Cristol, A. Jay

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Labor Law -- Unions -- Loyalty Oath

University of Miami School of Law

University of Miami Law Review Volume 12 Number 1 Article 14 10-1-1957 Labor Law -- Unions -- Loyalty Oath A. Jay Cristol Follow this and additional works at: https://repository.law.miami.edu/umlr Recommended Citation A. Jay Cristol, Labor Law -- Unions -- Loyalty Oath, 12 U. Miami L. Rev. 124 (1957) Available at: https://repository.law.miami.edu/umlr/vol12/iss1/14 This Case Noted is brought to you for free and open access by the Journals at University of Miami School of Law Institutional Repository. It has been accepted for inclusion in University of Miami Law Review by an authorized editor of University of Miami School of Law Institutional Repository. For more information, please contact library@law.miami.edu. UNwvERsrT or MAzNr LAw REvIwGenerally a stockholder, who is not a director, is not charged withnotice of the affairs of the corporation.12 A stockholder who does notparticipate in an illegal or tortious act is not to be held accountable."'In the principal case the appellant was charged with knowledge of, andparticipation in the fraud, in that she was a principal stockholder, andpermitted the use of her funds for corporate affairs. The court, in effect,charged that the appellant's status in the corporation, together with thefact that her money was being used by the corporate entity was tantamountto her participation in the fraud. It may be that such a charge lies withinthe discretion of the courts, but did the evidence in fact show that sucha charge was warranted? It is submitted that it did not. In the case ofCorvell v. Phipps, 14 the court stated that the plaintiff must show by a pre-ponderance of evidence that the corporation's activities were in reality thoseof the individual stockholder.The appellant was not a director of the corporation either in nameor in reality; it was not shown that she actually participated in the fraud,and the evidence and testimony did not show that she had knowledge ofthe fraud. The court relied upon her status as principal stockholder, andthe fact that her funds were used in the corporation as a basis to disregardthe legal entity.' 5 It would seem that the Florida courts are no longerreluctant to brush aside the corporate veil, but rather they are aggressivein doing so. It is conceded that the corporate fiction should not hinder thecourts in the achievement of justice. However, a careful scrutinization ofthe individual acts of corporate members will more accurately determinethe real actors.RALPH P. EzzoLABOR LAW - UNIONS - LOYALTY OATHA union officer filed a false non-Communist affidavit with the NationalLabor Relations Board with full knowledge by the union membershipthat the affidavit was false. The Board ruled that the union was not in12. Nettles v. Childs, 100 F.2d 952 (4th Cir. 1939); Mandeville v. Courtright,142 Fed. 97 (3rd Cir. 1905); Commercial Savings Bank v. Kietges, 206 Iowa 90,219 N.W. 44 (1928); Rudd v. Robinson, 126 N.Y. 113, 26 N.E. 1046 (1891);Hughes v. Wachter, 61 N.D. 513, 238 N.W. 776 (1931); Barson v. Pioneer Savings& Loan Co., 163 Ohio St. 424, 121 N.E.2d 76 (1954); Greenville Gas Co. v. Ries,54 Ohio St. 549, 44 N.E. 271 (1896); Medill v. Collier, 16 Ohio St. 599 (1866);Chournis v. Laing, 125 W.Va. 275, 23 S.E. 2d 628 (1942).13. Linninger v. Botsford, 32 Cal. App. 386, 163 Pac. 63 (1916); Atchison,T. & S. F. Ry. v. Cochran, 43 Kan. 225, 23 Pac. 151 (1890); Grapico Bottling Co. v.Ennis, 140 Miss. 502, 106 So. 97 (1925); Belo v. Fuller, 84 Tex. 450, 19 S.W. 616(1892). See note 12 supra. In Advertex, Inc. v. Sawyer Industries, su~ra note 7 the courtheld that the veil would not be lifted unless the assets were diverted by the stockholders orappropriated for their personal use.14. 128 F.2d 702 (5th cir. 1942).15. The court in the instant case noted the fact that the books of the corporationwere poorly kept, however Riley v. Fatt, supra note 11 held that this was not enough todisregard the legal entity.CASES NOTIEDcompliance with the National Labor Relations Act' and refused to allowthe union to avail itself of any further rights or benefits provided under theact.2 The court of appeals3 granted an injunction against the Board'saction. Held, affirmed, the sole sanction imposed by the statute' iscriminal action against the officer filing the false affidavit. The NationalLabor Relations Board had no power to order decompliance of the union,nor to alter in any way the union's right to benefits under the act," evenwhere the union membership was aware of the officer's fraud. Leedom v.Intertational Union of Mine, Mill and Smelter Workers, 352 U.S. 145(1956).Section 9(h) of the National Labor Relations Act of 1947 requiresunion officers to file non-Communist affidavits with the National LaborRelations Board. When all the officers required by the act have so filed,the union is considered to be in compliance with the act and is accordedcertain rights and benefits0 In the original House and Senate drafts of theact, the test of compliance under section 9(h) was the fact of non-member-ship in the Communist party An investigation by the Board was requiredwhere the veracity of the affiant was challenged. h'le I louse-Senate Confer-ence Committee recognized the possibility of an indefinite delay in accordingbenefits to unions, if the Board were required to investigate each affidavitfiled. They revised the wording of section 9(h) to require the mere filingof an affidavit to constitute compliance.8  The Penal Code" was madeapplicable in cases involving the filing of false affidavits. The section, as1. Labor Management Relations Act, 1947 (Taft-Ilartley Act), 61 SirAT. 143, asamended, 29 U.S.C. § 159 (h) (1952). "No investigation shall be made by the Boardof any question affecting commerce concerning the representation of employees, raised bya labor organization under subsection (c) of this section, and no complaint shall beissued pursuant to a charge made by a labor organization under subsection (b) ofsection 10, unless there is on file with the Board an affidavit executed conteinporancouslyor within the preceding twelvc-month period by each officer of such labor organizationand the officers of any national or international labor organization of which it is anaffiliate or constituent unit that he is not a member of the Communist Party or affiliatedwith such party, and that he does not believe in, and is not a nember of or supportsany organization that believes in or teaches, the overthrow of the United States Govern-meut by force or by any illegal or unconstitutional methods. The provisions of section35 A of the Criminal Code shall be applicable in respect to such affidavits."2. Maurice E. Travis, Ill N.L.R.B. 422 (1955).3. 226 F.2d 780 (D.C.Cir. 1955).4. See note 1 supra.5. Labor Management Relations Act, 1947 ('[aft-Ilartley Act), 61 STAr. 143 asamended, 29 U.S.C. § 160 (1952).6. Ibid.7. H.R. Rep. No. 353, § 6 80th Cong., 1st Sess. (1947). "Under the HouseBill, in section 9(f)(6) no labor organization could be certified if one or snore of itsnational or international officers or one or more of the officers designated on the ballotwas or ever had been a member of the Communist party.l.. The Senate Amendment,in section 9(h), contained a similar provision, differing from the IHouse Bill only iinot imposing the requirement that an officer 'has never been' one of the describedindividuals."S. See note I snpmr.9. § 35 A, as amended, IS I.S.C. § 1001 (194.S). provides ai penally of $10,000or a prison tern or both, for making fraudulent statements in matters under timejurisdiction of federal departments and agencies.UNIVERSITY 01' MIAMI LAW REViEWamcndcd, allows no delay in according benefits to unions, unless all officerinvolved refuses to filc.10 Paul M. Herzog, past Chairman of the Board,pointed out the wisdom of this revision four years later. In reviewing thehistory of section 9(h) he remarked how "intolerable and delaying" theadministrative procedure would have been if the original drafts had beenenacted. 1 Early rulings of the Board declared that it was not its purposeto litigate the veracity12 of affidavits. Thc courts upheld these rulings,stating that the intent of Congress was to prevent litigation,'3 and thereforethe question of veracity was not litigable before the Board.'" In holdingthis section constitutional tle Court concludcd that filing was not manda-tory,10 but was merely a condition precedent 7 to obtaining the services ofthe Board.In August, 1953, a union officer was indicted under the penal pro.visions of the code'8 for filing a false affidavit. Shortly thereafter,' theBoard attemptcd to protect its process from such abuse by promulgating astateient of policy 2 ' which declared that the conviction of an officer of aunion would decertify the union and it would be ruled "not in compliance"with the act. The statcment further declared that the Board would withholdbenefits from unions, pending the outcome of a criminal action, in cases whcreunion officers were indicted for filing false affidavits. " The courts imnicdi-ately rejccted this attempted policy change, holding that the Board hadno power or authority to investigate the veracity of affidavits or to sanctionunions because union officers had filed false affidavits, 22 even in a caseinvolving a returned indictelnt."?' The Board could only detcrminc thateach person required by the act to file had in fact done so."2410. 93 Cong. Rec. 6860 (1947). See Senator Taft's explanation of the louse-ScnateConference agreement on § 9(h).11. Leedom v. International Union of Mine Workers, 352 U.S. 145 (1956).12. Alpert & Alpert, 92 N.L.R.B. 806 (1950), Harry Bridges had been convictedof perjury. The Board refused to look behind the affidavit saying, "Persons desiringto establish falsification have recourse to the Department of Justice."13. N.L.R.B. v. Wiltse, 188 F.2d 917 (6th Cir. 1951).14. N.L.R.B. v. Louisville Container Corp., 209 F.2d 654 (6th Cir. 1954); N.L.R.B.v. Sharples Chemicals. 209 F.2d 645 (6th Cir, 1954); Farmer v. United ElectricalWorkers, 211 F.2d 36 (D.C. Cir. 1953).15. Cross v. N.L.R.B., 351 U.S. 62 (1956); Osm-ni v. Doods, 339 U.S. 846 (1950).16. National Maritime Union v. IHcrzog, 334 U.S. 854 (1948); N.L.R.B. v. Louis-ville Container Corp., 209 F.2d 654 (6th Cir. 1954); Aaronson Bros. Paper Corp. v.Fishko, 144 N.Y.S.2d 643 (Sop. Ct. 1955), affd, 286 App. Div. 1009, 146 N.Y.S.2d 661(1st Dept. 1955).17. United Mine Workers v. Arkansas Oak Flooring Co., 351 U.S. 62 (1956).18. See Iiitemational Fur Vorkers v. Farmer, 117 F.Supp. 33, 37 (D.D.C. 1953).19. The Board's policy decision was made on October 23, 1953; see note 20 infra.20. 18 Fed. Reg. 7185 (1953).21. N.L.I,13. v. Indiana & Nlichigaii Electric Co., 318 U.S. 9 (19-11). (In thiscase it was implied that the Board had the power to protect its proccss from abusc).22. Farmer v. International Fur Workers, 221 F.2d 862 (D.C. Cir. 1955); UnitedElectric Workers v. Herzog, 110 F.Supp. 220 (]).D.C. 1953), aff'd, Farner v. UnitedElectrical Vorkcrs; 211 F.2d 36 (DC.Cir. 1953).23. International Fur Workers v. Farnicr .117 ".tSlpp, 3; (1),]).C. 195).24. N.L.R.B. v. Coca Cola Bottling Co., 350 U.S. 264 (1956).CASES Nor)In the instant case, the court extended the union's right to benefitsunder the act to include a situation where the membership of the unionis aware that an affidavit is false at the time of filing. It concluded that"the rule written into section 9(h) is for th protection of unions as wellas the detection of Communists." -" In a companion case, 20 decided onsimilar reasoning, the court rejected the Board's attempt to sauction aunion, whose officer had been convicted of filing a false affidavit, becausethe officer had filed another affidavit subsequent to his conviction, andthe veracity of the later affidavit had not been challenged.It is submitted that these are times of strong public sentiment inregard to the Communist problem. It is comforting to know that theSupreme Court remains a stable influence in the midst of this emotionalstorm. Once again the Court has affirmed its faith in a government of lawsrather than men and has refused to permit an admninistrativc board toarbitrarily assume the function of a court.A. JAY CRISTOI,25. Lcedom v. International Union of \line Workers, 352 U.S. 145 (1956).26. Amalgamated Meatcntters AFL-CIO v. N.L.R.B., 352 U.S. 153 (1956). Gold,the union president, was convicted of filing a false non Communist affidavit, on August30, 1950. More than one year later he filed another affidavit. Mr. Justice Frankfurter,quoting froll the disscutiig opinion in the lower court, said: "A jury has found that in1930 Cold was both a Communist and a liar, to put it blntly. Yet to indulge in thepresumption that lie was therefore guilty oif cominittiiig a criminal offense a year laterin filing the 1951 affidavit is further than I can go on the record before us."

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Labor Law -- Unions -- Loyalty Oath

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