119 N.J. Eq. 230, *; 182 A. 37;
1935 N.J. Super. LEXIS
509, **
WILLIAM D. COLLINS et al., complainants, v. INTERNATIONAL
ALLIANCE OF THEATRICAL STAGE EMPLOYEES AND MOVING PICTURE MACHINE OPERATORS OF
THE UNITED STATES AND CANADA et al., defendants. DOMINICK MAGLIO et al.,
complainants, v. MOVING PICTURE MACHINE OPERATORS OF ESSEX COUNTY, NEW JERSEY,
LOCAL NO. 244, INTERNATIONAL ALLIANCE OF THEATRICAL STAGE EMPLOYEES AND MOVING
PICTURE MACHINE OPERATORS OF THE UNITED STATES AND CANADA, et al., defendants.
COURT OF CHANCERY OF NEW JERSEY
119 N.J. Eq. 230; 182 A. 37; 1935 N.J. Super. LEXIS 509
December 24, 1935, Decided
PRIOR HISTORY: [**1] On bill, &c. On final hearing.
CORE TERMS: junior, senior, business agent, arm,
by-law, membership, accounting, extortion, theatre, salary, public interest,
final hearing, injunction, discovery, treasury, moving picture, freedom of
contract, business manager, enjoined, classification, misfeasance, continuance,
so-called, graft, autocratic, lawful, malfeasance, apprentice, secretary,
regular
SYLLABUS: 1.
Discrimination between labor union members by its officers enjoined. The "senior
and junior" system condemned. Cameron v. The International Alliance, &c.,
118 N.J. Eq. 11, 176 A. 692, followed.
2. The constitutional
right of the individual to freedom of contract with respect to his own labor
(article 1, paragraph 1, New Jersey constitution) is unalienable and is a
property right guaranteed by the fifth amendment to the federal constitution.
3. Any arrangement between a labor union and its members whereby
such freedom of contract is surrendered to the union or its officers, or whereby
available positions of employment are considered as the property of the union
and subject to its disposal, is void as against public policy.
4.
The rule that in controversies between a labor union and its members the
remedies within the organization must be first exhausted before appeal to the
courts has no application where the public interest is involved. Nor is the rule
applicable where the pursuit of those remedies would be futile, illusory or
vain.
5. Where charges are preferred against union members by its
officers because of their [**2] insistence upon
their rights as members, and support of litigation designed to obtain or
preserve those rights, the prosecution of such charges will be enjoined and the
rights of the parties adjudicated in this tribunal.
6. While the
extortion of money or labor from members of a union by its officers as the price
of a job, or any other unlawful discrimination, will be enjoined, no accounting
for graft, whether of money or labor, thus paid will be ordered, both because
the parties to the illegal contract are in pari delicto and the paying member
does not come into court with clean hands, having sought by such payment to
obtain an unfair advantage over his fellow members.
7. Where the
officers of a labor union have been chosen by only a part of the members to the
exclusion of others who have the right to an equal voice in such selection; have
perpetuated themselves in office by fraud, intimidation or any unlawful conduct,
and have been guilty of misfeasance, malfeasance, and general mismanagement of
the affairs of the union for their own individual advantage, their continuance
in office will be enjoined pending an election of officers in which all members
shall have a voice, [**3] under the supervision
of a master of this court; and a custodial receiver will be appointed pending
such election.
COUNSEL:
Messrs. McCarter & English (Mr. Algernon T. Sweeney, of counsel), for the
complainants.
Messrs. Avidan & Avidan (Mr. Arthur T.
Vanderbilt, of counsel), for the defendants.
JUDGES: Berry, V. C.
OPINIONBY: BERRY
OPINION: [*231]
BERRY, V. C.
These two cases involve the internal affairs of Local No.
244, International Alliance of Theatrical Stage Employes and Moving Picture
Machine Operators of the United States and Canada. The relief sought in both
suits being identical in some respects and similar in others, and both
concerning malfeasance or misfeasance of the union officers and alleged unlawful
discrimination between members of that union, the cases were consolidated for
the purpose of trial, were heard together and will be disposed of as one case.
The first named case is known as the "junior" case; the second, as the "senior"
case. The complainants in the first case are all so-called "junior" members of
the local and the complainants in the second case are all so-called "senior"
members of the same local.
By the first bill, complaint is made and
relief sought [**4] as follows:
[*232] 1. Complaint of the alleged illegal and
unauthorized classification of the members of the local into junior and senior
classes. The complainants seek full membership rights in the union and an
injunction against the continuance of this classification and consequent
discrimination.
2. Complaint against so-called "arm-work" or "working on
the arm." The relief sought under this heading is an injunction against the
continuance of this practice and an accounting by the officers of all moneys
received by them as the result of such "arm-work."
3. Complaint of
extortion by the officers, individually, of moneys from the juniors as the price
of certain moving picture operators' jobs and periodical payments to said
officers by the juniors as the price of their continuance in those positions. An
injunction against this practice and a discovery and accounting for all of such
payments are sought.
4. Complaint against the control by the union
through its officers, and particularly by the business agent, of the various
moving picture machine operators' jobs within the jurisdiction of the local and
consequent discrimination between and among the members, and interference
[**5] with their right to freedom of contract of
employment. An injunction against the continuance of this practice is sought.
5. Complaint of the alleged illegal and unauthorized disbursement of
moneys of the local since January 1st, 1929. A discovery and an accounting for
such moneys are sought.
6. Complaint of misfeasance or malfeasance with
respect to group life insurance. Discovery as to such insurance is sought.
7. Complaint of misfeasance, malfeasance, extortion, discrimination and
general mismanagement of the affairs of the local. The relief sought under this
heading is the appointment of a custodial receiver and an injunction against the
officers' continuance in office.
The charges of the "senior" bill and
the relief sought are generally similar to those contained in the "junior" bill.
In addition they charge:
8. That the officers of the union have, without
warrant, preferred charges against them and threatened them with [*233] suspension or expulsion from the local because of
their activities in support of the junior suit and in demanding recognition of
their own right of freedom of contract; and they seek an injunction against the
preferring or hearing [**6] of any such charges
against them and from suspending or expelling any of them pending the final
disposition of this cause. They also ask a decree declaring void all provisions
of the local constitution and by-laws which in any way interfere with the
members' freedom of contract of employment.
The final hearing in these
cases began April 23d, 1934, and continued intermittently thereafter until June
27th, 1934, during which period many witnesses were examined and voluminous
testimony was taken. Subsequently, on July 30th, 1934, the testimony of two
witnesses, officers of the International Alliance of Theatrical Stage Employes
and Moving Picture Machine Operators of the United States and Canada, was taken
de bene esse in New York City, they having refused, for reasons best known to
themselves, to submit to the jurisdiction of the court and testify in this
state. At the conclusion of the final hearing in June counsel were directed to
file briefs with the court. Complainant's brief was received on May 3d, 1935,
and that of defendants on June 20th, 1935. Had briefs been submitted immediately
after final hearing, as directed, these cases could have been disposed of
promptly. The delay, [**7] which has occasioned
complaint on the part of some of the complainants, is due entirely to neglect of
counsel. The effect of this delay upon other litigation pending before me cannot
be accurately appraised, but it has proved a serious impediment to the prompt
disposal of other causes of equal or greater importance.
I shall now
consider the various complaints and the relief sought in their order as above
stated.
1.
MEMBERSHIP RIGHTS
The defendant local was
chartered by the defendant International on May 24th, 1912. Neither its
constitution and [*234] by-laws nor the
constitution and by-laws of the International provide for any classification of
its members as juniors and seniors; nor, in fact, is any distinction made in
those documents as to members. As a matter of fact, the preambles to the
constitution and by-laws of both International and Local breathe a spirit of
complete equality and fraternity. Article a, section 19 of the by-laws of the
International provides, however, that "affiliated locals are required to insist
that all positions within their jurisdiction be filled by their own members. In
the event of the local membership being unable to care for all vacancies,
[**8] preference must be given to members of
sister locals affiliated with this alliance. Not until the available members of
resident and out-of-town locals have been employed shall the engagement of
nonmembers be permitted. Any local failing to comply with the requirements of
this section shall be fined not less than Fifty Dollars ($ 50.00) for each
offense."
This provision was evaded by the officers of the local by
attaching to the local from time to time a number of operators who were known as
"permit men." This practice was the result of the desire on the part of the
officers to employ local talent in local theatres, while at the same time
restricting the membership of the union to that number deemed requisite to
insure the officers complete cotnrol of the positions involved. The permit men
had no membership cards, were not initiated, paid no regular dues and were not
participants in or beneficiaries of the group insurance plan. Their only right
was to take jobs under the supervision of the local. The number of permit men
had increased to approximately fifty in 1918 when the defendant Kauffman became
a member, and the regular membership of the union did not exceed sixty down to
[**9] 1925. Members of other locals having
complained of this apparent evasion of the quoted section of the by-laws of the
International, the officers of the defendant local conceived the idea of
admitting the permit men to limited membership in the local and thus instituted
the junior and senior systems, in total disregard of the spirit of equality and
fraternity suggested by the preambles to the constitutions and by-laws above
referred to. In March, 1929, [*235] fifteen of
the permit men were admitted into the local as juniors. These men were not
novices in the trade or apprentices in any sense of the word. They were moving
picture machine operators of many years' experience. Additional men were
admitted into the local as junior members until at the time of the final hearing
there were eighty-six juniors and ninety-one seniors. The proceedings for
admission of the juniors were exactly the same as those applying to the
admission of seniors. They applied for membership on printed application blanks
furnished by the International. These were sent to the general
secretary-treasurer of the International and approved by him. The applicants
were then initiated and took the "oath [**10] of
allegiance to the union." The ceremonial formalities of their admission were
exactly the same as those of the seniors. Union cards exactly like those held by
the seniors were issued to the juniors by the International. These cards were
sent by the International to the local union and after their receipt by the
local and before delivery to the new members the words "Jr. Dept." were stamped
upon the cards with a rubber stamp by the treasurer of the local. The juniors
pay exactly the same dues to the International Alliance as the seniors. The
group insurance policy taken out by the local covers the juniors as well as the
seniors and all are classified as "members" and all members -- juniors as well
as seniors -- hold like certificates of insurance in which each is designated as
"member of local No. 244." As already stated, the by-laws authorize no
classification of members into juniors and seniors nor is there otherwise any
discrimination among members authorized by these documents. There are, however,
certain unwritten laws or rules promulgated by the officers of the union, with
the approval of a majority of the seniors, which deprive the juniors of any
voice in the union's affairs. [**11] They are
not permitted to attend or vote at meetings of the members and they are obliged
to surrender their jobs to the seniors upon demand. Seniors are also entitled to
preference in the allotment of jobs. The juniors are required to pay to the
local ten per cent. of their weekly wages up to $ 50 and fifteen per cent. of
their wages in excess of that amount. They also pay $ 9 [*236] dues per quarter or $ 36 annually, while the
seniors pay $ 45 per quarter or $ 180 per annum, but make no other contribution
to the treasury of the local. Thus a junior receiving $ 100 per week would pay
ten per cent. of $ 50 or $ 5, and fifteen per cent. of $ 50, or $ 7.50, a total
of $ 12.50 per week or $ 650 per annum; and in addition $ 36 dues, making a
total of $ 686 as against $ 180 for the seniors. Out of the quarterly dues paid
by the members $ 3 from the seniors and $ 6 from the juniors is allotted by the
local to the sick and insurance fund. There is no written contract between the
juniors and the local which authorizes these exactions or the consequent
discrimination between juniors and seniors. The authority of the officers to
thus discriminate between the two classes of members [**12] rests upon motions or resolutions of the senior
members recorded in the minutes of the local, or upon the will or whim of the
officers themselves. Under the "rules" of the local a junior member cannot be
advanced to the position of a senior member except by two-thirds vote of the
seniors at any meeting called for that purpose. Before a junior is eligible to
such advancement he must deposit with the treasurer the sum of $ 500 in cash as
an admission fee. The opportunities for such advancement under the arbitrary
rules of the local are slight, indeed. Only eleven men have been made seniors
since 1929, seven of whom were closely related to officers of the local; and two
others were closely related to high officials of the Newark police department.
It is admitted that at least one of these latter was made a senior because of
the influence of his father, who was, at the time, a high police official. At
the time of his admission he had been affiliated with the local only six or
eight months. Other juniors who have been such for years are still waiting.
It is also a rule of the local that when a senior relieves a junior
temporarily, the senior is to be paid at the full senior rate [**13] of $ 13 per day, even though the particular job
pays less, in which event the junior must make up the difference. The junior has
no voice in fixing the scale of wages of either juniors or seniors.
It
is contended by the defendants that the juniors are really apprentices, and so
they are registered in the New York [*237]
office of the International Alliance; but the classification is determined by
the local controlled by the seniors and the secretary of the local wrote the
word "apprentice" in each junior application without the authority of the
applicant. But, as already stated, none of the juniors is an apprentice in any
sense of that term; all are experienced operators and hold positions equal in
importance to any held by the seniors; and there is no provision in the
international or local constitution or by-laws for the serving of any
apprenticeship.
The instant case is not unlike Cameron
v. International Alliance of Theatrical Stage Employees and Moving Picture
Operators, 118 N.J. Eq. 11, 176 A. 692, in which the court of errors and
appeals condemned the junior and senior systems employed in the Hudson county
local and accorded the juniors full membership rights in that [**14] local; in fact, the factual situation in both
cases is almost identical except that in the Cameron Case there was a written
contract between the local and the juniors, while here there is no such
contract. The practice in the allotment of jobs is, however, the same. On the
authority of that case, I therefore hold that the juniors are entitled to the
full and complete membership rights in Local No. 244 equally with the seniors.
2.
ARM WORK
At the conclusion of the final hearing I
said that this pernicious practice must cease. I believe it was enjoined by the
preliminary restraining order. It will be enjoined by the final decree. "Arm
work," or "working on the arm," as it is called, is where one member, usually a
junior, performs the work of one of the officers as an operator in a moving
picture theatre in addition to his own work in another theatre, and that officer
collects the salary incident to the job he nominally holds, the member actually
performing the work receiving nothing for it. In this way, Kauffman, the
business agent, Cooper, the president, Oppenheimer, the secretary, and Gehring,
the assistant business manager, and perhaps others, have [*238] been on [**15]
the payrolls of the largest theatres in Newark and vicinity for years, but
actually did no work there. Those who did "arm work" insist they had to do it to
hold their regular jobs. As a consequence, some of them worked sixteen or more
hours a day while getting paid for only half or less of that time. The excuse
(?) of the officers for this system of "arm work" is that their time is taken up
with official business and the officers' salaries are small. Obviously, the
juniors, or some of them, ought not to carry the burden of the support of the
officers who supposedly act for the benefit of all of the members. If the duties
of the respective offices call for full time, the incumbents should receive full
time pay from the union treasury, and not from the individual juniors. But the
evidence shows that some of the officers are already liberally compensated out
of the union treasury. This system of "arm work" has been in vogue since before
1927. The defendant Kauffman has not worked at all since 1929; but he has been
in receipt of a salary from one of the best paying jobs in Essex county and one
of the juniors has performed his work for nothing. One witness calculated that
he had [**16] earned more than $ 30,000 by "arm
work" for which the officers received the pay; another, $ 25,000; and others,
lesser sums. The bare fact that the system of "working on the arm" exists (and
it is admitted) is an indication of the principles and moral caliber (or lack of
them), of the officers who have profited by it; of their complete domination of
the members of the union and the absolute subserviency of those members to the
will or caprice of the officers. The condition resulting from this system is but
modified slavery. The juniors are no more than serfs, obedient to the will of
the dictatorial officers of whom the business agent Kauffman is the supreme
dictator. The position of the seniors, except the favored ones, is not much
better.
As already stated, the practice of "arm work" will be enjoined;
but no accounting of the moneys collected by the officers will be ordered as it
is apparent that "arm work" was an institution fostered and acquiesced in by the
full membership of the union notwithstanding relief from the evil system could
have been obtained at any time by application [*239] to this court. The complainants are themselves at
least partly responsible for the [**17]
condition of which they complain -- some of them eagerly sought the privilege
(?) of doing "arm work" to curry favor with the officers and gain advantage over
their fellows and thus to defeat that equality of opportunity and community of
interest which unionism is designed to preserve. Their hands are not altogether
clean.
3.
EXTORTION
This complaint is based upon the
contention of many of the junior members that they were required to pay certain
officers of the local sums ranging from $ 100 to $ 600 as the price of being
awarded certain motion picture operator jobs and that they were also required to
"kick back" to the officers of the local a portion of their weekly salary
ranging from $ 5 to $ 25 per week, according to the salary involved. Of course,
this charge is vigorously denied by the officers, but the evidence supporting it
is overwhelming and justifies the conclusion that it is well founded. It is true
that some of the witnesses who testified to this species of extortion and graft
are not of a character to inspire confidence in the truth of their testimony,
but there were many witnesses who testified to similar acts of extortion whose
testimony cannot be impeached; [**18] and on the
whole the character of all of complainants' witnesses compares favorably with
that of the defendants in the light of their admitted conduct. Further extortion
will be enjoined, but no accounting of the payments thus made will be ordered,
as complainants are in pari delicto and "it is the established rule that the law
will not assist either party to an illegal contract. * * * it will leave them
where it finds them." Cameron v. International Alliance, &c., supra. It is
urged that as the public interest is here involved this case comes within the
exception to the rule quoted. The exception is based upon "the reasons * * *
that the public interest requires that relief should be given; and it is given
to the public through the party." Story Eq. [*240] Jur. (14th ed.) § 421. The public interest is
amply served by an injunction against a continuance of the unlawful practice; an
accounting for the graft paid would benefit no one except guilty parties. The
complainants knew that they were paying graft and the defendants knew that they
were receiving graft. In making the payments the complainants were endeavoring
to secure an unfair and unjustifiable advantage over their [**19] fellow members. The doctrine of clean hands also
applies.
4.
CONTROL OF JOBS
It is admitted that the
defendant local has a virtual monopoly of the moving picture operators'
positions within its jurisdiction. It is not denied that the union controls the
operators' jobs and that it is impossible for an operator to obtain a job in any
of the motion picture theatres within its jurisdiction, and employing union
labor, except upon assignment by the business agent. In actual practice, the
business agent is the dictator and controls every such job. His word is law. The
constitution of the local provides that "it shall be the duty of the business
manager to furnish men for all positions when requested to do so." The theatre
managers know from experience that they have to request the business manager to
assign operators to their respective theatres. They are not permitted by the
local to deal directly. That the business agent appreciates his power under the
constitution of the local in this regard is indicated by the following except
from the minutes of a senior meeting held May 8th, 1934, while the final hearing
in this cause was in progress:
"The business manager stated that
[**20] as long as he held the position of
business manager he would give out the jobs and nobody else had any right to
tell any man that he would go here or there unless it came from him." (See
Exhibit D-14, page 85.)
The evidence shows conclusively that this power
was exercised by the defendant Kauffman in a wholly autocratic and arbitrary
manner. This complete control of positions was a [*241] vital element in aiding the extortion already
commented upon. In the assignment of jobs the desires of the employers and of
the employes are of no moment. The testimony supporting the charge of arbitrary
control of jobs by the business agent and the evidence generally discloses that
the men who were paying graft or "working on the arm" usually had steady
employment. It is too plain for argument that nominal control of jobs was in the
local, and actual control in the business manager; and that the members of the
local who have acquiesced in this practice have surrendered to the local and to
its officers their right of freedom of contract of employment. This situation is
similar to that condemned by the court of errors and appeals in Lo
Bianco v. Cushing, 115 N.J. Eq. 558, 171 A. 778, affirming [**21] this court on the opinion below.
Article
1, paragraph 1 of the constitution of this state provides that "all men are by
nature free and independent, and have certain natural and unalienable rights
among which are those of enjoying and defending life and liberty, acquiring,
possessing and protecting property and of pursuing and obtaining safety and
happiness."
In Walsche
v. Sherlock, 110 N.J. Eq. 223, 159 A. 661, in commenting upon the above
quoted language of our constitution, I said:
"Those unalienable rights
being guaranteed by the constitution, any contract, unreasonably restrictive
thereof, is necessarily void. I do not suggest that every contract restrictive
of constitutional rights is void. Mutual advantages arising from such contracts
equal to the burdens assumed or privileges curtailed may justify an individual
in waiving constitutional rights. But those rights which the constitution
recognizes as unalienable will be preserved by the courts notwithstanding
individual contracts of waiver especially where the public interest is affected
because that interest transcends the will or whim of the individual. This
concern as to the public interest is what is known as 'public [**22] policy.' The 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 their livelihood will not, therefore, be
countenanced."
[*242] That statement is
fully supported by the authorities cited in that opinion. We now have the added
authority of Cameron v. International Alliance, &c., supra, in which our
court of last resort has expressed itself on this point in no uncertain terms.
And see, also, Lo
Bianco v. Cushing, 117 N.J. Eq. 593, 177 A. 102. The restrictions upon the
freedom of contract involved in Walsche v. Sherlock were mild indeed in
comparison to those involved here. It is against public policy that the
individual should surrender his right of contract of employment -- the right to
the sale of his own labor -- to any other individual or organization "except to
the extent necessary to subserve the public interest." Cameron v. International
Alliance, &c., supra. This right "to have free opportunity to gain
employment and to retain a position of employment once it is gained, is as
precious in the eye of the law as [**23] the
right of the employer." Brennan
v. United Hatters of North America, 75 N.J.L. 729. (Italics mine.) It is one
of the property rights guaranteed by the fifth amendment to the federal
constitution (Cameron v. International Alliance, &c., supra), and is
unalienable. Much less may the complainants be deprived of this right without
their consent, except by constituted authority and in the public interest. In Lo
Bianco v. Cushing, supra, a by-law of the union provided that all moving picture
operators' jobs within the jurisdiction of the local were the property of the
local itself. Here, while the claim is not expressed in any written by-law of
the union, the practice is the same as there. Such a practice is but modified
slavery. The instant cases present but new examples of that spirit of revolt by
the rank and file of labor against autocracy and dictatorship within the union,
exemplified in Walsche
v. Sherlock, supra; Lo Bianco v. Cushing, supra, and Cameron v.
International Alliance, &c., supra. It is unfortunate, not only for labor,
but for society in general, that such conditions as disclosed in these cases can
exist. We are all, individually and collectively, irrespective [**24] of our trade or calling, more or less dependent
upon labor. And generally speaking, it may be truthfully said that what will
benefit labor will of necessity also benefit capital and is conducive to social
welfare. And labor unions organized [*243] and
maintained for the equal benefit of their members, a purpose entirely lawful and
laudable, are, without doubt, "conducive to the well being of society and a
necessary part of the social structure." Cameron v. International Alliance,
&c., supra. But this is so only when they are properly governed and pursue
their lawful objects in a lawful manner. Otherwise, they may become a cancer on
the social structure and impede social progress as effectively as they might
advance it if prudently managed in a true spirit of democracy. Union autocracy,
whether applied internally or externally, is equally reprehensible. Labor unions
had their origin in the ancient guilds of foreign countries. In this country
they were born of necessity arising from the unconscionable conduct of capital
-- of employers making virtual slaves of their employes. But the cure which was
sought for these ills via the union has in many instances, of which the instant
[**25] cases present a fair example, proved much
worse than the disease itself. The ills have been increased and intensified many
fold by the unconscionable conduct of the union officials and racketeering
business agents. It is such unconscionable and unscrupulous conduct -- persisted
in by so-called labor leaders, business agents, &c., in their lust for power
and their own greed for the wealth which they vociferously condemn -- that at
times brings the labor union into disrepute. And it must not be overlooked that
the rights of individuals, whether in or out of a labor union, as well as the
respective rights of labor and capital, are relative only. Each must exercise
his rights with due regard to the rights of others.
When labor learns to
properly govern itself; when union leaders and business agents learn the essence
of the golden rule; that enslavement of laborers to their autocratic and
dictatorial whims is no less pernicious than the much decried and condemned
enslavement of labor by capital, there will be less necessity for the
intervention of the courts in labor disputes and controversies of this kind, and
much less clamor, on the part of labor, against the injunctive power of [**26] equity -- a power as necessary to protect labor
from itself as from capital. There can be no "economic independence and security
and [*244] contentment of labor" so "essential
for the public order and welfare" (Cameron v. International Alliance, &c.,
supra) until the unscrupulous labor leader or business agent is shorn of his
autocratic power. The solution of the problem lies with the rank and file of
union labor itself.
The issue here is much deeper than appears upon the
surface; it is not merely whether the bare acts of the officers complained of
are wrong; it is whether the inherent right of the individual to work out his
own destiny, declared by the constitution to be unalienable, shall be preserved;
whether individuals are to be compelled to surrender to collectivism and
collectivism in turn to dictatorship. It touches the very foundations of
society. There can be but one answer to this issue. Once it is thoroughly
understood the rank and file of labor will revolt against the assumed
dictatorship of so-called labor leaders and of racketeering business agents and
resume their right to individual effort and insist on the freedom of contract
which is guaranteed them by [**27] the basic law
of the land. Union labor may purge itself.
5.
UNLAWFUL DIVERSION
OF UNION FUNDS.
Funds of a labor union are held in trust by its officers
for the lawful purposes of that union. Diversion to an unlawful purpose is a
breach of trust for which the officers are accountable. State Council, &c.,
v. Sharp, 38 N.J. Eq. 24; Grand
Lodge Knights of Pythias v. Germania Lodge, No. 50, 56 N.J. Eq. 63, 73, 38 A.
341; 5 Pom. § 2358; 4 Pom. § 1432; Parr v. Lancashire and Cheshire Miners
Federation (1913), 1 Ch. 366. No accurate records of the financial affairs of
the local for the years prior to 1931 were made available at the trial. It is
claimed that the records up to March, 1931, were destroyed or lost as the result
of a fire which occurred on March 29th, 1931. My conclusion from the testimony
is that these records were not burned; and if they were lost they were lost
voluntarily. Available records show that from January 1st, 1932, to June 30th,
1933, the [*245] union took in $ 53,217.12 for
its regular and emergency account and in addition the receipts of the union sick
fund for the same period were $ 3,392.38. That an accounting of union funds
should be decreed [**28] is indicated by the
following facts: Since November 13th, 1928, Kauffman, the business agent, was
paid a salary of $ 150 a week, but he was receiving $ 100 a week (or more) as
salary from a theatre in which he did not work. Someone else worked for him "on
the arm." He also has an allowance of $ 45 a month for his automobile. Two other
officers have a monthly allowance of $ 25 each for theirs. In 1930, 1931 and
1932 business agent Kauffman was given a present of $ 5,000 out of the local
treasury each year. Sums ranging from $ 500 to $ 2,500 have been paid to various
officers from time to time to cover their expenses in attending conventions,
without the requirement of an accounting, notwithstanding the fact that the
International Alliance paid their traveling expenses and $ 10 a day for living
expenses. Other officers have been the recipients of cash presents out of the
treasury of the local amounting to $ 2,200 in 1931 and $ 3,500 in 1932. In 1931
Kauffman got another $ 1,000 ostensibly for services on a wage scale commission;
other officers received $ 2,200 for like services. During the period covered by
the receipts referred to $ 15,638.62 was paid to the officers as salaries;
[**29] $ 10,800 as Christmas gifts and $ 3,550
for convention expenses; $ 2,338.05 for automobile and traveling expenses and $
1,500 was contributed to the campaign fund of various candidates for the Newark
city commission. The candidate who received the largest "campaign contribution"
was the police commissioner who was up for re-election, but was defeated. Why
this local should be so interested in a municipal election does not appear.
Whether this disbursement was a proper application of trust funds is open to
serious question. On the facts as they now appear the question would be answered
in the negative. At about the time these proceedings were instituted $ 5,000 was
paid out of the union treasury to a firm of New York attorneys, but for what
purpose does not appear. They have had no part in this litigation. There will be
an accounting.
[*246] 6.
GROUP
LIFE INSURANCE
Each member of the local, whether junior or senior, holds
a certificate of the Metropolitan Life Insurance Company certifying that he is a
"member of Motion Picture Machine Operators Union I. A. T. S. E. Local No. 244
and insured for $ 1,000" and that if his death occurs while "he is a member of
said union [**30] * * * the amount of insurance
in full on said member" will be paid to his beneficiaries. The premiums on this
group insurance are paid out of the union treasury, the premium charged being
the same for juniors as for seniors. Because of the uncertain financial
condition of the local, fear was expressed by the complainants that this
insurance might lapse for non-payment of premiums, hence discovery was sought.
At least partial discovery concerning this insurance was made during the course
of the final hearing. I assume that such discovery was satisfactory to the
complainants, as the point is not stressed in their brief. If any additional
discovery is necessary, it will be awarded.
7.
MISFEASANCE,
MALFEASANCE AND GENERAL MISMANAGEMENT.
Sufficient has already been said
to indicate that the charges of misfeasance, malfeasance and general
mismanagement of the affairs of the local are well grounded. The statement in
complainants' brief that "the present group of officers seems to constitute a
strongly established dynasty," is justified. The defendant Kauffman has been
business agent since 1920; the president, secretary and treasurer have occupied
their respective positions for [**31] about the
same length of time. The vice-president has been in office for eleven years. The
incumbency of some members of the executive board and some trustees has
continued for periods of from eight to ten years. No annual elections have been
held for at least ten years. In 1926, by [*247]
resolution adopted by the senior members, the terms of all officers, except the
business agent, was extended for five years. Kauffman's term was extended for
ten years and in 1930 another five-year extension was granted. The business
agent and secretary are, by virtue of their positions, perennial delegates to
all conventions, with liberal allowances for expenses, as already shown. The
perpetuation in office of these officers has been accomplished through the
intimidation of the members and their fear of losing their jobs. There was
testimony to the effect that the seniors were afraid to object in open meeting
to the conduct of the union affairs, and a critical anonymous letter circulated
among the members in 1933 brought forth abuse and threats against the unknown
writer. Free and open discussion at the meetings of the members was not
possible. At least one member was subjected to [**32] physical violence when he raised his voice in
protest at a meeting. The record is replete with testimony indicating the
complete domination of the members by the officers. Their continuation in
office, as already stated, is the result of intimidation and fear. They have
been guilty of bribery and extortion; and have proven themselves generally
unworthy of the trust reposed in them. They were chosen by only a portion of the
members, the seniors, to the exclusion of the juniors, and have perpetuated
themselves in office by dictatorial and autocratic methods which should not be
countenanced in any civilized community. Their continuance in office will be
enjoined pending the election of new officers in which the full membership must
have a voice, such election to be held under the supervision of a master of this
court and a receiver to be appointed in the meantime. Carlin v. Drury, 1 Ves.
& B. (1812) 155; Local No. 11, &c., v. McKee,
114 N.J. Eq. 555; Chalghian v. International, &c., Local
No. 617, 114 N.J. Eq. 497, 169 A. 327.
8.
CHARGES AGAINST
MEMBERS
The facts already stated and many more contained in the record,
which, for want of space, cannot be detailed here, indicate [**33] [*248] very
clearly that the pending charges were preferred against the complaining members
because of their activities in connection with this litigation and in
endeavoring to secure to themselves the rights and privileges to which they are
entitled. It is contended that these members have no right to apply to this
court for relief until the remedies within the organization, provided in the
constitution and by-laws, are completely exhausted; but I think it is plain that
there is no possibility of the accused members receiving a fair trial within the
union even if the charges were justified. And where the pursuit of internal
remedies "would be futile, illusory and vain" union members are justified in
first appealing to a court of equity. Walsche
v. Sherlock, supra. But aside from this fact, the present controversy (and
the charges against the members grew out of this controversy) is not of a
character to give the union tribunals exclusive jurisdiction. "These
organization tribunals were designed to adjust controversies between the union
and its members inter se strictly. Here the public is virtually a party, and the
provisions in question therefore have no application." Walsche
[**34] v. Sherlock, supra; Cameron v.
International Alliance, &c., supra. As to the jurisdiction of this court in
the premises, see, also, Lo
Bianco v. Cushing, 117 N.J. Eq. 593, 177 A. 102; Polin
v. Kaplan (New York Court of Appeals), 257 N.Y. 277; 177
N.E. 833. The prosecution of these charges will be enjoined.
Decree
accordingly.