Case Name: LATTER v. HOLSUM BREAD CO.
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1945-06-19
Citations: 108 Utah 364
Docket Number: No. 6795
Parties: LATTER v. HOLSUM BREAD CO.
Judges: McDONOUGH, j., concurs in the opinion of Mr. Justice WOLFE.
Reporter: Utah Reports
Volume: 108
Pages: 364–376

Head Matter:
LATTER v. HOLSUM BREAD CO.
No. 6795.
Decided June 19, 1945.
(160 P. 2d 421.)
Rehearing Denied September 7, 1945.
See 17 C. J. S., Contracts, sec. 230; Validity of agreement to submit all future questions to arbitration, note, 135 A. L. R., 79. See, also, 3 Am. Jur., 861.
Louis H. Callister and E. R. Callister, Jr., both of Salt Lake City, for appellant.
Clarence M. Beck and Homer Holmgren, both of Salt Lake City, for respondent.

Opinion:
WADE, Justice.
Plaintiff, Fullmer H. Latter, the business representative of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local Union No. 222, brings this action to recover pay for services rendered between January 1, 1942, and February 15, 1944, by four members of that union. The complaint is in four counts and plaintiff claims the money is owing under the terms of a contract, dated November 7, 1940, between the union and defendant governing the wage scale of the union members. Plaintiff's assignors were driver salesmen. Three of them were in defendant's employment at the time the contract was made and each was at that time receiving nine per cent of all net sales made by him and a guarantee of not less than $30 per week, and in addition thereto one per cent of all net sales made by him over $250. The fourth assignor was not in defendant's employment at the time the contract was made but was employed shortly thereafter and received the same wage scale as the other three.
With the beginning of 1942, defendant refused to pay the extra one per cent on weekly sales over $250, claiming the right to make this reduction under the contract. This action was brought to collect the accumulation of that amount over the period in question. The trial court entered judgment in favor of the plaintiff on the three counts covering wages of the three union members who were in defendant's employment at the time the contract was made but dismissed the other count. Defendant appeals from the part of the judgment against it and plaintiff appeals from the part against him.
The parties base their claims on the following provisions of the contract:
"Section 2. The wages and commissions of all regularly employed salesmen covered by this Agreement shall be nine per cent of all net sales of merchandise sold by him or at any time delivered to customers whom he regularly serves But in no event shall said wages or commissions be less than $30.00 per week.
"Section 4. No employee, by the adoption of this contract, who is now receiving a minimum guarantee in excess of $30.00 per week and 9 per cent on commissions, shall suffer a reduction."
Plaintiff argues that under Section 2 the regular wages and commissions were fixed at nine per cent of net sales and a minimum guarantee of not less than $30 per week and under Section 4 any employee who was at the time of the making of the contract receiving more than that should not be reduced to the scale of Section 2 but would continue on the scale he was then receiving. Defendant does not dispute that construction but contends that the one per cent on sales over $250 was not a part of the wages and commissions but was merely a bonus gratuitously given by the defendant and therefore he could withdraw it any time he wished. There was nothing in the manner of making the payment or of keeping books which supports this contention. The one per cent was paid to the employee at the same time and place and in a lump sum, and was accounted for on the books of the company in exactly the same maimer that the other parts of the wages and commissions were and the trial court found that it was a part of the wages and commissions. In view of these facts it would be an artificial construction to hold that this one per cent was a bonus and we therefore sustain the decision of the trial court thereon.
Plaintiff cross-appealed from the decision of the trial court dismissing the count covering the claim of his assignor who was not in the employment of the defendant when the contract was made. He argues that the Contract was made by the union as the collective bargaining agent of the members of the union and that all persons doing the same work should receive the same pay therefor. This argument is well taken but can only have force and effect where there is a contract to be made, and unless it is so provided in this contract we are powerless to do anything about it. Under Section 2 quoted above, the regular wages and commissions were fixed at nine per cent of the net sales and not less than $30 per week. Unless there is some other provision which takes the employee in question out of the provisions of that section, his wages and commission must be in accordance therewith. Section 4, by its express provisions, applies only to an employee who at the time of making the contract was receiving more than the standard rates, and therefore does not apply to this assignor. Nor is there any other provision of the contract which can help plaintiff on this count. The judgment of the trial court must, therefore, be sustained.
Section 14 of the contract contains the following provisions :
"It is agreed that should there be any change or violation of this agreement by any of the parties hereto or any question or interpretation of the meaning of any provision in this agreement which may arise between the parties hereto, an attempt shall be made immediately to settle such controversy amicably. In the event such controversy cannot be amicably settled, it shall be submitted to a board of arbitration which shall consist of two representatives chosen by the company and two representatives chosen by the Union. In the event that this board of arbitration is unable to reach a decision within seven days then in that event a fifth person shall be chosen by the committee and the decision of such board of arbitration shall be binding on the parties of this agreement; "
Immediately before the commencement of the trial defendant asked permission to file an amended answer wherein he pleaded as a bar to this action the failure of the plaintiff's assignees to submit this dispute to arbitration as provided for in the above quotation. This the trial court refused on the ground that such amendment does not state facts sufficient to constitute a bar to the action. Plaintiff assigns this ruling as error. .
It is almost the universal rule that in the absence of a statute to the contrary, an agreement to arbitrate all future disputes thereafter arising under the contract does not constitute a bar to an action on the contract involving such dispute, on the ground that it seeks to deny to the parties judicial remedies and therefore is contrary to public policy. Johnson v. Brinkerhoff, 89 Utah 530, 57 P. 2d 1132; Blodgett Company v. Bebe Company, 190 Cal. 665, 214 P. 38, 26 A. L. R. 1070; McCullough v. Clinch-Mitchell Construction Company, 8 Cir., 71 F. 2d 17; Gates v. Arizona Brewing Company, 54 Ariz. 266, 95 P. 2d 49; see annotation in 135 A. L. R. 79. Defendant concedes that this is the rule and that we have no statute to the contrary but contends that, notwithstanding the holding of Gates V. Arizona Brewing Company, supra, to the contrary, in labor cases a different rule should apply. He points out that by Section 49-1-9, U. C. A. 1943 we approved collective bargaining and contends that arbitration is a necessary part thereof. He refers us to an article entitled "The Function of Arbitration" by Philip G. Phillips, 33 Columbia Law Review 1366.
That article does not support defendant's contention. It does not discuss what is or ought to be the common law rule but what is the most desirable statutory policy. It states that the Draft State Arbitration Act authorizes contracts to arbitrate future disputes and poses the question whether arbitration agreements in labor trade contracts are specifically enforceable and whether statutes should attempt to make them so. The author points out that there are two theories of arbitration: One, that the arbitrators are the agents of the parties and as such are formulating contracts for the parties; the other, that the arbitrators are judges and determine problems of a judicial nature. He concludes that the statutes in question adopt the theory that the arbitrators are performing a judicial function; that ordinarily a labor dispute involves the making of a contract rather than determining the right of parties under a contract and therefore do not present a judicial problem but rather one of conciliation and mediation; and that such matters should be left to boards and commissions rather than to arbitrators authorized to perform judicial functions.
Here we are not concerned with an ordinary labor dispute. There is here no question of formulating a contract or agreeing upon terms. The contract has been made and fully performed by the employees and the only question to be determined is how much money is owing to the employees under its terms. This is purely a judicial question and in no sense one of collective bargaining. There does not appear to be any reason why there should be a different rule in this case and any other case involving the construction of a contract. Whether a new policy shall be established is for the legislature and not for the courts..
The judgment of the trial court is affirmed. Plaintiff shall recover his costs.