Joint Industry Board of the Electrical Industry v. United States

PETITIONER: Joint Industry Board of the Electrical Industry
RESPONDENT: United States

DECIDED BY: Warren Court (1967-1969)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 391 US 224 (1968)
ARGUED: Mar 25, 1968
DECIDED: May 20, 1968

Facts of the case


Media for Joint Industry Board of the Electrical Industry v. United States

Audio Transcription for Oral Argument - March 25, 1968 in Joint Industry Board of the Electrical Industry v. United States

Earl Warren:

Number 616, Joint Industry Board of the Electrical Industry et al., petitioner versus United States.

Mr. Stern?

Harold Stern:

Thank you, Your Honor.

May it please the Court?

This case is here pursuant to a petition for certiorari granted by this Court on December 6th -- December 4th, 1967.

The issue involved in this case is whether payments made by employers to the annuity fund of the Electrical Industry, which payments are earmarked for the employees of the contributing employers and credited to their respective accounts and establish fixed vested interests for those employees, constitute wages within the meaning of Section 64a (2) of the Bankruptcy Act.

Earl Warren:

May I ask you, is that precisely the same issue we had here in United States against the Embassy Restaurant?

Harold Stern:

I don't believe it's the same case --

Earl Warren:

You do not believe it's the same?

Harold Stern:

I think it's -- Very frankly, I don't know whether the Court wants to review the Embassy case.

I'm representing the annuity plan here.

I think the facts in this case are a little different from the Embassy case and that's what I intend to argue.

I think, from my argument and as a general principle and from the developments of pension funds, which during the last 10 years after the decision of the Embassy case have fixed vested rights --

William J. Brennan, Jr.:

That's your distinction, isn't it?

Harold Stern:


William J. Brennan, Jr.:

These are vested rights (Voice Overlap).

Harold Stern:

Vested rights and --

William J. Brennan, Jr.:

-- that was not include of what is before us in Embassy, is that it?

Harold Stern:


Now, in this case, the A & S Electric Company filed an arrangement for the benefit of creditors, Chapter XI proceeding and was subsequently adjudicated a bankrupt.

In the bankruptcy proceeding, the Joint Industry Board of the Electrical Industry, which supervises all of the various trust funds, filed a claim on behalf of several trust funds.

One was the Welfare and Pension Fund of the electrical industry, which was Welfare and Pension Fund as distinguished from the annuity plan in this case.

Another was a vacation fund; another was the employees' Disability Fund where the employee was to contribute for the state disability; and a number of others, including the annuity fund.

The total amount of the claim was some $10,000 but the payment to the annuity plan amounted to $5114 and covered some 40 employees who are employed there to whom moneys were owed.

And this annuity plan was established Your Honors in 1954.

It is a plan which was unique at that time.

A simple plan but there wasn't a similar plan in existence.

What happened when a collective bargaining agreement was negotiated, Your Honors, was that the union in negotiating an agreement requested that an annuity plan should be established and instead of the wage rate being increased with the result that there would be a withholding tax on the increased wages, deemed it advisable for the benefit of its members to provide them with security when they retired, when they're permanently disabled, if they left the industry and to the Armed Services or in case of death.

So instead of taking an increase in wages to the extent of $4 a day, they agreed that this $4 a day should be submitted to this annuity plan so that they would save the withholding tax at the time the wages were paid and would pay the taxes at a later date when they retire or in the event of death, which would be in a much lower bracket.

Now, this is not to be criticized as the plan.