Green v. Brophy

• Decision Date: 15 January 1940
• Docket Number: No. 7381.,7381.
• Parties: GREEN et al. v. BROPHY et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

71 App. DC 299, 110 F.2d 539 (1940)

GREEN et al. v. BROPHY et al.

No. 7381.

United States Court of Appeals for the District of Columbia.

Decided January 15, 1940.

Charlton Ogburn and Arthur E. Reyman, both of Washington, D. C., for appellants.

Lee Pressman, Sidney V. Smith, and Joseph Kovner, all of Washington, D. C., for appellees.

Before GRONER, Chief Justice, and STEPHENS and VINSON, Associate Justices.

VINSON, Associate Justice.

The appellants, individually, in their respective official capacities, and as representatives of the American Federation of Labor (hereinafter referred to as the plaintiff) brought an action in equity against the appellees, in similar capacities representing the Committee for Industrial Organization (hereinafter referred to as the defendant), to recover for the plaintiff, as trustee, some $29,212.72 which the Aluminum Workers' Union No. 18356 of New Kensington, Pennsylvania, an A. F. of L. federal labor union (hereinafter referred to as the union), transferred to the defendant in trust or in custody for the use and benefit of said union. The defendant moved that the amended bill of complaint be dismissed on several grounds, one of which was the alleged failure of the plaintiff to join indispensable parties — the union, its representatives, and/or those of its members who are legally and beneficially interested in the subject matter and result of this action. The motion to dismiss was sustained and the plaintiff appeals from that order. In support of the court's ruling defendant here urges only that the complaint is defective in failing to join such indispensable parties.

In substance, the material allegations of the plaintiff's bill of complaint are as follows:

The Aluminum Workers' Union of New Kensington, Pennsylvania, was established and granted a "Certificate of Affiliation", or charter, on August 1, 1933, as a federal labor union under the direct jurisdiction of the plaintiff. Said certificate or charter granted the union certain "autonomy" but provided that "the said Union * * * do conform to the Constitution, Laws, Rules and Regulations of the American Federation of Labor, and in default thereof or any part, this Certificate of Affiliation may be suspended or revoked according to the laws of this Federation. And should the said Aluminum Workers' Union No. 18356 be dissolved, suspended or forfeit this Certificate of Affiliation, then the persons to whom this Certificate of Affiliation is granted, or their successors, bind themselves to surrender the same with such other property as shall properly belong to this Federation. * * *"

The Constitution of the plaintiff provides in Article X for its revenue by levying certain per capita taxes, and Section 3 thereof provides: "Any organization affiliated with this Federation not paying its per capita tax on or before the 15th day of each month shall be notified of the fact by the Secretary-Treasurer of the Federation, and if at the end of three months it is still in arrears it shall become suspended from membership by the Federation, and can be reinstated only by a vote of the Convention when such arrearages are paid in full, as provided in Section 2 of this Article."

Article XIII, Section 16 of the said constitution provides: "That * * * Federal Labor Unions shall be prohibited from assessing their members or appropriating their funds for any purpose other than union or American Federation of Labor purposes."

Section 17 of the same article provides: "No * * * Federal Labor Union, * * * shall disband so long as seven members * * * desire to retain the charter. Upon the dissolution, suspension or revocation of the charter of any * * * Federal Labor Union, * * * all funds and property of any character shall revert to the American Federation of Labor, to be held in trust until such time that the suspended or defunct organization may be reorganized and ready to confine its activities and actions to conform with recognized enforceable laws of the American Federation of Labor. It shall further be the duty of the officers of the * * * Federal Labor Union, * * * which has been dissolved, or whose charter has been suspended or revoked, to deliver all funds and property to the President of the American Federation of Labor or a representative whom he may designate for that purpose."

The union remitted no per capita tax for any month after November, 1936.

At a meeting of the union on or about March 5, 1937, those present voted to "deliver or transfer the funds of the Union to the C.I.O. for the use and benefit of said Union". Said delivery or transfer involved $29,212.72 and was made in March 1937. The defendant deposited the funds in its own name in the Lincoln National Bank of Washington, D. C. At all times a "substantial number" of the union's members in excess of seven, and "upon information and belief approximately several hundred", opposed the transfer and "desired to retain their membership in said union and their affiliation with the Federation".

On May 28, 1937, "after giving due and ample notice to the union by registered mail of the charges and the arrearages in payment of per capita taxes as aforesaid, and holding a hearing thereon, the Executive Council of the American Federation of Labor, a duly constituted body having jurisdiction over the subject matter, did revoke the charter of Aluminum Workers' Union, No. 18356; that the Federation gave notice of said revocation to said union in writing, and made demand for the funds, books of account and all other property of said union to be turned over to the Federation to be held in trust pursuant to Article XIII, of Section 17, of the Constitution of the Federation aforesaid." Prior to this determination of the union's existence, a large number of the members thereof seceded from membership in said union, and from affiliation with the plaintiff.

The complaint further alleges that "by reason of the delivery or transfer of the amount of money as aforesaid to the C.I. O., the trust provided for as aforesaid has been impaired and will fail unless the same is enforced for the benefit of all of the members of the Federation, and particularly the members of the Federal labor union to be reorganized to confine its activities and actions to conform with recognized enforceable laws of the Federation; * * *". Relief prayed for is a court decree ordering the defendant to make restitution by paying to the plaintiff the sum of $29,212.72, and enjoining it from acting in any manner to defeat the enforcement and operation of the trust.

The only question presented on this appeal from the order of the District Court dismissing the complaint is whether it appears from these allegations of the complaint that indispensable parties to this action have not been joined.

Indispensable parties have been defined by this court as "All whose interests will be affected by the decree, that is, all persons materially interested either legally or beneficially in the subject matter of the suit * * *." Balter v. Ickes, 67 App.D.C. 112, 115, 89 F.2d 856, 859; Ducker v. Butler, 70 App.D.C. 103, 104 F.2d 236; Flynn v. Brooks, 70 App.D.C. 243, 105 F.2d 766, decided May 22, 1939. Other judicial pronouncements have been to the same effect. See Franz v. Buder, 8 Cir., 11 F.2d 854, 856, 857. It is important to note that whether a party is indispensable depends on something other than the effect of a decree as res adjudicata upon him. Of necessity that must be so, else absent parties would never be indispensable.¹ The guiding principle, determining the indispensability of absent parties, was enunciated by the Supreme Court in California v. Southern Pacific Company, 157 U.S. 229, 255, 15 S.Ct. 591, 601, 39 L.Ed. 683, as follows: "Irrespective * * * of the extent, technically speaking, of the effect and operation of a decree * * * as res adjudicata, it is impossible to ignore the inquiry whether the interests of persons not before the court would be so affected, and the controversy so left open to future litigation, as would be inconsistent with equity and good conscience."² That this represents the proper inquiry is supported by the fact that litigation requiring decision as to the legal consequences to be attached to a relationship where only one party thereto is made a party to the action is perhaps the clearest case of failure to join an indispensable party.³

To this rule, that persons with a material interest which a decree will affect are indispensable parties, there is a corrollary which is of some importance here. As cases cited by the plaintiff indicate, persons with a very real interest in the subject matter of a controversy which a decree will affect may not reach the stature of indispensable parties, if they are cestui que trusts whose interests their trustee may adequately represent in the particular litigation. "It cannot be doubted, that, under some circumstances, a trustee may represent his beneficiaries in all things relating to their common interest in the trust property. He may be invested with such powers and subjected to such obligations that those for whom he holds will be bound by what is done against him, as well as by what is done by him. The difficulty lies in ascertaining whether he occupies such a position, not in determining its effect if he does. If he has been made such a representative, it is well settled that his beneficiaries are not necessary parties to a suit by him against a stranger to enforce the trust citing cases; or to one by a stranger against him to defeat it in whole or in part. citing cases. In such cases, the trustee is in court for and on behalf of the beneficiaries; and they, though not parties, are bound by the judgment, unless it is impeached for fraud or collusion between him and the adverse party". Kerrison v. Stewart, 93 U.S. 155, 160, 23 L.Ed. 843.⁴

Where, however, the trustee may not be fairly said to represent the interests of his cestui que trusts,...