Associated Hat Mfrs. v. Baird-Unteidt Co.

• Decision Date: 13 July 1914
• Citation: 91 A. 373,88 Conn. 332
• Court: Connecticut Supreme Court
• Parties: ASSOCIATED HAT MFRS. v. BAIRD-UNTEIDT CO.

91 A. 373

88 Conn. 332

ASSOCIATED HAT MFRS.

v. BAIRD-UNTEIDT CO.

Supreme Court of Errors of Connecticut.

July 13, 1914.

Case Reserved from Superior Court, Fairfield County; Howard J. Curtis, Judge.

Action by the Associated Hat Manufacturers against the Baird-Unteidt Company to recover $5,000 liquidated damages for violation of certain resolutions of the plaintiff association passed under section 2 of article 8 of its by-laws by the defendant member of the association. Reserved by stipulation of the parties upon a finding of facts for the advice of the Supreme Court of Errors. Judgment advised for plaintiff.

The plaintiff is a nonstock corporation of the state of New York, comprised of 56 companies, corporations, and individuals engaged in the manufacture of fur felt hats, with places of business in the states of Connecticut, New York, New Jersey, Massachusetts, and Pennsylvania. The defendant was a corporation located at Bethel, Conn., and was a member of the association. The plaintiff was the successor of the Wholesale Fur Felt Hat Manufacturers' Association, whose assets, property, rights, agreements, and contracts had been transferred to the plaintiff.

The purposes and objects of the association, as recited in its certificate of incorporation, were to improve business conditions of its members, to maintain harmonious relations between them, and to promote, subserve, and encourage social intercourse between them.

The preamble to its by-laws recites that:

"The objects of this association, in addition to those set forth in its certificate of incorporation, are to foster the interests of those engaged in the manufacture and sale of fur felt hats, to reform abuses relating to the business of persons so engaged, to secure freedom from unjust and unlawful exactions, to obtain and diffuse accurate and reliable information as to all matters affecting members of this association, to procure uniformity and certainty in the relations existing between employees and employers, and in all lawful ways to promote and protect the business interests of this association."

Its by-laws provide:

Section 1. The decisions, prohibitions, orders and regulations of this association and its board of directors, shall be obligatory upon, and shall be complied with and observed in good faith by each and every member of this association.

Sec. 2. In order to insure the compliance with and obedience in good faith to the decisions, orders, prohibitions and regulations of this association, all members hereby agree to pay to the association the sum of five thousand dollars ($0,000) as liquidated damages, for the violation of or failure to comply with any of the decisions, prohibitions, and regulations passed or made by the association, in accordance with these by-laws and its certificate of incorporation. The said sum of five thousand dollars ($5,000) is not a penalty, but is to be construed as the damages which this association and the members thereof have suffered, by reason of the failure of any member to comply with the decisions, orders, prohibitions and regulations of this association, and in any action which may be brought to recover the said sum, it shall not be necessary or incumbent upon this association to prove any special damage whatsoever.

Article XIX. Sec. 1. Not less than one-third of all the members of this association must be present in person in order to constitute a quorum for business, provided, however, that any business before the meeting (a) involving the cessation or resumption of work by any or all of the members of this association, (b) any regulations regarding the union label and (c) proceedings relative to any fine or assessment, no less than two-thirds of all the members of this association must be present in person in order to constitute a quorum, and at least three-fourths of all members of this Association must concur in order to carry any motion or pass any regulation regarding these three questions.

Article VII. Sec. 1. No member may resign from this association until after ninety days' notice in writing to the secretary shall have been given, and no resignation shall be accepted or become operative until all dues, fines, assessments or other moneys due this association shall have been paid, nor shall any resignation be accepted during a suspension of work ordered by the association.

Article VI. Sec. 10. The board of directors shall have power to settle all the controversies and difficulties arising between the members of this association and their employees, and to decide all disputes and disagreements that may arise, except that they shall not order a cessation or resumption of work, make any regulations regarding the union label, or proceedings relative to the forfeiture of any bond, contract, penalty or fine of any member of this association.

The United Hatters of North America is an unincorporated association of journeymen hatters having over 9,000 members, and owning a union label, which it permits to be placed in hats manufactured in factories employing its members solely and commonly called "union or closed shops."

From July 1, 1907, to January 14, 1909, the members of the plaintiff and its predecessor employed exclusively in their factories members of the United Hatters' Association.

The plaintiff's predecessor entered into an agreement, to which the plaintiff succeeded, with the United Hatters that any disagreement between employer and employe should be submitted to arbitration. Prior to this agreement, in case of difference, the United Hatters withdrew the use of its label, and compelled its members to discontinue work until the difference was settled, thus frequently coercing the employer to accept unfair conditions, and one of the purposes of the arbitration agreement was to avoid the stoppage of work and the removal of the union label pending the adjustment of differences. The United Hatters continued to act under this agreement until the difficulty with the Guyer Company arose.

The Guyer Hat Company was a member of the plaintiff, and located in Boston, Mass. The prices charged by the members of the United Hatters for piece work was less in Philadelphia than in Boston. On July 1, 1908, the Guyer Company opened a factory in Philadelphia, and entered into an agreement with the members of the United Hatters for a bill of prices for piecework for hats manufactured in Philadelphia.

In August, 1908, negotiations between the Guyer Company and the United Hatters having failed, the United Hatters refused to permit their members to work in the Guyer factory unless the Guyer Company paid the same scale of prices as in its Boston factory. The Guyer Company referred the settlement of the dispute to the plaintiff. The plaintiff insisted that, pending arbitration, the union label should be restored and the members put back to work. The plaintiff and the United Hatters continued negotiations until about January 1, 1909, but the United Hatters refused to restore the label or put the men back to work, and insisted upon the Guyer Company performing its contract with them upon the Boston scale of prices to its members.

On January 12, 1909, the board of directors of the plaintiff passed a resolution that it recommend to the association:

"That the use of the union label to be discontinued in every factory of every member of this association one hour subsequent to the passage of this resolution, unless during the said period of one hour the association receives official notice that the label will be restored to and the men immediately placed to work in the factory of the Guyer Company, located in Philadelphia, Pa., under the conditions existing at the time of the withdrawal of the label and men."

On January 14, 1909, the association passed unanimously, all members including defendant being present, the resolution recommended and recited therein the arbitration agreement.

On January 15, 1909, the association communicated to all of its members the substance of this resolution, and the defendant and the other members of the plaintiff informed their employes that the union label would no longer be permitted to be used in their factories. Whereupon the employés who were members of the United Hatters, pursuant to its order, quit work, and all of the factories, including the defendant's, on January 16, 1909, ceased to manufacture hats, which condition continued until January 29, 1909.

The members of the plaintiff knew that a large proportion of the members desired to resume the operation of factories as open shops, and on January 28, 1909, the board of directors of the plaintiff passed the following resolution:

"That the board of directors recommend to the association that each member offer situations to operatives as individuals, in their respective factories on February 9, 1909."

The treasurer of the defendant was present at this meeting. Immediately thereafter a meeting of the association, duly called, passed a vote in accordance with this recommendation. The defendant was present at this meeting.

All of the members of the plaintiff, including the defendant, understood the resolution of January 28, 1909, to mean the hiring of their employés as individuals in an open shop. The defendant and other members of the plaintiff in the Danbury district opened their factories for the purpose of receiving applications from all who desired employment as individuals, but none such were received owing to the control of the hatting industry in this locality by the United Hatters.

Because of this condition, and of their inability to secure employés, the defendant was unable to operate its factory until June 8, 1909, and no hats were manufactured in the factories of the members of the plaintiff in the Danbury district during this period, while the members in other localities were able to operate their factories as open shops.

Shortly after January 28, 1909, the defendant and a majority of the members of ...