Polish Nat. Alliance v. National Labor R. Board

• Decision Date: 05 June 1943
• Docket Number: No. 8090.,8090.
• Citation: 136 F.2d 175
• Parties: POLISH NAT. ALLIANCE OF UNITED STATES OF NORTH AMERICA v. NATIONAL LABOR RELATIONS BOARD.
• Court: U.S. Court of Appeals — Seventh Circuit

136 F.2d 175 (1943)

POLISH NAT. ALLIANCE OF UNITED STATES OF NORTH AMERICA v. NATIONAL LABOR RELATIONS BOARD.

No. 8090.

Circuit Court of Appeals, Seventh Circuit.

June 5, 1943.

Casimir E. Midowicz and Ewart Harris, both of Chicago, Ill., for petitioner.

Lester Asher, N.L.R.B., of Chicago, Ill., and Robert B. Watts, Gen. Counsel, Ernest A. Gross, Associate Gen. Counsel, Howard Lichtenstein, Asst. Gen. Counsel, and Jacob I. Karro, William J. Isaacson, and John H. Garver, Attys., N.L.R.B., all of Washington, D. C., for respondent.

Before EVANS, SPARKS, and MAJOR, Circuit Judges.

MAJOR, Circuit Judge.

This case is here upon petition of the Polish National Alliance to review and set aside an order issued by the National Labor Relations Board, pursuant to Sec. 10(c) of the National Labor Relations Act, 29 U.S. C.A. § 151 et seq. The Board in its answer requested enforcement of its order.

The order is based upon findings that petitioner violated Sec. 8(1), (3) and (5) of the Act by its refusal to bargain collectively with Office Employes' Union No. 20732, A. F. of L. (hereinafter called the Union), by its discriminatory discharge of Anna Owsiak, by its discriminatory refusal to reinstate, upon application, a group of twenty-seven employees who had engaged in a strike caused and prolonged by petitioner's unfair labor practices, and by its anti-union conduct and statements. The Board, upon such findings, entered its order containing the usual cease and desist provisions and affirmative requirements.

The contested issues may be classified generally as (1) whether the Board has jurisdiction of petitioner or, more accurately perhaps, whether petitioner is subject to the Act, and (2) whether the Board's findings as to the unfair labor practices are supported by substantial evidence.

The jurisdictional provision of the Act is Sec. 10(a), which provides: "The Board is empowered, as hereinafter provided, to prevent any person from engaging in any unfair labor practice affecting commerce."

The critical words, fixing the limits of the Board's authority in dealing with labor practices, are "affecting commerce." The Act specifically defines the "commerce" to which it refers (Sec. 2 (6): "The term `commerce' means trade, traffic, commerce, transportation, or communication among the several States * * *." The Act also defines the term "affecting commerce" (Sec. 2(7): "The term `affecting commerce' means in commerce, or burdening or obstructing commerce or the free flow of commerce, or having led or tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce."

In National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, on page 32, 57 S.Ct. 615, on page 622, 81 L.Ed. 893, 108 A.L.R. 1352, wherein the question of the Board's jurisdiction was considered at length, the court stated: "Whether or not particular action does affect commerce in such a close and intimate fashion as to be subject to federal control, and hence to lie within the authority conferred upon the Board, is left by the statute to be determined as individual cases arise. We are thus to inquire whether in the instant case the constitutional boundary has been passed."

It therefore appears pertinent, in considering the question before us, to make a rather detailed statement of petitioner's activities. Petitioner is a fraternal benefit society, organized under the laws of the State of Illinois as a not-for-profit corporation. It is carried on for the benefit of its members, most of whom are certificate holders and their beneficiaries. It has a lodge system with ritualistic form of work and a representative form of government. Its purpose, as stated in its charter, is "to promote the cultural, social and economic advancement of its members, to foster fraternalism and patriotism among them, to provide death, disability, accident and other benefits to its members and their beneficiaries." Its membership, the creation, maintenance and disbursement of funds, and its activities generally, are performed in accordance with its by-laws and the laws of the State of its creation. Its supervising officials are elected at regular conventions, and constitute its supreme governing body. The convention is made up of delegates selected from local lodges. As its name indicates, only persons of Polish descent are eligible for membership. The preamble to its constitution recites the hardships and sacrifices which have been endured by the people of Poland as the reasons why many of them sought refuge in this country. The general purpose in founding the Polish National Alliance was to insure such Polish people of a more perfect union in this country and a proper moral, intellectual, economic and social development, and to secure by all legitimate means the restoration and preservation of the independence of the Polish territories in Europe.

Petitioner is organized into 1,817 lodges and is licensed to do business in twenty-six states, the District of Columbia, and Manitoba, Canada. Lodges are grouped into 190 councils, 160 of which are outside of the State of Illinois. On December 31, 1941, petitioner had in force 272,897 insurance benefit certificates with a total face value of $159,683,583. Such certificates afford every form of protection ordinarily furnished by life insurance companies and include: (1) Ordinary life, (2) 20-year payment life, (3) 20-year endowment, (4) endowment at age of 65, and (5) combined term and paid up at age of 65. Petitioner's manual states: "The premium rates on all certificates of insurance, and also the reserves, are computed on the basis of the American Experience Table of Mortality with interest at the rate of three per cent (3%) per annum, according to the Illinois standard basis. These assumptions are the most conservative used by American life insurance firms." Net earnings are distributed as dividends to members in accordance with the varying provisions of the certificates they hold; the certificates have a cash value which may be withdrawn by the member or utilized as security for a loan. Premiums collected, in excess of benefits paid out, become a part of petitioner's investments. It owned on December 31, 1941, assets of $30,090,835, represented by a variety of properties and securities. Investments in railroads totaled $1,500,000, bond holdings in public utilities and large scale industry operating in all sections of the country amounted to almost $3,000,000, extensive real estate holdings in five states were valued at $11,000,000, and holdings in securities of the United States, of state governments, and of nationally distributed political subdivisions totaled more than $8,000,000. During 1941, its total income was $5,717,344, of which $3,723,364 was received from members and $1,690,250 from investments. During this same year, benefits paid totaled $1,845,126.

Petitioner's business is managed by officers and directors from its Chicago office. As presently constituted, a person who becomes a member must also become a certificate holder. All terms and conditions of the benefit certificates are determined, investments made, applications for certificates, claims, and loans acted upon, and all benefit certificates and checks issued at the home office in Chicago. Its securities are purchased through licensed dealers, and with the exception of $11,000 on deposit with authorities in Manitoba, Canada, are kept in Chicago.

Sub-standard risks are reinsured through Lincoln National Life Insurance Company, and reinsurance documents are sent to that company's home office in Fort Wayne, Indiana. More than $250,000 of such insurance was in effect at the time of the hearing. The Credit Company of Atlanta, Georgia, rendered inspection reports concerning the financial standing and character of applicants for benefit certificates. Petitioner employs organizers in twenty-six states to obtain new members, and advertises in newspapers, magazines and other media. In 1941, the sum of $169,000 was disbursed for commissions and fees of field agents, $20,000 for compensation of "managers" engaged in soliciting, over $17,000 for "field supervision and traveling expenses," $15,000 for traveling expenses of officials, $13,000 for medical examinations, $4,000 for credit investigations of applicants in their respective localities, and $19,000 for postage and express, telegraph and telephone service. Petitioner also holds direct control of Alliance Printers and Publishers, Inc., located in Chicago, which publishes the Zgoda, petitioner's official publication. Over 1,000,000 copies of the daily edition and over 5,000,000 copies of the Sunday edition of this publication are mailed to members outside the State of Illinois. Petitioner, since its organization, has spent large sums of money for charitable, educational and fraternal activities among its members, including the sum of $252,210.03 in the year 1941.

The Board found: "Although the respondent has been organized as a non-profit corporation and its charter emphasizes the cultural and social purposes of its incorporation, these factors are not conclusive of the question of our jurisdiction; the determining point is what the corporation does. The activities of the respondent in issuing insurance benefit certificates and its attendant investments mark it as an insurance company. * * * Moreover, the fact that the respondent may not be organized for `profit' does not place it beyond our jurisdiction. We find that the respondent is engaged in commerce within the meaning of the Act."

Petitioner attacks this finding. It argues that it is a fraternal benefit society operating without profit to it, and that the insurance feature of its business is merely incidental to its main purpose. The Illinois statute under which it is organized and a number of decisions from courts of that State are cited in support of the distinction recognized between insurance companies and...