UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
decided: November 6, 1968.
KATHLEEN MOGLIA, PLAINTIFF-APPELLANT,
JAMES GEOGHEGAN ET AL., AS TRUSTEES OF LOCAL 282 PENSION TRUST FUND, DEFENDANTS-APPELLEES
Waterman and Feinberg, Circuit Judges, Zampano, District Judge.*fn*
This is an appeal from a judgment of the United States District Court for the Southern District of New York, dismissing plaintiff-appellant's complaint. Appellant sought a declaratory judgment pursuant to 28 U.S.C. § 2201 and Rule 57, Fed. R. Civ. P., declaring her to be entitled to receive payments under the Pension Plan of Local 282-Pension Trust Fund of $200.00 per month for a period of thirty-six months commencing May 1, 1965; directing appellees, as trustees of said Fund, to make such payments; and awarding her any reasonable attorney's fees incurred by her in enforcing the trust. Jurisdiction in the district court was founded on the existence of a question arising under a statute of the United States regulating interstate commerce, the Labor-Management Relations Act of 1947, § 302, 29 U.S.C. § 186, making the action one of which the district court had original jurisdiction pursuant to 28 U.S.C. § 1337. Appellees moved for summary judgment on the ground that appellant was not entitled to the relief she sought. Appellant also moved for summary judgment. Appellant's motion was denied and appellees' motion was granted. The learned district judge explained the result he reached in a reasoned opinion which contained the detailed facts involved. His opinion is reported at 55 LC 11,874 267 F. Supp. 641 (1967). We affirm the result reached below.
Appellant is the widow of John J. Moglia (Moglia) who died on August 7, 1966. At all times relevant to this case Moglia had been a member in good standing of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local 282 (Local 282), a labor organization representing employees of employers within the meaning of Section 302 (a)(2), Labor-Management Relations Act of 1947; 29 U.S.C. § 186(a)(2).
Appellees are the Trustees (Trustees) of the Local 282-Pension Trust Fund (Fund) which was established in 1955 by Local 282 and various employers who had entered into collective bargaining agreements with the Local. The Fund was the successor of other trust funds in which the Local had theretofore participated and was created by execution of an agreement and declaration of trust (trust agreement).
The trust agreement authorized the Trustees to receive payments from employers who signed collective bargaining agreements with the Local requiring such payments. The trust agreement specified that the Fund be used to provide retirement benefits for employees of contributing employers pursuant to a Pension Plan to be formulated by the Trustees.
The Fund was supposed to be maintained in strict conformity with Section 302(a) and (b) and with Section 302(c)(5) of the Labor-Management Act of 1947. Section 302(a) and (b) provide as follows:
(a) It shall be unlawful for any employer or association of employers or any person who acts as a labor relations expert, adviser, or consultant to an employer or who acts in the interest of an 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; or
(2) to any labor organization, or any officer or employee thereof, which represents, seeks to represent, or would admit to membership, any of the employees of such employer who are employed in an industry affecting commerce;
(b) (1) It shall be unlawful for any person to request, demand, receive, or accept, or agree to receive or accept, any payment, loan, or delivery of any money or other thing of value prohibited by subsection (a) of this section.
Violations of Section 302 are punishable by criminal penalties. Section 302(d) provides:
(d) Any person who willfully violates any of the provisions of this section shall, upon conviction thereof, be guilty of a misdemeanor and be subject to a fine of not more than $10,000 or to imprisonment for not more than one year, or both.
Section 302(c)(5) establishes limited exceptions to subsections (a) and (b) for payments to trust funds which meet specified requirements. The statutory requirements are that the employer's payments be made
The trust agreement was written to conform with the statutory mandate and spelled out limitations upon payments into and out of the Fund. It is uncontroverted that the trust agreement at all times contained the limitations required by Section 302.
From July 1, 1953, through March 31, 1965, Moglia's employer for twenty-eight years, Elmhurst Contracting Co., Inc., or its successor (Elmhurst), made payments into the Fund on behalf of Moglia and other employees and such payments were received and accepted by the Fund. During this period, the books of Elmhurst were regularly audited by auditors for the Fund to assure that the payments being made were in the proper amounts.
On April 15, 1965, listing Elmhurst as his only employer, Moglia filed an application for a pension with the Fund. It is uncontroverted that Moglia's age, length of service, and other qualifications for benefits under the Pension Plan of the Fund at the time of the filing of his application for a pension, and up to the time of his death, were such that, if he were entitled to benefits under the Pension Plan, he would have been entitled to payments for life commencing May 1, 1965, at the rate of $200.00 per month. If Moglia was entitled to these payments and he did not receive them during his lifetime, appellant, as his widow, would be entitled, pursuant to the provisions of the Pension Plan, to receive them for a period of thirty-six months, commencing May 1, 1965.
For some reason, the Fund does not investigate pension eligibility until after an application for pension benefits has been filed, and, after Moglia applied, an investigation of Elmhurst's status with the Fund revealed that Elmhurst had never entered into a collective bargaining agreement or a pension trust agreement with the Local although the Local had often requested it to do so.
The facts surrounding Moglia's application were reported to the Trustees at a meeting on June 15, 1965, but action on the application was deferred until the Trustees had an opportunity to consult with counsel. They were advised by counsel that payment to Moglia was prohibited by the Labor-Management Relations Act of 1947 and by the trust agreement, and that Moglia's application must be denied. They were also advised that the Labor-Management Relations Act of 1947 and the trust agreement prohibited them from accepting Elmhurst's payments. Accordingly, Moglia's application was rejected by the Trustees, and all the Elmhurst payments were refunded to Elmhurst. Elmhurst refused to accept the refund pending termination of the present litigation, and its payments are now being held apart from the rest of the Fund to be disposed of in accordance with the final determination of this action.
The question presented to us by appellant is whether she is entitled to receive pension benefit payments from the Local 282-Pension Trust Fund notwithstanding the fact that there never has been a written collective bargaining agreement or any other written agreement between Elmhurst and Local 282 detailing the basis upon which payments were to be made by Elmhurst, on behalf of its employees, into the Trust Fund. The answer to this question involves a construction of the relevant language of Section 302 of the Labor-Management Relations Act of 1947.
Appellant first contends that the written agreement requirement contained in subsection 302(c)(5)(B) applies only to payments made by employers into the Fund and not to payments made by the Trustees out of the Fund to employees, and, therefore, the Trustees would not be violating Section 302 by making payments to appellant.*fn1 However, we hold that, inasmuch as both Elmhurst's payments into the Fund and the Trustees' receipt of said payments were prohibited by Section 302 in the absence of a written agreement as required by subsection 302(c)(5)(B), appellant was not a person who could, under Section 302, lawfully be paid pension benefit payments from the Trust Fund.*fn2
Section 302 was originally passed as part of the Taft-Hartley Act of 1947. The Section's purpose was to curb the abuses, discovered by Congress after extensive investigation, which seemed to be inherent in funds created and maintained by contributions exacted from employers but which were administered by union officials without any obligation to account to the contributors or the union membership. See, e.g., 92 Cong. Rec., Part 4, 79th Cong., 2d Sess. 1946, p. 4893 (Senator Byrd), p. 4897 (Senator Knowland), p. 4894 (Senator Ball); S. Rep. No. 105, 80th Cong., 1st Sess., 52 (1947); 93 Cong. Rec., Part 4, 80th Cong., 1st Sess. 1947, p. 4678 (Senator Ball), p. 4678 (Senator Byrd), pp. 4746 and 4747 (Senator Taft). In 1959, Section 302 was amended to include within its ambit conduct which had been held to be outside Section 302 but conduct that Congress felt was of the type Section 302 was originally aimed at prohibiting. 1959 U.S. Code Cong. & Ad. News, 2326-30; 2360; 2469-70. A reading of the legislative history of Section 302 shows that Congress intended to prohibit the establishment of any union funds by means of employer payments unless the funds conformed in all respects with the specific dictates of Section 302(c). E.g., 92 Cong. Rec., Part 4, 79th Cong., 2d Sess. 1946, supra; 93 Cong. Rec., Part 4, 80th Cong., 1st Sess. 1947, supra; 1959 U.S.Code Cong. & Ad. News, supra; see International Longshoremen's Ass'n v. Seatrain Lines, Inc., 326 F.2d 916, 919-920 (2 Cir. 1964); Bey v. Muldoon, 217 F. Supp. 401 (E.D. Pa. 1962).
Under Section 302, any payment made by an employer to an employee representative, and this includes trustees administering a pension trust fund, see, e.g., United States v. Ryan, 350 U.S. 299, 100 L. Ed. 335, 76 S. Ct. 400 (1956); Sheet Metal Contractors Ass'n v. Sheet Metal Workers International Ass'n, 248 F.2d 307 (9 Cir. 1957), cert. denied, 355 U.S. 924, 78 S. Ct. 367, 2 L. Ed. 2d 354 (1958), contra, United Marine Division, I.L.A., Local 333 v. Essex Transportation Co., 216 F.2d 410 (3 Cir. 1954), and the receipt of such payments by an employee representative are absolutely forbidden unless there is a written agreement between the employer and the union specifying the basis upon which the payments are made. Thus, in the case of a legally established union pension trust fund, the only employer contributions which may be accepted by the trustees administering the fund are those contributions from employers who have a written agreement with the union as required by subsection 302(c)(5)(B). Absent the written agreement, there is no valid Section 302 trust as to those employer contributions; the parties making and accepting such contributions are violating Section 302, and the intended beneficiary of the illegal employer contributions has no legal right under Section 302 to the benefits normally derived from employer contributions to the trust fund. Only employees and former employees of employers who are lawfully contributing to a union pension trust fund may qualify as beneficiaries of a Section 302 trust. Rittenberry v. Lewis, 238 F. Supp. 506 (E.D. Tenn. 1965); Bolgar v. Lewis, 238 F. Supp. 595 (W.D. Pa. 1960).
Appellant makes an appealing argument that Congress intended to encourage and foster the creation and extension of union welfare funds and therefore that this court should not construe Section 302 so as to deny appellants the benefits of this welfare fund. As pointed out by the court below, acceptance of appellant's argument would not necessarily implement the congressional intention although it would provide benefits for the appellant. The reason for the rigid structure of Section 302 is to insure that employer contributions are only for a proper purpose and to insure that the benefits from the established fund reach only the proper parties. Schwartz v. Associated Musicians of Greater N.Y., Local 802, 340 F.2d 228, 233-234 (2 Cir. 1964). Any erosion of the strict requirements of this section could provide an unintended loophole for the unscrupulous, and could result in a diversion of funds away from the proper parties as had occurred before Section 302 was enacted. See Arroyo v. United States, 359 U.S. 419, 423-427, 3 L. Ed. 2d 915, 79 S. Ct. 864 (1959); cf. International Longshoremen's Ass'n v. Seatrain Lines, Inc., supra at 920.
Our construction of Section 302 may work a hardship in the instant case, especially as neither appellant nor her deceased husband appear to have engaged in any wrongful conduct; but we consider the construction of the statute that we have adopted is the only acceptable one in light of the congressional history and intent. Of course this does not preclude appellant from pursuing any other remedies that may be available to her.*fn3
Appellant also asks the court to invoke the theory of equitable estoppel as a basis for allowing pension benefits from the Trust Fund. Appellant argues that the Trustees, having accepted Elmhurst's contributions into the Fund for twelve years, and having regularly audited Elmhurst's books in order to assure that payments were being made in the proper amounts, are estopped from denying pension benefits to appellant on the ground that there was no written agreement between the Local and Elmhurst. Whatever merit this argument may have if directed to the appellee trustees' invocation of the terms of the trust agreement to deny appellant at this late date any pension benefits, a matter we need not decide, the equitable estoppel argument cannot supply the essential element of the written agreement Congress required by subsection 302(c)(5)(B).
The statutory requirement of a written agreement is not a minor technicality which may be dispensed with when, there being no written agreement, the acts of one party may be said to estop him from defending on that ground. A written agreement is necessary before payments may be made under the section. As compelling and as appealing as appellant's case is, the structure of the section and the Congressional intent underlying the section preclude any judicial inroads into its rigid, specific requirements.*fn4
Appellant conceded in the district court that at no time relevant to the cause of action asserted in her complaint there was a collective bargaining agreement or any other written agreement as such, between Elmhurst and the Local.*fn5 Appellant, now, without intending to qualify her concession, argues that the written agreement requirement of subsection 302(c)(5)(B) was, in fact, satisfied in the instant case. Appellant contends that subsection 302(c)(5)(B) only requires a written agreement and not a signed, written agreement, William Dunbar Co. v. Painters & Glaziers District Council, 129 F. Supp. 417 (D.D.C. 1955), and such an agreement in fact existed in the form of the unsigned collective bargaining agreement which was attached to the unsigned trust agreement governing the Fund. According to appellant, Elmhurst's conduct and action in observing the terms of the collective bargaining agreement attached to the trust agreement by paying uniform union scale wages and by making contributions to the trust fund were tantamount to ratification and adoption of a written agreement by Elmhurst even though it had not signed it. We do not agree with appellant's analysis.
In the first place, the Dunbar case involved a situation where employers were disputing their obligation to contribute to a union trust fund in the absence of a signed, written trust agreement. The district court in Dunbar found as a fact that, at one time previously, there had been in existence a valid, formal, written trust agreement, and that the original signed copy of this agreement had disappeared and only an unsigned copy remained. The question before the court in Dunbar was whether the employers could be compelled to contribute to the trust fund on the basis of the duplicate written agreement bearing no signatures. On these facts the district court held that subsection 302 (c)(5)(B) only required a written and not a signed agreement. Dunbar is clearly factually distinguishable from the instant case.
In the second place, ratification and adoption are only forms of acceptance of a contract and must conform to the general principles governing the formation of contracts. Two essential elements of a contract formation are mutuality of agreement and mutuality of obligation. See, generally, 17 C.J.S. Contracts § 1(1) (1962). Both of these elements are missing in this case. The union demanded the acceptance of a complete collective bargaining agreement along with the trust agreement.*fn6 Elmhurst did not appear to be willing to accept these terms at any time. In such a situation it would be ridiculous to assert that there was agreement between the parties and a mutuality of obligation. Therefore, on the record as made, we hold that there was no ratification of, or any adoption of, the collective bargaining agreement by Elmhurst.
Appellant has raised a number of questions relating to the possible abuse of discretion on the part of the trustees in so construing the trust agreement as to prevent them from paying benefits to the appellant. As we are holding that it would be illegal for the trustees to retain the contributions of Elmhurst or to pay benefits to appellant, it is not necessary to discuss these contentions for they relate only to the proper interpretation of the trust agreement or to the power of the Trustees under the agreement to deny pension benefits to the appellant.
We realize that other claimants to union welfare funds and perhaps even other claimants to this very pension trust may find themselves in the position of appellant.*fn7 Nevertheless, the proper remedy for such a regrettable situation is not the enforcement of a claimant's rights under the trust because that would allow evasion of a carefully drafted statute. The congressional scheme, if properly enforced by government attorneys, is designed to prevent this unfortunate situation from ever arising. Employing Plasterers' Association of Chicago v. Journeymen Plasterers' Protective and Benevolent Society of Chicago, Local No. 5, 279 F.2d 92, 97-98 (7 Cir. 1960). If the sanctions provided by Section 302(d) had ever been invoked here, neither the Trustees of this particular fund nor the trustees of any other similarly situated fund would ever permit the state of affairs to reach this deplorable condition.*fn8