No. 13749
I N THE SUPREME COURT O THE STATE O M N A A
F F O T N
1978
AUDIT SERVICES I I N C I .
a Montana c o r p o r a t i o n ,
P l a i n t i f f and A p p e l l a n t ,
E M ROAD CORPORATION,
L O
a corporation,
D e f e n d a n t and R e s p o n d e n t .
Appeal from : D i s t r i c t Court d t h e Fourth J u d i c i a l D i s t r i c t ,
H o n o r a b l e J a c k L. Green, Judge p r e s i d i n g .
C o u n s e l o f Record:
For Appellant:
George, W i l l i a m s a n d Benn, M i s s o u l a , Montana
R i c hard Ranney a r p u e d , M i s s o u l a , Montana
For Respondent:
P o o r e , PIcKenzie, Roth, R o b i s c h o n and R o b i n s o n ,
B u t t e , Montana
David Wing a r g u e d , B u t t e , Montana
F o r Amicus C u r i a e :
H i l l e y and L o r i n g , Great F a l l s , Nontana
; , ;<=.,. E m i l i e Loring a r g u e d , G r e a t F a l l s , Montana
M c K i t t r i c k and D u f f y , G r e a t F a l l s , Plontana
D . P a t r i c k M c K i t t r i c k a r c p e d , G r e a t F a l l s , FIontana
S u b m i t t e d : J a n u a r y 31, 1978
Decided : FEB 2 2 1n
9
Filed: FEB 2 2 1E
9
M r . J u s t i c e Frank I. Haswell d e l i v e r e d t h e Opinion of t h e Court:
A c o l l e c t i o n agency, on t h e behalf of t h r e e union t r u s t
funds, sued a corporation f o r an accounting and judgment f o r
a l l sums owing pursuant t o c e r t a i n c o l l e c t i v e bargaining agree-
ments and d e c l a r a t i o n s of t r u s t . Following a nonjury t r i a l ,
t h e D i s t r i c t Court, Lake County, denied r e l i e f t o t h e c o l l e c t i o n
agency. The c o l l e c t i o n agency appeals.
P l a i n t i f f Audit S e r v i c e s , Inc. i s a c o l l e c t i o n agency f o r
t h r e e union t r u s t funds. The t r u s t funds a r e : Laborer's A.G.C.,
Health and Welfare, Pension and Training; Operating Engineers
T r u s t of Montana, Health and Welfare, Pension, Apprenticeship
and Vacation; ~ e a m s t e r ' sT r u s t of Montana, Health and Welfare.
P l a i n t i f f i s attempting t o r e q u i r e defendant Elmo Road Corporation
t o s a t i s f y i t s o b l i g a t i o n s under c o l l e c t i v e bargaining compliance
agreements t o make c o n t r i b u t i o n s t o t h e s e t r u s t funds.
During t h e s p r i n g 1972, r e p r e s e n t a t i v e s of t h e Operating
Engineers, Teamsters and Laborers Unions contacted t h e Elmo Road
Corporation and requested t h a t i t become a p a r t i c i p a n t i n t h e
t r u s t s involved. The union r e p r e s e n t a t i v e s t a l k e d t o Roy Winslow,
t h e g e n e r a l manager of t h e defendant corporation. Winslow duly
executed c o l l e c t i v e bargaining compliance agreements w i t h t h e
union r e p r e s e n t a t i v e s . The compliance agreements provide t h a t
defendant agrees t o be bound by the e x i s t i n g c o l l e c t i v e bargaining
agreement i n e f f e c t between t h e union and t h e employer's a s s o c i a -
t i o n , t h a t defendant agrees t o comply with t h e various a r t i c l e s
of t r u s t which have been s e t up by c o l l e c t i v e bargaining agreement,
and t h a t compliance w i l l continue u n t i l such time a s e i t h e r p a r t y
n o t i f i e s t h e o t h e r i n w r i t i n g a t l e a s t s i x t y days before t h e
e x p i r a t i o n of t h e then e x i s t i n g c o l l e c t i v e bargaining agreement
of i t s i n t e n t i o n t o withdraw. The d e c l a r a t i o n s of t r u s t , which
t h e defendant agreed t o comply with, s e t f o r t h a schedule f o r
c o n t r i b u t i o n s t o t h e t r u s t funds by t h e employers bound t o t h e
agreements.
When t h e compliance agreements were signed, defendant was
working a s a subcontractor on a Polson school job f o r S l e t t e n
Construction Company. S l e t t e n Construction was a s i g n a t o r y t o
c o l l e c t i v e bargaining agreements with each of t h e t h r e e unions
involved here. These agreements contained c l a u s e s r e q u i r i n g t h e
signatory employer t o r e q u i r e a l l of h i s subcontractors t o comply
with t h e conditions of t h e agreements.
From A p r i l 1972 t o October 1972, t h e period of t h e S l e t t e n
Construction subcontract, defendant paid t h e required c o n t r i -
butions t o t h e t r u s t funds. When defendant stopped c o n t r i b u t i n g ,
t h e t r u s t s s e n t delinquency n o t i c e s . N payments were made by
o
defendant. The t r u s t s , t h e r e f o r e , assigned t h e i r causes of a c t i o n
to plaintiff. P r i o r t o t r i a l p l a i n t i f f had t h e records of defendant
audited. This a u d i t i n d i c a t e d an amount owing t o t h e t h r e e
t r u s t funds of $31,842.53, which includes c o n t r i b u t i o n s , l i q u i d a t e d
damages, i n t e r e s t and a u d i t f e e s . I n a d d i t i o n , under t h e terms of
t h e t r u s t documents, a t t o r n e y f e e s a r e recoverable. Prior t o
t r i a l , p l a i n t i f f incurred a t t o r n e y f e e s i n t h e amount of $1,802.02.
The case was t r i e d i n t h e D i s t r i c t Court on September 29, 1976.
T h e r e a f t e r judgment was rendered f o r defendant. Findings of
f a c t and conclusions of law were entered on December 7 , 1976. The
c o u r t found t h a t Roy Winslow d i d n o t have a u t h o r i t y t o s i g n t h e
compliance agreements on behalf of Elmo Road Corporation; t h a t he
did not believe the compliance agreements would bind the corpora-
tion to a long term collective bargaining agreement; that the
unions had not been certified as the exclusive bargaining repre-
sentatives of defendant's employees; and, that the collective
bargaining agreements, which the compliance agreements purported
to bind defendant, were not such contracts which were usual, proper
or necessary to be made in the ordinary transaction of defendant's
business. From these findings, the court concluded that Roy Winslow
had no actual, implied, or ostensible authority to bind defendant
to the collective bargaining agreements; that because he had no
authority to bind the defendant to the agreements, the defendant
has no obligation to contribute to the trust funds; and, that
because the unions were not certified by the National Labor Rela-
tions Board as the exclusive bargaining representative of defendant' s
employees and did not represent a majority of the employees, the
compliance agreements are invalid and unenforceable. Plaintiff
now appeals from this judgment.
Three issues are before this Court:
1) Whether the District Court erred in finding, concluding,
and decreeing that the agreements entered into between the
defendant and the unions were invalid because the employer's
general manager had no authority to bind the defendant to the
agreements?
2 Whether the defendant by making the contributions to the
)
trust funds for a period of time in 1972, ratified the collective
bargaining compliance agreements?
3 Whether the District Court erred in invalidating the
)
agreements between the employer and the unions which required the
employer to make contributions to the trust funds on behalf of
its employees?
The g e n e r a l manager of a corporation can have e i t h e r a c t u a l ,
implied, o r o s t e n s i b l e a u t h o r i t y t o e n t e r i n t o c o n t r a c t s on behalf
of t h e corporation. The g e n e r a l r u l e i s s t a t e d i n t h i s language:
"Unless h i s a u t h o r i t y i s s p e c i a l l y r e s t r i c t e d , a
g e n e r a l o r managing o f f i c e r o r agent may e n t e r i n t o
any c o n t r a c t which i s u s u a l , proper o r necessary t o
be made, i n t h e ordinary t r a n s a c t i o n of t h e company's
b u s i n e s s , o r which he i s held o u t t o t h e public a s
having a u t h o r i t y t o make, o r which, although beyond
h i s g e n e r a l powers, he i s expressly authorized t o make;
and a t h i r d person who d e a l s w i t h such manager i s n o t
a f f e c t e d by s e c r e t l i m i t a t i o n s upon such a u t h o r i t y .
* * *" 19 C.J.S. Corporation, §1043(f).
This r u l e has been adopted i n Montana. E l e c t r i c a l Products
Consolidated v. E l Campo, I n c . , (1937), 105 Mont. 386, 73 P.2d
199.
I n t h i s case t h e t r i a l c o u r t concluded Winslow, a s t h e
g e n e r a l manager of Elmo Road Corporation, had no a c t u a l , implied,
. o r o s t e n s i b l e a u t h o r i t y t o s i g n t h e compliance agreements on
behalf of t h e corporation. P l a i n t i f f contends t h e evidence does
n o t support t h i s conclusion.
I n reviewing t h e f i n d i n g s and judgment of t h e D i s t r i c t
Court, w e w i l l n o t d i s t u r b those f i n d i n g s i f they a r e supported
by s u b s t a n t i a l evidence, Johnson v. J a r r e t t , (1976), 169 Mont.
408, 548 P.2d 144; Fautsch v. Fautsch, (1975), 166 Mont. 98,
530 P.2d 1172. The evidence must be viewed i n t h e l i g h t most
favorable t o t h e p r e v a i l i n g party. Johnson v. J a r r e t t , supra;
Luppold v.Lewis, (1977), Mont , , 563 P.2d 538, 34 S t . Rep.
Applying t h a t standard t o t h i s c a s e , t h e D i s t r i c t Court's
f i n d i n g t h a t Roy Winslow had no a c t u a l a u t h o r i t y t o bind t h e c o r -
p o r a t i o n t o t h e compliance agreements i s supported by s u b s t a n t i a l
evidence. The evidence supporting t h i s f i n d i n g i s t h a t : (1)
Roy winslow's employment c o n t r a c t l i m i t e d h i s a u t h o r i t y t o a c t
on behalf of the corporation; (2) t h e a u t h o r i t y of t h e g e n e r a l
manager i s s e t f o r t h i n t h e by-laws and r e g u l a t i o n s of t h e cor-
p o r a t i o n ; and ( 3 ) t h e testimony of t h e p r e s i d e n t of t h e corpora-
t i o n , A 1 Hewankorn, a s t o t h e a u t h o r i t y of t h e g e n e r a l manager.
The employment c o n t r a c t o u t l i n e d t h e g e n e r a l manager's
d u t i e s t o be: (1) procurement of c o n t r a c t s , obtaining financing
and necessary equipment; (2) o v e r a l l supervision of f i e l d work,
o f f i c e work, and equipment maintenance; and ( 3 ) h i r i n g , f i r i n g ,
d i s c i p l i n i n g and a s s i g n i n g jobs t o a l l employees. The c o n t r a c t
provided t h e defendant agreed t o h i r e Winslow a s i t s g e n e r a l
manager i n accordance w i t h t h e a u t h o r i t y and r e s p o n s i b i l i t i e s
o u t l i n e d i n i t s r e g u l a t i o n s and by-laws. The r e g u l a t i o n s and
by-laws s t a t e g e n e r a l l y t h a t t h e manager w i l l c o n s u l t with t h e
Board of D i r e c t o r s on a l l major q u e s t i o n s of p o l i c y and be pre-
pared t o submit such questions t o t h e shareholders f o r f i n a l
decision. I n h i s testimony A 1 Hewankorn s t a t e d t h a t Winslow had
no a u t h o r i t y t o bind t h e corporation t o any c o l l e c t i v e bargaining
agreement and t h e corporation considered any r e l a t i o n s h i p with
a l a b o r union t o be a major question of policy t h a t would have
t o be decided by t h e shareholders and n o t t h e general manager.
A g e n e r a l manager can have implied a u t h o r i t y t o e n t e r
c o n t r a c t s on behalf of a corporation. Implied a u t h o r i t y has
been defined i n t h i s manner:
"Implied a u t h o r i t y i s a form of a c t u a l a u t h o r i t y
derived by i m p l i c a t i o n from t h e p r i n c i p a l ' s words o r
deeds. It i s sometimes s a i d t h a t implied a u t h o r i t y
i s a c t u a l a u t h o r i t y c i r c u m s t a n t i a l l y proved. I n
g e n e r a l , an agent has implied a u t h o r i t y t o do those
a c t s which a r e u s u a l and i n c i d e n t a l t o t h e authorized
t r a n s a c t i o n and those which a r e reasonably
necessary t o accomplish t h e p r i n c i p a l ' s
purposes, including t h e making of whatever
c o n t r a c t s a r e needed." S e l l , Agency, 540 (1975).
The r u l e i n Montana on implied a u t h o r i t y has been s t a t e d a s
follows :
"No p r i n c i p l e of law i s more c l e a r l y s e t t l e d than
t h a t an agent t o whom i s i n t r u s t e d by a corporation
t h e management of i t s l o c a l a f f a i r s , whether such
agent be designated a s p r e s i d e n t , general manager,
o r superintendent, may bind h i s p r i n c i p a l by c o n t r a c t s
which a r e necessary, proper, o r usual- t o be made i n
t h e ordinary prosecution of i t s business. *** The
f a c t t h a t he occupies, by t h e consent of t h e board
of d i r e c t o r s , t h e p o s i t i o n of such an a g e n t , implies,
without f u r t h e r proof, t h e a u t h o r i t y t o do anything
which t h e corporation i t s e l f may do, s o long a s t h e
a c t done p e r t a i n s t o t h e ordinary business of t h e
company." Trent v. Sherlock, (1900), 24 Mont. 255,
263, 6 1 P. 650.
I n t h i s c a s e , t h e D i s t r i c t Court found t h a t Roy Winslow
d i d n o t have implied a u t h o r i t y t o s i g n t h e compliance agreements
on behalf of Elmo Road Corporation. Specifically, the court
found i n i t s f i n d i n g of f a c t X V I :
"The c o l l e c t i v e bargaining agreements, t o which t h e
v a r i o u s compliance o r p a r t i c i p a t i n g agreements executed
by Roy Winslow purport t o bind t h e Elmo Road Corpora-
t i o n , were n o t such c o n t r a c t s which were u s u a l , proper
o r necessary t o be made i n t h e ordinary t r a n s a c t i o n
of t h e Elmo Road Company' s business ."
P l a i n t i f f contends t h e evidence does n o t support t h i s finding.
W agree.
e
The evidence i n d i c a t e s Roy Winslow signed the compliance
agreements t o o b t a i n t h e Polson school job subcontract from
S l e t t e n Construction. He t e s t i f i e d t h a t i f he had n o t signed
t h e agreements, Elmo Road Corporation would n o t have obtained
the contract. A t t h e t r i a l of t h i s c a s e , i n i t s b r i e f , and
i n o r a l argument, defendant admits Winslow signed t h e agreements
s o t h e corporation could o b t a i n t h e subcontract. However,
defendant contends the signing of the agreements was not usual,
proper or necessary for Winslow to do in the ordinary transaction
of defendant's business.
We believe Winslow did have implied authority to sign the
compliance agreements and the finding of the District Court on this
issue cannot be upheld. The court found that one of Winslow's
responsibilities was to procure work for the corporation. This
finding is supported by the evidence. In order to procure work
on the Polson school job, the evidence shows that he had to sign
the compliance agreements. Thus, his signing of those agreements
was proper, usual and necessary in the transaction of defendant's
business. Winslow had the implied authority to sign the agreements.
Plaintiff also contends Winslow had ostensible authority
to sign the agreements. As stated earlier, ostensible authority
is another form of authority a general manager can have to act on
behalf of a corporation. Ostensible authority is defined in section
2-124, R.C.M. 1947:
"Ostensible authority is such as a principal,
intentionally or by want of ordinary care, causes
or allows a third person to believe the agent to
possess. 1
'
The District Court concluded Roy Winslow did not have
ostensible authority to sign the compliance agreements. Plaintiff
argues the evidence does not support this conclusion.
Plaintiff's argument is that the evidence showed Winslow
was, as general manager of the corporation, the official representa-
tive of defendant's company; that the restrictions on his authority
were in regulations and by-laws, which were not recorded or filed
nor available to be viewed by the union representatives; that
A1 Hewankorn, president of Elmo Road Corporation, was on the
job site when the union representatives came to get the agree-
ments signed and he made no effort to tell the union agents
they should talk to him and not Roy Winslow; that both Winslow
and Hewankorn testified they knew of no facts that would have
put the union representatives on notice of the restrictions in
Winslow's authority; and that general managers usually sign such
agreements on behalf of their companies.
On the other hand, defendant argues the evidence shows
that Winslow did not have ostensible authority. It again argues
the agreements were signed to obtain the subcontract and this
is not evidence of ostensible authority. Further, it argues
that A1 Hewankorn testified the by-laws and regulations of the
corporation were free to be examined by the union representatives
if they chose to examine them; and Winslow testified he did not
consider himself the official representative of the corporation
for all purposes.
This Court has previously held that ostensible authority
arises from the facts of the particular case and the test is
found in a determination of the exact extent to which the principal
held the agent out or permitted him to hold himself out as
authorized, and what a prudent person acting in good faith under
the circumstances would reasonably believe the agent's authority
to be. Butler Mfg. Co. v. J & L Imp. Co., (1975), 167 Mont.
519, 540 P.2d 962. Applying that standard here, we find Roy
Winslow had ostensible authority to sign the compliance agree-
ments and bind the defendant to them. He was held out to be the
general manager of the corporation and the union representatives,
- 9 -
unaware of any restrictions in his authority, could reasonably
believe Winslow had the authority to sign the agreements.
In concluding as a matter of law that Roy Winslow did not
have ostensible authority, the District Court made no finding
of fact that he lacked such authority. The defendant, in its
brief and at oral argument, states the finding which says the
compliance agreements were "not such contracts which were usual,
proper or necessary to be made in the ordinary transaction of
Elmo Road Company's business", is a finding of a lack of ostensible
authority in Winslow to execute the agreements. As pointed out
earlier, this finding deals with implied authority and not
ostensible authority. Implied authority and ostensible authority
are not one and the same.
We believe the District Court misapplied the law in
concluding, as a matter of law, that Winslow did not have osten-
sible authority to sign the compliance agreements. Ostensible
authority can be implied from the words and conduct of the
parties and circumstances of the particular case notwithstanding
a denial by the alleged principal. Ludwig v. Montana Bank and
Trust Co., (1939), 109 Mont. 477, 98 P.2d Applying that
rule to this case, we find defendant, by making Roy Winslow its
general managr and authorizing him to procure work for defendant,
implied to third parties that he had the ostensible authority to
sign agreements such as those in question here.
In discussing the effect of limitations on an agent's
authority on third parties, the Restatement on Agency 2d, 4167,
states:
" I f a person d e a l i n g with an agent has n o t i c e t h a t
t h e a g e n t ' s a u t h o r i t y i s c r e a t e d o r described i n a
w r i t i n g , which i s intended f o r h i s i n s p e c t i o n , he i s
a f f e c t e d by l i m i t a t i o n s upon t h e a u t h o r i t y contained
i n t h e w r i t i n g , unless misled by conduct of t h e
principal ."
Comment b. t o 5167 s t a t e s :
"* ** O r d i n a r i l y , by-laws of a corporation o r t h e
records of t h e employer's business a r e n o t intended f o r t h e
i n s p e c t i o n of t h i r d persons within t h e t h e meaning of t h i s
Section ."
Thus, under t h i s r u l e , t h e l i m i t a t i o n s on t h e g e n e r a l manager's
a u t h o r i t y contained i n t h e r e g u l a t i o n s and by-laws can have no
e f f e c t a s n o t i c e t o t h i r d persons dealing with t h e manager,
r e g a r d l e s s of t h e i r being open f o r i n s p e c t i o n o r n o t . The
l i m i t a t i o n s i n those documents cannot l i m i t t h e g e n e r a l manager's
ostensible authority.
Therefore, we hold Roy Winslow had both implied and o s t e n s i b l e
a u t h o r i t y a s g e n e r a l manager of Elmo Road Corporation t o a c t on
behalf of t h e corporation and t h e D i s t r i c t Court's conclusions
t o the contrary are i n e r r o r ,
I n i t s second i s s u e p l a i n t i f f r a i s e d t h e i s s u e of r a t i f i -
c a t i o n a t t r i a l and on appeal. Defendant a t t r i a l and on appeal
argues t h a t t h e d o c t r i n e of r a t i f i c a t i o n has no a p p l i c a t i o n t o
t h i s case, The D i s t r i c t Court made no f i n d i n g s of f a c t o r con-
c l u s i o n s of law on t h e i s s u e of r a t i f i c a t i o n . Nor d i d t h e c o u r t
make a f i n d i n g of f a c t o r conclusion of law on why Elmo Road
Corporation made t h e c o n t r i b u t i o n s t o t h e t r u s t funds i n 1972,
o r what e f f e c t those c o n t r i b u t i o n s had regarding t h e r i g h t s and
o b l i g a t i o n s of t h e p a r t i e s t o t h i s a c t i o n .
The proper r e s o l u t i o n of t h e i s s u e of r a t i f i c a t i o n i s t h e
r u l e s e t f o r t h i n Freeman v. Withers, (1937), 104 Mont. 166, 65
P.2d 601. There, t h i s Court s t a t e d t h a t where t h e p r i n c i p a l , with
knowledge of a l l t h e m a t e r i a l f a c t s , v o l u n t a r i l y makes p a r t i a l
payment on an unauthorized c o n t r a c t , t h e r e i s s t r o n g evidence
of r a t i f i c a t i o n . Applying t h a t r u l e h e r e , we f i n d t h a t Elmo
Road's voluntary c o n t r i b u t i o n s t o t h e t r u s t funds during t h e
months of A p r i l through October, 1972, r a t i f i e d insl low's a c t of
signing t h e agreements r e q u i r i n g the c o n t r i b u t i o n s .
The t h i r d i s s u e , whether t h e D i s t r i c t Court e r r e d i n i n v a l i -
d a t i n g t h e compliance agreement, i s a d i s p u t e involving a c o l l e c t i v e
bargaining agreement. P l a i n t i f f claims t h e compliance agreements
are valid. Defendant claims they a r e i l l e g a l and i n v a l i d . To
resolve t h i s disagreement, 5 301 of t h e Taft-Hartley Act, 29
U.S.C. 5 185(a) must be invoked. That s e c t i o n reads:
" S u i t s f o r v i o l a t i o n of c o n t r a c t s between an
employer and a l a b o r organization representing
employees i n an industry a f f e c t i n g commerce a s
defined i n t h i s c h a p t e r , o r between any such labor
o r g a n i z a t i o n s , may be brought i n any d i s t r i c t c o u r t
of t h e United S t a t e s having j u r i s d i c t i o n of t h e
p a r t i e s , without r e s p e c t t o the amount i n controversy
o r without regard t o t h e c i t i z e n s h i p of t h e p a r t i e s . I I
This s e c t i o n has been construed t o mean t h a t t h e r e i s concurrent
j u r i s d i c t i o n i n t h e s t a t e c o u r t s t o hear such d i s p u t e s , b u t , i n
e x e r c i s i n g t h i s j u r i s d i c t i o n , s t a t e c o u r t s must apply f e d e r a l l a b c r
law. Dowd Box Co. v. Courtney, (1962), 368 U.S. 502, 82 S.Ct. 519,
7 L ed 2d 483. Montana has recognized t h i s p r i n c i p l e . Lowe v.
O'Connor, (1973), 163 Mont. 100, 515 P.2d 677.
I n i t s findings of f a c t and conclusions of law, t h e D i s t r i c t
Court held t h a t t h e compliance agreements were i n v a l i d and unen-
forceable by t h e union t r u s t funds. S p e c i f i c a l l y , t h e c o u r t found
t h e unions were not c e r t i f i e d by the National Labor Relations Board
a s t h e exclusive bargaining r e p r e s e n t a t i v e of defendant's employees;
t h a t t h e unions never represented a majority of t h e employees of
any bargaining u n i t of defendant's employees; and t h a t t h e unions
had no a u t h o r i t y t o r e p r e s e n t t h e employees. These f i n d i n g s and
conclusions were based on t h e National Labor Relations Act, 29 U.S.C.
and
5 158(a) / ( b ) , which d e a l s with u n f a i r l a b o r p r a c t i c e s .
The United S t a t e s Supreme Court, i n construing 29 U.S.C.
and
5 158(a) / ( b ) , has held t h a t t h e determina t i o n of an u n f a i r labor
p r a c t i c e i s e x c l u s i v e l y a function of t h e f e d e r a l system. San Diego
Building Trades Council v. Garmon, (1959), 359 U.S. 236, 79 S.Ct. 773,
3 L ed 2d 775. Thus, although a s t a t e c o u r t has t h e a u t h o r i t y t o
construe and enforce c o l l e c t i v e bargaining agreements, i t does not
have t h e a u t h o r i t y t o i n v a l i d a t e a l a b o r c o n t r a c t , proper on i t s
f a c e , because one of t h e p a r t i e s has a l l e g e d l y engaged i n an u n f a i r
labor p r a c t i c e . I n t h i s c a s e , we hold t h e D i s t r i c t Court e r r e d i n
i n v a l i d a t i n g t h e compliance agreements which were proper on t h e i r
face because t h e s t a t e c o u r t s lack t h e a u t h o r i t y t o do so.
A case i n p o i n t on t h i s i s s u e i s T r u s t Fund Services v. Hey-
man, (1977), 88 Wash.2d 698, 565 P.2d 805. I n that case, a collec-
t i o n agency was attempting t o c o l l e c t c o n t r i b u t i o n s from an employer
who was o b l i g a t e d t o c o n t r i b u t e t o union t r u s t funds and had
f a i l e d t o do so. The employer's defense was an a l l e g a t i o n of
u n f a i r labor p r a c t i c e s on t h e p a r t of t h e union. H f u r t h e r argued
e
t h e i s s u e of u n f a i r l a b o r p r a c t i c e was r e s j u d i c a t a because t h e
9th c i r c u i t and t h e Federal D i s t r i c t Court had rescinded t h e
c o n t r a c t between t h e employer and t h e union, when t h e employer sued
t h e union i n f e d e r a l c o u r t f o r r e c i s s i o n of t h e c o n t r a c t on a
claim of u n f a i r labor p r a c t i c e . The Washington Supreme Court held
t h e claim of u n f a i r l a b o r p r a c t i c e was no defense t o t h e a c t i o n
by t h e c o l l e c t i o n agency f o r t h e unions. F u r t h e r t h e Washington
Court held t h a t i t was n o t bound by t h e d e c i s i o n of t h e f e d e r a l
courts. C i t i n g San Diego Building Trades v. Garmon, supra, t h e
Washington Court s t a t e d t h e National Labor Relations Board has
exclusive j u r i s d i c t i o n t o determine u n f a i r l a b o r p r a c t i c e s and
s t a t e c o u r t s a s w e l l a s f e d e r a l c o u r t s must d e f e r t o t h e e x c l u s i v e
competence of t h e F.L.R.B. Thus, i n t h i s c a s e , t h e defendant can
only r a i s e t h e question of u n f a i r labor p r a c t i c e s on t h e p a r t
of t h e unions before t h e N.L.R.B. This Court cannot decide t h a t
issue.
Therefore, t h e judgment of t h e D i s t r i c t Court i s vacated.
The cause i s remanded t o t h e D i s t r i c t Court f o r e n t r y of judgment
i n accord with t h i s opinion, and f o r determination of reasonable
a t t o r n e y f e e s t o be awarded t o p l a i n t i f f f o r t h e s e r v i c e s of i t s
a t t o r n e y s a t t r i a l i n t h e D i s t r i c t Court. That award s h a l l be
added t o our award of $1,250 a t t o r n e y f e e s f o r t h e s e r v i c e s of
i t s a t t o r n e y s on appeal and both s u m s h a l l be incorporated i n t o
t h e judgment .
V
Justice
W Concur:
e