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Court of Appeal, First District, Division 3, California.

Wayne E. WISE, Plaintiff and Respondent, v. SOUTHERN PACIFIC COMPANY, a corporation, Defendant and Appellant.

Civ. 25261.

Decided: April 23, 1969

William R. Denton, W.A. Gregory, San Francisco, for appellant. Leo Fried, San Francisco, Perkins, Carr & Anderson, Sacramento, for respondent.

Suit for wrongful discharge.   The Southern Pacific Company appeals the judgment for plaintiff Wise in the sum of $17,737.56, given in a nonjury trial.

Wayne E. Wise, carman, was discharged by his employer, Southern Pacific Company, on February 10, 1960, for violation of Rule 803 of the General Rules and Regulations of the company, reading, “Any act of hostility, or wilful disregard of the Company's interests will not be condoned.”   This occurred after a hearing, concerning his alleged solicitation of “various employes of the Southern Pacific Company during the years 1957 and 1958 for the purpose and with the intent of inducing these employes to bring personal injury lawsuits against this company and to hire certain attorneys-at-law to handle and prosecute their said personal injury claims and lawsuits against this company.”

The collective bargaining agreement between the company and System Federation No. 114, Railway Employes Department, American Federation of Labor, provided in Rule 46, in part, “All claims for personal injuries shall be handled with the Personal Injury Claim Department.”

Rule 39 of the applicable collective bargaining agreement provided “No employe shall be disciplined, or dismissed, without a fair hearing by the proper officer of the Company * * *.   At a reasonable time prior to the hearing, such employe shall in writing, be apprised of the precise charge against him, be given reasonable opportunity to secure the presence of necessary witnesses, and shall have the right to be represented as provided for in Rule 38.   If it is found that an employe has been unjustly suspended or dismissed from the service, such employe shall be reinstated with his seniority rights unimpaired, and compensated for the wage loss, if any, resulting from said suspension and dismissal.   Stenographic report of hearing will be taken, if requested, and employe's representative will be furnished with a copy.”

 In private, as well as public employment, an employe accepts employment subject to conditions prescribed by contract, or by law.

 “This latter prescription of the statute makes it quite evident that ‘the Railway Labor Act does not empower the courts to enforce against railroads any prescribed procedure for investigating and discharging its employees * * * ’ Brooks v. Chicago, R.I. & P.R. Co., 177 F.2d 385, 391 (8 Cir.1949).”   The provisions of the Railway Labor Act do not interfere with the normal exercise of the right of the carrier to select its employes or to discharge them.  (Virginian Ry. Co. v. System Federation No. 40,300 U.S. 515, 559, 57 S.Ct. 592, 81 L.Ed. 789.)   Any limitations on the exercise of those rights substantively or procedurally must be found, if any exist, in the collective bargaining agreement.

 Provisions for such a hearing in Sections 38 and 39 of the collective bargaining agreement effectuate the duty of both carriers and employes to exert every reasonable effort to settle all disputes in conference between representatives of employes and the carrier, as is imposed by Section 2, subsections 1 and 2 of the Railway Labor Act.   But the provisions of that act do not govern the procedure by which a carrier may discharge employes, nor the conduct of an investigation conducted on railroad property.   The act contemplates that disputes growing out of grievances, or out of the interpretation or application of agreements shall, prior to reference to the Adjustment Board, be handled in the usual manner up to and including the chief operating officer of the carrier designated to handle such disputes.   The act does not supersede the provisions as to conferences, by whatever name they are called, found in the contractual agreement.

 “Therefore, when a railroad employee questions the propriety of the initial hearing held on carrier property, his claim must be based on the provisions of the collective bargaining agreement relating to that subject.”   (Edwards v. St. Louis–San Francisco Railroad Company, 7 Cir., 361 F.2d 946, 953.) 1

Rule 39 of the collective bargaining agreement, quoted at the beginning of this opinion, provides the only substantive or procedural “due process” in such instances.

We have set forth above the company's allegation that Mr. Wise had violated Rule 803.   Pursuant to Rule 39, Wise was notified;  a formal hearing was held;  witnesses were produced and gave statements;  their previous subscribed written statements were considered;  Mr. Wise cross-examined the witnesses, produced some of his own, and presented documentary testimony.

At the hearing Mr. Wise had three union representatives.   Their status at a disciplinary hearing is not clear from Rule 38, to which Rule 39 refers, except in the appellate stages.   Subsection 38(g) states:  “This rule recognizes the right of representatives of the Organizations, parties hereto, to file and prosecute claims and grievances for and on behalf of the employes they represent.”   In any event the three representatives, as well as Mr. Wise, took a prominent and vocal part in the hearing and examination of witnesses.

R.D. Spence, superintendent of the Sacramento division, presided as hearing officer.   The hearing concluded, the transcript was forwarded to higher officials, who discharged Mr. Wise on February 10, 1960.

 No contractual provision cited to us indicates any limitation upon the employer's right to determine what is, or is not, just cause for discharge.   Southern Pacific Company is shown to have adopted rules concerning employe conduct.   No reason is advanced, and we discern none, why they were not applicable to Mr. Wise as an employe.   Likewise, it appears to be well-established law that the sufficiency of the reason for discharge, in the absence of contract or law otherwise, is not a justiciable question.  (31 Am.Jur., p. 390, § 8.)   It is said that even though not specified in the contract, an employer may discharge an employe for any legal cause.   (Twentieth Century–Fox Film Corp. v. Lardner, 9 Cir., 216 F.2d 844, 51 A.L.R.2d 728, cert. den. 348 U.S. 944, 75 S.Ct. 365, 99 L.Ed. 739, reh. den. 348 U.S. 965, 75 S.Ct. 522, 99 L.Ed. 753.)

 Disloyalty to the employer or the employer's interest is a private treason which unquestionably is just cause for dismissal of an employe.   In National Labor Relations Board v. Local Union No. 1229 International Brotherhood of Electrical Workers, 346 U.S. 464, 472, 74 S.Ct. 172, 176, 98 L.Ed. 195, the United States Supreme Court stated:  “There is no more elemental cause for discharge of an employee than disloyalty to his employer.”   The court stated (p. 475, 74 S.Ct. p. 177.) “The courts have refused to reinstate employees discharged for ‘cause’ consisting of insubordination, disobedience or disloyalty.”

No employer, public or private, may justly be called upon to employ and pay termites or teredos to bore in and weaken the organization they are employed to maintain and which maintains them;  even when they have strong conflicting loyalties, and feel personally justified.

“No servant can serve two masters:  for either he will hate the one, and love the other;  or else he will hold to the one, and despise the other.”  (St. Luke 16.13.)

 One of the foundation stones of private business is that the employe must be loyal to his employer.  “Loyalty is implicit in the contract of hiring.   No private business can succeed without the conscientious, undivided support of its employees.   The man or woman who denies allegiance to his employment is, and should be, soon separated from it.   Nemesis with a club waits for him around the corner.   And, so long as the employment continues, every employer has the right at any time to ask his employee to declare his loyalty.”  (Garner v. Board of Public Works, 98 Cal.App.2d 493, 498, 220 P.2d 958, 961;  Black v. Cutter Laboratories, 43 Cal.2d 788, 806, 278 P.2d 905.)

Upon discharge, under Rule 38(c) and (h) of the collective bargaining agreement between Southern Pacific and System Federation No. 114 (as revised and reprinted April 19, 1957), Mr. Wise had a choice of further action.   Rule 38(e) provides in part:  “All claims or grievances involved in a decision by the highest designated officer shall be barred unless within nine (9) months from the date of said officer's decision proceedings are instituted by the employe or his duly authorized representative before the appropriate division of the National Railroad Adjustment Board or a system, group or regional board of adjustment, that has been agreed to by the parties here-to as provided in Section 3 Second of the Railway Labor Act.   It is understood, however, that the parties may by agreement in any particular case extend the nine (9) months' period herein referred to.”   Rule 38(h) provides:  “This rule is not intended to deny the right of the employes to use any other lawful action for the settlement of claims or grievances provided such action is instituted within nine (9) months of the date of the decision of the highest designated officer of the Carrier.”

There are marked differences between the procedures and remedies upon appeal to the National Railroad Adjustment Board [45 U.S.C.A. §§ 151, 153] on the one hand, and the current suit for breach of the contract of employment on the other.   The Second division of the Board having jurisdiction over carmen's disputes can make a speedy and adequate determination of a cause, after exhaustion of the appeals provided for in Section 38 of the bargaining agreement.   A state court may not order reinstatement.  (Roberts v. Western Pac. R.R. Co., 104 Cal.App.2d 816, 232 P.2d 560.)

In this case, under Rule 38(h), Mr. Wise elected to sue in the state court, rather than to carry the matter back to the Board which on January 8, 1958, while overturning his disciplinary discharge of the year before, in effect had upheld his suspension, though leaving his seniority rights unimpaired.   So 9 years later, this cause is here.

 Mr. Wise exhausted his administrative remedies under the collective bargaining agreement.   He is privileged under that agreement, California law, and the federal law, to sue for wrongful discharge.   (Stroman v. Atchison, T. & S.F. Ry. Co., 161 Cal.App.2d 151, 165–166, 326 P.2d 155;  Transcontinental & Western Air v. Koppal, 345 U.S. 653, 661–662, 73 S.Ct. 906, 97 L.Ed. 1325, and authorities cited;  Martin v. Southern Railway, 240 S.C. 460, 126 S.E.2d 365.)

 On Mr. Wise's previous appeal (Wise v. Southern Pacific Company, 223 Cal.App.2d 50, 35 Cal.Rptr. 652) it was held the state courts have jurisdiction, and we adhere to that determination as the law of the case.   (People v. Durbin, 64 Cal.2d 474, 477, 50 Cal.Rptr. 657, 413 P.2d 433.)

When the election is to sue for wrongful discharge, rather than to appeal to the National Railway Adjustment Board, the ultimate issue becomes whether there were any adequate grounds for discharge.   If so, any deficiencies in the procedure leading up to the discharge are not separately actionable.   There is only one cause of action.

 Where a discharged railroad employe elects to seek relief in the courts instead of through administrative remedies, the railroad may assert any cause or reason it may have in justification for discharge of an employe and is not limited by the contract provisions regarding notice, hearing and the like.  (Haynes v. Winston–Salem Southbound Railway Co., 252 N.C. 391, 113 S.E.2d 906, 910.)

 If believed by the company officials, Mr. Hankins' testimony of Mr. Wise's solicitations relative to suit against the company alone was sufficient substantial support for discharge of Mr. Wise for violation of Rule 803.

If after resolving all the conflicts in the statements presented and made at the company hearing, only a suspicion had remained that Mr. Wise was soliciting employes to violate their obligation under Rule 46 of the collective bargaining agreement to handle their claims through the claims department, inciting litigation against the company and running and capping for specific attorneys (in violation of the law), the evidence of his disloyal and hostile activities received at time of trial was substantial.

Mr. Wise admitted he assisted counsel for persons suing the company by taking photographs, by doing investigative work, and by giving technical advice to them in such personal injury work.   He admitted he received money from various attorneys for such work.   He brought attorney Fried on company property to interview an employe who had been injured, before any request by the employe, and Mr. Fried took photographs of the location involved before being retained by the injured man.   Mr. Fried obtained a contract from the employe on the same visit to company property, escorted by Mr. Wise.   For use in litigation against the company, Wise took photographs on company property clandestinely, taking care not to be caught by a company official;  once he went into a shop early in the morning to take photographs before employes arrived.   In Mazza's case “I took numerous photographs, I enlarged them, I gave him [Mr. Fried] a lay-out of the property, from time to time I reviewed it—I talked it over with Mazza, talked it over with other employees there, and gave Mr. Fried a report on all the circumstances as to area, the filth, the dirt, the corruption, the litter that was involved in this area;  this all went to Mr. Fried in order to prosecute Mr. Mazza's case.”

He received $300 from attorney Perkins for similar services in the Clary suit against the company in 1957;  performed investigations in San Francisco on the Orosco case against the company;  he “got some information, some diagrams and some photographs” for Mr. Fried in the Gravencamp suit against the company, the pictures being taken in the company car shop 3 in Sacramento early in the morning before shift;  for which he received $100.

For an employe to bring a photographer on company premises to take pictures to be used against it is gross disloyalty as a matter of law.

We have outlined some of the evidence presented on the trial.   Mr. Wise's contentions as to such evidence were that since such incidents were not specified in the disloyalty charge upon which the company hearing was held, they could not be considered at time of trial in further justification of the discharge.   Secondly, he asserted that since such acts occurred after his previous discharge by the company (reduced to a suspension without pay but according him his seniority) he was not subject to the company rules, nor required to be loyal during that period.   We conclude he was in error in both assertions.

 “If good and sufficient reasons for appellee's discharge existed, the appellants may set them up on trial by way of defense, though they may not have known of them at the time of the discharge.”   And again, “If employe has been unfaithful and disregardful of his duty under the contract, he may be discharged, and the employer may defend any action for breach of contract brought by the employe, because of his discharge, though ignorant of any or all the facts when the discharge is made.   The inquiry on trial is, had the employe been unfaithful at the time of the discharge?   If yea, it would be remarkable, indeed, if he should be permitted, in a court of justice, to say:  ‘True, I was unfaithful, and merited my discharge, but my employer did not then know of my unfaithfulness, and I must be recompensed in damages for my proper discharge because of my employer's ignorance of my misconduct.’ ”  (Odoneal v. Henry, 70 Miss. 172, 12 So. 154, 155, quoted in Masonite Corporation v. Handshoe, 208 Miss. 166, 44 So.2d 41, 44–45;  likewise, the dicta of Carpenter Steel Co. v. Norcross, 6 Cir., 204 F. 537, and Loos v. George Walter Brewing Co., 145 Wis. 1, 129 N.W. 645.)

 In 35 Am.Jur. 471, section 37, it is said, inter alia, “Nor is it material that the employer assigned another ground as the cause of the employee's dismissal.   The employer may justify a dismissal by relying upon a ground different from that assigned at the time of the dismissal.”

Upon trial here the company did not defend the discharge upon a different ground, but only produced additional instances, admitted in essence by Mr. Wise.

 In our opinion, the trial judge erred in ruling that in determining whether Mr. Wise was unjustly discharged, the cause is limited to the years 1957–1958, and the data considered at the company hearing.  (Adams v. Southern Pacific Co., 204 Cal. 63, 266 P. 541, 57 A.L.R. 1066.)

At the trial, the basic issue was Mr. Wise's loyalty or hostility under company Rule 803.   He there had full opportunity to meet evidence of additional instances of his disloyal conduct.   It would be idle, under contract Rule 39, to investigate these instances, the truth of which was admitted in court by Mr. Wise.  (Adams v. Southern Pacific Co., supra, 204 Cal. 63 at 68, 266 P. 541.)   Even though the case was limited to the incidents revealed at the hearing, receipt of evidence on the further incidents is clearly permitted by Evidence Code, section 1100 on the question of his intent.

 Mr. Wise next contends that while the appeal from his first discharge was pending and he was “out of service,” his disloyalty then was no breach of his duties under the contract.   We hold that he was an employe of appellant when these acts occurred.   He purportedly was discharged for disciplinary reasons on January 15, 1957, following his suspension on December 27, 1956.   The award of Division Two of the National Railroad Adjustment Board on January 8, 1958 annulled the discharge, stating that “the discipline administered has served its purpose and the claimant should be reinstated with seniority rights unimpaired but without pay for time or wage loss.”   Mr. Wise returned to work.   The board, in effect, reduced “discharge” to “suspension.”   If he was not an employe during the suspension, he would not have been entitled to any seniority rights based on such employment.   Having resumed service as an employe under such circumstances, he is estopped to assert now that he was not an employe during suspension.   To claim the benefits of employment he must himself comply with its burdens.  (Brotherhood of R.R. Trainmen v. Central of Georgia Ry. Co., D.C., 202 F.Supp. 324, 326 [picture taking while on leave;  an employe on leave of absence is still an employee];  Brotherhood of Railway and S.S. Clerks, etc. v. Atlantic Coast Line R. Co., 4 Cir., 253 F.2d 753 [let in photographers, on off-duty time;  discharge sustained].)

Having held various capacities as a labor union official, respondent states:  “It was inevitable that the respondent in performing his duties to the union as chairman of the Local Protective Board would do acts hostile to and which would necessarily be in disregard of the appellant's interest.”   And again, “Enlightened thinkers realize that in a free enterprise system of government, it is necessary that union representatives be free to engage in battle with management, unfettered by fear of unjust discharge.   Were it otherwise, the workers would be exploited by the management and we would not have social progress.”   His illustrations are pertinent to the issues involved in hammering out a collective bargaining agreement, but not to its performance in good faith by all concerned.

In the applicable collective bargaining agreement between Southern Pacific Company and System Federation No. 114 (as revised and reprinted April 19, 1957) the preamble recites:  “The obligation that rests upon the Management to provide, and the Employees to render honest, courteous and efficient service is recognized.   A spirit of co-operation between the Employees and the Management is essential to safe and efficient maintenance and operations, and both parties agree to so conduct themselves.   The responsibility for success rests equally with the Employees and the Management.”

But at the hearing, at the conclusion thereof, Mr. Spence asked Mr. Wise:  “Are you saying, then, Mr. Wise, that when you were local chairman that status gave you the privilege of failing to comply with the rules and regulations of the carrier?”   Wise answered, “Mr. Spence, you have failed to indicate what would be satisfactory conduct for a local chairman.   As I stated before, a union is in conflict with the interest of the carrier from the day of its inception, our contract is in conflict and a representative of an organization will be in conflict with the carrier at any time that representative should discharge a duty which is not satisfactory to the carrier.”

Such declarations against interest are admissible as tending to prove the existence of the facts declared or admitted.  (Hansen v. Civil Service Board, 147 Cal.App.2d 732, 738, 305 P.2d 1012.)

Mr. Wise seeks to void his discharge upon the grounds that as a union committeeman, he owed a duty to fellow union brothers injured in company service to see that their compensation was secured for them.   There was a conflict at the hearing whether his advice to employ attorneys to bring suit against the company was requested by the injured ones.   But his own assertions are that it was his duty as a union committeeman to act on his own initiative in any event.   There is nothing in the collective bargaining agreement to this effect, nor in his hiring by the company, to permit him unilaterally to assume such a function.   The collective bargaining agreement provides in Rule 38 that a duly authorized local committee of not to exceed three members of his craft in case of any grievance, unjust treatment or improper application of the agreement itself may submit the employe's case “informally to the foreman, general foreman and/or the master mechanic (or from foreman to general foreman and/or to shop superintendent in General Shops).”   After a decision at the highest level “the general chairman of the craft, may appeal the case to such higher officials of the Company as are designated to hear appeals.  * * * ” The decision of the highest officer then may be taken to the National Railroad Adjustment Board, or an agreed regional or system board of adjustment.

Mr. Wise was once such a general chairman of the craft.   He asserts his activities in diverting claims to attorneys were justified by his membership in the Local Protective Committee.   So far as contained in the agreement and the record, it would appear that this was the committee authorized to carry grievances through the indicated channels.   But a three-man committee may only act by concurrence of two-thirds or more of its members.  (Civ.Code, § 12.)

 Mr. Wise cannot rely on this to justify his unilateral campaign to undercut the claims procedure established by Rule 46 of the bargaining agreement.   This provision is as follows:  “Employes injured while at work are required to make a detailed written report of the circumstances of the accident, as soon as they are able to do so, after receiving medical attention.   Proper medical attention shall be given at the earliest possible moment and employes shall be permitted to return to work as soon as they are able to do so, without signing a release, pending final settlement of the case.   All claims for personal injuries shall be handled with the Personal Injury Claim Department.”  (Italics added.)

Labor Code, section 2856, provides:  “An employee shall substantially comply with all the directions of his employer concerning the service on which he is engaged, except where such obedience is impossible or unlawful, or would impose new and unreasonable burdens upon the employee.”

The evidence reflects that the company retained a staff of doctors, and maintained a company hospital in San Francisco to care for injured employes.   Therefore discipline against Mr. Wise does not violate Rule 41, which provided:  “The Company will not discriminate against any Committeeman who is delegated to represent employes covered by this Agreement, and for that purpose will grant leave of absence and free transportation, when not contrary to State or National laws or pass regulations.”   There is no showing that Mr. Wise was treated any differently than any other employe engaged in similar disloyal activities.   If, as he contended, his committee duties vis-a-vis management required a hostile stance, he at least could have asked for a leave of absence, such as he had received as general committeeman, to make his status clear.

On April 20, 1964, the United States Supreme Court decided Brotherhood of Railroad Trainmen v. Virginia ex rel. Virginia State Bar, 377 U.S. 1, 84 S.Ct. 1113, 12 L.Ed.2d 89.   It appeared that the brotherhood had established regional counsel to assist in the prosecution of claims by injured railroad workers.   That department of legal counsel recommended to the brotherhood members and their families the names of 16 lawyers whom the brotherhood believed to be honest and competent.   The result was to channel all or substantially all of the workers' claims to the lawyers chosen, which practice was enjoined by the Virginia courts.   It was noted that the brotherhood maintained a staff at its own expense to gather evidence for the injured worker or his family.   The United States Supreme Court agreed that the referral practices, as specified, could not be enjoined under the First and Fourteenth Amendments.   It was pointed out that this ruling did not authorize “ambulance chasing,” and that under the facts there neither the union nor the lawyers whom they selected were parties to the solicitation of business.   (Id. pp. 6–7, 84 S.Ct. 1113.)  (Italics added.)

Mr. Wise cannot justify his activities by this decision.   In the first place, it was pronounced four years after his discharge.   Secondly, his conduct was more than the exercise of the personal right of a union member to recommend an attorney to brothers in the union.   He is shown to have had some personal interest in the activities of the attorneys suing the employer company.   Lastly, whatever rights the union may have, Wise, as a railroad carman, was not hired by the union or the company as a legal aid representative of the union.   He was bound to respect Rule 46 of the collective bargaining agreement which provides all personal injuries were to be handled by the personal injury claims department.   He clandestinely trespassed upon company property to make photographs to be used against the company.   He briefed Mr. Fried and brought him to Mr. Mazza before there was any request by Mazza, thus being a “runner and capper” in apparent violation of Business and Professions Code, sections 6151–6153.

Upon trial, the transcript of the proceedings of the company hearing was received in evidence.   Mr. Wise asserted it could not be used as evidence of the truth of the statements made at the hearing.

 The status of such transcript is not gauged by principles applicable to governmental administrative proceedings, but by Rule 39 of the collective bargaining agreement, providing that at disciplinary hearings or investigations a stenographic report of hearing will be taken if requested and employe's representative will be furnished a copy.   The purpose of such a report or transcript is clearly established by the other provisions of the rule, providing for appeals to higher company authority;  and finally, to the National Railway Adjustment Board, or to the courts.   The report is not therefore to be rejected upon trial as hearsay, in reviewing the evidentiary bases on which the company acted or the contentions of a plaintiff in respect thereto.   Other evidence, of course, may be received at the trial.   (Russell v. Ogden Union Ry. & Depot Co., 122 Utah 107, 247 P.2d 257, 260.)

If judicial doctrine were applicable to a non-judicial private contractual procedure, it is our opinion that the present transcript is a business record required by the contract (Evid.Code, § 1271), receivable in evidence as such.   The statements of the company employes therein contained were the narrations of those who had a business duty to report, when requested, the circumstances under which they did or did not comply with Rule 46 of their contract relative to their personal injury claims.   The declarants were subjected to the examination of Mr. Wise and his representatives.  (Fox v. San Francisco Unified School Dist., 111 Cal.App.2d 885, 891, 245 P.2d 603;  People v. Crosslin, 251 Cal.App.2d 968, 975–976, 60 Cal.Rptr. 309;  Nesbitt Fruit Products, Inc. v. Del Monte Beverage Co., 177 Cal.App.2d 353, 364, 2 Cal.Rptr. 333.)

Any possible objection was cured by the appearance and personal examination of the declarants at the hearing.  (Cf. Frampton v. Hartzell, 179 Cal.App.2d 771, 776, 4 Cal.Rptr. 427;  LaPrade v. Department of Water & Power, 27 Cal.2d 47, 52, 162 P.2d 13.)

The foregoing considerations suffice to dispose of this appeal on the merits.   However, the law of the case developed on the previous appeal (Wise v. Southern Pacific Company, supra, 223 Cal.App.2d 50, 35 Cal.Rptr. 652) in respect to the alleged deficiencies in the company hearing compels our further consideration.

In Wise v. Southern Pacific Company, supra, (at p. 60, 35 Cal.Rptr. 652), it was held that an allegation that the appellant “breached” or “violated” its contract of employment, or that the discharge was wrongful, unjust or without cause, alone was conclusionary and insufficient, but was saved by a general allegation of performance on Wise's part, and because he had pleaded specifically the conduct which he claimed violated the contract.   The issues were stated thusly (Id. p. 61, 35 Cal.Rptr. p. 658):  “In the instant case [Second Amended Complaint, Par. X] plaintiff alleged that under the terms of the Brotherhood–Company agreement he could not be dismissed without just cause or without first having a fair hearing and as a union committeeman could not be discriminated against.   He then alleged six instances of specific conduct on the part of the Company as violative of these covenants of the agreement:  (1) failure of the hearing officer to consider the evidence presented;  (2) failure of the hearing officer to permit plaintiff to cross-examine witnesses presented against him;  (3) failure of the hearing officer to permit plaintiff to be confronted by his accusers;  (4) the hearing officer's conduct of examination of witnesses in an unfair manner;  (5) failure of the hearing officer to grant plaintiff reasonable continuances to obtain and produce evidence;  (6) the intentional reception by the various hearing officers of testimony known by them to be false and induced for the purpose of securing plaintiff's discharge.   We are satisfied that the foregoing allegations apprise defendant of the specific charges it has to meet.”

But such bold assertions were reduced in the opening statement on trial to the procedural charges that (1) evidence was hearsay, (2) questions were leading, (3) the hearing was not prompt, (4) the use of two hearing officers was improper, (5) inquiry into another case was blocked, (6) a certain non-employe was not produced as a witness.

The trial court found that the defendant held a hearing on the stated charges, resulting in dismissal of Mr. Wise on February 10, 1960;  that he performed work and skills as a railway carman in satisfactory manner, and complied “with all the terms required by said Collective Bargaining Agreement.  * * * ”   The court did not find that he complied with the rules established for the conduct of employes by the company, particularly Rule 803.

Finding No. 8 was “That the hearing mentioned in Finding No. 2 was not a fair hearing,” and “9.   That the proof adduced to support the charge mentioned in Finding No. 1 did not constitute a just cause for dismissal.”   The trier of the fact may not substitute its opinion for the employer's opinion (Adams v. Southern Pacific Company, supra, 204 Cal. 63, 266 P. 541, 57 A.L.R. 1066) when it is clearly not an arbitrary determination.

 The trial court did not make findings as to the allegations of Paragraph X of the complaint held on the first appeal to be the backbone of the case, as framed by Mr. Wise;  although appellant duly requested them.   This was error.   Appellant was entitled to such findings.  (Zweig v. Fireman's Fund Indem. Co., 139 Cal.App.2d 461, 293 P.2d 812;  Cummins v. Gates, 235 Cal.App.2d 532, 45 Cal.Rptr. 417;  McGuire v. San Diego Transit System, 143 Cal.App.2d 509, 299 P.2d 905;  Relaxacizor, Inc. v. W.B. Geissinger & Co., 221 Cal.App.2d 19, 34 Cal.Rptr. 269;  Senior v. Anderson, 138 Cal. 716, 722, 72 P. 349.)   This is especially true, since the effect of such findings if they had been made would have been to countervail or destroy the purported findings made upon which plaintiff had judgment.   (Sharp v. Pitman, 166 Cal. 501, 137 P. 234;  Chamberlain v. Abeles, 88 Cal.App.2d 291, 299, 198 P.2d 927.)   In view of such denied requests for proper findings, we cannot supply missing findings by implication.  (Code Civ.Proc. § 634.)

Though under the usual appellate practice we are not required to do so, we have carefully read and considered the complete hearing transcript, and the reporter's transcript of the trial court proceedings.

Though the trial court failed to make findings as to the facts, as required by the allegations of Paragraph X of the Second Amended Complaint, we are impelled by the record before us to indicate some points of applicable law pertinent to the procedural sufficiency of the company hearing, for guidance of the trial court in making appropriate findings and conclusions of law.

It is apparent from Finding 9 (that the proof adduced to support the charges at the hearing did not constitute a just cause for dismissal) that the conclusions of the trial court resulted from its apparent failure to give effect to the substantive evidence at the company hearing;  and failing to consider the proof and admissions of Mr. Wise at the trial in reference to other relevant episodes not known and not specified in the original hearing.

As we have indicated above, the testimony of the witnesses at the hearing was properly before the trial court on the authenticated transcript of the company hearing, without production of the declarants.  (Loper v. Morrison, 23 Cal.2d 600, 608–609, 145 P.2d 1;  Verdugo Highlands, Inc. v. Security Ins. Co., 240 Cal.App.2d 527, 535, 49 Cal.Rptr. 736.)

 A hearing may be so unfair in circumscribing of the employe's opportunity to be heard or in some other respect as to conclusively show such arbitrary and capricious action on the part of the hearing officers as to call for the conclusion that its members did not exercise their judgment at all and thus warrant interference by the courts.

 But it is not for the courts to say what cause is or is not sufficient to support a dismissal, unless possibly the cause assigned be so frivolous that all minds must necessarily agree that it is not a legitimate cause.  (State ex rel. Wolcott v. Boyington, 110 Wash. 622, 627, 188 P. 777.)

The hearing provided for in Rule 39 of the contract is not a quasi-judicial hearing in any administrative law sense;  nor is it anything other than a business conference to investigate the conduct of an employe.   The employe has the contractual right to state his side of the story, to support it by the statements of witnesses, to have representatives, to have a record made of what is said;  by virtue of which he can appeal any adverse action to those railroad officials higher up in the management.   After this, if he desires, he can appeal to the National Railroad Adjustment Board or the courts.   This hearing procedure is a valuable protection from hasty, ill-advised or unjust action against him.

At the outset, the limitations of the available hearing procedures must be noted.   The hearing is not a trial.   It is a company investigation, before a designated representative.   He has no power to swear witnesses.   If the hearing in question is a typical example, the hearing officer has little compulsive power to maintain any procedure or order at all.   Neither the employe nor the company has power to subpoena witnesses, although the company does cause employes to attend on behalf of either the employe or the company when requested.   The hearing officer does not resolve the conflicts in evidence nor form the conclusions to be reached.   His function, as evidenced in this case, was to record the proceedings, thereafter forwarding the transcript to the higher-ups, who determine to discharge Mr. Wise on February 10, 1960.

 A hearing is not per se unfair because the discharging authority conducts it (State ex rel. Holland v. Sudheimer, 164 Minn. 437, 205 N.W. 369), especially since the contract required it to do so.

 Rule 39 provides for a hearing “by the proper officer.”   Mr. Spence was that officer.   We find no breach of the agreement or unfairness to respondent in the fact that Mr. Spence attempted to preside as such, leaving the questioning to an assistant, Mr. Ankerson;  until objections by Mr. Wise and associates forced Mr. Spence to resume, for the most part, the interrogator's role as well.   Most of the hearing transcript is taken up by the questions, objections and narrations of Mr. Wise and his representatives.   In permitting all of them to take part individually, serially, or in concert, as well as Mr. Wise, the hearing officer exceeded the bounds of required fairness.   The employe is required to be heard, not a multiplicity of representatives.

There was no requirement, and no reason shown, for the committeemen's request to obtain their own secretary to record the proceedings.   Since their request was prompted by the hearing officer's directions given to the secretary to record Carey's statement, one can only assume that they wanted an independent record they could control.   Assuming no harm or inconvenience would result, an employe might well keep his own stenographic record.   But the “official” record of the proceedings must of necessity be kept at the direction of the hearing officer, by fair intendment of Rule 39 of the collective bargaining agreement.

Specification of the “precise charge” required by Rule 39 of the bargaining agreement was adequately met by the language of the notice.   It was not required that the employes' statements concerning Wise's alleged solicitations be incorporated.  (Cf. appellant's claim on appeal, Wise v. Southern Pacific Company, supra, 223 Cal.App.2d 50 at 63, 35 Cal.Rptr. 652.)   There is no showing of any request for, or any denial of, any reasonable continuance to meet the disclosures as the hearing proceeded.   The plaintiff knew what he had been doing more completely than did the company.  (Cf. McConville v. Milk W.D. Union, 106 Cal.App. 696, 700, 289 P. 852, any deficiency is overcome by plaintiff's full participation in the hearing.)

The union committee, said Mr. Wise, “suspected” that Smith solicited, coerced, induced and procured the employes' statements in an unethical manner, and that the written statements were hearsay.   The hearing officer indicated in substance that the parties themselves were available and could be examined as to such matters, and that if the principals indicated their statements were coerced as respondent “suspected”, or some other materiality developed, Smith would be brought in.   But the record does not disclose any such foundational development.   Without some showing or claim as to what would have developed from Smith's testimony, no legal unfairness is shown.   He was not a material witness, nor an “accuser” whom Mr. Wise was entitled to confront.

The hearing officer received five signed statements of witnesses;  those witnesses were produced, identified their signatures, were questioned by respondent and his three representatives in relation to the statements, and in some cases they were questioned several times.   They were questioned both about the events recorded in their statements and the circumstances under which their statements were taken.  (Cf. Whitlow v. Board of Medical Examiners, 248 Cal.App.2d 478, 56 Cal.Rptr. 525, use of transcript was not error.)   That the statements somehow led the witnesses (Cf. Evid.Code, § 764) or that hearsay was illegally received does not appear from the record.

Certainly no greater requirement prevailed in the company hearing than in formal administrative law;  hearsay evidence is proper when it is of the nature upon which responsible persons are accustomed to rely in the conduct of serious affairs, any common law or statutory rule to the contrary notwithstanding.   (Gov.Code, § 11513(c);  cf. Mast v. State Board of Optometry, 139 Cal.App.2d 78, 85, 293 P.2d 148;  Ellers v. Railroad Retirement Board, 2 Cir., 132 F.2d 636, 639, reports, letters, etc. validly received.)   It is sufficient if there is other substantial evidence in the record to support administrative action, and no more restrictive rule should be applied to a private employer's investigation.

 If legal rules of evidence were at all applicable, one might also refer to Evidence Code, sections 770, 1235 and 1236.   Investigation reports are utilized normally in administrative proceedings, and are unobjectionable when the declarant is present and available for examination.  (Cf. La Prade v. Department of Water & Power, supra, 27 Cal.2d 47, 52, 162 P.2d 13.)   Use of such statements to initiate an inquiry into employe conduct was a reasonable starting point for the hearing.   By production of the written statements at the outset, Mr. Wise was able to know quickly the information which he might contest.   This probably was fairer, quicker and more concise than development by lay questioning.   He was given requested continuances or recesses to study how to respond to them.   Such employe declarations, if they stood alone, were not objectionable hearsay, as they related the conversations between the declarant and Mr. Wise himself, who was afforded full confrontation and cross-examination of the declarants, including Mr. Hankins.  (Cf. People v. Gould, 54 Cal.2d 621, 626, 7 Cal.Rptr. 273, 354 P.2d 865.)

A fair hearing implies that it is fair to the employer as well as to the employe.   Mr. Wise cannot on one hand attack the use of written statements, subjected to cross-examination, without debilitating his own evidence, not subject to cross-examination;  consisting of a letter to Mr. Cagley, the letter of a handwriting expert relative to Hankins' written report, the minutes of a labor convention in 1954, and alleged statements of Mr. Hilldebrand, a legal counsel for the union.

 If conflicts developed between the witnesses' signed statements and their oral testimony, there is no legal right to insist the hearing officer or the discharging officials entirely reject those written statements, even in a legal forum.  (Evid.Code, § 780(g), trier of fact determines credibility when there is a statement made by a witness, inconsistent with any part of his testimony at the hearing;  see also Phillips v. G.L. Truman Excavation Co., 55 Cal.2d 801, 810, 13 Cal.Rptr. 401, 362 P.2d 33.)

While a company official, as well as Mrs. Hankins, indicated to Mr. Hankins his mistake in identifying the handwriting in the body of his signed statement as his own, consideration of his statement is not in law an “intentional reception of false testimony”, i.e., Hankins' original identification of the handwriting in the body of the statement, as his own.   The substance of his statement was not thereby changed.  (Cf. People v. Porterfield, 186 Cal.App.2d 149, 158, 8 Cal.Rptr. 897, proper to call attention to prior statements of witness and to give an opportunity to correct his testimony.)

The conclusions reached do not require that we consider the errors assigned respecting the measure of damages.   Under the provisions of Rule 39 of the collective bargaining agreement, compensation is limited to the “wage loss, if any.”

The judgment is reversed, with directions to the trial court to make new findings and conclusions of law consistent with the foregoing, and to enter judgment accordingly.



1.   That decision affirmned the ruling of the Adjustment Board, holding that a discharge (for pocketing a cash fare) based upon the written statement of a passenger was properly supported, though the passenger was not produced.

DAVID, Associate Justice pro tem.* FN* Retired Judge of the Superior Court sitting under assignment by the Chairman of the Judicial Council.

DRAPER, P.J., and HAROLD C. BROWN, J., concur.