Goldmann, Freund and Conford. The opinion of the court was delivered by Conford, J.A.D.
The defendant-union appeals from an order of the Chancery Division permanently restraining enforcement of an arbitration award and denying defendant's counterclaim for enforcement of the award. The plaintiff-company had sought this restraint after the arbitrator had entered an interim award favorable to the union's position that certain employees were entitled to vacation pay benefits under their collective bargaining agreement.
Botany Mills, the plaintiff, and the Textile Workers Union, the defendant, entered into a two-year collective bargaining agreement on April 14, 1954. The agreement, by Article XIX, was to continue in "full force and effect" until March 15, 1956 and for "successive one year periods" thereafter,
unless terminated by written notice given 60 days prior to the termination date.
At one time Botany employed over 6,000 employees, but by December 1955, because of intermittent layoffs due to technological changes and various work curtailments, this number had dwindled to about 1,000. Botany finally decided to discontinue operations and, on December 29, posted the following notice:
"The Dyeing and Finishing Operation of Botany Mills, Inc. will discontinue permanently as an active operation on December 31, 1955.
Since this operation is being discontinued, all salaried and hourly paid employees of the Dyeing and Finishing Division of Botany Mills, Inc. are hereby notified that they are laid off at the close of operations of their scheduled shifts on December 29th and December 30th, 1955."
On December 31 all manufacturing operations were discontinued.
The relevant contract provision concerning vacation pay, Article VI, entitled "Vacation and Vacation Pay," provides:
"Each employee in the employ of the Employer on each April 15th hereafter during the life of this agreement who has been in its employ at least one (1) year prior thereto but less than three (3) years, shall hereafter receive a vacation of one (1) week with pay as hereinafter set forth at a time to be set by the Employer; each employee in the employ of the Employer on each April 15th hereafter during the life of this agreement who has been in its employ at least three (3) years prior thereto but less than five (5) years, shall hereafter receive a vacation of one (1) week with pay as hereinafter set forth at a time to be set by the Employer; and each employee in the employ of the Employer on each April 15th hereafter who has been in its employ for five (5) years or more prior thereto, shall receive a vacation of two (2) weeks with pay as hereinafter set forth."
The succeeding paragraphs of Article VI provide that in calculating the amount of vacation pay, for both hourly and piecework employees, the four-week period immediately preceding April 1 of the vacation year should be used as a base.
Vacations were to be scheduled between April 15 and September 15. It was further provided that:
"Any employee who is qualified for a vacation or vacation pay under the foregoing but who had been laid-off for a continuous period of six (6) months or more prior to April 15th * * * shall not be entitled to a vacation or vacation pay.
Any employee whose employment has been terminated prior to April 15th, as provided in Article XI-K shall not be entitled to a vacation or vacation pay."
Article XI-K lists several reasons for which "seniority and continuous employment records" of employees would be lost, including layoffs for two years or more.
On January 9, 1956 the company gave notice pursuant to the aforementioned Article XIX of the contract that the collective agreement would be terminated effective March 15, 1956.
The union demanded vacation pay for all employees whose layoffs occurred after October 15, 1955. That date was specified by the union because of the contract provision concerning vacations quoted above, which excepts from disqualification from vacation benefits on account of layoff those employees who had been laid off less than six months prior to April 15 of the vacation year, and because the company had awarded vacation pay in 1954 and 1955 to any employee who had been laid off not earlier than the preceding October 15. The union had made these demands known to the company representatives as early as October 1955 at a meeting, engendered by rumors of the impending shutdown, between the union and Botany's general manager. The demands were formally renewed on February 2, 1956, before the expiration date of the contract. The company's answer to the counterclaim of the union in this cause admits it denied liability for the claims during the month of February 1956.
On April 4, 1956 the arbitration machinery of the contract was invoked by the union and the dispute was formally placed before the arbitrator.
The arbitration clause of the agreement ...