author: Mr. Justice Harlan Mr. Chief Justice Warren,

text:
    READING CO. v. BROWN, TRUSTEE IN BANKRUPTCY, et al.
    No. 127.
    Argued March 4-5, 1968.
    Decided June 3, 1968.

      Thomas Raeburn White, Jr., argued the cause for petitioner. With him on the briefs was H. Merle Mulloy.

      Owen B. Rhoads argued the cause for respondent Brown. With him on the brief were Samuel Marx and Arthur E. Newbold III.

      Richard M. Roberts argued the cause for the United States. On the brief were Solicitor General Griswold, Assistant Attorney General Rogovin, Harris Weinstein, Crombie J. D. Garrett, and Edward Lee Rogers.

   Mr. Justice Harlan

delivered the opinion of the Court.

On November 16, 1962, I. J. Knight Realty Corporation filed a petition for an arrangement under Chapter XI of the Bankruptcy Act, 11 U. S. C. §§ 701-799. The same day, the District Court appointed a receiver, Francis Shunk Brown, a respondent here. The receiver was authorized to conduct the debtor’s business, which consisted principally of leasing the debtor’s only significant asset, an eight-story industrial structure located in Philadelphia.

On January 1, 1963, the building was totally destroyed by a fire which spread to adjoining premises and destroyed real and personal property of petitioner Reading Company and others. On April 3, 1963, petitioner filed a claim for $559,730.83 in the arrangement, based on the asserted negligence of the receiver. It was styled a claim for “administrative expenses” of the arrangement. Other fire loss claimants filed 146 additional claims of a similar nature. The total of all such claims was in excess of $3,500,000, substantially more than the total assets of the debtor.

On May 14, 1963, Knight Realty was voluntarily adjudicated a bankrupt and respondent receiver was subsequently elected trustee in bankruptcy. The claims of petitioner and others thus became claims for administration expenses in bankruptcy which are given first priority under § 64a (1) of the Bankruptcy Act, 11 U. S. C. § 104 (a)(1). The trustee moved to expunge the claims on the ground that they were not for expenses of administration. It was agreed that the decision whether petitioner’s claim is provable as an expense of administration would establish the status of the other 146 claims. It was further agreed that, for purposes of deciding whether the claim is provable, it would be assumed that the damage to petitioner’s property resulted from the negligence of the receiver and a workman he employed. The United States, holding a claim for unpaid prearrangement taxes admittedly superior to the claims of general creditors and inferior to claims for administration expenses, entered the case on the side of the trustee.

The referee disallowed the claim for administration expenses. He also ruled that petitioner’s claim was not provable as a general claim against the estate, a ruling challenged by neither side. On petition for review, the referee was upheld by the District Court. On appeal, the Court of Appeals for the Third Circuit, sitting en banc, affirmed the decision of the District Court by a 4-3 vote. We granted certiorari, 389 U. S. 895, because the issue is important in the administration of the bankruptcy laws and is one of first impression in this Court. For reasons to follow, we reverse.

Section 64a of the Bankruptcy Act provides in part as follows:

“The debts to have priority, in advance of the payment of dividends to creditors, and to be paid in full out of bankrupt estates, and the order of payment, shall be (1) the costs and expenses of administration, including the actual and necessary costs and expenses of preserving the estate subsequent to filing the petition . . . .”

It is agreed that this section, applicable by its terms to straight bankruptcies, governs payment of administration expenses of Chapter XI arrangements. Furthermore, it is agreed that for the purpose of applying this section to arrangements, the words “subsequent to filing the petition” refer to the period subsequent to the arrangement petition, and the words “preserving the estate” include the larger objective, common to arrangements, of operating the debtor’s business with a view to rehabilitating it.

The question in this case is whether the negligence of a receiver administering an estate under a Chapter XI arrangement gives rise to an “actual and necessary” cost of operating the debtor’s business. The Act does not define “actual and necessary,” nor has any case directly in point been brought to our attention. We must, therefore, look to the general purposes of § 64a, Chapter XI, and the Bankruptcy Act as a whole.

The trustee contends that the relevant statutory objectives are (1) to facilitate rehabilitation of insolvent businesses and (2) to preserve a maximum of assets for distribution among the general creditors should the arrangement fail. He therefore argues that first priority as “necessary” expenses should be given only to those expenditures without which the insolvent business could not be carried on. For example, the trustee would allow first priority to contracts entered into by the receiver because suppliers, employees, landlords, and the like would not enter into dealings with a debtor in possession or a receiver of an insolvent business unless priority is allowed. The trustee would exclude all negligence claims, on the theory that first priority for them is not necessary to encourage third parties to deal with an insolvent business, that first priority would reduce the amount available for the general creditors, and that first priority would discourage general creditors from accepting arrangements.

In our view the trustee has overlooked one important, and here decisive, statutory objective: fairness to all persons having claims against an insolvent. Petitioner suffered grave financial injury from what is here agreed to have been the negligence of the receiver and a workman. It is conceded that, in principle, petitioner has a right to recover for that injury from their “employer,” the business under arrangement, upon the rule of re-spondeat superior. Respondents contend, however, that petitioner is in no different position from anyone else injured by a person with scant assets: its right to recover exists in theory but is not enforceable in practice.

That, however, is not an adequate description of petitioner’s position. At the moment when an arrangement is sought, the debtor is insolvent. Its existing creditors hope that by partial or complete postponement of their claims they will, through successful rehabilitation, eventually recover from the debtor either in full or in larger proportion than they would in immediate bankruptcy. Hence the present petitioner did not merely suffer injury at the hands of an insolvent business: it had an insolvent business thrust upon it by operation of law. That business will, in any event, be unable to pay its fire debts in full. But the question is whether the fire claimants should be subordinated to, should share equally with, or should collect ahead of those creditors for whose benefit the continued operation of the business (which unfortunately led to a fire instead of the hoped-for rehabilitation) was allowed.

Recognizing that petitioner ought to have some means of asserting its claim against the business whose operation resulted in the fire, respondents have suggested various theories as alternatives to “administration expense” treatment. None of these has case support, and all seem to us unsatisfactory.

Several need not be pursued in detail. The trustee contends that if the present claims are not provable in bankruptcy they would survive as claims against the shell. He also suggests that petitioner may be able to recover from the receiver personally, or out of such bond as he posted. Without deciding whether these possible avenues are indeed open, we merely note that they do not serve the present purpose. The “master,” liable for the negligence of the “servant” in this case was the business operating under a Chapter XI arrangement for the benefit of creditors and with the hope of rehabilitation. That benefit and that rehabilitation are worthy objectives. But it would be inconsistent both with the principle of respondeat superior and with the rule of fairness in bankruptcy to seek these objectives at the cost of excluding tort creditors of the arrangement from its assets, or totally subordinating the claims of those on whom the arrangement is imposed to the claims of those for whose benefit it is instituted.

The United States, as a respondent, suggests instead that tort claims arising during an arrangement are, if properly preserved, provable general claims in any subsequent bankruptcy under § 63a of the Act, 11 U. S. C. § 103 (a). That section reads as follows:

“Debts of the bankrupt may be proved and allowed against his estate which are founded upon . . . (7) the right to recover damages in any action for negligence instituted prior to and pending at the time of the filing of the petition in bankruptcy . . .

It is agreed by all parties that this section will not avail the present petitioner who, it appears, did not file suit on its claim prior to the bankruptcy proper. This, the United States argues, is its own fault: it could have filed suit after the tort, during the arrangement, and before the petition in bankruptcy, and thus preserved its claim.

This was not the view of the District Court. Section 302 of the Act, the section which provides that Chapters I to VII of the Act (including §§63 and 64) shall be applicable to arrangements under Chapter XI as well as straight bankruptcies, contains the following provision:

“For the purposes of such application the date of the filing of the petition in bankruptcy shall be taken to be the date of the filing of an original petition under section 722 of this title [§ 322 of the Act, 11 U. S. C. § 722, which provides for filing original petitions for arrangements] . . . .”

Section 378 (2) of the Act, 11 U. S. C. § 778 (2), dealing with procedure when bankruptcy ensues upon an arrangement, provides that

“in the case of a petition filed under section 722 of this title, the proceeding shall be conducted, so far as possible, in the same manner and with like effect as if a voluntary petition for adjudication in bankruptcy had been filed and a decree of adjudication had been entered on the day when the petition under this chapter [i. e., the petition for an arrangement] was filed . . .

The effect of these two sections is that, whether or not an arrangement is superseded by bankruptcy, for purposes of applying § 63 to arrangements the date of the arrangement petition is deemed to be the date of a petition in bankruptcy.

From this fact, the District Court concluded, and petitioner now argues, that a person negligently injured during the course of an arrangement could never have a provable general claim under § 63a. For that section requires that suit be filed before the filing of the petition in bankruptcy, and, when the section is applied to an arrangement, the date of the filing of the petition in bankruptcy is deemed to be the date of the filing of the arrangement petition.

In response, the United States notes that § 378 (2) is qualified by the words “so far as possible.” The Government therefore suggests a holding that it is not “possible” to treat the date of the arrangement petition as the critical date in a case such as the present, because that point in time antedates the tort. On that theory, it is suggested that, for present purposes, § 63a’s reference to the date of filing the bankruptcy petition be taken to refer to the date of the petition in bankruptcy proper.

We do not find this an acceptable alternative. The only thing that renders it not “possible” to follow the statutory scheme and meld the arrangement into the bankruptcy is the Government’s insistence that petitioner’s claim must be held to have been provable under § 63a if only petitioner had taken the proper steps. There is nothing “impossible” about construing the sections here involved to mean what they say: a tort claim arising during an arrangement, like a tort claim arising during a bankruptcy proceeding proper, is not provable as a general claim in the bankruptcy.

There are additional reasons for reading the sections literally in this case. In the first place, the United States’ suggestion will not work where bankruptcy does not ensue upon the arrangement, for then there is no later date that can be used as the cutoff for 63a (7) claims. In that case, it would be necessary either to hold that a tort claim arising during an arrangement is a provable general claim if bankruptcy ensues but is not a provable general claim in the arrangement itself, or to hold that there is no time limit on filing suit so long as the arrangement remains an arrangement. Nothing in the qualifying language of § 378 (2) grants permission to read the time limitation out of § 63a (7) of the Act.

An even greater difficulty is presented by the fact that § 63a refers to provable debts of the bankrupt, and distinguishes the bankrupt from his estate. Section 302 provides that in applying § 63a to arrangements, the word “bankrupts” shall be deemed to relate also to “debtors.” Thus the natural reading of § 63a, when applied to arrangements as if they were bankruptcies, is that in order to be provable under § 63a (7) a tort claim must be a claim against the debtor and not against the estate in a Chapter XI arrangement. Respondents might argue this question as they do the time limitation: that it would be preferable to deem the words “debts of the bankrupt” to mean “debts of the debtor or of his estate arising up to the time of bankruptcy proper.” This argument is open, however, to the same objections as the argument on time limitations: it is a strained reading of the statute which makes no allowance for the occasions when straight bankruptcy does not ensue.

In any event, we see no reason to indulge in a strained construction of the relevant provisions, for we are persuaded that it is theoretically sounder, as well as linguistically more comfortable, to treat tort claims arising during an arrangement as actual and necessary expenses of the arrangement rather than debts of the bankrupt. In the first place, in considering whether those injured by the operation of the business during an arrangement should share equally with, or recover ahead of, those for whose benefit the business is carried on, the latter seems more natural and just. Existing creditors are, to be sure, in a dilemma not of their own making, but there is no obvious reason why they should be allowed to attempt to escape that dilemma at the risk of imposing it on others equally innocent.

More directly in point is the possibility of insurance. An arrangement may provide for suitable coverage, and the court below recognized that the cost of insurance against tort claims arising during an arrangement is an administrative expense payable in full under § 64a (1) before dividends to general creditors. It is of course obvious that proper insurance premiums must be given priority, else insurance could not be obtained; and if a receiver or debtor in possession is to be encouraged to obtain insurance in adequate amounts, the claims against which insurance is obtained should be potentially payable in full. In the present case, it is argued, the fire was of such incredible magnitude that adequate insurance probably could not have been obtained and in any event would have been foolish; this may be true, as it is also true that allowance of a first priority to the fire claimants here will still only mean recovery by them of a fraction of their damages. In the usual case where damages are within insurable limits, however, the rule of full recovery for torts is demonstrably sounder.

Although there appear to be no cases dealing with tort claims arising during Chapter XI proceedings, decisions in analogous cases suggest that “actual and necessary costs” should include costs ordinarily incident to operation of a business, and not be limited to costs without which rehabilitation would be impossible. It has long been the rule of equity receiverships that torts of the receivership create claims against the receivership itself; in those cases the statutory limitation to “actual and necessary costs” is not involved, but the explicit recognition extended to tort claims in those cases weighs heavily in favor of considering them within the general category of costs and expenses.

In some cases arising under Chapter XI it has been recognized that “actual and necessary costs” are not limited to those claims which the business must be able to pay in full if it is to be able to deal at all. For example, state and federal taxes accruing during a receivership have been held to be actual and necessary costs of an arrangement. The United States, recognizing and supporting these holdings, agrees with petitioner that costs that form “an integral and essential element of the continuation of the business” are necessary expenses even though priority is not necessary to the continuation of the business. Thus the Government suggests that “an injury to a member of the public — a business invitee — who was injured while on the business premises during an arrangement would present a completely different problem [i. e., could qualify for first priority]” although it is not suggested that priority is needed to encourage invitees to enter the premises.

The United States argues, however, that each tort claim “must be analyzed in its own context.” Apart from the fact that it has been assumed throughout this case that all 147 claimants were on an equal footing and it is not very helpful to suggest here for the first time a rule by which lessees, invitees, and neighbors have different rights, we perceive no distinction: No principle of tort law of which we are aware offers guidance for distinguishing, within the class of torts committed by receivers while acting in furtherance of the business, between those “integral” to the business and those that are not.

We hold that damages resulting from the negligence of a receiver acting within the scope of his authority as receiver give rise to “actual and necessary costs” of a Chapter XI arrangement..

The judgment of the Court of Appeals is reversed, and the case remanded for further proceedings consistent with this opinion. T, . , ,

T, , , It is so ordered.

Mr. Justice Marshall took no part in the consideration or decision of this case.

Mr. Chief Justice Warren,

with whom Mr. Justice Douglas joins,

dissenting.

In my opinion, the Court has misinterpreted the term “costs and expenses of administration” as intended by § 64a (1) of the Bankruptcy Act and, by deviating from the natural meaning of those words, has given the administrative cost priority an unwarranted application. The effect of the holding in this case is that the negligence of a workman may completely wipe out the claims of all other classes of public and private creditors. I do not believe Congress intended to accord tort claimants such a preference. Accordingly, I would affirm the judgment below.

On other occasions, this Court has observed that “[t]he theme of the Bankruptcy Act is ‘equality of distribution’ . . . ; and if one claimant is to be preferred over others, the purpose should be clear from the statute.” Nathanson v. NLRB, 344 U. S. 25, 29 (1952); see Sampsell v. Imperial Paper Corp., 313 U. S. 215, 219 (1941). More particularly, the Act expressly directs that eligible negligence claims are to share equally with the unsecured claims in a pro rata distribution of the debtor’s nonexempt assets. Bankruptcy Act §§ 63a (7), 65a, 11 U. S. C. §§103 (a)(7), 105(a). Departing from this statutory scheme, the Court today singles out one class of tort claims for special treatment. After today’s decision, the status of a tort claimant depends entirely upon whether he is fortunate enough to have been injured after rather than before a receiver has been appointed. And if the claimant is in the select class, he may be permitted to exhaust the estate to the exclusion of the general creditors as well as of the wage claims and government tax claims for which Congress has shown an unmistakable preference. In my view, this result frustrates rather than serves the underlying purposes of a Chapter XI proceeding, and I would not reach it without a clear indication that Congress so intended.

Congress enacted Chapter XI as an alternative to straight bankruptcy for individuals and small businesses which might be successfully rehabilitated instead of being subjected to economically wasteful liquidation. The success of a Chapter XI proceeding depends largely on two factors: first, whether creditors will take the chance of permitting an arrangement; second, whether other businesses will continue to deal with the distressed business. With respect to the first of these considerations, today’s decision will undoubtedly discourage creditors from permitting arrangements, because it subjects them to unpredictable and probably uninsurable tort liability. I do not believe the statutory language requires such an interpretation. I would construe § 64a (1) with reference to the second consideration mentioned above. In my opinion, the Court would reach a result more in line with congressional intent and the Bankruptcy Act generally by regarding as administrative costs only those costs required for a smooth and successful arrangement. Accordingly, the administrative cost priority should be viewed as a guaranty to the receiver and those who deal with or are employed by him that they will be paid for their goods and services. Any broader interpretation will discourage creditors from permitting use of the rehabilitative machinery of Chapter XI and tend to force distressed businesses into straight bankruptcy.

It is equitable, the Court believes, that the general creditors (and wage and tax claimants) bear the loss in this case because they have “thrust” an insolvent business upon petitioner for their own benefit. I respectfully submit that this is a most unfair characterization of arrangements. An economically distressed businessman seeks an arrangement for his own and not for his creditors’ benefit. Of course the creditors will benefit if the arrangement is successful, just as they would have benefited if the businessman had been successful without resorting to an arrangement. But a business in arrangement is no more thrust on the public than is any other business enterprise which is conducted for the mutual prosperity of the owners, the wage earners and the creditors. Realistically, the only difference is that a business administered under Chapter XI has not been prosperous. If the arrangement is successful, the owners, wage earners and creditors will all benefit; if it is not, they will all be injured. Thus, I would not distinguish in this case between petitioner and the other general creditors, none of whom was responsible for the catastrophe for which all of them must sustain some loss. Instead, in deciding this case, I would adhere to the Act’s basic theme of equality of distribution.

The Court states that its decision will encourage Chapter XI receivers to obtain “adequate” insurance. The Court fairly well concedes, however, that in this case “adequate” insurance “probably could not have been obtained and in any event would have been foolish.” In other words, so far as this Court knows, the insurance taken out by the receiver in this case was in fact “adequate,” in the sense that no reasonable receiver could or should obtain fire insurance in the amount of $3,500,000 on the assumption that his workman might accidentally cause a fire of the proportions which occurred here. Moreover, quite apart from the case at bar, there is absolutely no indication that today’s decision is needed to encourage receivers to obtain insurance. I see no basis in the Act or in sound policy for a ruling that the creditors of an estate under a Chapter XI arrangement become involuntary insurers against a liability which probably would not and should not be insurable by more traditional means.

The Court also relies, in my opinion mistakenly, upon analogies to equity receiverships. In reorganizations under Chapter X and § 77, Congress has directed the courts to apply the rules of priority developed in equity. However, arrangements under Chapter XI are governed strictly by the statutory priorities fixed by § 64a. These statutory priorities differ in many respects from those applicable to equity receiverships, and they have been amended repeatedly to narrow the class of claimants which may participate ahead of the general creditors. Furthermore, even in the case of § 77 reorganizations where the priorities developed in equity are controlling, Congress has specifically provided for one exception to the rule that tort claimants are to be' treated as general creditors. Bankruptcy Act § 77 (n), 11 U. S. C. § 205 (n). That exception is in favor of a narrowly defined class of claimants. Congress has not expressly provided a similar exception to cover petitioner’s tort claim, and I would not infer one.

Finally, the Court concludes, for two reasons, that it is “linguistically more comfortable” to treat petitioner’s claim as an administrative cost rather than as a negligence claim which could have been proven under § 63a (7). First, § 63a refers to provable claims against the debtor and not against his estate. Second, §§ 63a (7) and 302 require that an action be commenced on the claim before the filing of the arrangement petition, and allowing claims like petitioner’s would in effect toll the time limitation imposed by these sections. With respect to the first of the Court’s reasons, I find no statutory or practical basis for distinguishing between the debtor and his estate in this case. Had the arrangement been successful, the debtor would have been liable for any damages occasioned during the administration under the line of cases relied upon by the Court. Texas & Pacific R. Co. v. Bloom, 164 U. S. 636 (1897). The suggested distinction between “debtor” and “estate” would be meaningful only if the two words pointed to different sources of liability. Here, petitioner’s negligence claim, if allowed, would diminish the debtor’s estate irrespective of whether it were treated as an administrative cost under § 64a or as an ordinary negligence claim under § 63a (7). With respect to the Court’s second argument, Chapter XI provides that the straight bankruptcy provisions, including § 63a (7), 'are applicable to arrangement proceedings only “so far as possible.” Bankruptcy Act § 378 (2), 11 17. S. C. § 778 (2). I have no difficulty in concluding that, where the claim does not arise until after the arrangement petition is filed, it is manifestly impossible for a lawsuit on that claim to precede the filing of the petition. Further, I know of no more complete wa.y to “read the time limitation out of § 63a (7) of the Act” than by treating certain negligence claims as administrative costs as the Court does in this case.

I see no basis in equity or in the statutory language or purpose for subjecting every class of creditors except petitioner’s to a loss caused by the negligence of a workman. Consequently, I would construe “actual and necessary costs” as limited to those costs actually and necessarily incurred in preserving the debtor’s estate and administering it for the benefit of the creditors. I would not include ordinary negligence claims within this class.

       Section 302 of the Act, as set forth in 11 U. S. C. § 702, provides in part as follows:
      “The provisions of chapters 1-7 of this title shall, insofar as they are not inconsistent with or in conflict with the provisions of this chapter [XI], apply in proceedings under this chapter.”
      Section 64a (1), a part of Chapter VII and hence applicable to Chapter XI arrangements by virtue of § 302, itself provides that where, as here, ordinary bankruptcy ensues upon a proceeding under another chapter,
      “the costs and expenses of administration incurred in the ensuing bankruptcy proceeding shall have priority in advance of payment of the unpaid costs and expenses of administration . . . incurred in the superseded proceeding . . .

      We deal here, therefore, with a claim that will in any event be subordinate to administration expenses of the bankruptcy proper.

       Thus the merits of negligence claims have not been adjudicated, and, of course, we intimate no views upon them.

       See infra, at 480.

       This is explicitly provided in § 302.

       Compare 3 Collier, Bankruptcy ¶ 62.15:
      “Section 2a (5) empowers the court to authorize the business of bankrupts to be conducted for a limited period by a marshal, receiver or trustee. Such continued operation of a business is in substance a means of preservation, namely as a going concern, sometimes with a view to rehabilitation .... Expenditure incurred by continued operation of a bankrupt’s business will, therefore, on principle, follow the rules ... as to expenditure in connection with preservation. The difference, if any, lies in the greater variety of types of expenses . . . (Footnotes omitted.)

       The case that petitioner finds most closely in point is Vass v. Conron Bros., 59 F. 2d 969. Vass was the receiver of certain bankrupts who had been dealers in cold meats and had leased space in their cold storage plant to Conron. Vass confirmed the lease, one of whose covenants provided that the lessor would maintain sufficient refrigeration; thereafter, Vass allegedly failed to refrigerate properly, damaging stored property of the lessee. The lessee then attempted to sue Vass in a state court, alleging breach of the covenant and negligence. Vass, however, obtained an injunction from the bankruptcy court against the state action; the Court of Appeals affirmed in an opinion by L. Hand.
      The issue in Vass was whether the state action would conflict with the bankruptcy court’s jurisdiction over the estate. In ruling that the action could not be maintained, Judge Hand concluded, inter alia, that the action did not fall within the federal statutory permission for actions based on any liability arising out of “any act or transaction” of the trustee “in carrying on the business connected with” the property entrusted to him. Judge Hand concluded, on special facts, that the trustee in confirming the lease was merely holding matters in statu quo, not continuing the business. Consequently, he said that “the liquidation of the lessee’s resulting damages was as much a part of the usual administration in bankruptcy, as that of the pay of accountants, custodians or other assistants.” 59 F. 2d, at 971. In context, the language just quoted is of little assistance in the present ease.

       28 U. S. C. § 959 (b) provides as follows:
      “A trustee, receiver or manager appointed in any cause pending in any court of the United States, including a debtor in possession, shall manage and operate the property in his possession as such trustee, receiver or manager according to the requirements of the valid laws of the State in which such property is situated, in the same manner that the owner or possessor thereof would be bound to do if in possession thereof.”
      This provision of course establishes only the principle of liability under state tort and agency law, and does not decide from whom or with what priority tort claims may be collected. In McNulta v. Lochridge, 141 U. S. 327, 332, this Court had occasion to note that “[ajctions against the receiver are in law actions against the receivership, or the funds in the hands of the receiver, and his contracts, misfeasances, negligences and liabilities are official and not personal, and judgments against him as receiver are payable only from the funds in his hands.”
      This statement of course means only that torts of a receiver are in principle compensable out of the assets of the estate in receivership and, again, does not indicate whether such claims shall be paid prior to, equally with, or after other claims against the receivership.
      We do not here reach, and do not mean to reaffirm the implication of McNulta that an action against the receiver personally, or against the debtor after termination of the receivership, would never lie under any circumstances. As to such questions, the statement of McNulta is dictum.

       See n. 7, supra.

       370 F. 2d 624, 628.

         E. g., Texas & Pacific R. Co. v. Bloom, 164 U. S. 636; Bereth v. Sparks, 51 F. 2d 441; §77 (n), 11 U. S. C. §205 (n), according particular recognition to the tort claims of railroad employees, does not, as the dissent suggests, mean that other tort claims are not chargeable against a receivership itself. Rather, as the United States concedes, “tort claims arising during a receivership or reorganization period . . . have generally been given the priority status of general administrative expenses.”

         E. g., Nicholas v. United States, 384 U. S. 678. At pages 687-688 we stated:
      “Taxes incurred in the pre-arrangement period must be content with a fourth priority under § 64a (4) of the Bankruptcy Act. On the other hand, taxes incurred during the arrangement period are expenses of Chapter XI proceedings and are therefore technically a part of the first priority under § 64a (1).”
      The Court also ruled that interest accruing on such claims during the arrangement period would also fall within § 64a (1). Ibid. See also Boteler v. Ingels, 308 U. S. 57.

       Compare 3 Collier, Bankruptcy ¶ 62.15 :
      “Among other expenses incident to conducting a business and therefore allowable as administrative expenditure may be . . . payments on claims for personal injuries inflicted in the operation of a business, rent, insurance, commissions, cost of raw material or merchandise purchased for manufacturing or resale and any other expense ordinarily attendant upon active participation in commercial or industrial life.” (Footnotes omitted.)

       Certain wage claims and government taxes obtain second and fourth priorities respectively under the second and fourth subdivisions of § 64a, 11 U. S. C. §§104 (a) (2), 104(a)(4). The government tax claims in this case, nearly all of which will be excluded from sharing in the estate under today’s decision, amount to approximately $245,000.

       Unlike straight bankruptcy, only the debtor himself may file a petition for an arrangement under Chapter XI. Bankruptcy Act §§ 321, 322, 11 U. S. C. §§ 721, 722; 8 Collier, Bankruptcy ¶ 4.02 [1],

       In fact, the absence of any other adjudicated case on the question here presented is a strong indication that the receiver’s insurance is usually perfectly adequate.

       11 U. S. C. §§ 501-676.

       11 U. S. C. § 205.

       Bankruptcy Act §§77b, 115, 11 U. S. C. §§ 205 (b), 515; see In re Chicago Express, Inc., 332 F. 2d 276, 278 (C. A. 2d Cir. 1964). Section 102 of the Act (11 U. S. C. §502), which is applicable to corporate reorganizations, specifically provides that § 64 “shall not apply in such proceedings unless an order shall be entered directing that bankruptcy be proceeded with ...”

       To take but two examples, government tax claims obtain a higher priority in equity receiverships and under Chapter X than they do under § 64a, see Bankruptcy Act § 199, 11 II. S. C. § 599; 6A Collier, Bankruptcy ¶ 9.13 [2]; and the “six-months rule” applied to equity receiverships has no analogue under § 64a. See Dudley v. Mealey, 147 F. 2d 268 (C. A. 2d Cir. 1945).

        E. g., compare Act of July 1, 1898, c. 541, § 64a, 30 Stat. 563, with Act of May 27, 1926, c. 406, § 15 [64a], 44 Stat. 666; compare 80 Stat. 270, 11 U. S. C. §§35, 104(a)(4) (1964 ed., Supp. II), with Act of June 22, 1938, c. 575, amending §§ 17a (1), 64a (4), 52 Stat. 851,874.


source: Caselaw Access Project

author: Mr. Justice Brennan

license: Public Domain

text:
    WIRTZ, SECRETARY OF LABOR v. HOTEL, MOTEL & CLUB EMPLOYEES UNION, LOCAL 6.
    No. 891.
    Argued April 29, 1968.
    Decided June 3, 1968.

      Harris Weinstein argued the cause for petitioner. With him on the brief were Solicitor General Griswold, Assistant Attorney General Weisl, Louis F. Claiborne, Alan S. Rosenthal, Robert V. Zener, Charles Donahue, George T. Avery, and Beate Bloch.

      Sidney E. Cohn argued the cause for respondent. With him on the briefs was Jerome B. Lurie..

      Laurence Gold argued the cause for the American Federation of Labor and Congress of Industrial Organizations, as amicus curiae, urging affirmance. With him on the brief were J. Albert Woll and Thomas E. Harris.

   Mr. Justice Brennan

delivered the opinion of the Court.

This action was brought by petitioner, the Secretary of Labor, in the District Court for the Southern District of New York for a judgment declaring void the May 1965 election of officers conducted by respondent Local 6, and ordering a new election under the Secretary’s supervision. The action is authorized by § 402 (b) of the Labor-Management Reporting and Disclosure Act of 1959, 73 Stat. 534, 29 U. S. C. § 482 (b). The Secretary charged that a bylaw of the Local which limited eligibility for major elective offices to union members who hold or have previously held elective office was not a “reasonable qualification” within the intendment of the provision of § 401 (e) of the Act, 29 U. S. C. § 481 (e), that “every member in good standing shall be eligible to be a candidate and to hold office (subject to . . . reasonable qualifications uniformly imposed) . He charged further that enforcement of the bylaw “may have affected the outcome” of the election within the meaning of § 402 (c), 29 U. S. C. § 482 (c).

The District Court, after hearing, entered a judgment which declared that the prior-office requirement was not reasonable, but also declared that it could not be found that its enforcement in violation of § 401 (e) “may have affected the outcome” of the election. The court therefore refused to set aside the May 1965 election and to order a new election under the Secretary’s supervision, but did grant an injunction against enforcement of the bylaw in future elections. 265 F. Supp. 510. The Court of Appeals for the Second Circuit reversed the provision of the judgment which declared the bylaw not to be reasonable and its enforcement violative of § 401 (e), and set aside the injunction. The court found it unnecessary in that circumstance to decide whether enforcement of the bylaw at the election may have affected the outcome. 381 F. 2d 500. We granted certiorari. 390 U. S. 919. We hold that the restriction was not reasonable and that its enforcement may have affected the outcome of the election. The Secretary is therefore entitled to an order directing a new election under his supervision.

I.

Title IV is one of the seven titles of the Labor-Management Reporting and Disclosure Act (LMRDA). Earlier this Term, we observed that “Title IV’s special function in furthering the overall goals of the LMRDA is to insure ‘free and democratic’ elections. The legislative history-shows that Congress weighed how best to legislate against revealed abuses in union elections without departing needlessly from its long-standing policy against unnecessary governmental intrusion into internal union affairs.” Wirtz v. Local 153, Glass Bottle Blowers Assn., 389 U. S. 463, 470-471. The Court of Appeals, however, in considering the reasonableness of the bylaw, emphasized only the congressional concern not to intervene unnecessarily in internal union affairs, stating that “[i]n deciding the issue of reasonableness we must keep in mind the fact that the Act did not purport to take away from labor unions the governance of their own internal affairs and hand that governance over either to the courts or to the Secretary of Labor. The Act strictly limits official interference in the internal affairs of unions.” 381 F. 2d, at 504. But this emphasis overlooks the fact that the congressional concern to avoid unnecessary intervention was balanced against the policy expressed in the Act to protect the public interest by assuring that union elections would be conducted in accordance with democratic principles. As we said in Wirtz v. Bottle Blowers, supra, at 473, decided after the Court of Appeals decided this case, “. . . Congress, although committed to minimal intervention, was obviously equally committed to making that intervention, once warranted, effective in carrying out the basic aim of Title IV.” Thus, “the freedom allowed unions to run their own elections was reserved for those elections which conform to the democratic principles written into § 401.” Id., at 471. In a companion case, Wirtz v. Local 125, Laborers’ Int’l Union, 389 U. S. 477, 483, we said that the provisions of § 401 are “necessary protections of the public interest as well as of the rights and interests of union members.” In sum, in § 401 “. . . Congress emphatically asserted a vital public interest in assuring free and democratic union elections that transcends the narrower interest of the complaining union member.” Wirtz v. Bottle Blowers, supra, at 475.

A pervasive theme in the congressional debates about the election provisions was that revelations of corruption, dictatorial practices and racketeering in some unions investigated by Congress indicated a need to protect the rights of rank-and-file members to participate fully in the operation of their union through processes of democratic self-government, and, through the election process, to keep the union leadership responsive to the membership. This theme is made explicit in the reports of the Labor Committees of both Houses of Congress. It is reflected in the discrete provisions of Title IV and also of Title I, the “Bill of Rights” for union members. 29 U. S. C. § 411. Title IV, and particularly § 401, was the vehicle by which Congress expressed its policy. That section prescribes standards to govern the conduct of union elections: International union elections must be held at least once every five years and local elections at least once every three years. Elections must be by secret ballot. Specific provisions insure equality of treatment in the mailing of campaign literature; require adequate safeguards to insure a fair election; guarantee a “reasonable opportunity” for the nomination of candidates, the right to vote, and the right of every member in good standing to be a candidate subject to “reasonable qualifications uniformly imposed,” the guarantee with which we are concerned in this case. 29 U. S. C. §§ 481 (a)-(e). Furthermore, although Congress emphatically gave unions the primary responsibility for enforcing compliance with the Act, Congress also settled enforcement authority on the Secretary of Labor to insure that serious violations would not go unremedied and the public interest go unvindicated. See Wirtz v. Bottle Blowers, supra; Wirtz v. Laborers’ Union, supra; Calhoon v. Harvey, 379 U. S. 134.

Congress plainly did not intend that the authorization in § 401 (e) of "reasonable qualifications uniformly imposed” should be given a broad reach. The contrary is implicit in the legislative history of the section and in its wording that “every member in good standing shall be eligible to be a candidate and to hold office . . . .” This conclusion is buttressed by other provisions of the Act which stress freedom of members to nominate candidates for office. Unduly restrictive candidacy qualifications can result in the abuses of entrenched leadership that the LMRDA was expressly enacted to curb. The check of democratic elections as a preventive measure is seriously impaired by candidacy qualifications which substantially deplete the ranks of those who might run in opposition to incumbents.

It follows therefore that whether the Local 6 bylaw is a “reasonable qualification” within the meaning of § 401 (e) must be measured in terms of its consistency with the Act’s command to unions to conduct “free and democratic” union elections.

I — I I — I

Local 6 has 27,000 members, assets of $2,300,000, and assets in welfare, pension, and medical funds of some $30,000,000. The Local represents bartenders, maids, dining room employees, and kitchen employees of hotels, motels, and private clubs in New York. It is structured into six geographic districts, each with five craft departments, for hotel and motel employees, and a seventh district for private clubs. The various crafts have their own representatives in each hotel, motel, or club. An Assembly, composed in 1965 of 372 members, meets four times a year and is the basic representative body. The delegates are elected from among the craft units within each of the seven districts on the basis of one delegate for each 75 members of a craft. 'The Assembly in turn elects from its membership an Executive Board on the basis of one board member for each 500 members, augmented by principal officers and by nonvoting business agents, 31 of whom are elected from the seven districts and others who are appointed by the Assembly. The Executive Board meets monthly. There is also an Administrative Board made up of, in addition to general officers, seven district vice-presidents elected from the districts and elected or appointed delegates to the New York Hotel and Motel Trades Council. Finally there are four paid full-time general officers — President, Secretary-Treasurer, General Organizer, and Recording Secretary, all elected by the membership at large. Terms of office are three years. In practice the affairs of the Local are administered by the general officers and the Administrative Board.

The bylaw under challenge limited eligibility for positions as a general officer, district vice-president or elected business agent to members of either the Assembly or the Executive Board or members who, “at some time in the past, have served at least one term on either the Executive Board, the Assembly, or the old Shop Delegates Council.” The Shop Delegates Council was abolished in 1951 and replaced by the Assembly. These qualifications apply, however, only to members who stand for election for office. Vacancies may not always be filled by election; the general officers may in such cases fill vacancies by appointment of members without prior office-holding experience, with the approval of the Executive Board and the Assembly.

By the terms of the bylaw, in the May 1965 election only 1,725 of the 27,000 members were eligible to run for office. Of these, 1,182, or 70%., were eligible only because of service on the Shop Delegates Council which had been abolished 14 years earlier. Thus, only 543 of the eligibles, some 2% of the membership, had at some time or other served at least a term.in the Assembly, designated in the bylaws as “the highest body of the Union,” since its creation in 1951.

Five elections were held between 1951 and 1965. All of them were won by the “Administration Party,” whose slates were composed largely of incumbents. Until the May 1965 election there was only token opposition to those slates. Early in 1965, however, a “Membership Party” was organized. It attempted to field a slate of candidates to oppose the “Administration Party” slate for, among others, the four general offices and for 13 of the 27 vice-president and business agent posts. But enforcement of the bylaw disqualified the “Membership Party” candidates for the general office of Secretary-Treasurer and for eight of the district offices. Other “Membership Party” nominees were disqualified for lack of good standing. In result, the “Membership Party” slate was reduced to candidates for the offices of president, general organizer, and business agent in two districts. The “Administration Party” ran a full slate and elected its candidates by margins up to 7 to 1. Following the election, “Membership Party” members protested the validity of the bylaw and, after unsuccessfully exhausting internal union remedies as required by § 402 (a)(1), filed the complaint with the Secretary of Labor as authorized by that section which in due course led to the Secretary's filing this action.

Plainly, given the objective of Title IY, a candidacy limitation which renders 93% of union members ineligible for office can hardly be a “reasonable qualification.” The practical effect of the limitation was described by the District Court:

“In practice it was not possible to be elected to the Assembly except with the blessing of the Administration Party conferred by selection to run for the Assembly on Row A [of a voting machine]. This was doubtless in large part because there was never a full slate of opposing candidates for the Assembly. The candidates to run on Row A for the Assembly were selected by the incumbent group of officers and were put in nomination after caucuses of invited members, attended by officers. It was only natural that candidates selected to run on Row A for the Assembly would be supporters of the administration. All candidates on Row A were pledged to support each other. Dissidents could not be elected to the Assembly. . . .
“Since 1951 the only way new members could become eligible for office was to win election to the Assembly. But in this period the only candidates which won such election were those who ran on Row A, the administration ticket. The only way to run on Row A was to be selected by the administration. Thus, dissidents could not become eligible to be opposing candidates for office and effective opposition was thus sharply curtailed.” 265 F. Supp., at 516, 520.

The Local attempts to defend the restriction as a “reasonable qualification” by citing the concededly impressive record of the “Administration Party” in running the Local’s affairs since 1951. There is no reason to doubt that the Local has enjoyed enlightened and aggressive leadership. But that fact does not sustain the Local’s burden. Congress designed Title IV to curb the possibility of abuse by benevolent as well as malevolent entrenched leaderships.

The Local also argues that the high annual turnover in membership, the diverse interests of the various craft units and the multimillion-dollar finances of the Local justify the bylaw as a measure to limit the holding of important union offices to those members who have acquired a familiarity with the Local’s problems by service in lesser offices. That argument was persuasive with the Court of Appeals, which said:

“[I]t is not self-evident that basic minimum principles of union democracy require that every union entrust the administration of its affairs to untrained and inexperienced rank and file members. ... It does not seem to us to be surprising that the union should hesitate to permit a cook or a waiter or a dishwasher without any training or experience in the management of union affairs to take on responsibility for the complex and difficult problems of administration of this union.
“We do not believe that it is unreasonable for a union to condition candidacy for offices of greater responsibility upon a year [sic] of the kind of experience and training that a union member will acquire in a position such as that of membership in Local 6’s Assembly.” 381 F. 2d, at 505.

That argument is not, however, persuasive to us. It assumes that rank-and-file union members are unable to distinguish qualified from unqualified candidates for particular offices without a demonstration of a candidate’s performance in other offices. But Congress’ model of democratic elections was political elections in this country, and they are not based on any such assumption. Rather, in those elections the assumption is that voters will exercise common sense and judgment in casting their ballots. Local 6 made no showing that citizens assumed to make discriminating judgments in public elections cannot be relied on to make such judgments when voting as union members. Indeed the Local is not faithful to its own premise. A member need not have prior service in union office to be appointed, to a vacancy in any office. Also, many members of the powerful Administrative Board become such by reason of their appointments as delegates to the New York Hotel and Motel Trades Council, another example of important officers who are not required to have had prior service. Moreover, as the District Court found, “once such an officer is appointed, he automatically becomes a member of the Assembly and immediately becomes eligible to run thereafter for any union office. This enables the incumbent group to qualify members for elective office by a procedure not available to dissidents.” 265 F. Supp., at 520.

The bylaw is virtually unique in trade union practice. It has its counterpart in some other locals of this International Union but not in all; and it is not a requirement included in the International’s constitution. Among other large unions only the International Ladies Garment Workers Union has a similar restriction, but that union provides members with the alternative of a union-conducted course in union management. Of 66 unions reporting receipts over $1,000,000 for 1964, only locals of ILGWU and Local 6 reported having this requirement.

Control by incumbents through devices which operate in the manner of this bylaw is precisely what Congress legislated against in the LMRDA. Cf. Wirtz v. Bottle Bloioers, supra, at 474-475. Accordingly, we hold that the bylaw is not a “reasonable qualification” within the meaning of § 401 (e).

III.

The Secretary was not entitled to an order for a supervised election unless the enforcement of the bylaw “may have affected” the outcome of the May 1965 election, § 402 (c), 29 U. S. C. § 482 (c). The “may have affected” language appeared in the bill passed by the Senate, S. 1555. The bill passed by the House, H. R. 8342, and the Kennedy-Ervin bill introduced in the Senate, S. 505, required the more stringent showing that the violation actually “affected” the outcome. The difference was resolved in conference by the adoption of the “may have affected” language. Senator Goldwater explained,

“The Kennedy-Ervin bill (S. 505), as introduced, authorized the court to declare an election void only if the violation of section 401 actually affected the outcome of the election rather than may have affected such outcome. The difficulty of proving such an actuality would be so great as to render the professed remedy practically worthless. Minority members in committee secured an amendment correcting this glaring defect and the amendment is contained in the conference report.” 105 Cong. Rec. 19765.

The provision that the finding should be made “upon a preponderance of the evidence” was left undisturbed •when the change was made. That provision is readily satisfied, however, as is the congressional purpose in changing “affected” to “may have affected” in order to avoid rendering the proposed “remedy practically worthless,” by ascribing to a proved violation of § 401 the effect of establishing a prima facie case that the violation “may-have affected” the outcome. This effect may of course be met by evidence which supports a finding that the violation did not affect the result. This construction is peculiarly appropriate when the violation of § 401, as here, takes the form of a substantial exclusion of candidates from the ballot. In such case we adopt the reasoning of the Court of Appeals for the Second Circuit in Wirtz v. Local Union 410, IUOE, 366 F. 2d 438, 443:

“The proviso was intended to free unions from the disruptive effect of a voided election unless there is a meaningful relation between a violation of the Act and results of a particular election. For example, if the Secretary’s investigation revealed that 20 percent of the votes in an election had been tampered with, but that all officers had won by an 8-1 margin, the proviso should prevent upsetting the election. . . . But in the cases at bar, the alleged violations caused the exclusion of willing candidates from the ballots. In such circumstances, there can be no tangible evidence available of the effect of this exclusion on the election; whether the outcome would have been different depends upon whether the suppressed candidates were potent vote-getters, whether more union members' would have voted had candidates not been suppressed, and so forth. Since any proof relating to effect on outcome must necessarily be speculative, we do not think Congress meant to place as stringent a burden on the Secretary as the district courts imposed here.”

The District Court acknowledged that the issue was “governed by the teaching of Wirtz v. Local Unions 410, etc.” and correctly held that under its principle “a violation by disqualification of candidates does not automatically require a finding that the outcome may have been affected.” 265 F. Supp., at 520-521. We cannot make out from the court’s opinion, however, whether the violation was regarded as establishing a prima facie case that the outcome was affected. But if we assume that the court accorded the violation that effect, we disagree with its conclusion that the evidence met that case. The court cited the substantial defeat of those “Membership Party” candidates who did run, the lack of evidence that any of the disqualified nominees was a proven vote-getter, the lack of a substantial grievance or issue asserted by the “Membership Party” against the incumbents, and the overwhelming advantage enjoyed by the “Administration Party” of having a full slate of candidates. 265 F. Supp., at 521. We do not think that these considerations constitute proof supporting the court’s conclusion. None of the factors relied on is tangible evidence against the reasonable possibility that the wholesale exclusion of members did affect the outcome. Nothing in them necessarily contradicts the logical inference that some or all of the disqualified candidates might have been elected had they been permitted to run. The defeat suffered by the few candidates allowed to run proves nothing about the performance that might have been made by those who did not. The District Court properly perceived that the bylaw necessarily inhibited the membership generally from considering making the race, but held that any inference from this was disproved by “the heavy vote in favor of the administration candidates . . . .” Ibid. But since 93% of the membership was ineligible under the invalid bylaw, it is impossible to know that the election would not have attracted many more candidates but for the bylaw. In short, the considerations relied on by the court are pure conjecture, not evidence. We therefore conclude that the prima facie case established by the violation was not met by evidence which supports the District Court’s finding that the violation did not affect the result.

The judgment of the Court of Appeals is reversed and the case is remanded to the District Court with direction to order a new election under the Secretary’s supervision.

It is so ordered.

Me. Justice Marshall took no part in the consideration or decision of this case.

       The bylaw provided:
      “In order to be eligible for nomination as an officer, a candidate must possess the following qualifications: (1) He must be a member of the Union in continuous good standing for a period of two years immediately preceding his nomination; (2) He must be a member of either the Assembly or the Executive Board, or else, at some time in the past, have served at least one term on either the Executive Board, the Assembly, or the old Shop Delegates Council. In order to be eligible for nomination as a member of the Executive Board, as a delegate to the Assembly, or as a department delegate, a candidate must be a member of the Union in continuous good standing for a period of at least one year immediately preceding his nomination.”

       Section 401 (e) provides in pertinent part:
      “In any election required by this section which is to be held by secret ballot a reasonable opportunity shall be given for the nomination of candidates and every member in good standing shall be eligible to be a candidate and to hold office (subject to section 504 of this title and to reasonable qualifications uniformly imposed) and shall have the right to vote for or otherwise support the candidate or candidates of his choice, without being subject to penalty, discipline, or improper interference or reprisal of any kind by such organization or any member thereof. . . .” 29 U. S. C. §481 (e).

       Section 402 (c) provides:
      “If, upon a preponderance of the evidence after a trial upon the merits, the court finds—
      “(2) that the violation of section 481 of this title may have affected the outcome of an election, the court shall declare the election, if any, to be void and direct the conduct of a new election under supervision of the Secretary and, so far as lawful and practicable, in conformity with the constitution and bylaws of the labor organization. . . .” 29 U. S. C. §482 (c).

       Judge Dimock dissented from the reversal of the declaratory judgment but concurred in the setting aside of the injunction. However, he did not join the majority in holding that the District Court was without power to enjoin future violations; his concurrence was “based upon the Secretary’s concession of lack of power in the district court.” 381 F. 2d, at 507. This issue is not before us.
      The District Court did not consider other violations alleged in the complaint because no member of Local 6 had first invoked union remedies to redress them pursuant to § 402 (a). In light of our decision we need not consider the Secretary’s argument that a member’s protest triggers a § 402 enforcement action in which the Secretary may challenge any violation of §401 discovered in his investigation of the member’s complaint and brought to the attention of the union. Cf. Wirtz v. Local 125, Laborers’ Int’l Union, 389 U. S. 477, 481-482.

       See Report of the Senate Committee on Improper Activities in the Labor or Management Field, S. Rep. No. 1417, 85th Cong., 2d Sess. (1958). See discussion in Wirtz v. Bottle Blowers, supra, at 469-470.

       “. . . Like other American institutions some unions have become large and impersonal; they have acquired bureaucratic tendencies and characteristics; their members like other Americans have sometimes become apathetic in the exercise of their personal responsibility for the conduct of union affairs. . . .
      “. . . [E]ffective measures to stamp out crime and corruption and guarantee internal union democracy, cannot be applied to all unions without the coercive powers of government ....
      “. . . Union members have a vital interest ... in the policies and conduct of union affairs. To the extent that union procedures are democratic they permit the individual to share in the formulation of union policy. This is not to say that in order to have democratically responsive unions, it is necessary to have each union member make decisions on detail as in a New England town meeting. What is required is the opportunity to influence policy and leadership by free and periodic elections.
      “It needs no argument to demonstrate the importance of free and democratic union elections. . . . The Government which gives unions . . . power has an obligation to insure that the officials who wield it are responsive to the desires of the men and women whom they represent. The best assurance which can be given is a legal guaranty of free and periodic elections. The responsiveness of union officers to the will of the members depends upon the frequency of elections, and an honest count of the ballots. Guaranties of fairness will preserve the confidence of the public and the members in the integrity of union elections.” S. Rep. No. 187, 86th Cong., 1st Sess., 6-7, 20 (1959); I Leg. Hist. 402-403, 416. And see H. R. Rep. No. 741, 86th Cong., 1st Sess., 6-7, 15-16 (1959); I Leg. Hist. 764-765, 773-774.

       See, e. g., S. Rep. No. 187, supra, n. 6, at 34; H. R. Rep. No. 741, supra, n. 6, at 26-27; I Leg. Hist. 430, 784-785.
      For the general background and legislative history of the Act, see generally Aaron, The Labor-Management Reporting and Disclosure Act of 1959, 73 Harv. L. Rev. 851 (1960); Cox, Internal Affairs of Labor Unions Under the Labor Reform Act of 1959, 58 Mich. L. Rev. 819 (1960); Levitan & Loewenberg, The Polities and Provisions of the Landrum-Griffin Act, in Regulating Union Government 28 (M. Estey, P. Taft, & M. Wagner eds. 1964); Rezler, Union Elections: The Background of Title IV of LMRDA, in Symposium on LMRDA 475 (R. Slovenko ed. 1961).

       See 29 U. S. C. § 481 (e): “a reasonable opportunity shall be given for the nomination of candidates . . .”; id,., §411 (a)(1): “Every member of a labor organization shall have equal rights and privileges within such organization to nominate candidates

       The Local has amended its bylaw to liberalize the candidacy requirements (making eligible department delegates and members of five years’ good standing) and the amended bylaw was to govern an election scheduled for May 16, 1968. The District Court held the amended bylaw also unreasonable, but that ruling is not before us. 265 F. Supp., at 522-523. In any event, respondent’s argument that the amendment renders this case moot is foreclosed by Wirtz v. Bottle Blowers, supra, at 475-476. See also Wirtz v. Laborers’ Union, supra, at 479.

       For example, the “Membership Party” nominee for one of the vice presidencies was a department delegate (or shop steward) who had been active in his district council meetings; but he was ruled ineligible since he had not held office in the Assembly.

       Senator Kennedy had introduced, and the Senate had passed, similar legislation in the 85th Congress which died in the House. Senator Kennedy’s bill, S. 3751, included the “may have affected” language. In introducing the measure, he noted that “[i]f the United States District Court agrees with the Secretary, that there has been a substantial violation of the provisions of the bill, then he shall void the election ...” 104 Cong. Rec. 7954. (Emphasis supplied.) The Senate-passed version, S. 3974, retained the language and the report on the bill said this:
      “Since an election is not to be set aside for technical violations but only if there is reason to believe that the violation has 'probably affected the outcome of the election, the Secretary would not file a complaint unless there were also probable cause to believe that this condition was satisfied. . . . After a hearing on the merits the court would determine whether a violation had occurred which might have affected the outcome of an election.” S. Rep. No. 1684, 85th Cong., 2d Sess., 13 (1958). (Emphasis supplied.)
      Why Senator Kennedy modified the language in S. 505 is not explained.

       The Conference Report noted the change as follows:
      “In subsection (c) of section 402, the conference substitute adopts the provision of the Senate bill that directs the court to set aside an election if the violation ‘may have’ affected the outcome. Under the House amendment an election could be set aside only if the violation did affect the outcome.” H. R. Conf. Rep. No. 1147, 86th Cong., 1st Sess., 35 (1959); I Leg. Hist. 939.