its destination and was a part of the shipping service performed by plaintiff under bills of lading and tariffs and charged to shippers. It included movement of freight of all kinds on plaintiff's railroad both in carload lots and less than carload lots from and to New York City.
15. Prior to 1916 the handling of freight of the character described in finding 14 was performed by plaintiff with its own employees at its terminals in Jersey City. These services were performed by the Northern Contracting Company from 1916 to 1933, and since 1933 by the Jersey Contracting Corporation under the two contracts heretofore referred to.
16. The Jersey Contracting Corporation was incorporated as a Delaware corporation December 21, 1932, and has its principal business office at 500 Fifth Avenue, New York City. It maintains a smaller office at the piers in Jersey City. Under its certificate of incorporation it is authorized "to carry on the business of freighting, stevedoring, elevating, lighterage, storage, wharfage, warehousing, forwarding, docking, steering and berthing of ships and vessels; receiving, loading, unloading, transferring, storing, warehousing, elevating, and forwarding by truck, car float, boat, and in any other way, all kinds of goods, wares, merchandise, and commodities, and the doing of any act or thing connected therewith or incidental thereto."
17. No officers or employees of the contractor are or ever have been officers or employees of the plaintiff. No officers or employees of the plaintiff are or ever have been stockholders of the contractor. No officers of the contractor are or ever have been stockholders of the plaintiff. Neither the plaintiff nor any of its subsidiaries or affiliates own or ever have owned any of the stock, bonds, or other obligations of the contractor.
18. The work under the two contracts heretofore referred to was performed by the contractor at or near Jersey City where plaintiff has extensive freight yards at Manhattan Piers and Greenville Yards. These freight yards contained valuable and expensive equipment all owned by plaintiff which also owns and operates the barges and lighters used in carrying its freight between New Jersey and New York City. As heretofore shown, all the equipment used by the contractor in the performance of its work under these contracts was owned by plaintiff. New equipment was purchased from time to time by plaintiff upon the request of the contractor. The contractor billed plaintiff twice each month for the work done under the contracts and payments therefor were received in about three weeks.
19. The work performed by the contractor under these contracts was a special type of work requiring expert knowledge and experience. It constituted the great bulk of all work performed by the contractor though at times, including the periods involved in this proceeding, the contractor handled some freight for other persons. Similar freight handling from dock to steamship and from steamship to dock is performed by other stevedoring contractors instead of by the railroad or steamship companies involved.
20. In carrying out the work under the two contracts in question, the contractor employed approximately 1,000 men during the years of World War II and approximately 600 men prior to that time. These employees are known as marine freight handlers and approximately 50 percent of such employees are and were during the periods here involved members of Local No. 976 of the International Longshoremen's Association. About 50 percent of these employees are fairly permanent and the remaining 50 percent are transient and come and go within a few weeks or months. The contractor has a contract with the International Longshoremen's Association covering the wages and working conditions of the contractor's employees. The plaintiff is not a party to that contract and all negotiations with respect to the making of that contract and its interpretation and enforcement are carried on between the Longshoremen's Association and the contractor. Plaintiff is not now and never has been a party to any such negotiations.
21. The employees of the contractor are hired by that corporation and not by plaintiff. At the time of hiring, a record is made out for each employee and a brass identification check bearing a number and the name of the contractor is issued by the contractor to and is worn by each employee. The employees are paid and discharged solely by the contractor. They received no free transportation from plaintiff nor are they members of any employee organization of the plaintiff. Plaintiff issues no rules for the conduct of employees of the contractor except such general rules as "no smoking on the piers" and the plaintiff has never requested the contractor to discharge any of its employees.
22. The contractor makes reports of accidents involving injuries to its employees to the United States Employees Compensation Commission under the Longshoremen and Harbor Workmen's Compensation Act, 33 U.S.C.A. § 901 et seq., and also to the New Jersey Department of Labor under the New Jersey Workmen's Compensation Act, N.J.S.A. 34:15-1 et seq. The contractor files no reports with the Interstate Commerce Commission.
23. To handle the work at the two terminals, the contractor had an operating organization consisting of vice president and general manager who had charge of all operations, a superintendent in charge of each of the terminals, a pier foreman for each of the piers in the two yards, a gang foreman for each of the gangs working on the several piers, and gangs of six to ten laborers working under each gang foreman.
24. On eastbound movements of freight into New York in the two terminals, the contractor's employees secure each day from plaintiff's lighterage agent located at each terminal log sheets showing the freight which is to be transferred eastbound, such log showing the number of the freight car in which the freight is located, the name of the lighter or barge on which it is to be loaded, the destination in New York City, the permit date if the lading is for export and a description of the lading and its location, which in some instances may be on platforms rather than in cars. With that information, the contractor proceeds to handle the freight under its contract without any further instructions from the plaintiff or its officials or employees.
25. On movements westbound out of New York arriving at the two terminals by lighter or barge, the contractor's employees receive from plaintiff's lighterage agent at each of these terminals shipping orders (carbon copies of the bills of lading covering shipments) which describe the lading, destination, and the lighter on which it will be found. The contractor and its employees receive no other instructions from the plaintiff or its officials or employees concerning the handling of this freight. The contractor and its employees have nothing to do with the sealing of the cars and the movement of the cars out of the terminal, such work being performed by plaintiff.
26. During the entire period from 1932 to the present time while the contractor has been handling the loading and unloading of freight for plaintiff at the two Jersey City terminals (including the periods involved in this case — January 1 to March 31, 1937, and April 1 to June 30, 1942), plaintiff, acting through its officers, employees, and agents, has never given any instructions or directions to the employees of the contractor concerning the manner of performance of their work and has at no time in any way supervised or directed, or attempted to supervise or direct, the manner of rendition of their services.
The contractor through its officers and employees complied with its contracts with plaintiff during the periods involved in this suit through the exercise of its own judgment as to the best manner in which to perform the work. This work is done under an accepted and established practice which has varied little over a long period of years except as new and different commodities or materials have been handled and new and improved types of equipment have been added. The contractor's supervising officials and foremen were able, intelligent, and skilled men with years of experience in this work, most if not all of them having been with the contractor since it was organized in 1932 and many having worked for its predecessor, the Northern Contracting Company. Many of the workmen were likewise skilled men and had had long years of experience in this work. Because of their experience in this work it was not often necessary for a man engaged in a particular piece of work to ask for advice or instruction from his superior; for example, the superintendent from the general manager, the pier foremen from the superintendent, the gang foremen from the pier foremen, or the workmen from the gang foremen. However, the work was carried out through the organized direction of these individuals and whatever advice or instructions were necessary were given by these individuals to their subordinates in order to accomplish the results desired under the contract.
Conclusion of Law.
Upon the foregoing special findings of fact, which are made a part of the judgment herein, the court concludes that, as a matter of law, the plaintiff is entitled to recover $16,352.97 with interest as provided by law on $5,230.92 from December 31, 1943, and on $11,122.05 from September 19, 1944.
It is therefore adjudged and ordered that the plaintiff recover of and from the United States the sum of sixteen thousand three hundred fifty-two dollars and ninety-seven cents ($16,352.97) with interest as provided by law on five thousand two hundred thirty dollars and ninety-two cents ($5,230.92) from December 31, 1943, and on eleven thousand one hundred twenty-two dollars and five cents ($11,122.05) from September 19, 1944.
Plaintiff sues to recover taxes paid by it pursuant to the Carriers Taxing Act of 1937 and amendments thereto, 50 Stat. 435, 45 U.S.C.A. § 261 et seq., 26 U.S.C.A. Int. Rev. Code, § 1500 et seq., with respect to compensation for personal services paid by the Jersey Contracting Corporation. Since January 1, 1933, this corporation has performed work for plaintiff in loading and unloading cars and vessels and transferring freight between cars, vessels and platforms at Jersey City and Greenville, New Jersey.
Plaintiff, as a common carrier subject to the provisions of the foregoing act, filed tax returns for the quarterly periods January 1 to March 31, 1937, and April 1 to June 30, 1942, but did not include in those returns any tax on compensation paid to individuals employed by the Jersey Contracting Corporation in the performance of its contracts with plaintiff. Plaintiff subsequently filed under protest supplemental returns for both of the foregoing periods and reported therein taxes which it paid upon the compensation of these individuals who were employed by the contractor. It later filed timely claims for refund for these additional taxes which were disallowed by the Commissioner of Internal Revenue on the ground that the individuals employed by the Jersey Contracting Corporation to perform the services under its contracts with plaintiff were employees of plaintiff within the meaning of the Carriers Taxing Act.
During the taxable periods involved in this suit and both prior and subsequent thereto, plaintiff had no direct rail connection for freight destined into or from New York City. Incoming freight was unloaded from cars on plaintiff's railroad tracks in New Jersey and transported by water to New York City; and, similarly, freight originating in New York City was transferred to New Jersey where it was unloaded from boats and loaded onto cars. This work is commonly known as stevedoring or ship-freight handling work. It was a part of the shipping service performed for shippers, the charges for which were included by plaintiff under bills of lading and tariffs. Prior to 1916 the stevedoring work just described was performed by plaintiff with its own employees. From 1916 to 1933, that work was performed for plaintiff by the Northern Contracting Company, and since 1933 it has been performed for plaintiff by the Jersey Contracting Corporation under two separate contracts which are described in our findings, one entered into in 1933 and the other in 1940. The contracts differed in some details but the same type of service was performed under both contracts and under similar conditions.
The question presented is whether these individuals who were employed by the Jersey Contracting Corporation to perform this freight handling work for plaintiff are to be considered as employees of plaintiff within the meaning of the Carriers Taxing Act. That act levies a tax on "employers" measured by the compensation paid to their "employees" which is to be deducted by the "employers" from the compensation paid to the "employees." By that act the term "employer" is generally defined as a carrier, or any company which is owned or controlled by a carrier. The parties are agreed that plaintiff is an employer within the meaning of that act and that the Jersey Contracting Corporation is not such an employer. The same act defines an "employee" as "any person in the service of one or more employers for compensation", and further provides that "an individual who is in the service of an employer * * * if he is subject to the continuing authority of the employer to supervise and direct the manner of rendition of his service, which service he renders for compensation."
There can be no question that the individuals involved rendered service for compensation and that such services were an integral part of plaintiff's service as a common carrier of freight in transit. It is also true that if plaintiff had caused this service to be performed without the intervention of contracts of the character here involved, the individuals performing those services would have been considered as employees within the meaning of the Carriers Taxing Act. However, plaintiff maintains that the Jersey Contracting Corporation was an independent contractor and that the individuals employed by that contractor to perform these services were employees of the contractor and not employees of the plaintiff for the reason that they were not subject to the continuing authority of plaintiff to supervise and direct the manner of rendition of their services. We agree.
The Jersey Contracting Corporation was a separate corporation without any corporate or stockholding relationship with plaintiff. While the work performed by the contractor for plaintiff was a part of plaintiff's freight handling work which at one time was handled by plaintiff itself, it was a character of work which was frequently handled by carriers through independent contractors. Chicago, Rock Island Pacific Ry. Co. v. Bond, 240 U.S. 449, 36 S. Ct. 403, 60 L.Ed. 735, and United States v. Fruit Growers' Express Co., 279 U.S. 363, 49 S.Ct. 374, 73 L.Ed. 739. We are convinced both from the contracts themselves and what was done under the contracts that the Jersey Contracting Corporation was an independent contractor. The individuals who performed the services were employed, paid, and directed by the Jersey Contracting Corporation and in every sense were subject to the direction of that corporation as employer in the supervision and direction of the services rendered, as explained in detail in our findings.
The statute says that an individual is an employee of a given employer if he is subject to the authority of the employer "to supervise and direct the manner of rendition of his service." A reasonable construction of this language is that the employer must have the right to supervise and direct the details of the work which the employee is called upon to perform. The most that can be said under the contracts with respect to authority for supervision by plaintiff is that the work performed by the Jersey Contracting Corporation shall be satisfactory to plaintiff, which means that the control reserved to plaintiff related to the results obtained and not as to the manner in which the services were performed in obtaining those results.
It is true that the 1933 contract provides that the employees of the Jersey Contracting Corporation shall be satisfactory to plaintiff, shall conform to rules and regulations of plaintiff while on duty, and shall be subject to removal upon demand by plaintiff, but we do not interpret these provisions as giving any authority to plaintiff to supervise and direct the details of the services rendered, and the plaintiff did not in any sense undertake to supervise and direct the individuals employed by the contractor. Their supervision and direction in the performance of their work came solely from the contractor by whom they were employed and paid, the Jersey Contracting Corporation. These provisions are similar to those often appearing in the standard form of government contract which provides that
"The contracting officer may require the contractor to remove from the work such employee as the contracting officer deems incompetent, careless, insubordinate, or otherwise objectionable, or whose continued employment on the work is deemed by the contracting officer to be contrary to the public interest."
Even though the work being performed by a government contractor should be work which would ordinarily be performed by the Government, the inclusion of such a provision in the contract would not of itself make the persons performing the work employees of the Government.
Some point is sought to be made by defendant that the individuals who were performing these services required little or no direction and that the contractor was little more than an employment agent for plaintiff. The facts are certainly to the contrary. The work performed required special knowledge and skill which were furnished through the contractor's organization and direction. The supervision required was furnished by the contractor through a complete operating organization consisting of a general manager, superintendents, pier foremen and gang foremen, and the individuals performing the service looked to their immediate superiors for supervision and direction and not to plaintiff for orders in carrying out the work. At no time did plaintiff undertake to exercise any authority in directing the manner in which the services should be performed.
The statute also provides that the employee must not only be subject to the continuing authority of the employer in the rendition of his service but that service must be rendered for compensation. It seems most logical, as found by the court in Northern Pacific Railway Co. v. Reynolds, D.C., 68 F. Supp. 492, that the employer referred to in the statute would be the one who paid the compensation — in this instance the Jersey Contracting Corporation and not plaintiff. Admittedly the Jersey Contracting Corporation is not an employer within the meaning of the Carriers Taxing Act, and accordingly it cannot be said that the individuals employed and paid by it and subject only to its direction are employees within the meaning of that act.
The further contention is made by defendant for a broad statutory construction of the act in order to effectuate the social purpose of the legislation. However, where a statute is not ambiguous — as we think this one is not — there is no room for statutory construction such as would be necessary to bring within that act by implication individuals not otherwise specifically included therein. In addition, the exclusion of these individuals from the benefits of the Carriers Taxing Act does not deny to them the benefits of another statute, the Federal Social Security Act, 42 U.S.C.A. § 301 et seq., which was evolved about the same time for a similar purpose. The two statutes are mutually exclusive and it is clear that Congress did not intend that a broad construction should be given to either act which would result in overlapping jurisdiction. If material, a representative of the employees involved testified in this proceeding and strongly urged that they be left outside the Carriers Taxing Act and other legislation relating to employees of carriers.
This case is distinguishable from cases like the National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170, which involved newsboys who sold newspapers under supervision of the publisher but whose compensation was measured by the profit on the papers sold, and United States v. Vogue, Inc., 4 Cir., 145 F.2d 609, which concerned seamstresses working at home and paid on a piece-work basis. Not only did there exist authority for supervision and direction within the one held to be the employer, but also there was no intervening employer such as we have in this case. As the court said in Northern Pacific Railway Co. v. Reynolds, supra [ 68 F. Supp. 494], in discussing those cases:
"The question in both of those cases was whether the individuals involved were themselves independent contractors or `employees.' That situation is not present here. The individuals affected here are employees of either the contractors or of the railroad and are within the coverage and protection of either the Social Security Act and the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq., or they are governed by the special legislation enacted for railroad employees — that is, the Railroad Retirement Act of 1937, 45 U.S.C.A. § 228a et seq., the Railway Labor Act, 45 U.S.C.A. § 151 et seq., the Carriers Taxing Act of 1937, 26 U.S.C.A. Int.Rev. Code, § 1500 et seq., and the Railroad Unemployment Insurance Act, 45 U.S.C.A. § 351 et seq. They cannot be within the scope of both schemes of legislation as they are mutually exclusive."
A different conclusion might be said to have been reached in Wabash R. Co. v. Finnegan, D.C., 67 F. Supp. 94, but the elements of supervision and direction by the carrier over the employees of the contractor, alluded to by the court, were so much greater than in the case at bar as to suggest a distinction between the two cases on their facts.
Finally defendant urges that the Act of July 31, 1946, Public Law 572, which amended the statute with which we are concerned and set up a new definition of employees within the meaning of that act, is to be interpreted as a clarifying amendment which can be used to interpret the act in effect during the period involved in this proceeding. In the first place, we fail to find anything in the act or in the legislative history which would give to the statute a retroactive effect and make it applicable to the period with which we are concerned. In addition, when hearings were being held on a provision of that act which the proponents stated would bring the very individuals with which we are concerned under the act, officials of the Jersey Contracting Corporation as well as proponents of the legislation appeared as witnesses. After a full consideration of the provision in question, it was eliminated from the act, and we find nothing in the new definition of "employee", when considered as a whole and in the light of legislative history, which changes our conclusion previously expressed that the individuals employed by the Jersey Contracting Corporation for the performance of the work involved under the contracts in question are not employees of plaintiff within the meaning of the Carriers Taxing Act.
Taxes cannot be escaped by skill-fully devised contracts. On the other hand, the terms of a contract may not be stretched beyond their natural meaning in order to accomplish social ends however desirable. The plaintiff had found it desirable and practicable to have this special work done by independent contractors long before the taxing acts were passed. Contracts of the same type antedated both the taxing and social purpose legislation. The contracts were evidently made on the basis of practical operation and were not made in an effort to escape the consequences of either type of legislation. Since the facts of the case do not bring the plaintiff's contract within the terms of the Carriers Taxing Act we are not authorized to do so by judicial construction.
Plaintiff is entitled to judgment for $16,352.97 with interest as provided by law on $5,230.92 from December 31, 1943, and on $11,122.05 from September 19, 1944.
It is so ordered.
MADDEN, WHITAKER, and LITTLETON, Judges, concur.
WHALEY, Chief Justice, took no part in the decision of this case.