Labor Law-Collective Bargaining Agreements-Sham Exception to the Parol Evidence Rule in Welfare Trust Fund Agreement

Defendant, shortly after commencing a small-scale strip-mining operation, signed a standard United Mine Workers collective bargaining agreement. He claimed that before signing he informed the union representative that he could not pay the union wage scale, or the specified royalty payments to the plaintiffs, trustees of the union welfare and retirement fund, and that he signed only after being assured that the agreement was a mere formality. Defendant did not pay union wages, and sent monthly checks to the plaintiffs only in amounts he felt he could afford. Plaintiffs brought suit on the written agreement for payment of the royalties on coal mined by the defendant and were awarded a summary judgment. On appeal, held, reversed and remanded, one judge dissenting. The facts were not sufficiently established to determine whether or not the parol evidence rule should be invoked; but if the defendant can show that the signed contract was not the real agreement between himself and the union, he should not be held liable on the written terms.

Lewis v. Lowry, 295 F.2d 197 (4th Cir. 1961).