Court Opinion

ID: 9854650
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:11:01.788089+00
Date Added: 2024-06-11T09:23:12.096883
License: Public Domain

O’CONNELL, J.,
dissenting.
The theory that the constitution of the international union constitues a contract between the international and the subscribing local union has been criticized and in some cases applied without strict adherence to the principles of contract law. The fact remains, however, that “The underlying legal theory defining the role of the court in internal union affairs is that the union constitution is a contract between the union and its members.” Summers, The Law of Union Discipline: What the Courts Do in Fact, 70 Yale L J 175, 179 (I960).① Some form of legal compact exists as a result of the constitution of the BCW International to which Local No. 364 has subscribed and which has given rise to the parent-local affiliation. Our previous cases, in line with the universal rule, have described this form of agreement as a contract. Quinn v. Marvin, 168 Or 52, 57-58, 120 P2d 227 (1941); Carpenters Union v. Backman, 160 Or 520, 528, 86 P2d 456 (1939); Annotation: Withdrawal of a Local Labor Union or Part of its Membership from the Parent Organization or from a General Association as Affecting Property Bights, 23 ALB2d 1209, 1214-1216 (1952).
There appears to be no objection from any quarter if, in denominating the agreement a contract, it is recognized that the contract must be construed in light of its setting in the field of labor organization. In the interpretation of agreements which define the relationship between unincorporated associations generally, *286and labor organizations specifically, the courts have, in most cases, heeded the special character of the contract binding the organization together.
I think that all members of this court fully appreciate the fact that, no matter how the union constitution before us is described, it is an instrument which must be interpreted in relation to the problems which are present in union organization. We are not agreed, however, as to the solution of the particular problem presented here. In the analysis of that problem it is essential that we keep in mind the interrelationship of the parties and their affiliates. This case does not present simply a conflict between the BCW International and Local No. 364. Involved here is the interest of the entire organization which, of course, includes all of its component bodies.
The BCW constitution created a legal relationship between the BCW International and Local No. 364. Similar relationships were created between the international and other locals. The combination of all of these locals under the central control and leadership of the international makes up the unity of organization which the union constitution was designed to preserve. One of the methods of preserving that unity of organization was the constitutional provision calling for the reversion of funds to the international upon the secession of the local.
It is conceded that a seceding local could not retain funds held by it if its disaffiliation was not warranted. And, on the other hand, plaintiffs as well as the majority would concede, I think, that there could be circumstances under which the provision for a reversion of the local union’s funds should not be enforced. The question is: What are those circumstances; when *287can the local union secede legally and disregard this express provision for the reversion of funds?
The majority opinion, following the rationale in Bradley v. O’Hare, 11 App Div2d 15, 202 NYS2d 141 (1960), relies upon the theory that a breach of the fiduciary duty owed by the international to the local union is legal justification for vitiating the constitutional provision on the forfeiture of funds. The pronouncement that there has been a breach of a fiduciary duty does not solve the problem presented here; it simply introduces us to that problem. The question is: When will a breach of the fiduciary duty by officers of the parent union be sufficient to excuse the seceding local’s duty of performance to surrender its assets upon disaffiliation? It will certainly be conceded by the majority that not every act of corruption on the part of an officer of the international is sufficient to justify secession. What then is sufficient? It seems to be suggested that the test is whether the international is “dominated” by corruption. But this again is nothing but a word which, standing alone, offers no guide for making the cleavage between a justifiable and an unjustifiable secession. Nor is the solution found by simply stating the conclusion that the international breached an express clause in the constitution requiring it to maintain “alliance with other labor organizations.”
It may be admitted that the maintenance of such an alliance is important to the BCW organization, both international and local. However, if the parties intended the continued affiliation with the AFL-CIO as a condition of the existence of the contract between them it would seem that the condition would have been expressly stated in the constitution. The maintenance of alliances with other labor organizations is stated *288in the constitution not as an “obligation” but as one of the “aims” of the international. Whether the continued affiliation with AFL-CIO is material would depend upon the importance of that affiliation to the BCW and its locals. If the alliance with AFL-CIO did not materially aid the BCW organization in its bargaining efforts for increased wages and benefits, the failure to continue the alliance would not constitute a material breach of the contract. The evidence does not establish that the bargaining power of the BCW was made less effective after its expulsion from the federation. There was evidence indicating that after its expulsion BCW International obtained certain benefits for the local unions. It was not shown that the benefits would have been any greater had BCW continued as a part of the federation.
The problem in the present case is not solved by creating a breach of contract out of an “aim” expressed in the union constitution. The real question for solution is: How much corruption in an international union must there be to warrant the destruction of a part of the organization created by the union constitution “I
There is little doubt that Cross and his cohorts had control of the finances of the international and there certainly is evidence that they corruptly exploited their power for personal gain. On the other hand, it is equally clear that the international continued to function as the parent union for a substantial number (approximately one half) of locals which remained in the organization despite the corruption.② Under such circumstances, it cannot be said that there has been a failure of performance (consideration) on the part of the international with the consequence that *289defendants’ performance (surrender of assets) is excused.
Much, of the evidence in the present case relating to the corrupt conduct of Cross and other officers of the international was hearsay. Most of it is contained in reports which were admitted in the trial court as exhibits, principally the reports of the BCW convention and the proceedings before the Ethical Practices Committee of the AFL-CIO. Much of the balance of the evidence consists of other extra-judicial statements. But even giving full effect to all of this and the other evidence adduced, I do not see how it can be said that the international had become functus officio and thus unable to perform the duties which it owed to the locals. Most significantly, the BCW International continued to serve many other locals just as it continued to act effectively to further the interest of Local No. 364 for the considerable period of time which elapsed between the expulsion of the BCW from the AFL-CIO and the secession of Local No. 364. Further, there was evidence showing that Cross had rectified some of his defalcations and that certain accounting and record controls were instituted in the international’s office to facilitate the detection of misappropriations. Stuart, vice president of the international and high in command in the international heirarchy, was removed, from office and was indicted, convicted and sent to prison. It is possible that these efforts of ablution were little more than mere window dressing to assuage those who sought to cleanse the union, but we have no basis for making a judgment on the matter either way.③
*290The fundamental weakness in the position taken by the majority is that the corruption of Cross is equated to the corruption of the international union as an entity. And while we are told that the excuse for the defendants’ nonperformance is found in the fact that the international itself, and not simply its officers, was corrupt, the fact is that the AFL-CIO demanded, as a condition to reinstatement, only that Cross and Stuart be purged and barred from office and that Sims be reinstated. The AFL-CIO did not demand that the international as an entity be overhauled. The constitution was not a compact between Local No. 364 and Cross individually; it was an organization agreement binding the local to the parent union. Cross’ corruption did not destroy the bonds which joined the unions together; it simply weakened the organization. With his removal and the substitution of a faithful and honest president the international could and probably would regain its strength if in the meantime there was not such a wholesale disaffiliation of locals as to make rejuvenation impossible.
When business associations other than labor unions are afflicted with corrupt officers the courts do not generally permit one of the units of the association to appropriate a part of the organization’s assets. The explanation is, I fear, that in the law relating to union organizations, where one of the parties is reputedly *291associated with corruption or communist infestation, the courts have injected emotional considerations which are not a sound rationale for decision. I am afraid that because the courts dislike communism and corruption in union officials they have punished the parent union by depriving it of assets held by local unions who wish to rid themselves of their unsavory association.④
The cases involving unincorporated associations outside the labor field teach us that there is another method of dealing with this problem—a method which is consistent with the preservation of the traditional legal norms by which we decide other cases. Before turning to an examination of that method I wish to re-emphasize the crucial consideration in this case, a consideration which, I believe, the majority has overlooked. The international and its various locals constitute a unity of organization. The unity here is not simply that which brings the international and Local No. 364 together; there are other local unions which are drawn into the circle of organization by subscribing to the union constitution. Once brought into the fold each local becomes a part of an interdependent *292group and each must act in coordination with the others to obtain the greatest good for all locals and all the members. The strength of all locals lies in this unity, and the international is the cohesive force which holds them together and gives direction to their common purposes. If one withdraws from the group, the remaining locals are correspondingly weakened. I believe that the majority, in its zeal to punish the international and to protect Local No. 364, has overlooked the fact that there are other local unions in the BCW family which will be harmed by permitting the appropriation of union funds by Local No. 364 upon its disaffiliation.
It is worth repeating to note that the miscreant here was not the international and the local unions under it—'the corruption centered in a few union officers. The choice is not to award the assets to either the racketeers or the local which seeks to disassociate from corruption; rather the choice is between the alternative of maintaining the strength and structure of the entire organization and the alternative of allowing Local No. 364 to appropriate and remove from the organization a material part of its total strength. The latter, if allowed, is an easier course for the local to follow (especially since a rival international, the ABC, stands ready to take it in) than the alternative course of setting out upon the arduous task of prosecuting measures necessary to remove the corrupt influences. But the last mentioned alternative is the way of democracy and we should not surrender democracy to anarchy in the interest of expediency. Democracy in unions will be a reality only if union members realize that vigilance and effort is necessary if they are to preserve their union as an effective instrument to serve their interests. Unions can, and must, represent the interests of their constituents. But this can be *293only if the constituents recognize that it is their responsibility to take corrective actions for abuses of officers or other internal disorders. This leads us to a consideration of the methods by which the evils complained of can be remedied.
There are two available ways to bring corrupt union officers to book; one is internal union procedures; the other is the regular judicial machinery, civil and criminal.
It is generally agreed that the courts “should not interfere in the internal affairs of labor organization, if union democracy is our goal, until the organization has had a reasonable opportunity to correct any mistakes of subordinate bodies” (Cox, Law and the National Labor Policy, Monograph Series: 5, Institute of Industrial Eelations UCLA, p. 104 [I960]), for It is said that “ overzealous intervention can weaken and frustrate unions,” Summers, The Law of Union Discipline: What the Courts Do in Fact, 70 Tale L J 175, 178 (I960).⑤ On the analogy that governmental administrative remedies must be exhausted before resort to the courts is permissible, it is recognized that union procedures must be first pursued before judicial aid may be sought. See, Gray v. Reuther, 201 F2d 54 (6th Cir 1952); Reigel v. Harrison, 157 F2d 140, 146 (6th Cir 1947), Cert. Den., 329 US 800, 67 S Ct 493, 91 L Ed 684; Duffy v. Kelly, 353 Mich 682, 91 NW2d 916, 920 (1958), modified in other respects 94 NW2d 195; Annotation: Exhaustion of Eemedies Within Labor Union as Condition of Eesort to Civil Courts by Expelled or Suspended Member, 168 ALE 1462 (1947); Cox, Law and the National Labor Policy, *294Monograph Series: 5, Institute of Industrial Relations UCLA, p. 104 (1960); Cox, Rights Under a Labor Contract, 69 Harv L Rev 601, 647-648 (1956); Brooks, Impartial Public Review of Internal Union Disputes: Experiment in Democratic Self-Discipline, 22 Ohio St L J 64, 74 (1961); Summers, The Law of Union Discipline: What the Courts Do in Fact, 70 Yale L J 175, 207-212 (1960).
However, it is recognized that an aggrieved member need not exhaust internal remedies if the internal procedures would not afford an effective remedy. Brooks, Impartial Public Review of Internal Union Disputes: Experiment in Democratic Self-Discipline, 22 Ohio St L J 64, 82 (1961); Summers, The Law of Union Discipline: What the Courts Do in Fact, 70 Yale L J 175, 207-210 (1960). Frequently union procedures are such that the officials who are charged with infidelity to the union are the very persons who constitute the board empowered to pass upon the question. Brooks, op. cit. supra, pp. 71, 73; Summers, op. cit. supra, p. 207. And too, the procedures may be free from such control yet be ineffective simply because the machinery provided is too cumbersome. Summers, op. cit. supra, p. 208. For example, a remedy by way of an appeal to the union in convention frequently is not effective. See, Brooks, op. cit. supra, p. 73. When it is shown that such internal procedures are unavailing the courts will give relief. Local No. 373, Etc. v. International Etc., Ironworkers, 120 N J Eq 220, 184 A 531, 535 (1936); Madden v. Atkins, 4 App Div2d 1, 162 NYS2d 576, 585-86 (1957); Rodier v. Huddell, 232 App Div 531, 250 NYS 336, 339 (1931) ; Summers, op. cit. supra, p. 207-210. But those who seek judicial relief must produce evidence showing that the union procedures are not effective. Gray v. *295Reuther, Civil No. 20275, E.D. Mich (Sept. 19, 1960); Gray v. Reuther, Civil No. 20477, E.D. Mich. (Nov. 3, 1960), as cited in Brooks, Impartial Public Review of Internal Union Disputes: Experiment in Democratic Self-Discipline, 22 Ohio St L J 64, 77 (1961). See, Madden v. Atkins, 4 App Div2d 1, 162 NYS2d 576, 585 (1957). I do not find sufficient evidence in the case at bar from which I could conclude that Local No. 364, its members, or any other interested person exhausted the internal procedures under the BCW constitution. Judge Denecke, the trial judge, reaches the same conclusion in Ms written opinion.
But assuming that the internal procedures would not provide an adequate remedy because of the control exercised by Cross and Ms followers, there was, as I have pointed out above, open to Local No. 364 and others the various remedies afforded through normal judicial procedures. As fiduciaries Cross and the other defaulting officers entrusted with the union’s affairs, were subject to judicial scrutiny by a court of equity through a smt for an accounting, Bell v. Sullivan, 183 Misc 543, 49 NYS2d 388, 390-391 (1944); a receivership, Sibilia v. Western Electric Etc., Inc., 142 N J Eq 77, 59 A2d 251, 253 (1948); Local No. 11 Etc., Ironworkers v. McKee, 114 N J Eq 555, 169 A 351, 356 (1933); (“the recreant ones should be ousted from the positions of trust which they have violated, and others be appointed in their stead”). Bee, Katz and Friedman, Members’ Control over Officers, Elections, and Finances: Equitable Remedies and Modem Developments, 22 OMo St L J 97,101-104 (1961). Or equity may act through injunction. De Monbrun v. Sheet Metal Workers, International Ass’n., 140 Cal App2d 546, 295 P2d 881 (1956); O’Neill v. United Plumbers, Etc., 348 Pa 531, 36 A2d 325 (1944); Schrank v. Brown, *296192 Misc 80, 80 NYS2d 452 (1948). If the court should find that the election processes provided by the union are not fair it may provide the remedy by which fairness is guaranteed. Sibilia v. Western Electric Etc., Inc., 142 N J Eq 77, 59 A2d 251 (1948); O’Neill v. United Plumbers, Etc., 348 Pa 531, 36 A2d 325 (1944). Or if the board passing upon the grievance acts capriciously or corruptly, or beyond its powers as limited by the union constitution or by-laws, the court has power to set aside its action and provide fair hearing procedures. Fittipaldi v. Legassie, 7 App Div2d 521, 184 NYS2d 226 (1959); Reilly v. Hogan, 32 NYS2d 864, 868-869 (Sup Ct 1942), affirmed 264 App Div 855, 36 NYS2d 423; Cohen v. Rosenberg, 262 App Div 274, 27 NYS2d 834 (1941), affirmed 287 N Y 890, 40 NE2d 1018.
In addition to the civil remedies there is available the whole armory of criminal law sanctions. If Cross and others misappropriated union funds they were subject to criminal prosecutions. Any shortcomings which exist in our criminal law for bringing labor racketeers to account appear to be in the enforcement, and not in the substance, of our criminal statutes. 1959 Proceedings, ABA Section of Criminal Law 28, 32. The authors of a recent article point out the effectiveness of existing criminal laws when diligently prosecuted. Cohn and Lubell, Control of a Labor Union—By Whom, Over What?, 22 OMo State L J 163, 181-183 (1961). One vivid example of the effectiveness of criminal procedures is the conviction of Stuart, a vice president of the BCW, for embezzlement.
Much is made of the alleged autonomy of the local union and its greater significance in the bakery union organization relative to that of the international. The emphasis of the relative importance of the international *297and the locals may be put either way; each is important in its own sphere. Speaking generally of the relationship between the international and the locals it has been pointed out by Isaacson, Conference on Labor (Third Annual), New York University, 493, 501, 502 (1950) that “without the international, * * * there could be no real collective bargaining.” The author then sets forth the various reasons for this observation. His conclusion points up mutual dependence rather than relative importance: “In sum, each complement the other, each is essential to the other’s successful being.”
When a business association of any kind is formed it is generally understood that in the course of carrying on the association’s business there will be a certain amount of trouble and discord through which the organization must struggle (indeed, that is precisely the raison d’etre for the surrender of assets clause with which we are here concerned); and it is generally understood that in spite of these difficulties the association will remain in existence, leaving the aggrieved members to the remedies which are consistent with the continuance of the organization which they agreed to maintain.
It may be conceded that if the purpose for which the association was formed can no longer be accomplished the agreement to maintain the organization can be regarded as unenforceable. But, as I have already indicated, the evidence in the present ease does not show that this organization cannot function effectively in accordance with the purposes for which it was formed, if the corrupt officers are removed from their positions.
The plaintiff international and the non-seceding locals are entitled to the continued existence of the *298organization as provided by the union constitution. The organization cannot long effectively exist if the constitutional provision calling for the reversion of funds upon disaffiliation is not enforceable, for that is the principal sanction it has to assure internal cohesion— it provides the element of discipline which is essential to a democratic system of “ordered liberty.” Local No. 364, or any of the membership of the BCW, should pursue their appropriate available remedies, some of which are mentioned above, consistent with the continued existence of the international.
For the foregoing reasons I am of the opinion that the trial court properly held that the money and property of Local No. 364 reverted to the BCW International.
Goodwin, J., joins in this dissent.

 In the article by Summers it is noted that the contract theory is not “woodenly followed” (pp. 192-193), has been “manipulated” (pp. 223-224) and is “at most a rough guide” (p. 222).

 Local No. 114 in the city of Portland was one of these faithful members.

 It is probably an oversimplification to assume that cases such as this present nothing more than a conflict between the interests of the corrupt established order seeking only the maximum of exploitation and personal *290gain and the interests of the downtrodden local and Its members, the latter pure in heart, seeking only freedom from corrupt tyranny. As expressed by an' authoritative writer in this field, "in these cases virtue is seldom unalloyed or vice unrelieved.” Summers, Union Schism in Perspective: Flexible Doctrines, Double Standards, and Projected Answers, 45 Va L Rev 261, 269 (1959). Professor Summers informs us: "The hostility against President Cross of the BCW was not based solely on his misuse of union funds, but was in part based on his efforts to modernize the union structure and allow rationalization and mechanization of the industry. These efforts helped create an opposition faction in the union, and it was this opposition faction which supported the ouster of the BCW and became the core of the newly created rival. Fortune, Feb., 1958, p. 211.” Ibid., p. 269, n. 42.

 In the cases deciding intra-union' disputes it is becoming apparent that courts are applying one rule of law to unions allegedly tainted with communism or corruption and another rule for all others. In cases involving forfeiture of assets clauses upon secession, the courts have almost uniformly enforced the clauses in cases other than those where the international is reputedly afflicted with corrupt or communist officials. In approximately half of the cases involving secessions of locals from left-wing internationals which had been expelled from the CIO, the locals have been allowed to keep their assets despite the forfeiture clause. In all cases, such as the case at bar, where the local seceded from the BCW, the local has been allowed to retain its assets. Summers, Union Schism in Perspective: Flexible Doctrines, Double Standards, and Projected Answers, 45 Va L Rev 261, 265-268 (1959). Similarly, a “double standard” has been fashioned by the NLRB in its application of the contract bar doctrine in allowing or denying petitions for representation elections. Summers, op. cit. supra, pp. 269-274. A similar appraisal with respect to judicial interference or restraint in matters of union discipline is expressed in Summers, The Law of Union Discipline: What the Courts Do in Fact, 70 Yale L J 175, 185, 198-199 (1960) (“engaging in communist activities is not only unprotected, but the very taint may lead to outlawry * * * even due process of law is less due when claimed by communists”).

 “* * * the deep and pervading principle of preserving autonomy of unions constrains courts to give the union full responsibility and opportunity to correct its own mistakes." Ibid, at p. 267. See also, Kahn-Freund, Trade Union Democracy and the Law, 22 Ohio St L J 4, 9 (1961).