is disqualified from making future loans, and the amount of the loan unpaid, plus accrued interest, shall be charged against the member's interest in the Retirement Fund, but this is not to be construed as a waiver of other lawful methods of collection.
Under the facts and circumstances in this particular case, the Court is of the opinion that the contract between the plaintiffs and the defendants is a valid one, and that paragraph five of said contracts submitted especially to the Court for judicial determination, is valid, legal, and binding upon the parties to said contract, and that the Trustees under said contract have the right in their own discretion to make such loans as provided therein to the members of the Union having an interest in the same, as provided therein.
It appears to be the general rule that it is the duty of a trustee to invest funds entrusted to him if it is practicable to do so. 65 C.J.p. 795, par. 672. I find nothing in Section 302 which limits or otherwise regulates the making of loans of trust funds. That Congress contemplated the making of loans from the fund appears to be clear from the language of the section in question, the pertinent part of which reads as follows: 'Provided, That (A) such payments are held in trust for the purpose of paying, either from principal or income or both, * * * .' (Italics supplied.) Obviously, the making of payments from income contemplates that the money which is in the fund will earn a return.
Loans from trust funds to members would not be payments to members. The term 'payment' used in this section does not mean a loan. It is rather a settlement of a lawful claim which the member has against the fund created by the trust agreement and represents an annuity, pension or other form of benefit. Such payments are to be distinguished from loans. The loaning of money from the fund is simply a contractual arrangement brought about in the course of the prudent administration of the fund, with a view to making the fund productive and does not represent any settlement of a claim which a member may have against the fund.
A careful examination of Section 302 does not disclose any reason for denying to members the right to obtain these loans if the trustees consider such loans both prudent and safe. Therefore, it seems that the provisions of paragraph 5 of the proposed contract is consistent with Section 302 of the Act.
The Court sees no preclusion in law or spirit of law to using retirement funds to make loans to Union members, provided the trustees use their own good discretion in making the same, as provided in paragraph 5 of the contract between the parties to this action. In fact, the parties to said contract are agreeable to all the terms of the same, provided it is lawful to make such loans to the interested members, as therein set out.
This is somewhat a new question, and in determining the contract, including paragraph 5, to be valid, the Court does not want to be understood as having set a precedent for other similar contracts. Each contract will have to stand on its own terms and conditions, because such a privilege could be easily abused. Certainly it would not be within the law for trustees to permit the interested members to destroy such trust funds to the end that when a retirement should be available, the member would have already used and made way with the funds, and, therefore, the purpose of the law would be vitiated. The Court considers such funds as rather sacred, and it is the purpose of the law that they be available when due under the contract. It is a fine thing for a member to have set up and available when the retirement age comes a fund which will be both helpful and necessary.
Findings and Decree will be prepared by counsel for plaintiff and presented to the Court.
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