for breach of contract if the transfer of assets by the officers of old Local 88 was improper.
Defendants say that the assets transferred from old Local 88's bank accounts to mortuary accounts were no longer a part of the local's assets when the dissolution took place and were therefore not subject to the Constitution's forfeiture provision. They argue that the TMT International Constitution did not prohibit the establishment of a mortuary trust and that old Local 88's by-laws permitted it.
While the Model Local By-Laws offered by TMT International to its locals expressly provide for mortuary funds, the TMT International Constitution itself does not state that the locals may create such funds.
Although old Local 88's by-laws did not expressly mention the establishment of a mortuary fund for death benefits, the court reads their general terms to authorize creation of such a fund.
Article VII, § 1 states:
The monies of this Local may be expended for the effectuation of the objects and purposes of the Local as set forth in these By-Laws. The membership at a meeting shall authorize or approve by resolution the expenditure of the funds or the use of the property of the Local for any of the said objects and purposes.
Article II, entitled "Objects and Purposes", includes among old Local 88's goals:
to promote the best interests of its members and their families; . . . to promote health, welfare, pension, recreational and civic programs in the interest of its members and their families and the workers within its jurisdiction; . . . and to do all things necessary and proper, permitted by law, to carry out these objects and purposes.
This language grants to the local members significant latitude in disbursing union funds. The court sees no reason why provisions authorizing expenditures to promote the interests of its members and their families should not be read to permit expenditures for death benefits. Death benefits are amounts that are in "the interest" of a member's family.
The contention of plaintiffs that the court should invalidate the mortuary fund because its purpose was to evade the TMT International Constitution's forfeiture provision was rejected in Tile, Marble, Terrazzo, et al. v. Local 32, supra.
In that case the members of the local had the same purpose as did the members here. The Third Circuit upheld the creation of a mortuary fund because the local's constitution authorized the establishment of death benefits. Tile, Marble, Terrazzo, et al. v. Local 32, 896 F.2d at 1414-16. The same ruling was made by the Seventh Circuit in Tile, Marble, Terrazzo, et al. v. Ceramic Tile Finishers Union, Local 52, supra.
Nothing in the authorization in old Local 88's by-laws was in conflict with the TMT International Constitution, which contemplated that the locals had authority to provide for death benefits.
(c) Procedures for Establishing the Mortuary Fund
Plaintiffs challenge the integrity of the procedures establishing the mortuary fund. They say that the membership vote was invalid because the funds had already been transferred the day before the October 7, 1987 meeting. Under old Local 88's by-laws, the membership could "authorize or approve by resolution" the use of the local's funds or property to achieve its purposes. Article VII, § 1. The Executive Board had "general charge of the Affairs of the Union" and had to report periodically to the membership. Article V, § 8.
The by-laws did not dictate prior approval but required only that the Board report to the members and that the members authorize or approve of the use of the local's funds. The unanimous vote by two-thirds of the entire membership the day following the transfer ratified the actions by the Executive Board.
Plaintiffs also contend that the mortuary fund is invalid because the Committee simply transferred funds from one account to another and did not complete the arrangements for the mortuary trust until some time later. Even if plaintiffs' allegations are true, the failure by the officers to establish the trust fund within a specified time did not invalidate the vote by the general membership. That vote created the fund, and the officers were then bound to establish it. Tile, Marble, Terrazzo, et al. v. Ceramic Tile Finishers Union, Local 25, supra.
(d) Alleged Transfer of Other Assets
Plaintiffs seek recovery of $ 10,302.80 paid by old Local 88, $ 1,052.80 as a deposit for two rental cars and $ 9,250 as advance rental for an office and meeting hall. Plaintiffs also ask for return of certain books and records of old Local 88.
These expenditures were made before the Local 88 members decided to leave TMT International and join the Bricklayers. The funds were therefore not in the local's treasury on October 7, 1987 when that decision was made.
The expenditures were apparently made after the individual officers had decided to recommend to all local's members that they join the Bricklayers. Thus, while the expenses were legitimate from the standpoint of the local, plaintiffs may have a claim against the individual officers named as defendants depending on what they reasonably knew about the way in which the membership would vote.
The issues as to these expenditures, and the disputed question of whether plaintiffs have received all the books and records of old Local 88 to which they are entitled, are referred to Magistrate Judge A. Simon Chrein to hear and report.
Defendants' motion for summary judgment is denied insofar as it relates to the expenditures of $ 10,302.80 and the return of books and records. These matters are referred to Magistrate Judge Chrein to hear and report. Defendants' motion is otherwise in all respects granted. Plaintiffs' motion for summary judgment is denied.
Dated: Brooklyn, New York
September 25, 1992
Eugene H. Nickerson, U.S.D.J.
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