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Status of Trade Unions.
Attention, I think, should be called to the case of Howden v. Yorkshire Miners' Association recently decided by the House of Lords, which opens up and throws light upon the whole Status of Trade Unions as fixed by the Trade Union Acts 1871, 1876.
Before 1871 the legal position was this. By general law any agreement, by whomever made, which in itself was in restraint of Trade, was unlawful in the sense of being unenforceable; and in the case of an Association, if, as a whole, its purposes were unlawful, the Association itself became an unlawful Association, with the consequence that all its agreements were unenforceable. This was the case with a Trade Union. Its purposes were unlawful as being in restraint of Trade: none, therefore, of its agreements could be enforced by either party to the same. The particular agreement in question might not itself offend against the rule as to restraint of trade, as for instance an agreement to hire business premises, but for the Courts to enforce it would be indirectly to further the unlawful purposes of the Union. For the same reason a Trade Union could take no civil action for the protection of its funds, nor claim the benefit of any power given for that purpose to lawful Associations. This was an acknowledged grievance as shown by the temporary Trade Union Funds Protection Act of 1869. In 1871 Trade Unions sought to have this disqualification removed with the view that such of their agreements as were necessary for the carrying on of the business of a Trade Union and could be enforced without an investigation of the internal administration of the Union should be treated as valid by the Courts. If, however, the Bill were to be to the effect that Trade Unions and their affairs should be altogether exempted from the rule of restraint of Trade, then, as one consequence, all their agreements with their members would be enforceable either by members against the Union, or by the Union against the members. The first would be objectionable to Trade Unions, as it would expose them to litigation and interference by the Courts. The second would presumably be rejected by Parliament. Hence a middle course was adopted, and this found expression in the Trade Union Act of 1871.
The intended objects of the proposed legislation were thus explained by the members of the Government in charge of the measure when it was introduced successively into the two Houses of Parliament.
Mr. Bruce: 1
At present Trade Unions were wholly illegal; and, being so, every agreement, however innocent in itself, was tainted with illegality. The Bill did not propose to legalize what might be called primary contracts,
such as agreements not to work or not to employ, and no person will be entitled for benefits to which he is entitled under a contract with a Trade Union. If such contracts were enforceable now, Courts of Equity might be called upon to enjoin masters against opening their works, or workers from going to work or discontinuing a strike; whilst our County Courts would have to make decrees for contributions to strikers, or to enforce penalties from workmen who had felt it their duty to resume employment. It was not proposed to place Trade Unions therefore in all respects on the same footing as Friendly Societies. It was not the opinion of Mr. Harrison who so ably represented Trades Unions on the Commission that the law should be altered to that extent.
Lord Morley: 3
The Bill provided that all primary contracts made by Trade Unions should not be enforceable, but that the secondary contracts should be enforceable. The result of that would be that no legal proceedings could be instituted to enforce any agreement between the members as to conditions on which they will work, nor compel the payment of subscriptions, nor for the application of the funds, nor to discharge fines imposed upon any person by Courts of Justice, but on the other hand the Secretary could sue the Society for his salary, or the Society their banker in respect of their fund deposited with him. None of the agreements he had mentioned were constituted unlawful, but they were simply not enforceable by law. Indeed it was not the wish of the Trade Unions to be put completely in the position of Friendly Societies. Their objects, rights and liabilities were mostly, as remarked by the minority of the Commission, such as Courts of Law should neither enforce, modify, or annul, but such as should rest on consent.
1 Hansard, vol. cciv., page 266, 14th February 1871.
2 See remarks by Crompton, J., in Hilton v. Eckersley and Jessel, M.R., in Rigby v. Connol.
3 1871, May 1st, Hansard ccv., page 1918.
The sections of the Trade Union Act of 1871 bearing on this point are in the following terms:
3. The purposes of any Trade Union shall not by reason merely that they are in restraint of Trade be unlawful so as to render void or voidable any agreement or trust.
4. Nothing in this Act shall enable any Court to entertain any legal proceeding instituted with the object of directly enforcing or recovering damages for the breach of any of the following agreements, namely:
1. Any agreements between members of a Trade Union as such concerning the conditions on which any members for the time being of such Trade Union shall or shall not sell their goods, transact business, employ or be employed.
2. Any agreement for the payment by any person of any subscription or penalty to a Trade Union.
3. Any agreement for the application of the funds of a Trade Union:
(a) To provide benefits to members; or
(b) To furnish contributions to any employer or workman not a member of such Trade Union in consideration of such employer or workman acting in conformity with the rules or resolutions of such Trade Union; or
(c) To discharge any fine imposed upon any person by sentence of a Court of Justice; or
4. Any agreement between one Trade Union and another; or 5. Any bond to secure the performance of any of the abovementioned agreements.
But nothing in this section shall be deemed to constitute any of the above-mentioned agreements unlawful.
Both Section 3 and Section 4 applied to all Trade Unions whether registered or unregistered. Section 3 is qualified by Section 4. Section 3 clearly enabled the direct or indirect enforcement of any of the agreements above described as necessary for the carrying on of the business of a Trade Union, for presumably it would not be one of the agreements mentioned in Section 4. Section 4, it will be observed, does not in terms absolutely prohibit the enforcement of any of the agreements mentioned therein. With their indirect enforcement which by virtue of Section 3 was authorized it does not interfere at all. But its effect is to forbid Section 3 from being invoked for the purpose of directly enforcing any of the agreements mentioned in Section 4; and, in consequence, it has been decided
that if asked to directly enforce any such agreement the Court has to deal with the case as if Section 3 had never been enacted, in other words, to deal with it according to the law as it stood before 1871 when Trade Unions by reason of their purposes being in restraint of Trade were unlawful associations.
The construction of Sections 3 and 4 taken together has been several times before the Courts: and the question considered what is the difference between direct and indirect enforcement. It has been decided that an application by a member that he should be declared entitled under the rules to personal benefits or to re-instatement 1 as member of the Trade Union, and that an application by the Central Executive for an injunction to restrain the branch executive from dividing Union Funds amongst the members of the branch contrary to rules 2 were applications for the direct enforcement of an agreement within Section 4, and could not be entertained by the Court. On the other hand it was held by Mr. Justice Fry 3 that an application by a member for an injunction to prevent an amalgamation of one Trade Union with another was not for a direct enforcement of an agreement within Section 4 and could be entertained.
Recently these Sections have been further interpreted by the House of Lords in the case of Howden v. Yorkshire Miners' Association. The plaintiff, The plaintiff, a member of the Association registered trade union-sued for an injunction to restrain the central executive from applying the funds to the maintenance of a strike instituted by two of the branches, on the ground that the strike had not been formally authorized by the central executive as required by the rules. The Court of Appeal granted an injunction, and this decision was substantially affirmed by the House of Lords. Two of the Law Lords, however, Lord James of Hereford and Lord Davey, dissented, being of opinion that an injunction against the breach of rules was equivalent to a direct enforcement of the rules. As to the meaning of the word "directly," Lord Davey expressed himself to the effect that where the primary object of the action was to enforce the
1 Rigby v. Connol per Jessel, M. R.
2 Duke v. Littleboy.
3 Wolfe v. Matthews, 31 Ch. D. 194.
agreement, and the right of the plaintiff to maintain the action was founded on his right to have the rules observed, the action should be deemed to be one for directly enforcing the agree ment; but, where the construction and effect of the rules (if it came in at all) only came in as evidence to support the relief claimed, the action would not be one for directly enforcing the agreement. And as an illustration he supposed the case of trustees (not being members) suing to recover the property of which under the Act they were statutory owners and guardians, by means of an action in which the effect of the rules might be immaterial or material only as evidence. The other Law Lords gave a different interpretation to the word "directly." The Lord Chancellor in the course of his judgment observed:
This argument (of the defendants) seems to assume that the object of this enactment was to keep the Trade Unions out of the jurisdiction of the Court altogether. I do not think it does anything of the kind. . . . It seems to me that it would have been a very colorable concession to the Trade Unions if the legislature had left their funds, which under the arrangement made constituted a trust for a particular purpose, without any protection against those entrusted with the distribution of their funds. That the Court should not interfere with the distribution according to their own rules when such distribution was within the purposes of the trust is one thing, but that there should be no recourse to the Courts where it is threatened to divert them [is another]. . . . Surely the section cannot mean that, because the preservation of the property in trust is one that individually will benefit the beneficiaries, therefore it is a suit for enforcing one of the recited agreements which certainly in their terms are inapplicable.
And on the same point Lord Macnaghten observed:
I cannot think that the Legislature intended to strike at proceedings for directly enforcing certain agreements, leaving untouched and unaffected all proceedings (other than actions for damages) designed to enforce these particular agreements indirectly. To forbid direct action. in language that suggests that the object of the action so forbidden may be obtained by a side wind seems to me somewhat of a novelty in legislation. I venture to think that the word "directly" is only put in to give point to the antithesis between proceedings to enforce agreements directly, and proceedings to recover damages for breach of contract which tend, though indirectly, to give force and strength to the agreement for breach of which an action may be brought.