Boro Park Sanitary Live Poultry Market, Inc. v. Heller

Boro Park Sanitary Live Poultry Market, Inc., is a domestic corporation conducting a wholesale and retail market for the sale of live and slaughtered poultry. Four brothers and their mother are the sole stockholders, directors and officers of the corporation. Prior to December 31, 1938, the corporation employed members of the defendant union in its business under a written contract with the union. On that date the contract with the union expired. It has never been renewed. The stockholders of the corporation desire to do the work themselves. The union has taken the position that the plaintiffs were employers and therefore not eligible to membership in the union. Then the corporation refused to renew the union contract and since that time its stockholders have performed substantially all the manual work formerly done by members of the union. The four brothers are paid regular weekly wages; their mother receives no salary “ but, instead, support and

The plaintiff corporation in this action seeks to enjoin the union from all interference with it's business and an injunction pendente lite was issued restraining the defendant union from picketing and even from stating “ that the plaintiff corporation is engaged in any labor controversy or dispute, or that a strike exists on their premises, or that it is unfair to labor.” Upon appeal the Appellate Division reversed the order granting the injunction pendente lite and upon the defendants’ motion dismissed the complaint on the ground that it failed to allege facts sufficient to constitute a cause of action.

The Legislature, in section 876-a of the Civil Practice Act, has regulated the exercise of the equitable power of the Supreme Court “ to issue any restraining order or a temporary or permanent injunction in any case involving or growing out of a labor dispute, as hereinafter defined.” The section (subd. 10) defines a labor dispute as follows:

“ (c) The term ‘ labor dispute ’ includes any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of employment, or concerning employment relations, or any other controversy arising out of the respective interests of employer and employee, regardless of whether or not the disputants stand in the relation of employer and employee.”

The plaintiff concededly has failed to plead or prove matters which under the provisions of section 876-a must be pleaded and proven in order to obtain injunctive relief in “ labor disputes.”- The judgment of the Appellate Division dismissing the complaint cannot be successfully

We have said that the Legislature intended only “ to subject injunctions issued in disputes involving or growing out of the relations of employer and employee to special regulations,” and we have therefore excluded from the application of the statute cases where the “ owner of a small business seeks to avoid * labor disputes ’ as defined in the statute, by running his business without any employees.” (Thompson v. Boekhout, 273 N. Y. 390 , at 393.) Where an owner of a business does the work himself without employees the “ relation of employer and employee ” does not exist and there can be no “ controversy concerning terms or conditions of employment ” or “ concerning employment relations ” or “ arising out of the respective interests of employer and employee ” as provided in the statutory definition. The problem here is whether in this case the corporate employer and its stockholders who labor for wages in its business stand in the relation of employer and employee.

Four men perform manual labor for the corporation, formerly performed by members of the union. They receive wages for their work. The fact that they are stockholders or even officers of the corporation would not deprive them as employees of compensation for accidental injuries under the Workmen’s Compensation Law (Cons. Laws, ch. 67).. (Matter of Skouitchi v. Chic Cloak & Suit Co., 230 N. Y. 296 .) It would not bar them from the preference granted by statute for “ the wages of the employees, operatives and laborers ” of insolvent corporations conferred under the provision of chapter 376 of the Laws of 1885. (Palmer v. Van Santvoord, 153 N. Y. 612 .) (Cf. Federal Social Security Act; U. S. Code, tit. 42, § 1301; Federal Railroad Unemployment Insurance Act, enacted June 25, 1938, 52 U. S. Stat. p. 1094; U. S. Code, tit. 45, § 351.) It is said, however, that the corporate entity of the plaintiff may be ignored because the corporation conducts only a small family business and if ignored these stockholders are seen to be working for themselves without

It is said too that the union may not refuse to admit stockholders of a corporation because the union regards them as “ bosses ” and then insist that the relationship of employer and employee exists between corporation and a' stockholder working for the corporation in return for wages paid by the corporation. The union, with perhaps some exceptions not material here, is free to choose its own members and then to endeavor to obtain employment for its chosen members. It may reject these stockholders because they share indirectly in the profits of the business and their interests may not coincide with the interest of other workers. Controversy as to whether the stockholders or the members of the union should be employed to do the work of the corporation remains, none-the-less, a “ labor dispute ” within the letter and spirit of the statute.

The judgment of the Appellate Division should be affirmed, without costs. The appeal, by permission, from the order of the Appellate Division should be dismissed, without costs. The certified question is not answered.

(dissenting). 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

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 perfprms 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

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,

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 United States 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

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. Bowne Co., 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.