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Rossnagle v. Capra

Decided: July 18, 1973.


Kolovsky, Matthews and Crahay. The opinion of the court was delivered by Matthews, J.A.D.


In this Workmen's Compensation appeal there is no dispute as to the facts surrounding the happening of the two accidents which occurred while petitioner was repairing motor vehicles. The sole issue at trial involved the question of whether petitioner was an employee of respondents Shell Oil Company (Shell) and Bob Capra (Capra) at the time of the first accident, and of Shell alone at the time of the second accident, rather than an independent contractor on both occasions. Petitioner sought to prove that he was merely the manager of the service station where the accidents occurred, while the respondents attempted to show that he was an independent dealer-operator of the station which he leased for specified definite terms from Shell.

In February 1969, petitioner, a 26 year old with an eighth grade education, had been employed as a service station attendant by respondent Capra at his service station in Easton, Pa. While there employed he met and engaged in a conversation with Michael Barnes, a representative of Shell, who petitioner claimed, after several conversations, offered him a job as the "manager" of a Shell station in Phillipsburg, N.J. for which he would earn $150 per week plus commissions. Subsequent meetings were held at which Barnes, Capra and petitioner's brother, a "manager" of another Shell station, were all present and at which the arrangements for petitioner to work as a manager were confirmed. He was enrolled in and attended a Shell service station training school in Wayne for four weeks and was paid $80 per week plus 10 cents per mile travelling expenses.

Following completion of the training course, petitioner arrived on April 28, 1969 at the station in Phillipsburg to begin work. Capra, Barnes and one Roland Harris, who was associated with the E. K. Williams accounting firm, came

to the station and began discussing operations with him. He was instructed to sign several papers and was told that the station "had to go in his name" because Capra would not be permitted to have two Shell stations in his name. He acknowledged that the papers included among them a promissory note for stock and inventory, a lease and a dealership agreement. However, he claimed that he did not understand any of them and stated that he "just signed them to get it over with." Capra also signed some papers. However, petitioner stated that he did not "put up any money" for the station.

Petitioner then commenced operation of the service station. A representative of Shell came to the station for a couple of days to show him how to run the business. Barnes also came there every day for at least two weeks and gave certain directions as to the operation of the station, such as what type of uniform he was required to wear, and how the various Shell products were to be displayed. Petitioner operated the station for three weeks prior to the occurrence of the first accident but admitted that he never received the weekly salary of $150 plus commissions that he claimed he was promised.

The first accident occurred on May 16, 1969 when a motorcycle which petitioner was attempting to repair jammed its throttle and carried him out into the street where he was struck by a truck. While he was recuperating in the hospital after this accident, Barnes visited him there and told him that "everything was in his name" and that the station was his.

He returned to the station in November of 1969 and continued to work, although only to a very limited extent due to his injuries, until July 1, 1970 when the second accident occurred. On this occasion he fractured his hands when a tire which he had been repairing exploded. After his return to work following the first accident he "drew" a salary of $75 per week and he continued to earn that figure after the second accident.

In describing his operation of the station, petitioner stated that the price of gasoline was set at a retail price determined by Shell and that Shell initiated promotional advertising campaigns to draw customers. He admitted that a sign had been made for the station which read "Barry's Shell" (petitioner's first name) which Barnes had ordered for him and for which Shell had paid. He stated that Barnes set the hours of operation for the station but that he had the right to hire and fire employees and also the right to order inventory. He admitted that he had the right to and actually did run the station as he desired except as noted and that he had complete control of the premises and equipment at the station. If a customer wanted to have repairs done on a car, he decided whether or not the customer would be allowed to "charge" the costs of the repairs. Further, he procured a gasoline dealer's license and sales tax certificate in his name which were handled by E. K. Williams, the accounting firm that Barnes had suggested to him. He maintained the daily books and records which were occasionally checked by Capra. He maintained a bank account in the name of Barry's Shell, on which only he and his brother were authorized to draw checks. A personal income tax return listing his income from the business, and other documents such as sales tax forms and unincorporated business tax returns were all filed on his behalf by the accountants. He had also taken out a workmen's compensation insurance policy which covered his employees and which had been in effect ever since he commenced work in April 1969. Finally, petitioner stated that he paid the lease rental on the station out of his gas collections. He admitted that he was never paid any salary by Shell.

Capra gave a somewhat different version of the business arrangement among the parties. Although he admitted that in February 1969 he discussed with petitioner and Barnes the possibility of petitioner "managing" a second service station which he intended to lease, he claimed that at a subsequent meeting he informed Barnes and petitioner that he would not be able to take over another service station because of family

problems. Capra further stated that they then discussed the possibility of petitioner operating the station on his own. The specifics of the potential arrangement were that petitioner was to be the dealer of the station and that he would act as guarantor of petitioner's financial obligations to Shell arising out of the dealership. Capra stated that he had agreed to be guarantor for petitioner because he owed an "obligation" to petitioner's brother.

It was Capra's position that, other than serving as a guarantor, he never had any connection with the dealership arrangement between Shell and petitioner. He said he never participated in the profits of the business nor did he advance any cash for setting up the operation. He never ordered any inventory for the station or had any authority with respect to the hiring and firing of employees. He further claimed that although he occasionally visited the station to make sure that the "paper work" was being done, in order to protect himself from liability as a guarantor, petitioner did not report his weekly receipts to him.

Finally, Capra stated that at the time petitioner took over operations of the service station he knew of no agreement under which petitioner would be paid $150 per week plus commissions for managing the station.

Michael Barnes, who no longer is associated with Shell, was called as a witness in behalf of respondent Capra. He stated that at the time of the business arrangement in question he was a dealer representative for Shell. He too agreed that in February of 1969 a conversation took place wherein the possibility of petitioner becoming a manager of the Phillipsburg service station was discussed, but stated that an agreement to that effect was never consummated. After Capra advised him that he wouldn't be able to take over another Shell station because of family problems, a dinner meeting was held sometime subsequent to discuss the possibility of petitioner operating the ...

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