#### William H. McCord, as President of the Building Trades Employees’ Association, Respondent, *v.*Thompson-Starrett Company and Fidelity and Deposit Company of Maryland, Appellants.

First Department,

December 11, 1908.

Master and servant — association of employers — order that only members of particular union be employed — when order against public policy and unenforcible.

An order issued by a building trades employers’ association to its members forbidding the employment of artisans who do not at once join a particular union is against public policy, illegal and void, where the association is made up of nearly all prominent building contractors and practically the order affects the whole building trade in the locality.

As such order is against public policy a member of the association refusing to obey the same is not liable for the penalty of a bond given to secure compliance with the orders of the association.

While an individual employer may lawfully agree with a labor union to employ its members only, such agreement when participated in by all or a large portion of employers in any community, so as to become oppressive by operating generally upon the craftsmen in the trade, and imposing upon them a penalty for refusing to join the favored union, is against public policy and void.

Ingbaham and Clabke, JJ., dissented, with opinion.

• Appeal by the defendants, the Thompson-Starrett Company and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 10th day of March, 1908, upon the decision of the court rendered after a trial at the New York Trial Term, a jury having been waived.

*Morgan J.*O'Brien, for the appellants.

*Frederick Hulse,*for the respondent.

Scott, J.:

We would find no difficulty in affirming this judgment if the Building Trades Employers’ Association had gone no further than to order a general “lock out” of the members of the Brotherhood of Carpenters.

The communication of September 22, 1904, however, does go *131farther, and instructs the members of the association that no men may be set to work, or retained at work, who do not at once join a particular labor union, the Greater New York Carpenters’Union.

This requirement, if it is to be considered as the act of the association, was against public policy, illegal and void. *(Curran*v. *Galen,*152 N. Y. 33 ; *Jacobs*v. *Cohen,*183 id. 207.) I see no reason why we are not bound to regard this 2'equirement as the act of the association. By its constitution the board of governors is designated as the body' which is authorized to act for the association and to issue orders to the members. The complaint alleges, and the court has found, that the letter containing the objectionable order was “ sent to said defendant by the said Board of Governors and certified by its Secretary.” It is true that the letter speaks of the emergency committee as directing that all carpenters then in the employ of a member, who are competent, shall become members at once of the Greater Hew York Carpenters’ Union, and it does not appear who constitute the emergency committee or what power it possessed. But the same letter also contains the injunction, not purporting to emanate from the emergency committee, that no brotherhood carpenter, although willing to sign the arbitration plan, may be set to work unless he at once joins the designated union. Whether these instructions originated with the emergency committee or any one else, the board of governors, by causing them to be subscribed by their secretary and by sending them to the members of the association, adopted them and made them their own. In so doing, as it seems to us, they exceeded their lawful authority and undertook to impose upon the Thompson-Starrett Company an obligation which it was not required to assume. The bonds sued upon, although purporting to be given to secure liquidated damages, are in fact given to secure penalties for non-compliance with the order of the association, for it is apparent that the association, as such, could suffer no actual pecuniaiy damage from the disobedience of an order.

To collect a penalty for the disobedience of an order, it must appear that the order was one which was rightfully and lawfully given, and as it appears that the asscciation exceeded its authority in requiring that no carpenter should be employed unless he joined a particular union, it follows that the penalty cannot be collected. *132I do not understand that there is any serious difference of opinion between us as to the illegality of the directions to employ only members of one particular union. This seems to be established by the opinion of the Court of Appeals in *Curran*v. *Galen (supra),*reaffirmed and explained in *Jacobs*v. *Cohen (supra).*In the'latter case Judge Gray, writing for the court, makes it' quite clear that while an individual employer may lawfully agree with a labor union to employ only its members, because such an agreement is not of an oppressive nature operating generally throughout the community to prevent craftsmen in the trade from obtaining employment and earning their livelihood, yet that such an agreement when participated in by all or by a large proportion of employers in any community becomes oppressive and contrary to public policy because it operates generally upon the craftsmen in the trade and imposes upon them as a penalty for refusing to join the favored union, the practical impossibility of obtaining employment at their trade and thereby gaining a livelihood. The evidence makes it quite clear that the objectionable order of September 22, 1904, was of the latter class, for it is in evidence that the employers’ association embraced nearly every prominent building contractor, and that the “ lock out” affected practically the whole building trade in the borough of Manhattan. It is suggested, however, that even if the order to employ only members of the Greater Mew York Carpenters’ Union was beyond the authority of the board of governors of the employers’ association, still the earlier orders which merely forbade the employment of members of the Brotherhood of Carpenters, were authorized and lawful, and that the disobedience of these by defendants constituted a breach of the conditions of their bonds. Hence, it is argued that the illegal order may be ignored and tb^ forfeiture upheld by reason of the disobedience of the earlier orders, which are assumed to have been lawful. The difficulty with this argument is that the defendants did obey the earlier orders and did -lay off their employees in obedience to them. Indeed, for a long time after the issuance of the obnoxious order they continued to lock out the members of the Brotherhood of Carpenters, and made efforts to obtain a sufficient number of carpenters from outside the membership of that organization. There 'certainly is no reason to suppose that if defendants had filled up their work*133ing force with carpenters unaffiliated with any labor organization, the employers’ association would have accepted their action as a compliance with its orders for the violation of the illegal order of September *22,*1901, is expressly included in the bill of complaint as a reason for forfeiting the bonds sued upon. The judgment appealed from must, therefore, be reversed and a new trial granted, with costs to the appellants to abide the event.

Patterson, P. J., and Lattghlin, J., concurred; Ingraham and Olarjke, JJ., dissented.

Ingraham, J. (dissenting):

This case was triej. at Trial Term before the court, a jury having been waived. The appellants do not claim that the facts found were not sustained by the evidence. The court found that the defendant the Thompson-Starrett Company was a domestic corporation incorporated under the Business Corporations Law in the year 1899 for the purpose of conducting and carrying on the business of builders and contractors, and to perform engineering and architectural work, including the preparation of plans and specifications and expert work as acting and consulting and superintending engineers and architects; that prior to the 10th of June, 1901, a voluntary association was organized known as the Building Trades Employers’ Association of which the defendant the ThompsonStarrett Company was a member; that this association adopted what was called a constitution which stated that the object of the association was to foster the interest of those engaged in the erection and construction of buildings and other structures, to reform abuses relating to the business of persons so engaged, to secure freedom from unjust and unlawful exactions, to obtain and diffuse accurate and reliable information as to all matters affecting such persons, to procure uniformity, harmony and certainty in the relations existing between employers, employees, mechanics and laborers, and in all lawful ways to promote and protect the business interests of the members of the association, but that there was no intention, nor would there be any action on the part of the association, to control or in any way deal with prices or restrict competition; that there was to be a board of governors consisting of three representar *134tives from each of the specified employers’ associations and such other associations as might be provided for. This board of governors were to have power “ to decide all controversies, difficulties and differences arising between the members of this Association and their employees; to determine and regulate the conduct of the members of this Association relative to such controversies, difficulties and differences, and to decide all disputes and disagreements arising between employers associations represented on the board of governors and employees organizations. Also all controversies, difficulties and differences arising between the different employers associations represented on the board ; to determine, regulate and com trol the conduct of such employers associations relative to such disputes, difficulties and differences and generally to determine, regulate and control the conduct of the members of this association and the employers associations represented on the board in all matters pertaining to their relations with their employees, or in any and all matters affecting the building industry or the business interests in such building industry of the members of this association, and for this purpose to make general rules and regulations, provided, however, that where the controversy, difficulty or difference existing affects members of only one employers association represented on the Board of Governors, the Board of Governors shall take no action except upon the request of the Governors of the association in which the difficulty, difference or controversy exists. * * * The decisions, orders, prohibitions and regulations of the Board of Governors shall be final and obligatory upon each and every member of this association and shall be complied with,'obeyed and observed in good faith by every such member.” Article 10 provided that the “ Representatives from sixty (60) per cent of the associations represented on the Board'shall constitute a quorum for all business, except that of ordering a cessation or resumption of work by any or all of the members of this association. When the question of ordering a cessation or resumption of work by any or all of the members of the Association is before the Board, representatives from not less than seventy-five (75) per cent of the associations represented on the Board shall constitute a quorum, and to order a cessation or resumption of work at least four-fifths (4-5) of the vote must be in favor of such an order.” Article 11 provided that “ In *135order to insure the compliance with and obedience to the decisions, orders, prohibitions and regulations of the Board of Governors, all represented and individual members shall give bonds to this association. The form and amount of such bonds shall be deterznined by and satisfactory to the Boaz'd of Governors.” In compliance with this provision the Thompson-Starrett Company executed as principal, and the defendant the Fidelity and Deposit Company of Maryland as surety, four bonds which, except as to the amount, were substantially the same. The first bond was dated the 10th day of June, 1904. The second was dated the 22d of June, 1904. The third bond was dated the 19th day of July, 1904, and the fourth the 2d of September, 1904. Upon each of these bonds there is a cause of action alleged in the complaint, the plaintiff demanding judgment for the amount specified in the four bonds. Upon the first bond the defendant the Thompson-Staivett Ooznpany, called the principal, and the defendant the Fidelity and Deposit Company of Maryland, called the surety, “are held and firmly bound unto The Building Trades Employers’ Association and Charles M. Eidlitz, as President of the Building Trades Employer’s’ Association and his successors, and the individual membei’s thereof (hereinafter called the obligees) in the sum of fifteen hundred ($1,500) dollars,” for the payment of which the obligors jointly and sevez-ally bound themselves. The bond then recites that the principal had been admitted as a representated member of the Building Trades Employer’s’ Association, one of the obligees, upon the principal’s agreement and stipulation “ herein and hereby evidenced, that said principal will obey and execute all decisions, orders, prohibitions and regulations of the Board of Governors of said Building Trades Employers’ Association, given in pursuance and made under the authority of the Constitution and By-laws of said association, immediately upon service upon said Principal of a copy of the same duly certified by the Secretary of said Association; and also upon the execution and delivery of this undertaking to said Association, to pay to said obligees the sum of fifteen hundred dollars ($1,500) for liquidated damages to said obligees, by reason of any non-compliance of said principal with said agreement and stipulation; ” and the condition of the obligation is, “ that if the said principal shall duly and faithfully obey and execute any and all such decisions, orders, *136prohibitions and regulations of said Board of Governors of the said Building Trades Employers’ Association, given in pursuance and under the authority of the Constitution and By-laws of said association, then this undertaking shall be void; otherwise to remain in full force and effect.” The defendant the Thompson-Starrett Company, having thus qualified as a member of this association by the execution and delivery of these bonds, it remained in full membership thereof during the periods hereafter mentioned. There is certainly nothing in the objects of this association as stated in the constitution which is illegal under the laws of this State, or opposed to its policy. There is no statute or public policy that prevents individuals or corporations engaged in the erection and construction of buildings from associating themselves together for such a purpose ; nor are the methods adopted illegal. The association was to be governed by a board of governors, who were given power of rather an extraordinary nature, as they related not so much to the management of the affairs of the association as to determining controversies between the members of the association as between themselves, or between members of the association and their employees; but as the members of this association were capable of contracting, I know of no rule of law that ?imits them in making such a contract.

A scheme of arbitration was adopted by which, in the event of a dispute between any member of the association and its employees, the question in dispute could be settled by arbitration, rather than a resort to strikes or force; and provision was made for the enforcement of an agreement to arbitrate which should be made between the employers who were members of the association and their employees, and for the enforcement of any award which would result from such an arbitration. There is nothing in the constitution to show that anything more was intended than to accomplish this result. I cannot see that it was beyond the power of any business corporation to enter into such an agreement. It related entirely to the prosecution of its business, and adopted means of settling disputes which had become very common between employers of labor and their employees. The evidence here shows that prior to the organization of this voluntary association, the conditions had become such that it was almost impossible for any one to make a contract with any reasonable assurance of its being com*137pleted without submitting to extortion and blackmail, and such a condition existing there certainly could be no reasonable objection to the organization of either the employers or employees to provide for a settlement of these disputes by arbitration or agreement and thus relieve a situation which had become intolerable. To accomplish such a result it was necessary that the associates should act together so long as the object sought to be attained was legal, and the associates certainly could agree that they would bind themselves to carry out Hie order of a majority to accomplish this result. The orders that the members of the association were bound to obey were necessai’ily those which had relation to the object for which the association was organized, and the condition of the bond in each case was that the principal would obey and execute any and all such decisions, orders, prohibitions and regulations of the said board of governors, given in pursuance and under the authority of the constitution and by-laws of the said association. Clearly a decision, order, prohibition or regulation of the board of governors which had no relation to the object for which the association was organized would not be binding upon its members, and a refusal to execute it would not be a violation of the condition of the bond. The decision of this controversy, therefore, must necessarily depend upon the question as to whether or not the orders of this board of governors were given in pursuance and under the authority of the constitution and by-laws of the association; and, second, whether the principal upon these obligations disobeyed or refused to execute any of such legal directions.

The learned counsel for the appellants in his brief states that “ The court below has held that the regulations of the Board of Governors were authorized by its constitution. For the purposes of this appeal, it will be assumed that the Constitution of the Building Trades Employers’ Association did authorize the regulations of the character and having the effects of those in question. The question is then presented whether a constitution conferring such authority upon a Board of Governors could be accepted by the Thompson-Starrett Company or any other corporate member of the Association.” By this I understand that counsel for the appellants expressly conceded that the orders and regulations of the board of governors were authorized by the constitution; and as *138the constitution authorizes no order or prohibition that is either opposed to the law of this State or its policy, it is difficult to see how any question is presented on this appeal. The objects of the association are to be determined by its constitution and by-laws, and not by orders or directions that its board of governors subsequently gave. If that question is presented, however, it is unnecessary to determine that all the orders or resolutions of the board of governor’s were given in pursuance of and under the authority of the constitution and by-laws of the association. There is certainly a serious question presented as to whether the order of September 22, 1904, so far as it requires the defendants not to employ any workmen who would not join the new union called “the Greater Hew York Carpenters’ Union,” was authorized by the'constitution or was a requirement that could bind the members of the association.

If there was any evidence that this association was organized for the purpose of compelling all workmen to join a particular union before they were employed, it would be an illegal association under *Curran*v. *Galen*(152 N. Y. 33), for it was there said that “ Public policy and the interests of society favor the utmost freedom in the citizen to pursue his lawful trade or calling, and if the purpose of an organization or combination of workingmen be to hamper or to restrict that freedom, and, through contracts or arrangements with employers, to coerce other workingmen to become.members of the organization and to come under its rules and conditions, under the penalty of the loss of their position, and of deprivation of employment, then that purpose seems clearly unlawful and militates against the spirit of our government and the nature of our institutions; ” and a combination among employees to compel all workmen to join a particular labor union was held to be void. In *Jacobs*v. *Cohen*(183 N. Y. 207) *Curran*v. *Galen*is referred to as unaffected as an authority by any of the subsequent decisions of the court. In that case a contract between an employer, an association of its employees and a labor union which had no relation to either and which required the employer to employ only men of this labor union was upheld. Judge Gray, in delivering the opinion of the court, says: “ Organization, or combination, is a law of human society. It is open to all orders of men, who desire to accomplish some lawful purpose through the greater strength and effectiveness, which organization offers over *139individual effort. If surrender of individual liberty is involved in combination, that is, nevertheless, but an extension of the right of freedom of action. If, therefore, the organization of workingmen is not obnoxious to moral, or to legal, criticism and only the use, or directing, of the power of the organization to injure others, by preventing them from following their trade, is visited by the law with its condemnation, how can it fairly be said that the refusal of a body of men to work with those not in affiliation with them and an agreement with the employer, by which such are excluded from the shop, is acting beyond legally justifiable limits ? ” But this order of September 22, 1901, does not seem to be an order of the board of directors of the association, but is "more a recommendation or direction of the “ Emergency Committee ” which, so far as I can see, had no authority to make such an order, and for a violation of such an order the bond would not be forfeited. There is, however, a direct order of the board of governors of August 4, 1904, by which the members of the association are directed and ordered to “ lay off all carpenters * * * on Monday morning, August 8tli, 1904.” The principal of this bond recognized this order and obeyed it. On the 12th of August, 1904, a resolution was adopted by the governors *“*That if the Unions now on strike do not return to work on the jobs on which they have struck, on or before the morning of August 22d, the members of this association shall proceed with such mechanics as will agree to work under the conditions of employment as they existed on August 1st, and governed by aforementioned agreements.” In the answer it is alleged that this resolution of August 12, 1904, was intended and understood to require all members of the plaintiff association to employ thereafter in the place and stead of the laborers discharged and locked out pursuant to the said resolution of August 4,1904, only such laborers as would sign the arbitration agreement of the plaintiff association; and the defendants seem to admit that they disobeyed that order by re-employing members of this Brotherhood of Carpenters whom they had discharged under the order of August 4, 1904, without their agreeing to work under the conditions of employment that existed on August first. There was thus, it would appear, an admitted refusal to obey and execute the order and regulation of the board of governors which, as before stated, is conceded to *140have been authorized by the constitution of the Building Trades Employers’ Association.

It seems to me, therefore, that the condition of the bond was forfeited, and the judgment should, therefore, be affirmed.

Clarke, J., concurred in result.

Judgment reversed, new trial ordered, costs to appellants to abide event.