PEARSON CANDY CO v. WAITS

Reset A A Font size: Print

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

PEARSON CANDY CO., Limited, v. WAITS et al.

Civ. 14627.

Decided: December 28, 1944

Joseph L. Fainer and Russell E. Parsons, both of Los Angeles, for appellant. David Sokol, of Los Angeles, for respondents.

This is an appeal from a judgment dismissing plaintiff's complaint and defendants' cross-complaint on the ground that the superior court was without jurisdiction to grant the declaratory relief sought by plaintiff.

The findings of the trial court supported by substantial evidence disclose the following facts:

1) That plaintiff was a corporation organized under the laws of the state of Nevada, engaged in the business of manufacturing candy.

2) That plaintiff's principal factory was located in Los Angeles, and that plaintiff obtained its raw material from Iowa, Michigan and other states of the Union, selling the finished product in the states of Arizona, California, Nevada, Oregon and Washington.

3) That defendant E. R. Waits, was the business agent of his co-defendant; that defendant Bakery and Confectionery Workers' International Union of America, Local 417, was a labor union affiliated with the American Federation of Labor.

4) That within a day or two prior to November 1, 1941, one Clay C. Rittenhouse, who was then and there a business agent of the Bakery and Confectionary Workers' International Union of America, Local No. 417, together with another employee and business agent of the said union, came to the office of the plaintiff and stated to representatives of the plaintiff and to the plaintiff: ‘We have followed one of your trucks and observed that it passed through a picket line and we have followed it from that picket line to your place of business, and just for that we are going to make you sign a contract with us,’ and thereupon produced a form of contract similar to the agreement attached to plaintiff's complaint herein and marked Exhibit ‘A,'1 and stated: ‘We will give you a day or two to sign this agreement and if you don't sign it we will see to it that no trucks enter your establishments or deliver goods to you; we will see to it that no trucks are able to leave your plant; we will go to the railroads and see to it that they refuse to deliver merchandise to you or to accept merchandise from you; we will put a picket line around your place of business; we will picket your customers, and we will pursue a course of conduct that will put you out of business, and unless you sign this contract we will do whatever is necessary to put you out of business. We have practically broken the Hoffman Candy Company and you'd better get smart, or else’; and thereupon a representative of the plaintiff replied. ‘Well, we have no quarrel with your union. If one of our drivers went through a picket line, we did not know anything about it. We have instructed them not to do so. And another thing, none of our employees belong to your union, so far as we know, and if you men want to go ahead and solicit their membership, go to it. We are strictly neutral but you are welcome to go ahead and solicit our employees and if they want to join your union it is all right with us. That is their privilege.’ Thereupon a representative of the said union replied, ‘Sure. We haven't any members in your plant, but you are going to sign a Closed Shop Agreement, and you are going to make your people join ‘or else.’ Why should we bother chasing these people up? You can sign the contract or we will put you out of business. It is up to you to see that these people join the union.' Whereupon a representative of the plaintiff replied, ‘Well, the Christmas trade is coming, and we have almost Ten Thousand Dollars ($10,000.00) tied up in holiday candy, and we want no trouble. Why don't you go ahead and talk to our workers? If they want to join it is perfectly all right with us.’ Whereupon the representative of the union replied, ‘That is your hard luck. We know you have got your money all tied up, and unless you come through and sign this agreement right now, we will put you out of business. We'll break you—we'll teach you a lesson.’ In fear, and believing that the said defendant union and its members and business agents would use force and violence, or whatever means they thought were necessary to compel this plaintiff to sign this agreement, the plaintiff, before it was able to call a meeting of its board of directors, did sign the agreement and thereafter, in good faith, posted all notices of union meetings, and in good faith called upon the union to supply it with help from time to time; and only on one occasion did the union ever send help, and the plaintiff has been forced to hire labor wherever it was able to obtain it.

5) That plaintiff was engaged in interstate commerce and that when the contract above referred to was executed defendant union did not represent for bargaining purposes the majority of the employees of plaintiff.

6) That in January, 1943, the defendant union filed with and submitted to the National War Labor Board the issue whether or not the plaintiff company was bound by the contract in question. After a hearing by the Tenth Regional Board of the National War Labor Board, the Regional War Labor Board on May 25, 1943, issued its directive order in effect ordering the plaintiff to perform the contract in question ‘until such time as it should have been terminated in accordance with its provisions, or by agreement of the parties, or until the contract shall have been held invalid by the final decision of a competent tribunal.’ The directive then proceeds as follows: ‘This Board, while not expressly deciding that it is without jurisdiction to determine the legality of the contract, concludes, for reasons of policy, that the determination of legality should be made by the National Labor Relations Board or other tribunal of competent authority, the issues in dispute being meanwhile resolved through the Board's direction that the contract be observed.’

Plaintiff sought a review of the order by the National War Labor Board, but it was denied on July 16, 1943.

This is the sole question presented for our determination:

Did the superior court have jurisdiction to determine the respective rights of the parties under the contract they had entered into?

This question must be answered in the affirmative. Section 1060, Code of Civil Procedure provides in part as follows: ‘Any person interested under * * * a contract * * * may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an action in the superior court for a declaration of his rights and duties in the premises, including a determination of any question of construction or validity arising under such * * * contract.’ This section has been held constitutional by our Supreme Court in the case of Blakeslee v. Wilson, 190 Cal. 479, 482 et seq., 213 P. 495.

Clearly under the wording of section 1060, Code of Civil Procedure, the superior court had jurisdiction of the action now before us unless there is some paramount act of the federal government which deprives the court of its power to act. No such act has been called to our attention. There is nothing in the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., nor in the act creating the National War Labor Board which would deprive the superior court of jurisdiction in a case like the one here presented. This construction appears to have been recognized by the Tenth Regional Board of the National War Labor Board when it made its order relative to the present controversy: ‘This Board, while not expressly deciding that it is without jurisdiction to determine the legality of the contract, concludes, for reasons of policy, that the determination of legality should be made by the National Labor Relations Board or other tribunal of competent authority. * * *'2

It has been the established policy of the state of California to make its courts open and available to its citizens at all times. This policy has been embodied in the organic law of our state. Article VI, section 5 of the state constitution contains this mandate: ‘Superior courts, municipal courts and justices' courts in cities having a population of more than forty thousand inhabitants shall always be open, legal holidays and nonjudicial days excepted.’ Should a different conclusion be reached we would find our citizens in the anomalous position of the plaintiff in the instant case, who to date has been without recourse in any tribunal. In the present case the National War Labor Board has refused to accept jurisdiction, and so has the superior court.

It is to be borne in mind that we are considering solely the question of the jurisdiction of the court to entertain the action. The absurdity of the position assumed by defendants in contending that the trial court's ruling is correct is illustrated by a hypothetical case: Let us assume that defendants had placed a gun against the head of plaintiff's president and forced him under threat of death of execute a contract. If the ruling of the trial court is to stand, the plaintiff would be without recourse and bound to follow the terms of the contract no matter what provisions it contained. This situation, of course, would not be indorsed by even the most biased and prejudiced citizen. The principle involved in our illustration is identical with the principle involved in the present action. Justice and orderly procedure require the superior court to accept jurisdiction, and after a fair trial render its findings and judgment which will then be subject to review by this court, the Supreme Court of the state of California and, in a proper case, the Supreme Court of the United States.

Certainly no fair, honest, intelligent citizen can find any valid objection to such procedure. The contrary course would commit us to a policy of overriding the express will of a democratic people whose desires have been expressed through their constitution, both federal and state, and align us with those peoples of the world who believe that the people are incapable of governing themselves through their duly constituted authorities.

For the foregoing reasons the judgment is reversed.

I dissent.

The question for decision is whether the superior court has jurisdiction to determine a labor controversy between an employer and a labor union where the National War Labor Board has assumed jurisdiction over the dispute affecting interstate commerce and has decided that the terms and conditions of employment contained in the contract between the employer and the labor union shall govern their relations.

Plaintiff having executed a closed shop agreement October 27, 1941, with the Bakery and Confectionery Workers' International Union of America, Local 417, sought by this action to obtain (1) a declaration of the rights and duties of the signatory parties, (2) an annulment of the instrument and (3) an injunction against defendants to forbid their compelling plaintiff to abide by the contract.

On this appeal plaintiff contends that (1) the contract was void from its inception; (2) that the rider to the Appropriations Act, Public Law 135, 57 Stat. 515, does not bar the superior court from entertaining jurisdiction of the controversy. The trial court found the facts substantially as alleged by plaintiff, towit: (1) Plaintiff is engaged in the candy manufacturing business which it extends through interstate commerce. The defendant, Local 417, is an association of workers allied with the American Federation of Labor. The defendant Waits is a member of Local 417 and is now its business representative. All are located in Los Angeles County where plaintiff's business is conducted. (2) On October 27, 1941, by the use of divers and sundry threats on the part of one Rittenhouse, then the representative of the union, that it would wreck the business of plaintiff if it should refuse to sign a closed shop contract with Local 417, plaintiff was induced to execute an agreement whereby plaintiff recognized the union as the exclusive bargaining agency for all employees coming under the jurisdiction of the agreement. (3) The agreement was to remain in full force from November 1, 1941, to April 30, 1942, and from year to year thereafter until terminated by either party upon thirty days' written notice prior to the termination date of such year. No notice of termination was ever given. By its terms plaintiff was required to hire members of the union through its office to do the work in plaintiff's factory and it contained other provisions controlling the relations of plaintiff and the union. (4) At the time of executing the agreement, defendants knew that, under National Labor Relations Act (Wagner Act), plaintiff as an employer was required to remain neutral with respect to the affiliation of its workers with any labor union as provided by the Wagner Act, and was forbidden to enter into a closed shop contract with a union which did not represent a majority of its employees at that time. None of its employees held membership in Local 417 on October 27, 1941, but after that date all employees of plaintiff except one joined the local and paid dues until June 1942. New employees of plaintiff hired subsequent to November 1, 1941, did not apply for membership in defendant Local 417. (5) In October 1942 plaintiff rejected the union's demand that plaintiff discharge nine employees who were not members in good standing of the union and refused to arbitrate the issue as provided by the bargaining agency agreement. Subsequently, in January 1943, the union petitioned the National War Labor Board to determine whether plaintiff was bound by the contract. In the interim the second term of the agreement expired on April 30, 1943. (6) On May 25, 1943, the Tenth Regional War Labor Board, after a trial, by unanimous concurrence issued its directive order requiring plaintiff to perform its contract with the union. Also, it concluded that, for reasons of policy, the determination of the legality of the exclusive bargaining agency agreement should be made ‘by the National Labor Relations Board or other tribunal of competent authority.’ (7) Thereafter plaintiff applied to the National War Labor Board for a review of such directive order which appeal was denied on July 16, 1943. On September 9, the National War Labor Board assumed jurisdiction over the dispute, as provided by Section 7 of the War Labor Disputes Act of June 25, 1943, 50 U.S.C.A. Appendix § 1501 et seq., made a finding that plaintiff had failed to comply with the directive order of May 25, and determined that the labor dispute between plaintiff and the union had become so serious as possibily to lead to a substantial interference with the war effort. (8) The Board summoned the parties to a public hearing before a division of the National War Labor Board in Los Angeles on September 13, 1943, to show cause why plaintiff should not comply with the directive order of the Tenth Regional War Labor Board.

Six months after the appeal had been lodged here the National War Labor Board made its decision on September 8, 1944. After reciting the vicissitudes of the controversy from the occasion of its certification by the Secretary of Labor the Board confirmed the directive order of the Tenth Regional Board and ordered that the terms and conditions of employment which are to govern the relations between the parties shall be those set forth in their collective bargaining agreement.

Plaintiff contends that because it is engaged in interestate commerce its agreement with defendant Local was void as being in violation of Section 8(3) of the Wagner Act, 29 U.S.C.A. § 158(3) which forbids one engaged in interstate commerce to sign a closed shop agreement with a union not designated by a majority of the employees of the shop. It insists that the superior court should determine whether section 8 had been violated. There are three answers to this contention. (1) Section 10(a) of the Wagner Act, 29 U.S.C.A. § 160(a), vests the National Labor Relations Board with exclusive jurisdiction ‘to prevent any person from engaging in any unfair labor practice (listed in section 8) affecting commerce.’ But before that board may assume jurisdiction it must ascertain the existence of certain prescribed facts. See Secs. 9(a), (b), (c), 29 U.S.C.A. § 159(a–c); American Federation of Labor v. National Labor Relations Board, 308 U.S. 401, 405, 60 S.Ct. 300, 84 L.Ed. 347. (2) However, under circumstances such as are presented by the instant case, the National Labor Relations Board is divested of power to entertain jurisdiction and to decide the dispute by reason of the rider to the Appropriations Act Limiting the National Labor Relations Board. Such rider provides that the funds of the Board cannot be used to invalidate a collective bargaining agreement. If the National Labor Relations Board cannot be decide the issue, no method of reasoning is proposed whereby it may be held that a state court is clothed with such power, in view of the cited acts and the war powers vested in the central government by the federal constitution. (3) But finality for plaintiff's demand that the superior court assume jurisdiction to determine the dispute as to the legality of the collective bargaining agreement is spelled by the fact that the National War Labor Board has already exercised jurisdiction over the matter and has made directive orders that the agreement govern the relations of the parties. In so acting that board fulfilled its duty under the War Labor Disputes Act which forbids the continuance of a labor dispute that may substantially interfere with the war effort.

On no rational basis could the superior court enter a valid judgment settling the controversy. The War Labor Disputes Act provides that the War Labor Board shall have power to decide disputes between employers and employees and to ‘provide by order the wages and hours and all other terms and conditions (customarily included in collective-bargaining agreements) covering the relations between parties, which shall be in effect until further order of the Board.’ Public Law 89, 78th Congress, paragraph 7(a)(2) (9 War Lab. Rep. VII.1 ) The last mentioned Act supervenes all statutes in conferring jurisdiction of disputes affecting the conduct of a war. It was created by Congress in the exercise of the war powers conferred by Article I, Section 8, of the Constitution. It declares on its face that it was enacted as a war measure. Its duration is expressly limited to a period not to exceed six months following the termination of the current war. Under section 7(a) of Public Law 89 and the decisions which have interpreted it the authority of the United States is paramount when exerted as to subjects concerning which it has the power to control. Lajoie v. Milliken, 1922, 242 Mass. 508, 136 N.E. 419, 423; Hamilton v. Kentucky Distilleries & Warehouse Co., 1919, 251 U.S. 146, 40 S.Ct. 106, 64 L.Ed. 194; Northern Pac. R. Co. v. North Dakota, 1919, 250 U.S. 135, 150, 39 S.Ct. 502, 63 L.Ed. 897; Dakota Cent. Tel. Co. v. South Dakota, 1919, 250 U.S. 163, 39 S.Ct. 507, 63 L.Ed. 910, 4 A.L.R. 1623; McKinley v. United States, 1919, 249 U.S. 397, 39 S.Ct. 324, 63 L.Ed. 668; Tarble's case, 1871, 13 Wall. 397, 406, 409, 20 L.Ed. 597; State ex rel. Watson v. City of Miaml, 1943, 153 Fla. 660, 15 So.2d 481, 485.

These cases hold that a federal statute which discloses on its face that it is based upon the war power of Congress exceeds the force of a state law because the authority it gives arises ‘only because of the existence of war, and the right to exert such authority was to cease upon the war's termination.’ Northern Pacific R. Co. v. North Dakota, supra [250 U.S. 135, 39 S.Ct. 505]. Whether a contract involving the manufacturer of materials necessary to the war effort is helpful or harmful thereto is a question over which state courts have no inherent jurisdiction. The vast power vested in the President and the Congress to declare and wage war, carries with it all of those implied powers necessary to effectuate the express power. Such power is exclusive and extends to every matter and activity related to the war. Inasmuch as the War Labor Disputes Act is founded upon the war powers of Congress it must follow that the Act is valid and that when the War Labor Relations Board assumed jurisdiction over the instant controversy all other tribunals were thereby shorn of power to settle a labor dispute related to the war effort because that Board was vested with full authority to dispose of all such labor disputes. State ex rel. Watson, v. City of Miami, supra.

The facts that plaintiff was engaged in interstate commerce, that its security was threatened by the defendants and that it did not have a majority of its employees in the membership of Local 417 are not sufficient to override the paramountcy of the organic law and to authorize a state court to supersede a tribunal established to determine the issue at hand. The National War Labor Board having assumed jurisdiction and rendered a decision, both parties participating, the superior court of California has no power now to interfere. Harrington v. Superior Court, 194 Cal. 185, 228 P. 15; De Brincat v. Mogan, 1 Cal.App.2d 7, 36 P.2d 245.

The case of Park & Tilford I. Corp. v. International Brotherhood, Cal.App., 139 P.2d 963, is not applicable. We there held that jurisdiction was properly exercised to prevent the immediate, unlawful, and destructive acts involved in interstate commerce because no federal tribunal had theretofore assumed jurisdiction.

The judgment should be affirmed.

On Rehearing.

Rehearing denied.

I earnestly dissent from the denial of a rehearing. All existing constitutional provisions are set at naught by such order. It ignores the duality of our form of government. It would erase from the federal constitution the power exclusively granted to the President and the Congress to wage war. It would nullify that belated but inviolable Article VI which declares that ‘this Constitution, and the Laws of the United States which shall be made in Pursuance thereof * * * shall be the supremee Law of the Land.’

The vestiture of power in the President and the Congress to wage war carries with it all such powers as may reasonably be inferred from the grant to be necessary to effectuate the purpose of the power. McCulloch v. Maryland, 4 Wheat, 316, 4 L.Ed. 579. Such power is necessarily exclusive and it ‘extends to every matter and activity so related to war as substantially to affect its conduct and progress.’ Kiyoshi Hirabayashi v. United States, 320 U.S. 81, 63 S.Ct. 1375, 1382, 87 L.Ed. 1774. The judgment of this court repudiates the learned and exhaustive decision of the appellate court of Illinois and cited authorities which hold that as to such labor disputes the Federal War Labor Disputes Act, 50 U.S.C.A. Appendix § 1501 et seq., supersedes all state statutes. Appeal of Frank Foundries Corporation (In re Creager), 323 Ill.App. 594, 56 N.E.2d 649. It scorns the decision of the Supreme Court of Wisconsin which holds that an order of the War Labor Board ‘issued in the exercise of the war powers of the Executive in time of war supplants and operates to suspend state action in regard to the same subject matter.’ International Brotherhood of Paper Makers, Local No. 66, A. F. of L., v. Wisconsin Employment Relations Board, 245 Wis. 541, 15 N.W.2d 806, 807.

In view of the establishment of the War Labor Board, pursuant to an agreement of representatives of labor and capital that there would be no strikes or lockouts for the duration of the war and that all labor disputes should be settled by peaceful means, Executive Order 9017, 50 U.S.C.A. Appendix § 1507 note, it would not be in keeping with the comity heretofore preserved between the states and the central government for the Superior Court of California to maintain jurisdiction over a labor dispute which affects the war effort and especially one over which a federal tribunal has already exercised jurisdiction and pronounced final judgment.

A rehearing should be granted.

FOOTNOTES

1.  The contract was the usual form of Closed Shop Agreement.

2.  Italics added.

1.  Section 7(a) of the War Labor Disputes Act vests the National War Labor Board with power: (2) ‘To decide the dispute, and provide by order the wages and hours and all other terms and conditions (customarily included in collective-bargaining agreements) governing * * * which shall be in effect until further order of the Board. In making any such decision the Board shall conform to the provisions of the Fair Labor Standards Act of 1938, as amended; the National Labor Relations Act; the Emergency Price Control Act of 1942, as amended; and the Act of October 2, 1942, as amended, and all other applicable provisions of law; and where no other law is applicable the order of the Board shall provide for terms and conditions to govern relations between the parties which shall be fair and equitable to employer and employer under all the circumstances of the case.’ (War Labor Reports, Vol. 9, p. IX.)

McCOMB, Justice.

W. J. WOOD J., concurs.

Copied to clipboard