I respectfully dissent.
The conclusion of the majority is that construction of a primary line, construction of any extension of an existing primary line, or construction of secondary drop lines to customers is no part of the usual or ordinary business of an electric transmission company. With that conclusion I cannot agree and I venture the prediction that the majority opinion will be greeted with some amazement by electric transmission companies who now have employees doing such work.
The sole issue to be decided is whether line construction is a part of plaintiff's usual business. If it is, then the parties agree and it is the law (section 1551.25 (E), Code of 1939) that line-construction workmen are to be counted with plaintiff's other employees to determine whether plaintiff is an employing unit under the act, even though the line-construction workmen are actually employees of an independent contractor. If line construction is no part of plaintiff's usual business, *Page 922 then all agree the construction workmen should not be so counted and, under the facts here, plaintiff would not be an employing unit under the act.
The majority decides the issue by pointing out that "such construction work was uniformly delegated to others" and "was that of independent contractors alone" and the majority conclude from this:
"Accordingly, the workmen engaged by the independent contractors in such construction work are not deemed to be employees of appellant under the provisions of subsection E of section 1551.25, Code of 1939."
A single reading of the statute should demonstrate the unsoundness of a decision resting on such a premise. The statute comes into operation only if the company performs a part of its usual business by means of independent contractors. If its use of independent contractors to perform some work is to be construed as establishing that that work is not a part of the company's usual business, then the statute could never operate. The legislature sought to reach, in the tax base of an employer, the use of independent contractors if the work they performed was part of the usual business of the employer. The majority decides the work performed was not a part of the usual business of the employer because performed by independent contractors. By such circuitous reasoning the majority effectively nullify the statute entirely. Surely the question to be decided, namely, whether the construction of the lines was a part of the company's usual business, is one that must be approached without regard to whether the plaintiff built them with its own employees or had them built by independent contractors. If it built them with its own employees, it would be liable for the tax upon all employees under other provisions of the act. If it built them by independent contractors who pay the tax on their workmen, it would be liable for the tax on its own employees under the law if the building of the lines was a part of its usual business. The unemployment-compensation act places a burden of tax liability on employing units who have eight or more individuals performing services for it *Page 923 during a certain portion of a year. It gives to such workmen the benefits of unemployment compensation. The purpose of section 1551.25 (E) is perfectly clear. The legislature knew that there was another way for a company to perform many parts of its usual business besides the employee method. The company could engage independent contractors and accomplish what it had formerly accomplished by employees and in many cases avoid the tax and deprive workmen who did part of its usual business from the benefits of the compensation. It was to avoid such a practice that section 1551.25 (E) was enacted. By this section it only carried out the general plan of the legislation, which is to reach with tax burden the company that has eight or more individuals performing any part of its usual or ordinary business and to grant compensation benefits to such workmen without regard to whether the workmen or any number of them are employees of independent contractors with the company. The only effect if there is an independent contract is to relieve the company of the tax burden if the contractor is also an employing unit under the act.
II. There is nothing ambiguous in the statute. The decision here turns on the application of the phrase "part of its usual * * * business" to the facts of this case. Was the construction of the lines a part of plaintiff's usual business? What was plaintiff's usual business? Both sides admit it was the transmission and distribution of electricity to its members. It is admitted by both that plaintiff had the lines constructed by independent contractors in order to enable it to carry out its "usual business" of transmitting and distributing electricity to its members. Now, was the construction of the lines a "part" — any "part" — of that business? It seems clear that the building of the lines over which the electricity was to flow was a part of the usual and ordinary business. Note that the statute does not say that the work must be a usual part of the business. It must be a part of the usual business. Surely the erection of any part of a distribution system that reaches member consumers is a part of the usual or ordinary business of a company engaged in distribution. It may not be a usual part in the sense that it is done daily or frequently, but it seems clear that whenever it is done, to reach the first customer or *Page 924 the hundreds who later become customers, a part of the company's usual business has been performed. How is the company going to carry out its usual business of distributing electricity? It has to secure electric energy and secure a distribution system that reaches consumers. In other words, a part of the usual business of distributing electricity to customers is securing the manufactured energy to distribute and another part is securing a distribution system over which it is to travel to customers. The customer list may change. New customers may be secured. In order to reach the new customers the company may have to extend its primary lines. It may have to build new drop lines. Is the company whose usual business is the distribution of electric energy to customers performing wholly unusual business by building such primary lines or such drop lines? The electric transmission companies of Iowa which have expanded to meet the needs of growing cities by extending their primary lines and by erecting new drop lines in order to distribute energy to new customers have certainly been engaged in their usual business by such line construction.
While not conclusive, probably the best single test to apply to determine whether the performance of certain work is or is not a part of one's usual business is to consider whether the work performed is usually associated with such business; whether the performers of such work are in an employment that is usually identified with such business. The work done here was line construction of primary and service lines. In other words, the men who performed the work, even though they worked for construction companies, were line-construction men. The company was an electric transmission company. Where are workmen who construct primary line extension and service lines to customers usually found? They are usually employees of electric transmission companies and that very fact is strong evidence that they are carrying out a part of the companies' usual business. Line construction workmen would not usually be employed by electric transmission companies to perform a part of such companies' unusual business.
The record here shows that this company had line-construction employees. Mr. Connor, the superintendent of the *Page 925 company, testified that where a farmer asked for service after the primary transmission line had been constructed and there was no secondary line to his place, "the Cooperative put on the line at its own expense and by its own employees." (Italics supplied.) And with regard to this practice of building such secondary lines, he stated, "That is the usual business of the Cooperative to maintain service." The evidence before the commission showed the company built a new secondary line on an average of every 1.3 to 1.4 months. Mr. Connor further testified that he did not know of anything in the company's articles that would prevent the company from constructing a main or primary line. He said it would not be feasible in the sense that it would not be efficient operation, but if they did do it, it would be a part of the work which their articles authorized.
The foregoing testimony constitutes a complete answer to the only question in the case. The sole inquiry here is whether line construction is a part of the company's usual business. The superintendent has answered in the affirmative in the very language of the statute, stating that they have line-construction employees who build new secondary lines on an average of about every one and a third months as a part of the company's "usual business." In other words, the company had employees who did part of the same work that the construction company employees did and it is admitted that such work was a part of the Company's "usual business."
A case which touched on the problem is Singer Sewing Machine Co. v. New Jersey U. Comp. Comm., 128 N.J. Law 611, 615,27 A.2d 889, 893, affirmed 130 N.J. Law 173, 31 A.2d 818. Here the Singer Sewing Machine Company's usual business was the manufacture of machines. It entered into an independent contract with Di Perna, who contracted to act as a distributor to sell the company's products. Di Perna hired a salesman and the question was whether this salesman was entitled to unemployment benefits. The statute was identical with ours, so the question turned on whether he was to be counted as an employee of the company. The court held that under the statute Di Perna's salesman was to be deemed a company employee, stating: *Page 926
"The employment here contracted for [Di Perna's contract] was indubitably a part of prosecutor's [company's] usual trade or business in the legislative sense. It was primarily a contract for a selling service — such as patently takes the classification of an employment identified with prosecutor's business. The Company manufactured sewing machines, vacuum cleaners, motors and tables, and the individual parts thereof; and it was essential that there be a consumer outlet. Thus the distributor's function was an integral part of the business."
III. Counsel for appellant argue that the Unemployment Compensation Law is a taxing statute and therefore it should be strictly construed in favor of the taxpayer. I think that under any rule of construction, giving the words of the statute their plain ordinary meaning, the tax would apply in this case. While the majority does not mention any rules of construction that should govern the interpretation of section 1551.25 (E), Code of 1939, it is obvious that the majority is applying the strict-construction rule. In dissenting from the conclusion of the majority I wish to express my disapproval of the rule of strict construction for this act.
The second section of the act, section 1551.08 gives to the administrators of the act, and to the courts, a guide for interpretation.* A reading of this guide would seem to be direction to give the act a liberal interpretation.
The rule of strict construction was announced by this court in the case of Moorman v. Unemployment Comp. Comm., 230 Iowa 123,129, 296 N.W. 791, 794, decided March 18, 1941. *Page 927 In that case this court undertook "to set a guide of interpretation" for this particular statute which seems to be at variance with the legislative guide.
The opinion points out that the legislation "is remedial in character and that its enactment was to make possible the avoidance of involuntary unemployment and to distribute the cost of involuntary unemployment among the employers of industry who employed workers for wage." The opinion then states that this court and other courts have held remedial legislation should receive a broad and liberal construction and the opinion quotes from Rish v. Iowa Portland Cement Co., 186 Iowa 443,170 N.W. 532, and from Pierce v. Bekins Van Storage Co., 185 Iowa 1346,172 N.W. 191, some statements where we have held that the Workmen's Compensation Law, being remedial, is to receive a broad and liberal construction in aid of accomplishing the object and purpose of the enactment. But the opinion rejects the legal principles which induced this court to rule that the Workmen's Compensation Act is to be liberally construed and holds that because the act is of a "taxing nature," then the rule applies: "* * * that in tax cases the general rule for statutory construction is against the taxing body."
The Moorman case was the first case to reach this court where the Iowa Unemployment Compensation Law, now the Iowa Employment Security Law (chapter 77.2, Code of 1939), was involved. Such laws had been held to be a valid exercise of the taxing powers of a state. Carmichael v. Southern Coal Coke Co., 301 U.S. 495,57 S. Ct. 868, 81 L. Ed. 1245, 109 A.L.R. 1327. Because the law was of a taxing nature, we applied the general rule of strict construction applicable to general revenue taxing statutes. I feel that we were in error in adopting the rule of strict construction. The act can only be regarded as enacted in the interest of the public welfare to provide for assistance to the unemployed. It is an exercise of the police power for the purpose of protecting the health, morals, and welfare of the people by providing a cushion against the hardships suffered by those who, without fault of their own, are temporarily out of employment. Since its purpose is highly remedial, it should receive a liberal *Page 928 construction. I feel fortified in this view by the decisions of other jurisdictions showing a clear majority who favor the rule of liberal construction. The decisions of eight states, including Iowa, indicate adherence to the rule of strict construction for such statutes. Atkisson v. Murphy, 352 Mo. 644, 179 S.W.2d 27; Guaranty Mtg. Co. v. Bryant, 179 Tenn. 579, 168 S.W.2d 182; McCain v. Crossett Lbr. Co., 206 Ark. 51, 174 S.W.2d 114; State ex rel. Oklahoma Emp. Sec. Comm. v. Tulsa Flower Exch.,192 Okla. 293, 135 P.2d 46; Broadway v. Alabama Dry Dock Shipbuilding Co., 246 Ala. 201, 20 So. 2d 41; Maryland Unemployment Comp. Board v. Albrecht, 183 Md. 87, 36 A.2d 666; State v. Kenyon, Tex. Civ. App., 153 S.W.2d 195; Louisville Title Mtg. Co. v. Commonwealth ex rel. Unemp. Comp. Comm., 299 Ky. 224,184 S.W.2d 963.
At least twenty other states have now announced that the rule of liberal construction should apply to such legislation.
In Lindley v. Murphy, 387 Ill. 506, 511, 56 N.E.2d 832, 835, the court stated:
"The primary purpose of the Unemployment Compensation Act, as stated in section 1, is to afford relief to those involuntarily unemployed and their families. Amelioration of economic insecurity incident to involuntary unemployment is the objective to be effectuated. The statute itself is thus an exertion of the police power of the State, the legislation is remedial, and is to be liberally construed to the end that its basic purposes may be achieved. * * * The involuntary contributions required to maintain the system of unemployment compensation are not general taxes, and the statute is not a taxing statute. (Zehender Factor, Inc. v. Murphy, 386 Ill. 258 [53 N.E.2d 944]). In short, the Unemployment Compensation Act is not a revenue law * * *."
See, also, Grant Contracting Co. v. Murphy, 387 Ill. 137,56 N.E.2d 313; Zelney v. Murphy, 387 Ill. 492, 56 N.E.2d 754.
In Maine Unemployment Comp. Comm. v. Androscoggin Junior, Inc.,137 Me. 154, 160, 16 A.2d 252, 255, the Supreme Judicial Court of Maine stated, with regard to such a statute: *Page 929
"* * * it may be regarded as enacted in the interest of the public welfare in providing for assistance to the unemployed and so be entitled to receive a liberal interpretation. 59 C.J., Sec. 656, pages 1105, 1106. Relief of unemployment is a public purpose. Carmichael et al v. Southern Coal Coke Co.,301 U.S. 495, 515, 57 S. Ct., 868 [81 L. Ed. 1245, 109 A.L.R. 1327]."
In Singer Sewing Mach. Co. v. Industrial Commission, 104 Utah 175,189, 134 P.2d 479, 485, the Supreme Court of Utah stated:
"(a) The Unemployment Compensation Law was enacted under and as an exercise of the police power of the state.
"(b) Its purpose is remedial to protect the health, morals, and welfare of the people by providing a cushion against the shocks and rigors of unemployment.
"(c) Being remedial under the police power and not imposing limitations on basic rights, it should be liberally construed."
See, also, Northern Oil Co. v. Industrial Comm., 104 Utah 353,140 P.2d 329.
In Young v. Bureau of Unemployment Compensation,63 Ga. App. 130, 135, 10 S.E.2d 412, 415, the Court of Appeals of Georgia stated:
"The courts, as well as the administrator of the unemployment law, in construing and applying the provisions of such law must liberally construe and apply such law in the light of the public policy of this State, as declared in section 2 of the act. The courts shall be guided by the fact that the unemployment-compensation law is intended to provide some income for persons who are, without fault of their own, temporarily out of employment."
Without quoting from any more cases, I list the following decisions holding for the rule of liberal construction of the Unemployment Compensation Law: California Employment Comm. v. Black-Foxe Military Institute, 43 Cal. App. Supp. 2d 868, 110 P.2d 729; California Emp. Comm. v. Butte County *Page 930 Rice Gr. Assn., 25 Cal. 2d 624, 154 P.2d 892; California Emp. Comm. v. Los Angeles D.T.S. News Corp., 24 Cal. 2d 421,150 P.2d 186; Waterbury Sav. Bk. v. Danaher, 128 Conn. 78, 20 A.2d 455; Robert C. Buell Co. v. Danaher, 127 Conn. 606, 18 A.2d 697; Hagadone v. Kirkpatrick, ___ Idaho ___, 154 P.2d 181; State ex rel. Merion v. Unemployment Comp. Bd. of Rev., 142 Ohio St. 628,53 N.E.2d 818; Miller Auto Gear Parts Co. v. Unemployment Comp. Comm., 132 N.J. Law 34, 38 A.2d 292; Singer Sewing Mach. Co. v. New Jersey Unemp. Comp. Comm., 128 N.J. Law 611,27 A.2d 889, affirmed 130 N.J. Law 173, 31 A.2d 818; Unemployment Comp. Comm. v. Collins, 182 Va. 426, 29 S.E.2d 388; Cuddy-Gardner Co. v. Unemployment Comp. Bd., 69 R.I. 36, 31 A.2d 8; Sandoval v. Industrial Comm., 110 Colo. 108, 130 P.2d 930; News Pub. Co. v. Verweire, 113 Ind. App. 451, 49 N.E.2d 161; Knox Consol. Coal Corp. v. Review Board, Ind. App., 43 N.E.2d 1019; Review Bd. of U. Comp. v. Mammoth L. A. Ins. Co., 111 Ind. App. 660,42 N.E.2d 379; Rochester Dairy Co. v. Christgau, 217 Minn. 460,14 N.W.2d 780; Godsol v. Unemployment Comp. Comm., 302 Mich. 652,5 N.W.2d 519, 142 A.L.R. 910; Minor Walton Bean Co. v. Michigan U.C. Comm., 308 Mich. 636, 14 N.W.2d 524; O'Brian v. Michigan Unemp. Comp. Comm., 309 Mich. 18, 14 N.W.2d 560; Singer Sewing Mach. Co. v. State Unemp. Comp. Comm., 167 Or. 142, 103 P.2d 708,116 P.2d 744, 138 A.L.R. 1398; Puget Sound Bridge D. Co. v. State Unemp. Comp. Comm., 168 Or. 614, 126 P.2d 37; In re Yakima Fruit Growers Assn., 20 Wash. 2d 202, 146 P.2d 800; Sisk v. Arizona Ice Cold Storage Co., 60 Ariz. 496, 141 P.2d 395; Brown v. Haith, 140 Neb. 717, 1 N.W.2d 825; Unemployment Comp. Comm. v. Jefferson Standard L. Ins. Co., 215 N.C. 479, 2 S.E.2d 584; Grace v. Magruder, App. D.C., 148 F.2d 679, certiorari denied, ___ U.S. ___, 66 S. Ct. 24, 90 L. Ed. ___; Glenn v. Beard, 6 Cir., Ky., 141 F.2d 376, certiorari denied 323 U.S. 724,65 S. Ct. 57, 89 L. Ed. 582.
The word "tax" does not appear in the Iowa Employment Security Law. It has been judicially placed in such legislation by decisions upholding such laws as a proper exercise of taxing powers. But the court designation of an exaction, while proper *Page 931 for a discussion of validity, still leaves the question of whether the statute we have named a "taxing" statute should be liberally or strictly construed. The word "tax" has a first meaning which denotes an enforced contribution for the support of government and the amount is regulated by its necessities. In this field the government is exercising inherent power, essential to the very existence of independent government. The power to so tax is purely legislative and if there is any question whether the law was intended to reach this person or this property the statutory authorization must be shown for the courts cannot supply a legislative omission. For such a law the rule of strict construction against the taxing body is applicable. 59 C.J. 1131, section 670. But today we call many acts which are not revenue acts taxing statutes. Such acts are sustained by the police power. They are taxes in the broad sense that they are a government-imposed pecuniary burden to support an appropriate governmental function, to carry out a public policy that will promote the general public welfare or remedy an existing situation that is detrimental to the public welfare, or they are taxes in the sense of an exaction for the performance of an act which the state has the power to regulate or prohibit. Courts sometimes scrutinize such statutes to find the public purpose but, once found, the general rule that statutes founded upon public policy must be liberally construed to carry out that policy is the guiding rule for construction.
The Iowa Employment Security Law is founded upon the public policy of this state declared to be to relieve involuntary unemployment "by encouraging employers to provide more stable employment and by the systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment * * *." Section 1551.08, supra. The contributions go into a fund that is not a part of the public revenue and the amount employers pay varies in accordance with their benefit experience. Section 1551.13. When we state that the public policy is to relieve unemployment — and this is an appropriate state endeavor — we merely state the obvious. The point is that with such a public policy announced we will assume the legislature intended that every section of the act *Page 932 is to be liberally interpreted to the end that the policy objective be achieved. The interpretation guide of section 1551.08 is a proper legislative direction to apply the provisions of the act liberally to protect all the employees who can fairly be said to be within the intendment of the act against the possible dangers of future unemployment. I would overrule the statements in the Moorman case announcing the rule of strict construction for this statute and declare that the rule of liberal construction to carry out the public policy to relieve unemployment is the proper rule of construction to be followed.
I would hold that construction of the original primary line, and all extensions thereto and all service lines to customers from the primary line, was a part of the company's usual business as an electric transmission company, and, consequently, I would affirm the case.
BLISS, GARFIELD, and OLIVER, JJ., join in this dissent.
* 1551.08 Guide for interpretation. As a guide to the interpretation and application of this chapter, the public policy of this state is declared to be as follows: Economic insecurity due to unemployment is a serious menace to the health, morals, and welfare of the people of this state. Involuntary unemployment is therefore a subject of general interest and concern which requires appropriate action by the legislature to prevent its spread and to lighten its burden which now so often falls with crushing force upon the unemployed worker and his family. The achievement of social security requires protection against this greatest hazard of our economic life. This can be provided by encouraging employers to provide more stable employment and by the systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment, thus maintaining purchasing power and limiting the serious social consequences of poor relief assistance. The legislature, therefore, declares that in its considered judgment the public good, and the general welfare of the citizens of this state require the enactment of this measure, under the police powers of the state, for the compulsory setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own.