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decided: June 29, 1967.


Appeal from decree of Court of Common Pleas No. 5 of Philadelphia County, Sept. T., 1964, No. 3365, in case of Schoellhammer's Hatboro Manor, Inc. v. The Local Joint Executive Board of Philadelphia, Local Unions No. 111, 115, 232 and 301 Hotel and Restaurant Employees' and Bartenders' International Union AFL-CIO, and Greater Philadelphia Restaurant Operators, Inc. et al.


Richard H. Markowitz, with him Richard Kirschner, Louis H. Wilderman, and Wilderman, Markowitz & Kirschner, for appellant.

Richard G. Segal, with him Louis C. Johanson, and Fein, Criden and Johanson, for Schoellhammer's Hatboro Manor, Inc., appellee.

William A. Whiteside, Jr., with him Fox, Rothschild, O'Brien & Frankel, for Greater Philadelphia Restaurant Operators, Inc., appellee.

Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Jones. Mr. Chief Justice Bell took no part in the consideration or decision of this case. Dissenting Opinion by Mr. Justice Musmanno.

Author: Jones

[ 426 Pa. Page 55]

The Local Joint Executive Board of Philadelphia County, Local Unions Nos. 111, 115, 232 and 301 [Union], is an unincorporated labor organization which represents, as collective bargaining agent, hotel and restaurant employees in the Philadelphia area. Greater Philadelphia Restaurant Operators, Inc. [Association], is a Pennsylvania corporation which represents various restaurant and taproom operators and owners in the same geographical area.

The Association and the Union entered into a collective bargaining agreement on October 1, 1958.*fn1 Under the terms of that agreement, the Association recognized the Union as "the sole and exclusive collective bargaining representative of the employees . . . working in each establishment now operated and maintained by any of the EMPLOYERS or in any establishment hereafter operated and maintained by any of the employers,

[ 426 Pa. Page 56]

    in all matters relating to collective bargaining such as wages, hours of work, working conditions and adjustment of grievances." (Emphasis added). Article XVII, ยง 1 of that agreement further provides: " All matters in controversy or dispute arising during the term of this agreement, except those matters specifically enumerated in the last sentence of this article,*fn2 shall be discussed between the Employer and the representatives of the Union in an effort to reach an amicable adjustment. In the event that the Employer and the Union are unable to adjust the controversy or dispute between them, then either party shall apply to the American Arbitration Association for the purpose of having the impartial arbitrator designated in accordance with its rules and regulations. The impartial arbitrator thus designated shall promptly hear and decide the grievance or matter in dispute and the decision thus rendered shall be final and binding upon both parties." (Emphasis supplied).

Louise Schoellhammer, trading as Schoellhammer's Brewery Tavern, [Louise Schoellhammer], is an "Employer" under the agreement and a member of the Association and operates, as an individual under the Fictitious Names Act,*fn3 a restaurant-liquor establishment on North Hancock Street in Philadelphia. Schoellhammer's Hatboro Manor, Inc., [Manor], is a Pennsylvania corporation which operates a restaurant-liquor establishment in Hatboro, Montgomery County. The Manor is not an Association member and, at the time of the collective bargaining agreement, was not a signatory or party to such agreement.

The crux of the controversy between the Association and Schoellhammer, vis-a-vis the Union is whether

[ 426 Pa. Page 57]

Schoellhammer, the Tavern operator, is, in fact, operating and maintaining the Manor so as to bring the Manor within the provisions of the collective bargaining agreement as an "establishment hereafter operated and maintained" by an Association member. To determine that issue, the Union, on October 13, 1964, made a demand in writing for arbitration*fn4 under the arbitration provisions of the agreement and for a submission of that issue to the American Arbitration Association.

On November 9, 1964, the Manor instituted an equity action in Court of Common Pleas No. 5 of Philadelphia County seeking injunctive relief against the Union, the Association and Louise Schoellhammer. The Manor alleged, inter alia, that "it [was] an entity unto itself" and "in no way connected with the business conducted and owned by the [Tavern]", that it was not a party to the bargaining agreement and that the Union's demand for arbitration was an attempt to force the Manor into contractual obligations to which it was never a party, directly or indirectly. Manor sought to restrain the Union, the Association and the Tavern from (a) arbitrating any matter involving Manor and its employees, (b) from doing any act which would compel Manor to recognize the Union as collective bargaining agent and (c) from doing any act to compel Manor to interfere with its employees' right to select their own representative for collective bargaining purposes.

The court below (the late President Judge Alessandroni) granted a rule and, later, a preliminary

[ 426 Pa. Page 58]

    injunction restraining the parties from submitting the issue to arbitration.*fn5 From that decree this appeal was taken.

In deciding the instant controversy certain well settled principles must be kept in mind: (1) ". . . it has been stated over and over again that on an appeal from a decree awarding a preliminary injunction the Supreme Court will consider only whether any apparently reasonable grounds for the action of the court below existed, and the decree will be affirmed unless the record presents palpable legal error": Philadelphia v. Philadelphia Transportation Co., 386 Pa. 231, 236, 126 A.2d 132 (1956) and authorities therein cited; (2) arbitration is a matter of contract, and, absent an agreement between the parties to arbitrate an issue, the parties cannot be compelled to arbitrate that issue: United Steelworkers v. Westinghouse Electric Corporation, 413 Pa. 358, 362, 363, 196 A.2d 857 (1964); (3) it is for the court to determine on the basis of the contract provisions whether a party is bound to arbitrate and what issues, if any, it must arbitrate: Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241, 82 S. Ct. 1318 (1962); United Steelworkers, etc. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S. Ct. 1347 (1960); (4) recourse to arbitration as a means of resolving labor disputes is favored by the law (Textile Workers Union ...

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