Ran W Hat Shop, Inc. v. Sculley

• Decision Date: 04 August 1922
• Citation: 118 A. 55,98 Conn. 1
• Court: Connecticut Supreme Court
• Parties: RAN W HAT SHOP, Inc., v. SCULLEY et al.

118 A. 55

98 Conn. 1

RAN W HAT SHOP, Inc., v. SCULLEY et al.

Supreme Court of Errors of Connecticut.

August 4, 1922

Appeal from Superior Court, Fairfield County; William M. Maltbie Judge.

Suit by R an W Hat Shop, Inc., against Jeremiah Sculley and others for an injunction to restrain defendants from combining and conspiring to restrain interstate trade and commerce in a way to injure plaintiff's good will and business, or to in any way interfere with plaintiff's business, and to recover damages on account of defendants' unlawful acts. Judgment rendered for the defendants, and appeal by the plaintiff. Error and judgment reversed.

The process of the manufacture of fur felt hats is divided into two parts; one the production of the " hats in the rough," called the " making" ; the other the completion of the " hats in the rough," ready for wear, called the " finishing." Many factories carry on both branches of the manufacture, while some confine their business to the " making" and some to the " finishing." The workers employed in these processes are known as " makers" and " finishers," and in addition certain women who work in the finishing shops are known as " trimmers" ; each of these classes follows what is practically a different craft. The business is largely unionized, and the local unions are made up of those who follow one of these craft. These craft are bound together by joint interests, and together make up one trade, and all the unions are affiliated as the " United Hatters of North America," a voluntary association with some 10,000 members and about 30 unions.

The defendant local No. 10 is a union of " makers," employed in Danbury and vicinity, of which defendant Jeremiah Sculley is president and defendant John O'Hara is secretary. The defendant local No. 11 is a union of " finishers," employed in Danbury and vicinity, of which defendant Cornelius McCue is president and Hugh Shalvoy is secretary. The defendant local No. 15 is a union of " makers," employed in Norwalk and vicinity. The defendant local No. 16 is a union of " finishers," employed in Norwalk and vicinity, of which Charles Lynch is president and the defendant Royal Raymond is secretary. Each of these unions is a voluntary association. The defendant Michael Green is the national president of the United Hatters of North America, and the defendant Martin Lawler is the national secretary and treasurer of that organization.

Prior to June, 1919, union manufacturers of " hats in the rough" were not restricted by any rule or custom from selling that product to any finisher, whether or not he conducted a union shop, and neither rule nor custom of the unions gave union " finishing" shops any preference. Union workmen in " finishing" shops however, would not, and by the custom of the unions were forbidden to, work on " hats in the rough" which were produced in nonunion " making" shops.

The hatters' unions own and control a label or distinctive mark, known as a " union label," which under certain conditions they permit union manufacturers to attach to hats finished in their shops, and which is supposed to make the product so marked more saleable and marketable than hats not bearing that label. No manufacturer is, however permitted to use that label unless all work done upon the hats, in his own or any other shop, was carried on under union rules.

The plaintiff is a New York corporation, having succeeded to the business, trade-mark, and good will of a concern known as Rosenwald-Wimpheimer, and being engaged in the business of finishing hats made from fur felt " hats in the rough" and in selling the same, and operates a factory in Norwalk for the conduct of its business. Rosenwald-Wimpheimer had operated as a union finishing shop under an agreement with local 16 until about April, 1918, and they at this time became an " open" or nonunion shop, and ever since this time they and the plaintiff have continued to be such, purchasing " hats in the rough" required in their business in the open market and outside of Connecticut.

There is a considerable demand for fur felt hats in the spring, but a much greater demand in the fall. Orders for the fall trade are received by " finishing" shops in the spring and delivery is usually required before October 1st following. " Finishing" shops which do not produce their own " hats in the rough" order this product from " making" shops in the spring and summer in time to make up the hats they have sold for delivery not later than this date.

In the spring of 1919 both union and nonunion shops had difficulty in purchasing sufficient " hats in the rough" to fill their orders. Because of this lack of material, union " finishing" shops were either unable to, or were threatened with inability to, operate full time. Complaints of this were made to the officers of the United Hatters of North America, and these came to the attention of the defendants Green and Lawler, as president and secretary and treasurer respectively of that organization. In the effort to secure an adequate supply of " hats in the rough" for the union " finishing" shops, defendants Green and Lawler instructed orally and in writing the officers of local unions, including those in Danbury, to visit and inform the union " making" shops that in their judgment union " finishing" shops should be given preference over nonunion " finishing" shops in the matter of supplying " hats in the rough," and that no shipments of these should be made to the latter, until the needs of the union " finishing" shops had been satisfied. These instructions came in due course to the officers of locals 10 and 11 at Danbury, but these unions never as a body took action thereon.

Defendants Sculley and O'Hara, president and secretary of local No. 10, singly or together, either in person or by other means of communication, gave these instructions to the officers of six or seven of the union " making" shops in Danbury, and these officers stated to these shops the purport of the instructions they had received. The instructions of Green and Lawler were not confined to this state, and were not directed against any particular manufacturer. Their immediate purpose was to secure sufficient " hats in the rough" for " finishing" shops, and thereby to secure steady employment for the members of the affiliated unions. The natural effect of these instructions, if carried out, would be to make it more difficult, if not in some instances impossible, for nonunion " finishing" shops to secure sufficient " hats in the rough" with which they could fill their orders and keep their shops open, and to cause breaches of contract between union " making" shops and nonunion " finishing" shops; and all this defendants Green, Lawler, Sculley, and O'Hara knew, or ought as reasonable men to have known. The giving of these instructions was a reasonable means to the end purposed, and they were adopted in good faith.

On June 24, 1919, plaintiff had orders for 6,200 dozen hats for fall delivery, their value being between $300,000 and $400,000 and about 90 per cent. thereof were from customers outside the state, and called for delivery outside the state. It had contracted for substantially enough " hats in the rough" to take care of its needs in filling its own orders; its contracts being about equally divided between union and nonunion shops. The plaintiff and its predecessor had for a number of years purchased a considerable number of " hats in the rough" from George McLachlan, who operated a union " making" shop in Danbury. Prior to June 24, 1919, plaintiff had ordered from McLachlan a very considerable number of these hats, which he had accepted for fall delivery, but delivery for a large part of these orders had not at this time been made. On said day Sculley and O'Hara, pursuant to the instructions received from Green and Lawler, visited McLachlan, and stated to him the purport of the instructions.

At this interview it appeared that McLachlan had a lot of " hats in the rough" ready for shipment to plaintiff. McLachlan inquired if he should deliver these, and Sculley and O'Hara asked if he had any others ready for shipment for plaintiff in the shop, and, ascertaining that there were none, told McLachlan that he might deliver the hats ready for shipment. They did not ask him whether he had accepted orders from the plaintiff which were not filled, nor were they informed, nor did they have knowledge as to this, but from the purport of the conversation and McLachlan's conduct they might, as reasonable men, have so inferred.

A few days later McLachlan asked and received permission to deliver to plaintiff a few dozen more of hats, which were of a special kind. McLachlan delivered to plaintiff no other hats than these after this time upon its orders.

Sculley and O'Hara used no threats to McLachlan, but he obeyed the instructions and breached his contract with plaintiff because of his knowledge of the power of the unions to embarrass him in the operation of his factory, and his fear that they would do so and exact a penalty from him. McLachlan would without these instructions have filled these orders but he was not sorry to have a reason for breaching his contract with plaintiff, because he could obtain for the undelivered hats a price higher than the contract price. A few days after McLachlan ceased shipments to plaintiff, Wimpfheimer, president and treasurer of plaintiff, secured an interview with Sculley and O'Hara, and asked that McLachlan be permitted to continue filing plaintiff's orders, but they refused to grant this. In the course of the interview, Sculley and O'Hara either learned that McLachlan had in his shop accepted and unfilled orders from the plaintiff, or heard statements which would have...