Kennedy v. Silas Mason Co.

164 F.2d 1016, 1947 U.S. App. LEXIS 3130

• Court: Court of Appeals for the Fifth Circuit
• Decided: December 12, 1947
• Docket: 11976
• Status: Published

Opinions

McCORD, Circuit Judge.

Silas Mason Company during the late war constructed and operated an ordnance plant at Shreveport, Louisiana, under the terms of a “cost-plus-a-fixed-fee” contract with the United States Government. Plaintiffs sued for overtime, penalites, and attorney’s fees, which they claim to be due from the Mason Company under the Fair Labor Standards Act of June 25, 1938, c. 676, 52 Stat. 1060, 29 U.S.C.A. § 203, alleging that they had been employed in interstate commerce and in the! production of goods for commerce within the meaning of Title 29 U.S.C.A. § 203.

The Mason Company moved for a summary judgment, on the ground that the plaintiffs were not covered by the Fair Labor Standards Act, in that neither plaintiffs nor defendant were “engaged in commerce”, or in the “production of goods for commerce”, within the meaning of the Act. This motion was supported by the affidavit of the Vice President of defendant, to which was attached the contract under consideration. The affidavit in support of the motion for summary judgment sets forth the undisputed facts of the case.

The United States was engaged in a war which challenged the very life of the Nation. The defendant was called in and entered into a contract with the Government to construct for it an ordnance plant at Shreveport, Louisiana; and when such plant was erected, to manufacture munitions of war for the Government. The Government owned the land upon which the ordnance plant was built; it owned the plant; it owned the equipment and the materials which went into the manufacture of the munitions; and when such munitions were finished and ready for use, they were stored in plants and buildings which belonged to the Government, or went immediately to the firing line to be there used by the troops. These munitions never at any time went into or became a part of commerce as defined by the Fair Labor Standards Act. They were not manufactured for sale, nor were they ever intended or used for commercial purposes. The Mason Company had no interest, financial or otherwise, in the shipment, destination, or delivery of these munitions. It sold nothing in interstate commerce; it delivered nothing in interstate commerce; and it shipped nothing except as an agent or instrumentality for the loading of munitions which already belonged to the United States.

Had the defendant been engaged under its contract in the business of manufacturing munitions of war, either as a general proposition, or under contract by which it agreed to produce and sell to the Government, either at fixed prices, or at prices to be fixed from time to time, then we are of opinion that it would come within the Fair Labor Standards Act. This is not the case here. When viewed in the light of the powers reserved to the Government under this “cost-plus-a-fixed-fee” contract it becomes manifest that the Mason Company was not an independent contractor. The Government at all times supervised both the erection of the plant and the manufacture of the munitions.¹

We are of opinion that transportation by the Government of Government owned munitions during war for use by its armed forces is not “commerce” within the meaning of the Fair Labor Standards Act. Divins v. Hazeltine Electronics Corp., 2 Cir., 163 F.2d 100; Barksdale v. Ford, Bacon & Davis, Inc., D.C., 70 F.Supp. 690; Lynch v. Embry-Riddle Co., D.C., 63 F.Supp. 992.

The decisions cited by plaintiffs are not in conflict with our conclusion here. Bell v. Porter, 7 Cir., 159 F.2d 117, contains language favorable to plaintiffs, but, for aught that appears, in that case the appellants were independent contractors, with power to employ and discharge their employees without let or hindrance. Our case of Atlantic Co. v. Walling, 5 Cir., 131 F.2d 518, 521, holds that the Congress in defining “commerce” intended to give to the term the broadest possible meaning, so as “to include such transactions, conditions and relationships as have been heretofore known and acknowledged as constituting commerce in the Constitutional sense.” It nowhere holds, or tends to hold, that the transportation during war of Government owned munitions is “commerce” under the Fair Labor Standards Act.

While we have shown that the plaintiffs may not recover under the Fair Labor Standards Act, they . are further precluded from recovery for the reason- that the contract was entered into by the War Department and the defendant under the authority of the Act of July 2, 1940, Public No. 703, 54 Stat. 712, entitled “An Act to expedite the strengthening of the National Defense,” and both defendant and its employees are governed by the provisions of this Act.²

The appellants were working directly under the supervision and control ■ of the Government. Therefore, under section 4 (b) of the Act of July 2, 1940, under which they were employed and working,³ they are precluded from claiming overtime compensation under the Fair Labor Standards Act.

Furthermore, if the defendant was an agent or instrumentality of the United States for the production only of munitions of war, whose employees were paid with funds of the United States, whose hiring' and firing had to be with the approval of the United States, who worked in a building belonging to the United States, on materials supplied by and belonging to the United States, and who turned out a product that at all times belonged to the United States, which was delivered without any trade or commerce or transportation occurring; then, under subparagraph (d) of Sec. 3, 29 U.S.C.A. § 203(d), whereby the United States is excluded from the operation of the Act, the Act would not be applicable.

On the other hand, if the defendant was not an agency or instrumentality of the United States, and if the munitions were articles of commerce within the contemplation of the Act, and if the United States was not the producer of the munitions, and if the subparagraph (d) of Sec. 3 of the Act, excluding the United States from its operation, is not applicable; then' there would seem to be no escape from the conclusion that since the finished products and all their ingredients are the property of the United States and delivered to it as the ultimate consumer of the goods, the Act, under subparagraph (i) of Sec. 3, would still be inapplicable because the term “goods” “does not include goods after their delivery into the actual physical possession of the ultimate consumer thereof, other than a producer, manufacturer, or processor thereof.” Since the Government is the ultimate consumer, and since the goods were delivered into its actual physical possession as ultimate consumer, any movement of the goods thereafter by the ultimate consumer over state lines would not relate back and take the goods out of the exception of subparagraph (i) of Sec. 3 of the Act. Divins v. Hazeltine Electronics Corp., 2 Cir., 163 F.2d 100.

These employees were put in the munition factories by governmental command on the theory that they were an integral part of the war machine — not because they were an essential part of interstate commerce. We are unwilling, by judicial fiat, to fasten shackles on the nation’s feet as it marches to war, nor otherwise to hinder the Government in the exercise of the sovereign function of providing for the common defense unless we are convinced beyond doubt that the commands of Congress inexorably require it.

We find no reversible error in the record and the judgment is therefore affirmed.

1 “ * * * Performance of the construction work of the entire project will be under the supervision of the Contracting Officer appointed by the Quartermaster General * * * The Contracting Officer may require the Contractor to dismiss from the work any employee the Contracting Officer deems incompetent or whose retention is deemed to be not in the public interest * * * The Government reserves the right to pay directly to the persons concerned all sums due from the Contractor for labor, materials, or other charges * * * ’’

2 “ * * * This contract is authorized by the following laws: The Act of July 2, 1940, Public No. 703, 76th Congress, [54 Stat. 712], the Act of March [11], 1941, Public No. 11, 77th Congress [22 U.S.C.A. § 411 et seq.], and the Act of June 30, 1941, Public No. 139, 77th Congress [55 Stat. 366] * *

3 “ * * * Notwithstanding the provisions of any other law, the regular working hours of laborers and mechanics employed by the War Department, who are engaged in the manufacture or production of military equipment, munitions, or supplies shall be eight hours per day or forty hours per week during the period of any national emergency declared by the President to exist: Provided, That under such regulations as the Secretary of War may prescribe, such hours may be exceeded, but compensation for employment in excess of forty hours in any workweek, computed at a rate not less than one and one-half times the regular rate, shall be paid to such laborers and mechanics. * * * ” 5 U.S.C.A. § 189a.