not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income to be derived therefrom as well as the probable safety of their capital.'
It appears to the Court that these identical factors should be considered by a court in reviewing an application by fiduciaries to purchase real estate. There are no appellate authorities to guide the court in the determination of this issue, except the dictum of Chief Judge Magruder in Copra v. Suro, supra, 236 F.2d at page 115, that Congress intended to give the district court a general equity power over the welfare funds whose life in effect depends upon the permissive exception of Section 302(c)(5).
There are no Federal cases interpreting this aspect of Section 302. By analogy, however, the language of Mr. Justice Douglas in the case of Textile Workers Union of America v. Lincoln Mills, 1957, 353 U.S. 448, 77 S. Ct. 912, 1 L. Ed. 2d 972, becomes important. In that case the Supreme Court decided that in an action under Section 301(a) the substantive law to be applied is Federal law which the courts must fashion from the policy of our national labor laws and that Federal interpretation of the Federal law would govern. However, this significant language is added at page 457 of 353 U.S., at page 918 of 77 S. Ct.:
'But state law, if compatible with the purpose of § 301, may be resorted to in order to find the rule that will best effectuate the federal policy. See Board of Commissioners of Jackson County v. United States, supra, 308 U.S. (343), at pages 351-352, 60 S. Ct. (285), at pages 288-289 (84 L. Ed. 313). Any state law applied, however, will be absorbed as federal law and will not be an independent source of private rights.
'It is not uncommon for federal courts to fashion federal law where federal rights are concerned. See Clearfield Trust Co. v. United States, 318 U.S. 363, 366-367, 63 S. Ct. 573, 574-575, 87 L. Ed. 838; National Metropolitan Bank v. United States, 323 U.S. 454, 65 S. Ct. 354, 89 L. Ed. 383. Congress has indicated by § 301(a) the purpose to follow that course here. There is no constitutional difficulty. Article III, § 2, extends the judicial power to cases 'arising under * * * the Laws of the United States * * *.' The power of Congress to regulate these labor-management controversies under the Commerce Clause is plain. Houston, East & West Texas R. Co. v. United States, 234 U.S. 342, 34 S. Ct. 833, 58 L. Ed. 1341; National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S. Ct. 615, 81 L. Ed. 893. A case or controversy arising under § 301(a) is, therefore, one within the purview of judicial power as defined in Article III.'
Since there are no Federal statutes or decisions covering the particular problem before the Court, we must look to the law of Pennsylvania for guidance. The case of Geron v. Kennedy, 1955, 381 Pa. 97, 112 A.2d 181, Musmanno, J., holds generally that where discretion is conferred upon the trustee with respect to the exercise of a power, its exercise is not subject to control by the court, except to prevent an abuse by the trustee of his discretion. That case involved the payment of a pension under the Anthracite Health and Welfare Fund of the United Mine Workers of America.
Section 821.10 of the Fiduciaries Investment Act of 1949 is based upon Section 41(a)(2) of the Fiduciaries Act of 1917. There appear to be no Pennsylvania appellate cases interpreting this section. I can only conclude, therefore, that Section 10 of the Fiduciaries Investment Act was enacted in order to give a court of competent jurisdiction an opportunity to determine whether a proposed investment in real estate would in fact be an abuse of discretion on the part of the trustee. The question then presented in this petition would seem to be is the investment of $ 45,000 of trust funds, which would not only give the interested fund adequate quarters but by projected savings liquidate the investment within ten years, an abuse of discretion on the part of the trustees? In essence my inquiry is as to the sufficiency of the presentation of the reasons which prompted the determination of the trustees to make the purchase and particularly the question of good faith of the trustees in their unanimous determination.
There has been no challenge to the underlying security which the Court finds to be entirely adequate. There has been no valid objection taken to the business judgment of the trustees in arriving at their conclusion. It is my conviction and finding, after considering all of the testimony adduced, that the action of the trustees was in good faith, was calculated to and undoubtedly will promote the expeditious and economical operation of the fund, and that the prayer of the petition should be granted.
An attempt was made on the part of the objectors to expand the scope of this proceeding to include an investigation into the adequacy of benefits under the welfare fund and a challenge to the legal propriety of some of the provisions of the welfare agreement. No answer was filed by the objectors and I do not conceive it to be the duty of the Court to pass upon these questions not raised by proper and formal pleadings. If the objectors feel aggrieved with the sufficiency of the benefits paid under the plan, the trust agreement itself provides certain procedures for resolving these differences. They cannot be made part of the present controversy.
An appropriate order may be submitted by the petitioners in accordance with the foregoing opinion.