Arroyo v. United States/Opinion of the Court

Section 302(b) of the Labor Management Relations Act of 1947 provides: '(b) It shall be unlawful for any representative of any employees who are employed in an industry affecting commerce to receive or accept, or to agree to receive or accept, from the employer of such employees any money or other thing of value.' Under § 302(c) of the Act this broad prohibition is made inapplicable in five situations, one being, 'with respect to money or other thing of value paid to a trust fund established by such representative, for the sole and exclusive benefit of the employees of such employer * *  * .' provided that the trust fund meets certain standards specified in that subsection.

The petitioner, a representative of employees in an industry affecting commerce, was convicted in the United States District Court for Puerto Rico of violating § 302(b) of the Act by receiving $15,000 from two of their employers. The judgment of conviction was affirmed by the Court of Appeals for the First Circuit. 256 F.2d 549. Certiorari was granted because the case presents an important question as to the scope of this provision of the Labor Management Relations Act of 1947. 358 U.S. 812, 79 S.Ct. 55, 3 L.Ed.2d 56.

The facts are substantially undisputed. In 1953 the petitioner was president of a union which represented the employees of two affiliated corporations. In that capacity he negotiated a collective bargaining agreement with the employers. This agreement provided for the establishment of a welfare fund, which, it is unquestioned, met the requisite criteria of § 302(c)(5) of the Act. It was agreed that the petitioner would be the union representative on the joint committee which was to administer the fund. After the agreement was signed, the petitioner told the employers' representative that there was to be a union meeting that evening, and that he wanted to exhibit the welfare fund checks to the union members. Accordingly, the petitioner was given two checks for $7,500. Attached vouchers idnti fied the checks as the employers' contributions to the welfare fund.

Instead of subsequently depositing the checks in the existing welfare fund bank administration of the fund. Over a period them to open an account in the name of the fund in another bank. A few days thereafter, he gave the bank a purported resolution from the union's board of directors authorizing withdrawals from this account upon his signature alone. As soon as the employers learned what had happened, they attempted to secure performance of the agreement for joint administration of the fund. Over a period of several months, however, the petitioner used the money for his own personal purposes and, after transferring the funds to another account, for non-welfare union purposes as well.

The Government does not maintain that embezzlement by an employee representative from an employer-financed welfare fund would violate the federal statute under which the petitioner was convicted. It contends, however, that in this case the jury could properly find that the petitioner when he accepted the two checks intended to use the funds for his personal purposes, and that he was therefore guilty not of embezzlement, but of conduct amounting to larceny by trick. We agree that the evidence could properly support an inference that the petitioner's purpose from the outset was to apporopriate the two checks for his own use. We cannot agree, however, that this conduct violated § 302(b) of the Act.

Section 302(b) is a reciprocal of § 302(a), applicable to employers, which provides that '(a) It shall be unlawful for any employer to pay or deliver, or to agree to pay or deliver, any money or other thing of value to any representative of any of his employees who are employed in an industry affecting commerce.' The good faith of the employers in delivering the two checks to the petitioner-their intent that the money go to the welfare fund created by the collective bargaining agreement-was not questioned throughout the trial and is not questioned here. The sole purpose of the delivery of the checks, therefore, was to make a lawful payment. What the petitioner received were checks 'paid to a trust fund.' The transaction, therefore, was within the precise language of § 302(c), and thus was not a violation of § 302(b).

This is not to say that the statute requires mutuality of guilt for the conviction of either the employer or the representative of employees. An employer might be guilty under subsection (a) if he paid money to a representative of employees even though the latter had no intention of accepting. Cf. Lunsford v. United States, 10 Cir., 200 F.2d 237; Schneidr v. United States, 9 Cir., 192 F.2d 498. A representative might be guilty if he coerced payments from an innocent and unwilling empoloyer. Cf. United States v. Waldin, D.C., 149 F.Supp. 912, affirmed, 3 Cir., 253 F.2d 551. Both would be guilty if the payment were ostensibly made for one of the lawful purposes specified in § 302(c) if both knew that such a purpose was merely a sham.

The present case, however, is not an analogue to any of those situations. The checks were drawn by the employers and delivered to the petitioner as payment to a union welfare fund. Their receipt by him, therefore, was not a violation of the federal statute, whether his intent to misappropriate existed at the time of receipt or was formed later.

We construe a criminal statute. 'It is the legislature, not the Court, which is to define a crime, and ordain its punishment.' United States v. Wiltberger, 5 Wheat. 76, 95, 5 L.Ed. 37; United States v. Halseth, 342 U.S. 277, 72 S.Ct. 275, 96 L.Ed. 308; Krichman v. United States, 256 U.S. 363, 41 S.Ct. 514, 66 L.Ed. 992. We are mindful, of course, that, 'though penal laws are to be construed strictly, they are not to be construed so strictly as to defeat the obvious intention of the legislature.' United States v. Wiltberger, supra, 5 Wheat. at page 95. As Mr. Justice Holmes put it, 'We agree to all the generalities about not supplying criminal laws with what they omit, but there is no canon against using common sense in construing laws as saying what they obviously mean.' Roschen v. Ward, 279 U.S. 337, 339, 49 S.Ct. 336, 73 L.Ed. 722.

An examination of the legislative history confirms that a literal construction of this statute does no violence to common sense. When Congress enacted § 302 its purpose was not to assist the States in punishing criminal conduct traditionally within their jurisdiction, but to deal with problems peculiar to collective bargaining. The provision was enacted as part of a comprehensive revision of federal labor policy in the light of experience acquired during the years following passage of the Wagner Act, 29 U.S.C.A. § 151 et seq., and was aimed at practices which Congress considered inimical to the integrity of the collective bargaining process.

Throughout the debates in the Seventy-ninth and Eightieth Congresses there was not the slightest indication that § 302 was intended to duplicate state criminal laws. Those members of Congress who supported the amendment were concerned with corruption of collective bargaining through bribery of employee representatives by employers, with extortion by employee representatives, and with the possible abuse by union officers of the power which they might achieve if welfare funds were left to their sole control. Congressional attention was focussed particularly upon the latter problem because of the demands which had then recently been made by a large international union for the establishment of a welfare fund to be financed by employers' contributions and administered exclusively by union officials. See United States v. Ryan, 350 U.S. 299, 76 S.Ct. 400, 100 L.Ed. 335.

Congress believed that if welfare funds were established which did not define with specificity the benefits payable thereunder, a substantial danger existed that such funds might be employed to perpetuate control of union officers, for political purposes, or even for personal gain. See 92 Cong.Rec. 4892-4894, 4899, 5181, 5345-5346; S.Rep. No. 105, 80th Cong., 1st Sess., at 52; 93 Cong.Rec. 4678, 4746-4747. To remove these dangers, specific standards were established to assure that welfare funds would be established only for purposes which Congress considered proper and expended only for the purposes for which they were established. See Cox, Some Aspects of the Labor Management Relations Act, 1947, 61 Harv.L.Rev. 274, 290. Continuing compliance with these standards in the administration of welfare funds was made explicitly enforceable in federal district courts by civil proceedings under § 302(e). The legislative history is devoid of any suggestion that defalcating trustees were to be held accountable under federal law, except by way of the injunctive remedy provided in that subsection.

Without doubt the petitioner's conduct was reprehensible and immoral. It can be assumed also that he offended local criminal law. But, for the reasons stated, we hold that he did not criminally violate § 302(b) of the Labor Management Relations Act of 1947.

Reversed.

Mr. Justice CLARK, with whom Mr. Justice FRANKFURTER, Mr. Justice DOUGLAS and Mr. Justice WHITTAKER join, dissenting.