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Gilchrist v. Division of Employment Security

Decided: December 20, 1957.


Goldmann, Freund and Conford. The opinion of the court was delivered by Goldmann, S.j.a.d.


[48 NJSuper Page 150] The Director of the Division of Employment Security, Department of Labor and Industry, held that Thomas J. Gilchrist, t/a Baby Service Center, on November 2, 1952, effective January 1, 1952, became an employer subject to the Unemployment Compensation Act, under N.J.S.A. 43:21-19(h)(1), and that Stroll-O-Chair, Inc., became such an employer on April 5, 1954, effective that date, under N.J.S.A. 43:21-19(b)(2). This decision having been affirmed by the Acting Commissioner of Labor and Industry, petitioners appeal to this court. Stroll-O-Chair concedes that it acquired the organization and business of Gilchrist on April 5, 1954, and that if the latter was a subject employer at that time, it too is subject under N.J.S.A. 43:21-19(h)(2).

The salient facts have been stipulated in an agreed statement presented by the parties in lieu of record on appeal. R.R. 4:88-8.

Gilchrist was the New Jersey distributor for a special type of baby furniture, a combination stroller and highchair, manufactured by Stroll-O-Chair Corp., of New York, and known and advertised as "Stroll-O-Chair." He operated individually as Baby Service Center from February 1950 until April 5, 1954, with his place of business in Ridgefield. N.J., employing a bookkeeper and a deliveryman, and effecting sales through six or seven salesmen. On April 5, 1954 he formed Stroll-O-Chair, Inc., which took over his organization, assets and business. The company operated in the same manner as Gilchrist, and with the same salesmen. (Reference hereinafter to "petitioner" will mean either Gilchrist or the successor company.)

Petitioner gave the salesmen a suggested price ($114.95) at which the Stroll-O-Chair should be sold. However, many of the men did not hold to that price, but gave customers discounts in order to effect sales. Petitioner did not object to such price reduction, since it did not affect the amount payable to it, but merely reduced the salesman's commission (about $30). Petitioner made delivery on each order and collected the balance due in cash or check.

Salesmen had specific territories assigned them. These were protected under a gentleman's agreement, but the men sometimes sold outside their territory. Sales were recorded in triplicate on serially numbered order forms, purchased by the salesmen from petitioner at 25 cents a pad. One copy of the form was delivered to the customer, another to petitioner, and the third retained by the salesman, whose name was printed or stamped above the words "Authorized Dealer for [petitioner's name]" appearing at the top. Near the bottom of the form there was printed "For further information concerning delivery communicate with [petitioner's name, address and telephone number]." In making a sale the salesman would try to collect his commission by way of downpayment from the customer. If any part of the

balance thereafter paid by the customer to petitioner represented commission, that money would be paid to the salesman when his account was settled at the end of the month.

Deliveries were made by petitioner direct to the customer and the cost charged to him. Occasionally the salesman himself delivered the baby chair. If any question arose regarding delivery, the customer was required to communicate with petitioner, but if it concerned defective merchandise, he was to get in touch with the salesman. In case of a customer's default, the downpayment was retained by the salesman and petitioner was left to collect the balance due in whatever way it could.

It is further stipulated that salesmen used their own cars and received no reimbursement for automobile expense. They did not perform services at the central office; they were furnished no tools, secretarial service, telephone service, printed materials or office space, nor were they paid salaries. Salesmen had to secure and pay for any required mercantile or solicitor's license.

The men usually operated from their homes. They had no separate business establishments, offices or special equipment. Their cars carried no commercial registration. The salesmen had no business telephone listing or business stationery. They were not required to work any set hours or days. The men reported to the central office about once a month to settle their accounts. From time to time there were salesmen's meetings at the office to discuss price changes or other business matters.

The only source of income of the salesmen was from handling petitioner's Stroll-O-Chairs, although they tried, on occasion, to supplement this with some other form of work. However, these activities lasted for only short periods of time. One salesman testified that he sold Stroll-O-Chairs for 5 1/2 years and, prior to that, a chair known as "Wonder Chair." Another salesman sold Stroll-O-Chairs for a period of six or seven years and, before that, the "Baby Butler" and "Baby Pride" chairs of other companies.

The single question presented is: Did the salesmen perform

services in employment, as defined by the Unemployment Compensation Act, N.J.S.A. 43:21-19(i)(1) and (6)? For convenience, we reproduce the text of the statute, as ...

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