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Edwards v. Leopoldi

Decided: May 27, 1952.


McGeehan, Jayne, and Goldmann. The opinion of the court was delivered by Jayne, J.A.D.


[20 NJSuper Page 44] It will be elucidative immediately to explain that although the final judgments entered in the two above-entitled actions are implicated in the present appeals, only the case of Edwards, et al., v. Leopoldi, et al. , was submitted to final hearing, and by stipulation a judgment "to the same effect and in the same tenor" as that rendered in the Edwards case was entered in McBride, et al., v. Weihrauch, et al. The Edwards case was prosecuted at the final hearing solely by the intervenor and present appellant, United Electrical, Radio & Machine Workers of America.

The following prefatory announcement was made by counsel at the inception of the final hearing:

"Essentially what the case comes down to, as stated by your Honor at a conference at the bar is: Who is entitled to the funds of Local 447, and it is an action more or less in the nature of an accounting for the funds of U.E. Local 447."

Since the titles of the several associations to which reference will be made are somewhat lengthy, it will be expedient to employ the following symbolic designations: "C.I.O." for Congress of Industrial Organizations; "U.E." for United Electrical, Radio & Machine Workers of America, the intervenor and active plaintiff; "U.E.-C.I.O." for U.E. in its status as an affiliate of C.I.O.; "I.U.E." for International Union of Electrical, Radio & Machine Workers, which was given a charter by the C.I.O. upon the expulsion of U.E. from its affiliation with C.I.O.; and "Local 447" for the local union the assets of which are involved in the present litigation.

It is significantly informative to chronologize the prominent events. The C.I.O. is an international federation with which U.E. became affiliated on November 16, 1938. The U.E. is a national labor union having affiliated with it numerous local unions. Local 447 was organized by U.E. and received its charter as an affiliate of U.E. on November 4, 1941. By a resolution adopted at a convention of C.I.O. on November 2, 1949, U.E. was expelled from C.I.O. On January 10, 1950, Local 447 terminated its affiliation with U.E. and received a charter from I.U.E., which was organized as an affiliate of C.I.O.

The charter issued to Local 447 by U.E. contained the following contractual engagement: "It is hereby agreed in the acceptance of this Charter that the aforesaid Union shall conform to the Constitution, Rules and Regulations of the United Electrical, Radio and Machine Workers of America," herein designated U.E.

The related provisions of the constitution of U.E. applicable to its locals are sections N and O of Article 18:

"Section N. If a local disbands, the local secretary and trustees shall send all funds and property belonging to the local to the General Secretary-Treasurer. The General Secretary-Treasurer shall hold this property intact for one year. If within that time, an application is made by at least fifteen (15) former members, a charter will be reissued and the funds and the property returned. Should no application be made within the year, the funds and property shall revert to the International Union.

Section O. Any local union whose good standing members fall below seven (7) may have its charter revoked in accordance with the provisions of Article 18, Section N, and Article 10, Section I, of the International Constitution. Members of such a group may become members-at-large, affiliated directly with the International Union in accordance with Article 20, Section C, or they may transfer to other local unions in the area.

Any disbandment, dissolution, secession or disaffiliation of any local shall be invalid and null and void if seven or more members indicate their desire to retain the local charter."

The intervenor, U.E., insists that upon the disbandment, secession or disaffiliation of a local such as Local 447, its property belongs to U.E. The validity of the disaffiliation is not impugned.

Expedient also will be the quotation of some excerpts lifted from the opinion of the learned judge of the Chancery Division which display the course of deductive reasoning through which he reached his conclusion:

"Urged upon the court is the holding by the courts in this and other states that the relationship between members of an unincorporated corporation and between parent and subordinates thereof is contractual, and that the terms of the contract are to be found in the applicable constitutions. With this contention the defendants agree but say that in the instant case affiliation of UE with CIO became an implied condition of the contract of affiliation between Local 447 and UE, which compact was dissolved when the implied condition ceased to exist, and thereupon the UE constitution was no longer enforceable against the defendants.

I think it has been adequately established by the defendants that the continued affiliation of the UE with the CIO was an essential condition of the contractual relationship that existed between the

Local and the UE, and that when the UE was expelled from the CIO the most essential requirement for the continuance of the executory contractual relation ceased to exist.

In my opinion, the decision of this court in the case of Duris v. Iozzi , 6 N.J. Super. 530, 70 A. 2 d 793 (Ch. Div. 1949), controls the instant case. In the Duris case it was held that when the continued existence of a state of facts is an implied condition going to the essence of the contract, the destruction of that state of facts puts an end to the contract itself."

The opportunity elaborately to collate the many adjudications in the several jurisdictions pertaining to the general subject to which this case relates is not available. Attention must, however, be applied to the relatively recent majority and dissenting opinions in Harker v. McKissock , 10 N.J. Super. 26 (App. Div. 1950), the modifying conclusions of the Supreme Court on appeal, 7 N.J. 323 (1951); Walter Kidde & Co., Inc., v. United Electrical, Radio, etc. , 7 N.J. 528 (1951); United Public Workers of America v. Fennimore , 6 N.J. Super. 589 (Ch. Div. 1950); Duris v. Iozzi , 6 N.J. Super. 530 (1949); International Union, &c., C.I.O. v. Becherer , 142 N.J. Eq. 561 (Ch. 1948), affirmed 4 N.J. Super. 456 (App. Div. 1949), certif. denied 3 N.J. 374 (1949).

There is a noticeable proclivity of relatively recent origin in the conception and rationalization of cases of this nature to excommunicate the agreement embodied in the constitutions and laws of labor unions from the family of contracts and to deem the relationship sui generis and largely immune from the application of the settled principles of the law of contracts. It is suggested that the contract theory in such relationships is not a reality but a legal fiction and that voluntary associations of this class are not the creatures of a pure contract but of a "social compact" or "consensual engagement." It may be conjectured that the word "compact" is chosen because in analogy the Federal Constitution has been styled a compact between the states by which it was ratified.

However, our Supreme Court has spoken decisively concerning that deviation:

"* * * And the contract rationalization is generally considered sound and adequate. A voluntary association of this class is in its very nature a creature of contract by its members, though it is not necessarily a legal entity for all purposes distinct from its component members.

The articles of agreement are embodied in the constitution and laws of the association; and it is fundamental in the law of contracts that the legal rights and duties thereby arising shall be enforced as written unless condemned by the law. The conventional combination derives its force from and subsists by the will of the parties, and its dissolution entails such consequences as the parties have stipulated, consistent with law and established public policy. The contract establishes the rights of the association and the component unions and the individual members, in relation to one another."

Harker v. McKissock , 7 N.J. 323, 329 (1951). Vide, Cameron v. International Alliance, &c., U.S. & Canada , 119 N.J. Eq. 577 (E. & A. 1936); Fidelity, &c., Co. v. Brotherhood, &c., America , 120 N.J. Eq. 346 (E. & A. 1936).

The defendants ask us to observe that under the operation of section N it is only where a local "disbands" that "the funds and property revert to the International Union." Their insistence is that although Local 447 has seceded, it has not disbanded. Was the word "disband" as employed in the constitution intended by its practical import and meaning to embrace the action taken by Local 447? We resolve that question in the affirmative. This precise point was advanced by the seceding group in Walter Kidde & Co., Inc., v. United Electrical, Radio, etc., supra. In Brown v. Hook , 79 Cal. App. 2 d 781, 180 P. 2 d 982 (1947), the word "disband" so used was held to include the withdrawal or secession of the local lodge. See, also, Subsidiary High Ct. v. Pestarino , 41 Cal. App. 712, 183 P. 297 (1919); Rosenthal v. Reinfeld , 48 Misc. 652, 96 N.Y.S. 199 (Sup. Ct. 1905); Henry v. Cox , 25 Ohio App. 487, 159 N.E. 101 (1927); Grand Council Provincial Workmen's Ass'n. v. McPherson , 8 Dom. L.R. 672 (Canada 1912); Fitzgerald v. Abramson , 89 F. Supp. 504 (D.C.S.D.N.Y. 1950).

Obviously the provisions of the U.E. constitution were designed to preserve the connection and to protect the rights of the U.E. and of the loyal minority of the local. At the time of the trial of the present action the group of more than seven in number who it may be had previously sought to continue the local and retain its affiliation with U.E. also withdrew, effectuating a complete secession. Thus Local 447 disunited the interconnection, disbanded its organization with U.E., and discharged itself from further united service with its parent. In that sense it disbanded. Webster's International Dictionary (2 d ed.) p. 741.

We now encounter those subjects of the present appeal that are more susceptible of debate. The decision under review introduces the consideration of the essential elements of that which we speak of in the law as an implied condition and more remotely of the so-called doctrine of frustration of purpose. The two are distinguishable. Nor is frustration of purpose identical with ...

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