Court Opinion

ID: 3598311
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:45:27.160766+00
Date Added: 2024-06-11T13:59:00.952214
License: Public Domain

This action was brought by the plaintiff, a domestic business corporation, in equity to restrain the defendants from unlawfully interfering with it and its business. The plaintiff has failed to allege compliance with the provisions of section 876-a of the Civil Practice Act on the asserted ground that there is no "labor dispute" within the meaning and scope of the provisions of that section. At Special Term, it moved for an injunction *Page 488 pendente lite, which motion was granted. A cross-motion by the defendants to dismiss the complaint against the corporate plaintiff was denied. Upon appeal, the Appellate Division reversed the Special Term and dismissed the complaint. The Appellate Division allowed an appeal and certified to us the question as to whether the motion for the injunction pendentelite should have been granted upon the record presented. The answer to the question depends upon a determination as to whether or not the facts set up in the complaint establish that there was a "labor dispute" within the meaning of section 876-a of the Civil Practice Act.
The plaintiff is engaged in the business of selling, at wholesale and retail, kosher live and slaughtered poultry. It is alleged that the business is strictly a family enterprise and composed of four brothers and their mother, conducted at the same time in the name of Kershnar Brothers and also in the name of the corporation. The brothers and the mother are the officers and directors of the corporation and the only persons interested therein and it is alleged that no one person alone has any supervisory capacity but that all of them work together in agreement as partners using the corporate form only for convenience and that all of them participate in the labor both manual and clerical involved in conducting the business. Two of the brothers receive from the proceeds of the business thirty-five dollars each per week and two of them twenty dollars each per week but the mother receives no money. The father voluntarily and without pay helps the family out on Saturdays when not engaged in his regular employment elsewhere. A Hebrew functionary known as a shochet performs services in connection with the slaughtering of the poultry but it is conceded that he is not to be considered as an employee. No others are connected with or perform any work or services in the business.
It also appears that for several years the plaintiff corporation had written contracts with the defendant union *Page 489 
which provided, among other things, the number of employees the plaintiff was required to engage, the wages to be paid to them and the hours to be complied with, and that under those contracts the plaintiff employed one or two union members as required by the union and paid them the scale wages and in other respects complied with the contract. The time came for the renewal of the contract in December, 1938. It is alleged the plaintiff was willing to renew but not upon the terms that it was required to employ outside help who were members of the union, their business having become such that they could not continue to operate their business if they were required to employ and pay such help. It is alleged that their business was such that the four brothers with the mother could handle all of the work required to be done. The union refused to enter into such a contract or to admit the brothers to membership in the union on the ground that an employee relationship between the brothers and the corporation did not exist but that they were in fact themselves employers and therefore ineligible for membership in the union. It is alleged that illegal picketing and acts of violence were thereupon engaged in by members of the union for the purpose of compelling the plaintiff to enter into the contract upon the union terms, the result of which, if allowed to continue, would ruin plaintiff's business.
In Luft v. Flove (270 N.Y. 640), commenced prior to the enactment of section 876-a of the Civil Practice Act, where "plaintiff had only employed in the operation of his business his wife and two adult sons who were not members of the defendant unions and who desired to continue in such employ unmolested by such unions or by the members thereof," this court held that an action such as the one here brought might be maintained and the defendants restrained from picketing his place of business on his refusal to employ members of the union. A similar holding was made in Yablonowitz v. Korn (205 App. Div. 440). It is settled that relief might be had in the present action, *Page 490 
without the necessity of alleging compliance with the provisions of section 876-a of the Civil Practice Act, if the business were operated by an individual who personally did all the work without third-party-employee relationship existing (Thompson v.Boekhout, 273 N.Y. 390), since in such a case there could be no "labor dispute" within the intent, scope and meaning of that act. Upon the authority and reasoning of the Thompson case, the learned justice at Special Term held that the plaintiff was "a close family corporation," operated exclusively by the members of the family without third party employees, that the existence of the corporation did not alter the factual situation and that the case did not fall within the class of cases governed by the act. I am of the opinion that he based his decision upon solid ground and that his conclusion was correct.
It is still, however, here strenuously asserted that the mere fact that the four brothers and the mother were operating under a corporate form in the case at bar prevents such a result. While at law a corporation is an entity, a "personality," separate and distinct from its shareholders, members or officers, nevertheless, where the interests of justice require and under some circumstances the corporate form may be disregarded (Fletcher Cyc. Corp. [Perm. ed.] vol. 1, ch. 2, § 41 et seq.,
with cases indicating the substantially universal application of the rule). That rule is not limited to any specific class of cases or to any particular subject-matter or to the relative position of the parties in the litigation. Its foundation is broad enough to warrant its application wherever the peculiar facts in the particular case under consideration in the interests of justice demand, even where the rights and interests of third parties are involved. The rule has been well stated in UnitedStates v. Milwaukee Refrigerator Transit Co.
(142 Fed. Rep. 247), at page 255, where it is said: "If any general rule can be laid down, in the present state of authority, it is that a corporation will be looked upon as a legal entity as a general rule, and until sufficient reason to the contrary appears; but, when the notion of legal entity is used to defeat public *Page 491 
convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons. This much may be expressed without approving the theory that the legal entity is a fiction, or a mere mental creation; or that the idea of invisibility or intangibility is a sophism."
It seems to me that the defendant union correctly diagnosed the relation between the stockholders, officers and directors and the corporate entity when it refused to recognize the existence of the employee relation when application was made for membership to the union. Mere verbiage, nomenclature or form cannot change the facts. Theoretically, the members of the family may be designated as employees of the corporation. Practically, under the peculiar facts in this particular case, the four brothers and the mother were the corporation and were not servants of the corporation in any sense except by legal fiction (Matter of Bowne v. BowneCo., 221 N.Y. 28, 34). The defendants cannot "justify wrong" by asserting the contrary. The facts do not compel the application of any principle of estoppel which can prevent plaintiff to so assert. Under the facts here presented it must be so held in order to promote justice and to avoid the perpetration of wrong (1 Morawetz on Private Corporations [2d ed.], § 227, p. 222; Fletcher Cyc. Corp., supra; Wormser, Piercing the Veil of Corporate Entity, 12 Col. L. Rev. p. 496; cf. Farmers' Loan Trust Co. v. Pierson, 130 Misc. Rep. 110, 115, 119). Under such circumstances the principle of the Luft and Thompson
cases (supra) controls.
The judgment and order of the Appellate Division should be reversed, the order of the Special Term reinstated and the question certified answered in the affirmative, with costs to appellant in the Appellate Division and in this court.
CRANE, Ch. J., LOUGHRAN and FINCH, JJ., concur with LEHMAN, J.; RIPPEY, J., dissents in opinion in which HUBBS, J., concurs; O'BRIEN, J., taking no part.
Judgment accordingly. *Page 492