the top man (Delaney) or even the second in command (Leslie) who were the ones possessing the bargaining power and authority to deal with American in its labor relations with the Union. Motzell had little, if any, authority in that respect. The agreement which placed Motzell on American's payroll was not reached by Motzell but by Delaney and Leslie in dealing at arms length with Cherbonnier. Motzell performed a service, i.e., supplying employees when requested by American and representing the employees when questions arose or grievances occurred. He was paid weekly by check with income tax and social security payments being withheld. He was listed as an employee with the Workmen's compensation insurance carrier which accordingly increased American's compensation premiums. It this the kind of practice forbidden by Section 186 or is this within the confines of the exceptions and a legitimate labor practice under the provisions of the Act?
This Court is extremely mindful of the difficulty of there being a meeting of the minds of judges upon the question of what is a legitimate labor practice and what is illegitimate or illegal. The Court cites U.S. v. Kemble, 3 Cir., 1952, 198 F.2d 889, where after a conviction before this Court of an individual defendant and the Union under the Hobbs Act, 18 U.S.C.A. § 1951, the Court of Appeals sat in banc and out of seven members there were written and filed four opinions. This, naturally, is not said in criticism in the slightest degree but merely by way of illustration of the differences of opinion upon this particular subject.
The Court, likewise, has in mind that the Act under which we are considering this matter, passed in 1947, was amended in 1959 regrading the exemptions of employees, as follows (Section 186(c)(1)):
'The provisions of this section shall not be applicable (1) in respect to any money or other thing of value payable by an employer to any of his employees whose established duties include acting openly for such employer in matters of labor relations or personnel administration or to any representative of his employees, or to any officer or employee of a labor organization, who is also an employee or former employee of such employer, as compensation for, or by reason of, his service as an employee of such employer.' (Emphasis supplied.)
In the matter of United Marine Division v. Essex Transportation Co., 216 F.2d 410 (Nov. 3, 1954), the Court of Appeals for this Circuit reversed the holding of the District Court that payment by the defendant-company of money to a pension trust for employees would be contrary to Sections 186(a) and (b), and said this, at page 411:
'We approach the question with the thought in mind that these welfare funds represent a social device to be encouraged. See Upholsterers' International Union of North America v. Leathercraft Furniture Company, D.C.E.D.Pa. 1949, 82 F.Supp. 570. We are also conscious of the fact that abuses in the use of these funds had been the subject of public discussion. It was thought that in some instances employers had been induced to agree to pay into welfare funds over which they had no control and, indeed, over which members of the union itself had no knowledge or control. This appears quite clearly in the discussion of this portion of the Taft-Hartley Act when the matter was before the Congress.'
And further, at page 413:
'We think that the promise in this case is outside the evil which the Congress was endeavoring to erase in the sections of the statute which we have quoted. Since the fact situation is outside that evil, we do not think we should enlarge an application of the statute to void the type of arrangement which has met with legislative sanction, judicial approval and is a growing trend in employer-employee relations.
'The judgment of the district court will be reversed and the case remanded for further proceedings not inconsistent with this opinion.' In 1957 the Court of Appeals for the First Circuit, in the matter of Coppus Engineering Corp. v. National Labor Rel.Bd., 240 F.2d 564, said at page 573:
'We believe that the use of company property, and even time, for employee meetings, in the circumstances of this case, does not constitute substantial evidence on the record as a whole of support or domination. Chicago Rawhide Mfg. Co. v. National Labor Relations Bd., supra (10 Cir., 221 F.2d 165); National Labor Relations Board v. Valentine Sugars, 5 Cir., 1954, 211 F.2d 317. This evidence shows no more than cooperation by petitioner and a possibility of company control. However, 'neither mere cooperation, preference nor possibility of control constitute unfair labor practices; and the Board may not infer conduct that is violative of the Act from conduct that is not, unless there is a substantial basis, in fact or reason, for that inference.' Chicago Rawhide Mfg. Co. v. National Labor Relations Bd., supra, 221 F.2d at page 168. The sections of the Act before us were 'not enacted to prohibit or penalize courteous and friendly, or even generous, actions on the part of employers.' National Labor Relations Board v. Valentine Sugars, supra, 211 F.2d at page 320.'
Early this year, in the matter of United States v. Lippi, 190 F.Supp. 604, at page 607, Chief Judge Caleb Wright of the District of Delaware, in speaking of the section here under consideration, had this to say:
'Another independent ground for a new trial may exist. The Court has ruled that if defendant was a legitimate stockholder in the Coal Co., his receipts of dividends would not be violative of 29 U.S.C.A. § 186(b). This conclusion is confirmed by a review of the legislative history. Most of the debate focused upon problems resulting from governmental regulation of pension and welfare funds. The prohibitions on receipt by union officers of money from employers at best was intended to reach only certain forms of bribery and extortion and was not designed to be a sweeping regulation or prohibition of all forms of conflict of interest. * * *'
And, again, early this year Chief Judge John Murphy of the Middle District of Pennsylvania, in the matter of United States v. Alaimo, 191 F.Supp. 625 at page 627 said of this section:
"The chief, if not only, purpose of the section was to put a stop to practices that, if unchecked, might impair the impartiality of union 'representatives',' United States v. Ryan, supra, (2 Cir.), 232 F.2d at page 483; 'to prevent employers from tampering with the loyalty of union officials, and disloyal union officials from levying tribute upon employers,' * * *.'
This Court, therefore, concludes, in the light of these decided cases and the Court's interpretations of what the purposes of the Act were, that the activities of Motzell in regard to his dealings with American, as set forth in the first count of the indictment, were legitimate labor practices, as a result of open dealings between management and labor, and were not designed by the Union as an intimidation or extortion of the company nor an attempt on the part of the company to bribe the union official here involved, Motzell, or to gain control over the Union. Accordingly the defendant, Motzell, will stand acquitted upon the first count.
This Court is not of such an explicit opinion regarding the defendant's position in his dealing with Eastern. It would seem that under the exceptions of this Act, as the Court has found, one could indulge in such activities for one employer and not run afoul of the Act because one would be classified as an employee. But could one, being a representative of a labor union and the employee members thereof, escape conflict with the Act upon the grounds of being an employee under the exception provisions, if he is actually carried upon the books and records of more than one company at the one and the same time?
It is true that there are instances where a man can with all propriety be engaged in two separate employments at the one and the same time. The practice is, unfortunately, increasing due to our economy, where to make ends meet men have more than one employment. But these secondary employments are so-called after hour or week-end jobs, not performed at the one and the same time that the employee is performing work for the other employer.
It is, likewise, true that in this particular instance Cherbonnier was working for more than one company or client. But there is a great difference. Cherbonnier was being paid by his clients while Motzell, representing the employee members of the Union, was being paid by the Company employer.
If this practice (i.e., working for two employers) would be approved as not contravening the statute, where, along the line would it stop? Some would argue that one could indulge in such activities for two companies, some would say five, some would say ten. It is this Court's opinion that such a practice could and would constitute a form of extortion by a union upon a company or companies that the Act is designed to forbid. The Court, therefore, concludes that the actions of the defendant, Motzell, as pertains to the second count, were proscribed by the Act and we, therefore, come to the question of whether such actions were wilful.
In determining that we, naturally, must look at the entire picture. The actions covered a period of fourteen of fifteen months. They were out in the open. There was no attempt to hide or to term the payments anything other than what they were. The defendant was not the chief negotiator for the Union or even the second in command for that matter.
The Government relies heavily upon U.S. v. Ryan, supra. It is well, giving the defendant the benefit of the doubt as the law compels us, to keep in mind that the Ryan case was moving a course that, to say the least, was not the smoothest. On January 24, 1955, Ryan was pronounced guilty by the trial judge (128 F.Supp. 128). On July 1, 1955, the Court of Appeals of the Second Circuit reversed the conviction (225 F.2d 417). On February 27, 1956, the United States Supreme Court reversed the action of the Court of Appeals and remanded the case to that Court for study and consideration of other points (350 U.S. 299, 76 S. Ct. 400, 100 L. Ed. 335). Finally, on April 26, 1956, the Court of Appeals affirmed the conviction on a finding of wilfullness (232 F.2d 481).
In speaking of this particular statute and the application of the term 'wilful,' the Court of Appeals for the Tenth Circuit in the matter of Korholz v. United States, 1959, 269 F.2d 897, at page 902, approved the following charge to the jury by the trial court:
"Before there can be a conviction in this case it must be established beyond a reasonable doubt that acts charged in the indictment and in violation of the statute were done knowingly and wilfully. Now, the word 'knowingly' as used in the indictment, as used in these instructions means intentionally and with an awareness and consciousness of what one is doing. Now, the word 'wilfully' as used in the statute and in the indictment and in these instructions connotes an intentional violation of the law, and you are advised, ladies and gentlemen of the jury, that a defendant who actually does violate the provisions of law here involved would not be guilty of a criminal offense unless he is either conscious of the fact that what he is doing constitutes a violation of the law or unless he wholly disregards the law and pursues a course without making any reasonable effort to determine whether the plan he is following would constitute a violation of the law or not."
I think it should be borne in mind that this original hiring with American was entered into in July, 1955 (the date alleged in the indictment is July 7, 1955) shortly after the decision of the Court of Appeals of the Second Circuit on July 1, 1955, wherein the conviction of Ryan was reversed; and that Motzell discontinued this practice in September, 1956, shortly after the conviction of Ryan was finally reinstated which was on April 26, 1956.
Recently the United States Supreme Court had before it the matter of James v. United States, 366 U.S. 213, 81 S. Ct. 1052, 6 L. Ed. 2d 246, wherein the question was 'whether embezzled money is taxable income of the embezzler in the year of embezzlement under the income tax laws?' In 1946, in Commissioner v. Wilcox, 327 U.S. 404, 66 S. Ct. 546, 90 L. Ed. 752, the Supreme Court had held that it was not. In the James v. U.S., supra, case, decided May 15, 1961, the Court held that embezzled money was taxable income thus reversing the holding in Wilcox, but at the same time holding that as far as the James case was concerned, inasmuch as he could have relied upon the law as enunciated in the Wilcox decision, he (James) could not have been 'wilful' in his violation of the law (366 U.S. at page 221, 81 S. Ct. at page 1057, 6 L. Ed. 2d 246):
'We believe that the element of willfulness could not be proven in a criminal prosecution for failing to include embezzled funds in gross income in the year of misappropriation so long as the statute contained the gloss placed upon it by Wilcox at the time the alleged crime was committed. Therefore, we feel that petitioner's conviction may not stand and that the indictment against him must be dismissed.'
Under these circumstances, with the gloss placed upon the statute in question by the Ryan and other cases and no particular case having held that the facts (presently under consideration) constitute a violation of said statute, the Court cannot say that after full and fair comparison of all of the evidence that it has an abiding conviction to a moral certainty of the wilfulness of the defendant Motzell's actions. In this state of the case the law holds that a reasonable doubt exists and as it is one of the necessary elements of the crime, the defendant is entitled to a judgment of acquittal on the second count.
Counsel will prepare an appropriate order.