The opinion of the court was delivered by: BONSAL
In prior proceedings it has been held that the 1960 constitution of the National Maritime Union of America ("NMU") did not authorize the inclusion of non-officers of NMU in the NMU Officers Pension Plan ("the Officers Pension Plan"), and that NMU was entitled to recover from the Trustees of the Officers Pension Plan all amounts paid by NMU into the Officers Pension Plan for the account of non-officers, plus interest. Morrissey v. Curran, 302 F. Supp. 32 (S.D.N.Y. 1969), aff'd in part, rev'd in part, 423 F.2d 393 (2d Cir.), cert. denied, 399 U.S. 928, 90 S. Ct. 2245, 26 L. Ed. 2d 796 (1970), Segal v. Morrissey, 400 U.S. 826, 91 S. Ct. 52, 27 L. Ed. 2d 56 (1970), on remand, 336 F. Supp. 1107 (S.D.N.Y. 1972). Accordingly, on February 18, 1972, judgment was entered in favor of NMU against the Officers Pension Plan in the amount of $674,222.60 (representing $520,283.38 paid by NMU to the Officers Pension Plan for the account of non-officers, plus interest in the amount of $153,939.22), which judgment has been paid. On February 18, 1972, judgment was also entered in favor of the Officers Pension Plan against the defendant William Perry ("Perry"), a non-officer, in the principal amount of $222,200 (the amount of the lump sum pension paid to him), plus interest in the amount of $41,107, or a total of $263,307. This judgment has not been paid. The court has been advised that the Officers Pension Plan has instituted supplementary proceedings to collect the Perry judgment.
By Memorandum filed January 11, 1972, plaintiffs were authorized to "notice a hearing to determine the personal liability, if any, of the defendant trustees of the Pension Plan, Freedman, Segal and Karchmer, and officers of NMU, Curran and Wall, to NMU for the monies which the Pension Plan has paid out to non-officers and which it is unable to recoup." The hearing was held, and plaintiffs presented their evidence on April 13, 14 and May 1, 1972. The defendants then moved to dismiss, pursuant to Rule 41(b), F.R. Civ. P., on the ground that plaintiffs had shown no right to relief. By Memorandum filed June 29, 1972, the defendants' motions were granted with respect to the payments made to non-officer employees of NMU other than Perry,
and were denied with respect to the payment made to defendant Perry by the Officers Pension Plan on January 16, 1969. On July 12, 1972, the hearing was resumed and the defendants presented their evidence.
Plaintiffs are members of NMU, suing on behalf of all of its members under Section 501
of the Labor-Management Reporting and Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. § 501. Defendants Martin Segal ("Segal"), Abraham E. Freedman ("Freedman") and Leon Karchmer ("Karchmer") are the trustees of the Officers Pension Plan pursuant to an Agreement and Declaration of Trust of December 29, 1952 as subsequently amended. Freedman is also General Counsel of NMU. Defendant Joseph Curran ("Curran") is the President of NMU. Defendant Shannon Wall ("Wall") is the Secretary-Treasurer of NMU.
Freedman became a trustee of the Officers Pension Plan in 1963 when he became General Counsel of NMU. As trustee, Freedman drafts legal documents for the Officers Pension Plan and renders legal opinions to the other trustees.
Segal has been a trustee since the inception of the Officers Pension Plan in 1953, and the Martin E. Segal Company ("the Segal Company"), of which Segal is Chairman of the Board, has administered it. The Segal Company processes pension applications and computes pension benefits. The Segal Company also is the actuary for the NMU Welfare Plan and a pension plan covering the membership of NMU.
Karchmer, an original trustee of the Officers Pension Plan, is a Certified Public Accountant whose firm acts for NMU, the NMU Welfare Plan, the NMU Vacation Plan and the pension plan covering the membership of NMU. Karchmer keeps the books of the Officers Pension Plan and issues and receives checks on its behalf.
Statement of Facts with Respect to Perry
Perry had been employed by NMU since 1954, and as Assistant to the President since 1958. On August 2, 1966, he entered into an employment contract with NMU which provided that he would continue in the employ of NMU to serve as Assistant to the President until October 20, 1974. Paragraph 3 of the contract provided:
"In the event that this Agreement or Perry's employment should be terminated, with or without cause, prior to the expiration date hereof . . . Perry shall be entitled to continue to receive his said salary in full, including contributions to the NMU Officers Pension Plan and any other fringe benefits payable to the National Officers as under paragraph 2 hereof, during the balance of the term hereof . . . . In the event, however, of such termination . . . Perry shall have the option to demand and receive at one time . . . an amount equal to the said total salary, including contributions to the NMU Officers Pension Plan and any other fringe benefits payable to National Officers which he would have received during the balance of the original term . . . ."
Attached at the end of Perry's contract is an undated statement signed by Freedman, Segal and Karchmer, the Trustees of the Officers Pension Plan, by which they acknowledged that paragraph 4
of Perry's Agreement "shall be binding upon us and our successors in determining William Perry's entitlement to participation in, and benefits from, the NMU Officers Pension Plan." There is appended at the end of this opinion a copy of the Perry contract and of the statement signed by the trustees. The statement signed by the trustees may have been added on or about August 29, 1966, on which day Freedman, following discussions with Karchmer and Segal, furnished them with his legal opinion, quoted in part as follows:
"It is my considered judgment that Perry would continue as a 'Participant' in 'Covered Employment', even though his services may be discontinued by the union. The contract specifically so provides and must be so construed without any question.
"It is made crystal clear in the agreement that both the union and Perry agreed that Perry shall be deemed to be an employee of the NMU during the full term of the agreement, including any renewals or extensions. As above indicated, the agreement first of all provides that Perry shall continue in the 'employ' of NMU as Assistant to the President until October 20, 1974.
"Paragraph 1 of the agreement specifically requires the union to pay his salary, contributions to the NMU Officers Pension Plan and fringe benefits during the entire term of the agreement. Paragraph 2 of the agreement pointedly covers the inquiry made by Marty and provides that the payment of salary, contributions to the NMU Officers Pension Plan must be paid to the end of the term, notwithstanding any termination of his services with or without cause prior to the expiration date. Paragraph 3 expressly provides that Perry is to be deemed to be a 'Participant' in 'Covered Employment' (as defined in the Plan) during the full term of the original agreement and any extension. Paragraph 4 of the agreement specifically shows that the parties recognize, understand and agree that Perry shall be deemed to be a 'Participant' in 'Covered Employment' as defined in the NMU Officers Pension Plan to the very end of the term of the agreement or any extension notwithstanding anything that might be construed to be to the contrary elsewhere in the agreement, such as a termination of services with or without cause.
"In summary, in consideration of Perry's services to the union, past and future, the union agreed to maintain Perry in its employ at least until October 20, 1974 with full pay and all other benefits until the very end of that term or any renewal thereafter. There is no question but that this is a valid and binding agreement, and Perry's status as a covered employee continues at least until October 20, 1974, regardless of whether his services are discontinued by the union prior to that date. I recommend that the ...