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LEWIS v. HARCLIFF COAL CO.

January 7, 1965

John L. LEWIS, Henry C. Schmidt and Josephine Roche, as Trustees of the United Mine Workers of America Welfare and Retirement Fund of 1950, Plaintiffs,
v.
HARCLIFF COAL COMPANY, Inc., a corporation, and Harcliff Mining Company, Inc., a corporation, Defendants



The opinion of the court was delivered by: DUMBAULD

Plaintiffs are trustees of the Welfare and Retirement Fund of the United Mine Workers of America and sue for royalty claimed by reason of production of coal by defendants during the period October 1, 1957-September 30, 1963.

Defendants in their answer set up nineteen defenses. These restate in different forms defendants' basic contention, that when they signed the contracts giving rise to the royalties claimed the UMWA organizer knew they were not able to pay the royalty stipulated and told them that it would be all right if they just paid whatever they could or felt like paying, rather than the amount specified in the contract.

 Plaintiffs have filed a motion for partial summary judgment to simplify the issues. The motion applies to Nos. 3-17, both inclusive.

 Plaintiffs have also filed objections to interrogatories. As the occasion for the information sought thereby may depend upon the scope of the defenses remaining in the case, it will be appropriate first to deal with the motion relating to the defenses.

 Whatever one may think of the equities of the situation confronting a small coal company during hard times, if faced with a situation such as defendants allege was the case here, it seems clear that the law does not permit the written welfare agreement to be ignored by reason of any matters affecting the relationship of the coal company and the union inter sese. The Supreme Court has made it plain, in Lewis v. Benedict Coal Co., 361 U.S. 459, 469, 80 S. Ct. 489, 4 L. Ed. 2d 442 (1960), that considerations of social welfare with regard to the benefits payable to miners from the fund make it inappropriate to admit defenses based upon the alleged misdeeds of the union. The Court explicitly states that the duty to pay royalty arises 'on the production of coal independent of the union's performance.' Ibid., 466, 80 S. Ct. 494.

 Moreover it should be noted that in the case at bar we do not have a case such as Lewis v. Mears, 297 F.2d 101, 104 (C.A.3, 1962), relating to the need for mutual execution of a contract on both sides before it comes into effect as a binding obligation. Rather we are confronted with the question whether a written collective bargaining agreement can be entered into as an ostensible facade while the actual agreement is couched in different terms. Such a practice, we are convinced, is precluded as contrary to federal public policy in the labor relations field. Congressional policy in 29 U.S.C. § 186(c)(5)(B) strictly regulates the establishment of welfare trusts and requires that their terms be specified in detail in writing. It would frustrate federal regulatory policy if a union and employer could enter into a fictitious or ostensible agreement different from their real agreement. Moreover 29 U.S.C. § 158(d) with respect to collective bargaining agreements imposes the requirement that they be reduced to writing upon request. That policy would also be violated if a union and employer could concoct a secret conspiratorial agreement different from that proclaimed to the public and to the union members. In this connection it must be remembered that determination of the extent and nature of the consequences flowing from federal legislation is a federal question, and that where 'the policy of the law is so dominated by the sweep of federal statutes' that legal relations which they affect are governed by rules of law derived therefrom, conflicting state law and policy must yield to the legislative intent of Congress. Sola Electric Co. v. Jefferson, 317 U.S. 173, 176, 63 S. Ct. 172, 174, 87 L. Ed. 165 (1942).

 With this principle in mind, we turn to a scrutiny of the challenged defenses.

 The third defense is statute of limitations and/or laches. This suit was filed on October 10, 1963. The District of Columbia has a three year statute which if applicable would bar the action as to defaults before October 10, 1960. Under Pennsylvania law the entire sum due is collectible. Judge Miller's opinion of April 10, 1964, left the issue open, as depending upon where the cause of action arose. Since the obligation to pay arose, under the Benedict rule, when the coal was mined, and the coal was mined in Pennsylvania, and payable from proceeds there arising, it seems to us that the most significant contacts with the transaction are in Pennsylvania, and that the cause of action arose there, and is not barred by the statute of limitations. Nor is laches a bar. The suit has progressed, with promptitude, considering the volume of papers filed and discovery had.

 The fourth defense is that defendants did not execute the entire contract. The contracts here constitute an accession by defendants to a master contract formulated by extensive collective bargaining agreements within the industry. By their terms there is a proper incorporation by reference of prior documents. We see no merit to this defense.

 The fifth defense is merely a restatement of the fourth.

 The sixth defense (fraud, deceit, accident and/or mistake) is the meat of defendants' contention. It alleges that plaintiffs knew of the representations made by union representatives. Unfortunately for defendants, Benedict disposes of this defense.

 The seventh defense (duress, strike threats, violence) is subject to the same infirmity as the sixth.

 The eighth defense (impossibility of performance) is without merit. Inability to pay is not equivalent to the doctrine of impossibility of performance in contract law. A person on relief could validly oblige himself on a judgment note for a million dollars.

 The ninth defense is that the contract is too vague and indefinite to be valid, by reason of the fact that it contains no terms fixing its duration. If this were true, it might mean that it was terminable at will or after a reasonable time, but it would not render the contract ...


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