Walsche v. Sherlock

• Decision Date: 28 March 1932
• Citation: 159 A. 661
• Parties: WALSCHE et al. v. SHERLOCK et al.
• Court: New Jersey Court of Chancery

159 A. 661

WALSCHE et al.

v. SHERLOCK et al.

Court of Chancery of New Jersey.

March 28, 1932.

Syllabus by the Court.

1. The general rule is that the provisions of the constitution and by-laws of a voluntary association become a part of the contract entered into by a member when he joins that association.

2. It is also a general rule of law that in controversies between a member and the association the remedies within the organization

provided in the constitution and by-laws must be exhausted before appeal to the courts.

3. Under some circumstances, however, the rule of exhaustion of internal remedies will not be enforced even where the requirement was assented to when the litigant became a member, as where the pursuit of those remedies would be futile, illusory, and vain.

4. But the internal remedies which such members must exhaust before appealing to the courts are remedies of right and not those of grace; and these remedies must be such as are found in the constitution and laws of such association and which the member can enforce.

5. Article 1, par. 1, of the Constitution of New Jersey, guarantees to every citizen certain natural rights which are declared to be unalienable. Among these are the right of the individual laborer to sell his labor according to his own will, and the right of the individual employer to absolute freedom to employ whom he will. These are rights which the citizen himself cannot alienate and of which neither the Legislature nor a trade union can deprive him.

6. Contracts of individuals containing restrictions upon unalienable rights which are of an oppressive nature, and operating generally in the community to prevent workmen from obtaining employment and from earning a livelihood, are in restraint of trade, against public policy, and void.

7. Any contract or combination having for its object a monopoly or the control of anything which the world must have, and any contract which cannot be performed without injury to the public, is void and unenforceable.

8. A contract which tends to injustice or oppression, restraint of liberty, or legal right is against public policy and unenforceable. Included within this class of contracts are those tending to stifle competition.

9. While ordinarily the courts will neither enforce nor relieve the parties from an illegal contract, where such contract tends to the public injury, relief will be granted from a due regard to the public welfare. And such relief may be given to the public at the suit of a party to such contract because the maxim "in pari delicto, potior est conditio defendentis," does not apply where the public welfare is concerned.

Suit by Edward A. Walsche and others against Thomas J. Sherlock and others.

Decree in favor of the complainants.

Norbury C. Murray, of Newark, for complainants.

Saul Nemser, of Jersey City, for defendants.

BERRY, Vice Chancellor.

The complainants are four members of local No. 11 of the International Association of Bridge, Structural and Ornamental Ironworkers, which is an unincorporated labor union having its principal office at CO Branford Place, Newark, N. J. The territory over which this local exercises jurisdiction is that including the counties of Essex, Union, Morris, Middlesex, and parts of the counties of Passaic, Hudson, Somerset and Sussex. The defendants are Samuel McKee, president, John J. O'Neill, financial secretary, Thomas J. Sherlock, business agent, Peter Roth, Daniel Flynn, John Duffey, George Cowan, and Thomas Eagleson, members of the executive committee, and Paul Van Esten, treasurer and recording secretary of local No. 11.

The complainants seek to restrain the above-named officers of local No. 11 from using what is commonly known as the "permit" and "card index" system, or, if permitted to use said system, restrain from discrimination against the complainants and other members of the local by said officers. The bill alleges that "under the 'permit' system the members of the Local union were permitted to seek employment, * * * but could not commence work without having first procured from * * * Sherlock, or his assistant, a permit authorizing him to accept such employment from the particular employer and on the particular piece of work for which he had secured employment; the result was that without such a permit a member of the local could not obtain actual employment anywhere within the territory covered by such local No. 11, nor could he obtain employment in the territory of any other local in New Jersey or elsewhere without either a permit from the said Sherlock or a transfer out of his union, which transfer became operative so as to permit the workman to obtain employment in the territory of such other local, only if and when he was accepted by the other local union in whose jurisdiction he proposed to work."

The bill further alleges: "That under the 'card index' system employers desiring workmen were to communicate with the office of the local, listing their requirements; the members desiring employment were to report at the office of the secretary of the local, and a card index of those so reporting was to be kept, and employment, as it became available, was to be assigned and given to them in the order, in point of time, in which they had so registered or 'checked in,' as it was called; such assignment of employment was evidenced by a permit to that effect, so that the employer or contractor would not employ any man unless he produced a permit from the local, signed by Thomas J. Sherlock or John J. O'Neill, permitting such workman to work for that particular employer on that particular work." It is charged that before the installation of the card index system the defendant Sherlock used the permit system in a wholly arbitrary manner, granting, or refusing to grant, permits according to his own caprice, and that that system was used by him without any supervision, rules, or regulations; that the card index system was inaugurated in an attempt to abolish or curtail Sherlock's arbitrary powers thus assumed; and to insure equality in the distribution of employment amongst the members. It is further charged that the card index system has completely failed of its purpose because the defendants Sherlock and O'Neill have not administered it honestly, but, on the contrary, have fraudulently exercised it so that favoritism has resulted, and friends and supporters of Sherlock and O'Neill have been assigned to the best jobs, while the complainants and others opposed to the regime of Sherlock and O'Neill have been either left without work or assigned to the more dangerous and less lucrative jobs. Other abuses of the system and illegal practices by the defendant officers are charged in the bill. The defendants deny any abuse of the system and any fraudulent or illegal practices, and claim to have administered the permit and card index systems with absolute honesty and without favoritism. Generally speaking, however, I think that substantially all of the allegations of the bill of complaint are sustained by the evidence, although the defendants had not, at the time of the suspension of the final hearings, put in all their proof with respect to the misuse of the card index permit system. But all the principal defendants had testified, and, as the testimony stands, I am inclined to believe that complainants' evidence presented the true picture. However, another defense interposed, and the one with which we are now more particularly concerned, is that this court is without jurisdiction in the premises because the complainants have not exhausted the remedies within the organization provided by its Constitution.

It is admitted by the complainants that they have not exhausted these so-called remedies, but they claim they are not obliged to do so because the pursuit of them would be futile and would amount to a denial of justice, and that, if their compliance with the card-index-permit-system is required because of their contract of membership, such contract is void as violative of their constitutional right to freely dispose of their own labor, and the constitutional rights of employers anxious to employ them, to the free flow of labor to such employers.

After ten days had been consumed in the final hearing of this cause, it was decided to suspend further hearings until the legal questions raised by the pleadings and by counsel during the course of the trial, especially the defense of nonexhaustion of remedies within the association, were decided.

In disposing of these questions, it should be borne in mind that this is not a controversy between "labor" and "capital," such as is usually involved in injunction suits concerning labor unions; it is a strife within the union, aligned on one side of which are the four complainants, representing a considerable portion of its membership, and, on the other, certain members and officers of that union who are so-called "labor leaders," and who have the active support of the international officers. The union itself is not a party to these proceedings, and is involved only because the defendants in their answer invoke the provisions of the constitutions of the local, the district council, and the international. The particular section of the international constitution which is invoked is section 2a of article XVII, which reads as follows: "No officer or member of our International Association or its local unions shall resort to court proceedings of any description in any matter pertaining to this organization, its local unions or his membership until all remedies provided for within our International Association and local laws have been fully exhausted. Violation of this section shall be sufficient cause for expulsion from membership in this International Association and its local unions."

The general rule is that the provisions of the constitution and by-laws of a voluntary association become a part of the contract entered into by a...