Opinion by
Ervin, J.,
The claimant, Adolf Vitolins, who had been . employed by the Bethlehem Steel Company for 12 years, was laid off on February 21, 1968. In 1962 his wages from the Bethlehem Steel Company were $5,310.87. Since 1956 Yitolins, with his family, owned and operated a farm as a side line activity. He had worked the farm during nonworking hours at the steel plant. A great deal of the work at the farm was done by his wife and children. The gross income from the farm during 1962 was $4,591.24, it having come from the sale of livestock, patronage dividends, rebates or refunds, agricultural program payments and rent received from a tenant. His expenses, itemized on his Federal income tax form1 (and accepted by the Federal government as legitimate deductions in arriving at net farm profit or loss) were as follows:
Items Amount
Labor hired $ 89.00
Repairs, maintenance 429.10
Interest 1,027.22
Feed purchases 1,635.01
Seed, plants purchased 178.00
Fertilizers, lime 470.97
Machine hire 179.00
Supplies purchased 243.75
[186] Breeding fees 48.00
Veterinary medicine 137.65
Gasoline, fuel, oil 532.32
Taxes 818.67
Insurance 268.70
Utilities (%) 282.64
Bent of farm pasture 120.00
Trucking 222.36
Truck hire 36.00
Car expenses 226.12
Advertising 9.06
Cattle registering 8.50
Baby chicks 70.89
Depreciation 772.26
Total $7,805.22
He had a net operating loss of $3,213.98.
The Bureau of Employment Security, in reliance upon its Begulation 120, allowed only the expenses for labor, feed, seeds and plants, fertilizer and lime. Departmental Begulation 120, which became effective October 1, 1960, provided as follows: “1. For a claimant engaged in farming, ‘gross income’ from sales and services shall be reduced by subtraction of expenses for labor, feed, seeds and plants, fertilizer and lime.” The bureau, therefore, found that the claimant had weekly earnings of $44.00.
Claimant’s weekly benefit amount was $40.00 to which the bureau added a partial credit 12.00
making a total of 52.00
and then subtracted his weekly earnings 44.00
which left claimant with a partial benefit of only 8.00
The claimant filed an appeal and the referee modified the decision of the bureau and awarded benefits at the rate of $40.00 per week. The bureau then ap[187] pealed to the Board of Review and the board affirmed the decision of the referee. The bureau then took the present appeal in which the basic question is: What items are properly deductible from gross income to determine the claimant’s net income.
Prior to the 1959 session of the General Assembly a claimant who operated a farm, during a period of unemployment was ineligible for- unemployment compensation benefits on the ground that he was self-employed, regardless of whether or not he received any net income from his farming operation: Meckes Unemployment Compensation Case (1959), 190 Pa. Superior Ct. 578, 155 A. 2d 463; Kespelher Unemployment Compensation Case (1955), 178 Pa. Superior Ct. 511, 116 A. 2d 239; Muchant Unemployment Compensation Case (1954), 175 Pa. Superior Ct. 85, 103 A. 2d 438.
These decisions made it clear that the Unemployment Compensation Law created a gross inequity against some partially self-employed individuals as against individuals who performed the same services for wages while in the employ'of another. To correct this inequity the legislature in 1959 amended the law by adding thereto subsection 402(h), which provided: “An employe shall be ineligible for compensation for any week ...
“(h) In which he is engaged in self-employment: Provided, however, That an employe who is able and available for full-time work shall be deemed not engaged in self-employment by reason of continued participation without substantial change during a period of unemployment in any activity including farming operations undertaken while customarily employed by an employer in full-time work whether or not such work is in ‘employment’ as defined in this act and continued subsequent to separation from such work when such activity is not engaged in ás a primary source of livelihood. Net earnings received by the employe with [188] respect to such activity shall be deemed remuneration paid or payable with respect to such period as shall be determined by rules and regulations of the department.” 43 PS §802 (h).
The bureau interpreted the 1959 amendment in such a way as to give it power to further define “net earnings” as it did in Regulation 120. While it is true that the legislature, in §201 of the Unemployment Compensation Law, 43 PS §761, gave to the department the authority “to adopt, amend, and rescind such rules and regulations ... as it deems necessary or suitable”, it also provided that “such rules and regulations shall not be inconsistent with the provisions of this act. . . .” The referee and the board denied this power to the bureau. The majority of this Court are of the opinion that the board’s interpretation is the correct one. An examination of the 1959 amendment will reveal that a claimant, in order to qualify for benefits and to escape disqualification on the ground of self-employment, had to meet the following three conditions: (1) The self-employment preceded claimant’s layoff from his full-time work; (2) the self-employment continued without substantial change; and (3) the self-employment was not a primary source of livelihood.
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Opinion by
Ervin, J.,
The claimant, Adolf Vitolins, who had been . employed by the Bethlehem Steel Company for 12 years, was laid off on February 21, 1968. In 1962 his wages from the Bethlehem Steel Company were $5,310.87. Since 1956 Yitolins, with his family, owned and operated a farm as a side line activity. He had worked the farm during nonworking hours at the steel plant. A great deal of the work at the farm was done by his wife and children. The gross income from the farm during 1962 was $4,591.24, it having come from the sale of livestock, patronage dividends, rebates or refunds, agricultural program payments and rent received from a tenant. His expenses, itemized on his Federal income tax form1 (and accepted by the Federal government as legitimate deductions in arriving at net farm profit or loss) were as follows:
Items Amount
Labor hired $ 89.00
Repairs, maintenance 429.10
Interest 1,027.22
Feed purchases 1,635.01
Seed, plants purchased 178.00
Fertilizers, lime 470.97
Machine hire 179.00
Supplies purchased 243.75
[186] Breeding fees 48.00
Veterinary medicine 137.65
Gasoline, fuel, oil 532.32
Taxes 818.67
Insurance 268.70
Utilities (%) 282.64
Bent of farm pasture 120.00
Trucking 222.36
Truck hire 36.00
Car expenses 226.12
Advertising 9.06
Cattle registering 8.50
Baby chicks 70.89
Depreciation 772.26
Total $7,805.22
He had a net operating loss of $3,213.98.
The Bureau of Employment Security, in reliance upon its Begulation 120, allowed only the expenses for labor, feed, seeds and plants, fertilizer and lime. Departmental Begulation 120, which became effective October 1, 1960, provided as follows: “1. For a claimant engaged in farming, ‘gross income’ from sales and services shall be reduced by subtraction of expenses for labor, feed, seeds and plants, fertilizer and lime.” The bureau, therefore, found that the claimant had weekly earnings of $44.00.
Claimant’s weekly benefit amount was $40.00 to which the bureau added a partial credit 12.00
making a total of 52.00
and then subtracted his weekly earnings 44.00
which left claimant with a partial benefit of only 8.00
The claimant filed an appeal and the referee modified the decision of the bureau and awarded benefits at the rate of $40.00 per week. The bureau then ap[187] pealed to the Board of Review and the board affirmed the decision of the referee. The bureau then took the present appeal in which the basic question is: What items are properly deductible from gross income to determine the claimant’s net income.
Prior to the 1959 session of the General Assembly a claimant who operated a farm, during a period of unemployment was ineligible for- unemployment compensation benefits on the ground that he was self-employed, regardless of whether or not he received any net income from his farming operation: Meckes Unemployment Compensation Case (1959), 190 Pa. Superior Ct. 578, 155 A. 2d 463; Kespelher Unemployment Compensation Case (1955), 178 Pa. Superior Ct. 511, 116 A. 2d 239; Muchant Unemployment Compensation Case (1954), 175 Pa. Superior Ct. 85, 103 A. 2d 438.
These decisions made it clear that the Unemployment Compensation Law created a gross inequity against some partially self-employed individuals as against individuals who performed the same services for wages while in the employ'of another. To correct this inequity the legislature in 1959 amended the law by adding thereto subsection 402(h), which provided: “An employe shall be ineligible for compensation for any week ...
“(h) In which he is engaged in self-employment: Provided, however, That an employe who is able and available for full-time work shall be deemed not engaged in self-employment by reason of continued participation without substantial change during a period of unemployment in any activity including farming operations undertaken while customarily employed by an employer in full-time work whether or not such work is in ‘employment’ as defined in this act and continued subsequent to separation from such work when such activity is not engaged in ás a primary source of livelihood. Net earnings received by the employe with [188] respect to such activity shall be deemed remuneration paid or payable with respect to such period as shall be determined by rules and regulations of the department.” 43 PS §802 (h).
The bureau interpreted the 1959 amendment in such a way as to give it power to further define “net earnings” as it did in Regulation 120. While it is true that the legislature, in §201 of the Unemployment Compensation Law, 43 PS §761, gave to the department the authority “to adopt, amend, and rescind such rules and regulations ... as it deems necessary or suitable”, it also provided that “such rules and regulations shall not be inconsistent with the provisions of this act. . . .” The referee and the board denied this power to the bureau. The majority of this Court are of the opinion that the board’s interpretation is the correct one. An examination of the 1959 amendment will reveal that a claimant, in order to qualify for benefits and to escape disqualification on the ground of self-employment, had to meet the following three conditions: (1) The self-employment preceded claimant’s layoff from his full-time work; (2) the self-employment continued without substantial change; and (3) the self-employment was not a primary source of livelihood.
If the claimant met these three tests, his unemployment compensation benefits were to be reduced by his “net earnings” from the self-employment. The legislature undoubtedly realized that a self-employed person’s income might be produced in irregular amounts and at irregular periods. For example, a self-employed farmer works many months without income and then sells his crops at one time. It would be unfair to the claimant if his period of unemployment coincided with his harvest time income. He would be totally ineligible for benefits. On the other hand, if the same claimant were laid off at planting time, he would have no farm income during this period and his unemployment [189] compensation benefits would be inequitably high. It was, therefore, necessary to devise a method to prorate the fruits of the part-time self-employment over the entire year to arrive at a fair estimate of the claimant’s weekly net earnings from such activity. This task was delegated by the legislature to the department in the following language: “Net earnings received by the employe with respect to such activity [self-employment] shall be remuneration paid or payable with respect to such period as shall be determined by rules and regulations of the department.” We interpret this language, as did the board, to mean that the department has power to make regulations as to the period. We do not believe that the legislature intended to delegate to the department the power to define “net earnings” by rules and regulations.
It is a fundamental precept of statutory construction that words and phrases shall be construed according to their common and approved usage. Section 33, Statutory Construction Act, Act of May 28, 1937, P. L. 1019, 46 PS §533.
A word used in a statute must be given its plain everyday meaning where not defined in the statute: Com. v. McHugh, 406 Pa. 566, 178 A. 2d 556.
Statutes are presumed to employ words in their popular sense, and when words used are susceptible of more than one meaning, the popular meaning will prevail: Ferraro v. Crowell, 198 Pa. Superior Ct. 222, 182 A. 2d 98.
Webster’s New International Dictionary (Second ed. p. 1644) defines “net earnings” as: “excess of earnings over expenses, sometimes including interest charges, during a given period.”
In the case of Jones and Nimick Manufacturing Co. v. Com., 69 Pa. 137, our Supreme Court laid down this definition: “Net earnings or income are the products of the business, deducting the expenses only. . . .”
[190] Where a statute failed to define “net earnings,” the term must be given its usual and ordinary meaning, which is what is.left after deducting necessary and legal items of expenses incident to the business: Woods Lumber Co. v. MacFarland, 209 Tenn. 667, 355 S.W. 2d 448.
“Net earnings” are the' excess of gross earnings over expenditures .defrayed in producing them, aside from, and exclusive of capital laid out in constructing and equipping a business: Grand Traverse Hotel Co. v. U.S., 79 F. Supp. 860.
“Net earnings” is an accounting term describing what remains after various deductions, including depreciation, from gross earnings: Bellingham Securities Syndicate v. Bellingham Coal Mines, Inc., 13 Wash. 2d 370, 125 P. 2d 668 (See Syllabus No. 4).
Interest on a debt is a proper deduction from gross earnings in determining “net .earnings”: Belfast & M. L. R. Co. v. City of Belfast, 77 Me. 445, 1 A. 362.
The bureau, by selecting only a few of the numerous farming expenses to the exclusion of all others, completely disregards the common: meaning of “net earnings.” To say that a farmer may deduct the cost of fertilizer from gross earnings, but cannot deduct the cost of repairing and maintaining his fertilizer spreader, or the gasoline necessary to run it, the hiring of the truck to haul it, or the taxes and insurance on his barn wherein he stores it, is absurd. No provision in Eegulation 120 is made for the dairy farmer. He may not have to purchase seeds, plants and fertilizer and lime, but he will incur, as did the claimant, expenses for breeding fees, veterinary medicine and cattle registration. No provision is made in Eegulation 120 for the deduction of these'expenses. Each of the expenses listed by the claimant was essential to the production of the farm income. Without these items there would be no farm income with which to charge the claimant. [191] Yet the bureau would disregard all of these items in its computation of “net earnings.”
It is also argued that the Board of Review does not have the power to strike down any part of Regulation 120. The answer to this is that the board, under §203 of the Unemployment Compensation Law, is given the power to hear appeals arising from claims for compensation and to take such action for the disposition of such appeals “as it deems necessary and consistent with this act.” The bureau did not have the power to redefine “net earnings” contrary to the common and accepted meaning of such term. The portion of Regulation 120 which does this is contrary to and inconsistent with that portion of the 1959 amendment relating to “net earnings.” The Board of Review, to properly pass upon this appeal, necessarily had the power to strike down that portion of Regulation 120 in order to do justice to the claimant in this case.
Decision affirmed.