Warren E. Burger: Mr. Keeley, you may proceed whenever you’re ready.
Charles F. Keeley: Mr. Chief Justice, may it please the Court. Michigan instituted this action back in 1966 tactically on the invitation of Governor Rhodes who indicated that it would be quicker to solve the controversy between the north cape of Maumee Bay to the international boundary. We filed this matter with this Court was referred to Special Master Maris for hearing. He held several hearings and finally he made a report. It is this report for which Michigan has found some exceptions. The first exception that the State of Michigan finds is that the Special Master did not correctly relocate the north cape of Maumee Bay. I would refer you to finding number 31 in which he said that the location of the north cape of Maumee Bay can be found by referring to Captain Anthony -- to Captain A. Talcott’s survey.
Warren E. Burger: Mr. Keeley.
Charles F. Keeley: Yes, sir? I beg your pardon.
Warren E. Burger: Could you tell us what page on the -- would it be Page 15?
Charles F. Keeley: Yes, Page 15. At that time, it was recognized by the Special Master that that is a correct conclusion as to what the north cape of Maumee Bay was in 1835. There was absolutely no evidence in this record to say that the north cape had washed away by 1836. So we would submit that this is the better method of finding the north cape of Maumee Bay and we’d also like to cite the matter of Chinoweth versus Haskell, which 28 United States Reports Page 92. This case said that courses and distances should be regarded in locating boundaries.
Harry A. Blackmun: Mr. Keeley, will you somewhat enlighten me as to why this case is very important to the State of Michigan? Are there islands or -- that are at issue or is the land under the water important some time or is it just because you want the matter finally determined?
Charles F. Keeley: No, I think the rules in that this case began, Your Honor, is because there was oil and gas believed to have been underneath this water and additionally there have been some other mineral developments that are not in the record at all but are important to both states.
Harry A. Blackmun: I see, well that’s -- it just hadn’t come clear to me and I wondered what was all about.
Charles F. Keeley: When the Special Master made his relocation of the north cape of the Maumee Bay, he did not determine pursuant to the statute of 1836, that’s June 15, 1836, but he relied on the survey by Engineer Gannet when there was a joint commission between -- provided by these two states to survey the land boundary. And when he relocated that line, he used the same degree of measurement from Post 70 to 71 until it intersected with itself, 45 degree angle from the existing seawall on Turtle Island. That is why we believe that our position is correct because it is a contemporary with the statute of 1836. It was a statute and a report of which was before the Congress at that time that the statute was passed. Judge Maris assumed that the line would be North 87 degrees 49 minutes and 44 seconds East and there is no way you can do that except by going back to this previous survey in the teams of the 1900, teams of the 20th century, and this is not where it should -- should have located. He should have gone back to the survey just prior to the passing of the statute.
Thurgood Marshall: The indispensable adequacy of the Congress drew the line that you say that drew in 1836 West Sister Island would be in Michigan. The Senate didn’t mean to do that, did they?
Charles F. Keeley: What island would be in Michigan?
Thurgood Marshall: West Sister Island, that’s what the Master said.
Charles F. Keeley: I am not aware that he did say that Mr. Justice.
Thurgood Marshall: Well, I get the page for it. He said, “It would be a bizarre result.” Now, let me find it. Go ahead, I’ll find it.
Charles F. Keeley: Okay. Thank you. We take a very fundamental disagreement with regard to the fact that Special Master said.
Thurgood Marshall: Did he say bizarre?
Charles F. Keeley: I believe it’s on Page 29 of his report that the statute of 1836, June 15th of 1836 is clear and unambiguous. We feel that this statute was not clear and unambiguous. We say that the 24th Congress itself felt the statute was not clear and unambiguous, because only eight days after the statute was enacted, they came and enacted another statute to define the northern boundary of the State of Ohio. And if you look at the statutes, they are almost identical from the point of view whether they ae -- thence, northeast to the international boundary line. Therefore, we believe that you must take another look at the statute and recreate the history by which it was enacted. We also put into evidence the case, the witness, Ralph Berry who comes with imminent qualifications. He is a civil engineer, he is a Professor of Geodesy at the University of Michigan and he has testified on Page 88 of the record that this is a matter that it is not clear and unambiguous. They have to take into consideration all the facts and circumstances of the case. Lastly, I would like to have this Court consider the fact that the Special Master included in his definition of the boundary line from the north cape to the international boundary line, Turtle Island, and in no way was Turtle Island a part of the statutory language defining this boundary. Turtle Island was a point of reference by Captain A. Talcott to locate the north cape of the Maumee Bay.
Potter Stewart: Well, I thought that that’s the only way the that the Special Master used it and what he did was to use the old lighthouse, which was located on Turtle Island within a very small margin of era, and he reversed the northeast course backwardly. What we’ve got is in sailing in Cal of 45-degree course, he reversed it backwardly into a 225-degree course to get to line, isn’t that right?
Charles F. Keeley: He referred to --
Potter Stewart: Through the old lighthouse?
Charles F. Keeley: That’s correct, Your Honor.
Potter Stewart: That’s the way I understood it.
Charles F. Keeley: But as far as the statute creating the boundary line is concerned, that only relocates the north cape of the Maumee Bay and has nothing to do with the -- from the north cape of the Maumee Bay. There is no reference at all in the statute.
Potter Stewart: Well, the reference is to a northeast course, isn’t it?
Charles F. Keeley: Northeast course, yes.
Potter Stewart: And northeast means 45 degrees, so the Special Master held and your claim is that it means generally northeastwardly following the previous line, isn’t that it?
Charles F. Keeley: That’s correct.
Potter Stewart: Which would be just a couple of degrees north of east, isn’t that right?
Charles F. Keeley: That’s correct.
Potter Stewart: Right.
Charles F. Keeley: And he maintains that further on the grounds that the case is -- that the statute is clear and unambiguous.
Warren E. Burger: Counsel, in the circumstances of a disagreement of this kind, do you think there is any perfect way to achieve a perfect solution?
Charles F. Keeley: I would think there is any perfect way to achieve anything except I think you can follow the statute and if you want to call that as a perfect remedy, that’s --
Warren E. Burger: Well, I am talking now about the physical factors, not statutory interpretation. Isn’t it -- what I am telling at is --
Charles F. Keeley: Yes.
Warren E. Burger: -- if you have this kind of a boundary problem, isn’t it a matter of doing the best you can with what you have to work?
Charles F. Keeley: Yes, I see what you mean Mr. Chief Justice. If you are going to do that, I suspect to one of the things you might look at would be taking a perpendicular line to the north cape and draw that as the line which would separate the two states, and -- but that was not in the evidence, that’s why I would hesitate to call that to your attention at this time, but I think that would be one way in which the parties on both sides of the Bay would get what was perhaps given to them by the Congress.
William H. Rehnquist: Perpendicular to what Mr. Keeley?
Charles F. Keeley: Perpendicular to the Bay. That’s one of the problems that would be confronted with any -- determination of that is to find out what the Bay consists of.
William H. Rehnquist: Do you mean a line across the mouth of the Bay?
Charles F. Keeley: That’s right. That’s approximately what it would be. And would it be from the north cape down to Kelley’s Island or would it be embraced from the end of the Detroit River down to some other group of islands across the Bay, across the lake. I don't have anything more. Thank you.
Warren E. Burger: Very well. Mr. Rawlings.
Charles S. Rawlings: Mr. Chief Justice and may it please the Court. The issues involved in the Michigan-Ohio boundary dispute as it goes through Lake Erie or basically to the enabling legislation at issue of course is the legislation of June 15, 1836, which legislation established the northern boundary line of the State of Ohio, and provided for the admission of the then territory of Michigan into the Union upon the conditions expressed in that statute. One of the conditions expressed was that Michigan specifically ascent to the boundary line as set forth in the statute. After some months of debate in the territory of Michigan, Michigan did ascent in December of 1836 and was admitted to the Union in January of 1837. The boundary description, of course, as it affects us in this particular dispute, extends from the southern extremity of Lake Michigan to the most northerly cape of the Maumee Bay, the most northerly cape as it existed in 1836 at the time of the enactment of the legislation before us, and from that point, northeast to the international boundary line between United States and Canada. It is and has been Ohio’s position throughout the course of this controversy that the term northeast used in the 1836 legislation means halfway between north and east or in equal point from each, and in terms of degrees that would translate into North 45 degrees East. We feel that a statute embodying this term is clear and free from ambiguity, and if that is so, it is not necessary to look to contemporary historical documentation, such as in evidence in this particular case, in order to locate the direction of the course from the former north cape to the international boundary line. If one accepts Ohio’s premise in the Special Master’s conclusion that northeast means North 45 degrees East, we are still left with the problem of relocating the former position of the north cape of the Maumee Bay. The north cape of the Maumee Bay, as it existed in 1836, has been subject to considerable erosion at that time and, of course, no longer occupies its former position. In trying to reach a solution to this problem, we are aided by several factors. Initially, we know that the land portion of the boundary line between Michigan and Ohio was monumented and surveyed by joint agreement between the two states in 1915, and currently terminates at what is known as Post 71 which is the easternmost terminal monument going toward the former land position of the north cape as it existed in 1836. That land boundary has been unchallenged so far as we are aware since 1915 and it does follow a defined course. We are further aided --
Harry A. Blackmun: Why did it take until mid 1950 to have that survey made?
Charles S. Rawlings: Apparently -- well, of course the dispute between the two states was settled in 1836 by virtue of the enabling legislation. Apparently, from 1836 until the early part of the 20th century, the territory around Toledo and Lucas County and what is northwestern Ohio was not fully developed to an extent to cause too much confusion. The report of the survey, an engineer’s report in 1915, last says, the cause of the survey, the fact that land values have been appreciating rapidly in the Toledo-Lucas County area and also states in the course of its report that there was considerable apprehension among the citizens, because of this increase in land value as to where the boundary lay, and it was therefore felt necessary by both states of Ohio and Michigan to permanently monument that particular boundary. In so doing, they attempted to retrace the boundary as set forth and monumented by William Harris in the year 1817. The stated reason again in the 1915 report is that land had been increasing and there was enough concern on the part of all land owners in the area to, at this point in time, warrant a survey of the land boundary.
Potter Stewart: This dispute, this general dispute, has a long, long history doesn’t it Mr. Rawlings and back to the so-called War of Toledo when each troops from Michigan and troops from Ohio were well on their way to a confrontation over this boundary dispute?
Charles S. Rawlings: Yes, it does Mr. Justice Stewart. The misunderstanding, of course, originally given rise to the dispute. IT was due to the incorrect position of the southern extremity of Lake Michigan as shown on most of the maps of the day, and they further dispute between the states as to whether the boundary line on the land portion should go from the southern extremity of Lake Michigan to the north cape of Maumee Bay or should be a due east line from the southern extremity of lake Michigan as your --
Harry A. Blackmun: It was a strange to say the least starting point, the southern extremity of Lake Michigan for a boundary between Ohio and the State of Michigan.
Charles S. Rawlings: Yes, although when one considers that Ohio and Michigan are part of the five states carved out of the Northwest Territory and further considers that at that point in time, Lake Michigan was perhaps the only known physical feature of that area, which could be located other than the Ohio River on the south and the Pennsylvania line on the east. It isn’t too surprising because Congress was concerned itself with carving out three states at least, perhaps five, out of the Northwest Territory. It is surprising in the sense that the position of Lake Michigan or at least its southern extreme, as shown on the prevailing maps of the day, primarily Mitchell’s Map of 1755, was generally assumed to be quite valid and showed a latitude of 42 degrees, 30 minutes north, whereas in fact the position, as shown, was considerably north of its true position. This error and this mistake and what everyone, prior to around 1818, had considered a rather fixed monument from which to draw a boundary was the cause of considerable historical prevalence between Ohio and Michigan, and as it has been alluded to, almost caused a war between the two states. Only the personal intervention of President Jackson and a considerable diplomatic maneuvering prevented armed conflict between Ohio and Michigan.
William H. Rehnquist: Mr. Rawlings, would Congress have had any reason to think that a line between the southern tip of Lake Michigan and the north cape of Maumee Bay would have been an east-west line as opposed to perhaps a more northeasterly line than it turned out to be?
Charles S. Rawlings: I don’t believe so, Your Honor. By the time a legislation of 1836 had been enacted the true position of the southerly extreme of Lake Michigan was known. And that true position fall south of the north cape. So that a line drawn due east from the true position of the southerly extreme of Lake Michigan would not strike the north cape at all but would strike several miles below it.
William H. Rehnquist: Well, and then you say that the Congress knew this in 1836?
Charles S. Rawlings: I believe in 1836 Congress knew the physical fact of the southern extremity of Lake Michigan much better than they had realized it prior to that time. They had taken into consideration many arguments from Senators and Representative from both the State of Ohio and to then territory of Michigan and a memorial sent to Congress and to the Executive Branch, most of this documentation is an evidence in this proceeding and before the Special Master.
William H. Rehnquist: Well, if they knew that the line were northeast, doesn’t that give some plausibility to Michigan’s contention that when it speaks of the northeast projection out into the lake that they meant simply a continuation of the land boundary?
Charles S. Rawlings: I don’t believe so, Your Honor, because the due east line which was striven for by the territory or Michigan, up until the enactment of the 1836 legislation, was rejected by the Congress of the United States. Congress in so reject in it recognized in effect the Ohio proviso to the Constitution of 1802, and extended of the boundary northeast. It seems to us that it is considerably more logical to believe that Congress, in using the term northeast, meant North 45 degrees East than to conclude that they meant a line which although true it is about 2 degrees 10 seconds North of East, comes very close in practical effect being due east line. I think if Congress had meant to extend the existing land boundary according to the Talcott survey of 1834, they might well have used the language in the legislation appropriate to the purpose, either indicating direct to the international boundary line or using phraseology more appropriate to that end. The Turtle Island which has been referred to and considerably in the briefs and arguments before the Special Master and in argument this morning, is a small island located by Captain Talcott in 1834 and its existence was known prior to that time at the mouth of the Maumee Bay. It is located approximately three quarters of a mile from the Maumee Bay and we know, by reference to historical surveys and evidence in this proceeding that a line drawn North 45 degrees East was passed through the existing circular concrete seawall on Turtle Island. Now, we have never contended in the course of this proceeding that the existence of Turtle Island is determinative of the question of the meaning of the term northeast, clearly it is not. It is relevant, however, if one accepts the basic premise that northeast means North 45 degrees East. By reference to historical survey as we know that a line drawn North 45 degrees East will pass through that island. It is then logical to reverse that known col South 45 degrees West until we strike the projection of the known and existing line boundary line monumented in 1915. It is at that point in time that both Ohio and the Special Master contend one has relocated the north cape of the Maumee Bay with about as much practicable accuracy as one can hope for I think when one is trying to locate a point which is not been in existence since well before the middle of the 19th century. The north cape of the Maumee Bay, therefore under that theory, would be readily ascertained and Turtle Island would serve as a convenient fixed boundary or monument readily seen by anyone sailing in and out of Maumee as a memorial or monument on the boundary line. Throughout the course of Michigan’s arguments both before the Special Master and in this Court, there has been reference to the survey made by Captain Andrew Talcott in 1834. And of course, Michigan’s basic position in this litigation is that, that survey or at least a computation or an extension of the line of that survey through mathematical computations of its witness called in this proceeding, should be extended in a northeasterly direction about 2 degrees North of East to the international boundary line. We would point out that Congress in 1836 when it enacted the statute providing for the admission of the territory of Michigan into the Union had before it three basic surveys. It had before the Harris Survey of 1817, which was drawn in accordance with the Ohio proviso and went from the southerly extreme of Lake Michigan to the most northerly cape of the Maumee bay. It had before the Fulton Survey, which was a due east line drawn really at the request of then acting Governor Cass of the Territory of Michigan who complained that the Harris Survey was not drawn in accordance with then existing legislation. And the Talcott Survey in 1834. We submit that there is nothing in the record of this case which indicates at all that Congress intended to extend the Talcott line across the lake. The very title of the Act providing for the Talcott Survey is called “An Act Preparatory to adjust in the Northern boundary of the State of Ohio.” And apparently, Congress at least has revealed in the Michigan Exhibit 8 Senate Report on the territories, felt that necessary in view of the very difficult situation which had developed between the State and Territory, and in view the conflicting claims to have Captain Talcott ascertain the latitude and longitude of the points in issue prior to further considering the arguments between the State and Territory and coming to a conclusion on the boundary. It did come to a conclusion on that boundary in 1836 and that conclusion settled the issue in favor of the State of Ohio. And finally, as we have indicated, if the position is adopted that the legislation of 1836 was clear on its face, then there is no need to refer to debates between Senators and Congressmen or letters addressed to Congress to construe the meaning of the statute. But if this Court determines that indeed, in accordance with the claim of Michigan, the statute is not clear on its face that there is some ambiguity, and if there is then a felt need to refer to the documentation introduced in evidenced in this case, we believe that a review of that documentation will not support the claim of Michigan. We point, for example, to Michigan Exhibit 10 in evidence in this proceeding particularly Pages 4 and 6 of that exhibit, which contain statements by the then duly authorized representatives of the Territory of Michigan rejecting admission of their state or their territory into the union because they could not live with the boundary lines set by Congress in the statute, and noting clearly in that particular documentation that Michigan knew the import of the Congressional decision. There is reference in that exhibit to the fact that Ohio, if Michigan has to accede to this proposition, will obtain jurisdiction over the entire western end of Lake Erie, almost to the mouth of the Detroit River and above the River Rouge. Michigan decries this, they say it’s unfair, they indicated this is not in conformance with the ordinance of 1787, they indicated this is not in conformance with the legislation of 1805 by virtue of which the Territory of Michigan was formed out of Indiana Territory, but they nonetheless recognize what the meaning of the legislation is. And after rejecting Congress proposal twice, finally the third time around they agreed to this proposal with much bitterness in ranker  as is revealed in the debates feeling that the admission into the Union and the advantages of the statehood outweighed losing a position for which they had striven for some 25 or 30 years prior to that time. We would also note the fact as it’s revealed in the documentation and evidence in this case most of it supplied by Michigan that under a theory of the due east line extending from the southern extremity of Lake Michigan, the theory that is contained in the statutes before the exact position of the southern extreme of Lake Michigan was known. And under the maps and existence of that time, Ohio would have gotten almost all of Lake Erie. Clearly, it seemed that Congress had before it maps of the lake and there is even references in the documentation and evidence in this case to the effect that Ohio might have claimed more than it chose to claim, had it not inserted the proviso indicating that the boundary should be established to the north cape of the Maumee Bay. The reason they inserted that proviso, I believe both states can agree, is because Ohio at that time was primarily concerned with preserving Port City of Toledo in the mouth of the Maumee Bay. The debate between the two States prior to 1836 over what was referred to as the Toledo Strip being concerned with those points. We further note the testimony which has been referred to in argument this afternoon and was discussed extensively in briefing and argument before the Special Master that is the testimony of the Geodetic Engineer of the University of Michigan called on behalf of Michigan. We indicated at the time to the Special Master and reiterate our position this afternoon that although the State of Ohio has no evidence rebutting the mathematical calculations of Professor Berry as he extends the Talcott line across the lake to the international boundary line, we consider this calculations totally irrelevant if this Court believes that the true boundary, as revealed in the language of the statute, is North 45 degrees East. Much of the testimony concerns the Professor’s opinion as to the meaning of the historical documents and his ultimate conclusion of law on this case, we consider it not relevant if the Court initially holds that the line is due northeast. And finally we would refer the Court's attention to the other exhibits offered by Ohio, the resolution of the Ohio General Assembly in 1933 defining the boundary as we have contended it to be today. The Michigan Rescission Resolution of 1945 in which they agreed with the State of Ohio. True they rescinded that resolution two years later, but it indicates at least to us that highly-placed officials of the State of Michigan at that point in time were aware of where the boundary lay and agreed with Ohio.
Potter Stewart: When was that? In 1930’s?
Charles S. Rawlings: Yes, the Ohio General Assembly passed their resolution in 1933.
Potter Stewart: And it was done with the prospect that Michigan would pass a concurrent resolution but not --
Charles S. Rawlings: Yes, specifically stated in the 1933 Resolution as the hope that Michigan would pass a like resolution.
Potter Stewart: Right and Michigan did so.
Charles S. Rawlings: They did in 1945 identical to that of Ohio. They rescinded that resolution on 1947 two years later. And that is where the matter lay until --
Potter Stewart: Right.
Charles S. Rawlings: -- the filing of this litigation. We would also refer the Court’s attention respectfully to the two other exhibits submitted by Ohio, the maps of the Erie and Oregon quadrangle compiled by the geodetic service. Both of those maps show the boundary line between the two States as being North 45 degrees East from a point located as north cape, and notations at the top of those exhibits indicate that the exhibits were prepared in collaboration with the Commissioner of Highways of State of Michigan. In summary, therefore, we would respectfully urged this Court to confirm the findings and the conclusions issued by Judge Maris, the Special Master in this case, and to enter a decree in this matter in conformance with the findings and conclusions, and recommend the decree of the Special Master.
Warren E. Burger: Do you have anything further, Mr. Keeley?
Charles F. Keeley: I have nothing, Mr. Chief Justice.
Warren E. Burger: Very well. The case is submitted gentlemen.


Earl Warren: Number 142, School District of Abington Township, Pennsylvania et al., Appellants, versus Edward Lewis Schempp et al. Mr. Ward.
Philip H. Ward, III: May it please the Court. This case is here on an appeal from the decision of a three-judge District Court that held Pennsylvania's Bible-reading statute being unconstitutional establishment of religion. Now, this case is different from the case you have just heard because in Pennsylvania, the Bible-reading statute does not require that the Lord's Prayer be said, it has nothing to do with the Lord's Prayer. It is the practice at Abington Township during the morning exercises to follow the statutory Bible reading with the recitation of the Lord's Prayer. However, that is not the practice in all of Pennsylvania. The decree that has enjoined Abington in this case and the court below found it was unconstitutional either to read the 10 verses of the Bible pursuant to Pennsylvania statute either alone or in conjunction with the recitation of the Lord's Prayer. Consequently, the basic issue in my case is a constitutionality of reading 10 verses of the Bible without comment to the school children of Pennsylvania, or if the Court finds that that practice is unconstitutional, it need not concern itself with the Lord's Prayer. And if it finds that practice is constitutional, the reading of the 10 verses, but that following it with the recitation of the Lord's Prayer effects the constitutionality of the Bible reading then of course it could frame a decree accordingly.
John M. Harlan II: Do this come up on demurrer or --
Philip H. Ward, III: No, sir. There is a record in this case. We also believe that this case is different from any of the cases, the church state cases this Court is heretofore considered. We think we have a novel factual situation here. We think the question presented for this Court for the first time is, what does the Constitution require us to do with an old tradition that has undoubted secular values, it's noncompulsory, but yet it in some ways reflects the religious origin of the country?
Byron R. White: This is a -- it's noncompulsory, was there any place in the school with the -- I can't get to the (Inaudible)
Philip H. Ward, III: Yes, Mr. Justice White. I just --
Byron R. White: Were there any places at school you'd go and not (Inaudible)
Philip H. Ward, III: Actually, there's nothing in the record because nobody asked to be excused. We could speculate the public address system typed into each room. You can turn off a button so that one room will be no noise but there's nothing in the record from turning it.
Byron R. White: So it never -- was there any need to make (Inaudible)
Philip H. Ward, III: That question never arose. We shall argue that the religious liberties of the Schempp's who were the appellees -- the plaintiffs in this case are not infringed that this case doesn't concern the establishment of religion within the meaning of the Constitution and that there is no requirement that Pennsylvania must give up an ancient custom simply because it involves the use of the Bible. Now, this litigation started five years ago when the original complaint was filed. At that time, the Bible-reading statute of Pennsylvania provided that 10 verses of the Holy Bible had to be read at the opening of each school day, provided it will be read by the teacher in charge and it further provided that in the event the teacher refused to participate, he could be dismissed. The complaint filed by the Schempp's under that statute said that the practice at Abington, reading the Bible according to the statute following it with the recitation of the Lord's Prayer, violated their religious consciences and liberties, interfered with the rights of the parents to raise their children and the method of their own belief. And also practiced -- the practice fostered contradictory beliefs. They sought an injunction against the reading of the Bible following by the Lord's Prayer. Now, there was a trial held and we have a record in this case. The trial was held and the three Schempp children, Roger, Ellory and Donna, testified that they had been compelled to attend Bible reading. They testified that many passages from the Bible read to them, confused them, aggrieved them, and taught some things which was contrary to their belief at home.
John M. Harlan II: How old are these youngsters?
Philip H. Ward, III: They're -- the two -- Roger -- Ellory, who was the oldest, Mr. Justice Harlan has graduated. He's about 21. But Roger and Donna, I think are 17 and 19 but in any event they're both presently at Abington High School, senior class. In addition to the testimony of these children, we had the testimony of two experts.
Arthur J. Goldberg: These children are Unitarian?
Philip H. Ward, III: Sir?
Arthur J. Goldberg: These children are Unitarian?
Philip H. Ward, III: They are Unitarian. We had the testimony of the two experts, who testified concerning the Bible pretty much as Your Honors would expect that the Bible is a great document. It's an old document. It comes from certain basic original sources. That it is a religious document in the sense that it has moral literary value that Dr. Grayzel, who was an eminent Jewish Theologian, testified that all of the New Testament and parts of the Old Testament would be -- would offend the belief of the Jews. As a result of that trial, the lower court, the three-judge court found that the practice of reading the Bible pursuant to the old compulsory statute, followed by the saying of the Lord's Prayer, amounted to an establishment of religion because it said the Bible deals with man's relationship to God. That this daily reading is a daily reminder of that relationship and this daily reading indoctrinates the children and that consequently also the parent's rights were abridged. It said it violates free exercise and that Ellory and the children were forced to attend. And then it said, since the teachers had to read under pain of dismissal, they would try to get a large audience for the Bible reading to hear. The main point, the main thrust --
John M. Harlan II: I don't get -- I don't get the last part.
Philip H. Ward, III: We -- you recall under the statute as it then stood, it required that the teacher in charge reading the Bible or cause it to be read and any teacher who refused to participate could be disciplined and expelled. Therefore, in the lower court decision, in the first case which was the trial under that particular compulsory statute which contained that provision, the judge said that since a teacher knows that he may be expelled or may be dismissed, it's -- to his advantage to assemble -- convince the children to listen.
John M. Harlan II: I don't get it but I understand it.
Philip H. Ward, III: No. What the court below meant was this, that since the -- the court reasoned that if the teacher knows that he must conduct this ser -- I don't agree with what the court held, but this is what I understand them to say, if the teacher knows he is required to participate in this service, therefore he knows the state likes to serve it, therefore he is going to make certain the children are attentive and listening when the ceremony is conducted.
John M. Harlan II: Well, alright. I hear you.
Philip H. Ward, III: Alright. That's what they call it.
John M. Harlan II: One thing I -- I gather to that is that they need a teacher or have more witnesses to testify.
Philip H. Ward, III: Well that's -- and then in fact there is no teacher complaining here which I think is the short answer to the question.
Arthur J. Goldberg: (Inaudible)
Philip H. Ward, III: Thank you, Mr. Justice Goldberg. That is what I was trying to say and that is what (Voice Overlap)
John M. Harlan II: Well, I thought there's no point in relying to this but I didn't know if the statute for -- said that the teacher not only have to read but be enthusiastic about it.
Philip H. Ward, III: Well, they required enthusiasm in Abington. But the essential part of the lower courts decision in the first compulsory statute was -- as I understand the compulsion that every child had to attend. In other words, it was a concern then to what reading a certain passage from the Bible might be on a Jewish child's mind, but he knew a Jewish child had to be there. And as a matter of fact, the eighth finding of fact of the first decision which is at page 194 of the record, was that as a matter of fact, the children had to be present and that they were compelled to be present at the Bible reading ceremony. So the decree held that, the first decree held that we could not read the Bible pursuant to the statute or otherwise except that we always can use any book, this decree said. We can use any book we want in the schools of Abington as a reference or as a source, as a material for study. In other words, they weren't banning the Bible per se from Abington. They mentioned nothing of the Lord's Prayer in the first decree. Following this decree, we immediately found notice of appeal with this Court. Prior to the time, our jurisdictional statement was filed with this Court, the legislature of Pennsylvania amended the Bible Reading Act to provide that any child could be excused from the Bible reading, from participating or being there upon a written request of his parent or guardian and also eliminated from the statute, that particular language about the teacher having to be enthusiastic as Mr. Justice Harlan said, that was stricken out. We -- this Court then, the Supreme Court, they catered the judgment and remanded our case back to the three-judge District Court for further action appropriate in light of the amendment to the Bible-reading statute. Thereafter, the three-judge court allowed the Schempps to amend their complaint by eliminating the name of Ellory, who had been graduating and by simply substituting the new statute. A trial was held under the amended statute, and at that trial, the testimony was as follows, doctor -- Mr. Schempp, the father, testified that he was familiar with new excused provision but that he had not elect to have his child -- his children excused because he thought if he did, if he asked them to be excused, the other children would consider his children odd balls, as a word he used, different. I think communists or immoral, the word from the record but in any event, different.
Potter Stewart: So, the fact is he did not ask to have his children excused?
Philip H. Ward, III: No, he did not. He testified --
Potter Stewart: Then you don't know, therefore, what effect, if any, there would have been --
Philip H. Ward, III: No.
Potter Stewart: Had he done so?
Philip H. Ward, III: No, all we know is that he believes that had they been excused --
Potter Stewart: Well, that's a subject (Voice Overlap). Exactly and that's all we have, isn't it?
Philip H. Ward, III: That is all we have on it. He was follow -- he also described, what he said were the mechanics of Bible-reading in Abington. He described how it worked but he admitted he had never been there. He had never talked to the teacher about it. He never talked about the excused provision. His son follow -- Roger followed him to the stand and said that his father had correctly described the practice at Abington or the objections of Abington, the appellants, the Court also admitted into this second trial, all of the evidence that had been taken in the first trial under the compulsory statute. We believe then and we believe now that testimony concerning a compulsory statute where a child has to listen, has no effect in -- is irrelevant in a trial where a child may absent himself but we -- this, the issues in this Bible case transcend any problem of admissibility of evidence so we do not make that argument now. As a result of the second trial, the lower court's decision was that the amended statute and that is as you recall the statute requires -- provides to be excused was an establishment of religion. It said that Bible-reading followed by the Lord's Prayer is devotional. It said that the excuse is no help because the practice is still held everyday, that the Bible was a Christian document. It didn't -- this is the court's decision with which we are now appealing did not deal with the Free Exercise Clause because it's said it was unnecessary to pass on the contentions of the Schempps concerning free exercise, because we find this is an establishment of religion. It said that this case is really governed, falls right within McCollum. That the facts are essentially the same and the decree that was issued enjoins us, as I have said from reading the Bible pursuant to the statute, either in conjunction with or not in conjunction with saying the Lord's Prayer. The decree also says that we can use any book in the schools or religious source -- for educational source. He almost filed probable jurisdiction noted and we are here today.
John M. Harlan II: Did that junction go into effect?
Philip H. Ward, III: No, we obtained to stay until the action of this Court. What is this Bible reading practice?
Potter Stewart: Did I understand you to say Mr. Ward before you proceed, that there was reliance at all in the Free Exercise Clause in the Court in this case?
Philip H. Ward, III: The -- in the second decision --
Potter Stewart: Which is before us now.
Philip H. Ward, III: Before us now, the Court said it need not pass on the Free Exer -- the contingencies made on the free exercise because we find that this is a violation of the Establishment Clause. Now, what is this particular practice with which the Schempps -- to which they object? Now, although the public school Bible-reading practice in Pennsylvania is an old one, we know from the records that it was old in the 1860's. It first became statutory in 1913 and the amendment to that Act said, “The purpose of the statute was to bring lessons of morality to the school children during their school days.” Since that time, it's been continuously required by the statute. At Abington, this is the way it works, between 8:15 and 8:30 on every school day, all the children in their homerooms, advisory sections, there's a public address system in each of their room. At 8:15, the morning exercise starts. First, they have what's called an introduction, a fact for the day. They pull something out of the World Almanac to gain the attention of the children. Mt. Everest is 29,000 feet high, something like that to get them thinking. This is followed by 10 verses of the Bible, read without comment --
Arthur J. Goldberg: The Almanac comes first?
Philip H. Ward, III: The Almanac comes first. It's an attention gatherer. This has followed --
Potter Stewart: Almost later I guess.
Philip H. Ward, III: Sir? Yes, this is followed or the 10 verses of the Bible is followed by the Lord's Prayer which in turn is followed by the flag salute, which in turn is followed by the school announcements for the day. The botany class will meet in room A instead of room B. Then you have a conclusion at which they announce the children who read the preceding announcement. These announcements, this reading of the fact of the day, the Bible, the prayer, are done by the children of the -- the students of the television and the radio workshop which is a regular course of the English Department at Abington. There are about 30 students in this course and it's voluntary. The Bibles -- these chil -- these students read, the -- excuse me -- the Abington only supplies one Bible. It purchases one Bible which is the King James Version. These students who read the Bible or in this course of 30 people are encouraged to read their own Bibles and the record shows the testimony to the effect that the King James Version has been read, the Revised Standard Version has been read, the Jewish Holy Scriptures had been read and the Douay Version has been read. The selection of the verses to be read is completely up to the child. This is the practice that the Schempps are complaining about, 10 verses of the Bible read by one child to another.
Potter Stewart: And this is -- these are broadcast or typed from one place in the school to every classroom?
Philip H. Ward, III: Yes, Mr. Justice Stewart there is a room at which the radio and TV class meets. That is where the little broadcasting affair is and then the children participate there, those that have been selected to read.
Potter Stewart: We're talking about one school building here?
Philip H. Ward, III: It's the only one that is a subject to this suit sir, the Abington High School and that is where both of these children are. Roger and Donna are seniors in that school. This is the way it is carried out --
Potter Stewart: In this school?
Philip H. Ward, III: In this school.
Potter Stewart: And there is no evidence at all in the record as I understand it because of the posture of the case as to what would happen if it showed up or showed a child or his parents take advantage of the statute and request to be excused from this.
Philip H. Ward, III: The only thing that -- there is no evidence to show what would happen, except this Mr. Schempp testified.
Potter Stewart: That's his subjective prophecy.
Philip H. Ward, III: Yes.
Potter Stewart: Without that there is nothing.
Philip H. Ward, III: But he testified that a child might be made to stand outside the classroom but that is as you say is subjective testimony. There is no -- the situation is never a reason, therefore there is no --
Potter Stewart: So we, we don't know -- there's no evidence at all, one way or the other about whether or not there would be any compulsions or coercive forces psychological or otherwise?
Philip H. Ward, III: Because no one asked to be excused. What are the Schempps really complaining about? It's not the Bible itself because --
Arthur J. Goldberg: (Inaudible)
Philip H. Ward, III: No, sir.
Arthur J. Goldberg: (Inaudible)
Philip H. Ward, III: No, sir. Mr. Justice Goldberg, on page 16 of their brief, the plan -- the Schempps make the argument that they have no objections of the Bible being used in the schools as part of a pedagogical source material. They're like the court below, the court has always said, we are not preventing you from using the Bible in the schools, what the plaintiffs say is they don't like the way we are using the Bible. They say we are not in fact teaching morality, bringing lessons of morals to the children although that's what the statute says we're doing and that is what we contend we're doing. The Schempps say we are not doing that. How could we be teaching moral?
Earl Warren: We'll recess now, Mr. Ward.


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: Yes.
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: Yes. 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. It's a very laudable situation. This plan was approved by the Treasury Department of the United States. This government -- this country has been thinking in terms of security for people so that they do not become the subjects of charity in case of death or disability or upon retirement, and the thought was that these fixed interests, when the man retired, should supplement his regular pension which he received from the pension plan. In case he became disabled that he should have relief. In case he left the industry, he should have relief. In case of death, then in addition to the moneys which was credited to his account, the equity, a sum would be paid of a $125 a month to the widow who was usually the designated beneficiary until the equity was entirely paid. And in addition thereto, there would be approximately $5,000 in death benefit paid to over a $125 a month which $5,000 death benefit was earned from the investment of the payments made by the employers and which would be invested in earned income. In addition to that, on the moneys that were on deposit, there would be interest credited which has been done over the last several years. Now, in this case, we claim that this case is different and can be distinguished from the Embassy case on this ground. In the Embassy case, the payment was made for the purpose of purchasing life insurance, medical benefits and surgical benefits, which were all contingent on the happening of an event.
Abe Fortas: Do you remember whether the life insurance was a term insurance or was it straight life?
Harold Stern: No, it was group life insurance I believe.
Abe Fortas: And that was term insurance, was it?
Harold Stern: Yes, and that was all contingent. If a man left the industry, he would have no interest in the life -- he had no benefit on the life insurance. If he didn't become sick or needed no surgical benefit, he received no benefit from it. This case is entirely different. This is $4 a day instead of wages. It's fixed in a man's account. It must be paid to him whether he retires, whether he is disabled, whether he leaves the industry, whether he dies. Secondly, in the Embassy case, this Court spoke in terms that I think it was $8 a month was paid for each workmen, and the Court stated, it had no relation to the production or times or conditions of employment. In this case, the $4 a day is a time and condition of employment. The $4 a day is paid when and only if the man works and produces a days work. In other words, it is the same situation as if it were $4 an hour or $5 an hour plus $4 away a day, which are his wages.
Abe Fortas: What was the man worked (Voice Overlap)
Earl Warren: What are the differences between the $4 and the $8?
Harold Stern: The $8 is merely a sum which is paid to workmen. A workman may be employed by a company and may not work half the time because he's sick. He is still -- they would still make the payment to him of that $8 a month. In the $4 a day, he doesn't work any day, there's no money paid on his behalf.
Earl Warren: I see.
Abe Fortas: Suppose a man works for the company for three to four years and then he is discharged or he resigns not to retire from the industry but go to work for another company, is he entitled to any of these funds?
Harold Stern: Your Honor, if he goes to work for another company that is covered by this agreement --
Abe Fortas: Yes, but suppose it's not?
Harold Stern: If he's not, if he isn't covered by this agreement, you mean another company, he is entitled to receive moneys at the rate of $60 a month.
Abe Fortas: Just be careful, if you were because I want to be precise about this to make sure I understand it. Suppose he goes to another -- he resigns from the company in which he is employed. He goes to another company, in the electrical industry that is not covered by this agreement
Harold Stern: He would receive $60 a month just the same as if he went into business for himself.
Abe Fortas: I see. Suppose he is discharged by the company at the end of let's say three or four years, what happens then?
Harold Stern: And he leaves the industry?
Abe Fortas: And he leaves the industry first?
Harold Stern: If he leaves the industry, the money is credited to his account plus his accumulated interest, which is usually 4% in the last few years, would be paid to him at the rate of $60 a month until the money is credited to his account has been exhausted.
Abe Fortas: So discharge and voluntary resignation from the same company are treated the same?
Harold Stern: That's right.
Abe Fortas: Is there any minimum period during which he has to work for the company or under this industry wide agreement before he is entitled to receive payments from the company?
Harold Stern: The $4 a day, which is paid by the employer, is credited to his account from the first day that he starts employment in is earmarked. And I might say --
Abe Fortas: And if he retires from the industry, let's say at the end of six months, then he is entitled to what has been accumulated?
Harold Stern: Yes, and I might say that every single month, and this is not disputed, the annuity plan of the Electrical Industry sends to each participant of the plan a statement like a bankbook which shows how much money he has credited to his account and at the end of the year, the statement contains likewise a crediting of the amount of interest that has been earned and the moneys deposited to his account. Now, in the Embassy case, the Court spoke about the purpose of Section 64a (2), was to provided a protective cushion in times of financial distress. Of course, this is not in the statute. It was a practical matter. I think the Court can take judicial notice of the fact that in case of bankruptcy, before the estate of a bankrupt, estate is wound up when the wages -- the priority wages are paid, it may be a period of a year or two or three may elapse till the thing is wound up. Now, I agree with the Court on protective cushion and this is the purpose why this plan was adopted. This provides a protective cushion to the man who is disabled, the man who has retired, the man in the event of his death plus payments taken. He can never be deprived of one cent. And when the Court spoke in the Embassy case, and I want to be very frank about making a payment to the trustees of which Mr. Justice Black dissented, we say here that the trustees are merely the agents for these people who act on their behalf and these people have a vested interest. And if the annuity plan didn't pay them their right, they will have a right to go into court under the decisions and collect the moneys due them under the provisions of the plan. The cases covering this point are in my brief and I won't argue before the Court. Now, I do want to spend a minute on the question that in a case decided after the Embassy case by this Court in 1962 in the Sulmeyer against Southern California Pipe Trades Company case, the Court of Appeals held there “That moneys contributed to a vacation and holiday fund, and earmarked for the benefit of the participants, constituted wages within the meaning of Section 64(2)(a) of the Bankruptcy Act”. The Court in that case, despite the Embassy case, distinguished it and held that they were entitled to priority. The government would distinguish that case on the ground that in the Sulmeyer case, the withholding taxes were taken out when it was paid when, Your Honors, the Court in the Embassy case makes no mention of withholding taxes. The Bankruptcy Act was adopted originally in 1841 long before we ever had any income tax. It was within the contemplation of Congress. Secondly, the Bankruptcy Act is not predicated on a definition that it should be given into a priority, provided that withholding tax is not taken. Nothing illegal, nothing wrong has been done here. In fact, the President's Commission has commended the adoption of vested pension funds for the protection of society which is nothing more than an extension of the provisions of our Social Security Act.
Speaker: Have there been any efforts of the Congress to --
Harold Stern: I'm coming to that, Your Honor. I'll say to that, I'm coming to that. I'll get to that skip and bounce my argument. Now, the government contends that there were efforts in Congress made to amend Section 64a (2) of the Bankruptcy Act meaning. In the first place, it is my contention that under the particular facts of this case, of this particular case, it's fixed vested interest which constitute wages. Secondly, under the amendments of the Bankruptcy Act, which has been spoken about, they refer to lengthening and shortening the period that It was a bankrupt to State, increasing or decreasing the amounts of the priorities, inclusion of individuals who are not prior included within the Bankruptcy Act. To say, distinct say point is that the attempts which were made in Congress to amend the Bankruptcy Act refer in language to all fringe benefits which could include welfare, pension, vacation, annuity and a month or two about the fringe benefits which are far greater than the situation in this case. And in this same connection, may I point out, if you consider the proposed amendments, to Section 64 of the Bankruptcy Act, how can one reconcile that with the provisions, with the decision in the Sulmeyer case which did grant the priority by Court of Appeals and which were related to the fringe benefit namely holiday and pension funds fairly. The next point, I'm going to make on this point, Your Honors, and I'd like to have permission of the Court to submit a letter which I received from Congressman Leonard Foxely (ph) who introduced all of these Bills in Congress, which shows that these Bills were produced/introduced. They weren't debated. They weren't voted on. It was a proforma Act and in his letter says, “He hopes in the argument of this case, the Court will extend in his language the meaning of wages or interpret the meaning of wages to cover situation”.
Earl Warren: Is that on the record or is that written for this case --
Harold Stern: No, I --
Earl Warren: -- as an argument for the fact?
Harold Stern: I said I would ask the permission of this Court. I have submitted a copy to my adversary and I wrote it for the purpose of this case when I saw the brief of the government. If the Court doesn't want me to submit it, I won't.
Earl Warren: Well, I think we all know. Maybe the counsel will say whether he has any objection to it and not to --
Harold Stern: Well, he knew -- he knew that we would want to submit it, but I'm just so not submitted, Your Honor. I don't think that this is the time.
Speaker: You solicited the letter?
Harold Stern: Pardon me?
Speaker: You solicit --
Harold Stern: I wrote a letter asking him to give me any information that he could about the presentation of Bills in Congress with reference to legislation concerning fringe benefit plans. And the reason I wrote the letter Your Honor is, because I have read the brief and I refer it to Bills and I didn't know how they came about and so forth. Certainly, there was no intention to perform any act of impropriety. Your Honor, for all of those reasons, we claim that this Court should reverse the decision of the United States Court of Appeals. I would like to have a few minutes for rebuttal if necessary, Your Honor.
Earl Warren: Mr. Wallace?
Lawrence G. Wallace: Mr. Chief Justice and may it please the Court. I think it's important in this case not to loss sight of the fact that the issue is not whether the petitioner has a just claim provable in bankruptcy, but the issue is whether Congress has seen fit to give the petitioner's claim priority over other just claims that are provable in bankruptcy. Now it's elementary that under our bankruptcy system, losses are suffered by creditors recognized by Congress as having just claims. We do not appropriate public funds in order to pay all the just claims in full. They can be paid only to the extent that there are assets in the estate available to cover them and priorities are preferred status which can be achieved only through subsidization by other creditors whose just claims will be wholly or partially eclipsed by payment of the priority claim in full. It happens that in this case, the contest is between a claim under the second priority and the government's claim under the fourth priority. But of course, the issue of statutory interpretation transcends the facts of this particular case and its resolution will affect the distributions in all bankruptcy cases. Now, Congress has been very cautious in granting priorities as this Court has noted on many occasions. The Court, in Nathanson against the National Labor Relations Board, speaking through Mr. Justice Douglas, pointed out that the theme of the Bankruptcy Act is equality of distribution. At the outset then, before addressing ourselves to the relevant statutory provisions and cases, which of course must govern the case, it might be observed that at least in ordinary human affairs, when there is a time of financial exigency, the tendency is not to give primacy at all cost to continuing to put money aside for anticipated future needs. It might have been as an original proposition seem somewhat remarkable if Congress were to single out for among all the just claims on the estate and at the time of bankruptcy, contributions owing to a pension fund, anyone's pension fund as being a claim of such pressing need and of such overriding importance as to require subsidization at the expense of the other just claims on the estate. Well, but of course, the case must be governed and controlled by what Congress has done in the statute and the interpretations that have been rendered, but keeping in mind again in the words of this Court in the Nathanson case, that if one claimant is to be preferred over others, the purpose should be clear from the statute.
Abe Fortas: Well here, don't you have a difference here that this -- there's a very close resemblance to wages in the sense that there was $4 per day. And I note that in your brief you talked about the possibility that some workman may be favored over others, but if all of them get the credit of the additional $4 a day, doesn't that put the matter in a different light? In Embassy, the situation was different in the sense that there's no money that was credited to the account of the individual workers as I understand it.
Lawrence G. Wallace: Well, the insurance benefits were credited to the account of the individual workers. I really don't think that the rationale of the Embassy case would rest on so insignificant a distinction in terms of the purposes of the priorities of the Bankruptcy Act. I think that the phrase “Wages due to workman” as used in Section 64a and the second priority was very carefully interpreted by the Court in Embassy, not in a mechanical, technical way, but in an interpretation based on the review of the entire history of that provision and an assessment of the statutory purpose in granting that priority.
Abe Fortas: Well this provision in Embassy are these -- there are these words in Embassy? Let us examine the nature of these contributions. It reflects on some $8 per month for each workman. The amount is without relation to his hours, workers, wages or productivity, it is due to the trustees not the workman and the latter has no legal interest in it whatever. A workman cannot even compel payment by defaulting employer. In other words, that looks as a -- reads as if the Court was quite concerned with the particulars of the arrangement?
Lawrence G. Wallace: As a matter of fact Mr. Justice Fortas, most of the same things can be said about the present contributions, but I think that the essential part of the rationale in Embassy, after an examination of these individual attributes of the contribution and what the Court subsequently have used as the guiding post in such cases as Sulmeyer as to be found on the next page in the opinion on page 33 in the last paragraph that begins on that page. After the Court satisfied itself that the terms of the statute do not require that these contributions be held to be within the meaning of the priority, the Court said, “Thus, they cannot be treated as being within the clear, unequivocal language unless it is clear that they satisfy the purpose for which Congress established the priority”.
Abe Fortas: And just before that though the sentence says “the contributions here are not due to workman nor have they, the customary attributes of wages”. Do you think that's equally true of the $4 a day in this case?
Lawrence G. Wallace: I would say as the Court in Embassy defined the customary attributes of wages as sums immediately due to the workers, it is equally true and it's certainly is true of the Courts view of due to workmen since the sums are paid to the trustees and the workmen are limited in the same way they were in Embassy as to the control that they can exercise over the funds.
Earl Warren: Well, under Embassy, if a man was in the industry for four years under this agreement, let's say and he either quit or was fired from his employment and went out of the industry, what was he entitled to receive under that contract?
Lawrence G. Wallace: Under Embassy's?
Earl Warren: Embassy.
Lawrence G. Wallace: Yes, he was entitled not to receive benefits under this Welfare Fund that he was entitled to have health and life insurance during the period of his employment if the premiums were paid.
Earl Warren: No, but I'm talking about after he leaves, is he entitled to anything if he gets out and leaves the industry?
Lawrence G. Wallace: Only on the basis of the contingency that he should become ill or die before the insurance policy expires.
Earl Warren: Alright, now what is he entitled to under this contract if he is fired and leaves the industry?
Lawrence G. Wallace: If he leaves the industry, there are benefits payable to him under this contract but that is --
Earl Warren: Now what benefits is he entitled to?
Lawrence G. Wallace: It depends on the extent to which he has built up a claim within the fund.
Earl Warren: Isn't he entitled to $60 a month?
Lawrence G. Wallace: In some cases yes. It depends on how long he has worked in the industry that he -- but he is entitled to various amounts.
Earl Warren: But anyway, it depends on how much he put in?
Lawrence G. Wallace: It depends on how much he put in in part. He gets that back but he also get certain payments depending merely on the length of time he has been in the industry.
Earl Warren: Now how long do those payments exist?
Lawrence G. Wallace: It's a period of some months to those particular payments exist, again varying with --
Earl Warren: Isn't he entitled to get the return of the total amount that he put in?
Lawrence G. Wallace: Yes, he is. He is entitled to the return of the amount that he put in, in the event that he should leave the industry. That's right.
Earl Warren: Yes, that's what I'm talking about. Well isn't that a great variation from Embassy?
Lawrence G. Wallace: Well, I think it's a variation from the Embassy in the atypical case of the worker who leaves the industry. These men are professionals in the electrical industry in New York and I don't think it's uncommon for them to work for one employer and then another.
Earl Warren: No, but automation itself brings about attrition doesn't it in employments of that kind?
Lawrence G. Wallace: It can, of course --
Earl Warren: It does, doesn't it?
Lawrence G. Wallace: But the contention of the petitioners is not that the priority should be limited only to those claimants who have left the industry and will receive immediate benefits. Their contention is that the priority should be granted to all arrearages owing to the fund regardless of whether there is any immediate benefit to be secured, which is -- of course, in some atypical instances, there will be a benefit secured. Yet I think it's arguable that in the Embassy case itself, having health and life insurance is a much more immediate benefit for everyone than having additional contributions made to a pension fund. For most of the beneficiaries, there won't be any benefits received until the remote future.
Earl Warren: Well, that's the question as to bargaining on wages and working conditions, isn't it?
Lawrence G. Wallace: Well, it's true in both cases that there is collective bargaining as to this union welfare and pension funds, yes sir. I do believe that under the rationale of Embassy, the facts of Embassy really represented a closer case as to whether there was a present benefit to the workers than to the facts of the present case. It's quite conceivable that in a time of displacement, a financial distress worker needs his health and life insurance as much as he needs funds for his immediate subsistence where he's not apt to be thinking in terms of putting away moneys for the time of his retirement during this period of displacement so that in one sense, Embassy represented more immediate benefits to the worker than is true in this case.
Earl Warren: More immediate --
Lawrence G. Wallace: In terms of his having the insurance. The insurance itself is an immediate benefit even though he may not meet the contingency that would allow him the payment.
Byron R. White: Do you have -- do you think he has the protection --
Lawrence G. Wallace: The protection now of the insurance whereas he does not loss the protection of the moneys in his pension fund during the period in which the contributions are not made to the pension fund. It's not insurance in that sense. He still don't have his annuities --
Byron R. White: But in Embassy it was term insurance and money paid for a certain period of protection?
Lawrence G. Wallace: That's correct. I think under the rationale of Embassy, Embassy was really a closer case with typical workman covered than this case is. The rationale really is based in that case on a look at the history of the statute and the purpose which that priority must be deemed to have served. And in interpreting the provision, the Court very carefully noted that from its inception in 1841 and throughout its history, the wage priority has always been limited in three ways. It has been limited in the dollar amount that will be awarded to each claimant. It has been limited in the period of coverage. Presently, the dollar amount is $600 maximum. The period of coverage must be earned within three months of the employer's bankruptcy in order to come within the wage priority; and thirdly, it has been limited in terms of the kinds of employee's eligible, which is a particularly interesting limitation in terms of the interpretation to be given to the priority, it seems to me. For example, cases have held the following kinds of employees not to be eligible to receive the priority: accountants, actors, buyers, designers, editors, engineers, foremen, teachers and others. It has been a difficult matter of statutory interpretation, but it is quite clear that Congress was attempting to identify a particular category of employees who would be particularly vulnerable to the exigencies of the period of unpaid wages and should be afforded some special protection in order to equalize their status with the status of other creditors of the State such as the kinds of employees I just mentioned or any other creditors who have afforded to the petitioner in bankruptcy their services or their label or their property. And the purpose then of awarding the priority was the limited one of equalizing the status of the workman who were thought to be in a more financially vulnerable position but not putting them in a more favorable position than the other creditors. And that is why --
Speaker: [Inaudible] these are distinctions that have been drawn to refer to the type of eligible worker to step on. The legislative history or what were the statutes?
Lawrence G. Wallace: Yes, they do stem for the legislative history and the fact that the statute refers to certain kinds of workers. The present language of the statute at page 2 -- well, in our brief, I'm afraid I don't have the complete language in our Brief, but the references to workmen whether paid by commission or otherwise, to salesmen and the like kind of workers. There has been amendments in the kinds of workers who will receive the benefit of the priority over the years. But nonetheless, the priority has not been extended to cover the wages of all employees. Many kinds of employees are still merely general creditors who have to stand behind these priorities. Within this context that this Court in Embassy pointed out that the purpose was to provide the workmen a protective cushion against the economic displacement caused by his employer's bankruptcy and to the extent that a particular claim exceeds $600 or to the extent that a particular claimant was able to continue on the job for more than three months without being paid, Congress did not see fit to grant him priority as against other claimants. The purpose would be fulfilled if his priority were recognized only within those limitations; limitations which originally were only $25 maximum incidentally and it slowly been increased over the years.
Byron R. White: [Inaudible] particular state where the case of one worker $1200 claim for back wages and a $300 claim with respect to that or say $100 claim with respect to that worker from the pension fund. He would not get his -- I gather under the position that your adversary takes, the worker would not get his full $600 in his pocket.
Lawrence G. Wallace: Well, that is one of the great difficulties with the present structure of the Act being stretched to try to accommodate this kind of claim within the meaning of wage priority. There is no statutory basis --
Byron R. White: So you would prefer the post -- the future payment to a current claim?
Lawrence G. Wallace: The purpose of the second priority could actually be underlined in some cases in that way by having some of the funds siphoned off from the worker and not available to him to meet his immediate needs. That would be true in the case in which his own claims plus the claims of the fund that his account would exceed $600 and it would also be true as noted by this Court in Embassy in the case in which there were not assets enough left in the estate to pay off the claims in the second priority in full. And, this Court and other courts would really have to overturn a settled line of cases in attempting distinguish between classes of claimants as to which the statute draws no distinction. While the Court has been recognized just having equity power to rearrange priorities in response to the facts of a particular case. For example --
Abe Fortas: From here, is it your position that the $600 limitation per workman, per claimant as excess will have no application here?
Lawrence G. Wallace: Oh, it would have to have an application because that's the limit of the second priority to the extent that the claimant's claim exceeds $600, it is relegated to the general creditors.
Abe Fortas: Well, here you have the trustee of the fund who is claiming the amounts due under the -- due to the fund, in fact due to workman payable to the fund. Now, what you would actually have then would be that you take the wages due to a particular work and compute those which are entitled to the second priority. If those were under $600, you would have the amount to be credited to that workman up to $600, is that right?
Lawrence G. Wallace: Well, the ordinary rule is that if a claim within a certain priority cannot be fully satisfied then they share proportionally and for example if --
Abe Fortas: No, I am wasn't talking about satisfying now. I'm talking about how much would be allowed as a second priority. Let's take workman pay and he has a claim for wages in the amount of $500 dollars, which is entitled to second priority. Let us assume that the trustee has a claim for money to be credited to workman pay in the amount of $200. Now, the total amount that would be given a class 2 priority would be $600, is that correct?
Lawrence G. Wallace: That is correct.
Abe Fortas: So that you do have an automatic limitation on the aggregate amount?
Lawrence G. Wallace: On the aggregate amount, but the $500 would presumably be diminished. He would receive only 5/7th's.
Abe Fortas: Well, assuming that this estate were not adequate to pay the entire amount of the second priorities?
Lawrence G. Wallace: No.
Byron R. White: Even if it was, even if it was the amount of the $600, it has to be allocated between the $500 and the $200, is that what you're saying?
Lawrence G. Wallace: That's right. The $600 -- 5/7th's of the $600 would go to the workman and 2/7th's would go to the fund.
Abe Fortas: I see. You're making a distinction between what goes to the workman direct and what goes to the workman plus trustees of the fund.
Lawrence G. Wallace: That is the distinction because the purpose of granting the priority was to be sure that the workman would have funds to get him through the period of economic displacement. And if those funds will be siphoned off into the pension fund, their purpose will be to that extent undermined.
Abe Fortas: That was my confusion because you were saying siphoning off and that's a word that may mean transfer from one pocket to another pocket that they can't get in to quite as fast. That's what siphoning --
Lawrence G. Wallace: That's what I meant to convey by it. I meant the word to be helpful in understanding this problem. There's another problem in the present structure of the Act with recognition of these claims and that is the fact that Section 17 of the Act makes wage claims a non-dischargeable debt. I've asked the Clerk for the convenience the Court to distribute the text of Section 17 to each of you because it wasn't included in the briefs and I've underlined the applicable provision there. You notice that it is virtually identical with the provision in the priority section with the exception that there is no limitation in Section 17 to $600. And this Court recognized in the Embassy Restaurant case itself that the meaning of wages due to workmen in the two sections is intended to be the same and that is corroborated in the legislative history of Section 17, which we have cited in our brief in note 23 on page 20. Yet, the Court has said that “In view of the well-known purposes of the Bankruptcy Law, exceptions to the operation of its discharge thereunder should be confined to those plainly expressed. There's a -- the tendency has been, not only in the courts but in the Congress itself to construe the discharge provision very narrowly. And when Congress amended Section 17 in 1966 so as to decrease the extent to which tax claims are not discharged, the House report noted that nondischargeability “operates in a manner which is unfairly discriminatory against the private individual or the unincorporated small businessmen. Because in most cases, when a corporation is the petitioner in bankruptcy, that the nondischargeability of the debt is without significance because the corporation is liquidated after the bankruptcy proceedings, but these debts remained with individuals and partnerships and small businessmen. Now, if Congress were to change the rule of the Embassy case, it might well decide not to make fund contributions a nondischargeable debt even if it wished to grant them priority and it's certainly might further decide that their priority should be subordinate to the present wage claim priority. Indeed, the Bills that have been introduced expressly provided that the priority to be granted by an extension of the wage claim would be subordinate to the present wage claim and that if there were not assets enough to pay both the worker and the fund, the worker would be paid first. These are reasons why it might seem more advisable for Congress to consider how to accommodate the structure of the Act to granting of the claim priority that the petitioner has asked in this Court to grant if indeed Congress thinks that such a priority should be granted at all. In the nine years since the decision in the Embassy Restaurant case, Congress has been most unresponsive to Bills that have been introduced in every session to repeal that case by statutory amendment. And this is true even though --
Hugo L. Black: How was it unresponsive?
Lawrence G. Wallace: It's been unresponsive and not enacting them even though as you yourself, sir, noted in your dissent in Embassy Restaurant, Congress has on other occasions, been quick to amend the Section 64 in response to judicial decisions that it has disagreed with and we've cited those in our brief on pages 11 and 12. And in this particular instance, it seems it's especially questionable to attribute the failure of Congress to take action to congressional neglect of the subject due to oppressive other affairs because the fact is the Congress has in 1966 amended Section 64 in other respects. And in 1967, it completely reenacted the Section as we noted in our brief at page 11.
Earl Warren: Were there any Bills in the Congress specifically to overrule the Embassy?
Lawrence G. Wallace: Yes, there were, sir. We have cited --
Earl Warren: Limited to that or would that just be included in a broad provision?
Lawrence G. Wallace: Well, the purpose of the Bills, as they were drafted, they're set out in our Brief at pages 11 and 12, was to make pension fund contributions a claim that would have priority under the bankruptcy laws.
Earl Warren: All pension funds?
Lawrence G. Wallace: All welfare funds, that is correct. So that it would embrace Embassy and the present case as well if this Bill --
Earl Warren: It might embrace it but it wasn't directly specifically toward Embassy as it was decided, was it?
Lawrence G. Wallace: Well, it was directed toward Embassy and toward the subject in general. The response was narrow to the particular facts of the Embassy case, that is true. But there's every indication that funds, such as the petitioner have continued to prosper under the rule of the Embassy case and the voices of these funds and of the unions with which they are affiliated are not denied in attempt of hearing in the halls of the legislature or in the political process in this country. And in fact, it is rather difficult to imagine any interest group of comparable political influence that would be motivated to oppose these amendments that have been submitted year after year. Nevertheless, Congress has never been persuaded to amend the law in granting additional priority. And now this Court is being asked to adopt the amendment instead. It seems clear to me what the response of this Court should be to such a request.
Earl Warren: Very well. We will recess now.
Harold Stern: May I just have a minute?
Earl Warren: You may have one minute, yes because --
Harold Stern: I want to point out that I didn't make it clear that the claim in this case does not include any wages, due wages to the point that the man didn't get paid his regular wages at the end of the month, but is limited only to the moneys which were due to the annuity fund. And the reason for that is and I think it would be merely theoretical to talk about $500 or $300 in a building industry because in a building industry, if a man didn't receive his weekly pay at the end of that week, that would be it. He wouldn't work the next week so that be no possibility of that. Now, in this case, the moneys which were due to his account for the annuity fund and the reason that it became due is because if an employer don't pay money on time to a trust fund just like you don't pay his taxes on time. The union doesn't act to pull them in out and put them out of business and that's how it happened.
Earl Warren: Very well. We will recess.