The History of Trade Unionism / (Revised edition, extended to 1920)

by Sidney Webb; Beatrice Webb

The Osborne Judgement

This time the legal assault on Trade Unionism took a new form. The result of the dramatic victory of the Trade Disputes Act, and of the activity of the Labour members in the House of Commons, was considerably to increase the influence of the Labour Party in the country, where preparations were made for contesting any number of constituencies irrespective of the convenience of the Liberal and Conservative parties. The railway companies, in particular, found the presence in Parliament of the secretary of the railwaymen’s principal Trade Union very inconvenient. Within a couple of years of the passing of the Trade Disputes Act, on July 22, 1908, one of the members of the Amalgamated Society of Railway Servants took legal proceedings to restrain it from spending any of its funds on political objects, contending that this was beyond the powers of a Trade Union. Such a contention found no support among eminent lawyers, several of whom had formally advised that Trade Unions were undoubtedly entitled to undertake political activities if their rules authorised such action and a majority of their members desired it. W. V. Osborne, the dissentient member of the Amalgamated Society of Railway Servants, took a different view; and, liberally financed from capitalist sources, carried his case right up to the highest tribunal. As a result, in December 1909, as in 1825, 1867-71, and 1901-6, every Trade Union in the land found its position and status once more gravely impugned. In what became widely known as the Osborne Judgement, the House of Lords, acting in its judicial capacity as the highest Court of Appeal, practically tore up what had, since 1871, been universally understood to be the legal constitution of a Trade Union. [662]

The decision of the judges in the Osborne case throws so much light, not only on the status of Trade Unionism in English law, but also on the animus and prejudice which the Trade Disputes Act and the Labour Party had excited, that we think it worth treating at some length. Formally this judgement decided only that W. V. Osborne, a member of the Walthamstow Branch of the Amalgamated Society of Railway Servants, was entitled to restrain that Trade Union from making a levy on its members (and from using any of its funds) for the purpose of supporting the Labour Party, or maintaining Members of Parliament. But in the course of that decision a majority of the Law Lords, therein following all three judges of the Court of Appeal, laid it down as law (and thereby made it law until Parliament should otherwise determine), (a) that although Parliament has always avoided any express incorporation of Trade Unions, these were all now to be deemed to be corporate bodies, formed under statute, and not unincorporated groups of individual persons; (b) that it follows, by an undoubted principle of English law, that a body corporate, created under statute, cannot lawfully do anything outside the purposes for which the statute has incorporated it; (c) that as the purposes for which Trade Unions are incorporated have to be found somewhere authoritatively given, the definition which Parliament incidentally enacted in the Trade Union Act of 1876 must be taken to enumerate, accurately and exhaustively, all the purposes which any group of persons falling within that definition can, as a corporate body, lawfully pursue; and (d) that the payment of the salaries and election expenses of Members of Parliament, and indeed, any political action whatsoever, not being mentioned as one of these purposes and not being considered by the judges incidental to them, could not lawfully be undertaken by any Trade Union, even if it was formed, from the outset, with this purpose duly expressed in its original rules, and even if all its members agreed to it, and continued to desire that their organisation should carry it out.

This momentous judgement destroyed, at a blow, the peculiar legal status which Frederic Harrison had devised for Trade Unionism in 1868, and which Parliament thought that it had enacted in 1871-76. The statutes of 1871 and 1876, which had always been supposed to have enlarged the freedom of Trade Unions, were now held to have deprived these bodies of powers that they had formerly enjoyed. It was not, as will be seen, a question of protecting a dissentient minority. Whether the members were unanimous, or whether they were nearly evenly divided, did not affect the legal position. Trade Unions found themselves suddenly forbidden to do anything, even if all their members desired it, which could not be brought within the terms of a clause in the Act of 1876, which Parliament (as Lord James of Hereford emphatically declared) never meant to be taken in that sense. “What is not within the ambit of that statute,” said Lord Halsbury, “is, I think, prohibited both to a corporation and a combination.” This was the new limitation put on Trade Unions. All their educational work was prohibited; all their participation in municipal administration was forbidden; all their association for common purposes in Trades Councils and the Trades Union Congress became illegal. The judges stopped the most characteristic and, as was supposed, the most constitutional of the three customary ways that (as we have shown in our Industrial Democracy) Trade Unions pursued of enforcing their Common Rules, namely, the Method of Legal Enactment; grave doubt was thrown on the legality of some of the developments of their second way, the Method of Mutual Insurance; whilst the way that the House of Lords expressly prescribed was exactly that which used to give rise to so much controversy, namely, the Method of Collective Bargaining, with its concomitant of the Strike. So topsy-turvy a view of Trade Unionism, a view which seems to have arisen from the judges’ ignorance of its two centuries of history, could not have survived open discussion, and therefore could hardly have been taken by even the most prejudiced Parliament.