United States v. Montgomery Ward & Co.

• Decision Date: 12 March 1945
• Docket Number: No. 44C1611.,44C1611.
• Citation: 58 F. Supp. 408
• Court: U.S. District Court — Northern District of Illinois
• Parties: UNITED STATES v. MONTGOMERY WARD & CO., Inc., et al.

58 F. Supp. 408

UNITED STATES v. MONTGOMERY WARD & CO., Inc., et al.

No. 44C1611.

District Court, N. D. Illinois, E. D.

January 27, 1945.

Writ of Certiorari Denied March 12, 1945.

COPYRIGHT MATERIAL OMITTED

Charles Fahy, Sol. Gen., of Washington, D. C., J. Albert Woll, U. S. Atty., of Chicago, Ill., Hugh B. Cox, Asst. Sol. Gen., of Washington, D. C., Fowler Hamilton, Sp. Asst. to Atty. Gen., and John P. Frank and Robt. Greenleaf, both of Washington, D. C., for the United States.

Stuart S. Ball, Harold A. Smith, and Winston, Strawn & Shaw, all of Chicago, Ill., for defendants.

Writ of Certiorari Denied March 12, 1945. See 65 S.Ct. 862.

SULLIVAN, District Judge.

This is a civil action under the Declaratory Judgment Act of June 14, 1934, 28 U.S.C.A. § 400, brought by the United States against Montgomery Ward & Company, Incorporated, and sixteen of its officers.

This court has jurisdiction of this suit by virtue of Section 24(1) of the Judicial Code, 28 U.S.C.A. § 41(1), and under Section 274(d) of the Judicial Code, 28 U.S.C.A. § 400.

The cause was submitted to the court on the pleadings, affidavits and briefs, and counsel agreed that the hearing was on the merits as well as on the motions for temporary and permanent injunctions and declaratory judgment.

Under authority alleged to have been derived from Section 3 of the War Labor Disputes Act, known as the Smith-Connally Act, 50 U.S.C.A.Appendix § 1503, the President of the United States, by Executive Order No. 9508, dated December 27, 1944, directed the Secretary of War to take possession of and operate the plants and facilities of Montgomery Ward & Company located at Jamaica, New York; Detroit, Dearborn and Royal Oak, Michigan; Chicago, Illinois; St. Paul, Minnesota; Denver, Colorado; San Rafael, California; and Portland, Oregon. On December 28, 1944, the Secretary of War took possession of the plants and facilities described in the Executive Order, and is now in possession thereof. Simultaneously, on December 28, 1944, the complaint herein was filed, wherein the Government asks for a declaratory judgment and decree of this court declaring the rights and status of plaintiff, and more particularly declaring that under the Executive Order of the President issued on December 27, 1944, the Government is in lawful possession of the plants and facilities of the defendant. The complaint also asks that the court enjoin defendants from interfering with plaintiff's possession of such plants and facilities.

In 1940-1941 with the greatly expanded war production program the number of strikes in the country increased rapidly. To meet this situation and to provide for the peaceful settlement of labor disputes while at the same time maintaining the production of material and equipment essential to National defense, the President, on March 19, 1941, by Executive Order No. 8716 established the National Defense Mediation Board with jurisdiction to hear and make recommendations in labor controversies or disputes which might interfere with war production. The National Defense Mediation Board functioned until December, 1941, when it seemed expedient and advisable that it be given additional power. On December 17, 1941, ten days after Pearl Harbor, the President convened at Washington a conference of representative leaders of labor, industry and the public to discuss a national wartime labor policy. It was there agreed and recommended that for the duration of the war there should be no strikes or lock-outs, but that all labor disputes should be peacefully settled by a Board to be established for the adjustment of such disputes. Accordingly, the President, on January 12, 1942, by Executive Order No. 9017, 50 U. S.C.A.Appendix § 1507 note, established the National War Labor Board, authorized to take jurisdiction, either as a result of certification from the Labor Department or from its own investigation, over such labor disputes as might lead to substantial interference with the war effort; and which could not be settled by collective bargaining or conciliation.

The complaint herein sets out that Montgomery Ward has had a long history of labor disputes which it has refused to settle peacefully by the procedures provided in Executive Order No. 9017 and the War Labor Disputes Act; and the Government insists this course of action interferes with or threatens to interfere with and delay the effective prosecution of the war.

Defendant has filed its answer to the complaint, alleging that the President issued Executive Order No. 9508 on December 27, 1944, for the purpose of enforcing the orders of the War Labor Board, which are only advisory. That the order of the President in this case is illegal and void, and the seizure made pursuant thereto is in violation of the Constitution of the United States. Defendant further urges that no Act of Congress and no power conferred upon him by the Constitution authorizes the President to enforce the orders of the War Labor Board by seizure of its plants and properties.

Plaintiff and defendant have both filed numerous affidavits in support of their respective positions; the case has been argued at length and exhaustive briefs have been furnished to the court.

Montgomery Ward is admittedly one of the largest merchandising organizations in the world. Its business is nation-wide in scope. It sells approximately $600,000,000 worth of merchandise annually to approximately 30,000,000 customers, a large percentage of whom are farmers or live in rural areas. It operates 640 department stores, 190 catalogue mail order offices and 9 mail order houses. Its general administrative offices and a warehouse as well as a mail order division and a retail store, are located at Chicago. It sells building materials, farm machinery, heating apparatus, plumbing supplies, electrical and automobile supplies, repair parts, clothing, shoes, drugs, furniture, hardware, home furnishings, dry goods and parts for military aircraft. At various times it has secured from Government agencies preferences and priorities permitting it to obtain essential materials. It operates three factories, one located at Chicago Heights, which manufactures paints and varnishes. One located at Fort Madison, Iowa, where fencing and fence materials are manufactured; and the Hummer plant at Springfield, Illinois, which ordinarily manufactures farm equipment, but which is presently partly engaged in manufacturing carburetors, propellers and gun mounts to be incorporated in military aircraft, which plant has been in the possession of and operated by the Government since May 21, 1944. None of these factories are covered by the Executive Order. It is admitted that the manufacturing activities carried on by Montgomery Ward are minor compared to its entire business. It is principally engaged in a retail mail order business, selling the wide variety of goods and merchandise set out in the complaint. The business is managed, controlled and directed from the administrative offices in Chicago.

The Government contends that for more than two years Montgomery Ward has refused to adjust labor disputes with its employees on the basis of the directive orders issued by the War Labor Board. That these disputes have many of them resulted in strikes which have interrupted operations in some of Ward's plants and facilities, and that they threaten to stop operations in others, which conditions may spread to other industries which are essential to the war effort, all of which will impede and delay the successful prosecution of the war. Because of this situation the Government insists that the seizure of the plants and facilities of Montgomery Ward was justified under the provisions of Section 3 of the War Labor Disputes Act. The Government further contends, that in the event the court does not find this true, the President is authorized under his general war powers to make such seizure.

The first question for this court to decide is whether the President, under Section 3 of the War Labor Disputes Act, had power to take over and operate the plants and facilities of Montgomery Ward & Company. That section, 50 U.S.C.A.Appendix § 1503, provides:

"Sec. 1503. Power of President to take possession of plants; amendment of section 309 of this Appendix

"Section 9 of the Selective Training and Service Act of 1940 (section 309 of this Appendix) is hereby amended by adding at the end thereof the following new paragraph:

"The power of the President under the foregoing provisions of this section to take immediate possession of any plant upon a failure to comply with any such provisions, and the authority granted by this section for the use and operation by the United States or in its interests of any plant of which possession is so taken, shall also apply as hereinafter provided to any plant, mine, or facility equipped for the manufacture, production, or mining of any articles or materials which may be required for the war effort or which may be useful in connection therewith. Such power and authority may be exercised by the President through such department or agency of the Government as he may designate, and may be exercised with respect to any such plant, mine, or facility whenever the President finds, after investigation, and proclaims that there is an interruption of the operation of such plant, mine, or facility as a result of a strike or other labor disturbance, that the war effort will be unduly impeded or delayed by such interruption, and that the exercise of such power and authority is necessary to insure the operation of such plant, mine, or facility in the interest of the war effort."

While in a majority of the cases arising after the establishment of the War Labor Board the parties to labor disputes adjusted their differences on the basis of the decisions rendered by the Board, nevertheless labor disputes and disturbances arose which frequently resulted in strikes. Everyone agrees that strikes in time of...