Kuhn v. Box Canyon Livestock, Inc.

• Decision Date: 16 October 1981
• Docket Number: No. 13418,13418
• Citation: 637 P.2d 1154,102 Idaho 658
• Parties: Melvin G. KUHN, Claimant-Appellant, v. BOX CANYON LIVESTOCK, INC., Employer, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 1154

637 P.2d 1154

102 Idaho 658

Melvin G. KUHN, Claimant-Appellant, v. BOX CANYON LIVESTOCK, INC., Employer, Defendant-Respondent.

No. 13418.

Supreme Court of Idaho.

Oct. 16, 1981.

Rehearing Denied Dec. 22, 1981.

Dennis S. Voorhees of Walker & Spink, Twin Falls, for claimant-appellant.

John C. Hohnhorst of Hepworth, Nungester & Felton, Harry DeHaan of Benoit & Alexander, Twin Falls, for defendant-respondent.

McFADDEN, Justice.

Claimant-appellant Melvin G. Kuhn filed a claim with the Industrial Commission seeking workman's compensation benefits for injuries sustained when the employer's loaded bulk milk truck he was driving overturned on the interstate highway near Eden, Idaho. Appellant was employed by defendant-respondent Box Canyon Livestock, to haul milk from respondent's dairy near Wendell to a processing plant operated by Kraft, Inc. near Rupert. Appellant was also to return-haul whey, a by-product of dairy processing, from the Kraft plant to respondent's dairy.

Appellant's duties included pumping the milk from respondent's holding tanks into the 6,000 gallon tank of respondent's tractor-trailer truck, driving the truck to Kraft where the truck was weighed and the milk, following inspection and acceptance, unloaded by Kraft employees, and returning to respondent's dairy with whey which appellant then discharged into feeding troughs. Appellant was also to clean the truck tank at night and to take care of refueling and minor maintenance.

Unlike most south-central Idaho dairy operations, respondent had an employee, appellant, haul the milk from its storage tanks to the processor; others hired independent "contract haulers." The relatively few producers of dairy products who did their own hauling were primarily the larger operations who could affect an economic savings by using in-house haulers. Some processors required the use of contract haulers but Kraft did not.

Contract haulers are essentially independent contractors providing a transport service to dairy farmers, and come within the scope of the workman's compensation act. Accord, Backsen v. Blauser, 95 Idaho 811, 520 P.2d 858 (1974). These haulers can sample, inspect and grade the milk upon loading, but are subject to regulation under the Idaho Code and must obtain a milk hauler's permit issued by the state. Producer-haulers are not allowed to do these activities, and need not have a hauling permit; as previously noted, the sampling and grading is done by the processor's employees at the time of delivery rather than by the hauler at the time of loading. Another dissimilarity is that producer-haulers may return haul whey in the same truck used to haul milk, but contract haulers may not use their trucks for anything other than milk, at least absent specific authorization by the state.

The Industrial Commission found that respondent's hauling activity, within which appellant's injury occurred (i.e., while he was hauling the milk to Kraft) was excluded from workman's compensation coverage under the "agricultural pursuits" exemption, I.C. § 72-212(8), ¹ and therefore denied benefits. We disagree with the Commission's conclusion and reverse the order.

A similar question concerning the agricultural exclusion from workmen's compensation coverage was presented in Goodson v. L. W. Hult Produce Co., 97 Idaho 264, 543 P.2d 167 (1975). There the claimant contended that the employer, admittedly engaged in the agricultural pursuit of raising potatoes, entered into another, separate occupation which was not within the § 72-212(8) exclusion and that the claimant's injury, sustained while employed in this separate enterprise, was therefore compensable. This court stated at the outset in Goodson :

"This court repeatedly has recognized the policy that 'there should be accorded to the Workmen's Compensation Act a broad and liberal construction, that doubtful cases should be resolved in favor of compensation, and that the humane purposes which these acts seek to serve leave no room for narrow technical construction.' Smith v. University of Idaho, 67 Idaho 22, 26, 170 P.2d 404, 406 (1946). See also Miller v. FMC Corp., 93 Idaho 695, 471 P.2d 550 (1970); Kiger v. Idaho Corp., 85 Idaho 424, 380 P.2d 208 (1963); Collins v. Moyle, 83 Idaho 151, 358 P.2d 1035 (1961). A necessary corollary to the realization of the humane purposes and promotion of justice within the workmen's compensation scheme is that all exemptions from coverage, including the one for agricultural pursuits, be construed narrowly." 97 Idaho at 266, 543 P.2d at 169.

The general rules of law governing the application of the statutory exclusion were also set forth in Goodson. While the principal business of the employer governs the workmen's compensation status of an employee engaged in that enterprise and in employment incidental thereto, when an employer engages in a secondary enterprise which, although it may be related to the principal business, fairly can be said to be a separate occupation, the nature of that second enterprise supplants the principal business as the governing factor in determining the status of an employee engaged in the secondary separate enterprise. Goodson v. L. W. Hult Produce Co., supra, 97 Idaho at 267, 543 P.2d at 170. See also Manning v. Win Her Stables, Inc., 91 Idaho 549, 428 P.2d 55 (1967); Hubble v. Perrault, 78 Idaho 448, 304 P.2d 1092 (1956). Here it is clear, and the parties have stipulated, that the principal business of respondent is an agricultural pursuit, i.e., dairy production. The issue presented is whether the milk hauling activities engaged in by respondent, within which the appellant was employed and injured, are of a sufficiently separate nature as to supplant the principal business in determining the workmen's compensation status of appellant. We conclude that these activities do constitute such a separate enterprise. Respondent contends that by hauling milk it was merely taking its agricultural products to market and thus the activity was not separate but rather incidental to the primary agricultural enterprise, citing In re Farmers Cooperative Creamery Co., 66 Idaho 70, 75, 155 P.2d 762, 764 (1945), as at least implicitly recognizing the agricultural nature of such activity. ² As noted in Goodson :

"In keeping with the long-standing policy of narrowly construing the agricultural exemption from workmen's compensation, this court will examine closely all claims that a secondary business is merely incidental to a principally agricultural operation." 97 Idaho at 267, 543 P.2d at 170.

While in 1945 producers might have been forced to singly or collectively transport their milk to processors in order to culminate their agricultural pursuit, other options are now available to contemporary milk producers. Many, if not most, Idaho dairies hire contract haulers to transfer the milk from the dairies' holding tanks to the processor. Testimony before the Commission indicated that the point of sale in such cases occurs at loading, that is, if the hauler fails to properly check the milk at that time and it is later determined that the milk is spoiled or otherwise contaminated, the hauler bears the loss. Another option regarding the disposition of the milk deposited nightly in respondent's holding tanks was to sell the milk directly from those tanks to the public. While respondent could not so sell the milk under the circumstances as they existed, it could do so if it obtained a license from the state and met certain sanitation requirements. Respondent allowed its employees to consume the milk from the tanks, but it chose not to pursue this option for the sale of the milk. As noted, respondent chose yet another alternative by self-hauling the milk to Kraft and witnessing at the point of sale when Kraft sampled, inspected and accepted the milk.

The farmer in Goodson, engaged in raising seed potatoes, set up a marketing enterprise to dispose of certain oversize potatoes sorted from among the seed potatoes. This court stated:

"While the removal of oversize potatoes from those which are to be used for seed may be incidental to Hult's principal business, the disposition of them thereafter clearly is not. An expert in the seed potato business...