Coast Oyster Co. v. Perluss

• Court: California Court of Appeals
• Writing for the Court: SCHOTTKY; PIERCE, P. J., and FRIEDMAN
• Citation: Coast Oyster Co. v. Perluss, 32 Cal.Rptr. 740, 218 Cal.App.2d 492 (Cal. App. 1963)
• Decision Date: 22 July 1963
• Parties: COAST OYSTER COMPANY, a Corporation, Plaintiff and Appellant, v. Irving H. PERLUSS, as Director of the State Department of Employment of the State of California, Defendant and Respondent. Civ. 10590.

Page 740

32 Cal.Rptr. 740

218 Cal.App.2d 492

COAST OYSTER COMPANY, a Corporation, Plaintiff and Appellant, v. Irving H. PERLUSS, as Director of the State Department of Employment of the State of California, Defendant and Respondent.

Civ. 10590.

District Court of Appeal, Third District, California.

July 22, 1963.

Hearing Denied Sept. 18, 1963.

Anthony J. Kennedy, Sacramento, Kumm, Maxwell, Petersen & Lee, Seattle, Wash., for appellant.

Stanley Mosk, Atty. Gen., by Dan Kaufmann, Asst. Atty. Gen., and Walter J. Wiesner, Deputy Atty. Gen., Sacramento, for respondent.

SCHOTTKY, Justice.

Coast Oyster Company, a corporation, appeals from a judgment rejecting its claim for a refund of unemployment insurance taxes.

The essential facts were stipulated to by the parties. Briefly they are: Appellant was and is a Washington corporation engaged in the business of raising and selling oysters and oyster products. During the period involved herein, January 1, 1956 through December 31, 1958, appellant was engaged in its business of raising and selling oysters in Humboldt County. It operated oyster beds in Humboldt Bay and maintained two plants, one for fresh packing oysters and one for canning oysters, and offices in Eureka for its California operations.

Appellant's method of operation was as follows: It deposited oyster seed on its oyster beds; performed such tasks as were necessary for the protection of the beds and oysters; harvested the oysters; loaded the oysters on floating equipment owned by it; transported the oysters to its plants; and then opened, cleaned, graded, and packed or canned the oysters. The smaller oysters were fresh packed by appellant in containers with plastic tops. The oysters which were not suitable for fresh packing were cleaned, washed, graded and either sealed in cans which were placed in a retort for cooking or machine sliced, mixed with butter, oyster nectar and milk and certain artificial additives to make oyster stew, which was then placed in cans for cooking in a retort.

After the oysters had been fresh packed or canned, they were sold to two independent wholesale distributors f. o. b. appellant's warehouse under two trade names: (1) 'Willapoint,' which is owned by appellant, and (2) 'Chicken of the Sea,' which is owned by one of the independent wholesale distributors.

Appellant held a fish canner's and processor's license and a wholesale fish dealer's and preserver's license during the period involved herein.

The basic issue presented by this appeal is whether sums paid for any or all of the services rendered to a corporation engaged in the business of raising and selling oysters are to be considered paid for agricultural labor, as that term is used in the Unemployment Insurance Code, and therefore no includable in wages subject to unemployment insurance contributions.

Section 976 (all section references herein are to the Unemployment Insurance Code except as otherwise noted) requires the payment of 'employer contributions' based upon wages paid for 'employment.' Section 601 provides that employment means 'service * * * performed for wages * * *.' Certain services, however, are specified to be excluded services (sec. 625 et seq.), i. e., though performed for money they are not considered employment as that term is used in section 976.

The exclusion which is involved herein is that for agricultural labor (hereinafter referred to as the agricultural labor exemption) which is covered in sections 625 through 628. These sections provide as follows: ¹

625. "Employment' for the purposes of this part does not include agricultural labor.'

626. 'Agricultural labor includes all services performed on a farm in the employ of any person:

'(a) In connection with the preparation, care and treatment of farmland, including leveling for agricultural purposes, plowing, disking, and fertilizing the soil.

'(b) In connection with the sowing and planting of any agricultural or horticultural commodity.

'(c) In connection with the care of any agricultural or horticultural commodity. As used in this subdivision 'care' includes, but is not limited to, cultivation, irrigation, weed control, thinning, heating, fumigating, spraying, and dusting.

'(d) In connection with the harvesting of any agricultural or horticultural commodity. As used in this subdivision 'harvesting' includes, but is not limited to, picking, cutting, threshing, knocking off, field chopping, bunching, baling (including hay baling), field packing, and placing in field containers or in the vehicle in which the commodity will be hauled on the farm or to the place of first processing. By way of illustration, the placing of cotton in picking bags or other containers or vehicles, the field packing of berries and table and shipping grapes, the field packing of lettuce and other vegetables, the sacking of grain and the sewing of such sacks of grain, are included within the term 'harvesting' as used in this subdivision.

'(e) In connection with the assembly and storage of any agricultural or horticultural commodity. As used in this subdivision 'assembly and storage' includes, but is not limited to, loading, roadsiding, banking, stacking, binning, and piling.

'(f) In connection with the raising, feeding and management of livestock, mink, poultry, rabbits and bees, including, but not limited to, herding, housing, hatching, milking, shearing, handling eggs and extracting honey.'

627. 'Agricultural labor includes all services performed in the employ of the owner or tenant of a farm:

'(a) In connection with the drying, processing, packing, packaging, handling, grading, storing, freezing, transporting to delivery point or point of first processing, and marketing of any agricultural or horticultural commodity the major part of which was produced by such owner or tenant.

'(b) In connection with the operation, management, conservation, improvement or maintenance of such farm and its tools and equipment if the major part of such services are performed on a farm in connection with ordinary farming operations.

'(c) The provisions of subdivisions (a) and (b) are not applicable with respect to services performed in connection with commercial canning or commercial freezing operations or in connection with any agricultural or horticultural commodity after its delivery to a terminal market for distribution for consumption, or to manufacturing or commercial operations as distinguished from ordinary farming operations.'

628. 'As used in Sections 626 and 627 the term 'farm' includes, among others, stock, mink, dairy, poultry, fruit and truck farms, plantations, ranches, ranges, apiaries, orchards, vineyards, nurseries, greenhouses, or other similar structures used primarily for the raising of agricultural or horticultural commodities.'

Appellant contends most earnestly that the court erred in holding that the services upon which employer contributions were paid were not exempt as agricultural labor under the state act, sections 625 through 628, and in failing to recognize and follow the mandates of section 101 of said act. Appellant relies heavily on section 101 of the Unemployment Insurance Code which is concerned with unemployment compensation, and which provides:

'This part is a part of a national plan of unemployment reserves and social security, and is enacted for the purpose of assisting in the stabilization of employment conditions. The imposition of the tax herein imposed upon California industry alone, without a corresponding tax being imposed upon all industry in the United States, would, by the corresponding penalty upon California industry, defeat the very purposes of this law as set forth in this article. Therefore when existing federal legislation which provides for a tax upon the payment of wages by employers in this State, against which all or any part of the employer contributions required under this part may be credited is repealed, amended, interpreted, affected or otherwise changed in such manner that no portion of such contributions may be thus credited, then upon the date of such change, the provisions of this part requiring employer contributions and providing for payment of unemployment compensation benefits shall cease to be operative. * * *.'

Appellant points out that section 3306 of title 26 of the United States Code Annotated exempts from the Federal Unemployment Tax, under subdivision (c)(17), 'service performed by an individual in * * * the catching, taking, harvesting, cultivating, or farming of any kind of fish, shellfish, crustacea, sponges, seaweeds, or other aquatic forms of animal and vegetable life * * *.' Appellant argues that such employment would not be subject to federal unemployment tax and that section 101 of the Unemployment Insurance Code requires a holding that services rendered in connection with the raising and selling of oysters are exempt as agricultural labor. We are unable to agree with this contention.

Section 101 begins by specifically stating that the part of the code dealing with unemployment compensation is a part of a national plan of unemployment reserves and social security. The section next recognizes the fact that the tax imposed is in respect to California industry alone and that if there were not a corresponding tax being imposed on all industry in the United States, there would be a penalty on California industry which would defeat the purpose of the law. Accordingly, it then provides that if the existing federal legislation which provides for a tax upon the payment of wages by California employers against which the employer contributions required by the California law may be credited is repealed, amended, or changed to eliminate the credit allowed, the contribution provisions of the California law shall cease to be operative.

In brief, section 101 provides simply that if the federal credit is eliminated then the contributions required of California employers shall cease. The...