CONSOLIDATED VULTEE AIRCRAFT CORPORATION v. UNITED AUTOMOBILE AIRCRAFT AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA LOCAL 904 (1945)

Consolidated Vultee Aircraft Corporation has appealed from a judgment of the superior court dated January 25, 1944, confirming an award made by a permanent referee, who was acting as such pursuant to appointment under the Company's labor contract with the Union, United Automobile Aircraft and Agricultural Implement Workers of America, Labor 904. The Union also has appealed from an order made purporting to correct and amend the judgment, and from the judgment as amended and corrected on February 25, 1944.

The award of the referee consisted of an order that the Company and the Union should add to their contract an amendment reading as follows:

‘In order to secure the increased production which will result from greater harmony between workers and employers and in the interest of increased cooperation between union and management, which cannot exist without a stable and responsible union, the parties hereto agree as follows:

‘All employees who, 15 days after the date of this amendment to the contract are members of the Union in good standing in accordance with the constitution and bylaws of the Union and those employees who may thereafter become members shall, during the life of the agreement as a condition of employment, remain members of the Union in good standing.

‘The union shall promptly furnish to the Company a notarized list of members in good standing 15 days after the date of the amendment to the contract. If any employee named on that list asserts that he withdrew from membership in the Union prior to that date and any dispute arises, the assertion or dispute shall be adjudicated in accordance with the arbitration procedure of this agreement and the decision of the arbiter shall be final and binding upon the Union, the Employer and the employees.’

After the award was made, the Company, upon notice, moved that it be vacated by the superior court upon the ground that the grievance, consisting of the Union's wish to amend the contract, was not an arbitrable dispute within the meaning of the contract, and that the referee acted in excess of the jurisdiction conferred upon him by the contract. The Union made a counter-motion that the award be confirmed. After the judgment confirming the award was entered, the Company made a motion to vacate it upon the ground that it was made and entered inadvertently and erroneously and that it was contrary to the memorandum for decision of the trial court and the findings and conclusions of the court contained in said decision. The Company also moved in the alternative for an order correcting nunc pro tunc the judgment, by adding thereto a new paragraph, reading as follows:

‘It is further ordered, adjudged and decreed that the foregoing amendment does not and shall not be construed to impose any obligation upon the employer to discharge any employee for failure to maintain in good standing his membership in the Union according to the Constitution and By-laws of the Union, and does not impair and shall not be construed to impair the exclusive right to hire and discharge employees given by Article I, Section 6, of the contract to which the amendment relates.’

The Company also moved that if the judgment should not be vacated or amended, as requested, that it be amended by adding substantially the above language by way of recital. The judgment was amended by adding the paragraph we have quoted, commencing, ‘It is further ordered,’ etc.

We shall consider first the appeal of the Company. Its position taken before the referee, and since maintained, is that the referee was without jurisdiction to act upon the Union's proposal for amendment of the contract, and that the subject matter of the amendment was one which affected a vital right of the Company, as to which the referee, by the terms of the contract, was denied jurisdiction.

The provisions for arbitration in the agreement follow immediately those which provide grievance procedure. The grievance procedure calls for a written complaint, action thereon by a department head, appeal to the plan grievance committee of the Union and the Company's labor relations committee, each of which votes as a unit, and it provides for an appeal to the permanent referee when the Union committee and the Company committee fail to agree. The arbitration procedure is set out in section 6 of Article II, and reads as follows:

‘Section 6

‘Arbitration Procedure

‘If it is desired to appeal a decision from step two (2) of the Grievance Procedure to arbitration, such appeal must be made in writing within five (5) working days after receipt of the written decision in step two (2) of the Grievance Procedure. It is understood that an appeal may be withdrawn at any time. The Arbitration Procedure shall be conducted in the following manner:

‘A permanent referee shall be chosen by the Union and the Company to consider all matters submitted to arbitration. Said permanent referee shall hear all grievances or disputes brought before him, and his decision shall be accepted as final and binding by both parties. The decision of the permanent referee shall be rendered not more than five (5) days after the close of testimony and final argument pertaining to said grievance or dispute. Any expenses of arbitration shall be borne by and divided equally between the Union and the Company.

‘The permanent referee shall not have the jurisdiction to arbitrate provisions of a new agreement or to arbitrate away, in whole or in part, any provisions of this Agreement.’

It is the contention of the Company that the amendment in question would deny it a substantial right saved to it by the contract, specifically stated in section 6 of Article I, as follows:

‘Section 6

‘Management

‘The Company has and will retain the unquestionable and exclusive right and power to manage the plant and direct the working forces, including the right to hire, classify, suspend, discharge, promote, demote or transfer its employees, provided it does not conflict with the provisions of this Agreement.’

The Union replies, first, that the amendment does not have the effect of taking from the Company or impairing its unquestionable and exclusive right and power to hire and discharge its employees, and it says further that this at most was a conditional right because the contract was subject to amendment under section 3 of Article I, which reads as follows:

‘Section 3

‘Amendment

‘This Agreement may be amended at any time by the written consent of the parties hereto. If mutual consent for amending Agreement is not given, the desirability of amendment may be referred to the grievance procedure.’

The reply of the Company to this argument is that the agreement may be amended only by written consent of the parties; that the only matter relating to amendment that may be considered by means of the grievance procedure is the ‘desirability’ of an amendment, and it says further that even if a question of desirability is considered in the grievance procedure, there is no provision for carrying the matter to arbitration, which is a separate procedure.

Considering first the meaning of the provision for amendment, we find that both the referee and the trial judge were of the opinion that the provision ‘the desirability of amendment may be referred to the grievance procedure’ means that any proposal for amendment may be carried through the grievance procedure to arbitration and that the referee may order the contract amended. We shall not undertake to decide how this language should be construed in a case where the amendment propose did not take away from either the Union or the Company a substantial right which it had reserved to itself by the contract and which would not have been excluded from the scope of the grievance procedure and arbitration procedure by the last clause of section 6 of Article II. It is perfectly clear to us that the effect of the proposed amendment would be to take away from the Company the exclusive right reserved to hire and discharge which it was given by section 6 of Article I. The referee was of the opinion that where the proposed amendment would only add new provisions to the agreement, his powers were not limited by the last clause of the arbitration procedure. His views were stated as follows: ‘It also appears to the referee that it is a rather tortured construction of language to maintain that the addition of a new provision in an agreement is, in fact, arbitrating something away from the agreement.’ It may be that this statement had reference to the particular amendment, for the referee quoted the last clause of the arbitration provision, and we do not read his opinion as holding that the limitation upon his powers could be removed by means of the procedure for amendment, in which he would have the final decision. His opinion did not discuss whether the amendment would deprive the Company of a substantial right reserved by the agreement. He assumed that it would not and he ordered the maintenance of membership clause added to the contract as something which was considered desirable under the policy of the National War Labor Board.

The learned trial judge came to the conclusion that the amendment was wholly innocuous in its effect upon the Company's exclusive right to hire and discharge employees, and that it was therefore within the jurisdiction of the referee to order the parties to add it to their agreement. In his opinion he quoted section 5 of Article III, as follllows: ‘The Company may discharge an employee for good and sufficient reason’ and he expressed the opinion that failure to maintain membership in good standing would give the Company an additional reason for discharging an employee, that is to say, that failure to maintain membership would be made a good reason where otherwise it would not be, but that the Union would have no right to insist upon a discharge. It i clear from his written opinion that he did not construe the provisions for amendment as a means by which the rights of the parties could be materially altered and that he found that the referee had acted within his jurisdiction only because the amendment, as he construed it, did not infringe upon the exclusive right of the Company in the matter of hiring and discharging employees.

Counsel for the Union stoutly assert that the purpose of the amendment was to give to the Union the right to demand the discharge of any Union member who failed to maintain his membership in good standing, and they further assert that the failure of the Company to comply with the demand would be a breach of the contract. This unquestionably is a proper interpretation of the amendment, for maintenance of membership is made a condition of employment and, as counsel say, if it did not give the Union the right to demand discharge of employees, it would be meaningless and wholly ineffectual to accomplish the purposes of the Union. But at the same time they argue that even then the Company's unquestionable and exclusive right in the matter of hiring and discharging employees is not affected. They say the amendment would not give the Union the right to discharge employees but only the right to demand that the Company discharge them and that the Company would still retain its original right. This we cannot see. Under the amendment the Company would not retain the uncontrolled and exclusive right to hire and discharge all of its employees; that right would be limited to those employees who were not members of the Union and to those who, if members, retained their memberships in good standing. This would not be the contract which it made with the Union. It matters not whether the Company might be obliged under the amendment to discharge one or a thousand employees. If it had to discharge one because of his failure to maintain Union membership, the amendment would have operated contrary to the spirit and the letter of the original agreement. In fact, the addition of the amendment to the agreement would amount to a material alteration, even though no employee should ever be discharged by reason of it. Counsel for the Union, in discussing the desirability of a maintenance of membership clause in a labor contract, quote from learned discourses upon the subject, in which the advantages of such a clause are discussion from the viewpoint of a better employer-employee relationship. However sound these views may be, and whatever weight should be attributed to them in the negotiation of a new contract, we have only for consideration the interpretation of an existing contract. It is not for us to decide whether it would be desirable to add the amendment, but only whether the contract admits of the particular amendment. Being a court and vested with no administrative powers, but only judicial powers, and those well defined by the Constitution, statutes, and sound precedent, we must approach our problems and solve them from the standpoint of law and not of economic expediency. The principles which furnish a guide for the construction of contracts are fundamental; they do not change with the times. They are liberal; they direct courts and judges to take a broad view of the contract, to place themselves as nearly as may be in the position of the contracting parties, to consider the purposes sought to be accomplished by the agreement, and to give effect to them to the fullest extent the writing will allow, but it is forbidden by high principle and precept that a judge should place his convictions as to desirable economic and social relationships above his reverance for the law, and so we deem it to be irrelevant whether a maintenance of membership clause in a labor contract tends toward a better employer-employee relationship. If it does, any employer engaged as Vultee is, in a tremendous contribution to the war effort, should know it and take advantage of it. But the court cannot substitute its judgment for that of either party to the contract, as we would have to do in order to hold that the exclusive right to employ and discharge retained by the Company under its contract should be modified despite the Company's opposition. It was a right which the Company intended to reserve and did reserve in clear language. If it had not been considered an important feature of the contract, the Company would not have insisted upon it and the courts would not have had a case over it. It is in the agreement and its removal by amendment under the arbitration procedure was not permitted.

Counsel for the Union contend that the point of jurisdiction was conclusively settled by the arbitrator's decision that the matter was one in which he was authorized to act. It was competent, they say, for the parties to submit to arbitration not only disputes arising out of the contract but also the question of the extent of the arbitrator's powers with reference to amendments. And they say that his decision that he had authority to order the amendment is a part of the award and is not subject to review. They rely upon the general provisions for arbitration, contending that these are broad enough to submit to the arbitrator any question as to the extent of his powers. Under this construction his authority would be unlimited. He could order the contract amended as either party might request and in any manner which he thought desirable, regardless of the effect upon the original agreement. This is far from a suggestion that he would do so, for it is manifest from his opinion, which stated his conclusions, that it was his purpose to respect the limitation placed upon his powers. This limitation was in the interest of both parties. They clearly stated in their agreement that they did not intend to alter the framework of their negotiated relationship except by their further agreement: arbitration was to operate within the basic terms of the agreement, not to build a new and different one. The certainty and security which the parties had arranged for the duration of the war would have been seriously disturbed or lost if matters of substance were subject to constant change through arbitration procedure.

It seems clear that the special clause limiting the powers of the referee was inserted for the specific purpose of qualifying the general provisions for arbitration and it is therefore controlling. Sec. 1859, Code of Civ.Proc.; Smith & Wesson, Inc., 10 War Labor Reports, 148, 151; B. Fernandez & Hnos., S. En. C. v. Rickert Rice Mills, Inc., 1 Cir., 1941, 119 F.2d 809, 816, 136 A.L.R. 351; Merchant v. Mead-Morrison Mfg. Co., 1929, 252 N.Y. 284, 169 N.E. 386, 391, 393; J. F. Fitzgerald Const. Co., Inc. v. Southbridge Water Supply Co., 1939, 304 Mass. 130, 23 N.E.2d 165, 167; Conway v. Roth, 1917, 179 App.Div. 108, 166 N.Y.S. 182, 184. It was the duty of the court to determine from the agreement the extent of the referee's powers and to annul any or all of the provisions of the award as to matters which had not been submitted to him for decision. Secs. 1288(d) and 1289(d), Code of Civ.Proc.

We now come to a question as to the jurisdiction of the trial court. On December 16, 1943, within 30 days after the referee's decision, the Company gave notice of a motion to vacate the award as in excess of the arbitrator's jurisdiction and the Union gave notice of a motion to confirm it. The Union caused the dispute over the award to be certified to the Tenth Regional War Labor Board, and the court was advised to the certification before the trial. On March 23, some two months after the entry of the original judgment, the War Labor Board issued its order which read in part as follows:

‘1. The above-named parties shall carry out the terms of the award of the permanent referee, issued November 17, 1943, in the above-entitled matter, until such time as a court of competent jurisdiction shall rule otherwise, provided, that the requirement of the maintenance of membership clause of the award, that the company discharge an employee who fails to maintain his union membership in accordance with that clause, shall be placed in effect only if and when the judgment heretofore entered in the litigation between the parties by the Superior Court of the State of California, in and for the County of Los Angeles, is vacated by said court or reversed by a higher court as to such requirement.’

The Union challenges the jurisdiction of the court in the trial proceeding upon the ground that the matter was at all times within the exclusive jurisdiction of the Board by virtue of Executive Order No. 9017, January 12, 1942, 50 U.S.C.A.Appendix § 1507 note, establishing the Board, the provisions of which we find it unnecessary to quote at large, and the powers conferred upon the Board by section 7(a), (2), of the War Labor Disputes Act, 50 U.S.C.A.Appendix § 1507(a)(2), reading as follows:

‘(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 the relations between the parties, 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 [Title 29, §§ 201–219]; the National Labor Relations Act [Title 29, §§ 151–166]; the Emergency Price Control Act of 1942, as amended [sections 901–946 of this Appendix]; and the Act of October 2, 1942, as amended [sections 901, 961–971 of this Appendix, and Title 15, § 713a–8 and note], 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 employee under all the circumstances of the case.’

The Company does not question the jurisdiction of the Board but contends that under the Act, the rules and regulations of the Board, and the practice which it follows, its jurisdiction is not exclusive.

The question here is whether the state courts have been forbidden to act in matters as to which they would ordinarily have jurisdiction but which also are within the jurisdiction of the Board, where the Board has accepted jurisdiction but has taken no decisive action. The trial court, after a careful consideration of the question, answered it in the negative and we think answered it correctly. There is nothing in the executive order or in the War Labor Disputes Act which purports to give the War Labor Board exclusive jurisdiction in the judicial function and nothing inconsistent with the exercise by state courts of co-ordinate powers where the Board has not acted or where no conflict of authority or action would result. The state law in matters of arbitration is consistent with the authorized procedure of the Board, and proceedings under it should often materially aid the Board in the performance of its duties. The executive order reads in part:

‘2. This Order does not apply to labor disputes for which procedures for adjustment or settlement are otherwise provided until those procedures have been exhausted.

‘3. The procedures for adjusting and settling labor disputes which might interrupt work which contributes to the effective prosecution of the war shall be as follows: (a) The parties shall first resort to direct negotiations or to the procedures provided in a collective bargaining agreement.’

The parties have their bargaining agreement and it provides for arbitration. Sections 1280–1293 of the Code of Civil Procedure set out the state law and procedure in arbitration matters and are to be considered as a part of the agreement. The clear implication of section 3(a) of the executive order is that the Board may refuse to take jurisdiction until the procedures provided in the bargaining agreement have been resorted to and that it may also refuse to take jurisdiction if the results reached by resort to the procedure are deemed by the Board to be a satisfactory disposition of the matter in dispute. Arbitration may be had under state law, where there is a provision for it, or under rules established by the Board. The concluding clause of section 3 of the executive order reads: ‘After it takes jurisdiction, the Board shall finally determine the dispute, and for this purpose may use mediation, voluntary arbitration, or arbitration under rules establish by the Board.’ If the Board had been asked to take jurisdiction before the instant proceeding was initiated in court, a proper procedure would have been to refuse to do so until the validity of the award had been presented to the court for decision. It may even be assumed that the Board would have insisted that, having gone part way with their arbitration, and being in disagreement as to the validity of the award, the parties should take the next step under the state law and present that question to the court. The order which the Board made recognizes the jurisdiction of the state court in matters which are subject to arbitration under statutory procedure, and its own jurisdiction as well. This accords with the general understanding and practice as to the manner in which the several War Labor Boards exercise their jurisdiction. Statements to this effect will be found in Reader Mail Case, W. L. R., Vol. 8, p. 781; L. A. Railway Co., W. L. R. Vol. 1, pp. 23, 27. In the rules of the National War Labor Board, section 802.32, under the head of Enforcement of Arbitration Awards, it is provided: ‘Any such directive order of the Board or its agent shall be without prejudice to the right of any party to the case to appeal to a court of competent jurisdiction for a judicial determination of the rights and obligations arising out of the award and, if such a court renders a decision contrary to the conclusions of the Board or its agent, the order, or such part thereof as may be contrary to the determination of the Court, shall be considered of no force or effect.’

If the Union's contention on the point of jurisdiction should prevail, it would follow that the Regional Board should have disregarded the provisions of the contract for arbitration and the state law on the subject, despite the provision of the executive order that resort should first be had to arbitration and in disregard of the quoted rule of the National Board.

It appears to have been recognized in the beginning that the responsibilities and duties of the several War Labor Boards would be heavy and that they should not be required to act until the parties to the dispute had resorted to the means of settlement provided by their bargaining agreement. In the instant proceeding the court was called upon to place an interpretation upon the arbitration provisions of the agreement—a pure question of law. The learned trial judge elected to decide that question notwithstanding the certification of the dispute to the Board. He considered it to be his duty under the federal laws as he interpreted them and as they are administered by the War Labor Board, to determine the question of the validity of the award rather than to leave the question for the decision of the Board. The decision of the court has been accepted by the Board as settling the point of law. There is no conflict between the judgment and the order of the Board and hence no question of supremacy is involved. The review of the award by the court to determine questions as to its validity was calculated to simplify the problem presented to the Board in a matter in which both the court and the Board had jurisdiction.

The briefs contain discussions of other points of law, but the views we have expressed call for a reversal of the judgment in its original form and as amended, and render it unnecessary to decide other points.

The appeal of the Union questions the jurisdiction of the court to amend the judgment. The amended judgment will necessarily fall with a reversal of the original judgment.

The judgment of January 25, 1944, and the amended judgment of February 25, 1944, are reversed. The appeal from the order is dismissed.

On Motion for Rehearing.

The petition of the Union for rehearing raises a new point. It is contended that it any event the judgment should be affirmed, insofar as it relates to the check-off of dues by the Company, even though it be reversed as to the provision which requires maintenance of membership. The proposal of the Union was one for amendment of the contract by the addition of a maintenance of membership provision and a check-off of initiation fees and monthly dues of Union members. The award ordered the addition of the maintenance of membership provision, denied the requested check-off of initiation fees and provided for a check-off of dues only as to employees who should give the Company written authorization to make the deduction, such authorization to be subject to revocation at any time.

The ground of our decision was that an amendment of the contract which would require maintenance of membership would deprive the Company of a right which was reserved to it by the contract and that it was not within the jurisdiction of the Referee to order such amendment. The provision for check-off was not mentioned in our opinion for the reason that it was an integral part of one entire proposed amendment and had to stand or fall with the provision for maintenance of membership. It is not to be inferred from what we said of the maintenance of membership feature that our conclusions would have been the same as to the check-off feature. The question whether a dispute with respect to a voluntary and revocable check-off of dues, standing alone, would have been one for settlement by the Referee under his general powers was not presented for decision.

It view of the contention now made, it is appropriate to point out the reason why the award had to be considered as entire and not severable. The evidence that was before the Referee was not before the trial judge. The Union proposed one amendment, not two. The record upon which the matter was heard does not disclose the existence of any dispute between the Union and the Company with respect to a check-off of dues independently of maintenance of membership. The matter in controversy was stated by the Referee in his decision as follows: ‘Grievance Requesting Amendment to Agreement (No. B–99934). This case involves the request of Local 904 of the UAW-CIO for the amendment of their present agreement with Consolidated Vultee Aircraft Corporation, Vultee Field Division to provide for the insertion therein of a maintenance of membership and check-off provision.’ Following the decision of the maintenance of membership feature, the decision continued: ‘The remaining question is whether or not it is desirable to have a check-off inserted in the agreement along with the maintenance of membership clause,’ and the decision was for a voluntary and revocable check-off. In the written opinion of the trial judge it was stated: ‘The foregoing proposed amendment is characterized as a maintenance of membership and check-off provision,’ and it was treated as a single proposal throughout the opinion. No contention was made in the trial court nor in this court that the proposal of the Union or the award was severable. In order to confirm the award with respect only to the check-off the court would have had to construe the award as one which ordered a check-off independently of maintenance of membership. The Referee did not make such an award, nor does the record show that it was a matter in controversy. Under these circumstances it would not have been proper for this court to direct a modification of the judgment so as to confirm the award as to the check-off provision alone.

The petition for rehearing is denied.

SHINN, Justice.

DESMOND, P. J., and PARKER WOOD, J., concur.