PORT DISTRICTS; MUNICIPAL CORPORATIONS; CONTRACTS WITH LABOR UNIONS; POSSIBLE LIABILITY FOR PORT'S FAILURE TO MAINTAIN OPERATIONS DURING LABOR DISPUTE

PORT DISTRICTS; MUNICIPAL CORPORATIONS; CONTRACTS WITH LABOR UNIONS; POSSIBLE LIABILITY FOR PORT'S FAILURE TO MAINTAIN OPERATIONS DURING LABOR DISPUTE

(1) Port districts may enter labor agreements with unions when necessary, and may not withdraw unilaterally from such agreements in the absence of breach or legally recognized excuse for non-performance [[nonperformance]].

(2) Port districts have an independent duty to maintain services and must exercise reasonable diligence in preventing labor disputes which cause work stoppages if they are to avoid liability claims.

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                                                                 January 17, 1956

Honorable Cliff Yelle
State Auditor
Legislative Building
Olympia, Washington                                                                                                              Cite as: AGO 55-57 No. 187

Attention:  !ttMr. A. E. Hankins

            Chief Examiner

            Division of Municipal Corporations

Dear Sir:

            You have requested our answer to the following questions which were submitted to you by a port district:

            "'1. Since most ports do not have union agreements, and we assume that is because they are public institutions, we would like to know if we have any legal grounds for withdrawing from the agreement we now have with Local 23-30 CIO-IWA?

            "'2. In the event our crew is out on strike and someone not involved in the dispute asks for service, would they have any legal redress if we did not serve them?'"

             [[Orig. Op. Page 2]]

            The first question must be answered in the negative.  The second question cannot be answered categorically.  However, certain general observations made as will appear in our analysis below.

                                                                     ANALYSIS

            1. InChristie v. Port of Olympia, 27 Wn. (2d) 534, our court held that a port district as a municipal corporation of the state has implied power to employ longshoremen and warehousemen inasmuch as such employees are obviously necessary to carry into operation the declared purposes of the district.  Moreover, the court sustained the legal validity of a contract between the port and the longshoremen's union, indicating that such contracts were not illegal as against public policy.  At page 549, the court said:

            "It is so obvious that a public port must have the implied power to employ longshoremen, that no discussion of that point is required.  Without such employees, a port could not perform the very functions which it was created to perform.  Clearly, the power to employ includes the power to contract, and, as corollary to that, since longshoremen are absolutely necessary to carry on the functions of a port, we think a port necessarily has the implied power to make such contracts relating to wages, hours, vacations, and so forth, as are customarily offered to longshoremen by its competitors in the same business.  * * *"

            The court continued at page 551:

            "We are not disposed to hold that, if that agreement had been formally made by the commissioners, it would have been void as against public policy.  On the contrary, under the conditions shown, we think the agreement made by Gribble, [the port manager] purporting to act for the port, and subsequently ratified by the port, was not only consistent with public policy, but with good judgment and common sense."

            This office has previously issued opinions indicating, that, in view of theChristie decision, labor agreements between a port district and the longshoremen's  [[Orig. Op. Page 3]] union are valid.  We have also ruled that the port district may agree as part of its contractual undertaking to make contributions to the union pension fund.  See opinions of the Attorney General: September 4, 1951 (to the state auditor) [[Opinion No. 51-53-118]]; Opinion No. 51-53-174 [[to L. H. Bates, Employment Security Department on November 26, 1951]], copies of which are attached.

            Your letter does not state under what circumstances the agreement between the port district and Local 23-30 CIO-IWA was made, nor have we been provided with the text of the agreement itself.  Consequently, our answer to your question must necessarily be confined to the issue of the validity of such agreements in general.  We believe that theChristie case sustains the legal validity of labor contracts between port districts and unions.  Therefore the district may not unilaterally withdraw from the contract, in the absence of facts and circumstances which the law would recognize as constituting a breach of the agreement by the union or an excuse for non-performance by the port district.  Obviously a discussion of such eventualities is not properly within the scope of your question.

            2. We are of the opinion that your second question admits of no categorical answer.  An analysis of the problem presented depends upon a precise evaluation of the factual situation respecting (1) the manner in which the prospective customer requests port service; (2) the time the request is made in relation to the inception of the labor dispute; (3) the circumstances giving rise to the strike; (4) the character of the dispute itself, and (5) the provisions of the port's tariff then in effect.  Despite the lack of a precise factual setting in which the problem has been raised, it is nevertheless possible to set forth some general observations concerning the legal issues involved in your question.  We believe there are two such principal issues.

            (A). Does the law impose a duty upon a port district to render services upon request even though the port has not obligated itself to serve through prior contractual arrangements with the person requesting service?

            (B). Assuming that a port district is required to serve the public in the absence of contract, is such a duty excused in the event a strike cripples normal operations?

            These issues will be discussed in the order presented.

             [[Orig. Op. Page 4]]

            (A). The question of the existence of a duty to serve is obviously essential to any analysis of the possible liability of a port district to a prospective customer arising from its failure to maintain normal operating conditions.  Without a duty of some sort there clearly is no ground for asserting any liability whatever.

            At the outset, it should be pointed out that we have limited our analysis to the issue of the port's duty to serve in the absence of any contractual obligation to the customer.  We are precluded from embarking upon a discussion of the legal effect of prior contractual arrangements upon the general question of the port's duty to serve because we are provided with no facts indicating the existence of such arrangements.  We shall therefore pass to the broader question of the port's duty to persons requesting service where no prior contractual arrangements exist.

            The business of a port district is obviously public in character.  As a municipal corporation of the state it exists for the purpose of serving the public, and in turn the public must largely depend upon the port's facilities in order to conduct necessary commerce.  In a word, it seems clear that a port district is best characterized as a public service corporation.  See RCW 53.08.070.

            First, we find that the legislature, which in RCW Title 53 has provided for the formation of port districts, has not set forth any duty to be owed to the general public exclusive of duties incurred through contract.  However the common law often imposes this duty upon public service corporations even though there be no legislative pronouncement upon the problem.  Turning, then, to case law, we are obliged to point out that the Washington court has not as yet expressed its views as to whether a port district is required to serve the public regardless of its not having agreed to do so.  Moreover, research has failed to disclose cases from other jurisdictions dealing with a public port's duty to serve when the port is constituted as a municipal corporation of the state.  In such a situation, we are compelled to look toward the law which has been applied to such ports as are privately owned though public in character, in order to forecast as well as possible the result which a court might reach in the event the instant problem is presented for judicial determination.

            We are convinced that with regard to a port district a duty to serve does exist independent of contract.  InBarrington v. Commercial Dock Company, 15 Wash. 170, the court considered the circumstance under which a privately  [[Orig. Op. Page 5]] owned wharf is to be characterized as a public wharf.  Although there is no question that the facilities of port districts must be regarded as public in character, the Barrington opinion is important to our discussion here in that the court appears to indicate that a public wharf is impressed with a duty to serve the public irrespective of contract.  The court said at page 174:

            "In Gould on Waters (2d ed.), § 119, the author lays down the proposition, and supports it by a great array of authorities, that

            "'When wharves belonging to individuals are legally thrown open to the use of the public, they become affected with a public interest, and the wharfage must be reasonable.'

            "The proof in this case shows that numerous steamers landed at appellant's wharf daily, discharging passengers and baggage as well as freight from different ports in the waters of Puget Sound and elsewhere, and it also shows that the appellant receives the sum of twenty-five cents per ton for every ton of freight going out or coming in over said wharf.  We think that the language of the court inMunn v. Illinois, 94 U.S. 113, is applicable here, viz., that appellant 'stands in the very gateway of commerce; and takes toll from all who pass.'

            "In re The Canal-boat Kate Tremaine, 5 Ben. 62, it is said:

            "'A wharf is a necessity of modern navigation, and of navigation alone.  The sole object of its erection is to facilitate the transportation of passengers and freight upon navigable waters, . . . every vessel has a license to use, for her safety or convenience, any public wharf on navigable waters, upon paying reasonable wharfage.'"

            There appears in Wyman on Public Service Corporations, Vol. I, § 102, p. 83 (Baker, Voorhis & Co., New York, 1911) the following statement:

             [[Orig. Op. Page 6]]

            "It has been established from the earliest times that docks are at least public in character.  Vessels calling at a port are forced to use the docks that are maintained there.  And there will necessarily be few such docks since the locations which are both upon deep water and near to the commercial centers will always be limited.  All this necessarily calls for the law requiring public service from those proprietors who have given it out that their docks are public.  * * * "

            Although it seems clear an independent duty exists, there remains the problem of determining the extent and scope of the duty.  In 56 Am. Jur., Wharves, § 15, p. 1075, the following statement is made:

            "Rights, duties, and liabilities in respect of wharfage services and accommodations may depend upon or be affected by the character or status of the wharf as public or private.  If public, the owner is under obligation to make and keep its services and facilities available to all who make proper application, to the extent of its capacity, and is required to exercise reasonable diligence to this end.  * * *"

            The duty to serve is thus not absolute.  It would seem that anyone claiming that the port is liable to him for a failure to serve, could be effectively met by a contention that the port had exercised "reasonable diligence" in attempting to maintain its services.

            (B). Having determined that a port district is charged with a duty to maintain its services and facilities for the benefit of the public, we are now in a position to evaluate the legal effect of a strike upon that duty, bearing in mind that, in general terms, the duty is qualified by the port's exercise of "reasonable diligence" in discharging its obligation.

            We have been unable to find a case directly in point on this question.  The closest authority on the matter appears to be Warren v. Portland Terminal Company, 121 Me. 157, 116 Atl. 411, 26 A.L.R. 304.  In that case, the operations of a wharf which was owned and operated by a railroad company were  [[Orig. Op. Page 7]] closed down owing to a strike carried on by the company's wharf employees.  The question raised was whether or not the company, confronted with a crippling strike, was to be held liable for the loss suffered by the plaintiff, resulting from the company's inability to unload a vessel carrying plaintiff's cargo.  The court held that, under the facts of the case, the company had exercised "reasonable diligence" in attempting to discharge its obligations to the plaintiff before and during the strike, and was therefore to be relieved of any liability for the loss caused by the delay in unloading plaintiff's cargo.  The court said:

            "With actions upon express contracts we are not concerned, nor are we concerned with actions for loss of or injury to goods in transit for which the law makes the carrier liable as insurer.  To such actions strikes cannot be interposed as a defense.

            "For damages caused by mere delay a carrier is responsible only when it fails to exercise reasonable diligence and care.  It must exercise reasonable diligence in supplying itself with suitable and sufficient facilities and employees, in averting strikes and saving its patrons from strike losses.  If it performs this duty it cannot be held liable through having imputed to it the fault of persons, once its servants, who have by striking put an end to the relation of master and servant.

            "* * *

            "It was under obligation to use reasonable diligence to prevent the occurrence of the strike and to minimize its injurious consequences.

            "It was bound, moreover, to inform the plaintiffs of the fact of the strike and to keep them informed in relation to it, while the discharge was delayed so as to give the plaintiffs every reasonable opportunity to protect themselves from loss.  Eastern R. Co. v. Littlefield, 237 U.S. 145.  [59 L.Ed. 883, 35 Sup.Ct. Rep. 489 [[35 S.Ct. 489]].]

             [[Orig. Op. Page 8]]

            "* * *

            "It is not shown that the defendants failed to exercise reasonable diligence * * *"

            It must be noted that the court considered the wharf services as but a part of the company's function as a common carrier.  Nevertheless, we believe that the reasoning of the court would be applicable to the business of a port district even though we are unwilling to conclude that our port districts are to be characterized as common carriers.  Nevertheless, the services provided by public ports are so intimately connected with the services of common carriers that it can be expected some of the strict principles applicable to carriers will be considered to apply.

            In this connection, we think mention should be made of our court's decision inConsolidated Freight Lines, Inc., v. The Department of Public Service, 200 Wash. 659, inasmuch as the case appears to be the only expression of the Washington court's view upon the question of a strike affording an excuse for a public service corporation's failure to comply with its duty to serve the public upon request.  In that case, certain common carriers had their permits suspended by the department of public service owing to their failure to accept freight from the Davenport Hotel in Spokane.  The carriers' reason for failing to provide service was that their employees would strike if they were required to go through the picket lines maintained by certain striking employees of the hotel.  The court said at page 662:

            "The question then arises whether the appellants were excused by reason of the law.  They being common carriers, it was their duty, under the facts and circumstances of this case, to send their trucks through the picket line.  13 C.J.S. 407; I Moore on Carriers (2d ed.), 124; Chicago, B. & Q. R. Co. v. Burlington, C. R. & N. R. Co., 34 Fed. 481;Burgess Bros. Co. v. Stewart, 112 Misc. 347, 184 N.Y. Supp. 199."

            We hasten to point out that the relevance of this decision to the problem under consideration here is not too strong.  First, the public service corporation involved was clearly a common carrier, and we have already observed that the strict law applicable to carriers is probably not to be appliedin toto to our port districts, inasmuch as such districts are not primarily engaged in the business of carrying goods or persons.  Second, the question of the liability of the  [[Orig. Op. Page 9]] motor freight companies to the hotel for failing to provide service was not before the court.  Yet the case is worthy of note in that it apparently indicates that carriers, and perhaps other public service corporations as well, will not easily be excused by our court for failure to serve the public where the failure results from a strike.

            We conclude, however, that the question of a port's liability to a person requesting service, where a strike has closed down port operations, will probably be determined largely from an evaluation of the factual situation in which the question is ultimately presented to the court.  In this connection we believe that the problem will be resolved in terms of the port's "exercise of reasonable diligence" in attempting to avoid the strike in the first instance, and, failing that, in making its best effort to deal with the strike in a manner calculated to bring it to an end as quickly as possible.

            We hope this opinion may prove of some assistance to you.

Very truly yours,

DON EASTVOLD
Attorney General

J. CALVIN SIMPSON
Assistant Attorney General