Ullo v. Smith

• Decision Date: 22 August 1949
• Docket Number: Docket 21303.,No. 276,276
• Citation: 177 F.2d 101
• Parties: ULLO et al. v. SMITH et al.
• Court: U.S. Court of Appeals — Second Circuit

177 F.2d 101 (1949)

ULLO et al. v. SMITH et al.

No. 276, Docket 21303.

United States Court of Appeals Second Circuit.

Argued June 16, 1949.

Decided August 22, 1949.

COPYRIGHT MATERIAL OMITTED

Benenson & Israelson, New York City, for appellants. Aaron Benenson, James L. Goldwater and Richard M. Goldwater, New York City, of counsel.

Smith & McInerney, New York City, for appellees. Kevin McInerney and Gerard C. Smith, New York City, of counsel.

William S. Tyson, Solicitor, Bessie Margolin, Assistant Solicitor, William A. Lowe, Harry A. Tuell, Attorneys, United States Department of Labor, Washington, D. C., John A. Hughes, Regional Attorney, New York City, for United States Department of Labor.

Before SWAN and CHASE, Circuit Judges, and SMITH, District Judge.

CHASE, Circuit Judge.

The plaintiffs who have appealed were elevator men, porters, a handyman and a nightwatchman engaged in doing what is generally called the maintenance work in adjoining buildings known as 392 Fifth Avenue and 394 Fifth Avenue in the City of New York, and worked in the years 1938 to 1942 inclusive. The first building had eleven stories and a basement and the second was four stories high. The first three stories of each building had no partitions between them and both buildings were served by the same elevators and had a common heating service and sprinkler system. All parties agreed that for the purposes of this appeal they should be treated as one building, as indeed they are from the standpoint of business use. The appellee Smith owned them and the other appellee was his agent to manage and operate them with authority to engage and discharge employees and to direct and supervise their work.

The appellants were all engaged in work necessary to the maintenance of the building for the purposes to which it was devoted and if a substantial part of the building was used in the production of goods for commerce the appellants were covered by the Act. Kirschbaum Co. v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L. Ed. 1638. Although the Supreme Court has not yet definitely approved, our previous decisions have translated the substantial use requirement of the Kirschbaum case into mathematical terms by setting up occupancy by tenants engaged in actual physical production on the premises of 20% of the rentable space as the standard for decision. Callus v. 10 East Fortieth St. Bldg., Inc., 2 Cir., 146 F.2d 438, reversed on other grounds, 10 East Fortieth St. Bldg., Inc., v. Callus, 325 U.S. 578, 65 S.Ct. 1227, 89 L.Ed. 1806, 161 A.L.R. 1263; Fleming v. Post, 2 Cir., 146 F.2d 441, 158 A.L.R. 1384; Baldwin v. Emigrant Industrial Sav. Bank, 2 Cir., 150 F.2d 524, 161 A. L.R. 1234, certiorari denied 326 U.S. 767, 66 S.Ct. 171, 90 L.Ed. 462; Gangi v. D. A. Shulte, Inc., 2 Cir., 150 F.2d 694, affirmed D. A. Shulte, Inc., v. Gangi, 328 U.S. 108, 66 S.Ct. 925, 90 L.Ed. 1114, 167 A.L.R. 208. And we have held that such use need not be proved to equal twenty per cent to a mathematical certainty but that a close approximation will suffice. Roberg v. Henry Phipps Estate, 2 Cir., 156 F.2d 958.

The facts as shown by findings having adequate evidential support are that there were 55,150 square feet of rentable space in the building of which, approximately, from 55% to 98% was occupied by tenants during each of the years involved. There were 31 tenants in all, but the record fails to show the activities of 16 of them. At the trial the appellants conceded "everything" as to these, and the trial judge took it for granted that they were neither engaged in commerce nor in the production of goods for commerce; as that has not been challenged, we shall make the same assumption.

Four of the other 15 tenants were found to have been engaged in the production on the premises of goods for commerce; these occupied space as follows: 4,195 square feet in 1938, 5,645 square feet in 1939; 4,650 square feet in 1940, 5,300 square feet in 1941 and 5,645 square feet in 1942. The findings as to them are clearly correct. The remaining 11 tenants were found not to be engaged in the production of goods for commerce and this is also so clearly right except in respect to one, American Needlecrafts, Inc., that we need not discuss their activities in detail.

Decision should turn upon whether the space occupied by American Needlecrafts, Inc., 5525 square feet in each year from 1939 through 1942, should have been added to that used by the four tenants previously mentioned. The addition of this space in each year would result in totals as follows: 9,720 square feet in 1938; 11,170 square feet in 1939; 10,175 square feet in 1940; 10,825 square feet in 1941; and 11,170 square feet in 1942. These totals are more than 20% of the rentable space in 1939 and 1942; whether they would sufficiently approximate it in the other years we do not now decide. The findings in respect to American Needlecrafts, Inc., are: "American Needlecrafts, Inc., a manufacturer of quilted articles such as robes, negligees, comforters, bedspreads, etc., had its main office at the building, although its actual manufacturing plants were located in Kentucky. While some productive work was carried on at 392 Fifth Avenue, such production did not constitute a substantial part of the work or activities carried on by this tenant at 392 Fifth Avenue. The premises were used mainly as a business office, showroom and salesroom. Less than 15% of the space occupied by Needlecraft was used for activity that could be classed as producing, manufacturing, handling, transporting or in any other manner working on goods for commerce. The majority of Needlecraft's personnel at 392 did no productive work. There were 14 or 15 employees, composed of three salespeople, two or three girls working in the order department, three in the bookkeeping department, a purchase clerk, a packer, a switchboard operator and two or three in the preparatory department. In addition there were three executives. The executive offices of American Needlecrafts, Inc., occupied 400 square feet, or 7½% of the total space occupied by American Needlecrafts, Inc. True, in the premises at New York, there was some actual work done toward the preparation of the goods for manufacture. Designs originated here. Some preparatory work was done here, which included perforating, `stamping', model or pattern making and cutting cloth. A small amount of goods was sent back to New York to be put in the showroom for sale. This, of course, had to be packed and shipped. However, what was done by way of preparation etc., I regard as not a substantial part of all the activities carried on in these premises. American Needlecrafts, Inc. was not during the period in question substantially engaged at 392-394 Fifth Avenue in producing, manufacturing, handling, transporting or in any other manner working on goods for commerce."

If the actual space thus determined to be used for physical production were added to the space used by other tenants in the production of goods for commerce the total would fall far short of approximately 20% of the entire rental space in the building. On these facts, which are supported by the evidence, we are consequently squarely faced for the first time by the need to decide whether the amount of space devoted by any one tenant to the production on the premises of goods for commerce must be substantial in respect to the entire space occupied by that tenant in the sense that it must be approximately 20% before the entire space may be counted in applying the technique of aggregation of tenant space units in order to determine whether a substantial part of the building is used for the production of goods for commerce. We are referred to the language in subdivision 6 on pages 963-964 of 156 F.2d in Roberg v. Henry Phipps Estate, supra, which it must be admitted, makes all this space includible. But that should be regarded as dicta since we had already held in that case that other space not affected by what was there said was sufficient to put the appellant employees within the...