In this action plaintiffs and defendants each seek judgment on the question of liability.
Plaintiffs are the trustees of the welfare fund of Local Union No. 408, International Brotherhood of Teamsters, and certain members of that local who are suing on behalf of themselves and all other members similarly situated. Defendants are Local Union No. 478, International Brotherhood of Teamsters, the trustees of that local's welfare fund, and representatives of the employers who participate in the fund.
The plaintiffs sue for the benefit of certain former members of Local Union No. 478 whose membership was transferred to Local Union No. 408 in 1955 but who continued to participate in the welfare fund of Local 478 until October 1, 1960, and for the benefit of certain additional members of Local 408 who likewise participated in the 478 fund until the latter
date. In the suit plaintiffs invoke the inherent jurisdiction of equity to supervise the management of trusts. By way of relief they seek a direction that the defendant trustees of the welfare fund of Local 478 turn over and deliver to the trustees of the welfare fund of Local 408 a portion of the welfare fund of Local 478 based upon the contributions of the members of Local 408 thereto.
On the day fixed for trial the matter was submitted on stipulation of facts and briefs, each side moving for judgment in its favor. From the stipulation it appears that the individual plaintiffs were all, at one time, members of Local Union 478 and, as such, beneficiaries of the "Joint Welfare Fund of Employers and Local No. 478, I.B. of T." This fund was established by an "Agreement and Declaration of Trust" dated February 11, 1953. The parties to the trust agreement were Local Union 478, certain employers in the trucking industry whose employees were represented by that local, and six trustees, three of whom were denominated "Employer Trustees" and three of whom were denominated "Union Trustees." The trust agreement itself was to cover payments to be made under collective bargaining agreements between the local and various employers.
On May 1, 1955, over two years after the establishment of the welfare fund, the International Brotherhood of Teamsters, parent body of the two locals involved, issued a separate charter to Local 408. Thereupon, approximately 85 out of 3,300 members of Local 478 were transferred to the new local. It was mutually agreed by Local 478, Local 408 and the employers involved, that the employers would continue to make contributions to the Local 478 welfare fund for the benefit of the members of Local 408. This came about when the trustees of the welfare fund were requested to extend its benefits to the employees who had been transferred to Local 408 and to additional members who joined that local. The trustees passed a resolution approving this request, and employers having agreements with Local 408 thereafter made the required contributions to the fund of Local 478.
The welfare fund of Local 478 functioned without mishap until October 1, 1960, on which date Local 408 instituted its own welfare fund. Thereupon, some 810 out of approximately 4,500 members transferred from the Local 478 welfare fund to that of Local 408. Thereafter, employers having contracts with Local 408 ceased to make payments to the 478 fund. The trustees of the new Local 408 welfare fund requested the trustees of the Local 478 fund to turn over to their fund a pro rata share of any reserve and surplus in the 478 fund which would represent the interest of the 810 men who had transferred. The trustees of the Local 478 fund refused on the ground that under their construction of the trust agreement and of the arrangements made in 1955, the plaintiffs had no interest in the 478 fund "upon their severance from the 478 fund." The present suit followed.
In the trust agreement the purposes of the trust are set forth as:
"Section 1. The Trust and the Fund are created for the purpose of providing and maintaining through policies procured by the Trustees from duly licensed insurance carriers or other groups or agencies as may be determined by the Trustees, and accepted by the Trustees as part of the Fund, group life, hospitalization, accident and health insurance, and group benefits, as provided in the Labor Contract between the Employer and the Union, for the benefit of employees of the Employers, and if so determined by the Trustees, the dependents of such employees as defined by the Trustees. A copy of the agreement referred to in this section is annexed to and made a part hereof, and represents the contract in effect between the Union and the Employers in the Trucking Industry."
The trust agreement provided that each employer who was a party thereto would contribute to the fund $4 per week for each of his employees who was a member of the union, until the expiration of the collective bargaining agreement in effect between the employer and union. It also provided that:
"* * * The sum of $4.00 shall likewise be paid weekly by the Employer for each employee that the Employer desires to insure under the Fund who may not be members of the Union. The sum of $4.00 shall likewise be paid weekly by such members of the Union and
other individuals who may be permitted to participate in the Fund upon approval of the Trustees."
The method of application of the fund was prescribed as follows:
"(a) To pay or provide for the payment of all reasonable and necessary expenses of collecting the Employer Payments and administering the affairs of the Trust and Fund, including but without limitation, all expenses which may be incurred in connection with the establishment of the Trust and Fund, the employment of such administrative, legal, expert and clerical assistance, the purpose of leasing of such premises and the purchase or lease of such materials, supplies and equipment as the Trustees, in their discretion find necessary or appropriate in the performance of their duties.
(b) To pay or provide for the payment of premiums on the Policy or Policies when such premiums shall become due.
(c) To establish and accumulate as part of the Fund an adequate reserve for the purpose of continuing the Policies in full force and effect, such reserve to be determined by the Trustees."
The agreement describes the fund as:
"* * * the trust estate of the Joint Welfare Fund of Employers and Local No. 478 I.B. of T., which shall consist of all Policies together with all dividends, refunds or other sums payable to Trustees on account of such Policies, all investments made and held by the Trustees, all monies received by the Trustees as Employer Payments or as income from investments made and held by the Trustees or otherwise, and any other property ...