344 U.S. 25 (1952), 33, Nathanson v. Labor Board

Docket Nº:No. 33
Citation:344 U.S. 25, 73 S.Ct. 80, 97 L.Ed. 23
Party Name:Nathanson v. Labor Board
Case Date:November 10, 1952
Court:United States Supreme Court
 
FREE EXCERPT

Page 25

344 U.S. 25 (1952)

73 S.Ct. 80, 97 L.Ed. 23

Nathanson

v.

Labor Board

No. 33

United States Supreme Court

Nov. 10, 1952

Argued October 23, 1952

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

Syllabus

The National Labor Relations Board ordered a company to pay certain employees backpay. After an involuntary petition in bankruptcy had been filed against the company, the Court of Appeals decreed enforcement of the Board's order. The Board filed in the bankruptcy proceeding a proof of claim for the backpay.

Held:

1. The Board is a "creditor" as respects the backpay awards, within the meaning of the Bankruptcy Act. Pp. 26-27.

2. The Board's backpay order is a provable claim in bankruptcy -- as a debt founded upon an "implied" contract within the meaning of § 63(a)(4) of the Bankruptcy Act. P. 27.

3. The Board's claim is not a debt due to the United States within the meaning of R.S. § 3466, and it is not entitled to priority under § 64(a)(5) of the Bankruptcy Act, though it is entitled to such priority as wage claims enjoy under § 64(a)(2). Bramwell v. United States Fidelity Co., 269 U.S. 483, distinguished. Pp. 27-29.

4. Computation of the amount of the backpay award was properly referred to the Board by the bankruptcy court. Pp. 29-30.

(a) The fixing of the backpay is one of the functions confided to the Board as an administrative matter. Pp. 29-30.

(b) Wise administration demands that the bankruptcy court accommodate itself to the administrative process and refer to the Board the liquidation of the claim, giving the Board a reasonable time for its administrative determination. P. 30.

194 F.2d 24 reversed.

A proof of claim filed by the National Labor Relations Board, based on a backpay award against the bankrupt, was disallowed by the referee in bankruptcy. The District Court set aside the disallowance. 100 F.Supp. 489. The Court of Appeals affirmed. 194 F.2d 248. This

Page 26

Court granted certiorari. 343 U.S. 962. Reversed and remanded, p. 31.

DOUGLAS, J., lead opinion

MR. JUSTICE DOUGLAS delivered the opinion of the Court.

Respondent, the National Labor Relations Board, issued a complaint against the present bankrupt company alleging unfair labor practices, and, after appropriate proceedings, ordered the bankrupt to pay certain employees backpay which they had lost on account of an unfair labor practice of the bankrupt. Before the order was enforced by the Court of Appeals, an involuntary petition had been filed against the company. Thereafter, the Court of Appeals entered its decree enforcing the Board's order. In due course, the Board filed a proof of claim for the backpay, which was disallowed by the referee. The District Court set aside the disallowance. 100 F.Supp. 489. The Court of Appeals affirmed, 194 F.2d 248, holding that the Board's order is a provable claim in bankruptcy, that the Board can liquidate the claim, and that it is entitled to priority as a debt owing to the United States under § 64(a)(5) of the Act. The petition for certiorari was granted because of a [73 S.Ct. 82] conflict on the question of priority between that decision and Labor Board v. Killoren, 122 F.2d 609, decided by the Court of Appeals of the Eighth Circuit.

Page 27

We think the Board is a creditor, as respects the backpay awards, within the meaning of the Bankruptcy Act.1 The Board is the public agent chosen by Congress to enforce the National Labor Relations Act. Amalgamated Workers v. Edison Co., 309 U.S. 261, 269. A backpay order is a reparation order designed to vindicate the public policy of the statute by making the employees whole for losses suffered on account of an unfair labor practice. Phelps Dodge Corp. v. Labor Board, 313 U.S. 177, 197. Congress has made the Board the only party entitled to enforce the Act. A backpay order is a command to pay an amount owed the Board as agent for the injured employees. The Board is therefore a claimant in the amount of the backpay.

The claim is provable as a debt founded upon an "implied" contract within the meaning of § 63(a)(4) of the Bankruptcy Act.2 It is an indebtedness arising out of an obligation imposed by statute -- an incident fixed by law to the employer-mployee relationship. A liability based on quasi-ontract is one on an "implied" contract within the meaning of § 63(a)(4) of the Bankruptcy Act. See Brown v. O'Keefe, 300 U.S. 598, 606-607.

We do not, however, agree with the lower court that this claim, enforceable by the Board, is a debt due to the United States within the meaning of R.S. § 3466, and therefore entitled to priority under § 64(a)(5) of the Bankruptcy Act. It does not follow that, because the Board is an agency of the United States, any debt owed it is a debt owing the United States within the meaning of R.S. § 3466. The priority granted by that statute

Page 28

was designed "to secure an adequate public revenue to sustain the public burthens and discharge the public debts." See United States v. State Bank, 6 Pet. 29, 35. There is no function here of assuring the public revenue. The beneficiaries of the claims are private persons, as was the receiver in American Surety Co. v. Akron Savings Bank, 212 U.S. 557.

It is true that Bramwell v. United States Fidelity & Guaranty Co., 269 U.S. 483, extended the priority to a claim of the United States for Indian moneys. But that case rests on the status of the Indians as wards of the United States, see Bowling v. United States, 233 U.S. 528, and the continuing responsibility which it has for the protection of their interests. See United States v. Rickert, 188 U.S. 432, 444; Board of Commissioners v. Seber, 318 U.S. 705. We cannot extend that reasoning so as to give priority to a claim which the United States is collecting for the benefit of a private party. See American Surety Co. v. Akron Savings Bank, supra. The beneficiaries here are not wards of the federal government; they are wage claimants who were discriminated against by their employer. The Board has eliminated the discriminated by the backpay order, and enforcement of its order has been directed by the Court of Appeals. The full sanction of the National Labor Relations Act has therefore been placed behind the order. The Board argues that the interest of the [73 S.Ct. 83] United States in eradicating unfair labor practices is so...

To continue reading

FREE SIGN UP