Lewis v. Benedict Coal Corporation – Oral Argument – October 21, 1959 (Part 1)

Media for Lewis v. Benedict Coal Corporation

Audio Transcription for Oral Argument – October 21, 1959 (Part 2) in Lewis v. Benedict Coal Corporation

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Earl Warren:

Number 18, John L. Lewis, et al., Petitioners, versus Benedict Coal Corporation, and Number 19, United Mine Workers of America, versus Benedict Coal Corporation.

Russell R. Kramer:

To the honorable Mr. Chief Justices, may it please the Court.

Earl Warren:

We’ll wait just a moment till I get — till I get seated please.

Russell R. Kramer:

Pardon me.

I’m just trying to say that —

Earl Warren:

Now Mr. Kramer, you may proceed.

Russell R. Kramer:

All the Chief Justices, and may it please this Court.

This action originated in the District Court for the Eastern District of Tennessee by the suit instituted by the Trustees of the Welfare and Retirement Fund of the United Mine Workers of America, seeking to collect or to obtain from this settlor of a trust, certain moneys that the settlor had retained, under our tradition, the amount of those moneys being $76,000.

The defendant who was the — which was the settlor of the trust, the Benedict Coal Corporation in an answer to the petition or the bill complaint as filed, took the position first that because of certain conditions which were expressed in the contract under which the trust was created, there could not be any liability, taking the position that the trustees were third party’s beneficiaries, third-party beneficiaries to the trust agreement.

That there had been a breach of the trust agreement that or breach of the contract of which the trust agreement is a part, and that by the reason of the alleged breach there could be no recovery by the trustees for the funds or of the funds which were held by the settlor.

The — they also took the position, the defendant did, that it was entitled to a counterclaim for moneys which had heretofore been paid under the trust agreement.

That question is out of the case and we’re no interested in it.

It also filed a cross claim against the union, United Mine Workers of America, which was a party to the collective bargaining agreement and in the collective bargain agreement, the trust agreement is set forth.

Charles E. Whittaker:

(Inaudible)

Russell R. Kramer:

It has impleaded in the cross-claim and severed processes had upon it Your Honor.

And that impleading was done upon the basis of that claim was that under the Act which authorized, the Act of Congress which authorized the creation of this trust, there is a provision that a violation of the contract collective bargaining agreement gives a right of action and if they are asserting that they have a right of action against the union that is the settlor of the trust, the employer here, the coal operator and that they – the settlor has a right of action against the union because said the settlor, the coal operator.

The union violated the agreement in that there were certain strikes occurred during the period of the contract.

And the right, the suit as it’s instituted or the kind of cross action as instituted is based directly upon the federal statute or rights granted by the federal statute.

The original action is based upon the jurisdiction of federal court is diversity of citizenship and the amount involved several Act of Congress is not involved.

There was a trial of course for a jury and then the verdict has rendered by the jury, the jury found under the instructions of the trial judge that the settlor hold or had in possession $76,000 in round three years, a money that belonged to these trustees and that the trustees were entitled to have that and recover that money.

However, the court instructed the jury that it should also determine from the proof whether or not there had been a breach of this collective bargaining agreement by the union in that certain strikes had occurred which the Court said the jury could find were a violation of the contract and if the jury found that there were strikes which had occurred which were violative of the contract, the jury should ascertain the amount of damage that the company, the settlor, had suffered as a result of these illegal strikes, they found it to be illegal and the jury found that the amount of damage that the company had suffered was $81,000 in round figures.

So that the verdict to the jury as returned was that there is $76,000 due under the terms of the trust of the trustees.

There’s $81,000 due from the union as damages to the operator or the settlor who was also the settlor of the trust.

Upon that type of verdict, we made motion for the entry of a judgment then in accordance with the verdict, rendering judgment as we sought for the trustees for $76,000 plus interest from the day the institution of the action and on which execution could be awarded and that the $81,000 be rendered to the judgment against the union in favor of the company.

The court declined to enter that judgment and the court said in substance and so entered its judgment that there should be a setoff of the $81,000 which the union, which was the amount of the verdict against the union and which the company was entitled to recover against the $76,000, which the trustees were entitled to recover, resulting of course that the judgment awarded in favor of the trustees under their trust was entirely wiped out, and that there would be an additional amount payable by the union of some $4,000 or $5,000 to the company, the settlor of the trust.

That is the real question in this lawsuit as it goes on through and it is the question before Your Honors today.

Now it is our position first of course that there was no illegal strike and that there were no damages which of course have been recovered.

That part of this case I do not want to argue.

Counsel representing any other action which represents United Mine Workers of America will present that question.

But it is our position, it was our position in the Court of Appeals that this — the trustees are not third party beneficiaries of this contract, but they are trustees of a trust and that this $76,000 is trust fund that we are entitled to this trust fund and that our right to that trust fund cannot be defeated by setoff or some other action where the union is liable.

Russell R. Kramer:

We say that this contract itself created a trust, the raise of which is vested and the right to own and hold it is vested in the trustees and then it makes no difference while we do not think that there was a breech of this contract and if any liability arose for damages and that will be presented to Your Honors.

But we take the position that even if there were a violation of the contract, collective bargaining agreement, if there was an illegal strike, and incidentally the so-called illegal strikes in number of this case appears in Court lasted to a day or day and a half to two or three days, there were short period durations that work on damages only and the jury found $81,000 in damages float from that.

Incidentally to the Court of Appeals for the Sixth Circuit however found that the major damage is used and the trial court was entirely erroneous and remanded the case for a re-determination of the amount of damages that could be awarded for those, for that so-called breach of the contract.

Now I’m not interested in that phase.

I would accept that if the evidence is the same on any retrial if there’d be a retrial, the amount of damage recoverable for the breach of the contract could only be $15,000 and we would recover part of our money because the setoff wouldn’t wipe it all out if you understand what I’m driving at.

Can I ask you a question?

Russell R. Kramer:

Yes Your Honor.

(Inaudible) next case, what effect does that how in your case?

Doesn’t it render you case moot?

Russell R. Kramer:

Well, not entirely.

It could have a result of not — this question not being important, but it has another result may it please the Court.

In the pleadings as filed and in the case as tried and as affirmed in the Court of Appeals, it is not necessary for the settlor of the trust or the employer to do what they did here.

All they need to do to defeat our right of action is to prove that there was a violation of the trust that they suffered damages, they not — need not inter plead the union as a third party defendant here and simply defeat our recovery by approving that there was an illegal strike.

Now it is true Your Honor that if there were no damages which could be recovered in this case, then there would be no sum to setoff against our claim, but we think this question goes deeper than that.

That the very principle is involved and which is determinative and is a vital importance to trusts of this type, of which there are many, many and thousands, hundreds of thousands of people are beneficiaries of such trust which are in effect charitable trusts, that it goes further than just the narrow proposition here that they might not be entitled to recover.

That the proposition that’s squarely before Your Honors, today is, is there a right of setoff?

Now it’s true that in this case if they could not recover, if the settlor could not recover that is against the union, no damages could be awarded, they would have nothing to set off against us.

To that extent the other would be determined, but we do not think its determinative or the question on which Your Honors granted the writ of certiorari.

The broad question which Your Honors granted the writ of certiorari is this.

Can — is it proper even if the union is entitled, is test in damages, is it proper to have a setoff?

The real reason that that maybe material if I’m going to regress a moment again, in every action wherein the trust brings a suit to collect this raise in the trust.

It will be possible if this Court does not pass upon this question which we think if squarely before it for the company, the settlor, the employer to raise this question that there was a breach of contract.

Felix Frankfurter:

Suppose you had breach of agreement in this case, suppose this case had been settled out of the Court, the larger question if you let them break it, Justice Harlan would still may.

Russell R. Kramer:

It would Your Honor.

Felix Frankfurter:

Could we nevertheless go ahead and decide it although the parties came in and stipulated that they have settled the case?

Russell R. Kramer:

No Your Honor, it’s the question.

Felix Frankfurter:

(Inaudible) the question because a larger question remains?

Russell R. Kramer:

No Your Honor, it’s the question remoot.

I agree it would then become moot because there is no controversy, but in the absence of that settlement —

Felix Frankfurter:

Mr. Justice Harlan is suggesting there is no controversy, there’s no set-off.

Russell R. Kramer:

But we think there is a — there is a controversy because this issue is still there on whether or not the right of setoff exists.

Well the importance of the question you don’t have to argue I can understand that perfectly well and in the present posture of the phase before we haven’t reached this other case, of course you got a lot of questions, but I’m — step ahead at the moment and Court is wondering what would be the result of an in favor of you —

Russell R. Kramer:

Well I wouldn’t anticipated that question might be asked in those but it is our position that this question is still, it’s not moot and it’s still before the Court.

I do realize very frankly to Your Honors that if you hold, that if the Court should determine that there was no breach of the contract and therefore no damages could possibly arise then of course there could be no setoff.

Felix Frankfurter:

You might say, I take it, that this Court reaches your question first, the other question is still undecided and that isn’t be moot at that point, well they go on it like the Government – it wouldn’t become moot if your point of view recollected.

Russell R. Kramer:

I agree with Your Honor and we’re here first therefore our questions which were to be decided first and we’re entitled to the decision before you reach the other question, and I think that’s the logical answer, may it please the Court?

I want to go now to this question of the, whether not there is a trust.

The contract and whether or not these petitioners, the plaintiffs below, complainants, were really third-party beneficiaries in the capacity in which they bring this action to recover or were they trustees of the trust?

Charles E. Whittaker:

The matter — the matter whether as trustees they are third-party beneficiaries or not, isn’t all that’s important is to determine whether or not you’re entitled to the funds in the trust capacity?

Russell R. Kramer:

That is correct, it’s the ultimate answer, but may it please your honor the position is taken by the defendants here that if they have to maintain this action as third-party beneficiaries any defense that could be made by the prime parties of the contract, the union can — I mean yes can be made as against the beneficiaries and against the trustees.

And we say if they sue straight as trustees and their right of action is as trustees and not as third-party beneficiaries, it makes no difference what kind of action might be maintained as between the union and the coal operator.

In other words what does this contract, another section of this collective bargaining agreement, may it please the Court contains the provision, certain provisions with reference to settlement of disputes and certain procedures shall be followed.

Now it is the position that I don’t want to argue that question but it is the position of the defendants Your Honor that this, there were disputes between the union and the man, the miner.

That those disputes were not settled under the collective bargaining provisions and that when they were not settled there was a breach of the contract and I don’t think there was, but there was a breach of the contract and therefore that any rights that my clients had in this case are subservient to determination of whether or not that breach of the contract resulted in damages to the operator and therefore if it did such damages maybe set-off against our claim.

Charles E. Whittaker:

My whole point is this.

Whatever rights your trustees have, the right upon this contract and whether you call them third-party beneficiaries or something else, doesn’t affect the substance of their right.

Is that not true?

Russell R. Kramer:

No Your Honor I’m afraid that’s not entirely sound.

There is a difference between defenses that can’t be made to an action brought by third-party beneficiaries to a contract to recover on the contrary and rights that can be asserted as a defense against the plaintiffs if they are suing not as third-party beneficiaries but solely as trustees of a fund.

In other words, if they are solely as trustees of the fund, which we think they are in this action, then may it please Your Honor it makes no difference what violation of the contract they may have been.

Charles E. Whittaker:

I didn’t understand that there was a dispute, that they are property as union’s funds, nor that the funds to which they become entitled derived under the terms of this contract.

Russell R. Kramer:

Correct Your Honor.

Charles E. Whittaker:

Therefore I (Inaudible)

Russell R. Kramer:

Because Your Honor they assert, the defendant asserts that if they are maintaining this action as third-party beneficiaries although there are parties in there that as if they maintain their action as third-party beneficiaries then the defendant can setoff against any right that the third party beneficiary has any defense that he might have — against the claim between the original parties.

Charles E. Whittaker:

Would that depend on the terms of the contract?

Russell R. Kramer:

It does Your Honor and we stated under the terms of the contract he cannot set it up.

It may be that technically there isn’t too much difference between their position as third party beneficiaries and trustees, but I think our position is stronger and I’m strong in my own personal belief that we sue here as trustees in the very capacity we seek to sue and not as a third party beneficiary though we are a third party beneficiary in the trust.

Felix Frankfurter:

Well does that, does the fact that we sue formally as trustees and entirely eliminated (Inaudible) giving rise to a setoff because the trustees derive that from their right as third party beneficiaries.

In other words, the legal relations of the parties, I should think, (Inaudible) legal relationship with the parties.

I’m just thinking well of it no matter what label you give yourself as a (Inaudible)

Russell R. Kramer:

I concede that Your Honor, I concede that.

Felix Frankfurter:

But you say the fact that you derive your (Inaudible) in the third party beneficiaries is irrelevant to the suit by the trustee?

Russell R. Kramer:

I do.

Felix Frankfurter:

That’s your position?

Russell R. Kramer:

It is.

Felix Frankfurter:

And as a matter of law, the dual capacity (Inaudible)

Russell R. Kramer:

That’s correct Your Honor.

That’s our position.

yes sir, yes Your Honor.

William J. Brennan, Jr.:

Was this as a matter of law or as a matter of the contract provision?

Russell R. Kramer:

It’s a matter of proper construction of the contract provision, Your Honor.

William J. Brennan, Jr.:

In other words, in essence the contract gives you this right of action over against the employer or without regard to any action an employer might have against the union — the other party of the union —

Russell R. Kramer:

That’s our position Your Honor.

Felix Frankfurter:

Although you derive your funds through the contract which you say also (Inaudible) third party beneficiary.

Russell R. Kramer:

They do.

Let me —

Earl Warren:

Just a matter – just a matter of curiosity how are the trustees appointed under this particular trust?

Russell R. Kramer:

The trustees are appointed under by — pursuant to the terms of the trust, one, by the operators.

There are many, many operators, hundreds of operators who have joined in this collective bargaining agreement.

And at least 51% of them have to agree on one trustee who represents them.

The United Mine Workers of America choose a second trustee and those two choose a third or neutral trustee, and may it please the Court, the method of proving this, the authority to establish this type of trust is given by the Labor Management Relations Act of 1947 and it provides the method of choosing the trustees.

Now our agreement copies in to it, those provisions of the federal statute and provides that our trustees shall be charged named accordingly and they are still named here.

Felix Frankfurter:

Am I right in believing that the provision of the Labor Management Act does not bear upon this problem?

Russell R. Kramer:

Does not bear on it, no it does not bare on it in the way this case now comes to Your Honors.

At one time there was also a claim in here a violation of a secondary boycott, which falls under that Act, but that is eliminated.

Felix Frankfurter:

Fiscal, the inter-physical relationship is not —

Russell R. Kramer:

No sir.

Felix Frankfurter:

We get no light or shadow from the Taft-Hartley Act.

Russell R. Kramer:

Yes you do in one particular, Your Honor and I want to come to that in a moment unless Your Honor prefers now.

Felix Frankfurter:

In your own time — in your own good time.

Russell R. Kramer:

Alright.

Now on your record is the record Your Honors have in front of you on page 94 (a) of it, is the provision with reference to, it begins at the very bottom of page 93 (a), the establishment of this United Mine Workers of America Welfare and Retirement Fund.

Now this is a section of the collective bargaining agreement.

You note that near the bottom of page 93 (a) it starts.

It is hereby stipulated and agreed that contracting parties hereto that there is hereby created a fund to be designated and known as the United Mine Workers of America Welfare and Retirement Fund of 1950, I’m at the top of page 94 (a) Your Honors.

During the life of this agreement, there shall be paid into such fund by each operator signatory hereto the sum of 30 cents per ton or 2,000 pounds on each ton of coal produced for used or sale.

Such fund shall have its place of business at Washington and so on.

Due to lack of time we do not care to read further on that, I want to read on page 95 (a), the second paragraph.

“It is agreed that this fund is an irrevocable trust created pursuant to Section 302 (c) of the Labor Management Relations Act of 1947.

And then there is setout the very provisions that are in the Act itself.

Then I want to go over to page 96 (a) the last paragraph and this is exceedingly vital to this lawsuit.

Title to all the money’s paid into, and or do and owing said fund shall be vested in and remain exclusively in the trustees of the fund and it is the intention of the parties hereto that said funds shall constitute an irrevocable trust and no benefits of the moneys payable from this fund shall be subject to anticipation etcetera.

And then the very last sentence at the bottom of that page, may it please Your Honors, the moneys to be paid into said fund shall not constitute or be deemed wages, due the individual mine worker.

It takes out the case Your Honor recently had in the Embassy case, but it is — these are not wages in any shape or form, shall not be construed as wages.

This is a special fund created it be true as a result of the labor or the miner, but it never becomes his money, he never has any interest in it, the 30 cents of ton incidentally this was accurate, this contract was amended to make it 40 cents of ton and during the period we’re interested in part times 30 and part 40.

But the 30 cents per ton is never belongs — after that 30 cents of ton arises belongs to anybody, but the trustees and when does it become the property of the trustees?

In other words, when does it become the raise of the trust and we go back to what I read from page, near the bottom of 96 (a) titled to all moneys paid into or due and owing said fund shall vest in and remain exclusively in the trustees of the fund.

So that the title to this 30 cents a ton, although the money remains in the hands of the employer, is not his money, it’s nobody’s money but ours.

It may not have been segregated but there’s a constructive trust that as soon as at one ton of coal is mined by our man, that one 30 cents is our money, that’s not mined dollar, mined by the employer’s men, but that 30 cents is our money, and although has segregated, he has in his common fund, 30 cents of ours in what, in an irrevocable trust.

It can’t be taken away by wrongful conduct of a third party, not the trustees.

That’s the money of the trustees and to give the right of set off.

What you’re saying to us is by wrongful conduct of somebody else, the union, we’re going to take that money away from you though it’s yours and we’re going to give it to your employer.

That’s the reason, may it please this Honorable Court, you can’t set it off.

It’s ours.

It’s made ours by that trust.

Now the argument is made and frequently been made, but that can’t be a trust fund, that money is not in existence.

No the money wasn’t in existence of the time this agreement was made, but there was an intent expressed for these parties to create that trust and the raise comes into being as the coal is mined.

On every ton this 30 cents comes into being as our money and it’s that type of constructive trust, this is not an old fashioned garden variety trust that we knew about in school boy days.

This is a new form of trust that is growing up in recent years, but it is a trust.

Now that question Your Honor of whether or not this fund constitutes a trust fund has been before so far as I know only one court where that case of that person has been determined.

Russell R. Kramer:

It was before the Court of Appeals of the Seventh Circuit, very recently just in August and in the Court of Appeals in the Seventh Circuit, the attack was made on it.

The trustees brought an action there against the Quality Coal Company seeking to recover this money or to get the possession of it, not of recovering a debt, because that isn’t a debt, seeking to get possession of this money and the defense was made but it’s nothing but a debt, it is the trust fund and you trustees can’t recover unless you make enough money.

Felix Frankfurter:

You mean this — you mean this x times 30 cents worth money in the bank account of the respondent.

Russell R. Kramer:

That’s right.

Felix Frankfurter:

Generalized bank account.

Russell R. Kramer:

That’s right, of the Benedict Coal Company.

Felix Frankfurter:

Benedict Coal Company.

Russell R. Kramer:

That’s right and not separated.

Felix Frankfurter:

And you say that there was a —

Russell R. Kramer:

Constructive trust.

Felix Frankfurter:

A chosen action of trust.

Russell R. Kramer:

Yes.

I think that’s a very good term.

I’ve never seen that term used, but I think that is a very good term for you, the chosen action trust.

I think it was a constructive trustee.

It didn’t have to be separated and put away somewhere else.

I agree to set a piece of property — to give a piece of property in trust to John Jones, I don’t own it, I later acquire that property but I just don’t acquire this much property, I acquire right boundary.

The part I agree to give to John Jones is a constructive trust under it, other terms being met, even though it has yet to be separated from the big boundary.

I’ve acquired the ownership over the trust vested on that portion I agree (Inaudible) to trust that.

Here, I have doubt coming to possession of the 30 cents a ton or later the 40 cents a ton.

I have the money.

It’s not mine because your contract said with the union and with the trustees that the minute your mine ton of a coal, there’s 30 cents, the coal is separated from its surrounding circumstances, there’s 30 cents of that, that’s the trustees money.

Hugo L. Black:

If the mine company used that money for its own purpose, could it be prosecuted for embezzlement?

Russell R. Kramer:

Well I’m inclined to think it could be prosecuted for embezzlement.

I think that money is so much yes.

I don’t know if that question has arisen but it’s my opinion, yes Your Honor there could be.

Felix Frankfurter:

It would have to use — it would have to use so much as not to leave an aliquot share which would amount for x times 30.

Russell R. Kramer:

Well —

Felix Frankfurter:

Even on majority hypothesis.

Russell R. Kramer:

That is true except —

Felix Frankfurter:

Because after that term, it said even title if we can talk about title it didn’t matter, it belongs to the Benedict Company.

Russell R. Kramer:

Well a title Your Honor —

Felix Frankfurter:

If it — if it uses all the money and so is it — needs not a nickel in it?

Russell R. Kramer:

But it has embezzled our money.

Felix Frankfurter:

But it has to get down to that (Inaudible)

Russell R. Kramer:

Well it probably does before you can get that.

Charles E. Whittaker:

Is it not crucial for you (Inaudible) that Benedict’s is not an issue it’s just a debt, but money paid into or due and owing to the fund it is trust funds in the hands of the trustees, isn’t it?

Russell R. Kramer:

What it’s doing all in all is just as much as if it’s in under that language Your Honor as if it were actually cashing our hands.

We have two different items here in this trust.

We have the money they paid us.

We have the other part that’s over here in the bank account as Your Honor said a moment ago out of the company.

The only place difference is, may it please the Court that this trust fund is divided.

Part of it we now have in our possession, part is over here but we do not need to reduce it to possession under this contract and under the law of trust in order to constitute a trust.

As far as their argument is that it isn’t too annoying if the union is in default.

Russell R. Kramer:

Alright, Your Honor, I’m going to come that.

I’m going to just take that at the moment.

Here’s what happens.

We go and we mine 100,000 tons of coal.

We get it out of the ground and under this contract, it’s 30 cents per ton to us.

Now after we’ve mined the 100,000 of coal an illegal strike occurs if there is such a thing in this case, can that take away from us the right that’s already vested in us for that 30 cents a ton and that’s what the Court said below.

It’s out money and the reason of wrongful conduct if there can be such conduct on the part of the union.

We say they can’t take away our money.

We’ve done all we needed to do.

We — the union has done.

The man has done nothing here.

The man has done all that he needs to do.

It’s producing all the coal there and the moment they produce the coal, that money is the money of the trustees.

Now to come along and say about a week later or a month later “oh” that the operator can defeat this by holding on and on and on and not paying and eventually getting a strike planned weeks, months, years from now that nevertheless that you defeated our trust.

That wasn’t the intent of the parties.

That’s not the law as we see it.

Tom C. Clark:

Your argument that there was, there can never be anything owing.

Russell R. Kramer:

That’s right.

There is never any relationship of debtor and creditor between the holder of this fund and us.

Tom C. Clark:

Similar to the argument that was made this week in certain mechanic lien and spaces that —

Russell R. Kramer:

Well I heard just a bit of that argument but it’s similar to the theory on which I think that some of the Court asked questions with reference to that case, yes.

Tom C. Clark:

You claim that here the contract instead of being created by law, I mean the trustee, instead of being created by law, it was created by the contract.

Russell R. Kramer:

That is correct, Your Honor.

Tom C. Clark:

Never is anything owing to anybody except the trustees so far as that particular part of the payment is concerned.

Russell R. Kramer:

That’s right.

It’s our money.

Tom C. Clark:

That’s your argument.

Russell R. Kramer:

It is.

They can’t be reached to take it away from us.

Tom C. Clark:

In fact, if that’s not the case, is your case strong?

Does it have to be there in order for you to win?

Russell R. Kramer:

No it may — not as far as we’re concerned here.

It would have to be that in the ultimate if rights of third parties intervene, but there are no third parties intervening as far as we’re concerned.

Question was asked the other day by this Court with reference to an attachment of tax lien and so on.

It would have to be in order to defeat that lien.

But so far as we are concerned now, it really makes no difference.

The money is there apparently, and we have the right to that money, and they have no right to setoff the claim to pay the debt of somebody else.

What they’re doing is taking our money.

Tom C. Clark:

What do you mean the company has money and could pay it?

You do not mean that the company has a segregated fund.

Russell R. Kramer:

Oh no.

Tom C. Clark:

Because it’s segregated by this contract if it is —

Russell R. Kramer:

It is segregated by this contract, that’s correct.

That is correct.

Tom C. Clark:

It has to be enough all the time there your argument is to pay your people if they break their — breach their trust.

Russell R. Kramer:

Well I don’t want to quite get in that position, may it please Your Honor, for this reason.

Russell R. Kramer:

They might, the coal might not yet have been sold and turned into cash.

The coal may still be (Inaudible) on the yard but it’s either got to be in cash or in the coal.

Tom C. Clark:

After that has occurred?

Russell R. Kramer:

That’s right, I follow you.

Felix Frankfurter:

What — what are you suing for then?

You’re not suing for a debt.

Russell R. Kramer:

No sir I’m suing for money (Voice Overlap).

I’m suing this people because they are withholding my money.

Felix Frankfurter:

This is really a tort by way of breach of a tort by way of interfering with your trust of this case, they don’t owe you —

Russell R. Kramer:

Not as a debtor.

Tom C. Clark:

Not as a debtor.

And what do they owe you, they owe you because —

Russell R. Kramer:

They hold my money.

Tom C. Clark:

— they build these trustees and therefore they really a tort you’re suing them, isn’t it?

Russell R. Kramer:

I can’t refer to it.

Felix Frankfurter:

(Inaudible) I don’t care about labors but your argument so strongly insist they don’t owe you anything in the sense of a debtor and creditor —

Russell R. Kramer:

That’s right.

Felix Frankfurter:

Therefore what you are seeking to get is the money worth of their interference with your property, isn’t that right?

Russell R. Kramer:

I guess that’s correct, Your Honor, I’m not quite sure I follow that but —

Tom C. Clark:

The same with your property from the contract done —

Russell R. Kramer:

Yes it’s our property.

It might be (Voice Overlap)

Felix Frankfurter:

Automatically, it becomes your trust just as soon as the coal is segregated and the 30 cents worth is reckoned.

Russell R. Kramer:

Yes, Your Honor.

I want to call attention to just two of these things (Inaudible) because I do not take the time of my co-counsel in here.

On this question, I want to call the attention of this Court to the fact that in 1947 just after Labor and Management Relations Act was enacted, the United Mine Workers of America and the operators set up a trust similar to this, but in that trust they provided that the trust fund covered only the money in the fund.

We ask that you are to impress Your Honor as to file ago, but a case came along in the District Court in Arkansas and incidentally I find my reason there in my brief that I would like to ask this Court to correct on the printed brief and so would please.

It is at the bottom of page 11, in the footnote, the date of that Arkansas case Johnson — Jackson — Lewis against Jackson & Squire is marked 1954, Your Honors it should be 1949.

We got the error that is put it there.

The Jackson-Squires case held that an action could not be maintained by the trustees for this amount of money owing because the trust had not arisen.

Russell R. Kramer:

Then we came along and rewrote the trust immediately following that to answer the very question that his Honor asked a while ago that — then we added in to it the words entitled the money paid into, that’s as far as the old contract went, what the Newman said and due or due and owing said fund shall be vested in these trustees.

Charles E. Whittaker:

That’s why I can’t see why you keep saying that funds in the hands of predicate who entrusted these funds.

Do you immediately see whether it was simply debt then it’s money due and owing to the trustee.

Russell R. Kramer:

So far as the present case is concerned that’s true and that can be as far as it needs to go, but you might have right to third parties intervening in there because it’s a debt, Your Honor.

We think that no rights of third parties could ever intervene here so as to take it away from us.

Charles E. Whittaker:

I don’t think Benedict would ever be a trustee of one whole trust formation just recently for paying money in the hands of these trustees who signed up for the contract as authorized (Inaudible)

Russell R. Kramer:

The title to it does rest in them I agree on that.

But first, it can be a trustee of funds in their possession under many conditions that we recite in our brief that I haven’t time to go into.

That’s true that an ordinary employer cannot be a trustee of wages but this is not wages.

Therefore, it could be.

There’s one other thing that I want to talk just very, very briefly about and I want to mention the fact that this is an irrevocable trust.

If you’re going to — if we are going to, I should say, permit a setoff, it’s not irrevocable.

What happens?

The right to this money is revoked the minute there is a breach of the trust if they can recover damages into that say of this sort which I don’t think we can but if they can, it is revoked by the conduct of the third party, the union here.

Now one other thing, this trust is set up pursuant to the provisions of the Labor and Management Relations Act of 1947.

And that Act provides in these words that judgments may be obtained against the union for this breach of the collective bargaining agreement and certain other things, but such judgment shall be satisfied only out of the assets of the union.

When you permit a setoff here, you are taking our assets to pay a judgment in favor of the employer, contrary to the spirit under — of the very Act that authorizes a creation of this trust.

The Act says you cannot pay these judgments.

That’s what this is.

You cannot pay this $81,000 out of anything but assets of the union.

This $76,000 is our asset and you’re violating the very spirit.

In fact the word itself as well as the spirit of the statute which permits the creation of this trust when setoff is permitted.

Could I ask you one question before you sit down, Mr. Kramer?

Russell R. Kramer:

Yes sir.

Does a union member continue to have an interest in the fund in the hands of the trustees after he ceases to be a member of the union?

Russell R. Kramer:

In certain conditions, he does, in certain conditions, he does not.

In order to be a beneficiary of the trust under the terms and conditions set out in writing it through regard by the Act, he can be a — not a miner for a period of time and still be a beneficiary, his family can be beneficiaries.

There will come a time when he will have a cutoff date after a given period of time.

But Your Honors this trust fund is for the benefit of the beneficiaries that is what they get from us I mean what we got from Benedict is not for the employees of Benedict and their families and their children, but they will use into a common fund not separated as to each employer but goes into a common fund in which the employees, the wives and their dependents get insurance, hospital benefits and many other things from all employers.

There is no separation as to one employer, money collected from one employer being for the benefit of the employees of that employer alone.

Felix Frankfurter:

But Benedict’s obligation relates to Benedict’s employees, does it not?

Russell R. Kramer:

Well it relates to him in the sense that it only arises on coal produced by its employees —

Felix Frankfurter:

Yes.

That’s what I mean.

Russell R. Kramer:

— but the beneficiaries are the indefinite type of beneficiaries in this charitable trust.

Now there are people here who caused the strike that undoubtedly may never become beneficiaries.

Because of their wrongful conduct, we deprive beneficiaries may divide beneficiaries with his children anybody else 1000 miles away from the benefits of this trust.

We say with all earnest, may it please the Court that in the spirit of the law, the attitude of the Courts, during the last 15 or 20 years has been to encourage this trusts and help build it.

If the old technical sense of construction is to be applied to this trust and we say that we have to appear as third party beneficiaries and as such as anybody can violate this agreement and deprive us of our rights under beneficial rights, we’re going back simply the old common law variety of trust.

Felix Frankfurter:

What your — what your argument there rests upon the contention that the provision of the collective agreement dealing with all sorts of aspects of the complicated relationship between a coal operator and his men is that the trust, the creation of the trust is to be severed from the generalized collective agreement.

Russell R. Kramer:

That’s true and that’s true Your Honor.

Personally, I tend to argue but I haven’t done although there is a provision in this agreement that the entire agreement should be considered as an integrated agreement but that general provision not to be argued Your Honor by our opposition does not override the specific provisions set forth in our brief that the specific provision for the creation of this trust —

Felix Frankfurter:

Is it questionable overriding, it’s how you read a specific provision that’s part of a general agreement.

Russell R. Kramer:

That’s exactly what we say and because this specific provision must override any general statements outside somewhere else in need of it.

Felix Frankfurter:

Why is it a must?

I thought we’ve only brought up if you read a document in its entirety.

Russell R. Kramer:

Well you do and when reading its entirety, your only way has the idea here that this is a separate part of the agreement and we are entitled to this money as a trust fund.

Thank you.

Earl Warren:

Mr. Boiarsky.

M.E. Boiarsky:

Mr. Chief Justice and Members of the Court.

Upon complaint that the United Mine Workers of America and the District 28 of the United Mine Workers have violated the National Bituminous Coal Wage Agreements 1950 and 1952 by reason of pertinent strikes, the District Court entered a judgment upon a jury verdict against the union for a sum in excess of $81,000.

The Agreement did not contain any express no-strike clause or any other expressive waver or restriction or limitation upon that right.

The agreements, however, did cancel previous no-strike clauses contained in prior contracts.

The agreements also contained grievance machinery procedure and in each of the strike situations involved when District 28 represented these were called concerning stoppages, the grievances were settled and the miners returned to work.

In both of the lower courts, the unions contended that the agreements had preserved the right to strike without restriction or limitation.

Both Courts rejected this position.

And the Sixth Circuit affirmed the District Court on the issue of liability.

But because of errors relating to damages, it remanded the case solely for re-determination of the amount of damages.

Petitioners sought a writ of certiorari to that judgment on numerous points, but this Court granted cert limited, however, to the question of whether a stoppage of work, pending supplement of the dispute comestible under the grievance machinery procedures of the 1950 contract is proscribed by that agreement so as to subject the two unions, the mine workers in District 28 the damage actions under Taft-Hartley Section 301.

Now, if Your Honors please, the history of collective bargaining in the Bituminous Coal Industry in this country shows that prior to the year 1947 when the Taft-Hartley Act was enacted, providing for damage actions against labor unions for breach of contracts the prior agreements preceding 1947 contained express waivers of the right to strike and express prohibitions against the right to strike.

M.E. Boiarsky:

The 1941 and 1945 agreements for example as found on page 125-A of the printed record provided that a strike or stoppage of work on part of the mine workers shall be a violation of this Agreement.

It provided that for the duration of the Agreement no strikes shall be called or maintained hereunder.

It provided also that under no circumstances shall the operator discuss the matter under dispute with the mine committee or any representative of the United Mine Workers of America during suspension of work in violation of the agreement.

And I want particularly Your Honors to direct your attention to the language found in the 1941 Agreement which was carried forward into the 1945 Agreement and it is found and I emphasize that it is found under the settlement of dispute section and it says and I read from the record, printed record page 124-A pending the hearing of disputes, the mine workers shall not cease work because of any dispute.

Now in 1947 with the enactment of the Taft-Hartley Act with this Section 301 imposing civil sanctions upon labor unions for breach of contract the United Mine Workers was no longer willing to subject itself to a damage action by reason of any provision in the contract which prohibited the right to strike.

It provided for example that the earlier contracts were to be carried forward, but it provided specifically that the no-strike covenants of the preceding contracts were rendered null and void and abrogated and cancelled.

Is that the remaining on page 10 (Inaudible)?

M.E. Boiarsky:

That’s correct, yes.

I now read from page 129-A of the record, any and all provisions in either the Appalachian Joint Wage Agreement of July 19, 1941 or the National Bituminous Coal Wage Agreement of April 11, 1945 containing any no-strike or penalty clause or clauses or any clause denominated the illegal suspension of work are hereby rescinded, cancelled, abrogated and made null and void.

Now in the same contract and under subsection three of the same Section which is headed miscellaneous, the contracting parties agree that as a part of the consideration of this contract, any and all disputes, stoppages, suspensions of work and any and all claims, demands or actions going there from or involve therein shall be by the contracting parties settled and determined exclusively by the machinery provided in the settlement of local and district dispute section of this agreement or if national in character by the poor use of free collective bargaining as heretofore known the practice in the industry.

The 1948 contract carried forward the 1947 Agreement and in 1950 the same provisions were carried forward but there was added to the 1950 contract, subsection (4) of the miscellaneous section which provided that both the United Mine Workers of America and the operators affirmed their intention to maintain the integrity of this contract and to exercise their best efforts to available disciplinary measures to prevent stoppages of work by strike or lockup pending adjustment or adjudication of disputes and grievances in the manner provided in this agreement.

The Sixth Circuit declared that the agreement expressly stated that the no-strike provisions of the previous contracts were superseded.

They admitted that, but it declared that the question of whether or not the strikes violated the contract depended upon what affect the agreement to settle all local disputes in accordance with the settlement of local and disputes district disputes procedures had upon the right to strike.

It concluded that a strike to settle a dispute which a collective bargaining agreement provides shall be settled by an exclusive and obligatory alternative procedure constitutes a violation of the agreement.

Now it said that if that did not render meaningless the express abrogation of the no-strike clause.

But it said that the right to strike was preserved with respect to all disputes not subject to settlement by other methods made exclusive by the agreements and though it professed that the unions remain free from liability for spontaneous or wild cat strike which they defined as the kind of stoppages and suspensions of work which the agreement made subject to the settlement procedure, it concluded that the particular strikes which are involved here resulted from localized labor disputes which were cognizable under the grievance machinery, and therefore, the unions were liable.

Now it’s the position of the unions that strike activity pending the settlement of disputes under the grievance machinery of the contract was a permissive and not a prohibited activity.

The unions say that the collective bargaining history is enlightening upon the intention of the parties.

It says that as the District of Columbia Circuit Court of Appeals held in the case of International Union United Mine Workers of America versus the National Labor Relations Board, which involved an interpretation of the 1952 Agreement and which is found in 257 F .2d of page 211.

Hugo L. Black:

57.

M.E. Boiarsky:

257 F .2d, 211, that the bargaining history was both interesting and enlightening.

Now the Court of Appeals for the Sixth Circuit gave no consideration to that collective bargaining history.

The Court will recall that in the 1941 and 1945 Agreements that in the section of the contracts which provided for the grievance machinery itself that that Section committed the mine workers to a no-strike clause.

Now we say that in 1947 with the adoption of Section 301 of the Act that you have to consider for example that even though Congress recognized that — and sought in that Act to reduce strikes in industrial unrest its legislative history supported the position that the right to strike was preserved and that the question of the waiver of a right to strike was in matter for collective bargaining and that is precisely what the parties in the 1947 and 1940 and 1950 contracts did.

They preserved the right to strike by providing in there for the deletion, for the abrogation of the no-strike clauses that had occurred in previous contracts.

We say that unless clear language has lost its meaning that no — that the parties could not have expressed the right to strike in more definitive and unambiguous verbiage than they did.

That the right to strike was no longer waived but was reinstated.

If the contracting parties had intended that there should be no work stoppages pending settlement of disputes under the grievance machinery, we ask the question, “Why should they have so studiously provided for the recession of such clauses and that they should not be applicable, and that they should be rendered null and void?”

Now the District of Columbia Circuit in the case that I have cited, says it is hardly conceivable that a stoppage of work could occur except as a consequence of a dispute which would be cognizable under the grievance procedure of the contract.

And that being so, what was eliminated unequivocally in subsection one was restored completely in subsection three if subsection three was a no-strike agreement, but the District of Columbia Circuit continued saying, “If we are to credit the parties with normal capacity to reason and express themselves, we cannot read subsection three as a no-strike agreement.”

M.E. Boiarsky:

We direct the Court’s attention to the teachings of this Court in National Labor Relations Board versus Lion Oil Company which is found in 352 U.S. at page 282 where the Court declared that where there has been no express waiver of the right to strike a waiver of the right during such period is not to be inferred.

We also direct the Court’s attention to the language found in the Act in Section 13 which declares that nothing in the Act except as specifically prohibited shall be construed so as either to interfere with or impede or diminish in anyway the right to strike.

Now the District of Columbia Circuit pointing to that language says it seems to us that the spirit of the Section is an admonition to deciding tribunals not to interpret ambiguous provisions of contracts as amounting to no-strike agreements.

Under your view that the contract (Inaudible)

M.E. Boiarsky:

Mr. Justice our position here is that it is one thing for contracting parties to agree to process matters to the grievance machinery, and that is precisely what took place here.

We say that it is an entirely different matter for parties to agree not to strike pending the settlement of those disputes.

We say that they are two entirely different things, and that that distinction was recognized by the parties in the earlier contracts when they said specifically that pending the hearing of disputes that the miners would not strike.

We say that the fact that those provisions were in the earlier contracts that they were cancelled and rendered null and void gives basic content to the intention of the parties and the interpretation to be placed upon this contract that when the parties in subsection (1) of the miscellaneous section cancelled the no-strike clauses that they cancelled them totally and unequivocally.

That it was the intention of the parties to the contract that the right to strike was reinstated, that the unions were not to be subject to legal sanctions under Section 301 by virtue of strike activity.

And so we say that that a strike is not an alternative method of settling a dispute.

We say that as the Court said in the Tri-City’s Foundry case which is cited in the brief that the strike is an economic, a lawful economic instant and that just as the District of Columbia Circuit stated in the textile workers case which we cite in our reply brief, that there is no inconsistency, there is not the slightest inconsistency between genuine desire to come to an agreement and use of economic pressure to get the kind of agreement one wants, we cite that on page seven of our reply brief.

Felix Frankfurter:

May I ask you whether you regard the Meat case of the First Circuit as opposed to your view.

M.E. Boiarsky:

I do not.

I think it’s clearly distinguishable.

Felix Frankfurter:

Would you mind distinguishing it?

M.E. Boiarsky:

There in the Meat case Your Honor, in the first place there was an arbitration clause.

It did not have as we have in this particular case a prior no-strike clause where the parties negotiated those no-strike clauses out of the contract itself.

Felix Frankfurter:

Respectfully lost three isn’t coextensive and that doesn’t suck all the meaning out of the elimination of the no-strike clause as a mere matter of reading, does it?

M.E. Boiarsky:

I think Your Honor that you have to take into consideration the history of the collective bargaining of the various contracts.

I think you have to take into consideration the purposes which prompted the union in 1947 and again in 1950 to eliminate those no-strike clauses.

The purpose of the union to avoid the impact of damage actions brought under Section 301.

Now the Sixth Circuit has not undertaken to do either.

They’ve given no consideration to the purposes which brought about the change from the 1941 and 1945 contracts and the 1947 contract, they’ve given no consideration to the —

Felix Frankfurter:

But they referred or disagreed with the District of Columbia decision, and therefore we’re not unaware of the arguments that you’re making.

M.E. Boiarsky:

That is — that is correct.

But when — when you consider and now I get back to the Meat case, Your Honor, a reading of the Meat case particularly in the District Court shows that the District Judge premised his findings upon evidence which had been taken which showed that the union was not particularly attempting to protect its right to strike and the opinion so recites and the opinion also recites Your Honor.

If I may point to Your Justice for a moment, the Court indicates that he was not absolutely certain of his position, but he says this.

The parole evidence which I believed tends in the same direction as a constructu — contracture which I give the agreement as a matter of law but not very strongly.

It tends more in that direction however than in the direction of the union’s contention that by omitting this no-strike clause it was preserving its full and free right to strike.

Now we say that that is not true in this case, but the thing that the union was doing was expressly by eliminating the previous no-strike clauses expressly preserving his right to strike totally and unequivocally.

Felix Frankfurter:

But leaving in there after some conflicts have inevitably arrived in these and for some conflict, specific mode of settling there, is that right, is that a bare statement?

M.E. Boiarsky:

They have left in here a specific mode of —

Felix Frankfurter:

Specific mode of —

M.E. Boiarsky:

— of processing disputes but —

Felix Frankfurter:

Not all disputes, but certain ones.

M.E. Boiarsky:

Well they say — they say Your Honor, any and all disputes.

Felix Frankfurter:

Well what any or all —

M.E. Boiarsky:

And not only that but —

Felix Frankfurter:

Now any and all, do they?

M.E. Boiarsky:

Yes.

Charles E. Whittaker:

Any and all disputes have looked around this pursuit of game.

M.E. Boiarsky:

Well if they’re national and in character that’s a, that’s a different thing yes.

Charles E. Whittaker:

Look what I just (Inaudible) with the acknowledging of the right to strike in all (Inaudible) of dispute we need to reach a decision to be done (Inaudible)

Earl Warren:

I thought we’d finish the argument on this side before we — before we adjourn, if you —

Charles E. Whittaker:

(Inaudible)

M.E. Boiarsky:

Your Honor, it is our position that there is no restriction upon the right to strike placed in subsection three.

We say that that so for as the local and district disputes are concerned that there is a requirement under subsection three that those matters be processed as the contract provides namely to the grievance machinery if it is local if it is national in character then it is done by the process of pre-collective bargaining as heretofore practiced in the industry.

Now the word exclusive and again I reiterate that it was that — that it is one thing to agree to process grievances through the grievance machinery.

It is one thing to say that if the dispute is national in character that it will be done through the collective bargaining as heretofore practiced, but it is something entirely different to say that during the processing of those disputes, that the unions and the miners are committed to a no-strike condition.

Earl Warren:

We will recess now Mr. —