OOSTEN v. Kundsen Creamery Co. of California, Appellant.

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

John OOSTEN, Plaintiff and Respondent, v. HAY HAULERS, DAIRY EMPLOYEES AND HELPERS UNION, LOCAL UNION NO. 737, A. F. OF L.; Plant and Clerical Dairy Employees Union, Local Union No. 93, A. F. of L.; Knudsen Creamery Company of California, a corporation, Thomas C. Case, Jack Menage, Al Moen and Mark Whiting, John Doe 1 to 10, Inclusive of All Intervening Members as Though Each John Doe Were Severally and Separately Designated, Defendants,* Kundsen Creamery Co. of California, Appellant.

Civ. No. 20153.

Decided: January 17, 1955

Vaughan, Brandlin & Wehrle, by J. R. Vaughan and Warren J. Lane, Los Angeles, for appellant. Russell E. Parsons and John Van Aalst, Los Angeles, for respondent.

Appellant Knudsen Creamery Co. is engaged in the business of manufacturing and distributing milk and milk products with its principal place of business in the city of Los Angeles. Approximately 500,000 pounds of fresh milk are received and processed daily at the Los Angeles plant. Prior to August 6, 1951, respondent John Oosten, a dairy farmer, was one of the principal suppliers of milk to appellant Creamery Co. at its Los Angeles plant, and had been such a supplier for approximately ten years.

Defendant Hay Haulers, Dairy Employees and Helpers Union, Local Union No. 737 of the International Brotherhood of Teamsters, Chauffeurs & Warehousemen, affiliated with the A. F. of L. (hereinafter called Local 737), is a labor union having as one of its objects the organization of milkers in Los Angeles County in the vicinity of respondent's dairy farm. Defendant Tom Case is the Secretary-Treasurer of Local 737.

The defendant Plant and Clerical Dairy Employees Union, Local No. 93 of the International Brotherhood of Teamsters, Chauffeurs & Warehousemen, affiliated with the A. F. of L. (hereinafter called Local 93), is a labor union comprising, with other affiliated locals, all of the employees of appellant and of all the other major creameries in Southern California. Defendant Mark Whiting is the Secretary of Local 93.

The Christian Labor Association, Local No. 17, is a labor union of dairy employees in the same territory as that in which Local 737 exists.

The business relations between respondent and appellant Creamery Co. were evidenced and governed through the years by written contracts, the current one being introduced into evidence at the trial of this litigation.

On July 13, 1951, representatives of Local Union 737 called upon respondent and informed him that some of his employees wanted to join the A. F. of L. and gave him a copy of a proposed labor agreement to read over. The following Monday, the representatives of Local 737 again visited respondent and he told them he had not had time to get legal advice. Two days later, on Wednesday, respondent told these representatives of Local 737 that he did not desire to sign a contract with them. Respondent testified that he next saw defendant Case on August 3, 1951, at which time Case again sought to have him sign a contract with his union and informed him that if he did not sign there would be a picket line the following week.

A few days after the first visit from the representatives of Local 737 respondent had a conversation with Ben Meninga, Business Agent of Local 17 of the Christian Labor Association and on July 27, 1951, respondent signed a contract with the latter union.

On August 6, 1951, Local Union 737 put a picket line in front of respondent's dairy farm. At 6:30 a. m. on that day, an hour before the picketing started, Jess Goins, Business Agent of Local 93 appeared at the Knudsen Creamery Co. plant at 1974 Santee Street. Pete A. Breum was the employee of Knudsen Creamery Co. on duty at the dock to receive milk tankers. Goins spoke to Breum; he told him that a load of respondent's milk was coming in that morning; he described the milk tanker of respondent and told Breum that the latter's milk was unfair and that Breum didn't have to handle it. Breum reported this information to all the other employees that he was working with but said nothing to any of the management of Knudsen Creamery Co. Respondent's truck arrived about 9:00 a. m. Breum informed the driver that he couldn't handle respondent John Oosten's milk because it was unfair, but would unload Ralph Oosten's milk which was in a trailer attached to the same truck. Mr. Goins was joined by Mr. Vanderhar, Business Agent for Local 737, and both were present at the scene when respondent's truckload of milk arrived.

Prior to this occasion respondent had been dealing with appellant for ten years and during that time appellant had never refused to take respondent's milk. Respondent testified that he knew that all of the employees of appellant were members of A. F. of L. Unions and that Al Lorge and Eugene Krug were the designated milk receivers.

After the employees of appellant refused to handle respondent's milk he delivered the milk to the Excelsior Creamery, a nonunion creamery at Santa Ana, in Orange County, and continued to sell his milk to Excelsior from then on. He did not try to sell his milk to any other creamery because he did not know of any other non-union creamery and he knew that no union man would take the milk. Respondent brought milk to appellant's plant on five occasions subsequent to August 6, 1951, i. e., on August 16, August 29, September 1, September 8, and October 3.

Respondent had not accompanied his truck on August 6, 1951, but on August 16 he arrived at appellant's plant before his truck arrived and went to the office of Mr. Urquhart, appellant's Production Manager. His truck arrived about 12:30 p. m. There were then present on the receiving dock respondent, appellant's Production Manager, Plant Superintendent, Director of Industrial Relations, the Assistant Plant Superintendent, and Eugene Krug, the designated milk receiver. In the presence of all these persons, Mr. Nygaard, the Assistant Plant Superintendent, ordered Krug twice to receive the milk. Respondent testified that Nygaard said ‘We have a contract with John Oosten to receive the milk and I order you to receive this milk.’ The employee refused, saying that it was against the Union By-Laws to handle unfair milk.

On August 29, and September 1, 1951, the employee Al Lorge refused to handle the milk. When asked who told him that the milk was ‘hot’ he said he wasn't talking and finally walked away. On one or two occasions, Mr. Meninga, the Business Agent of Local 17, and Mr. Boer, of an organization known as United Dairymen, and a Mr. Miller were also present. On September 8, 1951, Miller told Lorge about a preliminary injunction and that he would be in contempt of court if he didn't take the milk, but Lorge nevertheless refused to handle the milk.

On October 3, 1951, Jesse M. Corneilson, a private detective employed by respondent's attorneys, served copies of a second preliminary injunction on several employees of appellant, including Al Lorge. When respondent's truck of milk arrived, Greenburg, appellant's Director of Industrial Relations, called those present into one group. In reply to questions of Greenburg, Lorge stated that he had received a copy of a court order, had read it and that he understood it. Greenburg then said: ‘We are under a court order to receive this milk * * *. We want you to unload it.’ Lorge said he would not and Greenburg said: ‘We order you to unload it.’ Lorge replied: ‘I refuse to do it * * *. It is unfair.’

Lorge then left to call Local 93. When he returned, Corneilson asked him if he would receive the milk, and he said: ‘Absolutely not.’ Corneilson informed Lorge that he would be in contempt of court, but Lorge was steadfast in his refusal to receive the milk.

Immediately upon learning of the incident at the receiving dock on August 6, 1951, appellant's management commenced an inquiry. Breum was interrogated. About August 10, 1951, Mr. Greenburg conferred with defendant Mark Whiting, Secretary of Local 93, to which appellant's production employees belonged. Whiting said that the injunction prohibiting further picketing by Local 737 did not change the status of the milk so far as Local 93 was concerned or in so far as appellant's employees were concerned. He said that the milk was still ‘hot’. About September 1, 1951, Greenburg conferred with Baird and Goins, who were officials of Local 93. Baird said that the employees did not have to receive the milk because it was ‘unfair’ and they did not have to handle an ‘unfair’ product. He said that under the contract with the Union an exempt employee could not dump the milk and that appellant could not fire an employee for refusing to dump the milk. In connection with a similar case a year before the Oosten matter, Whiting had informed appellant that if the company disciplined or discharged an employee for refusing to handle ‘hot’ milk, the plant would be shut down.

Following repeated attempts to deliver milk to appellant Creamery Co. and the refusal of the latter to accept it, respondent Oosten instituted an action against defendant Unions, certain of their officers and appellant Knudsen Creamery Co., for injunctive relief, damages and for breach of contract. Following trial before the court, judgment was rendered denying respondent relief as against the defendant Unions but judgment was ordered against appellant Creamery Co. in the sum of $20,314.19, representing the difference between what respondent would have received from appellant Creamery had the latter, pursuant to the terms of its contract, purchased and received from respondent Oosten all of the milk produced by the latter's herd, and what respondent actually received for the milk from Excelsior Creamery Co., to whom the product was sold after appellant Creamery Co. refused to take delivery thereof. From such judgment, Knudsen Creamery Co. prosecutes this appeal.

As a first ground for reversal of the judgment, appellant earnestly insists that labor troubles above narrated rendered it impossible for appellant to handle or dispose of respondent's milk on and after August 6, 1951.

The milk purchase agreement between appellant and respondent, in effect on the last named date contained the following provision:

‘12. In case of strike, lockout, or other labor trouble (whether the parties hereto are directly or indirectly involved) * * * which shall render it impossible for Seller to deliver, or Buyer to handle or dispose of such milk, no liability for non-compliance with this agreement caused thereby during the time of continuance thereof shall exist or arise with respect to either party hereto.’

We are not here concerned with a situation wherein the parties to a contract did not foresee the possibility of labor troubles preventing performance of their agreement. On the contrary, they recognized such a contingency and shielded themselves against it by the aforesaid condition and qualification contained in paragraph 12 of their contract.

The question, therefore, resolves itself as to whether, under the facts and circumstances here present, it was ‘impossible’ for appellant Creamery Co. to handle and dispose of respondent's milk.

In section 454 of the Restatement of Contracts, ‘impossibility’ is defined as not only strict impossibility but as impracticability because of extreme and unreasonable difficulty, expense, injury or loss involved. In modern cases, not only objective impossibility in the true sense is recognized as a defense, but also impracticability due to excessive and unreasonable difficulty or expense. Autry v. Republic Productions, Inc., 30 Cal.2d 144, 148, 149, 180 P.2d 888; Christin v. Superior Court, 9 Cal.2d 526, 533, 71 P.2d 205, 112 A.L.R. 1153; Transbay Const. Co. v. City and County of San Francisco, D.C., 35 F.Supp. 433, 435.

As a general rule it is true as contended by respondent that when a party by his own contract creates a duty or a charge upon himself, he is bound to a possible performance of it because he promised it. But this general rule is grounded on the premise that the promisor did not shield himself by proper conditions or qualifications. In the instant case both parties to the contract were mindful of the difficulties that might ensue should either become involved in labor troubles. And so they wrote into their contract a dispensation from performance if labor troubles which either ‘directly or indirectly’ involved either party rendered performance impossible. And, in shielding themselves against the consequences of labor troubles, the parties herein did not limit their dispensation from performance to an all out strike, lockout or a complete shut-down of their respective activities due to labor troubles, but specifically provided as follows: ‘* * * or other labor trouble (whether the parties hereto are directly or indirectly involved) * * *.’

Under the definitions of impossibility as above set forth let us examine the factual situation confronting appellant Creamery Co. to determine whether it was impracticable because of extreme or unreasonable difficulty, expense, injury or loss, for it to handle or dispose of respondent's milk. Appellant had a labor contract with Local Union No. 93 and that Union instructed its members employed by appellant not to handle respondent's milk because it had been labeled ‘unfair’ or ‘hot’ by Local Union No. 737, and the members of Local No. 93 who were ordered by appellant to handle respondent's milk refused to do so and the remaining 210 union employees of appellant testified they would not have handled respondent's milk even if they were to be discharged for such refusal. What would have happened had appellant discharged such union employees was made perfectly clear at the trial. Appellant would have been faced with a strike of its own employees, its plant would have been shut down and it would have been effectively prevented from receiving or disposing of any milk whatsoever. To us it seems manifest that appellant was confronted with insurmountable difficulties. And furthermore, respondent's loss was proximately occasioned, not through any act of appellant, but by reason of his own controversy with Local Union No. 737. As pointed out by appellant, ‘Knudsen's unwillingness to precipitate a general work stoppage had good reason. A staggering loss would have been sustained, not only by Knudsen but also by all other producers shipping milk to Knudsen, if Knudsen's Teamster-represented employees had refused to perform their jobs, thereby leaving this perishable commodity to spoil in Knudsen's plant. Factually, we know that it takes eight hours to get fluid milk from the tanker to the bottle in Knudsen's operation. * * * All milk coming into the plant is commingled. * * * Knudsen's Los Angeles plant handles about 500,000 pounds of milk a day. This milk comes in through the medium of fifteen to twenty tankers having an average capacity of 23,000 to 24,000 gallons of milk per tanker. Respondent argues that Knudsen should have brought on a strike and infers thereupon its obligation would be excused. * * * The trial court makes the same point when it says that Knudsen should have ‘tested’ for a strike. * * * Neither respondent, nor the trier of fact were confronted with making the decision of whether to take the step which would place in jeopardy 500,000 pounds of milk. The producers of this milk would have lost if it were to perish because of John Oosten's labor trouble, because in the face of strike or work stoppage paragraph 12 of the contract would certainly exonerate Knudsen from liability. It is one thing to conjecture without responsibility; it is a different thing to conjecture with knowledge of terrible losses to innocent bystanders which will result from a wrong decision.'

Viewed in the light of the rules heretofore announced, adopted as they were to make for justice between the parties to a contract, we are persuaded that under the provisions of the foregoing paragraph 12 of the contract now before us, appellant was excused from performance of its contract with respondent, and that under the circumstances here present, it would be unjust to require, as the judgment herein does, that appellant Creamery Co. underwrite the whole expense of respondent's controversy with the Unions, and with which controversy appellant Creamery Co. had no connection.

The foregoing conclusion at which we have arrived makes it unnecessary to consider or determine other issues presented on this appeal.

The judgment is reversed.

WHITE, Presiding Justice.

DORN and DRAPEAU, JJ., concur.

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