(dissenting ' in part).
The one fact which stands out above all others in this case is that there is no accusation or even suspicion of unfair or discriminatory treatment of employees by the Berkley Machine Works and Foundry Company, although its conduct was under constant and critical observation during the four years when it was engaged in bargaining with the International Association of Machinists Lodge No. 11. There was no disagreement as to wages or hours of work or working conditions, and no strike; in other words, the men were satisfied. The complaint relates to the failure of the company to reach and sign an agreement with the union to maintain existing conditions, and hence it may fairly be said that the controversy relates to the procedure of collective bargaining rather than to working conditions prevailing in the employer’s plant.
There can be no doubt that there were prolonged negotiations between the parties for a period of more than four years, or that the company acted in good faith throughout this period.1 The special mas*911ter found that the company acted in good faith and the court agrees; but the court finds that the special master and the company’s attorney acted under a mistake of law in supposing: (1) that the company was not obliged to bargain with the union in respect to the practice of granting increased pay in individual cases as a reward for meritorious service; and (2) that the company was not obliged to execute an agreement binding it to maintain existing rates of pay for a specified period of time.
I agree with the conclusion of the court as to the first matter. Individual merit increases are obviously desirable from the company’s standpoint but they are susceptible of misuse as an expedient to change an agreed rate of pay or to minimize the function of the union as the bargaining representative of the majority of the employees. They are accordingly looked upon with suspicion by the union whose tendency is to hold individual effort to the level of mediocrity in the belief that this is best for the body of the workers as a whole. Hence there exists a suitable field for negotiating which the employer cannot refuse to enter, as shown by the decisions which are cited in the opinion of the court. It may not be said, perhaps, that there are no circumstances under which an employer may grant an increase of pay or better working conditions to an individual employee as a reward of merit without bargaining with the union, but it is clear that an employer may not refuse altogether to treat with the union in this area of employer-employee relationship.
I am, however, constrained to differ with the holding on the second point not only in the statement of facts and the applicable law in the instant case, but also with respect to the unreasonable restraint which would be imposed upon the right of an employer to conduct his business in a prudent and lawful manner if the holding should be adopted as a general rule. We must take the facts from the report of the special master, for under the Federal Rules of Civil Procedure, rule 53(e) (2), 28 U.S. C.A. and the decision of this court in N. L. R. B. v. Standard Trouser Co., 4 Cir., 162 F.2d 1012, the master’s findings are binding upon us unless clearly erroneous, and the court does not find palpable error in this instance. The petition of the Board charged that the company refused to negotiate about any contractual provision which should bind it as to rates of pay, wages, hours and working conditions, and insisted upon maintaining full freedom of action as to such matters. In respect to this specification the special master made the following findings of fact: “This specification deals with wages, hours and other working conditions. The matter of hours has been dealt with in the preceding specification. Counsel has not pointed out what ‘other conditions’ there are about which the Company refused to negotiate or with respect to which it insisted on full freedom of action. The matter of rates of pay and wages alone remains for consideration.
“It should be said at the outset that uniformity of wages in the several classifications and the Company’s existing practice of granting individual merit increases constituted a basic disagreement underlying all other disagreements during the entire negotiations. None of the prolonged and heated discussion of other issues was ever divorced from these points of primary concern to each of the parties.
*912“The contention of the Board in this respect is primarily based upon the initial error that the Company refused to bind itself as to any minimum wage scale applicable to all employees. That such is wholly inaccurate clearly appears from the admissions of the Union representatives who successively conducted the negotiations for the Union, irrespective of the Company proof on that point. The Company clearly and repeatedly stated its agreement to bind itself to a minimum rate of pay in each classification equal to the prevailing rate in the area. The issue in dispute was the right of the Company without consulting the Union (1) to lower its general and existing scale of pay if economic conditions produced a reduction in the prevailing wage in the area, and (2) to place in effect individual pay increases for merit (or decreases for lack of merit), provided always in both cases that the minimum wage in each classification, as set by the prevailing rate in the area, was maintained. The Company’s position was not taken in any sense as a subterfuge or for the purpose of controlling wage rates in general.
“The reason for the Company’s position was that its actual wage rates were already above the prevailing rates in the area and that in intended to continue them so long as it could do so, economic conditions permitting, and that its policy of individual wage differentials for merit and ability, above its regular rates, was a long standing practice, both sound, reasonable and just.
“The change in economic conditions anticipated by the Company was the cessation of war-work, in which it had been chiefly engaged for governmental agencies, and an early return to civilian production, in competition for which it might not be able to continue its wage rates ‘in effect since the Union was certified.’ It agreed that it could and would maintain the prevailing rates in the area. It was unwilling to bind itself for the period of a year to the existing rates, nor place itself in a position where union agreement was necessary during the year in order to reduce its existing rates, if the specified economic conditions produced a reduction in the prevailing area rates during that year.
“That such was the issue is clear from the evidence.”
In view of these findings it is quite incorrect to say that the company was unwilling to bind itself to pay any specific rate for any specified length of time or that it refused to continue the status quo or any other rate for any appreciable period. The company was entirely willing to bind itself to pay a minimum rate of pay in each classification equal to the prevailing rate in the area. It was unwilling, amidst the uncertainties of the emergency of war, to agree to continue to pay a higher rate than its competitors for any definite period; and' it took this position in good faith, fearing that a cessation of war work would render the maintenance of existing conditions impracticable. There is no power in the Labor Board or in this court to compel an employer to sign an employment contract against his better business judgment exercised in good faith, and 'his refusal to comply under such circumstances should be ascribed rather to the reasonable desire to save himself from loss than to a stubborn 'refusal to perform his duty under the statute. The law was correctly stated by Judge Lindley in the Singer case, cited in the opinion, where he said, 119 F.2d 137 “Petitioner (the employer) could not be compelled to enter into a contract which did not reduce wages or which bound it not to make a reduction in the future.” Since this is the established rule, this court has no power to direct the company to purge itself by entering into an agreement to maintain existing conditions for any specified length of time.
. It appears from the master’s opinion that there were at least ten or twelve meetings of the Company with the union from June 1945 to September 1949 when the contempt proceedings began. The company complied with the requests of the union for conferences with promptness — once on the very day of the request, once the very next day, and once within three days. On three occasions there was some delay due to involvements of company counsel in litigation elsewhere.
All told there was an aggregate of thirty-four months of silence. Three of the most extended periods of inactivity (one in 1945 — 46, one in 1947-48 and one in 1949) occurred when the Labor Board was engaged in investigating the case. Both parties seized upon this fact to justify their silence. A fourth period of four months followed the company’s letter of February 25, 1946 in which the company specifically objected in writing to certain union proposals and offered to renew negotiations. A fifth period of three months followed the company’s counter-proposal of August 13, 1946 in which the union was advised that the company awaited its further action. A sixth period of three and a half months followed the union’s proposed modifications to the counter-proposal. This interval resulted from a mutual misunderstanding, both parties being equally blameless or equally to blame. A seventh period of silence which merged into the . period when the Labor Board was contemplating contempt proceedings, followed the union’s request for a conference in November, 1948. During the four years of negotiations, there were some half-dozen shifts in union personnel directly in charge. The master attributed the thirty-four months of quiet to this fact more than any other. The unfamikarity of the succeeding officers with what had gone before served to produce confusion, uncertainty and misunderstandings that never should have existed. It is not unreasonable to assume that the prevailing satisfactory wages and working conditions relieved both the company and the union of employee pressure to come to agreement without delay.
The union made about five different proposals in trying to reach agreement but these can be reduced in substance to fewer in number. The first three (one in the summer of 1945, one in February 1946 and one in July 1946) were identical save for the fact that the third one eliminated the union shop provision. The fourth (November 1946) was a modification of the company’s counter-proposal. The fifth (November 1948) represented no material departure from the fourth save that it dropped the demand for vacations with pay. In the course of the negotiations the union made concessions, among which were the withdrawal of its requests for union shop, for seven paid holidays, for double-time on Sunday, for call-in pay, for separation pay and for limitation on the number of apprentices.
The company stated its objections to the several union proposals in the numerous conferences and twice stated them specifically in writing — once in February 1946 and once in June 1946. The
*911company made its counter-proposal in August 1946, and the union modification of this counter-proposal became the prime subject of subsequent negotiation. In February 1948 the company reviewed, for the benefit of the Labor Board, the prior conferences and negotiations and it expressed the view that no agreement could be reached unless the union was prepared to yield on the matter of non-uniformity of individual pay raises in the sole discretion of the company and on the matter of vacations. Union proposals subsequent to this communication never once yielded on the first matter and its demands of the company for counter-proposals were not heeded. The master found that the position of the company in January 1949 was perfectly clear to the union; hence the union demands for counter-proposals did not necessarily warrant action by the company.