Application of E. P. O'MALLEY, Secretary, Local 128, Oil Workers International Union, CIO, for an Order Confirming Arbitrator's Award. E. P. O'MALLEY, Secretary, Local 128, Oil Workers International Union, CIO, Appelicant and Respondent, v. PETROLEUM MAINTENANCE COMPANY, W. A. Thompson, Jr. and Louis B. Minter, Defendants and Appellants.*
Defendants appeal from a judgment confirming an arbitration award in favor of respondent E. P. O'Malley, secretary of the Oil Workers Union, Local 128 of Oil Workers International Union, CIO.
On July 16, 1947, the Petroleum Maintenance Company entered into a collective bargaining agreement with the Oil Workers International Union, CIO, Local 128. Such agreement was to control the collective bargaining between the parties. It is a typical industrial contract; contains 21 specific articles; provides against strikes and lockouts, for observance by employees of the picket line of a recognized union, for a week's working hours, minimum wages, holiday pay, transportation of employees to places of work, payment for overtime and additional meals; inspection of equipment, clothing allowance, handling of ‘disputes arising over performance of this Agreement,’ promotions, lay-offs, rehiring, vacations, etc. The agreement became effective prior to October 5, 1951. On that date, appellant Petroleum Maintenance discharged one Frank J. Semmett, a member of Local No. 128. On April 10, 1952, respondent filed a petition for an order directing arbitration of Semmett's discharge.
On June 20, 1952, the trial court granted the petition and ordered that the parties proceed to arbitrate the matter. Appellants promptly appealed from that order. But the appeal was dismissed, see Petition of Corbett, 119 Cal.App.2d 21, 258 P.2d 1077, on the grounds that the order was not appealable under section 963 of the Code of Civil Procedure. This left appellants no alternative other than to proceed with the arbitration and to appeal from the final judgment. January 22, 1954, the parties entered into a ‘submission’ pursuant to which three arbitrators were selected. Each arbitrator having executed his acceptance of such appointment, the arbitrators convened and considered the cause, and on June 18, 1954, filed the ‘award of arbitrators' in favor of respondent holding that only by virtue of the order of the superior court they had jurisdiction to hear and determine the questions submitted for arbitration and that Frank J. Semmett ‘shall be reinstated, with full seniority rights as of October 4, 1951.’ Contemporaneously with such filing, Chairman Lennard with the concurrence of arbitrator Clayton prepared and filed the majority opinion on the issues presented, clearly declaring that as such arbitrators they deemed the matter of Semmett's discharge not arbitrable. Such opinion, in part, proceeded as follows: ‘Had there been no judgment ordering the parties to arbitrate the Semmett discharge, and had the issue of arbitrability been presented to me (absent such judgment) I would have ruled that this matter was not arbitrable. The reason which would have impelled me to so rule is that there is no limitation contained anywhere in the contract between the parties affecting management's right to discharge. Discharge itself is not mentioned anywhere. More than a dozen other items are specifically mentioned and are subject to arbitration in a dispute arising over the performance of the agreement. The grievance procedure culminating in arbitration is specifically applicable to the named items. I am in full accord with, or rather, would have been in full accord with, the principle that no party may be required to arbitrate any issue unless he has agreed to do so. I would have found nothing in this collective bargaining agreement requiring the employer to arbitrate discharges. As for the Union's contention that the remainder of a collective bargaining agreement can be nullified in the absence of such an implied limitation on the absolute power to discharge, I would have replied:
‘1. The parties apparently chose to run that risk.
‘2. There is no contention in the instant case that the company sought to evade its other contractual obligations by effecting a discharge.
3. The absence of a limitation on the right to discharge may itself have been one of the major considerations inducing the employer to enter into the agreement; and
‘4. An arbitrator does not have the power to modify the existing agreement of the parties unless he is specifically authorized to do so.’
Notwithstanding their own conclusions, the majority of the arbitrators joined in the award. On November 24, 1954, the court below made and filed its Findings of Fact and Conclusions of Law, confirming the award of the arbitrators and entered its judgment accordingly from which comes this appeal.
The ‘submission’ was not binding as such on appellants. Attorney Madden stated before the arbitration proceedings commenced that the only reason appellants were appearing before the arbitration board was the express order of the trial court. Appellants expressly excepted to the jurisdiction of the board and reserved all their legal rights.
The submission read in part:
‘The Company asserts that if the matter of discharge is subject to arbitration, the discharge of Frank Semmett, the employee, was proper.’ The submission further provided: ‘In submitting this matter to arbitration neither party shall be deemed to have waived any rights given them by law.’ At that time, the law was that appellants had no rights at law until they submitted to the arbitration board and there was a final judgment to be appealed from. The court cannot hold that the submission to the arbitration board was voluntary and refuse to recognize the very fact that forced appellants into submitting thereto. The decision of the superior court afforded the first opportunity for appellants to be heard on the merits of their cause. They had taken all the legal steps available to them in order to preserve their rights.
The trial court in the first instance erred in holding that the question of discharge was an arbitrable matter, and in ordering submission to arbitration. The trial court should have held either that the dispute was not arbitrable or that the question of whether discharge was arbitrable should be submitted to the arbitration board. ‘A meaning cannot be given to an instrument under the guise of construction or explanation which is not to be found in the instrument itself.’ Joerger v. Pacific Gas & Electric Co., 207 Cal. 8, 32, 276 P. 1017, 1028. The rules for interpreting contracts are well settled and are set forth in the Civil Code. Sections 1638, 1639, 1640. Here, the collective bargaining terms were reduced to a writing which measured the rights, duties and obligations of the parties. There is no charge of fraud, mistake or accident. It must be assumed that the writing contains the intentions of the parties both to include and exclude all articles of common interest. The intention of the parties must be gained from the contract itself. Tillis v. Western Fruit Growers, Inc., 44 Cal.App.2d 826, 831, 113 P.2d 267; Brant v. California Dairies, Inc., 4 Cal.2d 128, 133, 48 P.2d 13.
Where an industrial contract has been entered into by an employer with his employees, it is presumed that they intended it to be followed. Therefore, its terms and covenants must be religiously observed. Merely because some or all of such employees became dissatisfied with one or more of its provisions it does not follow that the contract should be amended by a court or by a referee or by a committee of third parties, acting as arbitrators. To arbitrate under an existing contract is definitely a different function from that of negotiating for an amendment to such contract. An employer cannot, by means of such arbitration be forced into supplementing his contract by adding thereto provisions not even suggested by the original draft of his agreement. Texoma Natural Gas Co. v. Oil Workers International Union, D.C., 58 F.Supp. 132, 148. But for the rewriting of the contract by the trial court in the first instance, the discharge of Semmett would not have been submitted to arbitration. Parties are not bound except by their agreements. A decision of arbitrators upon any question not referred to them by agreement of the parties is beyond, and in excess of, their authority. B. Fernandez & Hnos., S.En C. v. Rickert Rice Mills, 1 Cir., 119 F.2d 809, 815, 136 A.L.R. 351; Pumphrey v. Pumphrey, 172 Md. 323, 191 A. 235, 236.
Respondent contends that he was entitled to a decision as a matter of procedure in that appellants did not properly comply with Code of Civil Procedure, sections 1287, 1288, and 1289 in presenting to the confirming court objections to the arbitration award. More particularly, respondent points out that section 1287 provides for the confirmation of the order ‘unless the award is vacated, modified or corrected, as prescribed in the next two sections.’
Sections 1288 and 1289 provide for vacation etc. upon ‘application.’ Here appellants did not present objections to the arbitration award by an affirmative, original petition but rather in the form of an answer to respondent's application for confirmation. However, section 1287 makes no mention of the procedure for a party dissatisfied with an award; it is only the party who desires a confirmation of the award that must under that section make application to the court for such an order. In a situation similar to the one at bar, a union applied to the superior court for an order confirming an award. The employer answered and filed a counter application for an order vacating the award. This procedure was held to be proper. Flores v. Barman, 130 Cal.App.2d 282, 286, 279 P.2d 81.
In the light of the foregoing, it is unnecessary to discuss the merits of the discharge of Semmett. By reason of the fact that the collective bargaining contract of appellants and the union contained no provision for the submission of the discharge of a union member to arbitration, the judgment confirming the award to respondent has no basis.
The judgment is reversed with instructions to dismiss the action.
It is true that the collective bargaining contract here involved says nothing about discharge of an employee and that the scope of arbitration is defined as ‘disputes arising over the performance of this agreement.’ But mere silence of the contract upon the subject of discharge does not ipso facto solve the problem of whether dismissal of an employee when claimed to be wrongful falls within the category of a dispute ‘arising over the performance of this agreement.’ The trial judge held, and I think rightly, that the state of the instant record makes it unnecessary to pass upon this question; that there was voluntarily submitted to arbitration the question of whether the matter of discharge (i. e., interpretation of the contract in this regard) is an arbitrable one.
The initial application to compel arbitration contained an alternative prayer that the employer be directed (1) to proceed with arbitration of the grievance of Frank Semmett, the discharged employee, or (2) to proceed with arbitration of the question ‘whether the grievance of Frank Semmett is subject to the arbitration provision’ of the contract. After a contested hearing the court on July 8, 1952 drew the following conclusions of law: ‘I. A question of discharge is arbitrable and is within the grievance procedure of the contract between the parties dated August 4, 1947. II. Petitioners are entitled to an order requiring respondents to arbitrate the discharge of Frank Semmett in accordance with the provisions of Article 11 of said contract between the parties dated August 4, 1947.’ This was followed by an order that the company (designated herein as defendant) ‘proceed to the arbitration of the case of the discharge of Frank Semmett in the manner provided for in Article 11 of the agreement dated August 4, 1947, between the Petroleum Maintenance Company and Local 128, Oil Workers International Union.’
Defendant appealed and the District Court of Appeal of its own motion dismissed for lack of jurisdiction because such an order is not appealable. Corbett v. Petroleum Maintenance Co., 119 Cal.App.2d 21, 258 P.2d 1077.1 The court relied upon Jardine, Matheson & Co. v. Pacific Orient Co., 100 Cal.App. 572, 280 P. 697, and Sjoberg v. Hastorf, 33 Cal.2d 116, 199 P.2d 668, both of which explain that the order, though not appealable, may be reviewed upon an appeal from the final judgment.
The appeal having been dismissed there was nothing for defendant to do but to proceed with arbitration in accordance with article XI of the collective bargaining agreement. That article requires that the dispute be reduced to writing and submitted to the arbitrators in that manner. This the attorneys for the respective parties proceeded to do. It was plain before they drafted their agreement that the trial judge had ruled as a matter of law that the question of wrongful discharge was arbitrable and had ordered defendant to proceed to arbitration of the merits of the Semmett discharge. The principle that a nonappealable order is reviewable upon appeal from the final judgment in an action is well established. The cases cited in the Corbett opinion, supra, advert to this ultimate remedy. But counsel in drafting their agreement submitted to the arbitrators two specific questions: ‘We, The Undersigned Parties, hereby agree to submit to arbitration under the Voluntary Labor Arbitration Rules of the American Arbitration Association the following dispute: (1) Petroleum Maintenance Company, the Employer, asserts that the matter of the discharge of an employee is not subject to arbitration. The Oil Workers International Union, Local 128, CIO, representing the Employee, Frank Semmett, asserts that the matter of the discharge of an employee is subject to arbitration. The Union asserts that its position has been upheld by the Superior Court of the State of California, in and for the County of Los Angeles, in an action entitled: ‘R. E. Corbett, Secretary, Local 128, Oil Workers International Union, CIO, etc., Petitioners, vs. Petroleum Maintenance Company, etc., Defendant,’ Case No. 597917. (2) The Company asserts that if the matter of discharge is subject to arbitration, the discharge of Frank Semmett, the employee, was proper. The Union asserts that the discharge was improper and without cause, and the Union asserts that Frank Semmett should be reinstated with full seniority rights, and that he be made whole for all wages lost as a result of the Company's action.' Defendant company was under compulsion to arbitrate the second question but not the first. If it had confined the arbitration to question number two it would have preserved for determination upon the present appeal the question of correctness of the court's ruling of July 8, 1952. Although not compelled to do so counsel for the employer-defendant specifically agreed to an arbitration of the question of arbitrability, the one it now presents on this appeal. The union joined in this. Its present counsel and the trial judge expressed surprise that it did so. The strategy of defendant's counsel seems apparent. It must be assumed that they knew that defendant did not have to arbitrate this question of arbitrability and that this phase of the ruling could be reviewed later. Indeed, statements made by one of defendant's counsel to the arbitrators show that he appreciated this. But submission of that same question to the arbitrators gave defendant a second string to its bow,—a chance that the arbitrators would rule with it on that question. And counsel's guess was not far wrong. Both prevailing and dissenting opinions of the arbitrators expressed the view that the question inherently is not arbitrable. Unfortunately for defendant the majority felt that they were bound by the court's ruling to the contrary. Being under no obligation to submit that question to the arbitrators defendant's written agreement to do so had the quality of a voluntary arbitration of that issue to the same extent as if there never had been any court order. There is no impediment to submission of a law question to arbitration. Crofoot v. Blair Holdings Corp., 119 Cal.App.2d 156, 185–186, 260 P.2d 156; Myers v. Richfield Oil Corp., 98 Cal.App.2d 667, 670, 220 P.2d 973. To now review the holding of the arbitrators would be passing upon the merits of their ruling, which is forbidden by a uniform line of authorities, exemplified by Crofoot v. Blair Holdings Corp., supra, and Myers v. Richfield Oil Corp., supra, 98 Cal.App.2d at pages 671–672, 220 P.2d 973.
When the matter came on for hearing before the arbitrators counsel for defendant vigorously objected to their jurisdiction, saying that his client was present only under coercion of the court order. Specific reference was made to the question of arbitrability of the discharge question, counsel saying, in part: ‘It has been the contention of Petroleum Maintenance Company at all stages that the matter of discharge was not a subject matter embraced within the contract that I have referred to. Many other subjects have been covered in the contract, but not the matter of discharge, and that, therefore, the right of discharge is not an arbitrable issue.
‘I am specifically making that statement at this time so that there cannot be any claim that the employer has waived any legal rights that it may have after these proceedings are terminated. As I say, I am specifically excepting to the jurisdiction of the Board to proceed.’ Later the following colloquy took place between arbitrator Lennard and counsel for defendant: ‘In other words, are you and the union asking this Board to say that under your contract discharges are arbitrable? Mr. Madden: I feel this way, Mr. Lennard. That is a matter tht the Arbitrators would have to decide.'2 In the same breath counsel challenged the right of the arbitrators to pass upon the question. Reference was made to the fact that the submission agreement (after saying ‘we * * * hereby agree to submit’ questions (1) and (2)) contains a paragraph (4): ‘In submitting this matter to arbitration neither party shall be deemed to have waived any rights given them by law.’ That paragraph cannot be held to nullify (1) of the same document. In judicial proceedings one cannot give with the right hand and at the same time take away with the left. The entire procedure of counsel for defendant has been a shifting between inconsistent positions. If the arbitration of question (1) had resulted favorably, defendant would have accepted it with alacrity. Having been adverse, it is said to be without the arbitrators' jurisdiction though covered by defendant's specific agreement to submit.
Kirk v. Rutherford, 137 Cal.App.2d 681, 682, 290 P.2d 883, 884: ‘To quote Schulze v. Schulze, 121 Cal.App.2d 75, 83, 262 P.2d 646, 650: ‘The defendant may not play fast and loose with the court in this fashion. He cannot in one breath say the judgment is valid,—obtain relief thereby; and in the next, say it is invalid. * * * One to whom two inconsistent courses of action are open and who elects to pursue one of them, is afterward precluded from pursuing the other.’ And to quote from Alexander v. Hammarberg, 103 Cal.App.2d 872, 879, 230 P.2d 399, 404: ‘These two positions are entirely inconsistent. The courts will not recognize or tolerate such tactics. A party cannot thus ‘blow both hot and cold.’ McDanels v. General Ins. Co., 1 Cal.App.2d 454, 459, 36 P.2d 829, 832; Chaquette v. Ortet, 60 Cal. 594, 600. The courts would be impotent indeed if they were compelled to approve such duplicity. * * *''
It should be held that the written submission agreement was a voluntary submission to arbitration of the question of arbitrability of the matter of discharge, that it was decided by the arbitrators adversely to appellant, that the present appeal is but an effort to review the merits of that ruling and therefore cannot prevail.
I am also of the opinion that the contract contains an implied covenant against discharge of an employee without cause and the question of alleged wrongfulness of discharge is a matter for arbitration as a ‘dispute arising over the performance of this agreement.’ But I do not feel justified in consuming more space in the books for the mere purpose of expounding my views upon the proper construction of a particular contract.
I would affirm.
1. Corbett and O'Malley have acted as successive secretaries of the Union in maintaining these respective representative proceedings.
2. Reference is made to the transcript of the hearing before the arbitrators although the court excluded it, for that document is the basis of defendant's claim of error and is freely quoted in the briefs.
MOORE, Presiding Justice.
FOX, J., concurs.