Glidden Rural Elec. Co-Op. v. Iowa Employment Sec. Commission

• Decision Date: 13 November 1945
• Docket Number: 46680.
• Citation: 20 N.W.2d 435,236 Iowa 910
• Parties: GLIDDEN RURAL ELECTRIC CO-OPERATIVE v. IOWA EMPLOYMENT SECURITY COMMISSION.
• Court: Iowa Supreme Court

20 N.W.2d 435

236 Iowa 910

GLIDDEN RURAL ELECTRIC CO-OPERATIVE v. IOWA EMPLOYMENT SECURITY COMMISSION.

No. 46680.

Supreme Court of Iowa

November 13, 1945

George A. Rice, of Mapleton, E. A. Raun, of Denison, and Wisdom & Wisdom, of Des Moines, for appellant.

F D. Riley, of Des Moines, for appellee.

MANTZ Justice.

The action is in equity by the Glidden Rural Electric Co-operative, as plaintiff, against the Iowa Employment Security Commission as defendant, to cancel assessments of unemployment compensation tax levied against plaintiff by defendant for the years 1937, 1938, 1939, and 1940.

The trial court denied plaintiff's claim, dismissed its petition and this appeal followed.

I. The action being in equity is triable here de novo. There are no disputed facts. Appellant is a cooperative corporation organized under Chapter 390.1, Code of Iowa, relating to cooperative associations organized after July 4, 1933. Its principal place of business is in Carroll, Iowa, and its transmission lines extend into several adjoining counties. Its objects and purposes are as set forth in Art. 4, subsection 1 of its articles of incorporation and are as follows: 'A. To generate, manufacture, purchase acquire and accumulate electric energy for its members, and to transmit, distribute, furnish, sell and dispose of such electric energy to its members; and B, to construct, erect, purchase, lease as lessee, and in any manner acquire, own, hold, maintain, operate, sell, dispose of, lease as lessor, exchange and mortgage plants, buildings, works, machinery, supplies, apparatus, equipment and transmission lines or systems necessary, convenient or useful for carrying out and accomplishing any of the foregoing purposes.'

Appellant does not produce or generate electric power but has at all times purchased such product from the municipal plant of Glidden, Iowa, and distributed it to the members. It had about 428 miles of transmission line and about 940 members when the case was tried. When it was organized and received its permit on August 26, 1936, it had no physical property, such as plant, transmission lines, or service connections. Not having the proper and necessary equipment to build transmission lines, it let contracts for their construction. Such lines were built under certain specifications and when built and accepted became a part of its cooperative system. Contracts were entered into for such line construction with the Hoak Construction Company as follows: In 1936, 55 miles; in 1938, 90 miles; in 1939, 124 miles. One contract was let to the Evans Construction Company in 1939 for 90 to 110 miles. All of these contracts were carried out--the transmission lines were built and accepted and are now a part of appellant's system. Service connections for the individual members were made as the transmission lines were being built. Following the building of the transmission lines, all service connections for new members were made by the appellant. In all, appellant made about 50 to 60 of such service connections.

The Hoak Construction Company and the Evans Construction Company were in the business of constructing electric transmission and distribution lines during the rural electrification program. The former constructed such lines in Calhoun County, Crawford County, Cherokee County, Guthrie County, and Greene County. The latter, during the same period, constructed similar lines in Plymouth County, Cherokee County, and Pocohontas County.

At the time the contracts were being carried out on the transmission lines for appellant, the principal contractors paid for their various employees to the State of Iowa the state employment compensation. Later appellee decided that at the time the transmission lines were being built for appellant the employees of the contracting companies were to be counted as employees of appellant, thereby making the latter liable for the tax upon its other employees. This action on the part of the appellee is the basis of this action.

Appellant never had working for it at any one time eight employees and it was only by adding to the number of its employees those employed by either the Hoak Construction Company or the Evans Construction Company in building the transmission lines that made the tax possible. The appellee concedes that in case the employees of the two contractors of the various transmission lines cannot be added to the regular employees of appellant, then there is no tax payable. It will thus be seen that one of the issues herein is whether or not the employees of the Hoak Construction Company, or the Evans Construction Company, in building the transmission lines, may be deemed employees of appellant within the provisions of Chapter 77.2 of the 1939 Code. The assessment in the instant case is by reason of the provisions of section 1551.25, subsection E of said chapter, the material portion of which, so far as this appeal is concerned, provides as follows: 'Whenever any employing unit contracts with or has under it any contractor or subcontractor for any work which is part of its usual trade, occupation, profession, or business, unless the employing unit as well as each such contractor or subcontractor is an employer by reason of subsection 'F' or section 1551.14, subsection 'C', the employing unit shall for all the purposes of this chapter be deemed to employ each individual in the employ of each such contractor or subcontractor for each day during which such individual is engaged in performing such work.'

In its decree the trial court said:

'The only question for determination, therefore, is whether the work done by the contractors who built all of the plaintiff's primary lines and the greater part of its secondary lines was a part of the plaintiff's 'usual trade, occupation, profession, or business' within the contemplation of the above quoted statute. (Section 1551.25, subd. E, Code of 1939.)

'The court finds that the business of the cooperative as expressed in its articles is to accomplish its corporate purpose of generating or acquiring electricity and providing transmission lines, primary and secondary, for distribution to its members; that plaintiff's transmission and distribution lines are the very instrumentalities by which, and by which alone, plaintiff does, or can, either receive or deliver the electricity; that the work of constructing such lines is an actual, integral and operative part of the business of transmitting and distributing electricity--the very process and part of that business, and that the construction of the transmission lines and the distribution system by independent contractors was a part of the usual business of the plaintiff, Glidden Rural Electric Cooperative.'

Thereafter the court denied the petition of appellant and confirmed the tax imposed by appellee.

II. Was the work done by the contracting firms in building the various units of the transmission lines for appellant, a part of appellant's 'usual trade, occupation, profession, or business' within the meaning of Section 1551.25, subd. E, Code of Iowa 1939? We think this to be the decisive question in this case. The trial court answered this question in the affirmative, thus holding that such workmen were employees of appellant and that the work performed by them was a part of the usual business of appellant.

Following a careful study of the record, the statutes and the authorities, we are of the opinion that the trial court erred in so holding.

Appellant at no time built any primary transmission lines, and had no equipment for that purpose. All such lines used by it were built by independent contractors. The only lines built by the appellant were of a secondary nature--connecting customers with its primary lines, after they had been built.

Both parties are in agreement that the 'usual' business of appellant is that of the transmission of electricity. Concerning this the trial court held that inasmuch as the usual business of appellant was the transmission and distribution of electricity, that in order to do so it had to have transmission lines, that such transmission lines were instrumentalities for doing so, and therefore, the work of constructing such lines was 'an actual, integral, and operative part of the business of transmitting and distributing electricity.' It will be seen that the trial court held that the building and installing of all things necessary to carry on the business of appellant were necessarily a part of its usual business. This would seem to narrow the issue as applied to the statute above referred to--that the building of the transmission lines was a part of the usual business of appellant.

Appellant and appellee are unable to agree as to the meaning of the word 'usual' in the statute. The appellant argues that in connection with the statute the word 'usual' means the same as the word 'regular' and is to be taken in its ordinary every day meaning and that the usual business of appellant is to distribute electricity. On the other hand, appellee argues that the word 'usual' as used by the legislature was in the sense of 'essential to', or a 'necessary part of' the business, or for the 'purpose' of such business, and that as in this case the transmission lines were essential to the distribution of electricity, their building was a part of the 'usual business' of appellant. We think that appellant's view as to the particular statute under construction is correct.

III. In the construction of statutes, words are to be given their ordinary meaning unless the context shows a contrary intent on the part of the legislature. Sec. 63(2), Code of 1939; Des Moines City Ry. v. City of Des Moines, 205 Iowa 495, 216 N.W. 284; State ex rel. v. Larson, 224 Iowa 509, 275 N.W. 566; State v. Carson,...