Lora, Allcorn and Meanor. Meanor, J.A.D., Temporarily Assigned (Dissenting).
It is uncontroverted that at and following the consolidation order of October 29, 1965, these defendants held, received and disbursed various monies and other assets of Local 853. The defendants thereby became and remained trustees of said monies and assets for the membership of Local 853.
The plaintiffs, on behalf of themselves and all other persons who were members of Local 853 at the time of the promulgation of the consolidation order, seek and are entitled to a full and complete accounting from the defendants setting forth, in detail, (a) the nature, source and amount of all monies and other assets of Local 853 (or the membership thereof) which have come into the hands of the defendants, and (b) the disposition of all of said monies and other assets, showing the date, amount and purpose of each disbursement or other disposition -- including a full statement or list of all of the monies and other assets presently on hand.
The defendants literally have refused to prepare and to submit any accounting whatever, full and complete, or otherwise. The alleged failure or omission of the defendants to make or maintain records should not and does not operate to relieve them of this fundamental fiduciary duty.
Nor may the defendants take refuge in 29 U.S.C. § 501. Once the consolidation order issued, Local 853 ceased to be a "labor organization" within the meaning and intent of § 501, and thus § 501 would appear to be inapplicable. [ See, 29 U.S.C. §§ 152(5) and 206(d)(4).] In any event, § 501 clearly authorizes a suit for an accounting where, as here, the persons holding the assets and property
have refused to account, and good cause for such an accounting has been so obviously demonstrated. Sabolsky v. Budzanoski, 457 F. 2d 1245, 1252-1253 (C.A. 3rd, 1972), cert. den. 409 U.S. 853, 93 S. Ct. 65, 34 L. Ed. 2d 96 (1972); Hood v. Journeymen Barbers, Hairdressers, etc., 454 F. 2d 1347, 1354, n. 23 (C.A. 7, 1972).
Likewise, the trial court erred in authorizing the defendants to use the assets of Local 853 as a source of funds for advancement to or reimbursement of their attorneys for expenses incurred in their individual resistance to the consolidation. Without authorization by a majority of those persons constituting the membership of Local 853 at the time of the promulgation of the order of consolidation, the defendants have no right, power or authority to use trust funds for such purpose.
Accordingly, the judgment is reversed and the cause is remanded to the Chancery Division to enter judgment directing the defendants to file with said court, by a date certain, a full and complete accounting for the period commencing October 29, 1965 and ending 10 days prior to the date fixed for the filing of the account; fixing dates for the filing and service by the plaintiffs of exceptions to said accounting and for the trial or other disposition of any such exceptions; and directing counsel for the defendants to restore to the Receiver all sums paid or advanced to them out of the funds and assets of Local 853, within 30 days from the date of the filing of this opinion, in accordance with the terms of the order of the trial court authorizing such advances.
MEANOR, J.A.D., Temporarily Assigned (Dissenting). Although the majority reaches a desirable result, it is my opinion that 29 U.S.C.A. § 501 controls and requires a dismissal of this action. Accordingly, I dissent.
This labor controversy was initiated by a complaint which charged the individual defendants with breach of their fiduciary duties as officers and trustees of a union local.
The local involved is Local 853, Carpenters, Joiners and Millwrights of America. On October 29, 1965, the United Brotherhood of Carpenters and Joiners of America, AFL-CIO, ordered that Local 853 be consolidated with a larger neighboring organization. Local 853 theretofore had jurisdiction over a territory centered in Bound Brook, New Jersey. The intrinsic ...