114 N.W.2d 141, 114 N.W.2d 853

A. J. SWEET OF LA CROSSE, INC., and others, Appellants, v. INDUSTRIAL COMMISSION and others, Respondents.[*]

Supreme Court of Wisconsin.February 8, 1962 —
March 6, 1962.

[*] Motion for rehearing denied, without costs, on May 1, 1962.

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APPEAL from a judgment of the circuit court for Dane county: RICHARD W. BARDWELL, Circuit Judge. Reversed.

Five separate actions instituted by five La Crosse employers, pursuant to the Administrative Procedure Act (ch. 227, Stats.), against the Industrial Commission and certain individual employees of each plaintiff to review findings of fact and orders of the commission granting unemployment compensation benefits to defendant employees. The five actions were consolidated for the purpose of hearing and disposition by the circuit court.

The five plaintiff employers and their businesses are: A. J. Sweet of La Crosse, Inc., wholesale produce business; Click Distributing Company, Inc., distributor of candies, tobacco, school supplies, and sundries; Schilling Paper Company, wholesale dealer in paper and paper supplies; Selrite Grocers, Inc., wholesaler of groceries; and Western Fruit Company, wholesale dealer in fruit and produce. For a considerable number of years these five plaintiffs, together with a sixth La Crosse employer, Ed. Phillips Sons, a wholesale distributor of liquor, cigarettes, candy, and sundries, had collective-bargaining agreements with Local 199 of the International Brotherhood of Teamsters (hereinafter

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the “union”). These labor contracts covered those employees of the six employers failing within the classifications of truck drivers and warehousemen. Prior to 1956 the six employers had bargained as an association with the union. However, in 1956 the employers negotiated with the union on an individual basis, and this resulted in six separate three-year contracts expiring May 1, 1959.

The general provisions of all six contracts were identical, but other provisions contained some individual variations to fit the special circumstances of each employer. However, such variations are immaterial to the issues of the instant litigation. The preamble and the provisions relating to settlement of grievances and automatic renewal in each agreement read as follows:

“The parties subscribing to this agreement desiring to prevent strikes and lockouts, to maintain a uniform minimum scale of wages, working hours, and conditions of employment among the members of the union and the corporation hiring and employing persons as packers and general haulers of merchandise, and to facilitate peaceful adjustment of all grievances and disputes which may arise from time to time between the employer and the employee, have entered into this agreement.”

Grievance Procedure.
“There shall be shop steward appointed, one from each plant, and in case of any grievance, the shop steward shall try to settle same with the foreman or superintendent and, if he is unable to settle same, he shall then refer the grievance to the executive board of the local union or authorized business agent. However, if the authorized business agent or executive board and the company are unable to effect a settlement, it shall then go to an arbitration board, composed of five (5) members as follows: Two (2) members elected by each party, and in case the four (4) so chosen are unable to agree on a fifth member, then the labor relations board of the

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state of Wisconsin shall appoint said fifth member, who shall be wholly disinterested party.”

Automatic Renewal.
“This agreement shall be effective from the 1st day of May, 1956, and shall continue in force until the 1st day of May, 1959.

“If it is the desire of either party hereto to terminate such agreement, notices of termination must be sent at least sixty (60) days before the expiration date thereof.

“If it is the desire of either party hereto to continue such agreement but to make alterations, amendments, or changes herein, and if no notice of termination has been given by either party, then such party desiring amendments, additions, alterations, or modifications shall give notice at least thirty (30) days before the expiration date thereof (or the anniversary of such date) specifying the type and nature of the amendments, additions, alterations, or modifications, so desired. The parties shall thereafter commence negotiations concerning such modifications and the contract shall continue in full force and effect during such period of negotiations. Any agreement subsequently reached by the parties relating to amendments, additions, alterations, or modifications, shall be retroactive to the anniversary date. In the event no agreement is reached within sixty (60) days after the service of the thirty (30) day notice and unless the parties hereto shall otherwise agree, the contract may then be terminated upon a five (5) day notice by the party requesting such alterations. If no such five (5) day notice is given within ten (10) days after the expiration of such sixty (60) day period the contract shall be continued in full force and effect as though no notice has been given.”

Pursuant to this automatic-renewal clause, the union served on each of the six employers the required sixty-day written notice in February, 1959, stating that it desired to negotiate changes in the terms of the contract. In March the union served upon Ed. Phillips Sons the required thirty-day notice of the specific changes it desired to have made in the contract. Thereafter, bargaining negotiations between the

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employers and the union were had. An impasse was reached in such negotiations. On May 12, 1959, the union served upon the Wisconsin Employment Relations Board (hereinafter “W.E.R.B.”) a ten-day notice of intention to strike each of the six employers. On May 13, 1959, W.E.R.B. sent the following letter to each of the employers:

“This is to notify you that on May 12, 1959, the above-named labor union filed with this board a notice of intention to strike unless the dispute now in existence between your company and that union is settled in the meantime.

“This notice is given to you in accordance with the provisions of section 111.11 of the Wisconsin statutes. The statute provides that a union cannot strike until ten days after the filing of such notice. The ten days will expire as of midnight, May 22, 1959. Within the next few days a representative of the board will endeavor to contact the parties in an attempt to aid in bringing about a settlement of the existing dispute.

“We are inclosing a questionaire for your convenience in informing us of the status of negotiations.

“Very truly yours,
“Wisconsin Employment Relations Board
“/s/ L. E. Gooding, Chairman.”

“LEG: md
“cc: Mr. Elmer Seebold”

On May 19, 1959, Attorney Quincy H. Hale of the law firm of Hale, Skemp, Hanson, Schnurrer Sheehan wrote a letter to Elmer Seebold, business agent of the union, advising him that Hale had been retained by the six employers to represent them in connection with negotiating a new labor contract, and that all future negotiations were to be conducted on a group as distinguished from an individual basis. In the meantime, the employers had formed themselves into an informal association and agreed among themselves that if the union struck any one employer the others would forthwith

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lock out those of their employees in the bargaining units represented by the union. Several meetings were held between the union and Mr. Hale, representing the employers. A W.E.R.B. examiner also participated in these meetings as mediator.

On Monday, June 1, 1959, the union struck Ed. Phillips Sons. During the course of that week the other five employers locked out those of their employees who were represented by the union, advising them that their employment was being suspended until the existing labor dispute had been resolved.

The union and Ed. Phillips Sons reached a tentative agreement on a new labor contract on June 22, 1959. This employer then submitted the tentative agreement to the other employers in the group and obtained their approval of it. On Tuesday, June 22, 1959, the pickets were removed from the place of business of Ed. Phillips Sons and its striking employees returned to work. During that week, the other five employers recalled their locked-out employees. Negotiations continued between the employers and the union, and on July 20, 1959, the employers and the union signed new labor contracts which were made retroactive to May 1, 1959.

Thereafter, the employees, who had been locked out by the five plaintiff employers, filed claims with the Industrial Commission for unemployment compensation benefits for the period of time they were out of work during the lockout. These claims were denied by the commission’s deputy on the ground that claimants’ unemployment had been due to bona fide labor dispute. On appeal, the same determination was reached by the commission’s appeal tribunal. On this review, the commission reversed and held that the lockouts violated the existing collective-bargaining contracts and, therefore, claimants’ loss of employment was not due to bona fide labor dispute. Thus, the commission’s decision

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allowed benefits to the claimant employees. The five employers then instituted the instant action for review in the circuit court.

The circuit court on August 28, 1961, entered judgment confirming the decision of the commission, and plaintiff employers have appealed therefrom.

For the appellants there were briefs by Hale, Skemp, Hanson, Schnurrer Skemp, and oral argument by Quincy H. Hale and Joseph D. Becker, all of La Crosse.

For the respondent Industrial Commission there was a brief by Arnold J. Spencer, chief counsel of the unemployment compensation division, and Ralph E. Kline of Madison, and oral argument by Mr. Spencer.


Sec. 108.04 (10), Stats., of the Wisconsin Unemployment Compensation Act, provides:

“`Labor dispute. An employee who has left (or partially or totally lost) his employment with an employing unit because of a strike or other bona fide labor dispute shall not be eligible for benefits from such (or any previous) employer’s account for any week in which such strike or othe bona fide labor dispute is in active progress in the establishment in which he is or was employed.” (Italics supplied.)

The statutory words “other bona fide labor dispute” are broad enough to embrace those which culminate in lockouts. The commission has consistently, over a period of at least the past twenty-three years, interpreted this statute as disqualifying from benefits those employees who have lost time from work due to a lockout precipitated by a bona fide labor dispute.[1]
The unemployment compensation laws of nine other

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states specifically exclude lockouts from labor disputes which disqualify employees from benefits,[2] but our legislature has not seen fit so to provide.

It is conceded that a labor dispute was in progress between the union and the five plaintiff employers, over the changes the union desired to have made in the collective-bargaining contracts, at the time the employers locked out the employee members of the union. The crucial issue on this appeal is whether this labor dispute was bona fide within the meaning of the statute. Since resolving this issue involves the construction of the agreement between the parties, this presents an issue of law for the court, rather than an issue of fact upon which the commission’s finding would have to be upheld if any reasonable view of the evidence supported it.

Both the commission and the circuit court determined that loss of work by the claimant employees was not due to a bona fide labor dispute because the lockout by the employers constituted a violation of the then existing collective-bargaining agreements. The briefs of the parties cite no decisions by this court which have passed upon the question of which types of labor disputes are bona fide and which are not. The commission’s brief does cite a 1939 Dane county circuit court decision[3] and a 1959 appeal tribunal decision[4]

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which held that a labor dispute culminating in a strike or lockout, which violates the terms of a collective-bargaining agreement, is not a bona fide labor dispute within the meaning of sec. 108.04 (10), Stats. However, the only basis here advanced for determining that the labor dispute, which resulted in loss of days of employment to the claimant employees was not bona fide, is that the lockout was a violation by plaintiff employers of their collective-bargaining contracts with the union. Therefore, if such lockouts did not constitute a breach of contract, it is conceded that such labor dispute was bona fide.

The instant collective-bargaining contracts contained no express language prohibiting either strikes or lockouts during their term. However, both the commission and the circuit court held that under the wording of the preamble and automatic-renewal clause of the contracts such a prohibition arose by implication. Preambles and automatic-renewal clauses worded similarly to those of the instant contracts have been in fairly common use for some time. In view of this, we consider it significant that no cases have been cited to this court to sustain such a holding.

While the point is not raised by respondent commission’s brief, we have also given consideration to whether a no-strike, no-lockout clause can be implied from the inclusion of an arbitration provision as the final step in the grievance procedure set forth in the contracts. This is because, as stated by the United States supreme court in Textile Workers Union v. Lincoln Mills (1957), 353 U.S. 448, 455, 77 Sup. Ct. 912, 1 L.Ed.2d 972, an agreement to arbitrate grievance disputes is the quid pro quo for an agreement not to strike. The labor contract in the Lincoln Mills Case contained

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both a clause for the arbitration of grievances and also one prohibiting strikes or work stoppages, and thus that decision is not an authority which holds that a no-strike, no-lockout clause can be implied from a clause requiring the arbitration of grievances. However, the following federal cases have implied no-strike clauses from provisions in the labor contracts providing for the arbitration of grievances Lewis v. Benedict Coal Corp. (6th Cir. 1958), 259 F.2d 346 International Brotherhood v. W. L. Mead, Inc. (1st Cir. 1956), 230 F.2d 576; United Construction Workers v. Haislip Baking Co. (4th Cir. 1955), 223 F.2d 872 Gay’s Express, Inc., v. International Brotherhood
(D.C. Mass. 1959), 169 F. Supp. 834. Contra, International Union, United Mine Workers v. National L. R. Board (D.C. Cir. 1958), 257 F.2d 211.

An examination of the four above-cited federal cases, in which no-strike clauses were implied from the contract clauses requiring arbitration of grievances, discloses that there is a marked difference between the wording of those arbitration clauses and the clause included in the instant contracts. The contract in the Benedict Coal Corp. Case
required that all disputes be “settled exclusively” by the outlined grievance procedure or “by the full use of free collective bargaining.” The grievance-procedure clause provided that the “decision of the umpire shall be final.” In th W. L. Mead, Inc., Case, the arbitration article provided that the machinery therein set forth “shall be the exclusive means of adjudicating all matters.” The court’s determination therein limited the implied no-strike provision to matters appropriate to be arbitrated under the terms of the contract. The portion of the arbitration clause quoted in the Haislip Baking Co. Case is substantially the same as the one in th W. L. Mead, Inc., Case. The dispute that led to the strike in the Haislip Baking Co. Case grew out of the suspension or discharge of two workers; this dispute was of the type

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clearly required to be submitted to arbitration. The labor contract in the Gay’s Express, Inc., Case required that any dispute concerning the application or interpretation of the contract which could not be resolved between the employer and the union be referred to the general grievance committee and its decision was “to be final and binding upon both parties.” The union called a strike because the employer had discharged one of the employees in the bargaining unit.

The instant labor contracts lack any provision making the arbitrators’ decision of a grievance dispute final or binding upon both the employers and the union. Nor do they state that resort to the grievance procedure is to be the exclusive method of settling grievances, although this might be implied. Here the dispute which precipitated the lockouts was not one subject to the grievance procedure but was over the union’s demands for changes in the contracts. We do not deem that any implied no-strike, no-lockout clause in a labor contract, resulting from the inclusion of an arbitration clause, should extend to disputes which are not expressly made subject to arbitration. Therefore, the arbitration provision in the instant contracts does not give rise to an implied no-strike, no-lockout clause extending to the particular dispute between the parties over new contract terms, which precipitated the lockouts. Whether a no-strike clause can be implied coextensive with the coverage of the instant grievance procedure is not before this court, and we express no opinion on such issue.

Turning again to the preamble and the automatic-renewal clause of the instant contracts, we find no express provision that specifies that peaceful negotiation between the parties is to be the exclusive method of resolving any differences arising over demands of the union for changes in the contract.

The preamble contains only a general statement relating to the parties’ desire for labor peace, but no express prohibition

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of strikes and lockouts. The basic purpose of every labor contract is to attempt to preserve labor peace. This is also the purpose of state and federal statutes relating to collective bargaining. Though premised on such a socially desirable purpose, the instant general words cannot be said to imply the existence of as significant a provision as a no-strike, no-lockout clause, particularly where they are found only in the preamble and are not repeated in the body of the contracts.

Moreover, we fail to perceive in the automatic-renewal clause any provision which compels the implication that the parties yielded their rights to strike or lockout. This clause merely provided the procedure for alteration and termination of the contract. Failure to follow such procedure continued the contract “in full force and effect.” Clearly, this language does not prohibit strikes and lockouts or even provide that resort to either will terminate the contract. Absent such an express provision, the contracts continued despite the strike and lockout.

Furthermore, if the parties intended to bar each other from resort to a strike or lockout it would seem reasonable that the contracts would have so stated. To hold that such a clause is implied from the wording of the instant contracts would ignore the realities that take place in the hammering out of the terms of a labor contract through collective bargaining. The right to strike is the most-effective weapon a union possesses in dealing with employers and it is not reasonable to imply that this weapon has been yielded in the absence of either express language to that effect, or contract wording which states that some other method of procedure is to be the exclusive method of resolving differences. A no-lockout clause is a concomitant of a no-strike clause and, if the former is not to be implied, neither is the latter.

However, we doubt if a promise is ever to be imported into a contract by implication where the parties by acts of

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practical construction have negatived such an interpretation. This is because if it is necessary, in interpreting a written contract, to resort to implication in order to find a particular unstated promise, the written agreement is ambiguous in this respect. In such a situation a court ordinarily will place the interpretation upon the terms of the contract which the parties by their conduct have adopted. Cutler-Hammer, Inc., v. Industrial Comm. (1961), 13 Wis.2d 618, 632, 109 N.W.2d 468; George J. Meyer Mfg. Co. v. Howard Brass Copper Co. (1945), 246 Wis. 558, 574, 18 N.W.2d 468. See also 3 Williston, Contracts (rev. ed.), p. 1792, sec. 623.

We have present here two acts of the union which negative the existence of a no-strike, no-lockout clause. The first was the giving to W.E.R.B. of the ten-day notice of intention to strike each of the six employers. The second was the calling of the strike against Ed. Phillips Sons approximately three weeks later on June 1, 1959. There is nothing in the record to indicate that the union considered it was breaching its contracts in so doing, or that any of the employers then advanced any claim that a violation of the contracts had occurred.

For the reasons heretofore stated, we interpret these contracts as not containing any implied promise either that the union would not resort to a strike to enforce its demands for contract changes, or that the employers would not utilize the device of a lockout in resisting such demands. It necessarily follows that the claimant employees’ loss of time from work, for which they seek unemployment compensation benefits, was due to a bona fide labor dispute within the meaning of sec. 108.04 (10), Stats.

The employers contend that, irrespective of whether the labor contracts were construed to impliedly prohibit strikes and lockouts, the calling of the strike against Ed. Phillips Sons, Inc., constituted an act which entitled the other five

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employer members of the association to lock out their employees in self-protection. They point out that where one union negotiates with a group of employers it is a common union tactic to call a strike against the weakest member of the group for the purpose of forcing him to either make concessions or lose customers to other members of the association. Some federal cases have recognized the right of nonstruck association members to lock out their employees during the pendency of the strike to prevent such “whipsawing” tactics. National L. R. Board v. Truck Drivers Union (1957), 353 U.S. 87, 77 Sup. Ct. 643, 1 L.Ed.2d 676; Leonard v. National L. R. Board (9th Cir. 1953), 205 F.2d 355. Both the commission and the circuit court ruled adversely to this contention for reasons stated in their memorandum opinions. Because of our conclusion, that the labor contracts did not impliedly prohibit strikes or lockouts in connection with the instant labor dispute, we find it unnecessary to pass on this further issue.

By the Court. — Judgment reversed; cause remanded with instructions to set aside the decision of the commission.

[1] Commission appeal tribunal decisions so holding are 39-A-161, 46-A-617, 53-A-930, 56-A-457, 59-A-100, and 59-A-2363. (The figures preceding the A’s are the years in which these decisions were rendered; e.g., decision 39-A-161 was rendered in 1939.) See 1960 Digest of Wisconsin U. C. Cases, pp. 163-165, 178.
[2] Arkansas, Connecticut, Kentucky, Minnesota, Mississippi, New Hampshire, Ohio, Pennsylvania, and West Virginia. See Comparison of State Unemployment Insurance Laws as of January 1, 1960, U.S. Department of Labor pamphlet, BES No. U-141, p. 103.
[3] This decision was rendered by the late Judge ALVIN C. REIS i Lullabye Furniture Corp. v. Industrial Comm. and is abstracted in 1960 Digest of Wisconsin U. C. Cases, pp. 161, 162. In that case employees struck in violation of a no-strike clause in a labor contract, and after the strike was over the employer failed to call back to work part of the strikers. Cf. Streeter v. Industrial Comm.
(1955), 269 Wis. 412, 69 N.W.2d 583.
[4] No. 59-A-1802, abstracted in 1960 Digest of Wisconsin U.C. Cases, pp. 164, 165, and rendered in an unemployment compensation proceeding wherein employees of Allied Heating Company and three other employers sought benefits for time lost from work due to a lockout. The appeal tribunal found that the lockout was a violation of the collective-bargaining agreement and, therefore, that the labor dispute was not bona fide, citing Judge REIS’ opinion in the Lullabye Furniture Corp. Case.

The following memorandum was filed May 1, 1962:

PER CURIAM. (on motion for rehearing).

The day prior to the handing down of our original opinion herein, the United States supreme court decided Local 174, Teamsters, Chauffeurs, Warehousemen Helpers v. Lucas Flour Co.
(1962), 369 U.S. 95, 82 Sup. Ct. 571, 7 L.Ed.2d 593. This case involved an action in a state court in Washington to recover damages against a union for a strike which, it was alleged, breached a collective-bargaining contract. The court affirmed the judgment below in favor of the employer.

The collective-bargaining contract contained no express clause prohibiting strikes or lockouts, but the dispute which

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led to the strike was one which the contract required to be submitted to final and binding arbitration. The court held that there was an implied covenant in the contract which prohibited a strike under such circumstances. However, the significant portion of the opinion, in so far as the instant case is concerned, is contained in this sentence (369 U.S. p. 106):

“What has been said is not to suggest that a no-strike agreement is to be implied beyond the area which it has been agreed will be exclusively covered by compulsory terminal arbitration.”

We expressly pointed out in our original opinion herein that the union’s demands upon the employers for changes in the contracts were not subject to the arbitration clause of the contracts. The commission’s brief on rehearing presents no new arguments which cause us to doubt the soundness of any of the points decided in our original opinion. The only ground upon which the commission determined that the lockout was not precipitated by a bona fide labor dispute was that it was held to violate an implied no-strike, no-lockout clause of the collective-bargaining contracts. However, we deem it advisable to point out that there may be situations in which a lockout would not qualify as a bona fide labor dispute, even though it did not constitute a breach of contract on the part of the employer.

The motion for rehearing is denied without costs.

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