In re Liability of Farmers Cooperative Creamery Co.

• Decision Date: 24 January 1945
• Docket Number: 7160
• Citation: 66 Idaho 70,155 P.2d 762
• Parties: In re liability of FARMERS COOPERATIVE CREAMERY COMPANY, a corporation, for unemployment compensation excise taxes
• Court: Idaho Supreme Court

155 P.2d 762

66 Idaho 70

In re liability of FARMERS COOPERATIVE CREAMERY COMPANY, a corporation, for unemployment compensation excise taxes

No. 7160

Supreme Court of Idaho

January 24, 1945

Rehearing Denied February 19, 1945.

1. Workmen's compensation

Performance of services by farmers co-operative corporation for non-members within limits permitted by federal statutes did not change to non-agricultural employment which would otherwise be agricultural within Unemployment Compensation Law exempting agricultural labor from operation thereof. (I.C.A., secs. 22-2001 et seq.; Sess. Laws 1941, p. 393, sec 18-5 (f); Sess. Laws 1943, p. 60, sec. 19 (E) (f) (4); 7 U.S C.A., sec. 291, subd. 3.)

2. Workmen's compensation

Dairy farming is generally recognized as being an agricultural pursuit within Unemployment Compensation Law excepting agricultural labor from operation thereof. (Sess. Laws 1941 p. 393, sec. 18-5 (f); Sess. Laws 1943, p. 60, sec. 19 (E) (f) (4).)

3. Taxation

Services performed by truck drivers under contract with farmers co-operative corporation in gathering milk from member and non-member producers, and delivering it to creamery constituted "agricultural labor" which was exempted from coverage and taxation under Unemployment Compensation Law. (I.C.A., secs. 22-2001 et seq.; Sess. Laws 1941, p. 393, sec. 18-5 (f); Sess. Laws 1943, p. 60, sec. 19 (E) (f) (4).)

Appeal by the State from the Unemployment Compensation Division of the Industrial Accident Board.

Affirmed.

Bert H. Miller, Attorney General, and Thos. Y. Gwilliam, Assistant Attorney General, for appellant.

Persons hauling milk to the Farmers Cooperative Creamery are not rendering services within the meaning of "Agricultural Labor," sec. 18-5, chap. 182 of the 1941 Sess. Law, and chap. 29, sec. (E), (f), 1943 Sess. Laws. (Hansen Bros. Dairy, et al v. Riley, 137 P.2d 512; United States v. Turner Turpentine Co., 5 Cir. 11 F.2d 400; Wayland v. Kleck, 57 Ariz. 135, 112 P.2d 207; H. Duys & Co. v. Tone, 5 A.2d 23; Sanitary Milk & Ice Cream Co. v. Hickman, 119 W.Va. 351, 193 S.E. 553.)

E. B. Smith and George Donart for respondent.

The milk haulers transporting milk and cream to respondent creamery were engaged in agricultural labor. (Ida. Sess. Laws 1935, 3d Ext. Sess., chap. 12, sec. 19, subd. (g) (2), par. 4, p. 44; Ida. Sess. Laws 1939, chap. 239, sec. 18-5, subd. (f), p. 577; Ida. Sess. Laws 1941, chap. 182, sec. 18-5, subd. (f), p. 393; Ida. Sess. Laws 1943, chap. 29, sec. 19, subd. (f), par. 4, p. 60; Carstens Packing Co. v. Industrial Acc. Board, 63 Ida. 613, 123 P.2d 1001; Batt v. Unemployment Comp. Div., etc., 63 Ida. 572, 123 P.2d 1004.)

Givens, J. Per opinion Ailshie, J. Per Givens, C. J. And per Morgan, J., concurring with Ailshie, J., and Budge, J. Ailshie, C. J., and Budge and Holden, JJ., concur.

OPINION

Givens, J.

Respondent is a farmers' cooperative creamery, organized, existing and operating under chap. 20, title 22, I.C.A., engaged principally in manufacturing butter, but also other milk and cream products. Its membership is composed of some 3,000 farmers in Washington, Gem, and Payette Counties, Idaho, and Malheur County, Oregon, attained by paying $ 1.00 per year. Non-members as well as members market through the association.

The profits at the end of the year are divided among and distributed, pro rata according to their deliveries, to the constituent members as well as non-members who have sold to respondent.

Truck drivers under contract with respondent gather the milk from the producers. These drivers own their individual trucks, in some cases purchased from or through respondent, and in a sense 'own' the particular designated routes traveled and serviced by them. They are paid either so much a pound for butterfat and hundredweight for milk, or a fixed sum per month, or for so much a trip. Payments to these drivers are, together with all other expenses, included in respondent's cost of doing business. The pro rata profit is the balance remaining after the deduction, of certain reserves and the total cost of conducting the business, from the entire income. Thus, these payments as all other operating expenses are borne, though indirectly, by the farmer members and others from whom purchases are made.

The Unemployment Compensation Division Board contends these drivers are employees covered by chap. 182, 1941 Sess. Laws, and chap. 29, 1943 Sess. Laws. Respondent resisted the imposition of the tax on the ground that these drivers are independent contractors and engaged in agricultural labor, as defined in chap. 182, sec. 18-5, subd. (f), 1941 Sess. Laws, p. 393, ^[1] chap. 29, E (f), subd. (4), p. 60, 1943 Sess. Laws. ^[2] The board found the drivers are not independent contractors and that the service rendered by them is agricultural labor and hence exempted.

The State Unemployment Compensation Division appealed.

Though chap. 20, title 2, supra, does not mention the performance, by a cooperative as involved herein of services for non-members, it does not prohibit the same. Respondent's amended articles of incorporation ^[3] provide for it, and within limits adhered to by respondent, it is within the sanctioning Federal Statute, title 7, U.S.C.A., chapter 12, section 291, subdivision 3. ^[4] There was evidence to the effect that the federal income tax authorities did not consider such practice militated against respondents status as a cooperative, and no question was raised as to the effect of such service to non-members on the status of these drivers. Furthermore, in principle this court has indicated that such would not change employment, if otherwise agricultural, to non-agricultural.

Per opinion Ailshie, J.:

"I fail to see wherein the work done upon consigned products is any less "agricultural labor" than that done upon the same kind of products purchased by appellant, or grown by him on his own farm. It was all agricultural labor." Budge, J., concurs.

Per Givens, C. J.:

"The entire court is of the opinion that the activities of the appellant and his employes on products purchased outright by him from other producers and growers are in the same category, and the order of the board was in this particular incorrect. There remains only for determination the classification of the work done in connection with produce handled by appellant on consignment." Holden, J concurs.

CONCUR BY: MORGAN

And per Morgan, J., concurring with Ailshie, J., and Budge, J.:

"Except in one particular I am in accord with the opinion of Chief Justice Givens in this case. The point on which I am unable to agree with him is as to labor performed upon vegetables received by appellant on consignment. I believe all the labor mentioned in this case, including that on produce consigned to appellant, is "agricultural labor" within the meaning of the unemployment compensation law and is not "covered employment" by reason of which the excise tax should be imposed." (Batt v. Unemployment Compensation Law, 63 Ida. 572, 123 P.2d 1004, 139 A.L.R. 1157.)

It is generally recognized that dairy farming is an agricultural pursuit.

Agriculture. "* * * dairying."

Dairy, "A dairy farm." Dairying "the business of conducting a dairy farm." Funk & Wagnalls dictionary.

Agriculture. "In this broad use it includes * * * dairying * * *."

Dairy. "The department of farming or of a farm that is concerned with the production of milk, butter and cheese." * * * "Hence a dairy farm." Webster's dictionary.

Dairying. "The occupation or business of a dairy farmer or dairyman. It has been held to be included in 'agriculture' in the broad sense of that term." 25 C.J.S. 440.

Dairy. "The department of farming or of a farm that is concerned with the production of milk, butter and cheese, hence a dairy farm." Holmes v. Travelers Ins. Co., (Tex.), 148 S.W.2d 270.

On the pivotal point involved, appellant's authorities hold either that the status of employees within a processing or manufacturing plant or those connected with delivery of the products after processing or manufacture were not engaged in agricultural pursuit, H. Duys & Co., Inc. v. Tone, (Conn.), 5 A.2d 23; Employment Security Commission v. Arizona Citrus Growers, (Ariz.), 144 P.2d 682; Sanitary Milk & Ice Cream Co. v. Hickman, (W. Va.), 193 S.E. 553; which class of employees are not involved herein, or recognize the distinction between the above and those employees...