391 U.S. 224 (1968), 616, Joint Industry Board of the Electrical Industry v. United States

Docket Nº:No. 616
Citation:391 U.S. 224, 88 S.Ct. 1491, 20 L.Ed.2d 546
Party Name:Joint Industry Board of the Electrical Industry v. United States
Case Date:May 20, 1968
Court:United States Supreme Court
 
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Page 224

391 U.S. 224 (1968)

88 S.Ct. 1491, 20 L.Ed.2d 546

Joint Industry Board of the Electrical Industry

v.

United States

No. 616

United States Supreme Court

May 20, 1968

Argued March 25, 1968

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

An employer's unpaid contributions to an employees' annuity plan established by a collective bargaining contract are not entitled to a priority under § 64a(2) of the Bankruptcy Act, which grants priority, limited to $600 and to wages earned within three months before commencement of bankruptcy proceedings, to "wage . . . due to workmen." United States v. Embassy Restaurant Inc., 359 U.S. 29 (1959), followed. Pp. 225-229.

379 F.2d 211, affirmed.

WHITE, J., lead opinion

MR. JUSTICE WHITE delivered the opinion of the Court.

Section 64a(2) of the Bankruptcy Act, 30 Stat. 563, 11 U.S.C. § 104(a)(2), grants priority over the claims of other creditors to "wages . . . due to workmen, . . ." the priority being limited to $600 and to wages earned within three months before the commencement

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of the proceedings.1 The question before us is whether priority under 64a(2) must be accorded to an employer's unpaid contributions to an employees' annuity plan established by a collective bargaining contract. The referee and the District Court denied the priority, and the Court of Appeals affirmed. In re A & S Electric Corp., 379 F.2d 211 (C.A.2d Cir.1967). We granted certiorari, sub nom. Joint Industry Board of the Electrical Industry v. United States, 389 U.S. 969 (1967). We affirm the judgment.

The Annuity Plan of the Electrical Industry in New York City was established by a collective bargaining agreement between Local Union No. 3, International Brotherhood of Electrical Workers, AFL-CIO, and four associations of electrical contractors. The plan covers all employees in the bargaining unit represented by the union, and is funded by employer contributions of "Four Dollars ($4.00) per day for each day worked or each holiday for which payment is received by his employees. . . ." Payments are made to trustees who are empowered to collect and administer the contributions under the provisions of the plan. These trustees are the petitioners here. Contributions received by the

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trustees are credited to the account of the individual employees but are "payable to him only as hereinafter provided," namely, upon death, retirement from the industry at age 60, permanent disability, entry into the Armed Forces, or ceasing to be a participant under the plan. Death benefits are paid only out of income, if available, and other benefits, though they may be payable in installments, will at a minimum return to the employee the total of the contributions credited to his name, without interest.

A & S Electric Corporation, an employer liable for contributions to the annuity plan, was adjudicated a bankrupt in 1963. The Joint Industry Board filed a claim which included $5,114 representing payments under the plan which fell due but were unpaid during the three months prior to the commencement of the proceedings. Priority for this amount was asserted under § 64a(2). The United States, with a fourth-class priority claim for unpaid taxes, objected to the allowance of the Joint Board's [88 S.Ct. 1493] priority claim. The referee and the courts agreed with the United States, holding that payments due to the Joint Board were not wages due to workmen, relying for this conclusion principally upon United States v. Embassy Restaurant Inc., 359 U.S. 29 (1959).

We agree that Embassy Restaurant controls this case. There, the claim was for unpaid employer contributions to a welfare fund, the contributions being $8 per month for each full-time employee; the fund provided life insurance, weekly sick benefits, hospital and surgical payments, and other advantages for covered employees. That claim, the Court held, was not entitled to § 64a(2) priority because payments to such a welfare fund did not satisfy the manifest purpose of the priority, which was

to enable employees displaced by bankruptcy to secure, with some promptness, the money directly due to them in back wages, and thus to alleviate

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in some degree the hardship that unemployment usually brings to workers and their families.

359 U.S. at 32.2 The contributions involved there were payable to trustees, not to employees, and were disbursable to employees only on the occurrence of certain events, not including the bankruptcy of the employer. Neither the contributions nor the plan provided any immediate support for workmen during the period of financial distress.

The case before us concerns employer contributions to the welfare fund which are similarly not due the employees and never were; they were payable only to the trustees, who had the exclusive right to hold and manage the fund. Though the contributions were credited to...

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