BRAUER, Bankruptcy Judge
Judgment liabilities obtained by employers due to a bankrupt union's breach of a collective bargaining agreement were liabilities for "willful and malicious injuries" to property within the meaning of Section 17a(8) of the Bankruptcy Act. The strike, which breached the agreements, was accompanied by acts of vandalism, intimidation, terror and violence, and tortious acts committed by the bankrupt and its members.
Prior to its bankruptcy, the union had entered into collective bargaining agreements with the employers. The agreements contained a no-strike clause. This clause was breached by the union when it called a strike. The strike was attendant with many acts of violence and with conduct violative of a restraining order entered by a state court. The employers filed suit against the union for breach of Section 301 of the Labor Management Relations Act (LMRA). A judgment was obtained against the union on this cause of action. Thereafter, the union filed a voluntary petition in bankruptcy. The employers seek a determination that the bankrupt's separate liability to each is non-dischargeable under Section 17a(8) of the Bankruptcy Act, as a liability for willful and malicious injury to person or property.
The question confronting the court was whether the bankrupt's liabilities to the employers were for willful and malicious injuries to the person or property of another within the meaning of Section 17a (8). The court noted that an injury to person or property may be a malicious injury within the meaning of Section 17a(8) if it was wrongful and without just cause or excuse, even absent personal hatred or spite. Under Section 17a(8), willful means nothing more than the intentional doing of an act which necessarily leads to injury. Unquestionably, stated the court, the bankrupt's conduct in this case was willful and malicious within these definitions and the employers were thereby injured to the extent of their judgments.
The court next addressed the question of whether Section 17a(8) embraced the character of the liabilities proved by the employers. Some commentators, observed the court, hold that Section 17a(8) embraces only tort liabilities and does not embrace liabilities arising under contract. However, the court questioned this broad pronouncement, expecially when the contractual breach is accompanied by tortious conduct.
Here, noted the court, the strike was accompanied throughout its length by acts of vandalism, intimidation, terror and violence, and outrageous conduct, which was inimical to industrial peace and damaged the employers. These were acts tortious in kind and character, acts attributable to the bankrupt and its members. The acts calculated to "shut down the City of St. Louis", paralyzing the movement of freight in and around that area. The employers' judgment damages were the result. Thus, the court was compelled to conclude that the judgment liabilities were liabilities for "willful and malicious injuries to property" and were thus non-dischargeable. See Sec. 17a(8) [§ 523(a)(6)] at ¶ 9232.
Debts Not Affected by Discharge — Willful and Malicious Injuries — Labor Law Case — "Looking Behind the Record"
Employers seeking the non-dischargeability of liabilities obtained in a suit against a bankrupt union under Section 301 of the Labor Management Relations Act were not restricted to the record made in the Section 301 cause.
The employers and the union had entered into collective bargaining agreements. The agreements contained a no-strike clause. The clause was breached by the union when it called a strike, which was accompanied by acts of violence. The employers filed suit and obtained a judgment under Section 301 of the Labor Management Relations Act. Thereafter, the union filed a voluntary bankruptcy petition. The employers contended that the bankrupt's liability to them was non-dischargeable since it was incurred as a result of willful and malicious injuries to the person and property of the employers.
Other than the judgment obtained in the Section 301 cause, the employers offered no proof of their damages resulting from this "most willful and malicious conduct". This is significant since the Section 301 record did not include any evidence of the acts of violence alleged in the dischargeability complaints. The bankrupt union contended that the employers could not go behind the record made in the Section 301 cause and that the bankruptcy court could not consider any evidence other than the record in the Section 301 case. On the other hand, the employers urged that evidence in addition to that contained in the Section 301 cause should be considered in the dischargeability matter.
Finding no expression by the Eighth Circuit Court of Appeals on this matter, the court decided to follow the rule of the Fourth Circuit announced in the case of In re Pigge, CCH BANKRUPTCY L. REP. ¶ 65,894 (CA-4, June 11, 1976). In Pigge, it was held that a bankruptcy court, in the exercise of its exclusive jurisdiction to determine dischargeability of a debt, may look behind a state court judgment at the nature of the debt for which the judgment was entered. Following Pigge, the court held that the employers were not confined the the Section 301 record. Thus, the court overruled the bankrupt's objections to the receipt of any evidence other than that contained in the Section 301 record. See Sec. 17a(8) [§ 523(a)(6)] at ¶ 9232.