Gatliff Coal Co. v. Cox

• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)
• Citation: 142 F.2d 876
• Docket Number: No. 9727.,9727.
• Parties: GATLIFF COAL CO. v. COX.
• Decision Date: 01 June 1944

142 F.2d 876 (1944)

GATLIFF COAL CO.
v.
COX.

No. 9727.

Circuit Court of Appeals, Sixth Circuit.

June 1, 1944.

142 F.2d 877

COPYRIGHT MATERIAL OMITTED

142 F.2d 878

H. C. Gillis, of Williamsburg, Ky. (Tye & Siler, H. C. Gillis, and Robert L. Smith, all of Williamsburg, Ky., on the brief), for appellant

C. B. Upton, of Williamsburg, Ky. (R. L. Pope, of Knoxville, Tenn., and C. B. Upton, of Williamsburg, Ky., on the brief), for appellee.

Before HAMILTON, MARTIN, and McALLISTER, Circuit Judges.

HAMILTON, Circuit Judge.

Appellant, Gatliff Coal Company, is a Delaware corporation engaged in the business of mining coal in Whitley County, Kentucky, and a member of the Southern Appalachian Coal Operators' Association. Appellee, Maynard Cox, is an employee of appellant and a member of District No. 19 of the United Mine Workers of America.

On July 12, 1943, appellee filed his petition in the Whitley Circuit Court of the Commonwealth of Kentucky asking recovery of $6,686.62 with interest from March 31, 1943, which sum he alleged was due him as wages from appellant under a bargaining contract between the Southern Appalachian Coal Operators' Association and District 19, United Mine Workers of America. On September 21, 1943, appellant filed a special demurrer on the ground that the state court had no jurisdiction of the cause, because appellee was not a party to the contract on which he sued, and if a party the contract contained a clause of general arbitration and appellee's compliance therewith was a condition precedent to the institution of the action.

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On September 25, 1943, appellee filed an amendment stating that appellant was engaged in the business of mining and shipping coal and coal products in intrastate and interstate commerce, and that he was employed by appellant in its power house under appellant's contract with his union for which he was to receive wages of $1.023 per hour. He stated that under the Fair Labor Standards Act of June 25, 1938, 29 U.S.C.A § 201 et seq., he was entitled to recover time and one-half for all overtime he was required to work for appellant in excess of forty hours per week and was also entitled to collect the wages at the rate provided in the contract between the Southern Appalachian Coal Operators' Association and District No. 19, United Mine Workers of America.

On October 2, 1943, appellant filed its petition and bond for removal of the cause to the United States District Court for the Eastern District of Kentucky on the ground of diversity of citizenship and also on the further ground that the cause was one arising under the laws of the United States (28 U.S.C.A. § 71). The state court refused to remove the cause and on October 12, 1943, appellant filed a transcript of the record in the United States District Court for the Eastern District of Kentucky at London, Kentucky. 52 F.Supp. 482. On October 16, 1943, appellant filed in the district court its answer, counterclaim, and ancillary complaint in five paragraphs and a motion for a permanent injunction against the further prosecution of the cause in the state court. On the same date appellee filed a response and also motion to remand. The trial court refused to remand the cause.

Appellant alleged in paragraph 1 of its answer that the court was without jurisdiction of the subject matter of appellee's cause because appellee had no justiciable rights under the bargaining agreement between the coal operators' association and the labor organization and further that if appellee was authorized to maintain an action on the contract that under its terms any controversy concerning its application was subject to arbitration and that as a condition precedent to the institution or maintenance of an action under the contract, it was necessary for appellee to show that appellant had refused to arbitrate the claim, and at the time of the institution of this action he had not so shown.

Appellee moved to strike the paragraph of the answer in question. On November 22, 1943, appellant filed an application for a stay of trial and all proceedings in the action until arbitration was had as provided in the Federal Arbitration Act in 9 U.S.C.A. § 3, and in accordance with the contract between the Appalachian Coal Operators' Association and District No. 19, United Mine Workers of America. On November 26, 1943, the trial court sustained appellee's motion to strike and overruled appellant's motion for a stay. From these orders this appeal is prosecuted.

Our first problem is one of jurisdiction. The appeal is taken from interlocutory and not final orders as required by Title 28 U.S.C.A. § 225. In Enelow v. New York Life Insurance Company, 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440, and Shanferoke Coal & Supply Corporation v. Westchester Service Corporation, 293 U.S. 449, 55 S.Ct. 313, 79 L.Ed. 583, the Supreme Court held that an order granting a stay of proceedings which was based on an equitable defense or cross bill interposed in an action at law was an appealable interlocutory order within the provisions of 28 U.S. C.A. §§ 225(b) and 227. The stay orders involved in the cited cases are substantially the same as was moved for and denied in the case at bar. A special defense setting up an arbitration agreement is an equitable plea and the denial of a motion for a stay under the Arbitration Act, 43 Stat. 883, Title 9 U.S.C.A. § 3 is the denial of an application for an interlocutory injunction based on a special defense. Shanferoke Company v. Westchester Company, supra.

The language of Section 227 of Title 28 U.S.C.A. is to be construed to include cases where a stay of proceedings equitable in nature is either granted or denied until something collateral to the main action is determined. The statute looks to the substantial effect of the order made. The provisions of Rule 1 of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, and of Rule 2 that "there shall be one form of action to be known as `civil action'" does not obliterate the distinction between law and equity in the application of the section of the Code. Ettelson v. Metropolitan Life Insurance Company, 317 U.S. 188, 192, 63 S.Ct. 163, 87 L.Ed. 176.

When appellate jurisdiction attaches under Section 227, the reviewing court is not limited to a consideration of the action of the trial court on an interlocutory order denying or granting the stay, but

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if it appears from the record that there is an insurmountable obstacle to the maintenance of the action, the appellate court may direct that the proceedings be dismissed. Deckert v. Independence Shares Corporation, 311 U.S. 282, 287, 61 S.Ct. 229, 85 L. Ed. 189

We have jurisdiction to review each of the orders of which appellant complains and if appellee has no authority...