Case Name: McCOMB v. FARMERS RESERVOIR & IRRIGATION CO.
Court: United States Court of Appeals for the Tenth Circuit
Jurisdiction: United States
Decision Date: 1948-04-23
Citations: 167 F.2d 911
Docket Number: No. 3549
Parties: McCOMB v. FARMERS RESERVOIR & IRRIGATION CO.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 167
Pages: 911–918

Head Matter:
McCOMB v. FARMERS RESERVOIR & IRRIGATION CO.
No. 3549.
Circuit Court of Appeals, Tenth Circuit.
April 23, 1948.
Rehearing Denied May 25, 1948.
PHILLIPS, Circuit Judge, dissenting.
Reid Williams, Regional Atty., of Kansas City, Mo., and Bessie Margolin, Asst. Sol., of Washington, D. C. (William S. Tyson, Sol., Morton Liftin and Sidney S. Berman, Attys., U. S. Dept. of Labor, all of Washington, D. C., on the brief), for appellant.
John P. Akolt, of Denver, Colo. (Bancroft, Blood & Law, Frank N. Bancroft, Walter W. Blood, Brock, Akolt &. Campbell, and R. A. Dick, all of Denver, Colo., on the brief), for appellee.
Before PHILLIPS, BRATTON and MURRAH, Circuit Judges. „

Opinion:
BRATTON, Circuit Judge.
By complaint filed in the United States Court for Colorado, the Administrator of the Wage and Hour Division of the Department of Labor charged that The Farmers Reservoir and Irrigation Company, a corporation, was violating the Fair Labor Standards Act, 52 Stat. 1060, 29 U.S.C.A. §201 et seq., by failing to pay certain of its employees time and one-half for statutory overtime, and by failing to keep records, as required by the Act. An injunction was sought restraining continued violation. The defendant denied coverage under the Act. Entertaining the view that all of the employees involved except one were engaged in commerce or in the production of goods for commerce, aiid that all of such employees were engaged in agriculture, the court dismissed the action; and the administrator appealed.
The facts are not in issue. The company owns, maintains, and operates an irrigation system consisting primarily of four large storage reservoirs, a number of small reservoirs, and from 300 to 400 miles of canals. Approximately 100,000 acres of farm land is irrigated in whole or in part with water furnished by the company. The major portion of the water distributed is diverted from the public streams in Colorado during the non-irrigation season, is run through canals into the reservoirs, is released from the reservoirs, is carried through canals, and is delivered to the laterals of the farmers during the irrigation season. In addition to storage water, the company diverts from the public streams, transports through its canals, and delivers to the laterals of the farmers such other water as is available from time to time. The record title to the land upon which the reservoirs and the canals are located stands in the name of the company; and the company has a vested right fixed by judicial decrees to divert from the streams certain quantities of water as of various priority dates for use in irrigating land by its stockholders or their nominees in growing agricultural crops. The company has 10,500 shares of authorized capital stock, and each share entitles the owner thereof to an equal and pro rata share with every other share of the property of the company and of the available supply of water in the division of the system to which such stock is allocated. Each year the stockholders make an annual assessment upon the outstanding stock of the company for the purpose of raising money necessary to defray the expenses incident to the maintenance and operation of the system and for the payment of the principal and interest on the outstanding bonds of the company. The proceeds of the assessments constitute the sole source of income of the company, with the exception of incidental income from rentals for duck hunting and similar purposes on some of the reservoirs, the receipt of which operates to reduce the amount of the annual assessments. Payment of the assessments is a condition precedent to the right of a stockholder to receive water allocated to his stock. The company does not sell water and does not carry water for hire. It is a mutual ditch company, it does not make a profit, and it does not pay dividends.
The company employs reservoir tenders, ditch riders, an operator of a dragline used in connection with the maintenance and repair of the reservoirs and canals, and common laborers for special maintenance work. The number of such employees ranges from sixteen to approximately twenty-six. The reservoir tenders and ditch riders, collectively and interchangeably, attend the diverting of the water from the streams; attend its storage; attend its conduct through its canals and into the laterals of the farmers; patrol the reservoirs, canals, and other appurtenant structures; and keep the property in good operating order. In numerous workweeks in the year some of the employees work in excess of forty hours and are not paid for the overtime at the rate of one and one-half times their regular pay. Sugar beets, corn, peas, and beans are grown on the land irrigated with water furnished by the company. Virtually all of the sugar beets are processed into refined sugar at plants in Colorado; large parts of the corn, peas, and beans are canned at factories in Colorado; and substantial quantities of the processed products are shipped in interstate commerce.
Taking up the question whether the employees are engaged in the production of goods for commerce, section 3(j) of the Fair Labor Standards Act defines "produced" to mean "produced, manufactured, mined, handled, or in any other manner worked on in any State", and it provides that "an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, mining, handling, transporting, or in any other manner working on such goods, or in any process or occupation necessary to the production thereof, in any State." The purpose of the Act was to eradicate from interstate commerce the evils attendant upon low wages and long hours of service. Being remedial, and having a humanitarian purpose in view, the Act is broad and comprehensive and is to be liberally construed in respect of coverage. Joseph v. Ray, 10 Cir., 139 F.2d 409; E. C. Schroeder Co. v. Clifton, 10 Cir., 153 F.2d 385, certiorari denied 328 U.S. 858, 66 S.Ct. 1351, 90 L.Ed. 1629; Fleming v. Hawkeye Pearl Button Co., 8 Cir., 113 F.2d 52; Lofther v. First National Bank of Chicago, 7 Cir., 138 F.2d 299; Fox v. Summit King Mines, 9 Cir., 143 F. 2d 926; Walling v. Consumers Co., 7 Cir., 149 F.2d 626.
No fixed and unyielding rule has been blueprinted for determining in every case whether an employee is engaged in the production of goods for commerce, within the meaning of the Act. Each case must depend upon its own facts. But there are certain general guides. It is not necessary that the employee come in actual physical contact with the goods produced. It is enough if his work constitutes an essential or useful part of an integrated effort by which goods are produced for commerce. It meets the requirements of the Act if the work of the employee has such "close and immediate tie with the process of production for commerce" that it is in effect a part of it. The criterion is-necessarily one of degree. Kirschbaum v. Walling, 316 U. S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638; Warren-Bradshaw Drilling Co. v. Hall, 317 U.S. 88, 63 S.Ct. 125, 87 L.Ed. 83; Walton v. Southern Package Corp., 320 U.S. 540, 64 S.Ct. 320, 88 L.Ed. 298; Armour & Co. v. Wantock, 323 U.S. 126, 65 S.Ct. 165, 89 L. Ed. 118; Borden Co. v. Borella, 325 U.S. 679, 65 S.Ct. 1223, 89 L.Ed. 1865, 161 A.L. R. 1258; Roland Elec. Co. v. Walling, 326 U.S. 657, 66 S.Ct. 413, 90 L.Ed. 383; Mid-Continent Pipe Line Co. v. Hargrave, 10 Cir., 129 F.2d 665; Rucker v. First National Bank of Miami, 10 Cir., 138 F.2d 699, certiorari denied 321 U.S. 769, 64 S.Ct. 524, 88 L.Ed. 1065; Walling v. Amidon, 10 Cir., 153 F.2d 159.
Here, certain agricultural commodities are produced on land irrigated with water furnished by the irrigation company. The agricultural commodities are processed and the finished products move in the channels of interstate commerce. Irrigation of the land is necessary in order to produce the agricultural commodities. The employees in question perform physical work which is indispensable to the irrigation of the land. Without their work, the land cannot be irrigated, the agricultural commodities cannot be produced, and therefore no finished products can move in interstate commerce. The relationship of the employees to the production of the finished products which move in interstate commerce is not objectionably remote or tenuous. Instead, their work is vital and essential to the integrated effort which brings about the movement of the finished products in commerce. ' It is manifestly clear that the employees are engaged in a process or occupation necessary to the production of goods for commerce, within the meaning of the Act. Reynolds v. Salt River Valley Water Users Ass'n., 9 Cir., 143 F.2d 863, certiorari denied 323 U.S. 764, 65 S.Ct. 117, 89 L.Ed. 611; Walling v. Friend, 8 Cir., 156 F.2d 429; Meeker Cooperative Light & Power Ass'n v. Phillips, 8 Cir., 158 F.2d 698; McComb v. Super-A Fertilizer Works, 1 Cir., 165 F.2d 824.
We come now to the question whether the employees, though engaged in a process or occupation necessary to the production of goods, for commerce, are exempt from the wage and hour provisions of the Act. Section 3(f) defines "agriculture" to include "farming in all its branches and among other things includes the cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticultural commodities , the raising of livestock, bees, fur-bearing animals, or poultry, and any practices performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, including preparation for market, delivery to storage or to market or to carriers for transportation to market." And section 13(a) (6) expressly exempts from the wage and hour provisions of the Act all employees employed in agriculture. The definitive provision is broad and should not be restrictively interpreted. Jones v. Gaylord Guernsey Farms, 10 Cir., 128 F.2d 1008. But the exemption provision is to be narrowly construed, due regard being accorded the plain language of the Act and the intent of Congress. Phillips, Inc., v. Walling, 324 U.S. 490, 65 S.Ct. 807, 89 L.Ed. 1095, 15 A.L.R. 876; Fleming v. Hawkeye Pearl Button Co., supra; Bowie v. Gonzalez, 1 Cir., 117 F.2d 11; Miller Hatcheries v. Boyer, 8 Cir., 131 F.2d 283; Helena Glendale Ferry Co. v. Walling, 8 Cir., 132 F.2d 616; Schmidtke v. Conesa, 1 Cir., 141 F.2d 634; Walling v. Bay State Dredging & Contracting Co., 1 Cir., 149 F.2d 346, 161 A.L.R. 825, certiorari denied 326 U.S. 760, 66 S.Ct. 140, 90 L.Ed. 457; Walling v. Consumers Co., supra; West Kentucky Coal Co. v. Walling, 6 Cir., 153 F.2d 582; Walling v. Friend, supra; McComb v. Hunt Foods, Inc., 9 Cir., 167 F.2d 905. And one asserting that its employees are exempt from the wage and hour provisions of the Act has the burden of showing affirmatively that they come clearly within an exemption provision. Walling v. General Industries Co., 330 U.S. 545, 67 S.Ct. 883, 91 L.Ed. 1088; Mid-Continent Petroleum Corp. v. Keen, 8 Cir., 157 F.2d 310; Armstrong Co. v. Walling, 1 Cir., 161 F.2d 515; McComb v. Hunt Foods, Inc., supra.
The defendant' is a mutual irrigation company organized under the laws of Colorado, and it is the law of that state that in respect of the imposition of special assessments or the levying of ad valorem taxes a corporation of that kind is to be treated as one organized for the convenience of its members in the distribution to them of their water for use upon their land in proportion to their respective stock interests. Kendrick v. Twin Lakes Reservoir Co., 58 Colo., 281, 144 P. 884; Comstock v. Olney Springs Drainage District, 97 Colo. 416, 50 P.2d 531; Beaty v. Board of County Commissioners of Otero County, 101 Colo. 346, 73 P.2d 982. But local law relating to the imposition of special assessments or the levying of ad valorem taxes is not the test for determining whether the employees of such a corporation are engaged in agriculture within the meaning of section 13(a) (6), supra. To adopt that test would introduce into the statute variations and differences as widely apart as the laws of the several states. Persons engaged in identical work would be within the statute or exempt from its provisions, depending upon the location of their work and the attitude of the particular state. The statute is not expanded to include some employees and limited to exclude others engaged in the same work, depending upon local statutory or judicial concepts. National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170.
The defendant is a corporate entity, separate and distinct from the farmers to whom it furnishes water for irrigation. Its employees are under its direction and control, and they are engaged in keeping its property in operating condition and in operating its irrigation system. They are not employed by the farmers and are not under their direction or control, are not cultivating or tilling the soil, are not dairying, are not cultivating, growing, or harvesting any agricultural or horticultural commodity, are not raising livestock or poultry, and are not preparing any commodity for market, storage, delivery to storage, delivery to market, or delivery to a carrier for transportation to market. While irrigation activities carried on by a farmer in continuity with other operations of the farm as a link in a chain of events leading to the growing of agricultural commodities and in the subsequent preparation of such commodities for commerce are a part of agriculture within the meaning of the Act, employees of a company engaged in diverting water, storing water, and delivering water to farmers at their laterals for irrigating lands of the farmers, and in keeping the property of the company in operating condition, all separate and distinct from the farming operations of the farmers, are not engaged in agriculture within the intent and meaning of section 13(a) (6), supra. McComb v. Super-A Fertilizer Works, supra.
Section 13(a) (1) provides in presently material part that the wage and hour provisions of the Act shall not apply to any employee employed in a bona fide executive, administrative, or professional capacity, as such terms are defined and delimited by regulations of the Administrator; and Regulation 541, promulgated under the Act, provides among other things that the term "employee employed in a bona fide administrative capacity" shall mean an employee who is compensated for his services on a salary or fee basis at a rate of not less than $200 per month, exclusive of board, lodging, or other facilities. At the time of the institution of the action and at the time of the entry of the judgment, the bookkeeper and accountant of the company was paid a salary of $190 per month. Since then his salary has been increased to $210 per month. The contention of the Administrator that the company should be enjoined from further violation of the Act in the future by failing to compensate him for overtime is now moot and therefore does not call for discussion.
The judgment is reversed and the cause remanded for further proceedings in harmony with the views herein expressed.