Ensley v. Associated Terminals, Inc.

Plaintiff Don Ensley and his assignors are truck drivers in the employ of defendant Associated Terminals, Inc., a nonprofit corporation, engaged in the business of operating a truck freight terminal. These employees pick up outbound, and deliver inbound, shipments in the city of Grand Rapids, and are members of the "Truck Drivers Union, Local No. 406, International Brotherhood of Teamsters, Chauffeurs, Warehousemen, and Helpers of America."

On February 19, 1940, the union entered into a contract with defendant whose name was then Associated Truck Lines, Inc. This contract provided that city drivers should be paid at the rate of 5 cents per cwt. up to 3,000 lbs.; 4 cents per cwt. from 3,001 to 4,000 lbs.; 3 cents per cwt. from 4,001 to 5,000 lbs.; and 2 1/2 cents per cwt. for all over 5,001 lbs., with a minimum of 25 cents per stop. The contract also provided for a rate of 65 cents per hour to be paid city drivers, and a rider was attached to the contract, reading:

"Relative to the scale of 65 cents per hour for city drivers, it is not to prevail as long as city drivers are on the sliding rate. If the sliding rate of pay is eliminated the scale of 65 cents an hour shall prevail."

The contract was to cover the period from January 1 to December 31, 1940, and to continue in effect from year to year thereafter, unless modified by agreement upon 60 days' written notice prior to the annual date of expiration.

When the contract became effective, the city drivers were being paid on a sliding scale basis, and there was being deducted from the gross wages of each driver the sum of $20 a week to cover truck rentals. About February 25, 1940, defendant's employees were informed that the truck rental charge was changed from $20 to a deduction of 35 per cent. of their gross weekly wages. The written contract does not mention truck rentals but provides that:

"The employer agrees that all conditions of employment relating to wages, hours of work, overtime differentials and general working conditions shall be maintained at not less than the highest minimum standards in effect at the time of the signing of this agreement and the conditions of employment shall be improved wherever specific provisions for improvement are made elsewhere in this agreement."

Objections were made to this change but the deductions were continued without any satisfactory adjustment.

Plaintiff brought this action to recover the additional amounts deducted on the 35 per cent. basis from his wages and those of his fellow employees during the year 1940. Defendant does not question plaintiff's right to bring the action as a third party beneficiary under this contract.^*

The trial judge, sitting without a jury, found that the "sliding rate" and not the hourly rate was in effect during the period involved, and that the change made by defendant in the truck rental charge reduced the compensation due plaintiff and his assignors by $2,204.84. He held that there was an implied provision in the written contract fixing the charge of truck rentals at $20 a week, and that the increased deduction adversely affected the wage scale contrary to the provisions of the agreement. A judgment was entered in plaintiff's favor.

Defendant pleaded payment and contended at the trial that plaintiff and his assignors were estopped from asserting a claim for back wages because paychecks had been indorsed by them containing the following language: "Indorsement of this check constitutes receipt in full for wages to the end of the period shown on check stub." Defendant's claim of estoppel was properly denied because it was an affirmative defense and not pleaded. Nor is this question raised on appeal.

Defendant now contends on appeal that indorsement of these checks constituted a full settlement between the parties. The affirmative defense of accord and satisfaction was not pleaded, nor has defendant sought to amend its pleading. The defense of payment was pleaded; but that does not permit or include the defense of accord and satisfaction. Such affirmative defenses are not available unless pleaded.^** Court Rule No. 23, § 3 (1933).

Ordinarily granting an application reasonably to amend a pleading is within the court's discretion. But under the facts of the instant case even if such an amendment had been asked it should not have been granted because the only purpose it would serve, if any, would be to enable defendant to assert a defense that does not go to the real merits of the controversy and one that does not tend to produce an honest result. Defendant is not entitled to the exercise in its behalf of any discretionary power of the court.

Defendant contended in the trial court, and contends here, that the arbitration clause in the contract is, by implication, a condition precedent to suit, and that until resort to arbitration is had, no suit can be brought; or that, if the arbitration clause is not valid, the entire contract is invalid. The court held, in effect, that plaintiff did not need to resort to arbitration before commencing his action.

The provisions of the agreement with respect to arbitration read as follows:

"It is mutually agreed that should any differences arise between the company and the union or its members, including disagreements as to the meaning and application of the provisions of this agreement, there shall be no strikes, tie-up of equipment, walkouts or any cessation of work on the part of the union and its members, nor shall the company use any method of a lockout until the parties hereto first attempt to settle their differences or grievances in the following manner:

"All grievances of employee members must be reported in writing to officers or persons designated by the union if such grievances are not satisfactorily adjusted by the company. The union representatives shall present the written complaint to the company and every effort shall be made to settle the same.

"Failing in adjustment of any grievance or complaint by the employer and the union the matter shall be referred to an arbitration committee to be appointed as follows: two members to be appointed by the employer and two members to be appointed by the union and these four to select a chairman. Should the employer's and the union's representatives fail in selecting the fifth member, this selection shall be made by either judge of probate for Kent county.

"The decision of the arbitration board shall be final and binding on both the employer and the union."

The foregoing language, together with the introduction which reads:

"Whereas, both parties are desirous of preventing strikes and lockouts, and of maintaining a uniform wage scale, working hours and conditions among the members of the union, and to facilitate peaceful adjustment of all grievances which may arise from time to time between the employer and his individual employees,"

is designed for the purpose of avoiding strikes, tieups, walkouts, and lockouts, and has no bearing whatever upon judicial interpretation or determination of matters arising under the contract. The limitations imposed by the parties themselves exclude the question of whether arbitration is a condition precedent to judicial determination. Even if it were necessary to determine the question, the provision that, "The decision of the arbitration board shall be final and binding on both the employer and the union," leaves little room for implication, and renders appellant's position inconsistent with the majority rule as expressed by the authorities found in 26 A.L.R. 1077 et seq., and 135 A.L.R. 79 et seq.; and the rule in force in Michigan, as stated in Chadwick v. Phoenix Benefit Ass'n, 143 Mich. 481 (8 Ann. Cas. 170):

"A mere agreement to arbitrate does not prevent a suit at law.McGunn v. Hanlin, 29 Mich. 476. To have that effect, it must be accompanied by another and further agreement which either in express terms or by proper construction makes the award a condition precedent to the right of action."

See, also, Siewek v. F. Joseph Lamb Co., 257 Mich. 670.

There is ample evidence to support the finding of the trial judge that defendant agreed that the truck rental deduction should be $20 per week, and that this was an included provision of the contract of February 19, 1940. It was a breach of defendant's contract with its employees to increase the charge for its trucks and in that manner reduce their wages.

Counsel agreed on the record as to the amount due plaintiff if the trial judge should find defendant liable.

The judgment is affirmed, with costs to appellee.

BOYLES, C.J., and CHANDLER, NORTH, STARR, BUTZEL, and SHARPE, JJ., concurred. WIEST, J., concurred in the result.

^* See Act No. 296, Pub. Acts 1937 (Comp. Laws Supp. 1940, § 14063 — 1 et seq., Stat. Ann. 1942 Cum. Supp. § 26.1231 etseq.). — REPORTER.

^** See 3 Comp. Laws 1929, § 14128 (Stat. Ann. § 27.822). — REPORTER.