Disputes Act of 1906, against the trustees of an unregistered union ? 49 3. The Osborne decision 50 and the doctrine of ultra vires. We here enter upon an aspect of trade-union law, which, unlike the topics hitherto discussed, is not explicable solely by reference to the principles of contract, agency, and trust which go to make up the structure of voluntary societies. So far as the principle of ultra vires is applicable to trade unions their status is not merely that of voluntary societies, but a status governed by the specific provisions of the Trade Union Acts. To a voluntary society that principle has, properly speaking, no application. In the case of a voluntary society it is no doubt true that acts done by the society or its officers and applications of the funds of the society, which are not in accordance with its rules, are not binding upon the members, and may be restrained by injunction at the suit of complaining members; but in such cases we have merely to deal with breaches of contract or of trust. There is no incapacity on the part of the society or of its members as a body to pursue certain activities, provided the rules as originally framed or as subsequently duly altered authorize such activities. Nor is there anything to prevent such rules from authorizing at the same time the most diverse activities, provided such activities are in themselves lawful; e. g., to combine the promotion of political objects with social intercourse and amusement or the pursuit of profit. But the decision in the Osborne case is clear, that the pursuit of political objects in combination with the ordinary trade-union purposes is, at least, in the case of a registered trade union, ultra vires, and that the rules of such a trade union cannot be framed so as lawfully to confer the power to pursue such purposes. As Lord Macnaghten says, "A rule which purports to confer such a power as that now in question on any Trade Union registered under the Act of 1871, whether it 49 In Vacher and Sons Ltd. v. London Society of Compositors, The Times, March 26, 1912, it was argued in the Court of Appeal that subsection 4 (2) enables an action for tort (not committed in contemplation or furtherance of a trade dispute) to be maintained against a trade union, even without making the trustees parties. The court reserved judgment. 50 Amalgamated Society of Railway Servants v. Osborne (No. 1), [1909] 1 Ch. 163, [1910] A. C. 87. be an original rule of the Union or a rule subsequently introduced by amendment, must be ultra vires and illegal." So far as the decision in the Osborne case is based on the doctrine of ultra vires, and it is this doctrine which formed the basis of the ratio decidendi in which all the members of the Court of Appeal and the majority of the House of Lords concurred, it has nothing to do with any doctrine of public policy under which the particular application of funds to the support of "pledge-bound" members of Parliament might be considered objectionable, or with the principle asserted by Farwell, L. J., that the requirement of contributions for such purposes was an interference with the political liberty of the members. On the one hand, either of the latter grounds of objection, if correct, would apply equally to any other society, and even to transactions between persons not related to each other as members of a society. On the other hand, the rule that a trade union as such. cannot apply its funds or require contributions for political purposes is based solely on the limitation of purposes imposed by the Acts of 1871 and 1876, which, by the defining section, as construed by the courts, confine the objects of a trade union to the two objects of trade regulation and the provision of benefits for members. The rule thus equally prohibits trade unions from applying their funds to any other purposes whatsoever, however non-political or otherwise unobjectionable; e. g., contributions for the furtherance of education among the working classes. A Scotch court has, as a logical consequence of the Osborne decision, even restrained a trade union from paying the expenses of a delegate to the Trade Union Congress. Does the principle of ultra vires as laid down in the Osborne decision apply to all trade unions or only to registered unions? The defendants in the Osborne case are a registered union, and the case cannot be taken as a decision with regard to unregistered unions. Among the judgments given, those of Cozens-Hardy, M. R., Farwell, L. J., Lord Macnaghten, and Lord Atkinson clearly go upon the footing that a registered union by accepting registration has acquired a peculiar status which subjects it to the rule of ultra vires. On the other hand, the judgment of Lord Halsbury seems to be based on a view that the mere legalization of trade unions by the Act of 1871 was a privilege which carries with it a restriction of the purposes which may lawfully be pursued. As regards later cases Lord Sker rington in the Court of Session 51 expressed a perfectly clear view that the Osborne decision has no application to unregistered unions. "It is apparent that the ground of judgment that the purposes of a society are matters outside the purview of the Trade Union Acts, and therefore ultra vires can have no application to a society, which has no statutory constitution, and which is merely a voluntary association, such as an unregistered Trade Union.” In the circumstances of the particular case he held that the application of the trade-union funds for political purposes was a breach of contract. On the other hand, Leigh Clare, V. C.,52 has taken the opposite view, that unregistered unions are as much within the Osborne case as registered ones. I submit that on principle Lord Skerrington's view is the right one and that the Osborne decision has no application to unregistered unions. The principle on which the doctrine of ultra vires becomes applicable to corporate or unincorporated bodies is well stated in Lord Macnaghten's judgment, as follows: "It is a broad and general principle that companies incorporated by statute, for special purposes, and societies, whether incorporated or not, which owe their constitution and status to an Act of Parliament, having their objects and powers defined thereby, cannot apply their funds to any purpose foreign to the purposes for which they were established, or embark on any undertaking in which they were not intended by Parliament to be concerned. . . . This principle is not confined to corporations created by Special Acts of Parliament. It applies, I think, with equal force in every case where a society or association formed for purposes recognised and defined by an Act of Parliament places itself under the Act, and by so doing obtains some statutory immunity or privilege." 53 Now a union which applies for and obtains registration does exactly what Lord Macnaghten says. It voluntarily places itself under the Act, and by so doing obtains the privileges, not very extensive, it is true, but still actual privileges, conferred by registration. It does something analogous to what is done by a body of persons who apply for and obtain a grant of incorporation, and thereby subject themselves to a restriction to the purposes for which 51 Wilson v. Scottish Typographical Association, [1911] 1 Scot. L. T. 253- 53 [1910] A. C. at p. 94. such incorporation is given. On the other hand, it is difficult to say that a trade union by merely coming into existence does anything analogous to placing itself under the Act. It no doubt gets the advantage if its objects are in restraint of trade that its contracts and trusts are not illegal, and are within limits enforceable. But this is something very different from the voluntary assumption of a status with counterbalancing disabilities, for it may well be that a society might prefer to retain its liberty of determining what purposes it would pursue even at the cost of remaining subject to the taint of common-law illegality. Further, there are, and apparently always have been, a considerable number of trade unions of which the purposes never were illegal at common law. Such unions, unless they applied for registration, never derived any benefit from the Trade Union Acts at all. If the opinion of the Court of Appeal in Osborne v. Amalgamated Society of Railway Servants (No. 2) is right, the defendant society in that case is an example of such a union.54 Such a union, it is clear, might, apart from the Trade Union Acts, not only have lawfully pursued its trade purposes, but might have combined with them any political and other lawful purposes. It would certainly be a strange conclusion if the Trade Union Acts should be held to have taken away a liberty which such a society previously possessed. W. M. Geldart. OXFORD, ENGLAND. 54 It may be noted that this society, if its purposes were not illegal at common law, was not at the time of its formation in 1872 a trade union at all within the meaning of the Act of 1871, and was therefore at that time incapable of registration. MONEY STOLEN BY A TRUSTEE FROM ONE TRUST AND USED FOR ANOTHER. of [F it be true of language in general that it is an imperfect contrivance for the expression of human thought, this is especially true of the maxims, technical terms, and stock phrases employed to express legal conceptions. They furnish many short cuts and save a deal of time. They tend on the whole to simplify the processes of thought. But they are usually silent as to the reasons for their being and seldom admit their own limitations. Terms such as those with which we are about to deal, like "subrogation," tracing of trust property," and "purchaser for value," are all short cuts. They are familiar and invite us to use them. The mind feels at home in their company. That they are apt, however, to lead us astray is well illustrated by the recent case of Newell v. Hadley.1 The case may be stated briefly as follows: A man named Berry was trustee of two estates, the Newell Estate and the Pickett Estate. He had an inactive co-trustee of each estate. As trustee of the Pickett Estate, he had collected income with which he ought to have paid taxes and other bills but had stolen it. Wishing to conceal this theft and also to get more money which he could use dishonestly, he sold stock belonging to the Newell Estate and applied more than $6500 of the proceeds to the payment of the bills of the Pickett Estate. About three months later he resigned as trustee of the Pickett Estate and settled his accounts, charging himself with everything for which he was properly chargeable and being allowed for the money stolen from the Newell Estate and paid to the creditors of the Pickett Estate. His co-trustee and beneficiaries of the Pickett Estate knew nothing about his wrongdoings. About three years later he was discharged as trustee of the Newell Estate and his defalcations were discovered. Nearly six years after Berry had settled his final account with the Pickett Estate the bill in this case was filed by Newell, as trustee of the Newell Estate, and his 1 206 Mass. 335, 92 N. E. 507 (1910). |