NATHANSON, TRUSTEE IN BANKRUPTCY, v. NATIONAL LABOR RELATIONS BOARD.
No. 33
Supreme Court of the United States
Argued October 23, 1952.—Decided November 10, 1952.
344 U.S. 25
Mozart G. Ratner argued the cause for respondent. With him on the brief were Acting Solicitor General Stern, George J. Bott, David P. Findling, Owsley Vose and Irving M. Herman.
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 back pay 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 back pay 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
The claim is provable as a debt founded upon an “implied” contract within the meaning of
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
It is true that Bramwell v. U. S. Fidelity 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 discrimination by the back pay 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 United States in eradicating unfair labor practices is so great that the back pay order should be given the additional sanction of priority in payment. Whether that should be done is a legislative decision. The contest now is no longer between employees and management but between various classes of creditors. The policy of the National Labor Relations Act is fully served by recognizing the claim for back pay as one to be paid from the estate. The question whether it should be paid in preference to other creditors is a question to be answered from
The trustee claims that the liquidation of the back pay award should not have been referred to the Board.
The bankruptcy court normally supervises the liquidation of claims. See Gardner v. New Jersey, 329 U. S. 565, 573. But the rule is not inexorable. A sound discretion may indicate that a particular controversy should be remitted to another tribunal for litigation. See Thompson v. Magnolia Co., 309 U. S. 478, 483. And where the matter in controversy has been entrusted by Congress to an administrative agency, the bankruptcy court normally should stay its hand pending an administrative decision. That was our ruling in Smith v. Hoboken R. Co., 328 U. S. 123, and Thompson v. Texas M. R. Co., 328 U. S. 134, where we directed the reorganization court to await administrative rulings by the Interstate Commerce Commission before adjudicating the controversies before it. Like considerations are relevant here. It is the Board, not the referee in bankruptcy nor the court, that has been entrusted by Congress with authority to determine what measures will remedy the unfair labor practices. We think wise administration therefore 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.
In summary, we agree with the Court of Appeals that the claim was provable by the Board and that the computation of the amount of the award was properly referred to the Board. But since we disagree with the rul-
It is so ordered.
MR. JUSTICE JACKSON, with whom MR. JUSTICE BLACK joins, dissenting.
I think we should affirm the judgment below. I agree that the claim is one which can be proved in bankruptcy by the United States. The same reasoning which enables the Government to assert the claim would seem to enable it to assert the priority.
The claims which the United States asserts herein are something more than merely private indebtedness. The debtor‘s liability, enforceable only by the Government, is one of the most important sanctions to effectuate the policy of the National Labor Relations Act. That is one, at least, of the reasons why Congress did not see fit to leave prosecution of these usually small claims to scattered and often impecunious individual wage earners in a multiplicity of actions.
I see nothing in the policy of the Bankruptcy Act which precludes these claims, allowed in the Government‘s right and in its name, from sharing in the Government‘s general priority.
It can hardly be questioned that Labor Board awards constitute wages or their equivalent, but beneficiaries of
The judgment below denies these claims second priority but admits them to the fifth class. Ahead of them, in the fourth class, are all taxes owing to the United States and to any state or subdivision, and this obviously is the priority intended to protect the federal revenues. Only after all revenue requirements are thus satisfied does the judgment below allow these claims to be paid. The Bankruptcy Act in this fifth category certainly contemplates a class of Government claims not arising out of taxation. It does not seem to me inappropriate to consider the relation of the Government to the wronged laborer established by the Labor Relations Act as analogous to the Government‘s wardship toward Indians, found to warrant invocation of its priority in Bramwell v. United States Fidelity Co., 269 U. S. 483. The slogan “equality of distribution” can have little meaning when we are considering a section of a statute designed to establish inequality by a series of priorities. To protect the bankrupt‘s estate against inequalities caused by the unlawful preferences attempted by the bankrupt is one thing; to invoke such a “theme” to level out priorities created by statute is another.
While the legislation is not as complete or clear as one would like, supplying the rule for conflicts unanticipated by Congress is a large part of our work and I think the courts below have arrived at a practical solution of this question that accomplishes the purposes both of the Bankruptcy Act and the National Labor Relations Act. I would therefore affirm.