The sole issue involved here is whether contributions by an employer to a pension trust fund, which are required by a collective bargaining agreement, are entitled to priority as "wages" under N.J.S. 2 A:19-30.
National Meat Supply Co., Inc. (National) made an assignment for the benefit of its creditors pursuant to the provisions of N.J.S. 2 A:19-1 et seq. The assignee has filed his final account. He has made application for an order of payment of priority claims filed with him as such assignee. The United States of America has filed a claim in the sum of $311.27 which has first priority. There is no dispute that the wage claims of Anthony Bello and William J. Baumann, in the sums of $156.96 and $300, respectively, are preferred claims within the meaning of N.J.S. 2 A:19-30. This court is called upon to determine whether the claim of the Provision Salesmen & Distributor's Union, Welfare & Pension Fund, in the amount of $292.38, is entitled to priority as "wages due" from the assignor.
N.J.S. 2 A:19-30 provides:
"The wages of clerks, mechanics and laborers due from the assignor at the time of the general assignment including wages fully earned though not then payable, shall be preferred and shall be paid by the assignee before any other claim or debt. * * *" (Emphasis supplied)
Article XII of the agreement between the Provision Salesmen and Distributors Union Local 627 and National provides that:
"The Employer agrees that on the first day of each month to pay Three ($3.00) Dollars per man, per week, payable to the Provision Salesmen & Distributors Union, Pension Trust Fund.
It is hereby expressly agreed that for the purpose of the United States Bankruptcy Act or any State insolvency or debtor and creditor laws, the contributions payable by the Employer to the Provision Salesmen & Distributors Union Welfare Trust Fund and Pension Trust Fund as aforesaid shall be considered as wages and have priority as such provided in said act or such laws with respect to wages, and that the Trustees of the Trust Funds shall be deemed separate claimants with respect to each employee for whom contributions due shall have not been paid."
Counsel has not cited, nor has this court discovered, any authorities in New Jersey deciding this question. The union contends that welfare and pension funds are "wages" in that the same are negotiated between labor and management on behalf of workmen, and there is recognition that such costs are direct labor costs and applied as such. The theory and argument is that payments made to the fund are moneys the employee earns by reason of his work, and they are paid for such labor performed.
It would be instructive to review the provisions of the Bankruptcy Act, section 64, subsection (a)(2), 11 U.S.C.A. § 104(a)(2). The cited provision of the Bankruptcy Act provides that one of the debts to have priority is "wages and commissions, 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." (Emphasis supplied)
The question whether contributions by an employer to a union welfare or other trust fund, which are required by collective bargaining agreements, are "wages" entitled to priority payment in a bankruptcy proceeding, has caused considerable difficulty in the federal courts. Generally supporting the principle advanced by the union is In re Otto , 146 F. Supp. 786 (D.C.S.D. Cal. 1956); Martin v. William Casey & Sons, Inc. , 5 A.D. 2 d 185, 170 N.Y.S. 2 d 228 (App. Div. 1958);*fn* Matter of Embassy Restaurant, Inc. , 254 F.2d 475 (3 Cir. 1958); contra; In re Brassel , 135 F. Supp. 827 ...