Genix Supply Co. v. Board of Trustees of Health and Ins. Fund for Carpenters Local Union No. 971
| Decision Date | 29 March 1968 |
| Docket Number | No. 5421,5421 |
| Parties | GENIX SUPPLY CO., Appellant, v. BOARD OF TRUSTEES OF the HEALTH AND INSURANCE FUND FOR CARPENTERS LOCAL UNION NO. 971 et al., Respondents. |
| Court | Nevada Supreme Court |
R. W. Porter, Inc., a licensed contractor, was obligated under the terms of a master collective bargaining agreement to pay certain prescribed contributions to the trustees of the unions' health and insurance and pension plans for the membership. The contractor defaulted in those payments, $3,715.06 in one instance and $7,352.80 in the other. Porter having gone out of business, the trustees filed claims for the defaulted sums against the two $5,000 bonds Porter had deposited with the state when he obtained his contractor's license pursuant to Chapter 624 of the 1963 Nevada Revised Statutes then in effect. 1
Genix Supply Co. was a supplier owed monies by Porter. In the action of the trustees against the bonding companies, Genix interpleaded and cross-claimed for its unpaid bills and other creditors did the same. In all, their claims apart from the trustees' claims exceeded the face amount of the bonds.
The trial court granted summary judgment for the trustees of the welfare funds on the ground that the contributions of the employer into the funds are entitled to the priority of claims for wages under NRS 624.270(4) which provides that, 'The claim of any employee of the contractor for wages shall be a preferred claim against any such bond or cash deposit.' The other creditors, through Genix, appeal from that ruling.
We think it clear that the bonds required of contractors by NRS 624.270 are liable to claims for unpaid material and labor bills if the contractor defaults. Royal Indemnity Co. v. Special Service Supply Co., 82 Nev. 148, 413 P.2d 500 (1966), construing a bond identical to those in the instant case. Furthermore, NRS 613.125 imposes a statutory requirement upon the contractor to pay fringe benefit contributions previously agreed upon or suffer the consequences if he does not do so. Failure to pay fringe benefit contributions is either an unlawful act or an omission contemplated by NRS 624.270(3). 2
Since the claims in this case are properly chargeable against the bonds, the narrowed question is whether the unpaid fringe benefits are entitled to the wage claim priority as 'wages' (NRS 624.270(4)), or, because they are paid by the employer to the union trust funds and commingled like insurance premiums, they lose their preferred status. The amount available for distribution hangs in the balance.
The United States Supreme Court in United States v. Embassy Restaurant, Inc., 359 U.S. 29, 79 S.Ct. 554, 3 L.Ed.2d 601 (1959), limited the definition of 'wages' to in-pocket monies due the worker. The court stated that welfare fund contributions do not have the customary attributes of wages, that notwithstanding the contention that since 'unions bargain for these contributions as though they were wages,' and industry likewise considers them 'as an integral part of the wage package,' nevertheless the contributions to the trust funds do not serve the purpose of a cushion that the bankruptcy act priority intended. (See also In the Matter of A. & S. Electric Corp., 379 F.2d 211 (2nd Cir. 1967).)
In our view, United States v. Embassy Restaurant, supra, is confined to its own function, the determination of relative priorities of classes of creditors in a bankruptcy action before a bankruptcy court. It need not apply to other statutes (United States for the Benefit and on Behalf of Sherman v. Carter, 353 U.S. 210, 77 S.Ct. 793, 1 L.Ed.2d 776 (1957), a Miller Act case) or to local problems. True, welfare funds offer no support to the workman against the economic dislocation caused by an employer's bankruptcy, but in a federal bankruptcy all of the assets and liabilities are marshalled. There is no other place the creditors can go. In this case, there may be other avenues of relief available to creditors, for example, a suit against Porter (see NRS 624.270(4)), or participation in bankruptcy proceedings. We need concern ourselves only with the relative placement of two types of claims, one for labor and one for materials and the statute says labor comes first.
Our state has consistently declared a policy of providing balance to the unbalance between labor and business. For their respective purposes we have the office of labor commissioner, workmen's compensation, unemployment legislation, laws regulating hours and wages and others. The preference given in the statute we now are considering is consistent with that policy and we would be inconsistent if we rule that wages are not wages for this purpose. Simply because some of the workman's pay goes into a fund for his sickness and oldage security...
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