343 F.

2d 872

UNITED BROTHERHOOD OF CARPENTERS AND

JOINERS OF AMERICA, and J. O. Mack, individually and as
Executive Board Member of the United Brotherhood of
Carpenters and Joiners of America, Appellants and CrossAppellees,
v.
Malcolm BROWN, Hubert Black, C. E. Klag, and Howard
Lane, Appellees and Cross-Appellants.
No. 7943.
No. 7974.

United States Court of Appeals Tenth Circuit.

March 23, 1965.

COPYRIGHT MATERIAL OMITTED Richard R. Barnes, of Ratner,

Mattox & Ratner, Wichita, Kan. (Payne H. Ratner, Wichita, Kan., Francis
X. Ward and William A. McGowan, Washington, D. C., on the brief), for
appellants and cross-appellees.
Edward F. Arn and Milo M. Unruh, Wichita, Kan. (Richard F. Mullins, H.
R. Kuhn and Louis W. Cates, Wichita, Kan., on the brief), for appellees
and cross-appellants.
Before PICKETT, HILL and SETH, Circuit Judges.
HILL, Circuit Judge.

This suit was brought in the court below under the provisions, and to obtain
relief for alleged violations, of the Labor-Management Reporting and
Disclosure Act of 1959, 29 U.S.C.A. 401 et seq. (hereinafter referred to as
the Act). The defendants below have appealed in No. 7943 from that portion of
the judgment adverse to them and the plaintiffs below have cross-appealed in
No. 7974 from the portion of the judgment adverse to them. The plaintiffsappellees are individual members in good standing of Local Union No. 201 of

the United Brotherhood of Carpenters and Joiners of America (hereinafter

referred to as Local 201). The defendant-appellant, United Brotherhood of
Carpenters and Joiners of America (hereinafter referred to as United
Brotherhood), is a national labor union organization with which Local 201 is
affiliated. The defendant-appellant, J. O. Mack, is an agent and employee of
United Brotherhood and was appointed by it on April 4, 1963, to act as Trustee
for Local 201. Local 201 is, of course, the local union organization and it is the
only such local union situated in Wichita, Kansas.
2

The record in this case discloses that in the latter part of 1960 Local 201, by
letter application to the General President of United Brotherhood, initiated a
movement to form and organize a district council which was to be composed of
the local unions in six Kansas cities located in the general area around Wichita,
Kansas. The primary reason for the organization of such a district council was
to attempt to fully utilize the work force on various missile sites in the area and
to supply contractors on those sites with an adequate force of carpenters. One of
the benefits accruing to members of the local unions by organizing the district
council was that the members of a local union could go anywhere in the
territory of the council, even into that of another local union, and work without
being required to pay the usual "journeymen's permit" or "service permit" fee
that would be charged without a district council. Thus, the members of Local
201 would gain substantial benefits from the formation of a district council
since Local 201 was the largest local in the area and only three of the missile
sites were in its territory.

Upon receiving the application, the General President assigned Mack to assist
the local unions in forming the proposed district council. In addition, some of
the members of Local 201 visited other local unions in the area to explain the
advantages of having a district council. The minutes of Local 201 reflect that a
special call meeting of the local was held on October 18, 1960, for the purpose
of having an election on the issue of whether a district council should be
organized in the area. The members of Local 201 voted 53 to 9 in favor of the
proposal to organize such a council. At a later meeting on December 29, 1960,
the members of Local 201 elected nine delegates to represent them and
participate in the organization of the council.

Local 201's delegates met with the delegates from the other local unions in the
area on January 14, 1961, and organized what is known as the Ark Valley
District Council of the United Brotherhood (hereinafter referred to as District
Council). At this same meeting, one of the delegates from Local 201 was
elected President of the Council and other of the local's delegates were also
elected to office. In addition, bylaws for the District Council were drawn up and

ultimately approved.1 Section 3 of those bylaws provides that the District

Council "* * * shall be the central governing body and shall have legislative
and executive powers on all matters relating to the general interest and welfare
of our Local Unions and their members. The Council shall have the power to
establish uniform dues * * *." Section 14 provides: "The revenue of this
District Council shall be derived from the following sources: Per Capita tax
$4.00 for each rank and file member in good standing of each Local Union
affiliated with the District Council * * *." Section 31 provides: "The monthly
dues in this District Council shall be Eight Dollars ($8.00) * * *." It is not clear
from the record but apparently the effect of those provisions was to establish a
uniform monthly dues rate for each member of a local union of $8.00 and, out
of that amount, a per capita tax of $4.00 per month for each member was to be
paid to the District Council. Such a per capita tax is generally paid periodically
to the parent labor organization, i. e., the District Council in this case, and is a
charge against the local union, not its members, which is in lieu of a dues
assessment. It should be noted here that the plaintiffs were not delegates to the
January 14 meeting, at which the District Council was organized.
5

Thereafter, a post-card notice was sent to the members of Local 201 advising
them that a meeting would be held on January 26, 1961, to "* * * approve the
By-Laws and Working Rules of the Ark Valley District Council, and any other
Legal Business that may come before the house." The minutes of that meeting
reflect a 58 to 26 vote in favor of raising the members' monthly dues by $2.20
per person, or to a total of $8.00 per person as required by the proposed bylaws
of the District Council; but do not clearly show whether or not the Council's
bylaws were approved by the membership of Local 201.2 In any event, it was
stipulated in open court at the trial below that Local 201 approved the bylaws in
question. While the record is silent as to the other plaintiffs, it clearly shows
that Klag had knowledge of this meeting but did not attend it. And, some of the
members of Local 201 did work in the territory of other local unions without
being required to pay a fee for doing so.

It is not clear from the record whether increased dues were thereafter collected
from the members of Local 201, but it was stipulated that the per capita tax was
paid to the District Council. However, before any appreciable time had elapsed
a dispute arose over the matter of increasing dues and some of the members of
Local 201 questioned the validity of the January 26, 1961, election to raise
them. The grievance was submitted to the General President of the United
Brotherhood and he determined that it was a valid election. Nevertheless, the
same group of members remained unsatisfied and they demanded another
election. On July 6, 1961, at a meeting of Local 201 called for that purpose, a
motion was made and seconded to raise the dues from $5.80 to $8.00 per month

but it was defeated by a secret ballot vote of 91 to 26. The matter of raising the
dues again came before a meeting of Local 201 on September 7, 1961, and it
was again defeated by a secret ballot vote of 94 to 51. On October 19, 1961, a
meeting of Local 201 was called for the purpose of voting to disaffiliate from
the District Council. The minutes of that meeting show that the vote was 84 to
29 in favor of withdrawing or disaffiliating from the District Council and, also,
that legal proceedings were to be commenced to accomplish that end.
7

United Brotherhood took the position that the constitutions and bylaws of the
respective organizations did not authorize or permit the withdrawal of a local
union once the local had become affiliated with a district council and therefore
it did not recognize the attempted disaffiliation of Local 201. Consequently, on
December 16, 1961, appellants issued a written bulletin to all members of Local
201 stating that the local must commence collecting the $8.00 per month dues,
beginning January 1, 1962, in compliance with the various letters and telegrams
from the national office directing it to remain affiliated with the District
Council. A majority of the members of Local 201, who attended the regular
meetings and voted, were not in favor of the raise in dues. The controversy
between Local 201 and United Brotherhood over such a raise culminated on
May 6, 1962, at which time several members of Local 2013 brought an action
against the local's officers in the District Court of Sedgwick County, Kansas, to
enjoin the latter from paying any money from increased dues to the District
Council. The state court granted the injunction preventing the payment of any
money to the District Council for so long as Local 201 remained disaffiliated
from it. In so doing, the court found and determined that: There were two
provisions for the affiliation of local unions with a district council in the
constitution and laws of United Brotherhood; section 26A provided for
mandatory affiliation and section 26B, under which Local 201 was affiliated
with the District Council, provided for the permissive organization of district
councils; Local 201 terminated its affiliation with the District Council on
October 19, 1961; and upon such disaffiliation, the dues reverted back to $5.80
but prior to that time, or during the period of affiliation, the dues were governed
by the bylaws of the District Council and were $8.00 per month.

Subsequent to that decision and on August 2, 1962, the General President of

United Brotherhood, acting under section 26B, ordered a mandatory affiliation
of Local 201 with the District Council. He stated that the good of the members
in the area required the continued existence and effective functioning of the
District Council and found that "* * in order to function effectively for the
benefit of all members in the area, it is essential that Local Union 201 become
and remain a member of the Ark Valley District Council." The record does not
show whether Local 201 took any action in response to this directive; but,

apparently it did not because on September 24, 1962, the General President
again ordered Local 201 to immediately affiliate with the District Council and
raise its dues from $5.80 to $8.00 per month as of August 1, 1962. The record is
silent as to whether any action was taken in response to this order. On
November 27, 1962, the General President, by telegram, again ordered Local
201 to affiliate and "square up their arrearages" in dues to the District Council
or he would have "* * * no other recourse than to refer the entire matter to the
General Executive Board for whatever action they see fit which could result in
suspension of Local 201. * * *" The Local 201 minutes of November 29, 1962,
reflect that the members voted 43 to 13, upon motion by Black, to reply to this
telegram by stating that at all meetings held in the last six months "* * * the
majority of members present have voted against anything pertaining * * *" to
the District Council. The record does not show whether such a reply was in fact
sent to the General President. But, on December 4, 1962, he issued a final order
directing Local 201 to affiliate and raise monthly dues or immediate action
would be taken by the General Executive Board. Local 201's response was to
appoint a committee of its members for the purpose of preparing to fight the
United Brotherhood in court, if necessary, on the matters of affiliation and raise
in dues and the committee was authorized to retain counsel.
9

The General President referred the matter to the General Executive Board and a
committee thereof was appointed to hold a hearing in Wichita on the dispute.
The committee was appointed and the hearing was held pursuant to section 10K
of the United Brotherhood's Constitution and Laws.4 The Executive Committee
issued a report on March 26, 1963, wherein it recommended that: (1) Local 201
be placed under the complete supervision of the United Brotherhood's General
Office; (2) the supervisor appointed to carry out such supervision should
remove all of Local 201's officers and appoint new ones; and (3) the directives
of the General President, mentioned above, be carried out in full.

10

On April 1, 1963, the General President notified the president of Local 201 that
pursuant to the recommendations of the Executive Board, he had appointed the
appellant, Mack, as Trustee of Local 201 and Mack would take complete
supervision over all of its affairs, effective April 4, 1963.5 On the same date
Mack issued a notice to all officers and members of Local 201 advising them of
his appointment as Trustee of the local and stating that effective immediately
all officers of the local were suspended from office; that he was taking over
complete control of all of the local union's finances and affairs; and that the
regular weekly meetings were changed to two per month. At the local's regular
meeting on April 4, Mack formally took over Local 201 and discharged all of
the incumbent officers. At this and subsequent meetings of Local 201, Mack
also took the following actions: Reduced the meetings from one each week to

two each month; appointed new temporary officers; stated that no motions from
the floor at future meetings would be entertained; appointed delegates to the
District Council and State Labor Council meetings; stated that during the
period of trusteeship there would be no voting by members on local union
business; stated that by order of the General President, Local 201 was affiliated
with the District Council; raised dues from $5.80 per month to $8.00 per month
retroactive to August 1, 1962; placed a real estate mortgage upon the local's
building to secure a loan that was used to pay the arrearages due the District
Council; paid the per capita taxes to the District Council as they thereafter
accrued under the increased rate; paid the various monthly bills of the local
union; reduced the rent of the District Council for space in the local union's
building; negotiated a new labor contract with employers on behalf of the
members of the local; and preferred charges of "causing dissension" in the
union against some members of Local 201, as a result of which at least one of
them, Klag, was suspended from attending meetings for an indefinite period of
time. It was stipulated that all of these actions were taken without a vote, secret
or otherwise, of the members of Local 201 and that at all times Mack was
acting as agent for and representative of United Brotherhood.
11

Thereafter and in compliance with the Trustee's orders, the temporary officers
of Local 201 made several payments of local union funds to the District
Council. It was stipulated that the sum of $28,647 was paid during the period
of the trusteeship. As a result of the first payment, the plaintiffs in the state
court action filed an accusation in contempt alleging that such payment to the
District Council was in violation of the injunction entered by the court. A
hearing was had before the state trial judge and, in holding that the officers of
Local 201 were not in contempt, he found: The General President had authority
under section 26B6 of the Constitution and Laws of the United Brotherhood to
form district councils in areas not covered by the mandatory provisions of
section 26A7 such authority carried the inherent power to require the local
unions in the affected area to affiliate with a district council so formed by order
of the General President; and the General President by his order of August 2,
1962, directed all locals in the area, including Local 201, to affiliate with the
District Council, which was to continue to exist for the good of the
Brotherhood. The state court therefore held that Local 201 was affiliated with
the District Council as of August 2, 1962. That decision was affirmed upon
appeal by the Supreme Court of Kansas. Roush v. Hodge, 193 Kan. 473, 394
P.2d 101.

12

Prior to the time of the hearing on the contempt accusation and on May 17,
1963, this action was commenced in the court below and it was alleged, inter
alia, that the placing of Local 201 under the trusteeship of Mack was invalid

and in violation of Section 302 of the Act, 29 U.S. C.A. 462, and that the
heretofore mentioned actions of Mack, as well as others, were themselves
violations of various sections of the Act. Plaintiffs prayed for the following
relief: A dissolution of the trusteeship; reinstatement of the members of Local
201 alleged to have been unlawfully suspended by Mack as Trustee; a remission
of all fines and assessments levied by appellants upon members of Local 201
during the trusteeship; an accounting as provided for in section 501 of the Act,
29 U.S.C.A. 501, for the payments made to the District Council; and for
reasonable attorney fees.
13

It was stipulated at the trial below that the January 26, 1961, vote to raise the
monthly dues was by a standing vote, not by secret ballot, and that the
trusteeship was imposed for the following reasons: (1) The failure of Local 201
to raise its dues; (2) the failure to affiliate with the District Council; and (3)
appellants' contention that certain members of Local 201 were causing
dissension in the union.

14

The trial court found and held that: The trusteeship was invalid and should be
revoked; the members of Local 201 who were suspended by appellants should
be reinstated; all fines paid by them should be remitted by appellants; the
increase in dues from $5.80 to $8.00 per month was not by secret ballot and was
unlawful; the excess of $2.20 collected each month from the members from and
after August 1, 1962, should be remitted and paid to the members; an
accounting should be made by appellants; the members of Local 201 should be
restored to their right to administer their own affairs and elect officers;
appellants should be required to remove the cloud created on the title to the
local's building by the mortgage executed by Mack; and jurisdiction should be
retained to supervise the accounting and clearing of title to the real estate.
Judgment was entered accordingly and defendants below appealed. The trial
court also denied plaintiffs' claim for attorney fees and further found and held:
The state court's determination that Local 201 became affiliated with the
District Council by reason of the General President's directive of August 2,
1962, was res judicata and therefore Local 201 was obligated to pay its "per
capita tax" owing to the District Council; and for this reason the money paid to
the District Council at Mack's direction was a valid debt and should not be
recovered by plaintiffs. Judgment was rendered in accordance therewith and the
plaintiffs cross-appealed.

15

Appellants contend that the judgment must be reversed and the action
dismissed because plaintiffs have not exhausted the administrative remedy
available to them under the provisions of section 304(a) of the Act, 29 U.S.C.A.
464(a).8 The argument is that plaintiffs were required to first file a complaint

with the Secretary of Labor in accordance with section 304(a) and exhaust that
remedy before proceeding in court with this lawsuit. There is authority to
support that argument. E. g., Cox v. Hutcheson, 204 F.Supp. 442 (S.D.Ind.
1962); Flaherty v. McDonald, 183 F. Supp. 300 (S.D.Cal.1960) Rizzo v.
Ammond, 182 F.Supp. 456 (D.N.J.1960). But, there is also authority supporting
the view that a local union member need not exhaust the administrative remedy
provided in section 304(a) before bringing suit in the district court under that
section. Parks v. International Brotherhood of Electrical Workers, 4 Cir., 314
F.2d 886, 923, 924, cert. denied, 372 U.S. 976, 83 S.Ct. 1111, 10 L.Ed.2d 142;
Hotel and Restaurant Employees and Bartenders International Union v. Del
Valle, 1 Cir., 328 F.2d 885, 886, cert. denied, 379 U.S. 879, 85 S.Ct. 146, 13
L.Ed.2d 86; Forline v. Helpers Local No. 42, 211 F.Supp. 315 (E.D.Pa.1962);
Vars v. International Brotherhood of Boilermakers, 204 F.Supp. 245
(D.Conn.1962); Executive Board, Local Union No. 28, I. B. E. W. v.
International Brotherhood of Electrical Workers, 184 F.Supp. 649
(D.Md.1960). We believe the latter view is the better rule for the reasons set
forth in Judge Watkins' excellent analysis of section 304(a) in the Executive
Board case, supra, 184 F.Supp. at 655-659.9 We can add nothing to that
discussion and accordingly hold that appellants were not required to exhaust the
administrative remedy provided in section 304(a) before instituting this action.
16

Plaintiffs assert that in any event, they have complied with the statute and
exhausted the administrative remedy by complaint to the Secretary of Labor,
which complaint was denied and they were advised to seek redress in the
district court. It is true that a complaint was made to the Secretary but it appears
from the record that plaintiffs were then complaining of alleged violations of
section 101(a) (3) (A) of the Act, 29 U.S.C.A. 411(a) (3) (A), and section
303(a) of the Act, 29 U.S.C.A. 463(a). The first section relates to the raising
of local dues upon a majority vote by secret ballot and the latter section relates
to improper activities by a trustee during the period of trusteeship. Neither of
them are concerned with the validity of the trusteeship and the record does not
show that the specific issue of validity was ever presented to the Secretary.
And, it should be noted here that the enforcement provisions of section 304(a)
are inapplicable to remedy alleged violations of section 101 or, for that matter,
any other sections except those contained in subchapter IV, concerning
trusteeships. Cf. Calhoon v. Harvey, 379 U.S. 134, 85 S.Ct. 292, 13 L.Ed.2d
190. We cannot therefore conclude on the record before us that the plaintiffs
have exhausted their administrative remedy but must rest our decision on the
basis that such remedy need not be exhausted.

17

Appellants also contend that the judgment must be reversed and the action
dismissed for the reason that the plaintiffs have failed to exhaust the internal

remedies afforded by United Brotherhood's Constitution and Laws as required

by section 101(a) (4) of the Act, 29 U.S.C.A. 411(a) (4). We do not agree.
Section 101(a) (4) is applicable only where individual violations of the socalled Bill of Rights provisions are alleged and does not apply where, as here,
the validity of a trusteeship is being challenged. As the Supreme Court said in
Calhoon v. Harvey, supra, 379 U.S. at 138, 85 S.Ct. at 295: "Jurisdiction of the
District Court under 102 of Title I depends entirely upon whether this
complaint showed a violation of rights guaranteed by 101(a) (1), * * *." In
any event, the requirement that internal remedies be exhausted is subject to
certain exceptions that are applicable here. E. g., Calagaz v. Calhoon, 5 Cir.,
309 F.2d 248; Harris v. International Longshoremen's Association, Local 1291,
3 Cir., 321 F.2d 801; Libutti v. Di Brizzi, 2 Cir., 337 F.2d 216.
18

The basic issue in this case is, of course, the validity of the trusteeship imposed
upon Local 201 by United Brotherhood. That issue must be determined by
reference to section 302 of the Act, 29 U.S.C.A. 462, which provides that a
trusteeeship may be established and administered by a labor organization over
its subordinate body "* * * only in accordance with the constitution and bylaws
of the organization which has assumed trusteeship * * *." The statute is
mandatory in its terms and has nullified or removed whatever inherent power an
international union had prior to its enactment to impose such a trusteeship.
Unless the constitution and by-laws of the parent organization make provision
therefor, such organization has no power to establish a trusteeship over a
subordinate body. Flight Engineers International Association v. Continental Air
Lines, Inc., 9 Cir., 297 F.2d 397, cert. denied, 369 U.S. 871, 82 S.Ct. 1141, 8
L.Ed.2d 276. An examination of the constitution and bylaws of United
Brotherhood discloses that there is no specific provision authorizing it to
impose a trusteeship on any of its subordinate local unions.

19

It is suggested, however, that United Brotherhood's power to impose the

trusteeship in question may be derived from the general authority granted to it
in sections 6B10 and 6D11 of its Constitution and Laws, as implemented by the
provision in section 10K, which empowers the General Executive Board "* * *
to take such action as is necessary and proper for the welfare * *" of the
national union. Appellant's argument is that while its constitution and laws do
not specifically grant it the authority to impose trusteeships, such authority may
be implied from sections, 6B, 6D and 10K and that implied authority is
sufficient. We do not agree. The legislative history of section 302 of the Act
clearly discloses an intent on the part of Congress "* * * that there should be a
`limitation on the right of internationals to place local unions in trusteeship'"
and one of those limitations was that "* * * the trusteeship must conform to the
constitution and bylaws of the labor organization." 2 U.S.Code Cong. & Adm.

News, 86th Cong., 1st Sess., 1959, pp. 2333-2334. Obviously, a trusteeship
cannot conform to the constitution and bylaws of a labor organization where, as
here, the constitution and bylaws make no provision for trusteeships. We think
the statute not only contemplates, but requires, more than some vague general
reference to the effect that the parent organization shall have power to take such
action as is necessary and proper for its welfare. It requires at the very least that
the organization's constitution and bylaws set forth the circumstances under
which a trusteeship may be established over its local unions and the manner or
procedure in which it is to be imposed. It goes without saying, of course, that
the constitution and bylaws in that respect must not conflict with applicable
provisions of the Act.
20

A second limitation upon the imposition of trusteeships is that under section

302 it must be for one of the following purposes: (1) To correct corruption or
financial malpractice; (2) to assure the performance of collective bargaining
agreements or other duties of a bargaining representative; or (3) to restore
democratic procedures, or otherwise carry out the legitimate objects of the labor
organization. Congress recognized that the use of trusteeships by an
international union is a particularly effective device for the maintenance of
order within the organization and that "* * * they have been widely used to
prevent corruption, mismanagement of union funds, violation of collective
bargaining agreements, infiltration of Communists; in short, to preserve the
integrity and stability of the organization itself. * * *" But, Congress also
recognized that "* * * in some instances trusteeships have been used as a means
of consolidating the power of corrupt union officers, plundering and dissipating
the resources of local unions, and preventing the growth of competing political
elements within the organization." 2 U.S. Code Cong. & Adm. News, 86th
Cong., 1st Sess., 1959, p. 2333. To preserve the legitimate use of trusteeships,
Congress in enacting section 302 enumerated the purposes for which a
trusteeship could be imposed in language of a broad and general nature.
However, in order to prevent their misuse, Congress obviously intended those
purposes to have limitations as well and therefore in determining whether a
particular case meets the test, the statute must be construed in the light of the
various other provisions of the Act.

21

The purpose of the Act as a whole is not only to stop and prevent outrageous
conduct by thugs and gangsters but also to stop lesser forms of objectionable
conduct by those in positions of trust and to protect democratic processes within
union organizations. 29 U.S.C.A. 401; Nelson v. Johnson, 212 F.Supp. 233
(D.Minn.1962), aff'd, 8 Cir., 325 F.2d 646; Gartner v. Soloner, 220 F.Supp. 115
(E.D.Pa.1963). To accomplish that purpose, a "Bill of Rights of Members of
Labor Organizations" was incorporated into the Act. It provides, among other

things, that every member of a union shall have equal rights and privileges
within the organization to nominate candidates, vote in union elections, attend
union meetings and participate in the voting and deliberations at such meetings,
29 U.S.C.A. 411(a) (1); that every union member shall have the right to
assemble and meet freely with other members and express his views at
meetings of the organization, 29 U.S.C.A. 411(a) (2); that the rates of dues by
members of a union in effect on September 14, 1959, shall not be increased in
the case of a local union except upon a majority vote by a secret ballot and after
reasonable notice and in the case of a national or international, by a majority
vote of delegates at a regular convention, 29 U.S.C.A. 411(a) (3); that every
member of a union shall have the right to institute an action in court or before
an administrative agency under appropriate circumstances, 29 U.S.C.A. 411
(a) (4); and that every member shall have the right to certain safeguards before
being fined, suspended, expelled or otherwise disciplined, 29 U.S.C.A. 411
(a) (5). Thus, the rights of individual members of a labor union are protected by
federal statute with a view to allowing those members to conduct local matters
with a minimum of outside interference. In short, local affairs are to be
governed by local members under democratic processes.
22

With this background in mind we turn to a consideration of the purposes for

which the instant trusteeship was imposed. The trial court found, and the
evidence confirms, that United Brotherhood established the trusteeship over
Local 201 because it would not affiliate with the District Council and would not
raise its dues. The court also found, and the evidence shows, that it was not
imposed because of "dissension" within the local union. The result is that the
trusteeship was established for the purposes of affiliating Local 201 with the
District Council and raising the dues of its membership. In determining whether
these are proper purposes under section 302, we must remember that a majority
of the local membership consistently voted against having anything to do with
the District Council and on at least two occasions, by secret ballot, voted
against the proposal to raise the monthly dues. We must also remember that the
provisions of 29 U.S.C.A. 411 were designed to afford them protection in that
respect. Under these circumstances, we have no hesitancy in holding that the
purposes for which this trusteeship was imposed do not fall within any of the
categories set forth in section 302. Beyond question, they do not come under
the category of correcting corruption or financial malpractice and have nothing
whatever to do with collective bargaining. It is also clear to us that the specified
purposes are not within the category of restoring democratic processes or
otherwise carrying out the legitimate objects of United Brotherhood. To the
contrary, the imposition of the trusteeship in question could have no other effect
than to stifle democratic processes by, in effect, voiding the results of the
properly conducted elections on the issues involved. If we were to hold that the

asserted purposes were proper, this court would be placed in the position of
allowing a national union to establish a trusteeship over a local union because
the members of the local union insisted upon exercising a right granted them by
statute. This would in effect nullify and frustrate not only the plain purpose but
the express terms of the Act.
23

It is true that there is a presumption as to the validity of a trusteeship for a

period of eighteen months from the date of its establishment. 29 U.S.C.A.
464(c). But, it is quite clear from the statute itself and from the legislative
history that Congress intended for the presumption of validity to be available
only where the trusteeship has been established "* * * in conformity with the
procedural requirements of its [the labor organization's] constitution and bylaws
and authorized or ratified after a fair hearing either before the executive board
or before such other body as may be provided in accordance with its
constitution or bylaws * * *." 29 U.S.C.A. 464(c); 2 U.S.Code Cong. &
Adm.News, 86th Cong., 1st Sess., 1959, p. 2334. Since the trusteeship in this
case was not established in conformity with the constitution and bylaws, the
presumption is not available to appellants.

24

Appellants contend that even if we find the trusteeship invalid under the
provisions of the Act, the judgment must still be reversed because it was
determined to be valid in the prior state court action and that determination is
binding upon this court under the doctrine of res judicata. The trouble is that
the state court made no such determination. The trusteeship had not been
imposed over Local 201 at the time judgment was entered granting the
injunction in the state court and therefore its validity could not possibly have
been determined. It is true that the trusteeship was established prior to the time
the contempt accusation was filed in the state court. But, this lawsuit was also
filed prior to that time and in holding that the injunctive order had not been
violated the state trial judge said: "The actions of the United Brotherhood in the
placing of Local 201 under the direction of a trustee, and the subsequent actions
of the trustee and his agents or appointees have been challenged in another legal
action that is pending in the United States District Court, and such questions are
no part of this action, and the legality of same is not before this court." It is
apparent that the state court did not purport to pass upon the validity of the
trusteeship and therefore appellants' claim of res judicata is without merit.

25

We conclude that the trusteeship in question is invalid under the provisions of

section 302 of the Act for two distinct and separate reasons. Having so
concluded, it necessarily follows that the trusteeship was void from its
inception and therefore the challenged actions of the Trustee during the period
of the trusteeship were also unauthorized and invalid unless they can be

sustained on some other legal basis. That, of course, brings us to the crossappeal by the plaintiffs below.
26

The first point raised on the cross-appeal relates to the right of the plaintiffs to
recover, on behalf of the members of Local 201, the sum of $28,647 paid out of
the local union's funds to the District Council. It is clear from the record that
the temporary officers of Local 201 made several payments to the District
Council out of local union funds upon the orders and at the directions of the
Trustee, Mack. It is also clear that the first payment in the amount of $11,294
represented the arrearages due the District Council from Local 201 for its per
capita tax for the period from October, 1962, to March, 1963. However, it is
not clear from the record whether the additional payments to the District
Council totaled $28,647 or whether that figure includes the $11,294 payment.
Nor is it clear what these additional payments were for although there is some
indication in colloquy between court and counsel at the trial of the case that
they represented the per capita tax due to the District Council from Local 201
for the period from and after March, 1963. The lower court made no findings of
fact on these matters and the case must be remanded for that purpose. The
question we must resolve then is how extensive those findings must be upon
remand.

27

The plaintiffs contend that the trial court erred in denying recovery of the
$28,647 because the payments of that sum to the District Council were made in
violation of section 501 of the Act, 29 U.S.C.A. 501, and without the
approval, consent or vote of the local union members. The argument is that the
payments were unauthorized because they were made upon the orders of a
Trustee who was invalidly appointed and, more than that, were made in
violation of the trust or fiduciary obligations imposed upon labor union
representatives by section 501(a). Plaintiffs point out that they obtained leave
of the court below upon verified application for good cause shown in
accordance with the requirements of section 501(b) and argue that they are
therefore entitled to an accounting of the $28,647 under that subsection.

28

The court below denied recovery of the payments made to the District Council
on the basis that the litigation in the state courts had established that the
payments under the trusteeship constituted a legal debt owing from Local 201
to the District Council and that such determination was conclusive in this case
under the doctrine of res judicata, thereby precluding any such recovery.
However, the court also held that there had been a raise in local dues from
$5.80 per month to $8.00 per month in violation of section 101(a) (3) of the
Act, 29 U.S. C.A. 411(a) (3) and therefore an accounting must be made by
the defendants as to the $2.20 increase. It is apparent that these rulings are in

conflict with each other. To resolve that conflict, we must first determine
whether res judicata is applicable.
29

This court has recently held that under "* * * the doctrine of res judicata the
final judgment of a court of competent jurisdiction upon the merits of a
controversy is conclusive as to the parties to the litigation and their privies and
it is a bar to any further litigation upon the same cause of action, either before
the same or any other tribunal. * * *" Mid-Continent Casualty Company v.
Everett, 10 Cir., 340 F.2d 65, 69. The state court litigation with which we are
concerned here was in a court of competent jurisdiction and the judgments
rendered have become final. There is admittedly privity between the parties to
the state court proceedings and the parties to this action. Thus, the doctrine of
res judicata is applicable here unless there is merit to the further argument
made by plaintiffs that its application is precluded under the law by reason of
changed circumstances and equitable considerations.

30

Assuming, without deciding, that the plaintiffs' argument is a correct statement

of the law, it is not controlling here. There is nothing in the record to show a
sufficient change in circumstances since the entry of the state court judgments.
It is true that the trusteeship has been held invalid but that was not an issue in
the state court proceedings and has no bearing upon the issues decided therein.
There is, likewise, an insufficient showing of equitable considerations.
Plaintiffs seem to assume that all of the equities are in their favor and blandly
assert that to apply res judicata in this case "* * * is to oust equity from its
historical function of serving justice." But, we cannot ignore the fact that Local
201 was the prime influence in organizing the District Council, participated in
its organization and even accepted the benefits of its existence by going into the
territory of other local unions to work on projects located there without being
required to pay the usual permit fee to such local unions. Under these
circumstances, we must conclude that the doctrine of res judicata is fully
applicable and the issues determined in the state court proceedings are
conclusive on the parties to this action.

31

An examination of the state court proceedings show that the state courts made
the following rulings: The General President of United Brotherhood was given
authority by section 26B of the Constitution and Laws to form district councils
in areas not covered by section 26A; this authority carried with it the inherent
power to require local unions in the affected area to affiliate with a district
council formed by the General President; on August 2, 1962, the General
President exercised that power and ordered Local 201, and other local unions in
the area, to affiliate with the District Council; by reason of such order Local
201 became affiliated with the District Council as of August 2, 1962; and the

temporary officers of Local 201 did not violate the injunctive order and were
not in contempt of that order when they made the payment of $11,294 to the
District Council. Implicit in the latter ruling, is a holding and determination by
the state court that such payment was validly made to the District Council.
Right or wrong, those rulings are binding here and may not be relitigated in this
case. Therefore, there can be no question in this case but what Local 201 is
affiliated with the District Council and has been so affiliated since August 2,
1962. And there can be no question but what the $11,294 payment was validly
made to the District Council.
32

It is suggested, however, that unless the so-called increased dues of $2.20 are
ordered returned to the members of Local 201, the result will be a raise or
increase in local dues without a majority vote by secret ballot after reasonable
notice, in violation of section 101 (a) (3). If this be so, it is directly attributable
to the attempt to litigate the issues in two different forums. But, we are not
persuaded that such is the case for there is a clear distinction between local
"dues", as that term is used in the statute, and "per capita tax", which is
involved in the instant lawsuit. Ranes v. Office Employees International Union,
Local No. 28, 7 Cir., 317 F.2d 915. As the court observed in that case, the right
granted to local union members under section 101(a) (3) cannot be used to veto
the valid act of an international union. Thus, as a result of being affiliated with
United Brotherhood, Local 201 is bound by the Brotherhood's Constitution and
Laws which have been, rightly or wrongly, interpreted so as to authorize the
General President to form a district council. And, as a result of being affiliated
with a District Council so formed, Local 201 is bound by the Council's bylaws
providing for the payment by the local of per capita taxes.

33

We therefore conclude that the $11,294 payment to the District Council may
not be questioned in this proceeding. But, that is not true as to the payments
made subsequent to the judgment in the state court proceedings because the
state court did not rule upon them and the record does not clearly show that
those payments were for per capita tax. It is alleged that they were made in
violation of section 501(a) and consequently plaintiffs are entitled to an
accounting of those payments under the provisions of section 501(b). If it
should develop on the accounting that the payments were for per capita tax no
recovery may be had by plaintiffs. If it should develop that they were not for
per capita tax, the plaintiffs should recover the amount so paid unless the
District Council desires to intervene and can prove a meritorious claim thereto.

34

The second point raised on the cross-appeal is whether plaintiffs are entitled to
attorney fees. The trial court denied such fees on the ground that Title I of the
Act, 29 U.S.C.A. 411-414, makes no provision for the allowance thereof.

However they may be allowed under section 501(b) which provides, in part: "*
* * The trial judge may allot a reasonable part of the recovery in any action
under this subsection to pay the fees of counsel prosecuting the suit at the
instance of the member of the labor organization and to compensate such
member for any expenses necessarily paid or incurred by him in connection
with the litigation." This statute leaves the matter of the allowance of counsel
fees in the sound discretion of the district court and therefore upon remand and
the accounting the trial judge must first determine whether plaintiffs are
entitled to any such fees under the provision quoted above and, if so, the
amount thereof.
35

Other contentions made by the parties have not been overlooked but have been
determined to be without merit.

36

The judgment below insofar as it may require an accounting of the $11,294

payment to the District Council and denies plaintiffs' claim for attorney fees is
reversed and the case is remanded for further proceedings in accordance with
this opinion. In all other respects, the judgment is affirmed.

Notes:
1

Section 26C of the United Brotherhood's Constitution and Laws provides that:
"District Council shall have the power to make Working and Trade Rules for
the government of the Local Unions and the Members of the United
Brotherhood working in their districts. Also, Laws governing strike and other
donations except sick donations, which shall in no way conflict with the
Constitution and Laws of the United Brotherhood, and must be adopted by a
referendum vote of the members of the Local Unions affiliated with the District
Council and approved by the First General Vice-President before becoming
law, and their representation shall be according to membership."

The pertinent portion of the minutes reads as follows:

"The membership is voting on the change of By-Laws of District Council
increasing the dues $2.20 making the dues $8.00 per month and if it loses they
will collect the 1% of a members weekly salary."

Appellees Klag, Black and Lane were among the plaintiffs in the suit. Appellee
Brown was not but he apparently is no longer a party to the instant action

That section reads as follows:

"Whenever it appears to the satisfaction of the General President that any Local
Union or member thereof, or any District, State or Provincial Council is acting
contrary to the welfare of the United Brotherhood of Carpenters and Joiners of
America, or that the interest of the United Brotherhood otherwise requires, he
may appoint a committee to hold a hearing, after due notice to such subordinate
body or member. Upon completion of the hearing, the committee shall report its
findings and recommendations to the General Executive Board and to the
member or subordinate body involved. The General Executive Board is
empowered to take such action as is necessary and proper for the welfare of the
United Brotherhood of Carpenters and Joiners of America, subject, however, to
the right of appeal to the next General Convention."

A "trusteeship" is defined in section 3(h) of the Act, 29 U.S.C.A. 402(h), as

follows:
"`Trusteeship' means any receivership, trusteeship, or other method of
supervision or control whereby a labor organization suspends the autonomy
otherwise available to a subordinate body under its constitution or bylaws."

Section 26B provides:

"District Councils may be formed in localities other than in cities where two or
more Local Unions in adjoining territory request it, or when in the opinion of
the General President the good of the United Brotherhood requires it. The
District Council so formed shall be governed by the same General Laws
governing District Councils in cities."

Section 26A reads as follows:

"Where there are two or more Local Unions located in one city, they must be
represented in a Carpenters' District Council composed exclusively of delegates
from Local Unions of the United Brotherhood; and they shall be governed by
the uniform District Council By-Laws and have power to make laws and trade
rules which is no way conflict with the Constitution and Laws of the United
Brotherhood, and approved by the Local Unions and the First General VicePresident. The General President shall have power to order such Local Unions
to affiliate with such District Council, and to determine the jurisdictional area
and trade autonomy of such District Council, subject to appeal."

That section provides as follows:

"Upon the written complaint of any member or subordinate body of a labor

organization alleging that such organization has violated the provisions of this
subchapter (except section 461 of this title) the Secretary shall investigate the
complaint and if the Secretary finds probable cause to believe that such
violation has occurred and has not been remedied he shall, without disclosing
the identity of the complainant, bring a civil action in any district court of the
United States having jurisdiction of the labor organization for such relief
(including injunctions) as may be appropriate. Any member or subordinate
body of a labor organization affected by any violation of this subchapter (except
section 461 of this title) may bring a civil action in any district court of the
United States having jurisdiction of the labor organization for such relief
(including injunctions) as may be appropriate."
9

See also the discussions in Anderson, Landrum-Griffin and the Trusteeship

Imbroglio, 71 Yale L.J. 1460, 1498-1500; Symposium on the LaborManagement Reporting and Disclosure Act of 1959 (Slovenko Ed.), pp. 453454, 460, 468-471; Levitan, Union Trusteeships The Federal Law and an
Inventory, 11 Lab. L.J. 1067, 1074; Shneidman, Union Trusteeships and
Section 304(a) of the Landrum-Griffin Act, 14 Lab.L.J. 553-563

10

"The right is reserved to the United Brotherhood through the International

Body to regulate and determine all matters pertaining to the various branches
and subdivisions of the trade."

11

"The right is reserved to establish jurisdiction over any Local or Auxiliary

Unions, District, State or Provincial Councils whose affairs are conducted in
such a manner as to be detrimental to the welfare of the members and to the
best interests of the International Body."