National Labor Relations Bd. v. New Madrid Mfg. Co.

• Decision Date: 21 September 1954
• Docket Number: No. 14880.,14880.
• Citation: 215 F.2d 908
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. NEW MADRID MANUFACTURING COMPANY, a Corporation, and Harold Jones, an Individual, d/b/a Jones Manufacturing Company, Respondents.
• Court: U.S. Court of Appeals — Eighth Circuit

215 F.2d 908 (1954)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. NEW MADRID MANUFACTURING COMPANY, a Corporation, and Harold Jones, an Individual, d/b/a Jones Manufacturing Company, Respondents.

No. 14880.

United States Court of Appeals Eighth Circuit.

September 21, 1954.

Owsley Vose, Atty., National Labor Relations Board, Washington, D. C. (George J. Bott, Gen. Counsel, David P. Findling, Associate Gen. Counsel, A. Norman Somers, Asst. Gen. Counsel, and Jean Engstrom, Atty., National Labor Relations Board, Washington, D. C., with him on the brief), for petitioner.

Edward F. Sharp, New Madrid, Mo., for respondent New Madrid Mfg. Co.

Before SANBORN, JOHNSEN and COLLET, Circuit Judges.

JOHNSEN, Circuit Judge.

This is a petition by the National Labor Relations Board to have enforced an order issued by it, 104 N.L.R.B. No. 8, against New Madrid Manufacturing Co., a corporation, and Harold Jones, an individual, d/b/a Jones Manufacturing Co. New Madrid asks that enforcement of the order be denied. Jones has filed no answer or made other resistance to the Board's petition.

New Madrid was engaged in the business of manufacturing and distributing, as a processor, certain types of ladies' garments. It had its principal plant at New Madrid, Missouri, and for slightly over a year, prior to October 5, 1951, it had also been operating a branch plant at Malden, Missouri. Sometime about that date, it shut down the Malden plant, and in the latter part of November, 1951, it sold all the machinery, equipment and supplies thereof to Jones. Jones had been the manager of the Malden plant, while it was being operated by New Madrid. After the purchase by Jones, the machinery, equipment and supplies were moved to Portageville, Missouri, where Jones opened up a plant under the trade name of Jones Manufacturing Co.

The sale to Jones was made under a conditional sales contract, which required the payment by him of a certain purchase price, on a fixed installment basis, without prepayment privilege. In the contract, New Madrid had agreed to advance to Jones "sufficient funds to set up the plant proposed to be established at Portageville, Missouri," and to give Jones the manufacturing work on "at least fifteen thousand (15,000) dozen garments during a period of twelve (12) months after said factory shall have been placed in operation, provided, however, that deliveries are reasonable and are completed in the normal delivery time." New Madrid further agreed to make cash advances on such work as was being done for it at any particular time, to enable Jones to meet his payrolls. Jones in turn agreed that he would not engage in making garments for anyone else, except with New Madrid's approval. He also agreed not to draw out of the business, until the purchase price had been paid, more than a certain amount monthly in personal expenses and compensation, unless New Madrid gave its written consent thereto.

Charges of unfair labor practices, based on alleged hostility to union membership of its Malden employees, were filed against New Madrid, in relation to incidents occurring during the operation and to the shutting down of that plant, and when Jones began operating at Portageville, the charges were amended to include him and New Madrid jointly as employers, with respect to the wrongs claimed to have been done the Malden plant employees.¹ The complaint prepared by the Board's Regional Director, on which the matter was heard, entirely ignored the sale aspect of the transaction between New Madrid and Jones, and alleged that New Madrid had merely "delivered" the machinery and equipment to Jones, and that he was simply operating at Portageville "as the manager, agent and alter ego of * * * New Madrid," in a continuation by New Madrid of the Malden enterprise.

The Trial Examiner apparently thought it necessary to deal with the transaction between New Madrid and Jones on a little more definitive basis than this. He said that "the purported agreement * * * is not a real contract, that it was not intended to divest (New Madrid) of its title to the Malden plant machinery and did not do so, that it was not intended to makes Jones independent of (New Madrid) as the owner of a business in Portageville, Missouri, operating under the name of Harold Jones, d/b/a Jones Manufacturing Company, and did not do so, and that said contract is a sham, and void as a defense to any of the allegations of unfair labor practices alleged in the complaint."

Regarding himself as thus having effected clearance from legal port, through such a logging of the transaction between New Madrid and Jones as "not a real contract," as "a sham," as not leaving Jones engaged in any enterprise of his own, and as being wholly "void as a defense," the Trial Examiner made bold to venture still further out to sea and envisioned for himself this unique constitutional shore: "As it is within the realm of the possible that Jones actually believes himself bound by an agreement which creates obligations cancellable at will by (New Madrid)² from which Jones cannot escape, but is bound to work for (New Madrid) at his present fixed `drawing account',³ the undersigned, in all kindness, directs Jones' attention to the Thirteenth Amendment to the Constitution of the United States as a possible means of escape should he ever desire to free himself of the burden of his obligations."

The Board, however, could not apparently see its way clear to go along on the Trial Examiner's logging of the contract between New Madrid and Jones as a mere sham and as not being required to be accorded any legal recognition in the situation. It said: "We do not decide, as did the Trial Examiner, that the sales contract between Jones and the Company, whereby the latter sold its Malden plant machinery to the former for use in Portageville is not `a real contract' and of no binding effect upon Jones. The Board assumes the validity of the contract." But, went on the Board, "It is clear * * * that the Company retained substantial control over Jones' operations at Portageville;" that Jones therefore had become only a "partial successor to the Company's Malden plant business;" that, to whatever extent he thus had become a successor, "Jones had knowledge of his predecessor's unremedied unfair labor practices at the time he agreed to take over the business;" and that, on the basis of all of the foregoing, New Madrid and Jones were entitled to be regarded as constituting co-employers at the Portageville plant and to be held jointly and severally liable for the remedying of all the unfair labor practices which had existed in relation to the operations at the Malden plant and to New Madrid's shutting down of that plant.

A careful consideration of the entire record as a whole requires us to hold that, within the standards recognized as to reviews of findings made by the National Labor Relations Board, the evidence is sufficient to sustain the Board's findings here as to the unfair labor practices committed by New Madrid during its operation of the Malden plant. Just as much, also, as with the various incidents occurring during the actual operation of the Malden plant, which the Board appraised as having been unlawfully motivated, was the shutting down of the plant initially — to the time at least that New Madrid claims to have determined and acted to permanently close the business and dispose of its machinery and equipment — entitled to be found by the Board to have been in the nature of an intended lockout for purposes of combatting the unionization of the plant.

But we are not able to agree that the evidence affords a rational basis for the Board to declare that this initial shutdown or lockout never subsequently was intended to be or ever became converted into a permanent closing or quitting by New Madrid of the Malden enterprise, in the sense that, while it sold the machinery and equipment to Jones and Jones opened up and operated a business at Portageville, it would not have made such sale, and did not do so, except upon the basis of retaining such a right and power of control over Jones' operations as to make the Portageville plant, not the establishing of a new and individual enterprise by Jones, but in effect a continuation of the Malden enterprise, with Jones and New Madrid having come to share jointly the status and the responsibility of the previously existing employership.

The evidence shows affirmatively that after the initial shut-down or lockout had occurred at the Malden plant, New Madrid, during the period that the business was thus closed, had an audit made of the Malden books and operations by someone from the New Madrid plant; that this audit revealed a loss of $6,000 in the plant's activities for the period of slightly over a year that the small enterprise had been conducted; that the audit result was reported to and gone over by the officers and directors of the Company in the early part of November, 1951; and that — in the language of the Secretary-Treasurer of the Company — "The decision was made not to reopen the plant after we received operational figures on the...