Case Name: Schoellhammer's Hatboro Manor, Inc. v. Local Joint Executive Board of Philadelphia, Appellant
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1967-06-29
Citations: 426 Pa. 53
Docket Number: Appeal, No. 315
Parties: Schoellhammer’s Hatboro Manor, Inc. v. Local Joint Executive Board of Philadelphia, Appellant.
Judges: Before Musmanno, Jones, Cohen, Eagen, O’Brien and Roberts, JJ.
Reporter: Pennsylvania State Reports
Volume: 426
Pages: 53–69

Head Matter:
Schoellhammer’s Hatboro Manor, Inc. v. Local Joint Executive Board of Philadelphia, Appellant.
Argued January 5, 1967.
Before Musmanno, Jones, Cohen, Eagen, O’Brien and Roberts, JJ.
Richard H. Markowitz, with him Richard Kirschner, LouAs H. Wilderman, and Wilderman, Markowitz <£ Kirschner, for appellant.
Richard C. Segal, with him Louis C. Johanson, and Fein, Criden and Johanson, for Schoellhammer’s Hatboro Manor, Inc., appellee.
William A. Whiteside, Jr., with him Fox, Rothschild, O’Brien é Frankel, for Greater Philadelphia Restaurant Operators, Inc., appellee.
June 29, 1967:

Opinion:
Opinion by
Mr. Justice Jones,
The Local Joint Executive Board of Philadelphia County, Local Unions Nos. Ill, 115, 232 and 301 [Union], is an unincorporated labor organization which represents, as collective bargaining agent, hotel and restaurant employees in the Philadelphia area. Greater Philadelphia Restaurant Operators, Inc. [Association], is a Pennsylvania corporation which represents various restaurant and taproom operators and owners in the same geographical area.
The Association and the Union entered into a collective bargaining agreement on October 1, 1958. Under the terms of that agreement, the Association recognized the Union as "the sole and exclusive collective bargaining representative of the employees . . . working in each establishment now operated and maintained by any of the employers or in any establishment hereafter operated and maintained by any of the employers, in all matters relating to collective bargaining such as wages, hours of work, working conditions and adjustment of grievances." (Emphasis added). Article XVII, §1 of that agreement further provides: "All matters in controversy or dispute arising during the' term of this agreement, except those matters specifically enumerated in the last sentence of this article, shall be discussed between the Employer and the representatives of the Union in an effort to reach an amicable adjustment. In the event that the Employer and the Union are unable to adjust the controversy or dispute between them, then either party shall apply to the American Arbitration Association for the purpose of having the impartial arbitrator designated in accordance with its rules and regulations. The impartial arbitrator thus designated shall promptly hear and decide the grievance or matter in dispute and the decision thus rendered shall be final and binding upon both parties." (Emphasis supplied).
Louise Sehoellhammer, trading as Sehoellhammer's Brewery Tavern, [Louise Sehoellhammer], is an "Employer" under the agreement and a member of the Association and operates, as an individual under the Fictitious Names Act, a restaurant-liquor establishment on North Hancock Street in Philadelphia. Sehoellhammer's Hatboro Manor, Inc., [Manor], is a Pennsylvania corporation which operates a restaurant-liquor establishment in Hatboro, Montgomery County. The Manor is not an Association member and, at the time of the collective bargaining agreement, was not a signatory or party to such agreement.
The crux of the controversy between the Association and Sehoellhammer, vis-a-vis the Union is whether Schoellhammer, the Tavern operator*, is, in fact} operating and maintaining the Manor so as to bring the Manor within the provisions of the collective bargaining agreement as an "establishment hereafter operated and maintained" by an Association member. To determine that issue, the Union, on October 13, 1964, made a demand in writing for arbitration under the arbitration provisions of the agreement and for a submission of that issue to the American Arbitration Association.
On November 9, 1964, the Manor instituted an equity action in Court of Common Pleas No. 5 of Philadelphia County seeking injunctive relief against the Union, the Association and Louise Schoellhammer. The Manor alleged, inter alia, that "it [was] an entity unto itself" and "in no way connected with the business conducted and owned by the [Tavern]", that it was not a party to the bargaining agreement and that the Union's demand for arbitration was an attempt to force the Manor into contractual obligations to which it was never a party, directly or indirectly. Manor sought to restrain the Union, the Association and the Tavern from (a) arbitrating any matter involving Manor and its employees, (b) from doing any act which would compel Manor to recognize the Union as collective bargaining agent and (c) from doing any act to compel Manor to interfere with its employees' right to select their own representative for collective bargaining purposes.
The court below (the late President Judge Alessandroni) granted a rule and, later, a preliminary injunction restraining the parties from submitting the issue to arbitration. From that decree this appeal was taken.
In deciding the instant controversy certain well settled principles must be kept in mind: (1) ". . . it has been stated over and over again that on an appeal from a decree awarding a preliminary injunction the Supreme Court will consider only whether any apparently reasonable grounds for the action of the court below existed, and the decree will be affirmed unless the record presents palpable legal error" : Philadelphia v. Philadelphia Transportation Co., 386 Pa. 231, 236, 126 A. 2d 132 (1956) and authorities therein cited; (2) arbitration is a matter of contract, and, absent an agreement between the parties to arbitrate an issue, the parties cannot be compelled to arbitrate that issue: United Steelworkers v. Westinghouse Electric Corporation, 413 Pa. 358, 362, 363, 196 A. 2d 857 (1964); (3) it is for the court to determine on the basis of the contract provisions whether a party is bound to arbitrate and what issues, if any, it must arbitrate: Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241, 82 S. Ct. 1318 (1962); United Steelworkers, etc. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S. Ct. 1347 (1960); (4) recourse to arbitration as a means of resolving labor disputes is favored by the law (Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 77 S. Ct. 912 (1957); United Steelworkers v. Warrior & Gulf Navigation Co., supra, 363 U.S. pp. 578, 584, 585) and there is á "federal policy of settling labor disputes by arbitration" (United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596, 80 S. Ct. 1358 (1960)).
In the case at bar, the Union, seeking arbitration, alleges that an arbitrable issue has arisen under the collective bargaining agreement because that agreement has been violated by Louise Schoellhammer, a signatory to and an "Employer" under that agreement, in not applying the provisions of the agreement to the Manor and its employees which, allegedly, is an establishment now operated and maintained by Louise Schoellhammer.
Under the terms of the collective bargaining agreement, the Association, which represented, inter alia, Louise Schoellhammer, recognized the Union as the exclusive bargaining agent for all the employees of the Association members, if such employees worked in any establishment of any Association member which such Association member operated and maintained at the time of the agreement or operated and maintained thereafter during the term of the agreement. Beyond any question, this collective bargaining agreement, together with its arbitration provisions, bound the Association, the Union and Louise Schoellhammer.
An examination of the decree granting injunctive relief to the court below reveals its broad and sweeping nature: it restrains the Association, the Union and Louise Schoellhammer from (1) seeking to determine, by arbitration or otherwise, any matter involving the "rights, duties, liabilities and responsibilities of [Manor] and its employees, either directly or indirectly", (2) doing any act to compel Manor to recognize the Union as representative of Manor's employees for collective bargaining purposes or to compel Manor to require its employees to become members of the Union, (3) doing any act to interfere with Manor's employees' right to select their own collective bargaining agent, (4) engaging in any unlawful acts and in terfering with Manor's business and, (5) doing any act indicating to the public that Manor and its employees have a labor dispute. In justification of its grant of this injunctive relief, the lower court noted that Manor was not a signatory to the collective bargaining agreement and that, since arbitration is a matter of contract, Manor, which was not a party to the agreement, could not be compelled to arbitrate.
In determining the validity of this decree, initially, we must look to the factual posture of this litigation. Under the collective bargaining agreement, the Association, the Union and Louise Schoellhammer agreed to submit to arbitration "all matters in controversy or dispute", with certain presently irrelevant exceptions. A dispute arose between the Association and Louise Schoellhammer on the one part and the Union on the other part as to whether Louise Schoellhammer was operating and maintaining the Manor so as to bring the Manor's employees within the scope of the arbitration provision. The Union then demanded that this dispute be submitted to arbitration. Such demand was made not on Manor, who was not a party to the collective bargaining agreement, but on Louise Schoellhammer, who was a party to the agreement.
Upon such demand being made, Manor then instituted the instant litigation to prevent any arbitration of the dispute on the ground that it was not a party to the collective bargaining agreement. In Goldstein v. International Ladies' Garment Workers' Union, 328 Pa. 385, 391, 392, 196 A. 43 (1938), this Court decided that the issue whether the appellants in Goldstein were parties to a collective bargaining agreement under which arbitration was to be conducted was a matter for préliminary determination by the court and not by the arbitrator and described the right to have snch issue decided by a judicial tribunal, rather than by arbitration, as a constitutional right. In John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 84 S. Ct. 909 (1964), the Court stated: "The duty to arbitrate being of contractual origin, a compulsory submission to arbitration cannot precede judicial determination that the collective bargaining agreement does in fact create such a duty. Thus, just as an employer has no obligation to arbitrate issues which it has not agreed to arbitrate, so a fortiori, it cannot be compelled to arbitrate if an arbitration clause does not bind it at all." (p. 547). In the case at bar, the matter was determined upon the pleadings and legal arguments. The Union did not offer any evidence that Manor occupied the status of a party to the collective bargaining agreement so as to compel it, under the arbitration provisions of such agreement, to submit to arbitration. Under such circumstances, under the rationale of Goldstein and Wiley, Manor's obligation to submit to arbitration was a matter for the court to determine in the first instance. The court below correctly determined on the record then before it that Manor was under no obligation to submit to arbitration. Had the court granted injunctive relief so limited and restricted, its decree would have to be affirmed without qualification.
However, the injunctive relief granted by the court below barred the Union, the Association and Louise Schoellhammer, all of whom as parties to the agreement had pledged themselves to arbitrate disputes arising during the lifetime of the agreement, from the performance of their contractual obligation. In our view, the court below could not thus negate the arbitration provisions of the collective bargaining agreement. Arbitration furnishes a procedure for the settlement of disputes between an employer and Ms employees to avoid the disturbance of an industrial peace and "[t]he processing of disputes through the grievance machinery is actually a vehicle by which meaning and content are given to the collective bargaining agreement.": (United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 581, 80 S. Ct. 1347 (1960)).
The instant appeal presents two sides of a coin. On the one hand, judicial tribunals must recognize that arbitration, a matter of contract, should not be compelled of a party unless such party, by contract, has agreed to such arbitration, and on the other hand, where parties have agreed, by contract, to arbitrate, such an agreement must be enforced. The court below failed to differentiate these two well established legal concepts. On the record in the court below Manor clearly was not a party to the collective bargaining agreement, and, therefore, could not be compelled to submit to arbitration under the agreement and the determination whether Manor was a party was properly for the determination of the court and not the arbitration tribunal. However, the Association, the Union and Louise Schoellhammer, as parties to the collective bargaining agreement who had agreed to submit to arbitration all disputes arising under that agreement were under a contractual obligation to submit this dispute to arbitration. The court below could not and should not have restrained the Association and Louise Schoellhammer vis-a-vis the Union from submitting this dispute to the arbitration tribunal.
The question whether Louise Schoellhammer is operating and maintaining the establishment in Montgomery County known as Sehoellhammer's Hatboro Manor must be determined through the arbitration procedure. The finding of the arbitration tribunal on this question will bind the Association, the Union and Louise Schoellhammer, but it cannot bind the Manor. If the arbitration tribunal does resolve this question in favor of the Union, then the Union could, if it so chooses, proceed against the Manor in an appropriate judicial forum and it would then be within the province of the judicial tribunal to determine whether such finding is legally supportable and its effect upon Manor and its employees.
Under the factual posture presented on this appeal such circuity of action cannot be avoided if we are to give recognition to well settled principles in this area of the law.
To the extent that the court below by its decree restrained the parties to the collective bargaining agreement from proceeding to arbitration under such agreement, such injunctive relief must be denied.
The decree of the court below is affirmed. The matter is remanded to the court below to enter a decree consistent with the views expressed in this opinion. Each party to bear own costs.
Mr. Chief Justice Bell took no part in the consideration or decision of this case.
Under this agreement, the various restaurant and taproom operators and owners are termed "Employers".
These exceptions are not presently pertinent,
Act of May 24, 1945, P. h. 967, §1 et seq., as amended, 54 P.S. §28.1 et seq.
This demand was addressed to "Schoellhammer's" at 1158 North Hancock Street, Philadelphia, the address of the Tavern. While the demand could have been more artistically drawn, nevertheless It is clear the demand was not upon Manor but upon Louise Schoellhammer, trading as the Tavern, a party to the collective bargaining agreement.
After Judge Alessandroni's death, his opinion in support of his decree was adopted by the court below.
Manor's employees do not belong to any union.
This decree is couched in the identical language employed in Manor's prayer for relief.
The instant dispute was an arbitrable dispute under the agreement. In United Steelworkers v. Warrior & Gulf Navigation Co., supra, pp. 584, 585, it was said: "In the absence of any express provision excluding a particular grievance from arbitration, we think only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail....."