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District Court of Appeal, Fourth District, California.


Civ. 3288.

Decided: May 04, 1945

Robert W. Kenny, Atty. Gen., and Clarence A. Linn and Doris H. Maier, Deputy Attys. Gen., for appellants. Rogers & Clark, John H. Painter, and Verne-Marie Freeman, all of San Francisco, for respondent.

The plaintiff brought several actions under section 45.10 of the Unemployment Insurance Act, St.1939, p. 2058, for a refund of certain contributions paid under protest in 1939, 1940 and 1941, on the theory that the services involved were performed in agricultural labor and that Rule 7.1 is invalid insofar as it would exclude such services from the term ‘agricultural labor’. The actions were consolidated for trial and a judgment was rendered in favor of the plaintiff, from which the defendants have appealed.

The respondent owns and operates a large ranch of which approximately 97,000 acres are used for farming purposes. About 6000 acres are devoted to citrus fruits and other orchards, about 4500 acres to grain and field crops, about 60,000 acres to grazing, and about 26,000 acres have been leased to tenant farmers, largely on a share basis, and are used to raise citrus fruits, vegetables, grain and other crops. When the respondent acquired this ranch in 1894, it was used largely for cattle and sheep range. As the years have passed the productive capacity of the ranch has been gradually and greatly increased by developing irrigation, draining swamp land, washing out alkali and developing a system to prevent soil erosion in respective portions of the land. This has required the installation of a large number of electrically operated pumps, and the building of some dams, many miles of canals and pipe lines, roads, and terraces to control the movement of water in certain areas.

The respondent purchases electricity from a power company which is delivered at the edge of the ranch. It has installed and maintains its own distributing system within the ranch, using the electricity to operate pumping plants and motors and for lighting purposes. The respondent also furnished electricity to some of its tenant farmers and employees, to some cooperative marketing associations located on the ranch and to one private concern off the ranch, in that case trading electricity for sewage water. These other users of electricity were charged only the cost thereof and it is conceded that no profit was made therefrom. The respondent's reason for leasing portions of the ranch was that in those cases greater production could be obtained through the closer attention given by tenants having a personal interest in the crops.

While the respondent was mainly engaged in agriculture it operated, or was interested in, a few comparatively small industrial or commercial activities, mostly along the ocean, including a salt works. Contributions assessed in connection with such activities have been paid and no controversy exists relative thereto, with the exception of one item which will be later considered. No question is here raised with respect to a large portion of respondent's employees who are engaged in the work of actually tilling the soil, it being conceded that such services are agricultural labor within the meaning of the act.

To facilitate its work of preparing land for cultivation, raising crops, maintaining buildings and equipment, selling crops and keeping records, the respondent has, for greater efficiency, arranged a division of labor by assigning special duties to certain of its employees. One group, called the ‘Cummings Crew’ after its foreman, consists of about twenty men who maintain and operate the irrigation, drainage and reclamation systems. They install, operate and repair pumps, repair dams and ditches, drill some wells, construct terraces, remove silt deposits from orchards, level land for irrigation, operate a portable sprinkler system for irrigation, and construct and maintain private roads over the ranch to serve ranch purposes. At times, they operate some ten different kinds of heavy equipment requiring some degree of skill, and at times they do ordinary work, including the use of a pick and shovel when the occasion requires. Most of these men were ordinary laborers when they joined this crew. In this connection, a surveyor is employed, with occasionally an assistant, to determine grades, run lines for ditches and pipe lines, and do other work of this nature to promote the more efficient operation of the ranch. Another group are electricians who repair and maintain the electric lines on the ranch, do wiring, and repair and maintain the various motors on the irrigation pumps and in certain shops. Another group consists of carpenters, painters and plumbers. There are 245 large buildings on the ranch and 180 small sheds. They are located in twelve groups which are used as operating centers for the ranch. While all major construction work is done by outside contractors a small carpenter shop is operated and members of this group repaid and maintain the various buildings and fences on the ranch.

The extensive operations of this ranch require a large amount of mechanical farming equipment, including tractors, trucks, automobiles, harvesters, spray rigs, and numerous other machines and equipment, most of which are tractor drawn. Another group, consisting of three or four blacksmiths and eight mechanics, are engaged in repairing and maintaining this sort of equipment, including the sharpening of various tools. Another group consists of bookkeepers, stenographers, a timekeeper, a selling and purchasing agent, and other office help. There are also foremen, superintendents and managers of various kinds. The trial court found that 85% of the services performed in office work, and of the services of the various supervisors and managers, were essential to and directly connected with the growing of agricultural crops by the respondent on this ranch and the farming of the property. The court further found that the work done by all of the other employees above referred to was necessary and essential to and directly connected with the growing of agricultural crops on this ranch.

We are here concerned with certain specialized services rendered for the most part, not in the direct cultivation of the soil, but in maintaining and keeping in repair the buildings and equipment of the ranch; in maintaining and operating the irrigation and reclamation systems; in operating some of the heavier types of machinery; in managing, supervising and furnishing supplies and food for the men working the land; in keeping the necessary books and records; and all of which is incidental and essential to the development, cultivation and operation of the ranch.

By its terms ‘agricultural labor’ is excluded from the operation of the Unemployment Insurance Act. The question here involved is whether these specialized services should be classified as agricultural labor within the meaning of the act. The appellants contend that ‘the rationale of the agricultural labor exemption is based on the concept of a small family farm’, that because of its size this agricultural enterprise should be considered as industrial or commercial in nature, and that the services here involved ar esuch specialized services as to be, from their very nature, industrial or commercial even when performed on a farm and in connection with farming activities. It is further contended that in any event services do not constitute agricultural labor because of a provision added to Rule 7.1 of the Commission in 1940. That provision reads as follows:

‘Where the nature of the service is such that it might be properly said of the individual performing it that he is pursuing a special trade, calling, or occupation not closely connected with agriculture, the service does not constitute ‘agricultural labor’ even though the service may be performed on a farm by an employee of the owner or tenant thereof. Typical of such services are those performed by managers, spervisors, foremen, carpenters, painters, blacksmiths, mechanics or engineers, timekeepers, bookkeepers or other clerical workers, watchmen, janitors, cooks and gardeners.'

This act was adopted as a part of a national paln of social welfare and was designed to work closely with similar federal legislation. Originally, the federal act and the federal administrative definition of agricultural labor contained no ‘special trade’ provision. In 1937 and 1939 such a provision was adopted by the federal administrative authorities. It was then held in three cases that persons employed by farmers and for farm purposes were engaged in agricultural labor even though it might properly be said they were pursuing special trades. Stuart v. Kleck, 9 Cir., 129 F.2d 400; Jones v. Gaylord Guernsey Farms, 10 Cir., 128 F.2d 1008; Latimer v. United States, D.C., 52 F.Supp. 228. In 1939, Congress amended the federal act and provided that services ‘in the employ of the owner or tenant or other operator of a farm, in connection with the operation, management, conservation, improvement, or maintenance of such farm and its tools and equipment’ should be considered agricultural labor. 26 U.S.C.A. Int.Rev.Code, § 1426(h). To conform to this definition an administrative rule was adopted repeating substantially this language and providing that such services may include, for example, those performed ‘by carpenters, painters, mechanics, farm supervisors, irrigation engineers, bookkeepers, and other skilled or semi-skilled workers, which contribute in any way’ to the operation of a farm which is operated by the person employing them. In 1943, the legislature of this state passed a bill amending section 7 of this act by defining agricultural labor in conformity with the federal definition and in such a way as to include as agricultural special services which contributed to the conduct of a farm operated by the employer. This bill was vetoed by the governor but, in any event, it stands as the latest expression of the legislative intent. The Commission's construction of the term ‘agricultural labor’ as used in the act was changed five times between 1936 and 1940. It has been ‘neither uniform nor of long standing’. See Whitcomb Hotel, Inc. v. Cal. Emp. Comm., 24 Cal.2d 753, 151 P.2d 233, 236. Moreover, in a letter dated November 10, 1939, an employee of the Commission advised the respondent's counsel that ‘* * * it appears to be a well settled point of law in this state that any person who is performing services on a farm and contributing to the operation of the farm is engaged in ‘agricultural labor’, regardless of the fact that due to the size of the farm and the use of modernized equipment his services are highly specialized * * *'.

The services here in question were performed on a farm for the owner of a farm, as a part of regular farming operations, and for the sole purpose of producing and marketing agricultural crops. In State v. Christensen, 18 Wash.2d 7, 137 P.2d 512, 520, 146 A.L.R. 1302, it is said:

‘The courts * * * have had difficulty with this type of case, and some of this difficulty * * * has, in our opinion, arisen because the courts have attempted to pick out some particular phase of the operation as determinative of whether it was agricultural, industrial, or commercial, instead of looking primarily to the main general purpose of the operation.’

The appellants rely on the oft quoted suggestion that the test of what constitutes agricultural labor is ‘the nature of the work modified by the custom of doing it’. In other cases they have strongly contended that work which was inherently agricultural in nature became industrial or commercial when the general business of the employer was of that nature. Strangely enough, they here contend that services which are of a kind ordinarily associated with a particular trade or calling does not become agricultural, even though performed on a farm for a farmer and as a direct part of the business of producing agricultural crops. If, because of the surrounding circumstances, work which is by nature agricultural ceases to be such, within the meaning of section 7(a) of the Act, St.1939, p. 2850, when its performance is incidental to an industrial enterprise, a similar rule should be applied when the work is not only incidental but essential to an agricultural enterprise.

When this act was adopted in this state there were many large ranches producing agricultural crops by the use of mechanized equipment, with a division of labor, and by using irrigation, reclamation and drainage. In adopting the language of the act the legislature must have had these large ranches in mind as well as the smaller farms, and while the words ‘agricultural labor’ are not defined in the act they are also not limited, and it is unreasonable to suppose that it was intended to limit the exemption to small farms or to hand labor or to any particular part of the labor then being generally used on ranches and farms. It is easy to say that a carpenter is still a carpenter, a machinist a machinist or a bookkeeper a bookkeeper no matter where he is working. But we are here concerned with the meaning of a prticulr statute. That statute does not include or exempt a carpenter because he is a carpenter or an unskilled laborer because he is such. He is included or exempted because of the services he performs at a prticular time and the relation of those services to something else. If he is engaged in agricultural labor the statute says he is exempt, and this is not made dependent upon whether he has a special trade or calling in which, under other circumstances, he would not be exempt. Regardless of his trade or calling it is the work he is doing and the circumstances under which he does it that brings him within or without the provisions of the act. If his services are performed on a farm for the owner of the farm and for the very purpose of producing agricultural crops, if they are essential to that end under the setup established for that purpose, and if they are regular and not merely temporary, it would reasonably seem that he was engaged in agricultural labor.

Agriculture, like industry, has developed, changed and grown under modern conditions and with the adoption of new methods and the advent of improved machinery, including the use of electrical power and the internal combustion engine. This has also brought about, in some cases, changes in the methods and ways of doing to work necessary in carrying on agricultural operations. While we still have the small farm operated largely by hand labor and horsedrawn tools, the use of power machinery and larger and more varied equipment is now general on large and medium-sized farms and to some extent even on smaller farms. A large part of our agricultural products are now produced on large farms, the efficient operation of which would have been impossible a generation age, and which largely utilize modern methods and machinery. In spite of such, changes in methods and means of operation they are still agricultural enterprises and are operated for the purpose of producing agricultural products. It may well be said that the real question here is whether the statute in question contemplated agricultural labor under the conditions then actually existing and well known to the legislature, and as broadly applying to the business of agriculture in its entirety, or whether the exemption thus provided for was intended to be limited to agricultural labor under primitive conditions or as existing a century or more ago, and to apply only insofar as those conditions and methods may still survive. We think it was intended to cover and apply to existing conditions, those under which agriculture is now carried on throughout the state, and that it was intended to be limited by the circumstances under which the work is performed and not by whether the operations under which the work is done happen to be large or small.

It may be conceded that the fact that services may have some indirect or remote connection with the production and sale of agricultura crops is not sufficient to exempt them under the terms of the act. For example, services in the manufacture of plows, tractors, and many other things would, of course, not be agricultural labor even though the products of such labor may contribute to the success of farming operations. But there is a logical difference between such remote and indirect effect upon agriculture and services rendered on a farm for the owner thereof, which are an inherent and indispensable part of the forming operations, which are performed as a direct part of the farming enterprise being conducted for the sole purpose of producing agricultural crops, and without which such crops could not be produced. On a smaller scale, the same services would be held to be agricultural labor. Leveling ground so crops can be grown, digging irrigation ditches, sharpening and repairing tools, keeping pumping plants running and like services are essentially agricultural labor when done by the small farmer or his hired hand, as a part of the necessary work of raising crops on a farm. The character of the work is in no way changed when it is done on a larger scale by more men, and the situation is naturally and logically the same when the scale of operations is sufficiently large to justify a division of the labor and the use of men in particular portions of the work in which they have or develop special skill. To distinguish between persons engaged in the same form of work because in some cases there is more of that kind of work to be done, enough to permit an economical specialization in that regard, seems discriminating, illogical and in disregard of the apparent intent of the statute. If specialized services such as those of mechanics, supervisors and bookkeepers are a legitimate part of industry and properly classed as industrial labor when directly performed in an industrial enterprise it would seem only reasonable that they are a legitimate part of agriculture and should be considered as agricultural labor when performed on a farm and as a direct and necessary part of an agricultural enterprise.

We agree with the trial court's conclusion that insofar as Rule 7.1 ‘purports to exclude from the classification of ‘agricultural labor’ work which is necessary and essential to and directly connected with the growing of agricultural crops upon plaintiff's said ranch and other similar ranches, it is unreasonable and arbitrary and discriminates against plaintiff and against others engaged in operating large ranches in this state'.

Appellants further contend that the court erred in holding as exempt from the operation of the act certain services performed by some of these employees of the respondent on lands leased by it to tenants, mostly on a crop-sharing basis. These services consisted of work in connection with the drainage and reclamation of the land to make it more productive, for which no charge was made, it being a part of the general improvement of the ranch; of operating a ‘rain making’ sprinkler system for irrigation, and making certain repairs where the tenant had no facilities for doing the work, for which the cost of the work was charged; and work performed in harvesting tenant-grown grain on a cost basis. Not only should these services be considered agricultural under the circumstances here appearing, but so far as we can see from the record this matter is immaterial under section 7l(10) of the act, St.1939, p. 2850, which provides that where two kinds of services are performed the classification shall be based upon the one in which more than half of the time is spent in a given period.

Finally, there is a controversy with respect to one item relating to the operation of the salt works, a non-agricultural activity. One Madrid furnished certain men for work in this connection. The court found that Madrid was an independent contractor, and that these men were not employees of the respondent. The appellants contend that this finding is not supported by the evidence. The work consisted in shoveling salt into cars and was paid for by the ton. The men were not on the respondent's payroll and the money therefor was all paid to Madrid who paid the men. Madrid paid all costs of carrying Workmen's Compensation protection and furnished the men with living accommodations and transportation. There is evidence that the only instructions given to these men by the respondent were as to the place where they should work, and that none were given as to the method of doing the work. If it can be said that there is any conflict in the evidence the finding in this regard is fully supported.

The general question as to whether services of the nature with which we are here concerned should or should not be exempt from the operation of this act is one of policy which should be determined by the legislature and not by an administrative agency or the courts. In the long run, the purpose of such legislation will be better served if this time-honored distinction is retained. Under the statute, as it now stands, we think these services were exempt and that the special trade or calling provision of Rule 7.1 is void insofar as its application to these circumstances is concerned. In our opinion, the statute was intended to exempt from the operation of this act all ‘agricultural labor’ and not merely a part of it.

The judgment is affirmed.

BARNARD, Presiding Justice.

MARKS and GRIFFIN, JJ., concur.