Case Name: Boro Park Sanitary Live Poultry Market, Inc., Appellant, Impleaded with Others, v. Max Heller, as President of International Brotherhood of Teamsters, Chauffeurs, Stablemen and Helpers of America, Local Union No. 167, et al., Respondents
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1939-06-02
Citations: 280 N.Y. 481
Docket Number: 
Parties: Boro Park Sanitary Live Poultry Market, Inc., Appellant, Impleaded with Others, v. Max Heller, as President of International Brotherhood of Teamsters, Chauffeurs, Stablemen and Helpers of America, Local Union No. 167, et al., Respondents.
Judges: 
Reporter: New York Reports
Volume: 280
Pages: 481–491

Head Matter:
Boro Park Sanitary Live Poultry Market, Inc., Appellant, Impleaded with Others, v. Max Heller, as President of International Brotherhood of Teamsters, Chauffeurs, Stablemen and Helpers of America, Local Union No. 167, et al., Respondents.
Argued May 15, 1939;
decided June 2, 1939.
Stanley M. Dorman and Eugene Frederick Roth for appellant.
The court at Special Term properly found that no labor dispute existed, and, therefore, had jurisdiction to grant a complete injunction without compliance with section 876-a of the Civil Practice Act. (Thompson v. Boekhout, 273 N. Y. 390; Yablonowitz v. Korn, 205 App. Div. 440; Luft v. Flove, 270 N. Y. 640; Matter of Bowne v. Bowne Co., 221 N. Y. 28; Home Fire Ins. Co. v. Barker, 67 Neb. 644; Anthony v. American Glucose Co., 146 N. Y. 407.) The order of the Appellate Division reversing the order of Special Term which granted the temporary injunction, and denying it, having been made expressly on the law and not in the exercise of its discretion, is reviewable by the Court of Appeals. (Matter of Baltimore Mail S. S. Co. v. Fawcett, 269 N. Y. 379.) The Special Term was justified in issuing the injunction as provided in the order. (Luft v. Flove, 270 N. Y. 640; Fitter v. Kaminsky 7 N. Y. Supp. [2d] 101; Wishny v. “John Jones,” 169 Misc. Rep. 459.)
Leon Herzfeld, Arthur C. Mandel, Lester B. Lipkind and Irving Herzfeld for respondents.
A labor dispute exists between the plaintiff corporation and the defendant union within the meaning of section 876-a of the Civil Practice Act. The relationship of employer and employee exists. The procedural requirements of section 876-a must be complied with before any relief can be granted. (Krip Holding Corp. v. Canavan, 159 Misc. Rep. 3.) A corporation is a legal entity separate and apart from its stockholders, officers and members. When a corporate relationship exists, a partnership relationship cannot exist at the same time between the parties involving the identical business and subject-matter to the detriment of others. (Rapid Transit Subway Constr. Co. v. City of New York, 259 N. Y. 472; Brock v. Poor, 216 N. Y. 387; American Union Line, Inc., v. Oriental Nav. Corp., 239 N. Y. 207; Matter of Mt. Sinai Hospital [Goldman], 250 N. Y. 103; Claude Neon Lights, Inc., v. Federal Electric Co., 135 Misc. Rep. 113; Drucklieb v. Harris, Inc., 209 N. Y. 211; Boag v. Thompson, 208 App. Div. 132; Berger v. Eichler, 211 App. Div. 479; Cohen v. Mahoney, 160 Misc. Rep. 196; Thomashefsky v. Edelstein, 192 App. Div. 368.) Officers and directors of a corporation who perform manual labor in addition to their executive duties are deemed employees of the corporation. (Fitchett v. Murphy, 26 Misc. Rep. 544; Outterson v. Fonda Lake Paper Co., 20 N. Y. Supp. 983.) The Special Term below was not justified in issuing an injunction pendente lite as sweeping as the one granted. (Stillwell Theatres, Inc., v. Kaplan, 259 N. Y. 405; Exchange Bakery & Restaurant, Inc., v. Rifkin, 245 N. Y. 260.)

Opinion:
Lehman, J.
Boro Park Sanitary Live Poultry Market, Inc., is a domestic corporation conducting a wholesale and retail market for the sale of live and slaughtered poultry. Four brothers and their mother are the sole stockholders, directors and officers of the corporation. Prior to December 31, 1938, the corporation employed members of the defendant union in its business under a written contract with the union. On that date the contract with the union expired. It has never been renewed. The stockholders of the corporation desire to do the work themselves. The union has taken the position that the plaintiffs were employers and therefore not eligible to membership in the union. Then the corporation refused to renew the union contract and since that time its stockholders have performed substantially all the manual work formerly done by members of the union. The four brothers are paid regular weekly wages; their mother receives no salary " but, instead, support and contribution." A functionary, denominated a " shochet," is employed to certify that the corporation complies with Jewish dietary laws; otherwise the corporation has no employees except its stockholders. By picketing and other methods the defendant union is seeking to induce or compel the corporation to employ union members and to enter into a contract with the union on terms dictated by the union.
The plaintiff corporation in this action seeks to enjoin the union from all interference with it's business and an injunction pendente lite was issued restraining the defendant union from picketing and even from stating " that the plaintiff corporation is engaged in any labor controversy or dispute, or that a strike exists on their premises, or that it is unfair to labor." Upon appeal the Appellate Division reversed the order granting the injunction pendente lite and upon the defendants' motion dismissed the complaint on the ground that it failed to allege facts sufficient to constitute a cause of action.
The Legislature, in section 876-a of the Civil Practice Act, has regulated the exercise of the equitable power of the Supreme Court " to issue any restraining order or a temporary or permanent injunction in any case involving or growing out of a labor dispute, as hereinafter defined." The section (subd. 10) defines a labor dispute as follows:
" (c) The term ' labor dispute ' includes any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of employment, or concerning employment relations, or any other controversy arising out of the respective interests of employer and employee, regardless of whether or not the disputants stand in the relation of employer and employee."
The plaintiff concededly has failed to plead or prove matters which under the provisions of section 876-a must be pleaded and proven in order to obtain injunctive relief in " labor disputes."- The judgment of the Appellate Division dismissing the complaint cannot be successfully challenged if the case involves or grows out of a " labor dispute " as defined in the statute.
We have said that the Legislature intended only " to subject injunctions issued in disputes involving or growing out of the relations of employer and employee to special regulations," and we have therefore excluded from the application of the statute cases where the " owner of a small business seeks to avoid * labor disputes ' as defined in the statute, by running his business without any employees." (Thompson v. Boekhout, 273 N. Y. 390, at 393.) Where an owner of a business does the work himself without employees the " relation of employer and employee " does not exist and there can be no " controversy concerning terms or conditions of employment " or " concerning employment relations " or " arising out of the respective interests of employer and employee " as provided in the statutory definition. The problem here is whether in this case the corporate employer and its stockholders who labor for wages in its business stand in the relation of employer and employee.
Four men perform manual labor for the corporation, formerly performed by members of the union. They receive wages for their work. The fact that they are stockholders or even officers of the corporation would not deprive them as employees of compensation for accidental injuries under the Workmen's Compensation Law (Cons. Laws, ch. 67).. (Matter of Skouitchi v. Chic Cloak & Suit Co., 230 N. Y. 296.) It would not bar them from the preference granted by statute for " the wages of the employees, operatives and laborers " of insolvent corporations conferred under the provision of chapter 376 of the Laws of 1885. (Palmer v. Van Santvoord, 153 N. Y. 612.) (Cf. Federal Social Security Act; U. S. Code, tit. 42, § 1301; Federal Railroad Unemployment Insurance Act, enacted June 25, 1938, 52 U. S. Stat. p. 1094; U. S. Code, tit. 45, § 351.) It is said, however, that the corporate entity of the plaintiff may be ignored because the corporation conducts only a small family business and if ignored these stockholders are seen to be working for themselves without any employer. The corporate entity is, however, in this case not a fiction. It is the form chosen by the stockholders for the conduct of the business. It hires the stockholders to work for it. They are paid by it. They are subject to discharge by it. No court would, I think, listen to a claim that the corporate entity should be ignored if these " employees " claimed the benefit of the Workmen's Compensation Law, the Labor Law (Cons. Laws, ch. 31) or any other statute protecting employees. It should not be ignored in this case.
It is said too that the union may not refuse to admit stockholders of a corporation because the union regards them as " bosses " and then insist that the relationship of employer and employee exists between corporation and a' stockholder working for the corporation in return for wages paid by the corporation. The union, with perhaps some exceptions not material here, is free to choose its own members and then to endeavor to obtain employment for its chosen members. It may reject these stockholders because they share indirectly in the profits of the business and their interests may not coincide with the interest of other workers. Controversy as to whether the stockholders or the members of the union should be employed to do the work of the corporation remains, none-the-less, a " labor dispute " within the letter and spirit of the statute.
The judgment of the Appellate Division should be affirmed, without costs. The appeal, by permission, from the order of the Appellate Division should be dismissed, without costs. The certified question is not answered.