Guess v. Montague

• Decision Date: 16 September 1943
• Docket Number: No. 5089.,5089.
• Parties: GUESS et al. v. MONTAGUE.
• Court: U.S. Court of Appeals — Fourth Circuit

140 F.2d 500 (1943)

GUESS et al. v. MONTAGUE.

No. 5089.

Circuit Court of Appeals, Fourth Circuit.

September 16, 1943.

W. K. Charles, of Greenwood, S. C. (L. D. Jennings, of Sumter, S. C., on the brief), for appellants.

John D. Lee, of Sumter, S. C. (Lee & Moise, of Sumter, S. C., on the brief), for appellee.

Frederick U. Reel, Atty., U. S. Department of Labor, of Washington, D. C. (Douglas B. Maggs, Sol., and Bessie Margolin, Asst. Sol., both of Washington, D. C., George A. Downing, Regional Atty., of Atlanta, Ga., and Morton Liftin, Atty., U. S. Department of Labor, of Washington, D. C., on the brief), for Administrator of Wage and Hour Division, U. S. Department of Labor, as amicus curiae.

Before PARKER, SOPER, and DOBIE, Circuit Judges.

PARKER, Circuit Judge.

This is an appeal from a judgment for defendant in an action instituted to recover unpaid minimum wages, overtime compensation, etc., under section 16(b) of the Fair Labor Standards Act, 52 Stat. 1069, 29 U.S. C.A. § 216(b). The trial court directed a verdict for the defendant on the ground that he was operating a service establishment the greater part of whose selling or servicing was in intrastate commerce within the meaning of section 13(a) (2) of the act, 29 U.S.C.A. § 213(a) (2), and on the further ground that the plaintiffs had been paid in good faith the minimum wages due them before institution of suit and before any controversy arose as to their rights under the act.

Defendant operated a machinery repair shop, in which he repaired machinery for his customers, sold repair parts and rebuilt and sold secondhand machinery which he had purchased. A substantial part of the business done was in interstate commerce and it does not appear that any records were kept separating the labor performed in connection with interstate transactions from those purely intrastate or that it would have been feasible to make such separation. The nature of the business and of the work done by plaintiffs therein is correctly set forth in the brief of the Administrator of the Wage and Hour Division, filed amicus curiae, from which we quote as follows:

"Appellee operated a machine shop under the supervision of a mechanical engineer in which he employed a foreman, about 20 persons as machinists and laborers, and an apprentice. Appellee testified that the major part of the business for 25 years was the rebuilding of second-hand machinery. According to the evidence the employees in the machine shop did machine work of any kind. This included work on planing mill machinery, saw mill machinery, farm machinery, cotton gin machinery, boilers, gears, steam engines, water pumps, steam, acetylene, and wood work machinery.

"When the machinery was delivered to appellee's plant, the laborers unloaded it in the yard which apparently adjoins the machine shop. `The part of it that we think is worth repairing we separate from what we consider not worth repairing. That is scrap.' Thus the machinery would be partially disassembled or dismantled. The principal work of the laborers was in the yard on the second-hand equipment and included separating the scrap from the part that could be salvaged and cutting the scrap to prepare it for shipment. The scrap produced in this manner by the laborers reached substantial proportions, totaling more than 300,000 pounds in the 7 month period prior to the trial. The scrap was apparently accumulated in carload lots for shipment to industrial purchasers.

"The work in the machine shop included the repair of machinery belonging to others as well as work on the second-hand machinery acquired by appellee. The rebuilding of the machinery preparatory to its resale is accomplished in the `machine shop' under the supervision of a mechanical engineer. Skilled machinists operate the complicated machinery necessary to the rebuilding; the appellant laborers, although they would lift the goods into the lathes and take them out and help the machinists at whatever there was to be done were `instructed * * * to keep their hands off the machines'. According to one of the machinists, `in the operation of the lathe machine * * * we had gears and parts to machine-up and put on new parts by pulleys and sprockets to pull the gears and sawed and bolted them.'

"The equipment thus `manufactured, worked on, or produced at the machine shop' by its very nature had principally industrial uses. The description of the machinery in the record demonstrates its use for industrial purposes. The testimony of one witness indicates that the machinery was delivered `to the furniture plant and different places like that'. The record further indicates that among appellee's customers were lumber companies, a brick and tile company, manufacturing companies, furniture companies, cotton mills, and machine companies."

We do not think that a machine shop of the sort operated by defendant can be held to be a service establishment within the meaning of the exemption contained in section 13(a) (2) of the statute. It is to be noted that the language of the exemption is "retail or service establishment the greater part of whose selling or servicing is in intrastate commerce", and that the purpose of the exemption, as shown by the history of the act, was to make certain that retailers located near and making occasional sales across state lines would not be covered by the provisions of the act. Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 337, 87 L.Ed. ___; Walling v. American Stores Co., 3 Cir., 133 F.2d 840, 843. As said in the case last cited: "Section 13(a) (2) was not contained in the original drafts of the Act. The only provision prior to the inclusion of § 13(a)(2) which dealt with retailing was § 13(a)(1) which exempted any employee employed `in a local retailing capacity'. This failed to satisfy some of the members of the House who seriously doubted that it covered intrastate `retailers' situated near state lines and making occasional interstate sales. What the Congressmen meant by the use of that term `retailer' is discernible from their questions and comments. Representative Dempsey, prior to the adoption of the amendment, asked whether the bill could `in any way affect such business as that of the local groceryman, druggist, clothing store, meat dealer — any merchant, in fact — laundry, hospital, hotel, or even transportation companies operating solely within a State?' Representative Massingale offered an amendment and stated it was `for the purpose of protecting what you would call the corner grocery store man or the filling-station man'. The House voted down all amendments to achieve this purpose upon the insistence of Representative Norton that the Bill amply covered the problem until Representative Cellar offered his amendment. It exempted `any retail industry, the greater part of whose sales is in intrastate commerce'. This, he argued indicated `in the clearest way that retailing is exempted'. If it were accepted, `then retail dry goods, retail butchering, grocers, retail clothing stores, department stores will all be exempt.' The amendment was accepted."

In Bracey v. Luray, 4 Cir., 138 F.2d 8, this day decided, we hold that a retail establishment within the meaning of the exemption is one which sells in small quantities to the ultimate consumer. On the principle noscitur a sociis, the "service" establishment contemplated by the exemption must be of the same sort as the "retail" establishment therein referred to, i. e. it must be one "selling services to consumers", and this is the clear intimation of the Supreme Court. A. B. Kirschbaum Co. v. Walling, 316 U.S. 517, 526, 62 S.Ct. 1116, 1121, 86 L.Ed. 1638. As suggested by the Circuit Court of Appeals of the Second Circuit in Fleming v. Arsenal Building Corporation, 2 Cir., 125 F.2d 278, 280, we think that the exemption "should be limited to those who serve consumers directly, like tailors, or garages, or laundries". Other illustrations of service establishments within the meaning of the statute have been given as "barber shops, beauty parlors, shoe-shining parlors, clothes pressing clubs, laundries, automobile repair shops, or the like." Wood v. Central Sand & Gravel Co., D.C., 33 F. Supp. 40, 47; Fleming v. A. B. Kirschbaum Co., 3 Cir., 124 F.2d 567, 572.

It is clear, we think, that the business of defendant cannot be brought within the exemption. While the repair of machinery for customers, if there were nothing more, might fall within the exemption, the very substantial business of conditioning and selling scrap would certainly not come within it. Bracey v. Luray, supra. Nor would the work done in rebuilding and reconditioning secondhand machinery for sale by defendant fall within the exemption, which does not extend to manufacturing or processing goods for sale. Collins v. Kidd Dairy & Ice Co., 5 Cir., 132 F.2d 79; Walling v. Peoples Packing Co., 10 Cir., 132 F.2d 236; Samuels v. Houston, D. C., 46 F.Supp. 364. Nor, in such cases, is the employer's business any the less within the coverage of the act because some part of his activities may include intrastate retail sales or servicing. Collins v. Kidd Dairy Co. supra; Cullum v. Stevens, D.C., 46 F.Supp. 73; Samuels v. Houston, supra. Cf. Davis v. Goodman Lumber Co., 4 Cir., 133 F.2d 52.

As to the second ground upon which the court below directed the verdict, it appears that defendant paid to the plaintiffs Guess, Rodrigue, Weathersbee and Jones, before institution of suit and before any controversy had arisen, the full amount due them as minimum wages. Defendant was doubtful as to whether the act applied to his business, but upon being advised that it did, he called in these plaintiffs, explained the situation to them and tendered them checks for the full amount of the balance due them as wages under the minimum wage law. They accepted these payments in full settlement, without reservation of any rights, and executed receipts in full releasing defend...