Court Opinion

ID: 5392287
Source: CourtListenerOpinion
Date Created: 2022-01-08 09:55:52.274447+00
Date Added: 2024-06-11T08:29:37.987655
License: Public Domain

Callahan and Heffernan, JJ.
(dissenting). We are in accord with the views expressed by the Special Term as to the enforeibility of the provisions of the collective bargaining agreement permitting the Adjustment Board presided over by an Impartial Chairman as arbitrators to impose “ damages, money or other penalties ” for breaches of said agreement. We construe such provision to be no broader than one permitting the assessment of punitive damages. Neither such a contractual provision nor the awarded penalty of $5,000 imposed tentatively as a deterrent against future violations of the collective bargaining agreement would seem to conflict with the public policy of. the State (Loucks v. Standard Oil Co., 224 N. Y. 99; Matter of Mencher [Getter & Sons] 276 App. Div. 556; Matter of East India Trading Co. [Halari], 280 App. Div. 420; Civ. Prac. Act,.§§ 1448, 1462). We see no adequate reason why this court should decline to affirm such award.
The collective bargaining agreement is one between a publishers’ association and a union of newspaper employees covering labor relations in this industry in New York City. Its life was to be a period of two years, and it provided for the rights of the parties in great detail, including services of an Adjustment Board with its Impartial Chairman, who were charged with seeing that the agreement was fulfilled and industrial peace maintained. The chairman was expressly empowered ‘ ‘ to hear and determine all questions that may arise with respect to the interpretation or application of any of the provisions ” of the agreement, and the board was authorized to take any action which it might deem necessary or proper to make effective the provisions and intent of the agreement and safeguard the rights of the parties, including the power 1 ‘ to impose damages, money or other penalties ” upon any party found guilty of a violation of the agreement.
There is no dispute that during the'life of the agreement the union violated the same by calling a strike, which the Adjustment Board found violated section 16P of the agreement prohibiting any strike other than one against a party failing to comply with an order of said Adjustment Board. An award of $2,000 actual damages was made to the newspaper involved, and $5,000 conditional punitive damages were also awarded to be payable only when and if the union again violated section 16P. *509The parties had agreed that this decision was to control the decision of the claims of other newspapers as to their right to redress for identical strikes against them.
Special Term confirmed the award both as to the compensatory and punitive damages. The sole question presented on this appeal is the enforcibility by the court of that part of the award providing for the $5,000 penalty or punitive damages. It seems to us that only two points require consideration: (1) as to whether the contract provisions for and the award of a penalty or punitive damages should be refused enforcement by the courts as against public policy, and (2) whether the award is sufficiently mutual, final and definite to justify enforcement by judgment.
The majority view appears to be that the courts will decline to enforce the penalty provision, because it would not allow or enforce such provision in an action at law for breach of the contract maintained before the court directly.
It seems to us that this adopts too narrow a view of the court’s duty in this matter.
We are dealing with an award in arbitration as to which the legal rules of damage have no application. Arbitrators are not bound to recognize the distinction made by the courts as to the damages properly awarded in actions in contract as distinguished from those in tort.
It would serve little purpose to discuss at length the historical background of the rules applied by the courts as to the proper measure of damages in actions at law for breach of contract. We agree that in actions at law the penalty imposed by the arbitrators here would not be assessed. But the rules limiting damages in civil actions grow out of judicial interpretation. Arbitrators have no rule of stare decisis. One of these judicial rules affecting damages is that punitive damage is not to be allowed for breach of contract. Even this rule has had an exception in actions for breach of contract to marry. It does not follow that such a rule of law as to plenary actions establishes a rule of public policy limiting the power of an arbitrator. It is just as much the public policy of this State that arbitration awards within the limit of the submission are not to be impeached for misconception of the law (Matter of Marchant v. Mead-Morris Mfg. Co., 252 N. Y. 284, 302). Historically, the amount or nature of the damage to be awarded even in cases of breach of contract was first considered to be solely the affair of the jury, and the courts were reluctant to interfere with the punishment imposed (1 Sedgwick on Damages, [9th ed.], *510§§ 347-352, 370). The courts from time to time and step by step narrowed this rule, including a restriction against punitive damages for a breach of contract. But, as we have noted, in arbitration the interpretation of the law as well as the facts is for the arbitrators, and they are limited solely by the extent of their jurisdiction under the submission and against an award that would offend the public policy of the State. An award that might contravene the penal laws of the State is an example of one that might offend our public policy (Matter of Western Union Tel. Co. [ACA], 299 N. Y. 177).
There would appear to be no such offense where arbitrators within the power expressly conferred by the parties impose a contingent penalty of $5,000 to deter unwarranted industrial warfare in the future. In fact, it would seem to us that the public policy is as much, if not more, concerned with the maintenance of industrial peace as it is with the inflexibility of any judge-made rule of damages in contract actions brought in the courts. The collective bargaining agreement here concerns complex relations of employer and employee, and not a casual conflict between buyer and seller over how much one should pay to the other for violating a contract of sale. The parties by their voluntary agreement charged the arbitrators with the duty of maintaining the integrity of their contract and peace in the industry, and gave them the broadest power of action in accomplishing this end, including the right to impose penalties. The tentative penalty or fine of $5,000 in the event of recurrence of an improper act might well be found by those charged with such duty as the one sure way of maintaining observance of the collective bargaining agreement. It seems to us that the courts should not decline to enforce such a penalty on any theory or ground that it calls upon the judicial branch of the Government or approval of an act offending its sense of propriety.
The Legislature of the State has determined the validity of a contract to arbitrate, except as to certain instances not relevant here (Civ. Prac. Act, § 1448). It has directed that the courts must confirm and enforce an award, unless it is vacated upon certain grounds of illegality specifically enumerated in the statute (Civ. Prac. Act, § 1462). No ground of excessive or improper damage is specified as a basis for vacating an award.
We consider it our duty to follow the legislative directive and confirm the award so long as the arbitrators kept within the limit of their conferred powers, even though a court might not award damages in the same amount or of the same nature in *511an action at law. We are not faced with any situation where there has been the imposition of confiscatory or oppressive damages by way of unwarranted penalties fixed in the millions instead of the thousands. Thus, we find that there has not been imposed any unlimited draft upon the judicial power. When an occasion arises that the penalty is so oppressive as to offend our sense of public justice to enforce it, then it will be time enough to consider the question of the extent of our right to refuse to do so.
The duty of the court in respect to confirming and enforcing arbitrators’ awards is prescribed by statute, and we may not lightly disregard the statutory mandates upon any theory of separation of powers. At least, we may not do so in this particular case where its confirmation of the award would so little offend any exercise of the judicial power.
As to the second question concerning the finality, definiteness and mutuality of the award, we are of the opinion that it is enforcible. This award specifically states the conditions under which the $5,000 becomes payable. There is nothing more for the arbitrators to do except to say that there has been a recurrence of a strike in violation of section 16P. Thus the strike that already occurred defines the event, the recurrence of which makes the penalty payable. In any event, it would seem to us that the union is not aggrieved if payment of a sum is postponed, when it might have been presently required.
Accordingly, we dissent and vote to affirm the order and judgment confirming the award.
Cohn, J. P., and Van Voorhis, J., concur with Bergan, J.; Callahan and Heeeernan, JJ., dissent and vote to affirm, in opinion.
Order entered February 19,1952, and the order and judgment entered March 12, 1952, modified by reversing so much thereof as confirms the award for $5,000 punitive damages and by vacating such part of the award and, as so modified, affirmed with costs to the appellant. Settle order on notice.