By the Court.
The Cleveland Railway Company has been for the past 15 years or more the operator of all of the city street car lines in the city of Cleveland. In 1906 the company entered into the contract that is pleaded by the plaintiffs, a copy of which is attached to the petition, with the Local Union No. 268 of the Amalgamated Association of Street and Electric Railway Employees of America, hereinafter referred to as the union, which union was affiliated with the American Federation of Labor. For these past 15 years, the company and the union have been operating under and in conformance with this contract, some changes from time to time having been made, and the terms of the same having been extended, until now they are in force and effect until May 1, 1925.
In May of 1924 the union served the notices called for in this contract, upon the company, requesting or demanding certain changes and modifications in the contract, among others, an increase
in pay and some allowances of time for making out accident reports. The demands of the union were not acceded to by the company, which resulted eventually in the selection of arbitrators under the terms of the contract to settle the dispute, and the board of arbitrators met in May, heard the evidence, and on June 3d made a finding and award, concurred in by the two arbitrators selected by the union and the fifth or key arbitrator, Holcomb, the two members selected by the company having withdrawn from the arbitration proceedings. In this award there was an increase in pay, and the company thereby was required to pay an increase to the motormen and conductors amounting to 12 cents an hour, which increased pay was to begin the 1st day of May, 1924; and there was also time given for reports of accidents.
The company refused to comply with this award, upon several grounds, the first being that the contract itself, under which the award was attempted and under which the parties to this suit have been operating for the past 15 years, is illegal and void as against public policy; second, that regardless of the question of the legality of the contract, the provisions therein covering arbitration called for a common-law arbitration at best, and therefore the award had is not binding upon the company, because it withdrew from the proceedings before there had been an actual award or determination by the board; third, that there was fraud in behalf of the union in the selection of the fifth arbitrator, it being claimed that he was prejudiced against the company, and, not only in sympathy with the union, but morally obligated to it by rea
son of indorsements given him for political advancement.
Upon the refusal of the company to comply with the award and upon its threat to disregard the contract and to employ nonunion men, the plaintiffs, in behalf of the union, brought this action in equity to compel the company to carry out the award of the arbitrators and to pay to the members of the union the wages fixed by the award, and also to restrain the company from violating the contract between the parties in the respects set forth in the petition.
The action having been disposed of in the court below, not to the satisfaction of either party, appeal is perfected here by both parties, and is submitted to us upon a transcript of the evidence taken in the court below, and upon the conceded facts.
The first question confronting us is as to the legality of the contract involved herein. If it is a contract void against public policy, no court should allow itself to be made the instrument to enforce its obligations, or to consummate an end that the policy of our law .forbids.
Contracts that are illegal and against public policy have always been discouraged by the courts, and no action based upon such a contract is maintainable either in law or in equity, either directly or indirectly, to uphold the contract. The authorities quite uniformly agree that the court should look upon such a contract as no contract at all, and that an effort to enforce it, either directly or indirectly, or to claim benefits thereunder in a court of law or equity, is an effort to procure the
assistance of the court to carry out something that is against the interest of the public. And this the court will not do, even though the parties have acted under such an agreement and reaped the benefits thereof, or have been lax and tardy in invoking the claim of illegality.
The company, one of the parties to the contract here involved, was the only operator of city street railway lines in the entire city of Cleveland, and the contract contained agreements to the effect that the company would employ only union labor. It required all employees that were not members of the union to join the union within 60 days, or otherwise be discharged.
Contracts by which an employer agrees to employ only union labor are contrary to public policy when they take in an entire industry of any considerable proportions in a community so that they operate generally in that community to prevent or seriously deter craftsmen from working at their craft or workmen from obtaining employment under favorable conditions without joining a union. And such was the contract here, and it must necessarily be held to be in conflict with the public policy of our law, and illegal and void. The universal trend of authorities supports this position. • In addition to the cases cited by counsel, there is to be found in 13 Corpus Juris, p. 492, Section 439, a collection of the cases and a discussion of the rule.
It is contended, however, on behalf of the plaintiffs, that, notwithstanding the contract may be illegal in that part providing for a closed shop, still it should be considered as severable in its terms, and that so considered the provision for arbitra
tion -would be valid and enforceable; or, that, if tbe entire contract be held void, still the defendant has submitted to what was in effect a common-law award by arbitrators voluntarily selected, and is therefore bound by the award made by the arbitrators, and that therefore the remedy plaintiffs seek in this case is still available.
If the contract is to be adjudged a severable contract rather than an entire one, it is because, by a judicial interpretation thereof, it appears that it was contemplated and intended by the parties that the nature and purposes of its subject-matter, and its various terms, were to be divisible and independent of each other, and that the parties intended that each provision therein stand as a contract between them, independent of the other terms or agreements.
Elliott, in his work on contracts, Section 1543, and following, in a discussion of this subject, says in effect that, when the terms, nature and purposes of a contract show that it is contemplated and intended by the parties that each and all of its parts, material provisions and the consideration, are common each to the other and interdependent, it is to be considered an entire contract.
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By the Court.
The Cleveland Railway Company has been for the past 15 years or more the operator of all of the city street car lines in the city of Cleveland. In 1906 the company entered into the contract that is pleaded by the plaintiffs, a copy of which is attached to the petition, with the Local Union No. 268 of the Amalgamated Association of Street and Electric Railway Employees of America, hereinafter referred to as the union, which union was affiliated with the American Federation of Labor. For these past 15 years, the company and the union have been operating under and in conformance with this contract, some changes from time to time having been made, and the terms of the same having been extended, until now they are in force and effect until May 1, 1925.
In May of 1924 the union served the notices called for in this contract, upon the company, requesting or demanding certain changes and modifications in the contract, among others, an increase
in pay and some allowances of time for making out accident reports. The demands of the union were not acceded to by the company, which resulted eventually in the selection of arbitrators under the terms of the contract to settle the dispute, and the board of arbitrators met in May, heard the evidence, and on June 3d made a finding and award, concurred in by the two arbitrators selected by the union and the fifth or key arbitrator, Holcomb, the two members selected by the company having withdrawn from the arbitration proceedings. In this award there was an increase in pay, and the company thereby was required to pay an increase to the motormen and conductors amounting to 12 cents an hour, which increased pay was to begin the 1st day of May, 1924; and there was also time given for reports of accidents.
The company refused to comply with this award, upon several grounds, the first being that the contract itself, under which the award was attempted and under which the parties to this suit have been operating for the past 15 years, is illegal and void as against public policy; second, that regardless of the question of the legality of the contract, the provisions therein covering arbitration called for a common-law arbitration at best, and therefore the award had is not binding upon the company, because it withdrew from the proceedings before there had been an actual award or determination by the board; third, that there was fraud in behalf of the union in the selection of the fifth arbitrator, it being claimed that he was prejudiced against the company, and, not only in sympathy with the union, but morally obligated to it by rea
son of indorsements given him for political advancement.
Upon the refusal of the company to comply with the award and upon its threat to disregard the contract and to employ nonunion men, the plaintiffs, in behalf of the union, brought this action in equity to compel the company to carry out the award of the arbitrators and to pay to the members of the union the wages fixed by the award, and also to restrain the company from violating the contract between the parties in the respects set forth in the petition.
The action having been disposed of in the court below, not to the satisfaction of either party, appeal is perfected here by both parties, and is submitted to us upon a transcript of the evidence taken in the court below, and upon the conceded facts.
The first question confronting us is as to the legality of the contract involved herein. If it is a contract void against public policy, no court should allow itself to be made the instrument to enforce its obligations, or to consummate an end that the policy of our law .forbids.
Contracts that are illegal and against public policy have always been discouraged by the courts, and no action based upon such a contract is maintainable either in law or in equity, either directly or indirectly, to uphold the contract. The authorities quite uniformly agree that the court should look upon such a contract as no contract at all, and that an effort to enforce it, either directly or indirectly, or to claim benefits thereunder in a court of law or equity, is an effort to procure the
assistance of the court to carry out something that is against the interest of the public. And this the court will not do, even though the parties have acted under such an agreement and reaped the benefits thereof, or have been lax and tardy in invoking the claim of illegality.
The company, one of the parties to the contract here involved, was the only operator of city street railway lines in the entire city of Cleveland, and the contract contained agreements to the effect that the company would employ only union labor. It required all employees that were not members of the union to join the union within 60 days, or otherwise be discharged.
Contracts by which an employer agrees to employ only union labor are contrary to public policy when they take in an entire industry of any considerable proportions in a community so that they operate generally in that community to prevent or seriously deter craftsmen from working at their craft or workmen from obtaining employment under favorable conditions without joining a union. And such was the contract here, and it must necessarily be held to be in conflict with the public policy of our law, and illegal and void. The universal trend of authorities supports this position. • In addition to the cases cited by counsel, there is to be found in 13 Corpus Juris, p. 492, Section 439, a collection of the cases and a discussion of the rule.
It is contended, however, on behalf of the plaintiffs, that, notwithstanding the contract may be illegal in that part providing for a closed shop, still it should be considered as severable in its terms, and that so considered the provision for arbitra
tion -would be valid and enforceable; or, that, if tbe entire contract be held void, still the defendant has submitted to what was in effect a common-law award by arbitrators voluntarily selected, and is therefore bound by the award made by the arbitrators, and that therefore the remedy plaintiffs seek in this case is still available.
If the contract is to be adjudged a severable contract rather than an entire one, it is because, by a judicial interpretation thereof, it appears that it was contemplated and intended by the parties that the nature and purposes of its subject-matter, and its various terms, were to be divisible and independent of each other, and that the parties intended that each provision therein stand as a contract between them, independent of the other terms or agreements.
Elliott, in his work on contracts, Section 1543, and following, in a discussion of this subject, says in effect that, when the terms, nature and purposes of a contract show that it is contemplated and intended by the parties that each and all of its parts, material provisions and the consideration, are common each to the other and interdependent, it is to be considered an entire contract. To be considered a divisible contract, it must appear that it is one from its nature and purposes susceptible of division and apportionment, and has two or more parts in respect to the matters and things embraced by it and not necessarily dependent upon each other, and that the parties did not intend that they shall be so dependent upon each other. And then in following sections will be found illustrations of severable and entire contracts.
The contract here involved had for its purpose, principally and almost entirely, the provision for the terms and conditions under which the members of the union would work for the company, including some provisions for better conveniences and better hours, and then a provision that the terms of the contract as it was drafted could be changed to cover future years. Then came the provision for arbitration in case the union and the company failed to agree. We are not able to see how one could say that the provision for arbitration was a clause that the parties to this contract contemplated and intended should be taken as a lone and independent matter of agreement between the parties, to be enforced regardless of whether other provisions in the contract could stand or not. It seems, rather, that the provision for arbitration was only incidental to the real purpose of the contract, and that questions that arose touching and regarding the services to be rendered by the union men were the subjects to be arbitrated in case of disputes.
It might readily be seen how easily this invalid contract might be indirectly enforced by holding that the provision for arbitration could stand alone and be considered as a valid and binding contract between the parties, when we consider how easy it would be for the union to say to the company that there were men in its employment who for stated plausible reasons, but because of the real and secret reason that they were nonunion men, should be discharged. And in case the company refused to discharge them, compulsory arbitration would follow which might indirectly enforce upon
the company a closed shop agreement. Many other illustrations, in effect the same as this, might he brought to mind. We are convinced that this is an entire contract and not severable. If we view the proceeding had before the arbitration board as a common-law arbitration voluntarily entered into by the parties, as urged by plaintiffs, in what position do the parties find themselves?
It is well recognized by the authorities in regard to a common-law arbitration that either party may withdraw therefrom at any time before the award has been actually made. In the case before us, the defendant did withdraw from the proceedings before an actual award had been made, and in our judgment that disposes of this question.
Plaintiffs contend, however, that, if this be held to have been a common-law arbitration, still the withdrawal was not made until after information was procured by the defendant in advance that on the day following the award would be made, as it was, and that under such circumstances a withdrawal is not permissible under the rule above referred to; and, further, that the arbitration had was but an appraisal in fact, and that the right to withdraw did not exist at all.
In answer to this, the defendant, insisting that it is not, under any circumstances, an appraisal, asserts that there was fraud in the selection of the arbitrators and that hence, for this reason, there was not a fair and just arbitration, and that whatever might have been done by the board of arbitrators would not be binding upon the defendant.
The evidence shows clearly that while there may
have been no intention or design upon the part of the union or its friends, or upon the part of James W. Holcomb, the fifth or key arbitrator, selected by the other four, yet the circumstances and facts shown in regard to his relation to the union and his attitude towards both parties, and the other facts and circumstances, warrant this court in finding in effect, which we do find in this case, that there was legal fraud in the selection of Mr. Holcomb and in his continuing to sit as an arbitrator, and hence for that reason the award cannot be held to be binding upon the defendant.
We cannot see under what principle or theory the matters and things submitted to arbitration here involved could be viewed as but an appraisal. It was not to determine the value of services already rendered, but to determine what the terms of a new contract for a coming year were to be. It involved the future, while an appraisement usually involves the settlement of a dispute as to the present quantity or quality of something, whether it be wages already earned, the value of something lost or destroyed, or the like.
But aside from this consideration, it is clear that this submission to arbitration was under and by virtue of the contract, and by reason of that contract only, and had it not been for the contract there would not have been this submission, and hence to enforce any award made by virtue of this arbitration would be at least indirectly upholding and enforcing the contract that we hold to be illegal and void as against public policy.
For the reasons given herein, the decree will be
for defendant. Motion of plaintiffs for new trial will be overruled.
Decree for defendant.
Hughes and Warden, JJ., concur.
Judges Hughes and Warden, of the Third Appellate District, and Judge Roberts, of the Seventh Appellate District, sitting in place of Judges Levine, Sullivan and Vickery, of the Eighth Appellate District.