Darnel v. East, 77-1600
| Decision Date | 06 April 1978 |
| Docket Number | No. 77-1600,77-1600 |
| Citation | 573 F.2d 534 |
| Parties | 98 L.R.R.M. (BNA) 2015, 83 Lab.Cas. P 10,526 William R. DARNEL et al., Appellants, v. James O. EAST and East Painting, Inc., Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Michael C. Arnold, Kansas City, Mo., for appellant; Albert J. Yonke, Kansas City, Mo., on the brief.
David M. Harding, Terrell, Van Osdol & Magruder, Kansas City, Mo., for appellee; Robert F. Redmond, III, Kansas City, Mo., on the brief.
Before ROSS and HENLEY, Circuit Judges, and LARSON, * Senior District Judge.
The trustees of three fringe benefit funds (the Pension Fund, the Health and Welfare Fund, and the Savings Fund) of Painters District Council No. 3 (the union) appeal from that portion of the judgment of the district court denying their requested relief against James O. East and dismissing on the merits their action against him. They also challenge the amount of damages awarded against East Painting, Inc.
The basic facts are undisputed. 1 Prior to December 24, 1969, James O. East, doing business as East Painting Company, operated a painting contracting business and employed union members. On July 24, 1969, East, an individual proprietor, signed a stipulation agreeing to abide by, and comply with, any collective bargaining agreement between the union and the Builders Association of Greater Kansas City. 2 Both prior to signing that stipulation and until December of 1969, East made the required contributions to the fringe benefit funds.
On December 24, 1969, East incorporated the business. He continued to operate the corporation, East Painting, Inc., as its president, treasurer and one of its directors. East's wife served as vice-president, secretary and the second director. They were the sole shareholders.
There were no substantial changes in the operation, management or personnel of the business. East testified that the business was incorporated to avoid a union contract provision which would have prohibited him, as an employer, from performing any painting himself. In January of 1970 the corporation started making the required contributions to the funds.
On November 5, 1970, 3 East, as president of East Painting, Inc., signed a labor contract with the union. It was antedated July 14, 1969. That contract was identical to the July 13, 1969 contract between the union and the Builders Association, except for the termination provision. The July 13, 1969 Builders Association contract was to continue in effect until March 31, 1972, and from year to year thereafter "unless abrogated by either party upon expiration date." East Painting, Inc.'s contract provided that the agreement was effective until March 31, 1969, 4 and from year to year thereafter "unless notice is given in writing by either party to the other at least sixty (60) days prior to March 31, 1972, or any subsequent annual anniversary date."
Both the corporation's contract and the Builders Association's contract required the following employer contributions to the benefit funds: to the pension and health and welfare funds (effective January 1, 1970), 20 cents per hour for each hour worked by an employee doing work covered by the agreement or, in the case of an employee compensated at rollage rates, 4 percent of the gross earnings of such employee; to the savings fund, 25 cents per hour for each hour worked by an employee doing work covered by the agreement or, in the case of an employee compensated at rollage rates, 4 percent of the gross earnings of such employee.
On July 5, 1973, a subsequent contract between the union and the Builders Association was signed. It provided for an increase in employer contributions to the funds and was effective, retroactively, on April 17, 1973. The corporation never signed an agreement adopting the increased rates.
Neither East nor the corporation made any contributions to the funds in 1972 or 1973. On January 29, 1974, East's attorney served a written notice of termination on the union indicating that the corporation intended to terminate "any agreement that may now be in force" between the parties effective March 31, 1972. 5 On or about March 31, 1974, East Painting, Inc., was dissolved and its assets liquidated.
On November 1, 1973, the trustees filed their complaint against East and the corporation under the Labor Management and Relations Act §§ 301 and 302, 29 U.S.C. §§ 185 and 186, demanding that each defendant be required to perform under the terms of their agreements with the union.
After trial to the court the district judge found that it was admitted that the corporation is liable for having failed to contribute to the three fringe benefit funds from January of 1972 to March of 1973, as required under its contract with the union dated July 14, 1969. He further found that the corporation was not obligated under the subsequent contract between the union and the Builders Association to make contributions in the greater amount provided in that contract for the period following April 17, 1973. He did find the corporation liable for contributions to the funds for the period following April 17, 1973, in the amounts provided in its continuing contract with the union.
The district court found no basis in the record for imposing any liability on East individually since he was not an employer during 1972 and 1973 and he was not a party to the collective bargaining agreements in effect during those years.
Apparently the trustees determined that the judgment against East Painting, Inc., is uncollectible. They present unique arguments to this court in an attempt to establish East's individual liability for the 1972 and 1973 contributions. We reject their theories as presented here.
The Stipulation.
The district court found that the stipulation signed by East on July 24, 1969, was not effective to bind the corporation to the collective bargaining agreements between the union and the Builders Association, in part because there was no consideration for the stipulation and it was not a binding contract. We agree with the trustees that the district court erred in concluding that the stipulation was invalid for lack of consideration. Collective bargaining agreements are not ordinary contracts and are not governed by the common law concepts which govern private agreements. Transportation-Communication Employees Union v. Union Pacific Railroad Co., 385 U.S. 157, 160-61, 87 S.Ct. 369, 17 L.Ed.2d 264 (1966). Participation agreements such as the stipulation signed by East have been enforced without question as to consideration. See, e. g., Calhoun v. Bernard, 333 F.2d 739 (9th Cir. 1964); Construction and General Laborers Union, Local No. 1140 v. Sheesley-Winter Construction Joint Venture, 421 F.Supp. 137 (D.Neb.1976). Furthermore, the parties never questioned the validity of the stipulation.
However, even though there is no question as to the validity of the stipulation, we do not believe it was effective to impose liability against James O. East, individually, for the unpaid contributions in issue here. The parties agree that the July 24, 1969 stipulation bound East, as an individual employer, to the provisions of the July 13, 1969 union-Builders Association contract, and he made the required payments to the benefit funds until the business was incorporated. 6 After East Painting, Inc., was formed East was no longer an individual employer and, therefore, not bound by the stipulation. 7
Some argument might be made that the corporation, as a successor employer, was bound by the stipulation, but we do not reach that issue. The corporation continued East's practice of making the required payments to the benefit funds at least until its contract with the union was signed. As we discuss below, after the contract between the union and the corporation was signed, it alone governed the relationship between the parties.
The Union-Corporation Contract.
The stipulation bound East to a contract that was identical, except for its termination provision, to the contract subsequently signed by the corporation. If, under any theory, the corporation was bound by the stipulation, its obligation thereunder terminated on the execution of its contract with the union. Even though the contract between the union and the corporation contained no clause indicating that it was the sole embodiment of the agreement between the parties, there is no reason to bind the corporation to two contracts in which only the provisions regarding expiration date differed. Since those differing provisions...
To continue reading
Request your trial
-
International Union, United Auto., Aerospace, and Agr. Implement Workers of America (UAW) v. Yard-Man, Inc.
...the Court held that under certain conditions nonparties may be bound by a collective bargaining agreement. Similarly, in Darnel v. East, 573 F.2d 534 (8th Cir.1978), the Eighth Circuit Court of Appeals rejected the contract defense of lack of consideration as incompatible with federal labor......
-
Schreiber v. Philips Display Components Co.
...15[6] F.3d at 666. Nor did it become liable for the obligations incurred afterwards by LGP's new managers. Id.; Darnel v. East, 573 F.2d 534, 538-39 (8th Cir.1978). Once that liability was transferred, PENAC had no need to amend its retiree health program to exclude plaintiffs, since it was......
-
N.L.R.B. v. L.B. Priester & Son, Inc., 81-4060
...597 F.2d 1269, 1271 (9th Cir. 1979); Amcar Division, ACF Industries, Inc. v. NLRB, 592 F.2d 422, 429 (8th Cir. 1979); Darnel v. East, 573 F.2d 534, 537 (8th Cir. 1978). Even if this maxim of construction were controlling with respect to collective bargaining agreements generally, we would n......
-
AMCAR Div., ACF Industries, Inc. v. N.L.R.B.
...Employees Union v. Union Pacific RR Co.,385 U.S. 157, 160-61, 87 S.Ct. 369, 17 L.Ed.2d 264 (1966). For example, Darnel v. East, 573 F.2d 534, 537 (8th Cir. 1978), held that there need be no consideration for a stipulation that the parties agree to abide by a collective bargaining agreement.......