Farmers Reservoir Irrigation Co v. Comb Comb v. Farmers Reservoir Irrigation Co

Citation93 L.Ed. 1672,337 U.S. 755,69 S.Ct. 1274
Decision Date27 June 1949
Docket NumberNos. 128 and 196,s. 128 and 196
PartiesFARMERS RESERVOIR & IRRIGATION CO. v. McCOMB, Administrator of Wage and Hour Division, U.S. Dept. of Labor. McCOMB, Administrator of Wage and Hour Division, U.S. Dept. of Labor, v. FARMERS RESERVOIR & IRRIGATION CO
CourtUnited States Supreme Court

See 70 S.Ct. 31.

Messrs. John P. Akolt, Frank N. Bancroft, Denver, Colo., for Farmers Reservoir & Irrigation Co.

Mr. Jeter S. Ray, Washington, D.C., for McComb.

Mr. Chief Justice VINSON delivered the opinion of the Court.

The principal question to be decided in this case is whether the employees of a mutual ditch company are exempt from the provisions of the Fair Labor Standards Act1 as persons employed in agriculture. The company is the Farmers Reservoir & Irrigation Company, a Colorado corporation having an authorized capital stock of $1,050,000 and an authorized bonded indebtedness of $850,000, $450,000 of which is presently outstanding in the hands of the public. The company has central offices in Denver. It owns four large and several small reservoirs and a system of canals from 200 to 300 miles long, all in Colorado. The sole activity of the corporation is the collection, storage and distribution of water for irrigation purposes. The water is diverted from the public streams of Colorado, stored in the company's reservoirs and distributed to farmers through the company's canals.

The company is a mutual one. It does not sell water. It distributes it only to its own stockholders, who are each entitled to a limited quantity for each share of stock held. The income of the company is derived largely from assessments levied on the stockholders annually to pay for the costs of operating the system. There are no profits and no dividends.

The company did not comply with either the record keeping or the wages and hours provisions of the Fair Labor Standards Act, and the Administrator sought an injunction directed against continuation of these alleged violations. The company claimed that its employees were not subject to the Act. These employees fall into two categories. First, there are the field employees—ditch riders, lake tenders and maintenance men. Their activity, in general, consists of the physical operation, control and maintenance of the company's canals, reservoirs, and headgates. The second category comprises the company's office force in Denver. For purposes of this case it contains only one occupant the company's bookkeeper.

The District Court held that the field employees were engaged in the production of goods for commerce, as those terms are defined in § 3 of the Act, but that the bookkeeper was not. It held, however, that all of the company's employees were exempt under § 13(a)(6) as persons 'employed in agriculture.' This second hold- ing was reversed, as to the field employees, by the Court of Appeals for the Tenth Circuit,2 one judge dissenting, and, in No. 128, we granted the company's petition for certiorari on the exemption issue. The Court of Appeals did not pass on the bookkeeper's status. It regarded his case as moot because his salary was said by the company, in its brief, to have been raised to $210 per month while the appeal was pending. The court regarded this as sufficient to establish his exemption as an administrative employee under § 13(a)(1) of the Act and therefore limited its consideration and its reversal of the District Court to the field employees. In No. 196, we granted the Administrator's cross-petition with respect to the bookkeeper.

It is conceded here that the courts below were correct in holding that the field employe § are engaged in the production of goods for commerce. The company, however, argues that this requires the conclusion that they are employed in agriculture. This argument rests on the fact that the activities of the company and its employees are entirely confined within the State of Colorado. The company diverts water in Colorado, stores it in Colorado, distributes it in Colorado to farmers who, finally, consume it in Colorado. The only products moving in interstate commerce are the agricultural commodities produced by the farmers who consume the company's water. Hence, it is said that we can hold that the company's employees are engaged in the production of goods for interstate commerce only if we say that their work in supplying water to the farmers is an integral part of the production of the farm products which are shipped in interstate commerce. But that production is, of course agriculture. Hence, the company's employees, if they are engaged in the production of goods for commerce, must be exempt as persons employed in agriculture.

The argument rests on a misconstruction of § 3(j) of the Fair Labor Standards Act3—the section which the courts below relied on in concluding that the field employees of the company are engaged in the production of goods for commerce. Section 3(j) provides that 'for purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed * * * in any process or occupation necessary to the production thereof.'4 From the beginning, this Court has refused either to read this provision out of the Act by limiting the coverage of the Act to those actually engaged in production or, on the other hand, to expand it so as to include every process or occupation affecting production for commerce. We have held that if an occupation, not itself production for commerce, has 'a close and immediate tie' with the process of production, it comes within the provisions of § 3(j).5 Applying this standard, the Court of Appeals quite properly held that the field employees here are engaged in an occupation necessary, in the statutory sense, for the production of agricultural commodities shipped in commerce.6

But the conclusion that the work is necessary to agricultural production does not require us to say that it is agricultural production. This distinction between ne- cessity and identity, or, differently phrased, between production in the normal sense and production in the special sense defined in § 3(j) disposes of the company's contention. The question here is whether the occupation of the field employees of the ditch company can itself be termed agriculture. The answer to that question is not predetermined by the fact that the occupation is within the scope of the Act because it has a necessary connection, in commerce, with agricultural production.7

Agriculture, as an occupation, includes more than the elemental process of planting, growing and harvesting crops. There are a host of incidental activities which are necessary to that process. Whether a particular type of activity is agricultural depends, in large measure. upon the way in which that activity is organized in a particular society. The determination cannot be made in the abstract. In less advanced societies the agricultural function includes many types of activity which, in others, are not agricultural. The fashioning of tools, the provision of fertilizer, the processing of the product, to mention only a few examples, are functions which, in some societies, are performed on the farm by farmers as part of their normal agricultural routine. Economic progress, however, is characterized by a progressive division of labor and separation of function. Tools are made by a tool manufacturer, who specializes in that kind of work and supplies them to the farmer. The compost heap is replaced by factory produced fertilizers. Power is derived from electricity and gasoline rather than supplied by the farmer's mules. Wheat is ground at the mill. In this way functions which are necessary to the total economic process of supplying an agricultural product, become, in the process of economic development and specialization, separate and independent productive functions operated in conjunction with the agricultural function but no longer a part of it. Thus, the question as to whether a particular type of activity is agricultural is not determined by the necessity of the activity to agriculture nor by the physical similarity of the activity to that done by farmers in other situations. The question is whether the activity in the particular case is carried on as part of the agricultural function or is separately organized as an independent productive activity. The farmhand who cares for the farmer's mules or prepares his fertilizer is engaged in agriculture. But the maintenance man in a power plant8 and the packer in a fertilizer factory9 are not employed in agriculture, even if their activity is necessary to farmers and replaces work previously done by farmers. The production of power and the manufacture of fertilizer are independent productive functions, not agriculture.

In the absence of a detailed definition of agriculture we should be compelled to determine whether the activity concerned in the present case—the diversion, storage and distribution of wate for irrigation purposes—is carried on as part of the agricultural function or is so separately organized and conducted as to be treated as an independent, nonagricultural productive function. Fortunately, however, the Fair Labor Standards Act provides a carefully considered definition which is of substantial aid in helping us to make that determination.

The definition is contained in § 3(f) of the Fair Labor Standards Act. It says:

'Sec. 3(f). 'Agriculture' includes farming in all its branches and among other things includes the cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticultural commodities (including commodities defined as agricultural commodities in section 15(g) of the Agricultural Marketing Act, as amended), the raising of livestock, bees, furbearing animals, or poultry, and any practices (including any forestry or lumbering operations)...

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