01-1622 Laborers' Pension Fund v. A & C Environmental Inc.

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“Where a person is fraudulently induced to sign or endorse a bill or note in the reasonable belief that he is signing something else, he cannot really be said to have made or indorsed the bill or note; hence the ancient plea of non est factum is applicable. He is in effect stating that this is not his contract; in fact, it is not a contract at all. … Congress surely did not mean to allow pension funds to collect contributions from employers whose signatures had been forged on instruments containing collective bargaining agreements, and it is no more likely that it intended to allow funds to collect on contracts that are void because of fraud in the execution.

“Although fraud in the execution is a viable defense under ERISA section 515, A & C has not made out the defense. In order to establish the defense of fraud in the execution, A & C had to prove that it did not know that it was signing a collective bargaining agreement that obligated it to make contributions to the Funds and that its ignorance was excusable because it had reasonably relied upon the representations of the union representative.

“Mr. Clark was given a one-page form, which he filled out himself, writing the name of the company directly below the caption, ‘COLLECTIVE BARGAINING AGREEMENT.’ App. of Appellants at 129. Moreover, the record reveals that Mr. Clark was well aware of the fact that the act he was undertaking usually entailed the very result that occurred-the inclusion of all of the company’s operations, not just the work of a few employees, under any contract with the Union. That possibility had been the subject of a previous discussion in which he expressed his concerns to Mr. Frattini that if a company ‘goes union … it covers all their company operations.’ Tr.V at 187. Mr. Clark, therefore, should have been on the lookout for just such a clause in the document he was signing. It was not reasonable for Mr. Clark to forego the opportunity to review the document. A & C points out that Mr. Clark only had a high school education, but as a representative of A & C with the power to enter into contracts for the company, Mr. Clark ought to have known not to sign something on behalf of the company without reading it first.”

Reversed and remanded.

Appeal from the United States District Court for the Northern District of Illinois, Darrah, J., Ripple, J.