Philadelphia Nat. Bank v. EMPLOYING BRICKLAYERS'ASS'N

• Decision Date: 14 January 1959
• Docket Number: Civ. A. No. 25253.
• Citation: 169 F. Supp. 591
• Parties: PHILADELPHIA NATIONAL BANK, a National Banking Association, v. EMPLOYING BRICKLAYERS' ASSOCIATION OF PHILADELPHIA, a Pennsylvania corporation, Bricklayers' Union No. 1 of Pennsylvania of the Bricklayers, Masons and Plasterers International Union of America, an unincorporated association, William C. Boyd, President of Bricklayers' Union No. 1 of Pennsylvania of the Bricklayers, Masons and Plasterers International Union of America, Paul A. Paulson, Daniel J. Walsh, Joseph J. Sperlunto, Eugene B. McGough, Sr., John G. Bowman, R. Walton Struse, Jr., Bricklayers' Local No. 1 of Pennsylvania Welfare Fund, an unincorporated association.
• Court: U.S. District Court — Eastern District of Pennsylvania

169 F. Supp. 591

PHILADELPHIA NATIONAL BANK, a National Banking Association, v. EMPLOYING BRICKLAYERS' ASSOCIATION OF PHILADELPHIA, a Pennsylvania corporation, Bricklayers' Union No. 1 of Pennsylvania of the Bricklayers, Masons and Plasterers International Union of America, an unincorporated association, William C. Boyd, President of Bricklayers' Union No. 1 of Pennsylvania of the Bricklayers, Masons and Plasterers International Union of America, Paul A. Paulson, Daniel J. Walsh, Joseph J. Sperlunto, Eugene B. McGough, Sr., John G. Bowman, R. Walton Struse, Jr., Bricklayers' Local No. 1 of Pennsylvania Welfare Fund, an unincorporated association.

Civ. A. No. 25253.

United States District Court E. D. Pennsylvania.

January 14, 1959.

Arthur Littleton, John R. McConnell, David W. O'Brien, Morgan, Lewis & Bockius, Philadelphia, Pa., for plaintiff.

John J. O'Brien, Jr., Philadelphia, Pa., for Daniel J. Walsh, Eugene B. McGough, Sr., William C. Boyd, Bricklayers' Union No. 1 of Pennsylvania, etc.

Robert W. Lees, Philadelphia, Pa., for Employing Bricklayers' Ass'n of Philadelphia.

Louis H. Wilderman, Philadelphia, Pa., for Paul A. Paulson, Joseph J. Sperlunto, Bricklayers' Local No. 1 of Pennsylvania Welfare Fund, Bricklayers' Union No. 1 of Pennsylvania, etc.

Herman J. Obert, Philadelphia, Pa., for R. Walton Struse, Jr., John G. Bowman, Bricklayers' Local No. 1 of Pennsylvania Welfare Fund.

EGAN, District Judge.

Introductory

This is a petition in the nature of an equitable interpleader by the Philadelphia National Bank. The Bank wants to know who may give orders respecting the securities it holds as custodian and who may draw on the funds on deposit with it by the Welfare Fund created by the joint action of the Employing Bricklayers' Association of Philadelphia (Association) and the Bricklayers' Union No. 1 of Pennsylvania of the Bricklayers, Masons and Plasterers International Union of America. The area covered generally is the Delaware Valley west of the river. Negotiating Committees for the Employers' Association and the union bricklayers worked out the terms. The agreement itself was signed by the union's executive officers for the union. The original agreement was dated as of the first day of August 1949 and was thereafter amended from time to time on May 1, 1951 and August 5, 1952, and as of October 1, 1955. Four trustees were named, two by each side. There is no question about the two trustees named by the Association who are R. Walton Struse, Jr. and John G. Bowman. The sole controversy revolves about who shall represent the employees as trustees of the Fund.

Jurisdiction

While the complaint takes the form of an equitable interpleader proceeding under F.R.Civ.P. Rule 22(1) 28 U.S.C.A., jurisdiction is based on the fact that this is a controversy arising under Section 302 of Title III of the Labor-Management Relations Act of 1947, 29 U.S.C.A. § 186. That section, insofar as it is pertinent, reads as follows:

"(a) It shall be unlawful for any employer to pay or deliver * * * any money * * * to any representative of any of his employees * * *

"(b) It shall be unlawful for any representative of any employees * * * to receive or accept * * from the employer of such employees any money * * *

"(c) The provisions of this section shall not be applicable * * (5) with respect to money * * * paid to a trust fund * * * for the sole and exclusive benefit of the employees of such employer, and their families and dependents * * provided, That (A) such payments are held in trust for the purpose of paying, * * * for the benefit of the employees, their families and dependents * * * unemployment benefits or life insurance, disability and sickness insurance, or accident insurance; (B) the detailed basis on which such payments are to be made is specified in a written agreement with the employer, and employees and employers are equally represented in the administration of such fund, together with such neutral persons as the representatives of the employers and the representatives of the employees may agree upon and in the event the employer and employee groups deadlock on the administration of such fund and there are no neutral persons empowered to break such deadlock, such agreement provides that the two groups shall agree on an impartial umpire to decide such dispute, or in event of their failure to agree within a reasonable length of time, an impartial umpire to decide such dispute shall, on petition of either group, be appointed by the district court of the United States for the district where the trust fund has its principal office * * *

* * * * * *

"(e) The district courts of the United States * * * shall have jurisdiction, for cause shown * * to restrain violations of this section * * *".

There is no doubt that this Court has jurisdiction, under the section just quoted, to restrain disbursements of moneys of the Welfare Fund by unauthorized persons. See, In re Bricklayers' Local No. 1 of Pennsylvania Welfare Fund, D.C.E.D.Pa.1958, 159 F.Supp. 37, decided by my learned colleague, Judge Clary, on February 18, 1958. See also President Judge Hagan's opinion in the same case in the State Court, 1957, 14 Pa. Dist. & Co.2d 468.

The Facts

The defendant, William C. Boyd, was elected president of the local union for a one-year term from January 1, 1958. He has twice before been elected president since the creation of the Welfare Fund in 1949. On July 8, 1958 Boyd gave written notice, effective July 13, 1958, to the defendant, Paul A. Paulson, that he was removed as a trustee of the Welfare Fund and on the following day, July 14, 1958, he appointed the defendant, Eugene B. McGough, Sr. to replace him, giving appropriate notice as required by the trust instrument to all necessary parties. Thereafter, on July 30, Mr. Boyd gave written notice to the Bank as depository of the cash and custodian of the securities of the Welfare Fund that Mr. Paulson had been removed as trustee and that Mr. McGough had been appointed and was now qualified to serve with Daniel J. Walsh as trustees of the Fund representing the union employees. Copies thereof were also sent by Mr. Boyd, as head of the local union, to all interested parties.

Meanwhile, on July 16, 1958, the Arbitration Committee, also known as the Negotiating and the Conference Committee of the local union, designated Joseph J. Sperlunto to succeed Mr. Walsh, as trustee, the latter having been removed by the Conference Committee as a union trustee on the Welfare Fund. Thus Mr. Boyd, as head of the local union, contended that Walsh and McGough were the properly appointed and qualified union trustees, while the Welfare Fund itself and the Conference Committee of the local union insisted that Messrs. Paulson and Sperlunto were the duly elected and qualified trustees. To protect itself from an illegal dissipation of the Welfare Fund's assets, the Bank instituted the present proceeding.

The Bank wrote to Mr. Boyd, as president of the union, asking by what authority he took the action that he did. Mr. Boyd replied by letter dated August 5, 1958, reading as follows (Ex. PNB 12):

"Mr. Frank E. Beck "Philadelphia National Bank "Philadelphia 1, Pennsylvania.

"Dear Mr. Beck:

"In reply to your letter of July 31, 1958, I wish to inform you that under Article 16, Section 3 of the Constitution of the Bricklayers' Union No. 1 of Pennsylvania no member of this Union shall hold two offices at the same time.

"Paul Paulson was in violation of the aforementioned provision of the Constitution and I therefore removed him from the office of Welfare Trustee. Subsequently, I appointed Mr. Eugene B. McGough in Mr. Paulson's place. I did this in accordance with Article 24 of the Constitution of Bricklayers' Union No. 1 of Pennsylvania which authorizes me to appoint any member of the Union as an officer to fill a vacancy.

"Further, I wish to inform you that under Article 24 of the Constitution of the Union, the president has the power to appoint all special committees. Since the office of Welfare Fund Trustee is not specifically mentioned as one of the offices of the Union, the office therefore, comes within the definition of those offices that are created by the power of the president to appoint special committees.

"If there is any additional information that you require, please communicate with me at your convenience and I will be pleased to supply it.

"Finally, I have herein enclosed the signature cards for Daniel J. Walsh and Eugene B. McGough, the Union's lawful representatives on the Board of Trustees of the Welfare Fund."

We are thus confronted with a situation where the president of the union, under his purported power, dismissed Paulson as a trustee and appointed McGough as his successor, and the Conference Committee of the local union, under its asserted power, dismissed Walsh as a trustee and appointed Sperlunto as his successor.

The record shows that the trustees appointed by the Association of employers have always recognized Paulson and Sperlunto as the regularly constituted trustees for the local union during the period of this controversy.

The litigation here was precipitated when the rival factions in the local union were unable to settle their differences and Messrs. Struse, Bowman, Paulson and Sperlunto, as Welfare Fund trustees, attempted to transfer $24,000 from the general fund to a special fund at the Bank, which could be withdrawn on the sole signature of Andrew J. Cromwell...