# Appendix — Argo v. Wiman > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385601_0062%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1962 - **Citation:** 368 U.S. 977 ## Text la APPENDIX A UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 8298 Jous L. Lewis, Wexry G. Scusipt anp Josernine Roce, as Trustees of the Usirep Mixt Workers of AMEnica WerareE AND RetinemMest Funxp oF 1950, Appellees, Vv. EF. Arnoup Lowry, individually and trading as Lowry Coa Company, Appellant. Appeal from the United States District Court for the Western District of Virginia, at Abingdon. Tep Darton, District Judge. (Argued April 10, 1961. Decided September 16, 1961.) Before SoseLorr, Chief Judge, and Sorer and Hayxswortn, Cireuit Judges. Haynswortn, Circuit Judge: Summary judgment was entered for the plaintiffs in this suit by the Trustees for the Welfare and Retirement Fund of 1950 (United Mine Workers of America) against a mine operator for ‘‘rovalty’’ payments at the rate of forty cents per ton of coal mined by the defendant.' We think the summary judgment was inapvropriate in the light of the factual issues tendered. 1 Lewis v. Lowry, W.D. Va., 191) F. Supp. 490, 2a From May 1955 to August 1958 the defendant was en- gaged in a strip mining operation in Harlan County, Ken- tucky. He employed three or four men at a time in the operation, and during the entire period seven differeut individuals were employed by him in the work. | The defendant claims that shortiy after the operation commenced, a representative of the United Mine Workers, Floyd, came to the job and demanded that he sign the Na- tional Bituminous Coal Wage Agreement of 1952 with its amendments. At that time, the defendant had only three employees, only one of whom, he claims, was a member of the U.M.W. Nevertheless, the defendant signed the agreement and later signed the subsequent agreements of 1955 and 1956. Though he admits that Floyd made no threats of any kind to him, he claims that he was duressed into signing these agreements beeduse of his conviction, based upon violence in Harlan County, Kentueky in pre- vious years, that, if he did not do so, he and his employees would suffer injury to their persons or their property. Perhaps inconsistently, but more importantly, the defendant claims that before signing the first agreement he explained to Floyd that he could not pay a royalty of forty cents a ton or the union wage seale, and that Floyd prevailed upon him to sign the agreement as a mere formality, but with the clear understanding that he would not be bound by it. The defendant says that he operated on that bas*s during the three years preceding 1955, and that it was recognized by Floyd that the defendant could not afford the wages and royalty payments specified by the national agreement, and that he was not expected to pay them. The defendant also says that in performance he did not pay the wages required by the national agreement, that questions affecting working conditions were settled on the seene, and that he sent monthly checks to the plaintiffs in amounts which he felt he eould afford and without regard to the tonnage of coal mined, this being a in accordance with his claimed understanding with Floyd. These monthly payments to the plaintiffs were in) small, even amounts. Seven of them were for $120 each. two of them were for $140 each, three of them were for $200 each, three of them were for $100 each, and the remainder were for similar, even, mederate sums. The total of these pas ments aggregated $3,264, and the defendant suggests that neither the plaintiffs ner anvone else could have suppose! that such even figures could have been based upon actual coal production. Te points to his aetnal prodnetion fizures which when computed for each month to a fraction of a ton in tenths and multiplied Dw forty cents ao ten, wonld invariably produce an odd dollar amount for the rovalty payment. The plaintiffs claim that payments agerevating $52,705.40 should have been made to them and seek the reeovery in this aetion, after erediting the defendant with the $3,264 he paid, of $49,551.40. On summary judyment, the plaintiffs concede. as they must, that Flovd did and said everything that the defendant says he did and they aceept the other facts asserted by the defendant. The plaintiffs stand on the parol evidence rnle and upon a theory that the poliey of the National Labor Relations Act gives some added protection to labor agreements at- tacked as sham. Before we give consideration to the legal izsnes ten- dered. we think the factual situation should be more fully edeveloped. The defendant seeks to bring himself within the usnal role that an agreement which is purely preten- sive and delivered with m intention that it ts to be binding upon either party may be shown by parel evidence to have created ne contractual obligations.? It may be a 2 Tewis vo Mears, WD Pal 188 Po Sapp Fess and eee Burke vo Pitan s, 153 1S, 228. 14.8, 't. 810,58 L. Ee. Gos: In re Hicks & Son, Ine. 2 Gr, «2 F. 2d 277. 42 salutary limitation upon the rule that the bare assertion of the party to be bound is not enough to show that the purported contract was a pretense and a sham,? but here the defendant claims corroboration in the cireumstances of his performance, On the present record we think the facts are not suffi- ciently established to determine whether the situation is yoverned by the rule which denies enforcement of pre- tensive agreements or by the rule which forecioses the use of parol evidence to establish a contemporaneous oral agree- ment to vary the terms of a valid contract. It is suggested, however, that a remand would be pur- poseless, and that the usual rule, which permits a party to show the real agreement, notwithstanding the existence of a pretensive writing, is inapplicable to collective bar- gaining agreements, The contention is founded principally upon that provision in the National Labor Relations Act* which requires that a collective bargaining agreement he redueed to writin. if requested by either party. We find, however, no such broad and collateral effect of the statu- tory provision, The requirement that collective bargaining agreements be reduced to writing came into the Act after a history of refusal by some employers to make a memorial of agree- ments reached in collective bargaining negotiations. The Congress was of the opinion that a refusal to record an agreement reached was not the sort of good faith bargaining required by the Act. The requirement, however, ix directed to the real agreement of the parties. It does not make sacrosanct a pretensive agreement inconsistent with the real agreement reached in the collective bargaining process, 3 Rock Ola Manufacturing Corporation v. Wertz, 4 Cir., 282 PF. 2d 268. 429 USCA § 158 (d). OA If negotiators in a collective bargaining session should arrive at a complete agreement on the eve of April Fool's Day and, out of a perverted sense of humor, should re- duce to writing, sign, and distribute a pretensive agree- ment far from the real agreement they had reached, surely either party could show that the pretensive agreement was in fact pretensive, and the right of each to require that the real agreement be reduced to writing would be pre- served, The requirements of the Act are directed to the protection of the real agreement of the parties and not to alteration of aecepted principles governing proof of the terms of the real agreement. If, therefore, it should be made to appear that the union, for the sake of its relations with the larger mine operators, or for any other reason, insisted upon exeeu- tion hy the small operator of an agreement which in fact was pretensive and not the real agreement of the parties, nothing appears in the federal statutes which would prevent disclosure and proof of the real agreement between the union and the mine operator. Finally, it is suggested that the plaintiffs, the Trustees of the Welfare and Retirement Fund, may bave some vreater right to erforee a pretensive agreement than would either of the immediate parties to it. The rights of the trustees, however, are entirely derivative. Their right to recover contributions from the mine operator is dependent entirely upon the real agreement between the operator and the union. The trustees have no independent right to insist that ..n operator make any contribution to the fund, or that it do so on the same basis and under the same formula that other operators contribute. The trustees are the third party beneficiaries of the real agreement hetween the union and the operator, which they may en- foree in aceordance with its terms, but the fact that the suit is brought for the benefit of the third party bene- ficiaries would not foreclose a defense that there was no 6a contract or that the writing upon which the complaint ix based is not, in fact, the real agreement between the operator and the union.° The judgment will be reversed and the case remanded for further proceedings. Reversed and remanded, Sonevorr, Chief Judge, dissenting: The Distriet Court’s action was sound and its judgment should not be disturbed. Remand to the District Court is worse than useless since it is for the purpose of establishing a legal irrelevancy. This course is not justified because the only possible re- sult of a trial on the issue of ‘‘sham contract’’ would be to ascertain facts which could constitute no defense. Lowry became a party to the industry-wide collective bargaining agreement which obligated him to make royalty payments to the Trustees of the Welfare and Retirement Fund at the rate of $0.40 per ton. He regularly paid the fixed amount upon the number of tons he reported to the Trustees, reducing the total payments by the simple ex- pedient of understating the tonnage in each of twenty-five payments made during the period in question. When the Trustees discovered from his reports to other agencies that his production was much greater than he had ac- counted for to the Trustees, they demanded payment of the difference due. Lowry did not interpose the present defense of ‘‘sham agreement,’’ but sought to defend the correctness of the remittances made by him. He would not, however, agree to an inspection of his production ree- 5 One ean imagine circumstances in which a pretensive agreement between the union and a mine operator might induce action by the Trustees or employees to their detriment. In such a situation an estoppel might arise or the union and the employer might be held responsible for the losses in a tort action. No such circumstances are developed on this record. va ords, either by a certified publie aceountant of his own choice or by accountants from the Trustees’ office. It happens that each of bis sven employers whose names Lowry remembered in his deposition had been certified by him from time to time to collect, and did collect, benefits from the Trust Fund. However, my dissent ix based not upon the defendant's lack of equity, but upon broader grounds, f+r this is not just a small case involving a few miners. If the present employer is permitted to cireumvent his written collective bargaining agreement, the effects will be industry wide." There are three reasons why the defendant's allegations fail to constitute a defense to the snit by the Trustees, First, the statute authorizing agreements to establish in- dustrial trust funds, properly interpreted, requires that such agreements shall be in writing. Second, broadly as a matter of federal labor law, the so-called ‘*sham’? exeep- tion to the parol evidence rule should not be allowed in suits under collective bargaining agreements. Third, even if a private oral agreement, said to be the *‘real eontract’’, could be relied upon by Lowry in a suit by the union, it eannot be asserted as against the Trustees, 1 The present case involves no ‘‘ April Fools’ Day’ joxe, but is one of 4 series of attempts by coal operators over the nation to renege on their agreed- upen obligations with respect to the Union Welfare and “etirement Pand. For other cases where coal operators have attempted, unsueros the Trust Fund be similarly stated in writing. Congress could not have intended to safeguard against the improper use of money once it has been contributed to the fund, but not against evasion of the primary obligation to contribute. : _ Further, it would be inconsistent to read the statute to require that the agreement as to terms of payment to the 261 Stat. 157 (1947), as amended, 29 U.S.C.A. 4 186 (Supp. 1960). 393 Cong. Ree. 4747 (1947). 4Labor Management Relations Act § 302(¢)(5‘(B), 61 Stat. 157-58 (1947), as amended, 29 U.S.C.A. § 186(¢)(5)(B) (Supp. 1960), 5 See William Dunbar Co. v. Painters & Glaziers Dist, Couacil, 129 F. Supp. 417, 423 (Uc. D.C., 1955). Vn fund be in writing and vet to permit an employer to eleim the **sham"’ exception to the parol evidences rule. The res alty payments are an indirect method of compensating the employees,* and they have a right to kuow exactly what thes are receiving for their serviees. They also have a right te know how well their union nevotiators represented their interests. Thes are being deceived if the onbliely declared, written agreement may be sapped by a seeret ecorpaet. In addition, the establishment of this type of trust tund is generally made on an industry-wide basis. Tf some employ: ers secretly contribute less than their shares, other em. ploy rs may be foreed to contribute more to enable the fund to meet its oblications.? Assuming that diferent rov alties may be charged different employers, the other om ployers are at least entitled to know when someone is pay ing less per ton than they are. If then Congress has re- quired that the agreement be reduced to writing, it cannot he supposed to have contemplated that a party mas come into court with the defense, Yes, we have obediently put it in writing, but we did not mean it."* The salutary