Schlecht v. Walsh

• Decision Date: 02 October 1975
• Citation: 273 Or. 221,75 Or.Adv.Sh. 3326,540 P.2d 1011
• Parties: , 90 L.R.R.M. (BNA) 3060, 78 Lab.Cas. P 11,395 E. A. SCHLECHT et al., as Trustees of the Oregon-Washington Carpenters- Employers Health and Welfare Trust Fund, Appellants, v. Thomas J. WALSH, Jr., dba Tom Walsh & Co., Respondent. E. A. SCHLECHT et al., as Trustees of the Oregon-Washington Carpenters- Employers Pension Trust Fund, Appellants, v. Thomas J. WALSH, Jr., dba Tom Walsh & Co., Respondent. E. A. SCHLECHT et al., as Trustees of the Oregon-Washington Carpenters- Employers Vacation Savings Trust Fund, Appellants, v. Thomas J. WALSH, Jr., dba Tom Walsh & Co., Respondent. E. A. SCHLECHT et al., as Trustees of the Oregon-Washington Carpenters- Employers Apprenticeship and Training Trust Fund, Appellants, v. Thomas J. WALSH, Jr., dba Tom Walsh & Co., Respondent. E. A. SCHLECHT et al., as Trustees of the Oregon-Washington Carpenters- Employers Construction Industry Advancement Fund of Oregon and Southwest Washington, Appellants, v. Thomas J. WALSH, Jr., dba Tom Walsh & Co., Respondent. . *
• Court: Oregon Supreme Court

Page 1011

540 P.2d 1011

273 Or. 221, 90 L.R.R.M. (BNA) 3060,

78 Lab.Cas. P 11,395

E. A. SCHLECHT et al., as Trustees of the Oregon-Washington

Carpenters- Employers Health and Welfare Trust

Fund, Appellants, v. Thomas J. WALSH, Jr., dba Tom Walsh & Co., Respondent.

E. A. SCHLECHT et al., as Trustees of the Oregon-Washington

Carpenters- Employers Pension Trust Fund, Appellants, v. Thomas J. WALSH, Jr., dba Tom Walsh & Co., Respondent.

E. A. SCHLECHT et al., as Trustees of the Oregon-Washington

Carpenters- Employers Vacation Savings Trust Fund, Appellants, v. Thomas J. WALSH, Jr., dba Tom Walsh & Co., Respondent.

E. A. SCHLECHT et al., as Trustees of the Oregon-Washington

Carpenters- Employers Apprenticeship and Training

Trust Fund, Appellants, v. Thomas J. WALSH, Jr., dba Tom Walsh & Co., Respondent.

E. A. SCHLECHT et al., as Trustees of the Oregon-Washington

Carpenters- Employers Construction Industry

Advancement Fund of Oregon and Southwest

Washington, Appellants, v. Thomas J. WALSH, Jr., dba Tom Walsh & Co., Respondent.

Supreme Court of Oregon, In Banc. ^*

Argued and Submitted Sept. 8, 1975.

Decided Oct. 2, 1975.

Paul T. Bailey, Portland, argued the cause for appellants. With him on the briefs were Bailey, Doblie & Bruun, Portland.

Carl R. Neil, of Lindsay, Nahstoll, Hart, Duncan DaFoe & Krause, Portland, argued the cause and filed the briefs for respondent.

TONGUE, Justice.

These five consolidated cases are suits in equity by the trustees of funds established under a labor-management contract against a general building contractor who signed that contract. The suits seek to enforce a provision of the contract that such a general contractor must either require that any nonunion subcontractor engaged by him be 'bound to all of the provisions of this Agreement' or else maintain records for the subcontractor's employees 'and be liable for payment' of contributions for those employees to the funds established by the agreement for health and welfare, pensions, vacations, apprenticeship and 'construction industry advancement.'

The nonunion subcontractor paid an amount equal to these 'fringe benefits' directly to his employees in addition to their regular hourly wages, which equaled those required by the union contract. No payments, however, were made into the trust funds for any of these benefits.

The trial court held that defendant was required to make such payments to two of the trust funds, but not to the remaining three funds. The basis for that decision was that 'it is inequitable' to require defendant to make payments which 'amount to double fringe benefits' to the employees of the subcontractor (i.e., trust funds for health and welfare, pensions and vacations), but that 'it is equitable' to require that defendant make payments to the last two funds (i.e., apprenticeship and 'C.I.A.F.'), as 'funds which do not accrue benefits directly to the workmen.'

Plaintiffs appeal from the decree in the three cases in which the trial court refused to require payments to those three funds. Defendant cross-appeals from the decrees in the two cases in which the trial court ordered defendant to make payments to the other two funds and also from the refusal of the trial court to allow attorney fees in the three cases.

In support of its appeal plaintiffs contend that upon finding that defendant was obligated by the terms of his contract with the union to make 'fringe benefit payments' to the plaintiffs for the employees of its nonunion subcontractor, the trial court erred in holding that as a court of equity it could, in effect, modify the terms of the contract by holding that defendant was required to make payments into only two of the five trust funds upon the ground that it would be 'inequitable' to require payments to the remaining three trust funds.

The trial court recognized that 'were I in law, having made the findings of fact, I would have no option but to grant judgment in all five cases for the trustees.'

In Wikstrom v. Davis et ux., 211 Or. 254, at 268, 315 P.2d 597, at 604 (1957), we held that:

'Neither courts of law nor of equity have the right or power to make contracts for the parties, or to alter or amend those that the parties have made. It is the intention of the parties, manifested by their words, and not the whim of the court, that must be the guide in construing contracts by the parties thereto. * * *'

To the same effect, see City of Reedsport v. Hubbard et ux., 202 Or. 370, 385, 274 P.2d 248, 255 (1954), holding, in a suit in equity, that:

'* * * The court has no authority to read into said contract a provision which does not appear therein, nor to read out of it any portion thereof. And this is true, even though the result may appear to be harsh and unjust. The contracts of parties sui juris are solemn undertakings, and in the absence of any recognized ground for denying enforcement, they must be enforced strictly according to their terms. * * *.'

In these five consolidated cases the trial court properly concluded that:

'The labor contract required defendant to make fringe benefit payments to plaintiffs.'

Nothing in the terms of the contract justified the court's requirement that payments be made by Walsh to some of the trust funds, but not to all of them. ¹ All the funds have equal standing under the terms of the contract. Payments due to each fund are calculated on the same hours worked per employee. The contract specifies identical legal remedies for failure to pay into any one fund or all of them.

Defendant contends that 'the record in this case discloses at least innocent misleading of defendant and unclean hands,' as well as laches, in that 'the union officials failed to tell defendant until months after completion of the job that payment by Jackson (nonunion subcontractor) of fringe benefits directly to his men * * * would nevertheless leave defendant exposed for payment of the same sums into the trusts for the benefit of Jackson's carpenter-employees.'

However, the testimony by defendant to support these contentions was contradicted by testimony offered by the union. The trial court rejected these contentions by its findings of fact and conclusions of law. After examination of the record, we agree with those holdings. ²

Having so held, the trial court had no authority for 'equitable reasons' to deny relief to the union in three of the five cases, while granting such relief in the remaining two cases. It follows that we must reverse the decree of the trial court in those three cases (cases No. 389--034, 389--035 and 389--036) unless we conclude that defendant is entitled to prevail in his cross-appeal, as next discussed.

Defendant's first contention on cross-appeal is that the 'Subcontractors Clause' of the Carpenters Master Lbor Agreement violates 29 U.S.C. § 186, to the extent that it may be applied to require defendant to make contributions to union trust funds for the benefit of employees other than his own, as pleaded in defendant's Fifth Affirmative Defense in each of the five cases. The trial court sustained plaintiffs' demurrers to those affirmative defenses.

It is provided in 29 U.S.C. § 186(a) that:

'It shall be unlawful for any employer . . . to pay, lend, or deliver, or agree to pay, lend or deliver, any money or other thing of value--

'(1) to any representative of any of his employees who are employed in an industry affecting commerce . . .'

An exemption is provided in § 186(c)(5) for certain payment by an employer to trust funds, as follows:

'(c) The provisions of this section shall not be applicable * * * (5) with respect to money or other thing of value paid to a trust fund established by such representative, For the sole and exclusive benefit of the employees of such employer, and their families and dependents (or of such employees, families, and dependents jointly with the employees of other employers making similar payments, and their families and dependents): Provided, That (A) such payments are held in trust for the purpose of paying, either from principal or income or both, for the benefit of employees, their families and dependents, for medical or hospital care, pensions on retirement or death of employees, compensation for injuries or illness resulting from occupational activity or insurance to provide any of the foregoing, or unemployment benefits or life insurance, disability and sickness insurance, or accident insurance; * * *.' (Emphasis added)

Defendant says that:

'The net effect of 29 U.S.C. Section 186, with respect to contributions to trusts, is to prevent an employer from paying contributions to a trust for the benefit of anyone other than his employees or his employees as part of a pool with employees of other covered employers. The leading case on this point is Moglia v. Geoghegan (Geoghegan) 403 F.2d 110 (CA2, 1968), cert. den. 349(394) U.S. 919 (89 S.Ct. 1193, 22 L.Ed.2d 453) (1969). * * *'

Defendant also cites other cases as following what he contends to be the rule as stated in Moglia. ³

Defendant also says that:

'The key point of Moglia and its progeny is that 29 U.S.C. Section 186 requires that the employer's payments must be for the benefit of his own employees. It is clear that the payments demanded by plaintiffs and awarded by the Circuit Court in two of these cases fail to meet the test of Moglia, because defendant Tom Walsh & Co. is being required under the Subcontractors Clause to make payments into the trusts for the benefit of persons who are employees of Jackson, and not his own employees.'

As we read Moglia, however, the primary holding of that decision was that payments by an employer into such a trust fund must be made pursuant to a Written agreement. (See 403 F.2d at 115--16.) The same is true of most of the Moglia 'progeny.' This is in accord with the purpose of 29 U.S.C. § 186 to discourage corruption by prohibiting payments by employers to unions, except for those permitted in accordance with restrictions...