Penzien v. Dielectric Products Engineering Co.

• Decision Date: 05 January 1965
• Docket Number: AFL-CIO,No. 13,No. 990,990,13
• Citation: 374 Mich. 444,132 N.W.2d 130
• Parties: Wilbur PENZIEN, James Kandt, Lawrence De Pew, Margaret Singler, Edward Summers, Bernhard Stark, individually and on behalf of a class similarly situated, and Localof the International Union of Electrical, Radio and Machine Workers,, a voluntary unincorporated association, Plaintiffs and Appellants, v. DIELECTRIC PRODUCTS ENGINEERING COMPANY, Inc., a Michigan corporation, Defendant and Appellee.
• Court: Michigan Supreme Court

Page 130

132 N.W.2d 130

374 Mich. 444

Wilbur PENZIEN, James Kandt, Lawrence De Pew, Margaret Singler, Edward Summers, Bernhard Stark, individually and on behalf of a class similarly situated, and Local No. 990 of the International Union of Electrical, Radio and Machine Workers, AFL-CIO, a voluntary unincorporated association Plaintiffs and Appellants, v. DIELECTRIC PRODUCTS ENGINEERING COMPANY, Inc., a Michigan corporation, Defendant and Appellee.

No. 13.

Supreme Court of Michigan.

Jan. 5, 1965.

Livingston, Gregory, Van Lopik & Crane-field, Detroit, Starkey & Gentz, Mt. Clemens, for plaintiffs and appellants.

Dykema, Wheat, Spencer, Goodnow & Trigg, Detroit, Johnston & Wendt, Mount Clemens, of counsel, for defendant and appellee.

Before the Entire Bench.

ADAMS, Justice.

Plaintiffs sued for severance pay claimed by them as third party beneficiaries of a collective bargaining agreement, basing their claim on this contract language:

'Termination of Operations

'110. It is hereby agreed that in the event the Company takes any steps to close down operations in the Mount Clemens area plant or plants, this matter including the question of severance pay, shall become subject to negotiation upon twenty-four (24) hours notice by either party. It is further understood and agreed that paragraph 103 shall not apply in the event of failure to reach agreement in such negotiations.'

Paragraph 103 reads:

'The Union agrees not to call any strikes, stoppages or slowdowns during the terms of this Agreement unless and until the Grievance and Arbitration procedures as provided for herein have been exhausted, or if the employer refuses to abide by a decision of an arbitrator.'

Paragraph 110 was inserted in the bargaining agreement on September 29, 1952, because of fears of the employees that the company might close down its Mount Clemens plant. The company had located a plant in another State. Two members of the union negotiating committee inspected the new factory and were disturbed over the size of the facilities. On their return to Michigan, negotiations took place which led to Paragraph 110. It was continued in subsequent agreements.

In the summer of 1961, the union again suspected appellee might be planning to move. On August 25, 1961, the union requested that negotiations be held on the question of severance pay. The request was denied, as was a similar request dated October 4, 1961. By letter dated October 17, 1961, the union, referring to Paragraph 110, informed the appellee of its intention to arbitrate the question of severance pay. Arbitration never took place because 'the parties couldn't get together on arbitration so the period then went until the time there was hardly anyone left in the plant and there was no one to arbitrate the matter.'

In November, 1961, a notice from the appellee directed to its employees was posted. It stated that operations were being shut down as of the latter part of the month to take inventories and that normal production would be resumed on January 4, 1962. There followed a number of meetings between the company and the union. At a meeting on the 8th of December, it became obvious to the union that Dielectric was closing down. In the latter part of December, appellee notified the union it was closing its Mount Clemens plant. Meetings were continued, but there was never any offer by the company to pay severance benefits.

At the close of plaintiffs' proofs, defendant's motion for a directed verdict on the ground that the plaintiffs had failed to prove a cause of action was granted.

Is the agreement so clear and unambiguous there is no need to resort to other evidence to determine its meaning? Dunham v. W. Steele Packing & Provision Co., 100 Mich. 75, 58 N.W. 627; Gardner v. City National Bank & Trust Co., 267 Mich. 270, 255 N.W. 587; Paul v. University Motor Sales Co., 283 Mich. 587, 278 N.W. 714. The key words in Paragraph 100 are: 'question,' 'negotiation,' 'failure' and 'agreement.' Standard definitions of these words are as follows:

Question: 'A subject or aspect that is in dispute, open for discussion, or to be inquired into: * * * a subject or point of debate * * *.'-- Webster's Third New International Dictionary (1964). 'A subject or point of investigation, examination or debate; theme of inquiry; problem; matter to be inquired into; as a delicate or doubtful question.'--Black's Law Dictionary (4th ed.) (1951).

Negotiation: 'The action or process of negotiating * * *.' Negotiate: 'To communicate or confer with another so as to arrive at the settlement of some matter: meet with another so as to arrive through discussion at some kind of agreement or compromise about something * * *.'-- Webster's Third New International Dictionary (1964). Negotiation: 'The deliberation, discussion, or conference upon the terms of a proposed agreement; the act of settling or arranging the terms and conditions of a bargain, sale, or other business transaction.'--Black's Law Dictionary (4th ed.) (1951).

Failure: 'Omission of performance of an action or task; esp: neglect of an assigned, expected, or appropriate action * * *; want of success; lack of satisfactory performance * * *.'-- Webster's Third New International Dictionary (1964). 'Abandonment or defeat * * *. Deficiency, want, or lack; ineffectualness; inefficiency as measured by some legal standard; an unsuccessful attempt. * * *'-- Black's Law Dictionary (4th ed.) (1951).

Agreement: 'The act of agreeing or coming to a mutual arrangement * * * oneness of opinion * * * harmonious understanding * * * an arrangement * * * as to a course of action.'--Webster's Third New International Dictionary (1964). 'A coming or knitting together of minds; a coming together in opinion or determination; the coming together in accord of two minds on a given proposition; in law a concord of understanding and intention between two or more parties with respect to the effect upon their relative rights and duties, of certain past or future facts or performances ; the consent of two or more persons concurring respecting the transmission of some property, right, or benefits, with the view of contracting an obligation, a mutual obligation.'--Black's Law Dictionary (4th ed.) (1951).

The plain language of the contract provides for dealing with a 'question' that is to be subject to 'negotiation' if the company takes steps to close. If the negotiations do not succeed ('failure') and no 'agreement' is reached, then the union may have recourse to its remedies of strikes, stoppages or slow-downs which are otherwise barred upon Paragraph 103 of the contract. But, it is contended, parol evidence as to collective bargaining negotiations is admissible to explain the terms of the executed collective bargaining agreement because the substantive Federal law controls as to admissibility.

The Federal law relating to the inclusion of parol evidence of negotiations leading to a collective bargaining agreement is far from settled. Cases such as Pacific Telephone & Telegraph Company v. Comnunications Workers of America, D.C., 199 F.Supp. 689 (1961), say that, as to the history of the negotiations, the evidence 'cannot be used to change, vary or contradict the terms of the written instrument and all prior and contemporaneous agreements were merged therein and cannot be shown by parol evidence.' To the same effect see National Labor Relations Board v. Gulf Atlantic Warehouse Co., 5 Cir., 291 F.2d 475 (1961):

'We think that ordinarily the language of the contract as finally agreed upon must be construed by the courts in accordance with ordinary rules of construction without reference to the give and take of the bargaining sessions which produced the final terminology. Otherwise we would abandon completely the parol evidence rule when dealing with this type of contract.'

This holding on the parol evidence rule as it relates to a labor contract was criticized in National Labor Relations Board v. Perkins Machine Company, 1 Cir., 326 F.2d 488 (1964):

'We could not agree with the seeming suggestion in that opinion that the parol evidence rule required the waiver to be contained within the four corners of the written agreement.'

Other Federal cases state:

'[B]argaining agreements, to be binding upon Company and employees, should expressly define their respective obligations as well as the limits on or extent of the employee's rights.'--Nichols v. National Tube Co., D.C., 122 F.Supp. 726, 732 (1954).

'[I]f the contract in question were ambiguous or 'doubtful,' extrinsic evidence, particularly evidence which would indicate the contemporaneous understanding of the parties, would be admissible as an aid in construction of the disputed terms.'--Lewis v. Hixson, D.C., 174 F.Supp. 241, 248 (1959).

'The law is clear that where the language of the contract is ambiguous, the court can look to such extrinsic evidence as the parties' conduct, the statements of its representatives, and past practice to aid in interpretation. (citing cases).'-- United Electrical, Radio and Machine Workers of America v. General Electric Company, D.C., 208 F.Supp. 870, 872 (1962).

The trend of the Federal decisions is away from a rigid adherence to the parol evidence rule. Independent Soap Workers of Sacramento, Cal. v. Procter & Gamble Manufacturing Company, 9 Cir., 314 F.2d...