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Hanson v. Hutcheson

December 3, 1954


Author: Major

Before MAJOR, LINDLEY, and SWAIM, Circuit Judges.

MAJOR, C.J.: This action was instituted by plaintiff (appellant), a citizen of Maryland, as a member of an unincorporated labor union, International Brotherhood of Carpenters and Joiners of America (hereinafter referred to as the Brotherhood), on behalf of himself and all other members of such union, to procure an accounting for and restoration of funds belonging to such Brotherhood in an amount greatly in excess of three thousand dollars, allegedly misappropriated by defendants (appellees), all officers of the Brotherhood and citizens of Indiana. The complaint was filed on April 22, 1952, and on May 2, 1952, defendants filed a motion, supported by affidavit, attacking the complaint on numerous grounds, including a prayer for dismissal for failure to join Local 101, United Brotherhood of Carpenters and Joiners of America, with headquarters and place of business at Baltimore, Maryland, asserted to be an indispensable party and which, if joined, would destroy the sole grounds relied upon for jurisdiction, that is, diversity of citizenship.

The District Court, after considering the pleadings, including the affidavit attached to defendants' motion, depositions which had been taken at the instance of the plaintiff, briefs of the parties and oral argument, entered an order, the pertinent portion of which reads as follows:

"* * * the Court is of the opinion that Local No. 101, United Brotherhood of Carpenters and Joiners of America, with its headquarters and place of business at Baltimore, Maryland, is an indispensable party to this action; that this Court has no jurisdiction over such party, and a joinder of such party as a party defendant would destroy diversity jurisdiction, therefore this action should be dismissed."

From the judgment of dismissal plaintiff appeals. Thus, the sole issue for decision is whether Local 101 was and is an indispensable party. If so, it appears to be undisputed, at any rate evident, that it would be aligned as a party-defendant and that both it and plaintiff being citizens of Maryland, diversity jurisdiction would be destroyed.

The complaint alleges that the Brotherhood has upwards of one million members, of which plaintiff is one "by virtue of his membership in Local Union 101," and that he brings the suit "as such member, * * * for and on behalf of himself and all others similarly situated * * * to require them [defendants] to account for funds which * * * they have misappropriated from the treasury of the Brotherhood to their individual uses"; that the defendants have usurped their power as officers of the Brotherhood in numerous ways, and particularly that they have done so by revoking the charters of Locals which have demanded or might demand an accounting for the alleged unlawful conversion. In this manner, so it is alleged, defendants have deprived members of union status and have prevented action from being commenced by any Local or member other than plaintiff. The complaint also alleges that the plaintiff "will hold any judgment recovered in this action in trust for the benefit of the Brotherhood, subject to the directions of this Court," and that the funds alleged to have been unlawfully converted "constituted a trust for the members, including this plaintiff, and should be accounted for."

The motion to dismiss is predicated upon Rule 12(b)(7), which provides for dismissal upon "failure to join an indispensable party." Subdivision (d) of the same Rule provides that such a motion "shall be heard and determined before trial * * * unless the court orders that the hearing and determination thereof be deferred until the trial."

It is undisputed that there is no such thing as membership at large in the Brotherhood. Membership can be acquired and maintained only by becoming and being a member of a local union chartered by the Brotherhood. This is so by reason of the provisions of the constitution and laws of the Brotherhood. This is recognized by the plaintiff because in his complaint he asserts membership in the Brotherhood by reason of his membership in Local 101. This is essential because plaintiff must possess such membership in order to sue on behalf of all other members of the Brotherhood. More specifically, in the absence of such membership he would have no basis for the maintenance of a class action.

While the complaint alleges, as shown, that plaintiff is a member of the Brotherhood by reason of his membership in Local 101, the record reveals a long-standing dispute relative to such membership, which has been productive of much litigation described in detail in the affidavit attached to defendants' motion. Briefly, in 1946, two actions were commenced in the Circuit Court of Baltimore City, Maryland, one by the Brotherhood against Hanson (instant plaintiff), Local 101 and certain of its officers, and the other by Hanson, Local 101 and certain of its officers against the Brotherhood. Hanson as a part of the relief sought asked that his expulsion by the Brotherhood's general convention, held on April 23, 1946, be adjudged void and that he be restored personally to "the roll of membership." In the action instituted by the Brotherhood, Local 101 by its then president and its attorney (the same attorney who now appears on behalf of plaintiff) advised the court "the Local Union No. 101 will not regard or treat Gotthard Hanson as a member." These two actions appear to have been compromised by a consent decree without an adjudication of Hanson's status in relation to the Local.

In 1947, Hanson instituted a suit in the Superior Court of Marion County, Indiana, against the Brotherhood and the same individual defendants as those named in the instant case. There it was sought to have set aside and declared void a resolution adopted April 23, 1946, by the general convention of the Brotherhood, purporting to expel Hanson from membership. Also, an injunction was sought to require defendants to recognize Hanson as a member of Local 101; to refrain from interfering with such membership therein and his rights pertaining thereto, and to notify Local 101 to recognize Hanson as a member, to accept dues from him and to issue him appropriate evidence of his membership in such Local. Other issues were involved, which need not now be mentioned. The trial court in the main decided all issues in favor of the plaintiff and entered its decree accordingly. Upon appeal, the decree of the trial court was modified in the manner and to the extent set forth in the opinion of the Appellate Court of Indiana. Hutcheson et al v. Hanson, 121 Ind.App. 546, 98 N.E.2d 688. We shall subsequently comment upon this opinion of the Indiana court, inasmuch as both sides place much reliance upon it in support of their present contentions.

The affidavit filed in support of the motion sets forth in great detail, particularly admissions made by Hanson in pleadings filed in previous litigation, the reasons for the controversy regarding membership in Local 101. These allegations stand undenied and undisputed by the plaintiff, other than the general allegation of his complaint that he was such a member. We think no good purpose could be served in a detailed recitation of the allegations of the affidavit. Briefly, it is set forth that Hanson, in his reply to defendants' answer filed in the Indiana court, admitted that in 1924 he was denied membership in the Brotherhood and that thereafter he obtained membership by impersonating one Arthur B. Helgeson, a member, and that later he caused Helgeson's card to be changed to his name. The membership card thus obtained was in Local Union 941, Essex County, New Jersey. He admitted in his reply that he was fined by that Local for a violation of its rules, which fine was never paid. It was admitted that his relations with the New Jersey Local were concealed when he made application for membership in Local 101, and that he never obtained the consent of the New Jersey Local to transfer to Local 101, as required by the Brotherhood constitution. Hanson further admitted that he had given perjured testimony in the Baltimore suit relative to membership in Local 101 and as to other matters.

Since the Baltimore litigation in 1946, plaintiff has paid no dues to Local 101 and has attended no meetings, and it was expressly admitted by plaintiff's counsel in oral argument in the District Court that Local 101 has not recognized him as a member since the decree in the Baltimore litigation, entered in 1946.

We conclude, both on reason and authority, that Local 101 was an indispensable party, as decided by the District Court. While we find no case exactly in point, some by analogy are persuasive. In any event, the principle often announced requires, so we think, the conclusion which we have reached. A review of the cases in detail is unnecessary because they are cited and quoted from in a previous opinion of this court. metropolis Theatre Co. v. Barkhausen et al., 170 F.2d 481. On page 485, we quoted from opinions of the Supreme Court the rule for the determination of an indispensable party as follows:

"'Persons who not only have an interest in the controversy, but an interest of such nature that a final decree cannot be made without either affecting that interest, or leaving the controversy in such a condition that its final termination ...

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