Thacher v. United Construction Workers

The Special Term order appealed from was made on petition of the State Superintendent of Insurance and authorizes and directs the Superintendent to take possession of the property and liquidate the affairs of and dissolve a trust fund known as “ United Construction Workers, United Mine Workers of America — S. H. Pomeroy Company Welfare Fund”. The Fund through its trustees opposed the application on the ground that article XVI of the State Insurance Law asserted by the Superintendent as authority for such a liquidation is, as applied here, inconsistent with and repugnant to section 302 (subd. [c], par. [5]) of the Federal Labor-Management Relations Act (U. S. Code, tit. 29, § 186, subd. [c], par. [5]) pursuant to which the Fund was established as a supplement to or part of a collective bargaining agreement made in 1957. The parties to that agreement were S. H, Pomeroy

As required by the collective bargaining agreement the employer established the Fund to provide hospital and medical benefits for the employees and agreed for that purpose to pay to the Fund an amount equal to seven cents for each man hour worked. Administration was to be by a joint Welfare Committee of four members, two appointed by the company and two by the union. The committee was required to and did establish the Welfare Fund at a named bank in Washington, D. C., and to use the moneys solely for paying the premiums on policies of accident, hospitalization, medical expense and similar insurance for the benefit of Pomeroy’s approximately 65 employees and their dependents. Complying with article III-A of the New York Insurance Law enacted in 1956, the Fund filed with the State Insurance Department a ‘1 Registration Statement for Employee Welfare Funds ” and continued until 1960 to submit to the department the annual reports called for by article III-A. In July, 1959 a labor dispute at the Pomeroy plant caused a work stoppage after which the employer ceased operations and made no further payments into the Welfare Fund. In July, 1960 the Welfare Fund notified the State Insurance Department that the Pomeroy company had gone out of business but that the Welfare Fund would be continued in effect for the benefit of the employees by continuing the payment of insurance premiums until all the money in the Fund should be expended. The Insurance Department, however, took the position that it was its function and obligation to liquidate this Welfare Fund. The department so informed the Welfare Fund trustees, at the same time ordering them to desist from any further acts in respect thereto. The trustees (three of whom live in this State) insisted, however, that the Insurance Department had no right or duty as to such a liquidation. This litigation followed. The Welfare Committee has not been stayed from paying the accruing premiums and the Fund is being used up or has been used up. The question of law is, however, of some importance because of the number and size of such funds set up to benefit persons employed in this State.

The parties agree that articles III-A and XVI of the State Insurance Law in terms subject such a Welfare Fund to regulation by the Insurance Department and empower the department to conduct any required liquidation thereof. The first question for our consideration is whether Congress, in legalizing these welfare funds and mandating their administration by trustees, etc., so fully occupied the field that customary statutes regulating the dissolution of insurance funds must give way. We think it clear that Congress did not intend to pre-empt this field. We must also consider the question as to whether article XVI of the Insurance Law as applied here is repugnant to section 302 (subd. [c], p.ar. [5]) of the Federal Labor-Management Relations Act (U. S. Code, tit. 29, § 186, subd. [c], par. [5]). There is no such inconsistency.

The Taft-Hartley Act not only authorizes and requires collective bargaining but authorizes the making of a welfare trust agreement as part of an employer-employee bargain (U. S. Code, tit. 29, § 158, subd. [d]). If in its statute dealing with welfare trusts Congress had taken jurisdiction over all aspects and incidents of such trusts and their administration and dissolution, there would be no place in the field for article XVI of our State Insurance Law since dissolution by the State Insurance Department would set up a conflict with national policy. But the Federal statute has no such coverage. As was correctly said in Moses v. Ammond ( 162 F. Supp. 866 , 874): “To read into this statute, as plaintiffs urge, a broad bestowal of jurisdiction over all disputes relating to union welfare funds is not consonant with the architecture of the law or with its purpose. ’ ’ The ‘ ‘ architecture ’ ’ of the Federal statute is plain and symmetrical. Subdivisions (a) and (b) of section 186 of title 29 of the United States Code make it unlawful for an employer to offer or

The order should be affirmed, with costs.

Judges Dye, Fuld, Froessel, Van Voorhis, Burke and Foster concur.

Order affirmed. Motion for stay denied.