Kavanas v. Mead, 5794.

• Decision Date: 20 December 1948
• Docket Number: No. 5794.,5794.
• Citation: 171 F.2d 195
• Parties: KAVANAS et al. v. MEAD.
• Court: U.S. Court of Appeals — Fourth Circuit

171 F.2d 195 (1948)

KAVANAS et al. v. MEAD.

No. 5794.

United States Court of Appeals Fourth Circuit.

December 20, 1948.

Melvin W. Kahle, of Wheeling W. Va., for appellants.

Carl G. Bachmann, of Wheeling, W. Va., for appellee.

Hugh Wells, of Cleveland, Ohio, and Charles McCamic, of Wheeling, W. Va., amici curiae.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

SOPER, Circuit Judge.

This is an appeal from a decree in bankruptcy which denied priority to certain wage claims of miners in the employ of the bankrupt, Warner Coal Corporation, and allowed them merely as general claims. The governing statute, Section 64, sub. a(2) of the Chandler Act, 11 U.S.C.A. § 104, sub. a(2), provides: "The debts to have priority, in advance of payment of dividends to creditors, and to be paid in full out of bankrupt estates, and the order of payment, shall be * * * (2) wages, not to exceed $600 to each claimant, which have been earned within three months before the date of the commencement of the proceeding, due to workmen, servants, clerks, or traveling or city salesmen on salary or commission basis, whole or part time, whether or not selling exclusively for the bankrupt." The question on this appeal is whether the wages claimed by the miners were "earned within three months before the date of the commencement of the proceeding."

Warner Coal Corporation ceased mining operations on June 15, 1943. It had been involved in litigation in the Common Pleas Court of Cuyahoga County in the State of Ohio, which resulted on June 17, 1943, in an attachment of Warner's bank balance in the sum of $3477; and the suffering of this lien while insolvent constituted the act of bankruptcy on which were based the involuntary petition in bankruptcy filed against Warner on October 9, 1943, and the adjudication in bankruptcy on February 10, 1944. See Warner Coal Corp. v. Costanzo, 4 Cir., 144 F.2d 589. A receiver was appointed in the bankruptcy proceedings on October 22, 1943, and began to operate the mine on October 23, 1943. From June 15 to October 23, Warner retained only a small maintenance crew. The receiver, although not a party to the contract between the operators and the miners' union, nevertheless operated the mine according to its terms.

The current wages up to October 1, 1943, were paid by the bankrupt. The District Judge held that wages earned from October 1 to October 9, 1943, were entitled to priority, and that wages earned from October 9 to October 23, when the receiver began operations, should be allowed as part of the necessary costs of preserving the bankrupt estate. In the order authorizing the receiver to operate the mines, the District Judge expressly stated that the basic wages of the miners, after the date of the appointment of the receiver, would be preferred charges against the receiver, and this statement has been given effect. The District Judge, however, refused priority to the claims involved in this appeal on the theory that the amounts claimed were not earned within three months before October 9, 1943, when the petition in bankruptcy was filed. These claims are as follows:

1. (Lamp Refunds) From April 1 to June 7, 1943, the bankrupt deducted 8c per shift from each man's wages for the use of lamps furnished by the employer. On June 7, 1943, a directive of the War Labor Board required the operators, including the Warner Coal Corporation, thereafter to furnish the lamps without charge and also to refund the money deducted for this purpose between April 1 and June 7 on the next pay day which, in this case, would have been July 10, 1943. These claims amount to $1261.68.

2. (Back Pay) Under the contract in force between the miners and the operators between April 1 and June 7, 1943, stonepickers' wages amounted to $5.15 per day. Under the directive of the War Labor Board of June 7, these wages were raised to $6.00 per day and the increase was made retroactive to April 1, 1943, and the refund became payable on July 10, 1943, the next pay day. These claims amount to $293.06.

3. (Portal to Portal Pay) On December 17, 1943, the United Mine Workers and the coal operators signed a compromise agreement which fixed the amount to be paid to the miners for portal to portal pay from April 1 to June 20, 1943. The contract provided that each miner on the pay roll during this period should be paid not later than June 25, 1944, the sum of $40, (50c per day for 80 days) in full satisfaction of his claim for portal to portal pay, which should have been included in his weekly pay during the period, under the decision of the Supreme Court in Jewel Ridge Coal Corp. v. Local No. 6167, 325 U.S. 161, 65 S.Ct. 1063, 89 L.Ed. 1534, These claims amount to $16,915.50.

4. (Vacation Pay) These claims relate to vacation pay for the period from June 28, 1942, to June 27, 1943, in the sum of $14,950, and vacation pay for the period from June 28, 1943 to October 23, 1943, in the sum of $2885.48. Under the contract between the miners and the operators the vacation pay for the first mentioned period would have amounted to $20 for each miner, payable on June 25, 1943, subject to the provision, however, that qualified employees of mines which suspended operations prior to the end of the qualifying period and remained idle for the balance thereof, should receive their vacation pay not later than the third pay day after the resumption of operations which, in this case, would have been December 10, 1943. A directive of the War Labor Board of May 25, 1943, increased the vacation pay from $20 to $50 per man.

During a part of the year beginning June 28, 1943, that is from June 28, 1943, to October 23, 1943, the mine was idle and only a maintenance crew was employed. The receiver, who began operations on October 23, 1943, paid to the men employed by him a proportionate part of the vacation pay for this year based upon the time that they were employed by him, that is to say, from October 23, 1943, to June 27, 1944. The District Court held that the miners who earned no wages from July 9 to October 9, when the bankruptcy proceedings were instituted, were not entitled to priority for vacation pay for this period, but allowed the amounts claimed as general claims against the estate. Miners who earned wages from July...