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District Court of Appeal, First District, Division 2, California.


Civ. 11034

Decided: May 05, 1939

I.M. Peckham and Sol A. Abrams, both of San Francisco, for appellants. Cullinan, Hickey & Sweigert, Rogers & Clark, and Webster V. Clark, all of San Francisco, amici curiae. John Francis Neylan, of San Francisco, for respondent Howard Automobile Co. Mathew O. Tobriner, of San Francisco, for respondent Retail Automobile Salesmen's Local Union No. 1067, and others. Clarence E. Todd, of San Francisco, amici curiae in support of California State Federation of Labor.

In a brief filed by special permission, after the cause was fully argued and ordered submitted, counsel for the respondent local union raised for the first time the question of the constitutionality of section 921 of the Labor Code, St.Cal.1937, p. 208. It is a settled rule that a new question cannot be raised in this manner as opposing counsel have no opportunity to reply, and we accordingly treated the issue as not properly raised. In their petition for rehearing it is again contended that this section is unconstitutional because it denies liberty of contract without due process. Coppage v. Kansas, 236 U.S. 1, 35 S.Ct. 240, 59 L.Ed. 441, L.R.A.1915C, 960; Montgomery v. Pacific Electric Ry. Co., 9 Cir., 293 F. 680, and similar cases are cited holding that the constitutional guarantee against deprivation of life, liberty or property without due process of law, includes the “liberty” of the citizen to contract as he may desire without abridgment or interference by any legislative authority. We do not deem it pertinent to analyse or discuss the reasoning of these cases. It should be sufficient to say that in the later case of West Coast Hotel Company v. Parrish, 300 U.S. 379, 57 S.Ct. 578, 81 L.Ed. 703, 108 A.L.R. 1330, Chief Justice Hughes, in an opinion sustaining the Washington statute regulating minimum hours and wages for women, clears this question of due process in relation to freedom of contract in the following language (300 U.S. 379, 57 S.Ct. page 581, 81 L.Ed. page 708, 709, 108 A.L.R. 1330): “In each case the violation alleged by those attacking minimum wage regulation for women is deprivation of freedom of contract. What is this freedom? The Constitution does not speak of freedom of contract. It speaks of liberty and prohibits the deprivation of liberty without due process of law. In prohibiting that deprivation, the Constitution does not recognize an absolute and uncontrollable liberty. Liberty in each of its phases has its history and connotation. But the liberty safeguarded is liberty in a social organization which requires the protection of law against the evils which menace the health, safety, morals, and welfare of the people. Liberty under the Constitution is thus necessarily subject to the restraints of due process, and regulation which is reasonable in relation to its subject and is adopted in the interests of the community is due process.

“This essential limitation of liberty in general governs freedom of contract in particular. * In dealing with the relation of employer and employed, the Legislature has necessarily a wide field of discretion in order that there may be suitable protection of health and safety, and that peace and good order may be promoted through regulations designed to insure wholesome conditions of work and freedom from oppression.” See also National Labor Relations Board v. Jones & Laughlin S. Corp., 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893, 916, 108 A.L.R. 1352.

We entertain no doubt that the United States Supreme Court, if called upon to rule on the provisions of our Labor Code, would, in view of this clear exposition of the subject matter involved, hold that its declared policy of voluntary and unhampered collective bargaining was a reasonable regulation “designed to insure wholesome conditions of work and freedom from oppression.” This principle is based squarely upon the settled doctrine that constitutional limitations of this character are designed for the protection of the minorities against the oppression and encroachment of the majorities, but that police regulations operating reasonably for the protection of the health, safety, morals and welfare of the public at large are not rendered invalid by the fact that they may affect incidentally the exercise of some right of the individual guaranteed by the Constitution.

In all these cases we attach less importance to the provisions of section 921 than to those of section 923. If 921 be unconstitutional in its attempt to ban the particular contracts specified therein the same point cannot be urged with equal vigor against 923. This section establishes and stabilizes the principle of collective bargaining upon the principle that, since “governmental authority has permitted and encouraged employers to organize” in the field of capital control, the individual employee should be protected in his rights to freely and voluntarily organize for his protection, and for the general welfare of the public at large. This section applies to all employees. There is no discrimination, no special privilege, and no denial of the due processes of law. There is no suggestion here that it is unreasonable or oppressive in its operation. There is no contention that it is not a general regulation “designed to insure wholesome conditions of work and freedom from oppression.”

Petitioners urge us to clarify the opinion in so far as the mooted question of “closed shop” is concerned. This also is a question which was not raised in any of the three appeals. We did not hold, and there is nothing in the Labor Code which would call for a holding, that a contract between an employer and a labor union would be illegal if the employer agreed to employ union men only. What we did hold is that the right of existing employees to collective bargaining would ban such a contract if it obligated the employer to discharge such employees unless they joined involuntarily the contracting labor organization. This is so because such a contract would be contrary to the declared public policy—not of section 921 of the Labor Code, but of section 923, which undertakes to protect the existing employee in his right to bargain collectively, and without coercion upon the part of the employer, or any one else. In the opinion we emphasized that the meat of the declared state policy was the employee's privilege of “freedom of association, self-organization, and designation of representatives of his own choosing.” The issue which was presented and decided in each of the three cases was whether these employees who sought to exercise this privilege were entitled to the protection of the law against the acts of those who would coerce them to forego that privilege. But there is nothing in the Labor Code which would prohibit such employees, through their own voluntary organization or bargaining agency, executing a contract with their employer under which he should agree to employ members of that organization only.

It is further argued that since the contracts here involved were proposed to be signed by the employer and an outside labor union, they were not within the terms of section 921 which denounces contracts between the employer and an “employee or prospective employee”. There are several answers to the argument. First, if the contracting labor union is the duly authorized bargaining agency of the employees, its contract is the contract of the employees. This follows from the settled rule that the contract of the agent is the contract of the principal. Second, if the labor union is not the chosen bargaining agency of the employees, its contract is contrary to the public policy declared in section 923. This is so because such a contract deprives these employees of the right to bargain collectively through agencies of their own choosing. These sections of the Code are all designed for the same purpose and all must be read together. If the contract is expressly denounced by section 921, it is void; if it is not expressly mentioned in section 921, but is contrary to the public policy of section 923, it is equally void.

So much is said in the briefs about “regular” labor unions that we must again refer to the definition of “labor organization” found in the National Labor Relations Act of 1935, § 2(5), 29 U.S.C.A. § 152 (5), as “any agency or employee representation committee or plan, in which employees participate * for the purpose * of dealing with employers concerning grievances *”. The right of “self-organization” accorded the employees in section 923 runs to all bona fide “labor organizations” and associations, whether local or national in their scope. But it should be noted that these sections of the Labor Code do not refer to labor “unions”, though that expression is used frequently in other statutes. They refer to labor “organizations”, and section 923 emphasizes the necessity of voluntary “self-organization”. These provisions do not justify the assumption of super-legal powers by any organization or group of individuals to determine how the constitutional or statutory rights of any other organization, or group of individuals, shall be exercised. They expressly demand the protection of the right of every individual employee of “freedom of association, self-organization, and designation of representatives of his own choosing.” Therein lies the fundamental difference between the argument of the petitioners and the rule of the former opinion. The petitioners are most emphatic in their demands of the constitutional rights of all members of “regular” labor unions. At the same time they are the most persistent in the denial of the constitutional rights of all others. The rule of the opinion is that the Labor Code undertakes to protect the rights of all employees irrespective of their class or organization, and that it specifically seeks to protect them in their right to bargain collectively with the employer, free from coercion or oppression by any individual or group. Accordingly we held that, where there is no labor dispute between the employer and his employees, and a picket or boycott is maintained, advertising the employer to be “unfair to organized labor,” and the sole purpose of these activities is to compel the employer to make a contract denounced by the Labor Code as contrary to public policy, such picket, or boycott, is maintained for an unlawful purpose, and is a proper subject for equitable relief, either upon the petition of the employer, or upon the petition of those employees whose collective bargaining rights are thus infringed.

The petition for a rehearing is denied.

NOURSE, Presiding Justice.