United States v. Carbone, 474

• Court: United States Supreme Court
• Citation: 327 U.S. 633,90 L.Ed. 904,66 S.Ct. 734
• Docket Number: No. 474,474
• Parties: UNITED STATES v. CARBONE et al
• Decision Date: 25 March 1946

327 U.S. 633 66 S.Ct. 734 90 L.Ed. 904 UNITED STATES

v.

CARBONE et al.

No. 474. Argued Feb. 26, 27, 1946. Decided March 25, 1946.

On

Appeal from the District Court of the United States for the District of Massachusetts.

Page 634

Mr.Frederick Bernays Wiener, of Providence, R.I., for appellant.

Mr. Hammond E. Chaffetz, of Washington, D.C., for appellees Joseph L. Carbone and others.

Mr. Michael Carchia, of Boston, Mass., for appellee Vincent Di Nunno.

Mr. Justice MURPHY delivered the opinion of the Court.

This case comes to us under the Criminal Appeals Act¹ directly from the United States District Court for the District of Massachusetts. It raises an important question as to the meaning and scope of § 1 of the Act of June 13, 1934,² commonly known as the Kickback Act, making it unlawful to prevent anyone employed in construction or repair work of a public nature or financed in whole or in part by the United States from receiving the full compensation to which he is entitled.

Three of the appellees are officers of Local 39 of the International Hod Carriers' Building and Common Laborers' Union of America; the fourth appellee is president of the Eastern Massachusetts Laborers District Council and is also employed by Local 39. They were indicted for conspiring to violate § 1 of the Kickback Act. It was charged

Page 635

that during the period of the alleged conspiracy, October 1, 1940, to March 30, 1941, two contractors were engaged in the construction of various public buildings for the United States at Fort Devens, Massachusetts. The appellees, by virtue of their positions with Local 39, made an agreement with the contractors whereby the latter undertook to employ as laborers only such persons as were approved by appellees and to discharge any such employees at appellees' request. The contractors also agreed to employ forty persons named by the appellees, known as stewards, to perform such duties as the appellees might direct, and to provide an office for the appellees on the site of the construction. About 7,500 laborers were employed during the course of the construction.

Pursuant to this agreement, the appellees approved to the contractors for employment as laborers members of Local 39 or of other locals of the International Union and only such other persons as paid the appellees the sum of $5.00. The appellees represented to the latter persons that this payment would be regarded as an installment upon the initiation fee of Local 39 and the International Union and that each such employee would be required to pay the appellees $5.00 per week until the total initiation fee was paid 'or the person would not be permitted to continue work upon the said construction.' Receipts were given for each weekly payment. The initiation fee was originally $50.00, but it was later reduced to $40.00 and then to $20.00.

It was further charged that the appellees directed the stewards each week to go among the laborers and demand of each non-member of the union either that he display a receipt showing that he had paid the $5.00 for the current week or that he immediately pay that sum to the stewards or to the appellees 'under threat of procuring his dismissal from his employment' if he did not do so. The appellees allegedly were able to carry out this threat by reason of

Page 636

their agreement with the contractors, the appellees 'well knowing, and intending, that the laborers would pay the said five dollars out of the compensation to which they were entitled under their contracts of employment with the said contractors.'

The indictment also stated that the appellees kept no records of those who made payments to them. But if a laborer should present receipts showing payment of the initiation fee in full, his name was recorded and sent to the headquarters of the International Union with the sum of $5.35, representing the share of the fee to which the International was entitled under its rules. And the appellees 'made no report to the Local 39, or to anyone, of the amount they had received from laborers paying less than the full initiation fee as aforesaid, or the total sums they had collected in this way, nor did they cause any of the sums collected in this way and received by them to be recorded in the Financial Secretary's book as the rules of the said International Union require: The defendants (appellees) well knowing that the majority of those who paid the initial five dollars would not and did not complete payment of the full initiation fee.'

The indictment concluded by charging that the appellees acted in concert in these matters, that they induced the laborers to give up part of the compensation to which they were entitled under their contracts, that they represented that they were acting for Local 39 and the International, and that they concealed from these organizations the sums they thus collected from laborers who did not pay the initiation fee in full.

The appellees moved to dismiss the indictment, alleging as one ground that it did not state an offense cognizable in law. Relying upon this Court's decision in United States v. Laudani, 320 U.S. 543, 64 S.Ct. 315, 88 L.Ed. 300, 149 A.L.R. 492, the District Court granted the motions. 61 F.Supp. 882, 883. It plainly was of the view that the facts as alleged in the indictment fell

Page 637

outside the scope of the Kickback Act. It stated that it did not believe that 'either the history or the purpose of the Kickback legislation warrants an extension of its scope to include these defendants. * * * The closed shop is within the legitimate objectives of trade unionism. Implementation of this objective by the means used by these defendants should not expose them to the risk of criminal prosecution.' From this judgment the United States appeals.

We agree with the District Court. Section 1 of the Kickback Act punishes 'whoever' induces another person employed on a federally financed project 'to give up any part of the compensation to which he is entitled under his contract of employment, by force, intimidation, threat of procuring dismissal from such employme t, or by any other manner whatsoever.' The United States contends that this provision applies to the instant situation inasmuch as the appellees induced certain workers on a federal project to give up part of the compensation to which they were entitled by threatening to procure dismissal from their employment. Emphasis is placed upon the allegation in the indictment that the appellees had power to enforce this threat by reason of the closed shop agreement with the contractors and upon the further allegation that the appellees neglected to report or to turn over to Local 39 of the International Union all of the money collected, as required by the rules of those organizations.

But as is apparent from our discussion in the Laudani case, not every person or act falling within the literal sweep of the language of the Kickback Act necessarily comes within its intent and purpose. That language must be read and applied in light of the evils which gave rise to the statute and the aims which the proponents sought to achieve. When that is done the inapplicability of the Act to the facts set forth in the indictment becomes clear.

Page 638

The statute grew out of an investigation of so-called rackets by a subcommittee of the Senate Committee on Commerce pursuant to S.Res. 74, 73d Cong., 2d Sess. This investigation 'revealed that large sums of money have been extracted from the pockets of American labor, to enrich contractors, subcontractors, and their officials.' S.Rep. No. 803, 73d Cong., 2d Sess. It was found that laborers, especially those pursuing the building trades, often were paid the prevailing rate of wages but were compelled by their employers to give back or kick back a percentage of the pay which they had lawfully earned and received. Discharge was threatened unless they complied with the demands for kickbacks. The employers were thereby enabled to evade the scale of wages imposed by the Government on its construction projects, to the detriment of the workers. Such was the evil at which the Act was directed. As stated by the House committee in...