JUNEAU SPRUCE CORP v. INTERNATIONAL LONGSHOREMEN WAREHOUSEMEN UNION

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District Court of Appeal, First District, Division 1, California.

JUNEAU SPRUCE CORP. v. INTERNATIONAL LONGSHOREMEN'S & WAREHOUSEMEN'S UNION et al.

No. 14577.

Decided: March 30, 1951

Gladstein, Andersen, Resner & Leonard, George R. Andersen, Lloyd E. McMurray, San Francisco, for appellants. Thelen, Marrin, Johnson & Bridges, San Francisco, for respondent.

Defendants' motion for change of venue from the Superior Court of Marin County to the San Francisco Superior Court was denied. Defendants appeal.

Question Presented.

Is a labor union (unincorporated association) to be treated for venue purposes as a corporation, or does the residence of its individual members determine venue?

Facts.

In 1948 plaintiff, under the Federal Labor-Management Relations Act of 1947, 29 U.S.C.A. § 141 et seq., recovered judgment against both defendants in the District Court for the Territory of Alaska in the sum of $750,000 plus costs, attorneys' fees, etc., in the sum of $10,467.55. Thereafter plaintiff sued defendants on said judgment in the Superior Court of Marin County. The first named defendant moved timely for change of venue to San Francisco, filing affidavits to the effect that its principal and only place of business is San Francisco and that the other defendant does not have an office anywhere in California, nor do any of its members reside anywhere in California. The motion was made upon the grounds that the moving defendant maintains its place of business in San Francisco and that the complaint does not allege, nor is it the fact, that the cause of action sued upon, or the obligation upon which it is based, arose in California or in Marin County or was to be performed therein. Plaintiff filed an affidavit in opposition to the motion, stating that the moving defendant is an unincorporated association consisting of several thousand members residing throughout the State of California; that among the members are two residing in Marin County, giving their names and addresses. It is stated on information and belief that there are in excess of two hundred members residing in Marin County. The court, apparently on the theory that there were members of the association residing in Marin County, denied the motion. For Venue Purposes Is a Labor Union a Jural Entity?

Article XII, section 16, of the Constitution provides: ‘A corporation or association may be sued in the county where the contract is made or is to be performed, or where the obligation or liability arises, or the breach occurs; or in the county where the principal place of business of such corporation is situated, subject to the power of the court to change the place of trial as in other cases.’ It is conceded that Marin County does not come within the categories set forth in the first portion of section 16. Plaintiff contends that the second portion of the section permitting suit in the county of the principal place of business, applies solely to corporations, and that as to venue for unincorporated associations, section 395 of the Code of Civil Procedure, which provides for venue in the county of a defendant's residence, allows venue in the county of any member of the association. Defendants contend that the whole constitutional section applies as well to unincorporated associations, and, in any event, for venue purposes an unincorporated association of the type of a labor union should be treated as a corporation. This question has not been determined heretofore in California.

In interpreting section 16 the form in which it was quoted in Ivey v. Kern County Land Co., 115 Cal. 196, at page 200, 46 P. 926, 927, is suggestive: ‘The constitution of this state provides as follows: ‘A corporation or association may be sued (1) in the county where the contract is made (2) or is to be performed (3) or where the obligation or liability arises, (4) or the breach occurs, (5) or in the county where the principal place of business of such corporation is situated, subject to the power of the court to change the place of trial as in other cases.’ Const. art. XII, sec. 16.' The form of the test above quoted emphasizes that each one of the clauses or phrases to which it gives a number (from 1 to 5) is a correlative clause, each, as much as any of the others, telling where in a given situation ‘A corporation or association’ may be sued. This is emphasized by the concluding phrase ‘subject to the power of the court to change the place of trial as in other cases.’ This ‘subject to’ manifestly was intended to apply equally to each of the preceding five clauses, thus reaching back through the semi-colon in the official text. This de-emphasis of the importance of the semi-colon suggests a further thought: In each of the first four numbered clauses there was no occasion to mention either ‘corporation’ or ‘association,’ those clauses dealing with the place where the contract was made or to be performed, or where the obligation or liability arose, or the breach occurred. Only in the fifth clause was there any occasion to use a word or words mentioning or referring to ‘corporation or association.’ Admittedly, the expression ‘such corporation’ is a bit ambiguous, but the reasonable intendment was that these words were merely words of reference to what the section was about, to wit, the place of the commencement of the suit of the designated transitory actions against a ‘corporation or association.’ Viewed simply as a term of reference, ‘such corporation’ would seem adequately to refer back to ‘A corporation or association.’ This view receives added emphasis because of the utter lack of any apparent reason for treating an association like a corporation in the first four instances mentioned, and differently in the fifth.

Moreover, the section must be interpreted under present day conditions. Even if it were true, as contended by plaintiff, that at the time of the adoption of the Constitution in 1879 the unincorporated associations of those days were not included, such fact does not determine the question. The law is progressive and must necessarily be so. We must bear in mind that business conditions are never static, nor must the law be. The unincorporated associations of 1879 are a far cry from those of today, and particularly is this so of labor unions. In interpreting the constitutional provision, if the association of today is more nearly akin to corporations than to the associations of those days, it is imperative that it be treated as a corporation. An analysis of section 16 as a whole shows that it was intended that for venue, a jural entity was to be treated as such rather than to break that entity into its component parts. If, then, the particular unincorporated association is a legal entity of a corporation type, it should be so treated. That it is such is shown by the legislation and decisions concerning it.

Section 388 of the Code of Civil Procedure provides that when two or more persons, associated in any business, transact such business under a common name, the associates may be sued by such common name, and the summons may be served on one or more of the associates. The judgment in such action shall bind the joint property of all the associates and the individual property of the parties served, in the same manner as if all had been named and sued upon their joint liability. In interpreting this section, in Artana v. San Jose Scavenger Co., 181 Cal. 627, at pages 629, 630, 185 P. 850, 851, the court said: ‘The association, whether it be a copartnership or other association of individuals transacting business under a common name, is, for the purposes of the section, a legal entity distinct from its members, and it is this legal entity which is in this action the sole party defendant.’ (Emphasis added.) If, as there held, the association, a legal entity, is the sole party defendant, how can it be broken up into terms of its membership and venue be determined by the residence of any of its members?

As said concerning unincorporated associations in Jardine v. Superior Court, 213 Cal. 301, 309, 2 P.2d 756, 760, 79 A.L.R. 291: ‘In California, the entity theory has been established by a number of decisions. [Citing cases.]’ In Armstrong v. Superior Court, 173 Cal. 341, 159 P. 1176, it was held that section 388 applied to a labor union. Plaintiff contends that the language in the Jardine case, 213 Cal. at page 310, 2 P.2d at page 760, ‘So far as constitutionality is concerned, we see no distinction between such a statute applied to partnerships and to other unincorporated associations,’ supports their contention that as to venue, associations are to be treated as partnerships as to whom it has been held that venue depends upon residence of the individual partners. The question in the Jardine case was not one of venue but whether section 388 was constitutional in providing for judgment against the joint property of all the associates of an unincorporated association without serving all its members. The court pointed out that its constitutionality had long been established in this state. A second objection was that the Los Angeles Stock Exchange was not the type of association to which section 388 applied. In holding that it was, the court said, 213 Cal. at page 320, 2 P.2d at page 764, ‘there is certainly no reason to restrict its application to any one class of associations doing business. It abrogates a rule unsuited to present conditions, and should receive a liberal construction.’ This liberality of construction should be applied to section 16, as, logically, in an action against an association, such as a labor union, having members scattered all over the state, it would be ridiculous to allow venue in any county in which one of the members might happen to reside. The statement in the Jardine case that as to the constitutionality of the act there is no difference between an association and a partnership, cannot be construed to mean that as to other matters there is no distinction between them.

Plaintiff contends that defendants' contention confuses jurisdiction with venue, pointing out that actually any superior court in California would have jurisdiction if plaintiff saw fit to file the suit there, and no proper motion for change of venue were made. However, in Krogh v. Pacific Gateway & Development Co., 11 Cal.App. 237, 104 P. 698, it was held, in effect, that section 16 applies to venue, because the court stated that where a corporation is sued in a county other than those mentioned in the first part of the section, the corporation, under the second portion of the section, has the right to change the venue to the county of its principal place of business. It held that a corporation was entitled to a change of venue also under section 395 of the Code of Civil Procedure. Thus, the question here is one of venue and its solution depends upon whether the association is to be treated as a corporation and therefore entitled, under section 16, or section 395 of the Code of Civil Procedure, to a change to its place of residence, i. e., its principal place of business, or treated as lacking an entity, and hence under section 395, venue lies in the county of any member.

A case which is quite persuasive on the subject is Sperry Products v. Association of American Railroads, 2 Cir., 132 F.2d 408, 145 A.L.R. 694 (L. Hand, J.). The effect of this case on the question before us is twofold: (1) In interpreting section 16 of the Constitution, an unincorporated association must be considered a jural entity similar to a corporation for procedural and venue purposes; and (2) in applying section 395, residence of an unincorporated association of the type under consideration here is its principal place of business rather than the residence of its individual members. There the plaintiff appealed from a judgment dismissing its complaint for the infringement of a patent, on the ground that the action had been brought in the wrong district. The action was brought against a corporation, an individual and an unincorporated association—the Association of American Railroads, comprised of two hundred railroads. For reasons unimportant here, the other two defendants were disregarded, and the action treated as one against the association alone. Section 109, Title 28 U.S.C.A., as it then read, provided that in patent cases, jurisdiction lay in the district court in the district in which the defendant is an inhabitant, or in any district in which the defendant, whether a person, partnership, or corporation, shall have committed acts of infringement ‘and have a regular and established place of business.’ The district selected by plaintiff for the action was one in which members of the association were ‘inhabitants.’ Defendant moved to dismiss on the ground that it was not an inhabitant1 of the district, nor was its principal place of business there. The trial court, as in our case, held the venue proper as one or more of its members was an inhabitant of the district, and dismissed the action. On appeal to the United States Circuit Court of Appeals, the judgment of dismissal was reversed. The court pointed out that in United Mine Workers of America v. Coronado Coal Co., 259 U.S. 344, 42 S.Ct. 570, 66 L.Ed. 975, it was held that an unincorporated association (a labor union) could be sued in a federal court as an entity without joining all its members, although theretofore the contrary had been the rule. It then said that although for diversity of citizenship the courts would look to the membership, ‘for most purposes the law still looks at such associations as mere aggregations of individuals. Since, however, for the purpose of suit it has come to regard them as jural entities, we can see no reason why that doctrine should not be applied consistently to other procedural incidents than service of process, and venue is one of such incidents. Certainly that promotes simplicity, and simplicity was one of the conveniences which induced the original change. Therefore in construing § 48, Jud.Code, 28 U.S.C.A. § 109, in its application to an unincorporated association it seems inevitable that we should attribute an ‘inhabitancy’ to it as though it were a single jural person and not an aggregate.' 132 F.2d 408, 411, page 697 of 145 A.L.R. It then went on to state that ‘It is not altogether clear a priori how to attribute location to a collective venture even after one has called it a jural person.’ 132 F.2d 408, 411, page 697 of 145 A.L.R. Then, ‘It does not violate common understanding to think of a common venture or enterprise as having spatial position wherever any part of those activities take place by which it is realized. That is a practicable test and it is really the only practicable test. To say that it exists wherever any of its members are is plainly untenable, for they all have their individual activities which are altogether alien to the enterprise. To say that the enterprise exists wherever and whenever any of the members think about it would be childish.’ 132 F.2d 408, 411, page 698 of 145 A.L.R. The court then went on to determine of what district the association is an inhabitant. Pointing out that ‘inhabitant’ has the same meaning as ‘resident’ and that as to a corporation such words mean its principal place of business, it then holds that as an unincorporated association is a jural entity, a suit under section 109 above-mentioned must be brought either at its principal place of business or at any of the regular and established places of its business where it may have infringed a patent.

Plaintiff contends that the entity theory with respect to unincorporated associations has not been extended to all matters. The cases cited by plaintiff on this point follow. In Ginsberg Tile Co. v. Faraone, 99 Cal.App. 381, 278 P. 866, it was held that section 388 does not permit an action to be instituted by a partnership in the common name. See also Kadota Fig Ass'n v. Case-Swayne Co., 73 Cal.App.2d 797, 167 P.2d 529 where the trial court found plaintiff to be a partnership, while the reviewing court stated the record was not clear on the subject. In Reed v. Industrial Acc. Comm., 10 Cal.2d 191, 73 P.2d 1212, 114 A.L.R. 720, it was held that as to a workmen's compensation insurance policy issued to one of the members of the partnership and covering employees of the partnership, the latter was not a distinct unit separated from its members. The court stated that apart from exceptional situations, a partnership is not considered an entity but an association of individuals. These cases were referring to partnerships and not to unincorporated associations. In Grand Grove U. A. O. D. of California v. Garibaldi Grove, 130 Cal. 116, at page 119, 62 P. 486, 487, an action concerning the regularity of a resolution of the Grand Grove dissolving the subordinate Grove, the court stated: ‘Associations of this character are not bodies politic or corporations, nor are they recognized by the law as persons. They are mere aggregates of individuals, called for convenience, like partnerships, by a common name.’ The court was not considering a question at all similar to the one in the case at bar. Moreover, it must be pointed out that there is a vast difference in resemblance to a corporation between a labor union and a fraternal organization. While there is authority to the effect that the law relating to labor unions is the law applicable to social and fraternal orders, Greenwood v. Building Trades Council, 71 Cal.App. 159, 233 P. 823, that rule by no means is always applicable. This traditional view grew up when labor unions were small unimportant organizations, and is no longer in accordance with the facts. When the tremendous growth of labor unions in recent years is considered, together with their growth in importance and power, it would seem that in many respects labor unions more nearly resemble corporations than they do voluntary social or fraternal orders, or partnerships. In fact, as early as 1888 it was recognized in this state that ‘Courts will interfere for the purpose of protecting property rights of members of unincorporated associations in all proper cases, and, when they take jurisdiction, will follow and enforce, so far as applicable, the rules applying to incorporated bodies of the same character.’ Otto v. Journeymen Tailors' P. & B. Union, 75 Cal. 308, 17 P. 217, 219. It is obvious that such organizations are no longer comparable to voluntary fraternal orders or partnerships; that they are sui generis, and approximate corporations in their methods of operation and powers. This being so, at the procedural level at any rate, wherever it can be done without violation of some rule of law, the ends of justice will be more properly served if the courts apply to such organizations the rules applicable to corporations rather than the rules applicable to voluntary fraternal orders or partnerships. While there may be associations which are more similar to partnerships than corporations, as the Venice Road Race Association was held to be in Leake v. City of Venice, 50 Cal.App. 462, 195 P. 440, the modern labor union is far more similar to a corporation than to a partnership. To consider such organizations under present day conditions as mere social or fraternal orders or partnerships is to close one's eyes to the realities now existing.

Cases like Old Rivers Farms Co. v. Roscoe Haegelin Co., 98 Cal.App., 331, 276 P. 1047, in which, in an action brought against the company and also its individual members, the court held that a voluntary unincorporated association doing business under a written agreement of trust as a stock corporation, but which had not organized under the laws as to corporations, was not a corporation within the meaning of certain sections of the Constitution defining corporations and providing proportionate liability for stockholders; and Stitzinger v. Truitt, 81 Cal.App. 502, 253 P. 971, where the court found that a so-called ‘syndicate’ which purported to be a trust was in fact a copartnership, are obviously not in point.

In Scott v. Donahue, 93 Cal.App. 126, 269 P. 455, an action was brought by the plaintiff on behalf of himself and some two hundred associates to recover Liberty bonds, the property of a local lodge of the Brotherhood of Railroad Trainmen. The parent organization was brought in as a defendant. The parent organization had revoked the charter of the local and the action was to determine who was entitled to the bonds originally belonging to the local. In discussing the ownership of the bonds the court quoted the language hereinbefore quoted from Grand Grove U. A. O. D. of California v. Garibaldi Grove. This language, plaintiff contends, supports its position. No question of procedure, or question similar to the one here was presented in that case. Obviously, as between the unincorporated association and its members, it has no being apart from its members, but that does not mean that in its relationship to others it may not have a legal entity.

While section 16 is susceptible to the construction that the second clause purposely omitted associations, such a construction is not compelled, and a more liberal construction is entirely reasonable and more in accord with present day needs. In any event, a reasonable application of section 395 providing venue in the residence of a defendant, is that the residence of a labor union unincorporated association is at its principal place of business rather than at the residence of its individual members.

The order is reversed.

FOOTNOTES

1.  ‘Inhabitant’ is used here in the same sense as ‘resident’ in our venue statutes.

BRAY, Justice.

PETERS, P. J., and FRED B. WOOD, J., concur.

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