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BRIARCUFF CANDY CORPORATION, (formerly Loft Candy Corporation), Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. No. 465, Docket 72-1755. United States Court of Appeals, Second Circuit. Argued Dec. 13. 1972. Decided March 12, 1973. John J. Yurow, Washington, D. C. (John Harllee, Jr., and Arent, Fox, Kintner, Plotkin & Kahn, Washington, D. C., on the brief), for appellant. William S. Estabrook, III, Tax Division, Department of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, and Ernest J. Brown, Tax Division, Department of Justice, Washington, D. C., on the brief), for appellee. Before KAUFMAN, ANDERSON and OAKES, Circuit Judges. ANDERSON, Circuit Judge: This is an appeal by Briarcliff Candy Corp. (taxpayer), formerly Loft Candy Corp. (Loft), from a decision of the Tax Court which held that substantial expenditures made by Loft in the tax year July 1, 1961 to June 30, 1962, in developing a market for the sale of its candy to wholesale customers were made to acquire a capital asset, 26 . U.S.C. § 263(a)(2), and not deductible as ordinary and necessary business expenses under 26 U.S.C. § 162(a). The Loft Candy Corp. and its predecessors had, since late in the 19th century, engaged in the manufacture and sale of candy and confectionery products. More than 80% of its sales were made through its own retail stores, and the rest were through wholesale customers. Its retail stores were located in the thickly populated urban centers in the northeastern part of the country. During the 1950's there began in this country, particularly in the northeast, a major demographic phenomenon in the form of a population shift of thousands of people from the urban centers to the suburbs. This gave and has continued to give rise to very serious problems for municipal, state and the federal governments, many of which still remain unresolved. The social and economic consequences have been far reaching; and urban centered businesses, large and small, have been compelled to take measures to meet the change, in the interest of survival. In response to the effect of this exodus, the taxpayer at first sought to retain the numbers of its customers by opening retail candy stores in the suburbs but each such outlet could only attract a fraction of the sales volume achieved by the stores in the urban centers, which resulted in proportionately higher operating cost and a lower profit margin. Its operating profits for the fiscal years ending June 30, or thereabouts, of 1958 through 1961 were as follows: In the latter part of 1961 taxpayer’s management instituted a program of soliciting independently operated retail outlets such as drugstores, card stores and the like, to include in their businesses the retail sale of Loft’s candies. Taxpayer, in its own organization, set up a separate “franchise” division headed by a vice president and staffed with a sales manager, several salesmen and clerical personnel. Its task was to persuade these storekeepers to take on the retail sale of Loft’s candies, to enter into agency or franchise contracts with them, specifying the terms under which candy would be furnished at wholesale by taxpayer and handled and sold by the retailer, and to see that the contracting stores were properly serviced and had a proper flow of merchandise. In each of these contracts the retail store proprietor agreed to set aside a space in the store for refrigerating display and storage counters at his own expense, to be exclusively devoted to the sale of Loft candies, and to use his best efforts to sell these candies to his customers. Taxpayer agreed to supply the retailer with its candies at a discount from retail prices and to assist the proprietor in setting up and operating the facility. It also agreed not to enfranchise a competing drugstore within a specified area. The contracts remained in operation for terms varying from one to five years and after the initial term, it was to continue from year to year unless terminated by one party giving 30 days notice to the other. Beginning in the latter part of 1961, the franchise division of the taxpayer embarked upon an extensive advertising campaign. It advertised in drugstore trade journals and circularized proprietors by mail to interest them in becoming a retail outlet for taxpayer’s products. In the tax year ending June 30, 1962, it mailed circulars, with attached reply cards to 50,000 independent drugstores. The 2,000 response cards received were followed up by telephone calls and personal visits by salesmen. By June 30, 1962, 600 appointments were arranged and 159 contracts were entered into. The net expenses incurred by the taxpayer in operating the franchise division for the taxable year ending June 30, 1962 were $332,869. The Commissioner divided the items making up this total into two categories of expenses which he labeled, “Promotional Expenses” and “Recurring Operational Expenses.” The promotional expenses aggregated $212,028, and these he disallowed as part of taxpayer’s claimed net operating loss carry back from the taxable year ended June 30, 1962 to the taxable year ended June 27, 1959. The Commissioner’s action was upheld by the Tax Court and the taxpayer has appealed. We reverse. On May 3, 1971 the taxpayer sold its business to Barricini Stores Inc. The history of taxpayer’s franchise division between year ending June 30, 1962 and the date of the sale of the business is significant and of interest. The following shows the agencies opened and closed during each year through June 1968, and the number in operation at the end of each year through June, 1969: Of the original 159 agencies in operation on June 30, 1962 about 120 were continuing to sell Loft’s candies on June 28, 1969. The taxpayer’s management, however, decided by January 1, 1969 that the returns from the franchise division were not sufficient to compensate for the administrative problems and particularly the restrictions (such as territorial restrictions) with which it was burdened under the agency contracts, and it therefore determined to terminate the agency contracts as soon as it could under their terms. The entire expenditures for and efforts of the franchise division made very little change in net sales. In the fiscal, years 1958 through 1970 the net sales were as follows: NET SALES As of the fiscal year ending June 28, 1969, Loft’s divisional sources of sales were as follows: 66% came from 250 company operated retail candy shops; 18% from 1,640 agency stores; 8% from 160 department stores and candy shops; and 8% from other outlets. When the taxpayer sold its business to Barricini Stores Inc. it was paid $10,000 for a group of assets made up of trademarks and tradenames, usable inventories, customer lists, agency contracts, manufacturing formulae, standards, guidelines and other production know-how, and a portion of its plant equipment and machinery. The Commissioner concluded that the taxpayer’s expenditures of $212,028 in 1962 were for capital assets “consisting of 159 valuable franchise contracts.” But in 1971, in the sale of the business, 179 of some of the same and similar franchise or agency contracts brought only a fraction of $10,000. The $212,-028 were only those described by the Commissioner as promotional expenses. The total expenses of the franchise division for 1962 amounted to $332,869. Nor was that the end of this kind of outlay. In subsequent full years through June 30, 1970, it was necessary to pay out an average in excess of twice what was spent in the half year ending June 30, 1962, in order to hold onto most of the contracting storekeepers and add new ones. The yearly totals were as follows: Taxpayer’s management considered that these expenses were annually recurrent and did not result in the acquisition of permanent capital assets. In spite of these large expenditures the net sales, as noted above, remained about the same while the net income declined. ' The Commissioner regarded taxpayer’s effort to maintain its sales and profits by seeking to recapture its customers who had moved to the suburbs as creating, in the franchise division, a distribution system for its products involving the securing of valuable agency contracts with druggists and other storekeepers which were capital assets, and that therefore the expenditures made in acquiring them were not deductible as “ordinary and necessary expenses paid or incurred in the taxable year in carrying on any trade or business.” The case principally relied upon by the Commissioner and the Tax Court is Houston Natural Gas Corp. v. Commissioner, 90 F.2d 814 (4 Cir.), cert. denied, 302 U.S. 722, 58 S.Ct. 43, 82 L.Ed. 557 (1937). Prior to 1927, Houston Gas & Fuel had a monopoly on the gas business in Houston. The taxpayer, Houston Natural Gas was engaged in the sale of gas in areas other than the City of Houston. Upon receiving permits for the construction of gas lines in Houston, Houston Natural Gas sold all its properties, except those in the suburbs of Houston and in Pasadena. Houston Natural Gas and Houston Gas & Fuel then began a prolonged and viciously fought battle for the gas business of Houston. One of Houston Natural Gas’ methods was the employment of armies of solicitors charged with the duty of keeping established customers happy while securing new ones. It also offered free installation of service lines between consumers’ residences and the company’s distribution system. The issue was the deductibility of the salaries and expenses of the solicitors, and the expenses incurred in installing the service lines. The Court of Appeals affirmed the Commissioner’s and the Tax Court’s rulings that these had been capital expenditures because they constituted “[t]he acquirement of something of permanent use or value in the business,” 90 F.2d at 816, quoting Gauley Mountain Coal Co. v. Commissioner, 23 F.2d 574, 576 (4 Cir. 1928), which consisted of (1) new customers, (2) good will, and (3) elimination of competition. The Houston Natural Gas case is cited by the Commissioner as an example of the application of a long standing principle of the Tax Court that “. . . expenditures made for benefits which are to be enjoyed for a period extending beyond the year in which they are made should be capitalized.” The Commissioner recited this as the general rule governing the decision in the present case. He further asserts that this rule will transmute expenses which would otherwise be “ordinary” under § 162 and therefore deductible, into non-deductible capital expenditures. The Commissioner also cites the Houston Natural Gas case as establishing the proposition that “. . .an intensive campaign to get new customers at any time gives rise to capital expenditures,” which he asserts also applies to the present case. The Government’s brief mentioned Mountain Paper Products Corp. v. United States, 287 F.2d 957 (2 Cir. 1961), as a decision which supports its concept of what a capital asset is. But that case concerned the acquisition of an entire business. There can be little doubt that Houston Natural Gas acquired a capital asset when it drove Houston Gas & Fuel Co. into receivership and took over the monopoly of the gas business in Houston. It is also well settled that where one company acquires another separate and distinct business entity, the cost of taking it over is a capital expenditure and not deductible under § 162. Similarly there is a capital expenditure where the taxpayer adds to its regular business of making and selling a product, a new branch or division designed to make and sell a different product. Of course, the tangible assets, such as buildings and equipment, newly put into such branch or addition, regardless of product, are capital additions. Also, a reasonable proportion of the wages and salaries of employees who spend some of their working hours laboring on the acquisition of the company’s new division, are allocable under Internal Revenue regulations to the new division, and therefore are chargeable to capital and not deductible. See 26 C.F. R. § 1.266-1 (e). Where however, the contributing factor is intangible and it enhances an intangible capital asset of the new division of the same established company, the boundary line between a taxable capital asset and a deductible ordinary and necessary expense, incurred in carrying on a business, becomes imprecise. In the present case the taxpayer used its sales personnel to solicit storekeepers, mainly druggists, as retail sellers of Loft candy. Though the sales group was called the “Franchise Division,” it was a part of the sales department of the company. The product sold was the same, it was also sold and for many years had been sold through the company-owned or leased retail outlets and through department stores and other business establishments. Loft was by long established policy both a wholesaler and retailer. It suffered a continuing loss of business when there was an exodus of many city dwellers to the suburbs; and it sought, through sales in the suburbs, to stem the flow of losses. The Commissioner relies on what he describes as “valuable franchise contracts with druggists” which provided the taxpayer with a certain suburban market for the duration of the contracts. The lack of substance in this concept will be discussed later on. Every new idea and every change of method in making sales, even in promoting special sales or developing new sales territory, do not require that the expenses connected with the operation be non-deductible under § 162. While the quotation taken by the Commissioner from Houston Natural Gas that “an intensive campaign to get new customers at any time gives rise to capital expenditures” may be valid enough if confined to the facts of that case, it is not acceptable as an unqualified general rule. In fact, expenditures by an already established and going concern in developing a new sales territory are deductible under § 162. Rev.Rul. 56-181. In reviewing the action of the Tax Court we have in mind that we said several years ago that “[t]he line between capital and current expenses is often a difficult one to draw, and Courts of Appeals should not overturn decisions of the Tax Court on this question unless they are manifestly wrong.” Seas Shipping Co. v. Commissioner, 371 F.2d 528 (2 Cir.), cert. denied, 387 U.S. 943, 87 S.Ct. 2076, 18 L.Ed.2d 1330 (1967). We are of the opinion, however, that manifest error was committed in this case. The Tax Court rests its decision squarely on the fact that some of the agency agreements continued in effect for terms exceeding a year, and that therefore the expenses connected with the procuring of the agreements were not “ordinary” but capital in nature and could not be deducted under § 162. Prior to 1971 this was an often repeated and generally applied standard. The Supreme Court, however, in the case of Commissioner v. Lincoln Savings & Loan Ass’n, 403 U.S. 345, 354, 91 S.Ct. 1893, 1899, 29 L.Ed.2d 519 (1971), held, “. . . [T]he presence of an ensuing benefit that may have some future aspect is not controlling; many expenses concededly deductible have prospectivé effect beyond the taxable year. What is important and controlling, we feel, is that the [premium] payment serves to create or enhance for [the taxpayer] what is essentially a separate and distinct additional asset This has brought about a radical shift in emphasis and directs the inquiry in the present case to the question whether or not Loft, in advertising and soliciting drugstores and others to act as agents for the sale of its candies, and in making written agreements with them to function in that capacity, “created or enhanced for [itself] what [was] essentially a separate and distinct additional asset.” The Commissioner claims it did because the expenditures made, the deductibility of which is now at issue, resulted in the creation of “valuable franchise contracts which assured Loft of a certain suburban market for the terms of the agreements.” He also, in effect, claims that the ways and means adopted by Loft to bring about this result, in themselves, point to the creation of a capital asset; these are such things as Loft’s creation of a separate division to seek and procure sales outlets for its candies in the suburban area, the assertion that this was an intensive campaign to get new customers, the advertising addressed, not to ultimate consumers, but to the drugstore owners and other storekeepers, and the fact that Loft had suffered a decline in operating profits and was seeking to block the continuing erosion — a fact which, he asserts, brings the case within the prohibitions against deduction provided in § 263(a)(2). Taking up first the foregoing ways and means which allegedly indicate the creation of a capital asset, the changes which Loft made in its own internal organization to spread its sales into a new territory were not comparable to the acquisition of a new additional branch or division to make and sell a new and different product. Loft, in spite of its own talk about an additional division and the entering into franchise contracts, was doing no more than stimulating its sales department to stem the downward course of sales by making Loft’s candy available in the suburbs to a class of customers who had moved there from the cities where they had been purchasers of. its candy. It was selling exactly the same products it had sold for decades. Loft added some personnel to its sales force and advertised extensively. The Commissioner concluded that these measures constituted “an intensive campaign to get new customers” which, ipso facto, according to Houston Natural Gas, “give rise to capital expenditures.” With this we disagree. Every business entity, to remain viable, must continue to promote the sale of its product. The Tax Court, however, has enunciated as the law, a portion of Northwestern Yeast Co., 5 B. T.A. 232, 237 (1926), which says: “There can be little doubt in the minds of reasonable men fairly acquainted with modern business that promotion expenditures like those before us have a significance similar to the investment in more tangible assets. They fertilize the field for new production. Generally and theoretically, therefore, it is safe to say that some part of the cost of a campaign or system of promotion may be of permanent significance and may be regarded as a capital investment rather than a deductible expense.” If this is so, then it is incumbent on the legislative authorities making the statutes and the implementing regulations to furnish clear standards and guidelines as to what intangible assets are deductible under § 162 and what are not. At present it is anybody’s guess. What for example is “an intensive campaign to get new customers”? If Loft had added a half a dozen salesmen to its sales department and sent them on a house-to-house canvass in a new territory, taking orders for candy, would that be an “intensive campaign” ? If not, would the addition of 100 new salesmen using house-to-house solicitation and a large amount of advance advertising in the new territory fulfill the term? If this is a matter of degree, as in many instances the rulings seem to indicate, at what point does the quality or quantity of new and perhaps different sales and promotional activity cease to be deductible under § 162 and become a capital expense? The uncertainty concerning the allocation, and consequently the deductibility, of the intangible contribution of a salesmen’s wages or salary is illustrated by Revenue Rulings 68-561 and 69-331. The first of these concerned the activities of a gas utility company in promoting the construction of “all gas” houses. Special salesmen were sent out to solicit construction companies; also cash allowances were offered to participating contractors, and these efforts were accompanied by an advertising campaign. The offering of cash allowances were held to be a capital expenditure, but the salaries of the salesmen and the cost of advertising were held to be deductible. In the second of these rulings, 69-331, a gas utility gave bonuses and commissions to its own salesmen who were successful in soliciting consumers to lease gas-operated heaters. The same awards were given dealers and plumbing contractors for persuading consumers to lease the heaters. The bonuses and commissions were held non-deductible. Why salaries for solicitors for “all gas” houses are deductible, but those of solicitors for gas water heaters are not, is not readily apparent. The Commissioner attempted to shed some light on the distinction between the two rulings by explaining that “all gas” homes (and the advertising) were “less directly and significantly productive of assets having a value extending beyond the taxable year in which paid or incurred.” If further elucidation were possible, it would certainly be welcome. The Tax Court says: “The expenses incurred by petitioner in its drugstore solicitation program were not advertising directed at the promotion of its product but advertising directed at establishing new channels of distribution for that product and therefore would not be 'ordinary’ within the meaning of § 162(a).” In effect, this would permit a retailer dealing with ultimate consumers to deduct its advertising and promotional expenses in seeking and acquiring new customers, but deny similar tax treatment to a wholesaler whose customers are retailers. This is plainly a most unjust and unequal interpretation of the law, unsupported by legislative, regulatory or judicial authority. All sellers, whether at a wholesale or retail level, must be treated alike — in the absence of the acquisition of a capital asset, their expenses for advertising and promotion should be deductible under § 162. The Tax Court in its explanation of the kind of an “outlet” which is a capital asset, which it asserts Loft acquired through the so-called “franchise agreements”, said, “In numerous cases we have' held that where a taxpayer purchases new outlets for the sale of its products, whether or not those outlets are acquired as a part of a going business, the asset acquired is a capital asset and the payment for acquiring the new outlets must be capitalized. See Manhattan Co. of Virginia, Inc., 50 T.C. 78 (1968). In the instant ease petitioner acquired new outlets through its own efforts as distinguished from acquiring these assets by purchase. The fact that a capital asset is built or developed through the taxpayer’s own efforts does not change the nature of the expenditures necessary to acquire the asset. See Ben Perlmutter, 44 T.C. 382 (1965), aff’d, 373 F.2d 45 (C.A. 10, 1967), in which we held a portion of overhead expenses, including officers salaries, other overhead salaries, depreciation, insurance, legal and audit expenses, office expenses, truck expenses, and costs of utilities to be allocable to the construction of shopping center buildings and required that the allocable portion of such expenses be capitalized.” It is obvious that the court is talking about intangible contributions to tangible assets; not intangible contributions to intangible assets. It speaks in words such as “built or developed” and “construction of shopping center buildings”. In the foregoing discussion it is fully recognized that an intangible contribution to tangible assets, such as a company’s engineer’s supervision of the construction of a particular section of a new factory building, makes his salary, or a proportionate part of it, a capital expenditure connected with the building of the factory. If, however, the sales manager of an ongoing concern has contributed 25% of his time to devising a new or different method of attracting customers and selling candy, i. e. an intangible asset to his company, the deductibility or non-deductibility of that 25% of his salary turns upon the question of whether or not the new method is a capital asset and therefore non-deductible. It is a capital asset if at the time it is furnished to the company, it has an ascertainable and measurable value — that is, a value in money or a fair market value. It is not enough that it may have a favorable expectancy or that in the course of its use it increases sales and produces income. Reverting to the Tax Court’s discussion of new outlets, it said, “In the instant case petitioner acquired new outlets through its own efforts as distinguished from acquiring these assets by purchase. The fact that a capital asset is built or developed through the taxpayer’s own efforts does not change the nature of the expenditures necessary to acquire the asset.” The claimed distinction between outlets which are “purchased” and those which are “acquired through the taxpayer’s own efforts” is practically meaningless. The phrase “acquired through the taxpayer’s own efforts” is not recognized in the law as descriptive of a particular set of legal relations or interests. It certainly could embrace a purchase. Supposedly Loft could have leased, for a term of several years, floor spaces in the drugstores together with the refrigerating display eases. These facilities would have been “outlets acquired by its own efforts,” but the rent under the leases would have clearly been deductible, 26 U.S.C. § 162(a)(3), and nothing about them would have been a capital asset, unless a lease was assigned to another at a profit. 4A Mertens, Law of Federal Income Taxation § 25.27 (1972). The Commissioner also urges that the deductibility of the advertising and promotional expenses in this case are prohibited by § 263(a) because Loft, by undertaking “an ambitious new distribution program,” was seeking to make up for its drop in sales and the subsequent decline of operating profits. This section says, “No deduction shall be allowed for any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made.” The section is couched in terms which refer to tangible capital assets such as consumable resources or tools, structures, or machinery which wear out and for which depreciation has already been taken. It may also be applied to intangible assets provided they have an ascertainable and measurable value in money’s worth, so that they are no longer regarded as an expense but as a distinct and recognized property interest. Commissioner v. Lincoln Savings & Loan Ass’n, supra, 403 U.S. at 354-355, 91 S.Ct. 1893. The interpretation and application of the statutes and regulations with regard to tangibles in deciding whether a particular expenditure is for repairs or for a capital addition of improvement are sometimes difficult, but guidelines have been established which give a taxpayer clues as to what is correct and what is not. In the realm of intangibles, however, the rulings and decisions are in a state of hopeless confusion particularly where the issue concerns an intangible contribution (such as a salesman’s work-product) to an intangible asset (such as his company’s position in the market). Many decisions in this area rest upon administrative fiat, fortified by the requirement that the taxpayer show clear error. The Commissioner in the present case resorted to such nebulous phrases as “an intensive campaign to get new customers” and “an ambitious new distribution program” to define what a capital asset was in the circumstances of the case. But practically all businesses are constantly seeking new customers and pursuing a distribution program. When are the wages and salaries of its employees who take care of these things capital expenditures and non-deductible and when are they current expenses and deductible under § 162? The taxpayer, who may be exposed to interest and penalties for guessing wrong, is entitled to reasonably clear criteria or standards to let him know what his rights and duties are. As matters stand, the following quotation alluded to by a court of appeals of another circuit, which was wrestling with this general area of federal income tax law, is pertinent, “This kind can come forth by nothing, but by prayer and fasting.” The remaining point for discussion concerns the so-called “franchise agreements”. According to the Commissioner, Loft, by these instruments acquired capital assets, to wit: “159 new franchise outlets, innumerable new suburban customers, and the good will attendant to such acquisition, and assurance of a suburban market for at least the duration of the initial term of the contract. The Tax Court decision and the claims of the Commissioner on this appeal rest principally on the fact that the franchise or agency agreements provided benefits which Loft would enjoy for a period extending beyond the year in which they were made, and that, even if the payments made by Loft were otherwise ordinary within the meaning of § 162, the fact that the agreements were effective for more than one year make them capital assets. The Supreme Court, however, in Lincoln Savings & Loan, supra, held that the factor that an ensuing benefit may have some future aspect is not controlling, as the Tax Court has made it in the present case. The Supreme Court said that what was important and controlling was that the expenditures served to create or enhance for the taxpayer what is. essentially a separate and distinct additional asset. The Tax Court and the Commissioner argue that the franchise or agency agreements were in their nature valuable capital assets. We are of the opinion, however, that a review of the evidence, including an analysis of these agreements, does not furnish support for this conclusion. As there is no special statutory definition of “capital asset” which is applicable to their use in connection with §§ 162 and 263, the words must be taken in their usual and customary business sense as items of ownership of a permanent or fixed nature which are convertible into cash. In the first place the agreements gave Loft no property interest whatever in the small space occupied by the twelve foot display case or the storage area or the advertising features, or in the case itself. Title, possession and control remained in the store owner. Loft did not even have a leasehold interest. If it had acquired the stronger and more fixed attributes of a lease, it still would not have been a capital asset and the rent it paid would have been deductible under § 162. Where an outlet is procured through a lease or an agreement, such as those made here by Loft, the value of such limited use as Loft had in the outlet does not extend beyond the consideration which Loft, as the user, had to pay for it under the agreement. Loft paid by recognizing the store owner as a retailer for its candy, by giving him a commission on his retail sales, by according him the exclusive right (with a few minor exceptions) to carry on the retail sale of Loft’s candies within a specified area around his store, by providing the product and by giving necessary training and advice concerning sales and advertising. In return Loft had the store owner’s promise to install at his own expense a certain type of refrigerating display case and storage area to show certain advertising material, to set aside an area of floor space for the case and advertising matter where no other candy but Loft’s could be sold, and to permit Loft to inspect the area and case and to control his advertising. He was also to use his best efforts in selling Loft’s products. The store owner did not agree not to sell similar candy products of other manufacturers in the remainder of the store. He did not agree to sell any minimum amount of candy nor did he guarantee any amount of sales. There is nothing in the substance of these contracts which is distinguishable from a contract of employment for a term of a year or years. The store proprietors simply became retail sales, agents of Loft on a commission-paid basis. The expenditures at issue in the case are ordinary recruiting costs to enlist sales agents for a long established concern, and to seek sales agents for its usual and regular product. As such, they are deductible. See Queen City Printing Co. v. Commissioner, 6 B.T.A. 521 (1927); Hearing before Senate Finance Committee on the Deductibility of Travel and Entertainment Expenditures, 88th Cong. 1st Sess., p. 59 (1963) (Testimony of Mortimer Caplin, Commissioner of Internal Revenue). The Commissioner claims that each of the so-called franchise or agency agreements produced capital assets of “innumerable new suburban customers, good will and assurance of a suburban market for at least the duration of the initial term of the contract.” But these results are no different from what a number of good commission-paid salesmen in the same territory would have achieved and such commissions are clearly deductible under § 162. Loft did not acquire any new separate and distinct additional asset in these agreements. For these reasons we hold that the decision of the Tax Court was manifestly wrong. We also hold that the Tax Court erred in failing to consider and apply the governing principle of law. By late 1961 and early 1962 it was reasonably clear to the Loft Candy Corporation that the population shift had brought about continuously declining sales and a progressively shrinking net income. In order to stem the downward flow, protect its investment and continue in business, Loft was compelled to increase its sales, and it sought to do so by making its product more readily available to those who had moved to the suburbs. The facts of this case bring it squarely within the long recognized principle that expenditures for the protection of an existing investment or the continuation of an existing business or the preservation of existing income from loss or diminution, are ordinary and necessary within the meaning of § 162 and not capital in nature. Allen v. Commissioner, 283 F.2d 785, 790-791 (7 Cir. 1960); Lutz v. Commissioner, 282 F.2d 614, 617, 620 (5 Cir. 1960); Van Iderstine Co. v. Commissioner, 261 F.2d 211, 213 (2 Cir. 1958); Commissioner v. Surface Combustion Corp., 181 F.2d 444, 447 (6 Cir. 1950); United States v. E. L. Bruce Co., 180 F.2d 846, 848-849 (6 Cir. 1950); Lincoln Electric Co. v. Commissioner, 162 F.2d 379, 383 (6 Cir. 1947), reconsidered on other grounds, 176 F.2d 815 (6 Cir. 1949), cert. denied, 338 U.S. 949, 70 S.Ct. 488, 94 L.Ed. 586 (1950); Dunn & McCarthy v. Commissioner, 139 F.2d 242, 244 (2 Cir. 1943); Helvering v. Community Bond & Mortgage Corp., 74 F.2d 727, 728 (2 Cir. 1935); A. Harris & Co. v. Lucas, 48 F.2d 187, 189 (5 Cir. 1931); Snow, 31 T. C. 585, 593 (1958). See also, Young & Rubicam, Inc. v. United States, 410 F.2d 1233, 1243, 187 Ct.Cl. 635 (1969); Carl Reimers Co. v. Commissioner, 211 F.2d 66, 68 (2 Cir. 1954); Robertson v. Steele’s Mills, 172 F.2d 817, 821 (4 Cir.), cert. denied, 338 U.S. 848, 70 S.Ct. 86, 94 L.Ed. 519 (1949). The decision of the Tax Court insofar as it holds that the $212,028 expended by taxpayer in the tax year 1962 was not deductible is reversed and the case is remanded for modification of the judgment accordingly. . Expenses of Loft’s franchise division for fiscal year 1962: . When the impact of inflation is removed from these figures, the decline of Loft’s non-franchise sales is even more clearly demonstrated: • NET SALES [Constant (1958) Dollars] . Loft Candy Corporation net income: Before Taxes and Extraordinary Items. . Payments made to a landlord or to the lessee of an existing lease, over and above the amounts stipulated as rent by one seeking to acquire a lease are, of course, capital expenditures. 4A Mertens, Law of Federal Income Taxation, § 25.27 (1972). . The meagerness of Loft’s rights under these contracts made them only marginally enforceable. At most, Loft could have sought to enforce a drugstore proprietor’s vague promise to use his “best efforts” in selling the candy, which might be satisfied simply by his keeping his store open during normal business hours and refraining from overtly criticizing Loft’s products. In effect, by these contracts Loft acquired little more than an expectation or hope of future sales. While the druggists’ promises to dedicate certain minimum space to their Loft candy departments created a degree of mutuality which is a step beyond that which existed in the contracts considered in Willard, Sutherland & Co. v. United States, 262 U.S. 489, 43 S.Ct. 592, 67 L.Ed. 1086 (1923) and Van Iderstine Co. v. Commissioner, 261 F.2d 211 (2 Cir. 1958), we do not believe this minor additional factor is sufficient to justify our concluding that Loft purchased some intangible capital assets by these contracts. See Van Iderstine Co. v. Commissioner, supra, 261 F.2d at 212-213.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

H. E. JUELICH, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee. No. 72-3530 Summary Calendar. United States Court of Appeals, Fifth Circuit. March 22, 1973. H. E. Juelich, pro se. Charles S. White-Spunner, U. S. Atty., Irwin W. Coleman, Jr., Asst. U. S. Atty., Mobile, Ala., for defendant-appellee. Before THORNBERRY, GOLDBERG and RONEY, Circuit Judges. Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir. 1970, 431 F.2d 409, Part I. PER CURIAM: Petitioner, Herbert E. Juelich, appeals from the District Court’s denial of his motion to vacate sentence, brought pursuant to 28 U.S.C. § 2255. We find that' petitioner’s contention, that his constitutional right to due process was denied when evidence stemming directly from an “illegal” autopsy was admitted at his trial, was considered and ruled upon in 1963 at an evidentiary hearing held pursuant to an earlier § 2255 motion. At that time, the District Judge rejected petitioner’s contention, and we affirmed, Juelich v. United States, 5 Cir. 1965, 342 F.2d 29, 31. The District Court correctly rejected petitioner’s motion without holding an evidentiary hearing because petitioner is seeking relief previously sought under the provisions of 28 U.S.C. § 2255 on the same grounds previously raised and decided against him. Dryden v. United States, 5 Cir. 1972, 455 F.2d 491; Owens v. United States, 5 Cir. 1970, 430 F.2d 1173. We affirm. Affirmed. . See the quotation from the transcript of the 1963 evidentiary hearing in Juelich v. United States, 5 Cir. 1968, 403 F.2d 523. 525.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

HARRINGTON MANUFACTURING CO., INC., Plaintiff-Appellant-Cross Appellee, v. Idas B. WHITE, Defendant-Appellee-Cross Appellant. No. 71-2032. United States Court of Appeals, Fifth Circuit. March 13, 1973. Rehearing and Rehearing Eh Banc Denied June 7, 1973. Fred C. Philpitt, Washington, D. C., Robert D. Canada, Tallahassee, Fla., Elliott I. Pollock, Washington, D. C., for appellant. Marion B. Knight, Blountstown, Fla., Harvey B. Jacobson, Jr., Washington, D. C., for appellee. Before JOHN R. BROWN, Chief Judge, and GOLDBERG and MORGAN, Circuit Judges. JOHN R. BROWN, Chief Judge: On June 27, 1967, the United States Patent Office issued Patent No. 3,327,745, to Fred W. Meece and Frank B. Dew, both of Plymouth, North Carolina. The patent covered a hydraulically powered “tree cutter device”. On October 2, 1968, this lawsuit was filed by Meece and Dew’s assignee, the Harrington Manufacturing Company, seelcing damages and appropriate injunctive relief from Idas B. White for the latter’s alleged infringement of the Meece-Dew patent. In addition to denying infringement, White asserted the invalidity of the Meece-Dew patent as a positive defense. Upon the conclusion of the non-jury trial, the District Judge entered a memorandum order and opinion 323 F.Supp. 1345, upholding the validity of the Meece-Dew patent, but finding no infringement. Both parties appeal. Our review of the case convinces us that the Court below properly upheld the validity of the Meece-Dew patent. Upon a close examination of his holding with respect to infringement, however, we are compelled to reverse. It all boils down to the question of how to construe three little words in the patent claims- — “flexible interconnection means”. The trial court applied a common meaning, common sense construction and held that the patent, by expressly contemplating the use of a “flexible interconnection means”, did not envision — and hence would not protect— the use of an interconnection means, like a double acting hydraulic cylinder, which could be locked rigidly in place. But this ignores the basic purpose, the prosecution history, and — most importantly — the actual wording of the claims.' Giving appropriate consideration to these factors, we are convinced that these three little words sufficiently-described the inventive concept of the patent, and in turn, that that concept is invaded by Defendant’s device. The reading which we give to these three little words thus both sustains the trial court’s holding of validity and requires us to reverse his holding of non-infringement. I. Woodman, Don’t Spare That Tree! Modern civilization requires vast quantities of lumber and pulpwood for its progress. Originally man satisfied his need for timber by hacking down trees with crudely fashioned hand tools. As his need and sloth increased man invented the saw to cut through the wood more rapidly and efficiently. Even this innovation did not satiate society’s appetite, however, and about twenty-five years ago man began using small gasoline powered chain saws. But even these paragons of technological advance had their problems — among them the fact that tired aching backs refused to wield them at ground level. Thus, by cutting the trees higher than ground level lumberjacks left a considerable amount of wood unused. These uncut stumps also marred the beauty of the landscape and impeded the progress of log removal from the forest. Meece and Dew In 1965 Meece and Dew bent their creative ingenuity towards rectifying these problems. They started by constructing the cutting device. It consisted of a fixed jaw, which would press against the backside of the tree, a blade to do the actual cutting, and a pair of hydraulic cylinders to close the blade. They called the whole assembly a “shear head”. (See Figures A and B depicting the shear head in both the open and closed positions.) Meece and Dew then designed a “C” frame to be used to attach the shear head to the tractor. It consisted principally of two parallel arms which were to be mounted to the sides of the tractor with movable joints. Across the front of these arms they welded a support beam. This beam was horizontal with the ground. In order to be able to elevate the entire shear head another hydraulic cylinder was mounted onto the front of the tractor and attached to the support beam. The inventors then attached the shear head assembly to the support beam of the “C” assembly by means of several pivotal connections. This would allow the angle of the shear head to be adjusted according to the plane of the ground. This angular adjustment of the shear head was the “basic concept” of the Meece-Dew invention. It was the innovation calculated to solve the problems of stumpage which Meece and Dew had in mind. It was the Meece-Dew shear’s “raison d’etre”. Only one thing remained. Meece and Dew needed some element which would stabilize the shear head in the angle of the plane of the ground. They conceived of several possible means to accomplish this end. But when they built their first model, Meece and Dew chose the means which appeared to be the most rugged, the easiest to put in place, the easiest to repair, and the least expensive, i. e. they used a chain, which was attached at one end to the shear head and at the other to a supporting post welded perpendicular to the beam. (See Figure C.) In describing the various elements which could perform this task the patentees subsequently applied the fated nomenclature “flexible interconnection means”. Meece and Dew demonstrated their tree shear to several interested parties in December 1965. By February 1966, the Plaintiff Harrington Manufacturing Company had acquired exclusive rights to the invention in exchange for an agreement to prosecute the patent application in Meece and Dew’s behalf and make continuing royalty payments to them. By May 1966, Harrington was manufacturing the Meece-Dew shear and distributing it to its customers. White Meanwhile (that is in May, 1966) in Blountstown, Florida, the defendant Idas B. White was contacted by several unnamed individuals who requested that he build hydraulically operated tree shears for them. The resultant shear was field tested by White on July 30, 1966. The White shear was substantially identical to the Meece-Dew design, including the adjustable cutting head. Significantly, on first testing his shear White used a chain linkage support element. On finding this unsatisfactory he resorted to hydraulic cylinders. Harrington-White Interaction As assignee of the Meece-Dew patent rights Harrington was more than normally curious when he heard that someone in Blountstown, Florida, was building a tree shear similar to the Meece-Dew model which his company was then marketing. In August 1966, Joseph J. Harrington, Plaintiff’s president, stopped to meet with White en route to Panama City, Florida, where the Harrington version of the MeeceDew shear had been displayed since June 1966. The trial court found that Harrington made a suggestion that White might manufacture hydraulic cylinders for use on the Meece-Dew shear head (see Figures A and B, supra), that both parties voiced their intentions to seek patents, that Harrington had the opportunity to observe a photograph of the White shear, and ultimately that Harrington offered to purchase White’s patent rights. Negotiations stalled and this suit followed. As first patentee of this design, Harrington has the paramount right to manufacture the Meece-Dew shear. Southern Implement Manufacturing Co. v. McLemore, 5 Cir., 1965, 350 F.2d 244, 248. Unless White can prove that the Meece-Dew patent was invalid, Harrington is entitled to relief if he proves that White’s shear infringed the patent. II. Up A Tree: Validity Patents are a favored exception to the antitrust policies of the United States. While many patent advocates argue passionately that since they promote disclosure to society rather than exclusion from society that the term “monopoly” should not be applied patents, the better-reasoned view is that they are monopolies in the sense that they are governmentally protected rights to exclude others from the manufacture or sale of the patented article. Although the seventeen year duration is a built-in safeguard against extended abuse of the patent concession, society demands additional restrictions. One such restriction is the availability of judicial review of the patent. Thus, the Supreme Court of the United States has held: There has been a tendency among the lower federal courts in infringement suits to dispose of them where possible on the ground of noninfringement without going into the question of validity of the patent. It has come to be recognized, however, that of the two questions, validity has the greater public importance, and the District Court in this case followed what will usually be the better practice by inquiring fully into the validity of this patent. Sinclair & Carroll Co. v. Interchemical Corp., 1944, 325 U.S. 327, 330, 65 S.Ct. 1143, 1145, 89 L.Ed. 1644, 1646 (citations omitted). See also Beckman Instruments, Inc. v. Chemtronics, Inc., 5 Cir., 1970, 428 F.2d 555, 557; Sterner Lighting Inc. v. Allied Electrical Supply, Inc., 5 Cir., 1970, 431 F.2d 539. Finding the Meece-Dew tree shear patent to be one involving deep public interest, we carefully review the trial court’s decision upholding the validity of the patent. We start from the proposition that a lawfully issued patent is presumed to be valid. 35 U.S.C.A. § 282; Railex Corp. v. Speed Check Co., 5 Cir., 1972, 457 F.2d 1040, 1043; Beckman Instruments, supra at 560 or 428 F.2d; Foster Cathead Co. v. Hasha, 5 Cir., 1967, 382 F.2d 761, 764. Thus, the “burden of establishing invalidity of a patent shall rest on a party asserting it.” 35 U.S.C.A. § 282. The presumption of patent validity is rebuttable. 35 U.S.C. § 282; Radio Corp. of America v. Radio Engineering Laboratories, 1934, 293 U.S. 1, 55 S.Ct. 928, 79 L.Ed. 163. The courts, however, have not distinguished themselves for consistency in their determination of the quantum of proof necessary to rebut the presumption. For instance, this Court has employed varying statements of the necessary quantum of proof. See, e. g., Kardulas v. Florida Machine Products Co., 5 Cir. 1971, 438 F.2d 1118 (“clear and convincing * * * a mere preponderance of the evidence is insufficient * * * beyond a reasonable doubt”); V & S Ice Machine Co. v. Eastex Poultry Co., 5 Cir. 1971, 437 F.2d 422 (“competent evidence”); Stamicarbon, N. V. v. Escambia Chemical Corp., 5 Cir. 1970, 430 F.2d 920 (reviewing all the standards and approving the use of the beyond-a-reasonable-doubt standard); Kiva Corp. v. Baker Oil Tools, 5 Cir. 1969, 412 F.2d 546 (“beyond a reasonable doubt * * * clear and convincing”); Metal Arts Co. v. Fuller Co., 5 Cir. 1968, 389 F.2d 319 (“clear, satisfactory, and, by some it is said beyond a reasonable doubt”); Zero Mfg. Co. v. Mississippi Milk Producers Assoc., 5 Cir. 1966, 358 F.2d 853 (“strong rebuttal”); Southern Implement Mfg. Co. v. McLemore, 5 Cir. 1965, 350 F.2d 244 (“beyond a reasonable doubt”); Samuelson v. Bethlehem Steel Co., 5 Cir. 1963, 323 F.2d 944 (“Any reasonable doubt will be resolved against the party alleging the invalidity of a patent”); Fairchild v. Poe, 5 Cir. 1958, 259 F.2d 329 (“beyond a reasonable doubt”); Zachos v. Sherwin-Williams Co., 5 Cir. 1949, 177 F.2d 762 (“beyond a reasonable doubt”). We do not attempt to resolve this apparent inconsistency. Rather, we state that the presumption of patent validity may be rebutted only by a quantum of proof — whether it be called clear and convincing or beyond a reasonable doubt — which is greater than a mere preponderance of the evidence. One who seeks to rebut the presumption bears a heavy burden. Cf. Radio Corp. of America v. Radio Engineering Laboratories, 1934, 293 U.S. 1, 55 S.Ct. 928, 79 L.Ed. 163. Hobbs v. United States, 5 Cir., 1971, 451 F.2d 849, 856. See Railex, supra at 1043-1044 of 457 F.2d. There are essentially three tests for patentability: utility, novelty, and non-obviousness. 35 U.S.C.A. §§ 101, 102, 103; Beckman, supra at 561 of 428 F.2d; Hobbs, supra at 855, of 451 F.2d. It is clear that the constitutionally required element “to promote the useful arts and sciences” is satisfied by the Meece-Dew invention. Likewise, our review of the case satisfies us that the statutorily articulated requirement of non-obviousness is met. In this regard we note that the Meece-Dew shear solved the plaguing problems of the industry with great commercial success. See Graham v. John Deere Co., 1966, 383 U.S. 1, 17-18, 86 S.Ct. 684, 694, 15 L.Ed.2d 545, 556. The issue of novelty, or phrased in another way — whether the invention was anticipated by the prior art, is quite another thing. Brandishing prior patents, White strenuously contends that the Meece-Dew concept was anticipated by the relevant prior art. Of the six prior patents listed by the Court and parties as being the relevant prior art it is undisputed that four were before the examiner in the Patent Office. White has clearly not introduced a whit of evidence to rebut the presumption of validity with respect to these patents. But, in spite of the District Court’s finding of fact to the contrary, White urges that the French Patent No. 1,313,995 and the Burke Patent U.S. No. 638,553, were not before the examiner. Of course the statutory presumption of validity, 35 U.S.C.A. § 282, is diluted when the patent was not issued after a consideration of the prior art. American Seating Co. v. Southeastern Metals Co., 5 Cir., 1969, 412 F.2d 756, 760. Even a cursory examination of these patents, however, dispels the specter of anticipation. The French Patent consists of a shear head similar to the Meece-Dew design but mounted on a single, elongated, telescopic tubular arm extending from the front of the tractor. It adds nothing to the prior art of record. The ancient 1899 Burke Patent consisted of a steam powered circular saw. Its only potential resemblance to the Meece-Dew design was the presence of a means to limit the downward motion of the cutting head. When one recalls the fact that the major innovation of Meece and Dew was the angular adjustment it becomes apparent that the Burke Patent’s connection with the Meece-Dew patent is severely attenuated, if, indeed, it exists at all. In making this argument White is not only far-afield — he is out of the forest. In a last ditch effort to salvage something from his invalidity argument White contends that even if the independent claims of the Meece-Dew patent are valid, that Claim 10, which specifically names a hydraulic cylinder as an alternative “flexible interconnection means”, is invalid because either (i) the drawings in the patent application failed to disclose it, or (ii) White was a prior inventor with respect to this element. A patent application does not have to graphically depict every conceivable element of the invention as long as it details the essential factors. “A rejection of the claim for lack of showing in the drawing alone is not tenable.” Ex parte Taylor, Patent Office Board of Appeals, 1944, 66 U.S.P.Q. 366, 367. 4 Walker on Patents (2d ed. Deller 1965) § 247. Cf. Up-Right, Inc. v. Safway Products, Inc., 5 Cir., 1963, 315 F.2d 23, 27. Concerning White’s argument that he was a prior inventor we only say that a patentee does not have to manufacture the full range of possible equivalents to his patent to satisfy the 35 U.S. C.A. § 102(g) requirement of reasonable diligence to reduce to practice. If his basic ingenuity is fully disclosed and if he takes expedient steps to utilize his concept, a patentee will be allowed the protection of the law to the extent of his full range of equivalents. III. Out On A Limb: Infringement The major premise of the trial court’s holding that the White shear did not infringe the Meece-Dew patent, was his conclusion of law that “the word ‘flexible’ as appears in the Meece patent and as included in the phrase ‘flexible interconnection means’ should be given its ordinary and accustomed meaning. Accordingly, the Meece patent claims in suit all describe tree shears in which the support linkage is flexible or allow the shear head to freely move. The claims are not broad enough to include tree shears in which the support linkage is substantially rigid.” His minor premise was a finding of fact: “The defendant tree shear employs a double acting hydraulic cylinder as the sole element of the supporting linkage between the shear head and mounting assembly. The testimony of the qualified expert witnesses establishes by a preponderance of the evidence that the double acting hydraulic cylinder and circuit as used in the White tree shear is a rigid and not a flexible intei’connection.” Thus, from these two premises his obvious conclusion was “the double acting hydraulic cylinder in the White shear structure is not equivalent to the ‘flexible interconnection means’ of the Meece patented tree shear and, therefore, there can be no infringement.” A patent is infringed only if there is substantial identity between the accused device and the patented invention as to means, operation, and result. Stewart-Warner Corp. v. Lone Star Gas Co., 5 Cir., 1952, 195 F.2d 645, 648; Beckman Instruments, Inc. v. Chemtronics, Inc., 5 Cir., 1970, 428 F.2d 555, 563; Sterner Lighting, Inc. v. Allied Electrical Supply, Inc., 5 Cir., 1970, 431 F.2d 539, 543; U. S. Industries v. Otis Engineering Corp., 5 Cir., 1958, 254 F.2d 198; McCutchen v. Singer Co., 5 Cir., 1967, 386 F.2d 82. Normally this poses a question of fact to be resolved by a jury or Judge sitting as fact-finder under F.R.Civ.P. 52(a), Hughes Tool Co. v. Varel Manufacturing Co., 5 Cir., 1964, 336 F.2d 61; Walker, supra at § 511. In the present case, our review of the case convinces us that the trial Judge misconstrued the claims of the MeeceDew patent in formulating his major premise. Thus, we reverse without contesting the correctness of his findings of fact. See Sterner Lighting, supra at 543 of 431 F.2d. It is axiomatic patent law that improvement patents in a crowded art are to be construed narrowly. Since the frequently-asserted “anticipation” ground of invalidity calls for a factual determination, Inglett & Co. v. Everglades Fertilizer Co., 5 Cir., 1958, 255 F.2d 342, 345; Sterner Lighting, supra at 541 of 431 F.2d, the patentee’s narrow contentions in the validity context often dovetail unwelcomed into his broad contentions with respect to infringement. But a “patent may not, like a ‘nose of wax’, be twisted one way to avoid anticipation and another to find infringement.” Sterner Lighting, supra at 544, citing White v. Dunbar, 1886, 119 U.S. 47, 51, 7 S.Ct. 72, 74, 30 L.Ed. 303; Permo, Inc. v. Hudson-Ross, Inc., 7 Cir., 1950, 179 F.2d 386. Concerning the validity of the patent in suit, the District Court assessed the prior art and determined that Although certain constituent elements of the Meece patent were known in the prior art, the flexible interconnection means of the Meece patent produced a new and useful result and did not anticipate the prior art. It is this act of selection and arrangement of elements which, if it overcomes defects in the prior. art, produces the invention and renders it novel. Distilled to its essence, this statement indicates that the district court held that by designing the cutting jaws to pivot axially with respect to the horizontal support beam, Meece and Dew had made a patentable improvement on the prior art of tree-felling. Curiously, it is at this very point of novelty that the alleged infringement took place. But White seeks to distinguish his model from the Meece-Dew shear in two important respects: (i) the Meece-Dew patent specifically calls for a flexible interconnection means while the interconnection means in the White model is rigid, and (ii) the functions performed by the double acting hydraulic cylinder on the White shear were beyond the realm of Meece-Dew inventiveness. We take them up in this order. Lexicographic License The central determinant of the infringement issue is whether the use of a hydraulic cylinder to vary the angle of the cutting blade in the White shear constitutes the requisite identity of means to the Meece-Dew patent. Contending that it does not, White directs our attention to the fact that the Meece-Dew patent calls for a “flexible interconnection means” to accomplish this function. He parrots the syllogistic reasoning which the trial Court articulated in its opinion: (i) According to the very words of the Meece-Dew patent only a means which is “flexible” would be an infringing copy; (ii) Once the position of a hydraulic cylinder is set it is rigid; and (iii) Therefore, the hydraulic cylinder cannot possibly be an infringing means. Harrington counters by strongly urging that the term “flexible interconnection means” means what they choose it to mean, and, accordingly, they are entitied to the mesnes. In support of this argument they cite the handy apothegm that a “patentee may be his own lexicographer and . . . his own grammarian.” Inglett & Co., v. Everglades Fertilizer Co., 5 Cir., 1958, 255 F.2d 342, 347. See Thurber Corp. v. Fairchild Motor Corp., 5 Cir., 1959, 269 F.2d 841, 850; Thermo King Corp. v. White’s Trucking Service, Inc., 5 Cir., 1961, 292 F.2d 668, 675; Chicago Steel Foundry Co. v. Burnside Steel Foundry Co., 7 Cir., 1943, 132 F.2d 812, 814; Sockman v. Switzer, 1967, 379 F.2d 996, 1002, 54 C.C.P.A. 1563; Barrett v. United States, 1968, 405 F.2d 502, 507, 186 Ct.Cl. 210. Because there was no extant generic phrase which would encompass all of the possible means to vary the angle of the cutting head, Meece and Dew’s patent solicitor employed the phrase “flexible interconnection means”. Reading the claims in light of the purpose and function to be served by the “interconnection means” we conclude that the term includes the use of a hydraulic cylinder. The basic concept of the Meece-Dew patent — indeed, the major innovation which enabled their invention to pass the obviousness and novelty tests of validity — was that the plane of the shear’s cutting head could be angularly adjusted. Perhaps the term “adjustable interconnection means” would have more aptly described the means in terms of the end. But it is not the duty of this Court to rewrite the patent claims for Meece and Dew. Their able counsel, in choosing the term “flexible intcx'connection means” sought to convey the thought that the means could accomplish the end, i. e., vai'iance of the angle of the cutting head. Viewed in the light of the basic concept of the Meece-Dew invention, the prosecution history, and the specific wording of Claim 10, the term necessarily includes the use of a hydraulic cylinder. White has made much on this appeal about the fact that the Meece-Dew design required some “give” in the interconnection means to withstand the pressure from the natural reaction when the cut is completed and the tree falls. But a careful reading of the specifications reveals that the only time “give” is used in the patent is where the patentee described that quality which would allow the blade to be angularly adjusted so that it would rest on the ground and transmit most of the shock from the falling tree to the ground. Although the patentee cleaxdy extolled the virtues of “give”, it is manifest that “give” or “flexibility” in the sense of a self-adjustment to withstand shock was only an incidental benefit of the design. The basic concept of the Meece-Dew patent was one of adjustability. Thus, a hydraulic cylinder which could be adjusted to vary the angle of the shear head could function as a “flexible intex'connection means” within the purview of the patent claims. Our conclusion in this regard is compelled by the specific words of Claim 10 that in addition to the chain and the cable which they had previously used as the interconnectioxx means, a hydraulic cylinder might be used. Thus, Claim 10 specifically delineates as a pax't of the Meece-Dew invention the very thing which White’s shear, uses. This, of course, is in keeping with the basic concept of the patent as explained by the specifications: “Also, whereas a cable has been shown in FIGURES 1-5, a chain in FIGURE 6, and a chain or cable in FIGURES 7 and 8, the basic concept is that of having a means for varying the angle of the plane of the jaw members with respect to the beam. Consequently, no invention would be involved in replacing flexible cable or chain with an obvious equivalentf such as a hydraulic cylinder . . . .” (Emphasis added). This explication of the basic purpose of the invention puts the three little words —“flexible interconnection means” — in perspective. And given this perspective, we hold that the patentee/lexicographer intended to connote the adjustability of the shear head via the “flexible interconnection means”. The Cylindrical Argument White makes much ado about the peculiar nature of the hydraulic cylinder. Specifically, he argues that a double acting hydraulic cylinder, because of its capability of rigidity, could not conceivably be the equivalent of a “flexible interconnection means”. Thus, the argument goes, the Meece-Dew patent cannot be construed to “cover a double acting hydraulic cylinder as the sole element of the support linkage”. Contrasting the concepts of “rigidity” and “flexibility”, the trial court found this line of reasoning to be persuasive. This is particularly so, according to the Court, where the double acting hydraulic cylinder on the White shear possesses attributes not heretofore proclaimed by Meece and Dew, e. g. the fact that the force of the cylinder can be used to crush brush, snow, or other debris from the base of the tree to order to cut the tree at the lowest possible point. But if the original patentee possessed the novelty of conception, the infringer may not claim non-infringement merely because he put the patented means to a novel use. Beckman Instruments, Inc. v. Chemtronics, Inc., 5 Cir., 1970, 428 F.2d 555, 561; Walker, supra at § 563. The District Court stated the identity of means test of infringement as follows: Where a patentee elects to define an element of his claimed combination in terms of a “means” plus a function (as in the Meece claims “flexible interconnection means”) it is essential for infringement that the corresponding means of the accused structure perform the same function in the same way to obtain substantially the same results. The trial court then found two functions which the interconnection means in the Meece-Dew shear served: [i] to permit free pivotal movement of the shear head, and [ii] to serve to limit the downwardmost position of the arc through which the shear head could move. [(Finding 7)]. In the White shear the pressure of the cylinder against “toter brackets” performed the latter task. Thus, the result was not obtained solely by the hydraulic cylinder. [(Finding 15)]. It was in the former function, however, that the trial Judge found the crucial distinction between the Meece-Dew shear and the accused White shear. The Judge’s interpretation of the Meece-Dew shear was that the interconnection means left the shear head “flexible”. The White shear was “rigid”. Given the antithetical quality of the words “flexible” and “rigid” the trial Judge concluded that there was no infringement as a matter of law. [(Conclusion 29)]. But what was needed was a temporal perspective. Both shear heads were “flexible” at some point in time. Basic to the entire superstructure was the fact that the shear head could be elevated or depressed to attain the proper cutting angle or to maneuver the tractor with the shear assembly. Likewise, both shear heads could be “rigid” when mounted with a hydraulic cylinder and locked into position. The crucial factor for the means was that it could attain the end of “adjustability”. This was the crux of the Meece-Dew design. This functional approach to patent claim construction is a legacy of Hotchkiss v. Greenwood, 1851, 52 U.S. (11 How.) 248, 13 L.Ed. 683; See Graham v. John Deere Co., 1966, 383 U.S. 1, 12, 86 S.Ct. 684, 691, 15 L.Ed.2d 545, 553; Foster Cathead Co. v. Hasha, 5 Cir., 1967, 382 F.2d 761. We recognized the validity of describing elements of a patent in terms of “means” and function in Bryan v. Sid W. Richardson, Inc., 5 Cir., 1958, 254 F.2d 191, 194, where we observed: The word “means” is no shibboleth. To be sure, it, or its equivalent synonyms, cannot be used to describe the invention at the very point of novelty for to do so would then be to define invention in terms of the result. But where the novelty of the combination . is adequately disclosed with definable limitations, other and well-known elements need not be described in structural detail. We have carefully weighed the arguments of both parties over the meaning of the term “hydraulic cylinder”. Harrington contends that the term is a shorthand expression for “double acting hydraulic cylinder”. White, on the other hand, points out the fact that a two-way push can be obtained from a double acting hydraulic cylinder, whereas only a one way action results from a single acting cylinder. This fact has obvious incidental benefits, e. g., the shear head can be both raised and lowered by hydraulic power, the force of the cylinder can crush any brush which surrounds the tree, etc. But the crucial property of the Meece-Dew shear was adjustability. And whatever its other benefits, the White double acting hydraulic cylinder accomplishes this function. Regardless of whether the hydraulic cylinder used as an interconnection means acts singly or doubly, it was contemplated by Meece and Dew as an alternative means to the original chain or cable and specifically delineated in Claim 10. It is also helpful to consider the manner in which the patentees used the term “hydraulic cylinder”. It appears not only in Claim 10 with respect to the “flexible interconnection means”, But also in Claims 1(c), 2(c), and 5. Claim 5 is illustrative. There the patentees claim a device which employs a hydraulic cylinder to both raise and lower the beam. (See Figure C, supra.) Thus, it is evident that the patentees contemplated by the use of the words “hydraulic cylinder” a cylinder which could push two ways. Therefore, whether single or double, the use by White of any hydraulic cylinder which could vary the angle of the cutting head with respect to the plane of the ground constitutes an infringement in derogation of the patent rights of Harrington. IV. Can’t See The Trees for The Forest Letter patents serve to foster the constitutional mandate to promote the arts and sciences. If courts undermine the rights of patentees, not by a narrow construction of the scope of the invention, but rather on the basis of semantical facades, then the utility of a patent as a stimulus for greater public disclosure of private inventiveness will be greatly minimized and more inventors will resort to whatever protection the trade secrecy law may afford. Cf. United States v. Dubilier Condenser Corp., 1933, 289 U.S. 178, 53 S.Ct. 554, 77 L.Ed. 1114; Sears, Roebuck & Co. v. Stiffel Co., 1964, 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661; Compco Corp. v. Day-Brite Lighting, Inc., 1964, 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669. The main thesis of our patent system is that public disclosure is a worthy goal. Meece and Dew designed the first tree shear to employ an angularly adjustable cutting head. This invention presented a significant and patentable improvement over the prior art in that it allowed the tree to be cut parallel to the ground at its lowest point. Not only did this provide more useable wood per tree, but it also reduced the logistical problems of reseeding and — for that band of hardy conservationists now tramping the woods in search of nature, the red-cheeked warbler, see Allison v. Froehlke, 5 Cir., 1972, 470 F.2d 1123, a pure environment, and possible class actions — it enhanced the aesthetic quality of a nowstumpless forest. By marketing a shear employing this basic concept of the Meece-Dew design without a license from the patent owner, the defendant White has infringed on the dominant patent of the Plaintiff. Accordingly, this case is reversed and remanded to the District Court for imposition of the appropriate remedies. Reversed and remanded. . Since the claims of a patent establish, as would a deed an estate in land, the metes and bounds of the grant, Motion Picture Patents Co. v. Universal Film Manufacturing Co., 1917, 243 U.S. 502, 510, 37 S.Ct. 416, 418, 61 L.Ed. 871, 876, we set them out in full for all to road who will: 1. An improved tree cutting device including: (a) a cutting blade. (b) one end of said cutting blade being pivotably mounted with respect to a pair of fixed jaw members. (c) fluid operated cylinder and piston means interconnecting said pair of jaw members and said cutting blade, (d) two generally parallel supporting arms having their roar ends adapted to be pivotably attached to a vehicle, (c) pivot means for pivotally interconnecting said two generally parallel supporting arms and said pair of fixed jaw members, so that said pair of fixed jaws can have limited pivotal movement about a horizontal axis, (f) flexible interconnection means interconnected between said two generally parallel supporting arms and said pair of fixed jaw members which serves to limit the pivotal arc through which the fixed jaw members can pivot. 2. An improved tree cutting device including: (a) a cutting blade. (b) one end of said cutting blade being pivotably mounted with respect to a pair of fixed jaw members, (c) fluid operated cylinder and piston moans interconnecting said pair of jaw members and said cutting blade, (d) said fixed jaw members being mounted for vertical pivotal movement about an elongated horizontally disposed beam, and said fixed jaw members being additionally connected to said elongated horizontally disposed beam by flexible interconnection means so that said fixed jaw members are free to move through a limited pivotal arc. (e) two generally parallel supporting arms having their front ends attached to said beam and having their rear ends adapted to be pivotably attached to a vehicle, and (f) means for raising and lowering said beam. 3. An improved tree cutting device according to claim 2, wherein said flexible interconnection means comprises a cable. 4. An improved tree cutting device according to claim 2, wherein said flexible interconnection means comprises a chain. 5. A tree cutting device according to claim 2, wherein said means for raising and lowering said beam comprises a hydraulic cylinder and piston. 6. A tree cutting device according to claim 2, wherein said jaw members are provided with a plurality of teeth. 7. An improved tree cutting device according to claim 2, wherein said flexible interconnection means includes an upstanding post on said beam, a connection means on the top of said jaws, and a flexible element interconnecting said upstanding post and said connection means. 8. An improved tree cutting device according to claim 7, wherein said flexible element comprises a chain. 9. An improved tree cutting device according to claim 7, wherein said flexible element comprises a cable. 10. A tree cutting device according to claim 1, wherein said flexible interconnection means comprises an adjustable hydraulic cylinder. Plaintiff alleges that defendant White’s shear infringes Claims 1, 2, 5, 7 and 10. He specifically points to the very precise wording of Claim 10 in terms of a hydraulic cylinder. . None of the hydraulic cylinders shown in this figure were the subject of this controversy. The While shear used a double acting hydraulic cylinder in plane of the chain and post shown at point 1 in Figure C. . On July 10, 1967, the Patent Office issued Patent No. 3,382,899 to Idas B. White covering his shear. Neither the validity nor the construction of that patent is at issue in this litigation. . Section 103 of the Patent Act of 1952 added this criterion. In John Deere, supra, the Supreme Court held that it was merely a codification of pre-1952 case law. The test for obviousness under § 103 is whether the design of the patentee would have been a clear extension of previously existing principles to one possessing ordinary skill in the relevant prior art. See Ingersoll-Rand Co. v. Brunner & Lay, Inc., 5 Cir., 1973, 474 F.2d 491. The trial judge here specifically found that no prior inventor had conceived the notion of mounting the cutting head of a shear so that it could pivot to parallel the plane of the ground. The Judge also held that the great commercial success which the Meece-Dew shear enjoyed was indicative of its non-obviousness. While not to be given controlling weight, this is certainly a permissible factor. John Deere, supra; Ingersoll-Rand, supra. . The great treatise, in expounding the proper test for infringement, has specifically realized the efficacy of interpreting patent claims in accordance with the purpose and intent of the patentee rather than the common denotations of his choice of words: “To allow literality alone to satisfy the infringement test would force patent law to reward literary skill not the inventor’s creativity. Since the law is intended to benefit the inventor’s genius and not the scrivener’s talent, the structures must do the same work in substantially the same way and accomplish substantially the same result . . .” 7 Walker on Patents (2d ed. Deller 1972) § 531 at 307. . The Court of Claims, in first accepting this rule, explained the difficulty which a Court faces when the inventor’s chosen terminology does not adequately embrace the totality of his concept. Thus, the Court in a fascinating opinion by Judge Durfee concluded that resort must often be had to factors beyond the plain meaning of the chosen term: Courts occasionally have confined themselves to the language of the claims. When claims have been found clear and unambiguous, courts have not gone beyond them to determine their content. Keystone Bridge Co. v. Phoenix Iron Co., supra, 95 U.S. [274,] at 278, 24 L.Ed. 344; Borg-Warner Corp. v. Mall Tool Co., 217 F.2d 850 (7th Cir. 1954); Zonolite Co. and Insulating Concrete Corp. v. United States, 149 F.Supp. 953, 138 Ct.Cl. 114 (1957). Courts have also held that the fact that claims are free from ambiguity is no reason for limiting the material which may be inspected for the purpose of better understanding the meaning of claims. Warner & Swasey Co. v. Universal Marion Corp., supra, 237 F.Supp. [719,] at 737. We find both approaches to be hypothetical. Claims cannot be clear and unambiguous on their face. A comparison must exist. The lucidity of a claim is determined in light of what ideas it is trying to convey. Only by knowing the idea, can one decide how much shadow encumbers the reality. The very nature of words would make a clear and unambiguous claim a rare occurrence. Writing on statutory interpretation, Justice Frankfurter commented on the inexactitude of words: They are symbols of meaning. But unlike mathematical symbols, the phrasing of a document, especially a complicated enactment, seldom attains more than approximate precision. If individual words are inexact symbols, with shifting variables, their configuration can hardly achieve invariant meaning or assured definiteness. Frankfurter, Some Reflections on the Reading of Statutes, 47 Col.L.Rev. 527, 528 (1947). See, also, A Re-Evaluation of the Use of Legislative History in the Federal Courts, 52 Col.L.Rev. 125 (1952). The inability of words to achieve precision is none the less extant with patent claims than it is with statutes. The problem is likely more acute with claims. Statutes by definition are the reduction of ideas to print. Since the ability to verbalize is crucial in statutory enactment, legislators develop a facility with words not equally developed in inventors. An invention exists most importantly as a tangible structure or a series of drawings. A verbal portrayal is usually an afterthought written to satisfy the requirements of patent law. This conversion of machine to words allows for unintended idea gaps which cannot be satisfactorily filled. Often the invention is novel and words do not exist to describe it. The dictionary does not always keep abreast of the inventor. It cannot. Things are not made for the sake of words, but words for things. To overcome this lag, patent law allows the inventor to be his own lexicographer. Chicago Steel Foundry Co. v. Burnside Steel Foundry Co., 132 F.2d 812 (7th Cir. 1943); Stuart Oxygen Co. Ltd. v. Josephian, 162 F.2d 857 (9th Cir. 1947); Universal Oil Products Co. v. Globe Oil & Refining Co., 137 F.2d 3 (7th Cir. 3943), aff’d 322 U.S. 471, 64 S.Ct. 1110, 88 L.Ed. 3399 (1944). Allowing the patentee verbal license only augments the difficulty of understanding the claims. The sanction of new words or hybrids from old ones not only leaves one unsure what a rose is, but also unsure whether a rose is a rose. Thus we find that a claim cannot be interpreted without going beyond the claim itself. No matter how clear a claim appears to be, lurking in the background are documents that may completely disrupt initial views on its meaning.6 The necessity for a sensible and systematic approach to claim interpretation is axiomatic. The Alice-in-Wondcrland view that something means whatever one chooses it to mean makes for enjoyable reading, but bad law. Claims are best construed in connection with the other parts of the patent instrument and with the circumstances surrounding the inception of the patent application. Doble Engineering Co. v. Leeds & Northrup Co., 334 F.2d 78 (1st Cir. 1943). In utilizing all the patent documents, one should not sacrifice the value of these references by the “unimaginative adherence to well-worn professional phrases.” Frankfurter, supra, at 529. Patent law is replete with major canons of construction of minor value which have seldom provided useful guidance in the unraveling of comxxlex claims. Instead, these canons have only added confusion to the problem of claim interpretation. Doble Engineering. Co. v. Leeds & Northrup, supra, at 84. Autogiro Company of America v. United States, 1967, 384 F.2d 391, 396-397, 181 Ct.Cl. 55 (footnotes omitted). . Our disposition on the explicit wording of Claim 10 precludes any foray into the range of protection which might be afforded to Harrington under the doctrine of equivalents. 35 U.S.C.A. § 112. In the past, we have held that “an inventor, with respect to his patent, is entitled to a range of equivalents commensurate with the scope of his invention.” Up-Right, Inc. v. Safway Products, Inc., 5 Cir., 1963, 315 F.2d 23, 26. See Bryan v. Sid W. Richardson, Inc., 5 Cir., 1958, 254 F.2d 191, 194; Southern Saw Service v. Pittsburgh-Erie Saw Corp., 5 Cir., 1956, 239 F.2d 339; Rosen v. Kahlenberg, 5 Cir., 1973, 474 F.2d 858 (Part II). They could have merely shown the chain and the cable in the drawings and thereafter relied on the courts to interpret what was an equivalent. . So often the lexicographic license has been abused. In Thurber Corp. v. Fairchild Motor Corp., supra, we gave tribute to the prolixity of patent solicitors by setting forth in the margin 334 word unpunctuated sentence used in a patent claim. 269 F.2d at 850 n. 7. Later, in Thermo King Corp. v. White’s Trucking Service, Inc., supra, we lauded the new practice of drafting patent claims in understandable English with punctuational pauses and explanatory indentations. 292 F.2d at 675 n. 9. Juxtaposed with the claims of our past experience the Meece-Dew application is a model of clarity. It specifically states the claims in terms of means to accomplish ends, i. e. function. In the particular regard with which we are now concerned, it explicitly declares that: “Said fixed jaw members being additionally connected to said elongated horizontally disposed beam by flexible interconnection means so that said fixed jaw members are freely moved through a limited pivotal arc.” Claim 2(d).

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

In the Matter of HALLMARK MEDICAL SERVICES, INC., et al., Debtors. Isaac MIZRAHI et al., Appellants, v. William H. MARTIN, Trustee, Appellee. No. 72-2440. United States Court of Appeals, Fifth Circuit. March 15, 1973. Rehearing and Rehearing En Banc Denied May 18, 1973. Charles L. Neustein, Miami, Fla., for Heiman and Crary. Marvin E. Barkin, Tampa, Fla., W. K. Zewadski, St. Petersburg, Fla., for trustee. Preston O. Cockey, Jr., Leonard H. Gilbert, Tampa, Fla., for debenture holders. Before WISDOM, BELL and COLEMAN, Circuit Judges. WISDOM, Circuit Judge; In' this case a group of unsecured creditors in a Chapter X bankruptcy seeks priority ranking under the so-called “six months rule.” The appellant-creditors contend that this rule allows priority to all creditors who furnish credit to a corporate debtor within six months before the appointment of a trustee if such credit is necessary to the continued operation of the debtor. The district court, adopting the recommendations of a special master, disallowed the claim of priority of the six months creditors. Because the district court held as a matter of law that no six months class could exist in this case, the creditors here appealing offered no evidence as to what money or services they rendered to the debtor corporation. We hold that the six months rule may apply to Chapter X reorganizations of quasi-public corporations. We remand for a determination whether under principles of equity these creditors qualify for priority classification under that rule. I. Hallmark Medical Services, Inc., built, operated, and sold nursing homes for profit. It operated six nursing homes in Florida with beds for 472 patients and also owned several homes under construction which when completed would have a capacity for 620 patients. Hallmark also owned a hospital in Largo, Florida. On August 7, 1970, the holders of four million dollars of unsecured debentures filed a petition for involuntary corporate reorganization under Chapter X of the Bankruptcy Act. On December 21, 1970, the petition for reorganization was granted and a trustee was appointed. Proofs of Claim were filed and a ranking of creditors was established. Several unsecured creditors argued that they were entitled to priority for having extended credit to the corporation within the six month period before the appointment of a trustee. The district court ruled that Hallmark was a purely private corporation and that the six months rule did not apply to the reorganization of private corporations. The court denied the creditors’ claims for priority. That conclusion was reached without receipt of any evidence or testimony at the hearing of October 28, 1971, or at the hearing of March 15, 1972. All parties have stipulated that the sole issue on appeal is the applicability of the six months rule to a reorganization under Chapter X of the Bankruptcy Act. No questions of fact are before us. II. The function of the six months rule is to encourage the extension of credit to corporations delivering important public services at a time when they are financially weak. The end served is to prevent the interruption of services to the public and to preserve the value of the corporate assets for the other creditors. Without the benefit of preferential ranking, unsecured creditors would have no motivation to risk venture capital. The costs of labor, supplies, and repairs necessary for the continued operation of the corporation, or capital to purchase those items, have been treated as expenses of administration when they are provided within six months before the appointment of a trustee. The appellee acknowledges that the rule is applicable to public service corporations but argues that the rule does not necessarily apply to every corporation “affected with the public interest.” We conclude that the function, not the characterization, of the corporation and the purpose for the credit are the determining factors. III. The six months rule was judicially created and first applied in railroad reorganizations, Fosdick v. Schall, 1878, 99 U.S. 235, 25 L.Ed. 339. It was eventually extended to other public and quasi-public corporations providing the pub-lie with gas, lighting, telephones, irrigation, heating, and transportation. The application of the rule, however, has not been confined to public service corporations but has also been applied to private corporations under Chapter X of the Bankruptcy Act, 6 Collier on Bankruptcy § 9.13[5] (14th ed.); Remington, Bankruptcy § 4635 (Rev. ed. 1961). Operating expenses such as salaries, supplies, professional services, and workmen’s compensation for private corporations have been included within the ambit of the six months rule. Judge Learned Hand vividly explained the reason for extending the rule to private corporations: “ . . . Just as it is recognized that, after insolvency, the expenses of continued operation of a business may be necessary to preserve its value for the secured creditors themselves, and for that reason that the receiver’s creditors have priority, so it may be before insolvency. To take the case at bar, upon the continued operation of a hotel its good will depends; let it once shut down, and it will lose much of its value. Unless the tradesmen with whom it must deal can be protected, as its credit slowly wanes before final insolvency, it must begin to trade upon a cash basis, which may be difficult or even impossible. Some priority to them may be essential to the preservation of the business during that period as it is later. While the interests of the public were no doubt the paramount consideration in the origin of the rule, the interests of the lienors themselves may make equally imperative some protection to supply creditors.” Dudley v. Mealey, 2 Cir. 1945, 147 F.2d 268, 271. Dudley concluded that services and supplies provided to a hotel within the six month period were entitled to priority. In other cases where the public interest did not demand continued operation of a business and where there was no substantial class of lien-holders whose interests would have been jeopardized had a corporation ceased operation, creditors were denied the priority of six months status. In re North Atlantic & Gulf Steamship Co., Inc., 1962, S.D.N.Y., 200 F.Supp. 818, aff’d sub nom., Schilling v. McAllister Bros., Inc., 2 Cir. 1962, 310 F.2d 123; In re Pusey & Jones Corp., 3 Cir. 1961, 295 F.2d 479. Thus the rule is applied restrictively, rather than presumptively. Johnson Fare Box Co. v. Doyle, 2 Cir. 1958, 250 F.2d 656, 657; In re Yale Express System, Inc., 1972, S.D.N.Y., 342 F.Supp. 972. IV. In determining whether a corporation is public or quasi-public it is the function, not the character, of the corporate entity which is significant. Here, Hallmark provided services to 472 patients and was constructing facilities for 620 more. As of December 1971, 298 of Hallmark’s patients were classified as “Medicaid skilled” which meant that the patient was seriously ill and required skilled nursing care. The revenue produced from those patients was in fact less than the cost of the services provided them. Only 134 of Hallmark’s patients were private. The medical expenses of the others were paid by governmental subsidies from various sources including the Division of Family Services of the State of Florida (Medical Assistance for the Needy, Fla.Stat. Ann. 409.266), Medicare (Federal Health Insurance for the Aged, 42 U.S. C. § 1395 et seq.), and Hospital, Domiciliary, and Medical Care for Veterans (38 U.S.C. § 610 et seq.). Furthermore, expert testimony indicated a need for additional nursing homes in central Florida and that the market was underdeveloped. The homes were licensed and regulated by Florida statutes prescribing minimum standards of operation and requiring that inspection be permitted at reasonable times. Fla. Stat.Ann. § 400 et seq. A violation of those state regulations carries criminal penalties. Fla.Stat.Ann. § 400.13. The closing of these nursing homes would have serious consequences for those under their care. These nursing homes had a direct relation to public health and performed vital public function. It was exigent that these essential therapeutic services would be delivered without interruption. We conclude that Hallmark performed a quasi-public function that brought it within the ambit of the six months rule. In a Chapter X reorganization, though no statutory priorities exist, a trial judge may equitably apply the six months rule to quasi-public corporations where circumstances justify its application. This conclusion is not inconsistent with the Act’s policy of classifying all unsecured creditors together because a justification for priority is that an extension of credit has preserved a larger fund for the other creditors. Having concluded that a six months class may exist for quasi-public corporations we remand the case for further proceedings to enable the district court to determine whether these appellants merit inclusion within the rule. We do not express any opinion whether equity weighs in favor or against these appellants or whether they should properly be classified as six months creditors. Reversed and remanded for further proceedings consistent with this opinion. . Because of reasons stated in this opinion we do not reach the question whether the six months rule applies to purely private corporations. . The plan of reorganization called for sale of all of Hallmark’s assets for over five million dollars. That amount was sufficient to satisfy the claims of the United States, the claims of state and local governments, and the secured creditors in full, but would provide perhaps as little as 33 cents on the dollar for the unsecured creditors. Both the appellants and the debenture holders were unsecured. . In refusing to apply the rule to credit extended for original construction, the Supreme Court stated: “The [Fosdick] case lays great emphasis on the consideration that a railroad is a peculiar property, of a public nature, and discharging a great public work. There is a broad distinction between such a case and that of a purely private concern. We do not undertake to decide the question here, but only to point it out.” Wood v. Guarantee Trust & Safe Deposit Co., 1888, 128 U.S. 416, 421, 9 S.Ct. 131, 132, 32 L.Ed. 472, 473. In Wood the Court also emphasized that the credit was not for operating expenses. The six months rule for railroads has been codified at 11 U.S.C. § 205(c). Cf. Johnson Fare Box Co. v. Doyle, 2 Cir. 1958, 250 F.2d 656 where the court refused to equate “new equipment” with operating expenses. . In re Madison Railways Co., 7 Cir. 1940, 115 F.2d 586; Crane Co. v. Fidelity Trust Co., 9 Cir. 1916, 238 F. 693; Penn Steel Co. v. New York City Ry. Co., 2 Cir. 1914, 216 F. 458; Louisville and Nashville RR. Co. v. Memphis Gas Light Co., 6 Cir. 1903, 125 F. 97; Keelyn v. Carolina Mutual Telephone & Telegraph Co., 4 Cir. 1898, 90 F. 29; Reyburn v. Consumers Gas, Fuel, and Light Co., 1887, N.D.Ill., 29 F. 561; 6A Collier on Bankruptcy § 9.13(5) p. 249 (1972). . Bowen v. Hockley, 4 Cir. 1934, 71 F.2d 781; Dickinson v. Saunders, 1 Cir. 1904, 129 F. 16; Olyphant v. St. Louis Ore and Steel Co., 1884, E.D.Mo., 22 F. 179; L’Hote v. Boyet, 1905, 85 Miss. 636, 38 So. 1; Drennen v. Mercantile Trust & Dep. Co., 1897, 115 Ala. 592, 23 So. 164. . Regardless of equitable considerations, other courts have held that the six month rule cannot in any case apply to a Chapter XI bankruptcy. Priorities in a Chapter XI bankruptcy are determined by § 64 of the Act, 11 U.S.C. § 104 whereas Chapter X priorities are determined by principles of equity under § 115, 11 U.S.C. § 515, There are no statutory priorities under Chapter X. Section 102, 11 U.S.C. § 502 of the Act expressly excludes § 64 ranking. In re Chicago Express, Inc., 2 Cir. 1964, 332 F.2d 276. In Chapter X a court is empowered to classify creditors, § 197, 11 U.S.C. § 597. We do not here make any ruling with respect to a Chapter XI proceeding. See also Reading Co. v. Brown, 1968, 391 U.S. 471, 485, 88 S.Ct. 1759, 20 L.Ed.2d 751 (Dissenting opinion of Chief Justice Warren). Another Chapter XI proceeding where the six month rule was rejected is In re Pusey & Jones Corp., 3 Cir. 1961, 295 F.2d 479, affirming, 1961, D.Del., 192 F.Supp. 233, which involved a paper-making machine company. The rationale of Pusey was that this corporation did not serve a vital public interest and that the statute did not expressly allow priority. The court stated: “Considered reflection leads to the view the exception of the six months’ rule should not be extended to all private corporations.” Another case cited by the appellee, but which was decided on the basis of § 64 is In re Warner Coal Corp., 1949, N.D.W.Va., 83 F.Supp. 961, aff’d sub nom. Wheeling Electric Co. v. Mead, 4 Cir. 1949, 177 F.2d 718. . Hallmark received only $11.60 per day for the Medicaid patients and only $18.75 per day for the Medicare patients whereas private patients paid between $20 and $30 per day. A reduction in the number of beds available could tend to displace the welfare patients. . Findings of Fact, Referee in Bankruptcy, p. 6, October 27, 1970 (Exhibit Q, #18). . Compare the policy of this priority with the high ranking lien for salvage in admiralty. Gilmore and Black, The Law of Admiralty, § 9-20, p. 514 (1957). The rank is granted because of the “benefit conferred in preserving the value of the ship and cargo.”

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America, Plaintiff-Appellee, v. Robert W. PETERSON, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Wayne B. CLIZER, Defendant-Appellant. Nos. 72-2480, 72-2481. United States Court of Appeals, Ninth Circuit. March 13, 1973. Rehearing Denied May 1, 1973. C. E. Monty Hormel (argued), Ephrata, Wash., for defendants-appellants. Dean C. Smith, U. S. Atty. (argued), Carroll D. Gray, Asst. U. S. Atty., Spokane, Wash., for plaintiff-appellee. Before KOELSCH and WRIGHT, Circuit Judges, and EAST, District Judge. Honorable William G. East, Senior United States District Judge for the District of Oregon, sitting by designation. EAST, District Judge: Defendant-Appellant Robert W. Peterson (Peterson) was indicted on one count of violation of Title 26 U.S.C. Section 5845(a) and Section 5861(d) (National Firearm Act). Defendant-Appellant Wayne B. Clizer (Clizer) and Peterson were jointly indicted on an additional count of violation of the same sections and together with others an additional count of violation of Title 18 U.S.C. Section 371 (Conspiracy) . Peterson was convicted on all three counts and sentenced to custody on each, the terms to run concurrently. Clizer was convicted on Counts II and III and likewise sentenced. Each appeals and is at liberty on bail. We affirm. STATUTES Title 26 U.S.C.: Section 5841 — Registration of firearms. (a) . . Secretary .. shall maintain a central registry of all firearms. (b) .. Each manufacturer . . and maker shall register each firearm he .. makes. Section 5845 — Definitions. For the purpose of this chapter— (a) Firearm — The term “firearm” means (1) a shotgun having a barrel or barrels .. (Here follows through sub-paragraph (7) meticulous description of items of military ordnance and instrumentalities of crime.) .. and (8) a destructive device. (f) Destructive Device — The term “destructive device” means (1) any .. incendiary, .. (A) bomb, (B) grenade .. or (F) similar device; (3) any combination of parts either designed or intended for use in converting any device into a destructive device as defined in subparagraphs (1) .. and from which a destructive device may be readily assembled. The term “destructive device” shall not include any device which is neither designed nor redesigned for use as a weapon; INDICTMENT The Grand Jury charges: Count I “In or about July 1970, .. at the James Thornton ranch .. , Peterson did knowingly, wilfully and unlawfully possess an incendiary and destructive device as the same is defined in 26 U.S.C. Section 5845(f) and 26 U.S.C. Section 5845(a) (7), to-wit: an object composed of segments of fusees with gunpowder and incendiary ingredients and rope fuses attached, and the combination of said segments, gunpowder, ingredients and fuses, which were designed and intended for use as such a device and from which said device might be readily assembled, not registered to him in the National Firearms Registration and Transfer Record in violation of Section 5861(d) of Title 26, United States Code.” In Count II the grand jury charged Peterson and Clizer and others not named as defendants of an additional crime in identical words set forth in Count I. In Count III the grand jury charged that Peterson and Clizer with others “did unlawfully conspire, combine, confederate and agree with each other to commit offenses against the United States of America, that is: to knowingly, wilfully and unlawfully receive, possess, transfer and make incendiary and destructive devices as the same arc defined in 26 U.S.C. Section 5845, to-wit: objects composed of segments of fusees with gunpowder and incendiary ingredients and rope fuses attached, and the combination of said segments, gunpowder, ingredients and fuses, which were designed and intended for use as such devices and from which said devices might be readily assembled; which would not be and were not registered to them or any of them in the National Firearms Registration and Transfer Record, which would not be and were not the subject of any application to the Secretary of the Treasury of the United States or his delegate, and for which no tax would be or was paid, in violation of 26 U.S.C. Section 5861; and in pursuance of said conspiracy and to effect the objects thereof; the said defendants performed the following overt acts, among others, to-wit: 4. In or about July, 1970 . . Peterson and . . Clizer ignited and demonstrated said incendiary and destructive devices at the Oscar Tschirky farm; 6. In or about July, 1970 . . Peterson, . . Clizer, Oscar Tschirky and three other persons met at the Oscar Tschirky potato warehouse and discussed the burning of haystacks with said incendiary devices in Franklin County on the same night as haystacks were to be burned in Grant County;” (For brevity, the allegations of numbers 1, 2, 3, 5 and 7 additional overt acts are omitted.) ASSIGNMENT OF ERRORS Peterson and Clizer assert the trial court erred in: 1) Failing to dismiss all counts in the indictment on the grounds that the respective counts allege and describe incendiary and destructive devices which do not fall within the purview of Section 5845 or any of those subdivisions or subclassifications or otherwise constitute “firearms” proscribed by the section; 2) Failing to dismiss the cause on the grounds that the government failed to prove the alleged incendiary or destructive device was in fact a firearm proscribed by the section ; 3) Failing to grant the motion for a new trial or judgment of acquittal on the identical grounds asserted in assignment 2). 4) Giving its instruction number 9 to the jury on the grounds the instruction was fatally defective in defining the term destructive device, an erroneous statement of the law and tended to be confusing, misleading and prejudicial to Peterson and Clizer; 5) (a) Permitting the government the introduction or attempted introduction of evidence of other inflammatory well-publicized infamous events or crimes, distinct and separate to the crimes charged in the indictment and permitting evidence of malicious intent or “bad” motive to be introduced by the government regarding other matters of a prejudicial nature not necessary to proof of the crime charged and designed to show the appellants as “bad guys” or infamous personalities; (b) Spotlighting and connecting the distinct and separate crimes of malicious acts not shown to have been perpetrated by the appellants; 6) Failing to individually and extensively examine each juror on voir dire for possible prejudice resulting from the wide-spread publicity and in exploring the background of each, failing to permit counsel to conduct such voir dire, where all or substantially all of the prospective jury panel admitted having been exposed to possible prejudicial wide-spread news media publicity concerning a well-known series of multiple arson or crimes, which the Court preliminarily informed the panelmen were related to the crimes charged in the indictment. FACTS In July of 1970, Peterson, accompanied by Oscar Tsehirky, came to the farm of James Thornton located near Mesa in Franklin County, Washington. Peterson advised Thornton that they were there for the purpose of demonstrating a device to be used in setting fires. He explained how the device worked and set one off to demonstrate how it would work. For the explanation and demonstration he had a piece of fusee flare into which he poured flammable granulated material containing gun powder to which he added a short length of cotton rope. He lit the cotton rope to show how the cotton rope timed the igniting of the powder. When it ignited, there was a fast, fiercely-burning fire. Subsequently, in the latter part of July of 1970, Peterson and Clizer came to the potato cellar of Tsehirky near Mesa. They traveled in Peterson’s car, where he again had gun powder, fusee material and rope fuse in the back. Tsehirky summoned others to his potato cellar and a meeting then took place between Clizer and Peterson, Tsehirky and three others. At this meeting, Peterson and Clizer discussed with the others in attendance plans for a large burning of hay in Grant County and stated that they wanted the Franklin County National Farmers Organization to participate, too. Peterson and Clizer then showed to the others at the meeting a box containing fusees and segments of fusees, and proceeded to use these segments, gun powder and cotton rope in assembling and putting together devices as before. Approximately three or four of these devices were prepared, lit and allowed to burn. In each case, the fuse was lit and when the rope fuse burned down to the point of contact with the material in the fusee casing it ignited and burned. Peterson and Clizer explained that they had experimented at length with the use of the cotton rope fuse and determined that the length of time it took to ignite the device could be controlled by the length of the rope fuse. The defendants explained how the devices could be used for the purpose of setting haystacks on fire and discussed a list of haystacks that they intended to burn and the route which they intended to follow in burning these haystacks. THE DEVICES From the evidence in the record we draw this narrative picture of the device prepared and demonstrated by Peterson and Clizer: A three to four inch long casing and fuel segment of a fusee flare (commonly used as a highway or railroad hazard red visual warning signal) from which a portion of the fuel material inside the casing segment was removed. The removed fuel material was then mixed with an equal amount of gun powder. This mixture of material along with a piece of cotton rope was then inserted and tamped into the casing. The casing fragment, its impregnated fuel and the cotton rope were made tight with binding tape. Charles Caswell, an explosive expert with the Treasury Department, was called as an expert witness in the field of clandestine do-it-yourself devices used to destroy property. He related that he had experimentally constructed the type of' device described by the other witnesses. He stated that the device constructed by these defendants had all of the characteristics of any conventional incendiary device, that is, a fuse, a priming mixture which ignited the main fuel, the fuel itself and a container for the device. He also stated that it produced an intensely hot flame burning at 18,000-20,800 degrees and is highly effective for use in the destruction of property or material. He then compared the device in question with commercially manufactured and homemade-type military ordnance and weapons of crimes and violence, and explained that the device is comparable to a “Molotov cocktail” as well as certain types of incendiary grenades, and further gave the opinion that this device was a more efficient incendiary device for the purpose of setting haystacks afire than a “Molotov cocktail.” DISCUSSION While neither Peterson nor Clizer have raised a constitutional issue on the act, we note that the registration of firearms requirement does not involve self-incrimination. United States v. Freed, 401 U.S. 601, 91 S.Ct. 1112, 28 L.Ed.2d 356 (1971). Assignments of Error I, II and III At the threshold we point out our ultimate conclusion as to the necessary and material elements of the crimes alleged in the three counts, leaving out the conspiracy element of Count III over which we have no issue. These material elements are: 1. The commercial materials mentioned, segments of fusee, gun powder and cotton rope, could be readily assembled into an incendiary bomb, grenade, . or “destructive device”; 2. The respective defendants intended to use and did convert the materials into a bomb, grenade, ... or “destructive device”; and 3. He or they dealt with the materials and objects so assembled (destructive device) in a manner prohibited by law (possession of unregistered firearms). See United States v. Morningstar, 456 F.2d 278, pp. 281-282 (4th Cir., 1972). Also, we conclude from the record that the government produced sufficient evidence, if believed, to prove the necessary and material elements of the crimes and the allegations of each of the counts as an issue of fact. Accordingly, we consider the only issue raised under each of the assignments is that of the single issue of law raised in assignment I. Peterson and Clizer urge, in short, that Section 5845 in its entirety outlaws only an incendiary bomb, grenade, missile, mine or destructive devices of military type weaponry which are dangerous or deleterious to human life and limb, hence the premise asserted in assignment I. We have concluded from a perusal of the legislative history of the act that Congress was well aware of the rampant destruction of property and dangers to life and limb faced by the public through the use of converted military type weaponry and the street variety of homemade instruments and weapons of crime and violence. And with this awareness Congress intended to foster law and order among the public by the proscription of original and converted military type weapons and, also, the do-it-yourself type of similar devices and weapons of crime, violence and destruction. Again, it is manifest from a reading of the various definitions of “firearms” set forth in Section 5845(a)(1) through (6) that Congress intended thereby to proscribe modified or altered firearms commonly known as military type ordnance. It is likewise manifest that Congress proscribed devices other than military type ordnance through the language in subsection (a) (7) — a gangster type firearm attachment (silencer) and (8) — -a “destructive device.” A “destructive device” under its definitions in Section 5845(f) is: (1) any incendiary, ... (A) bomb, (B) grenade, . . . or (F) similar device (italics supplied). While the words “incendiary . . . (A) bomb, (B) grenade, . . .’’do have a military type ordnance connotation, it is not necessarily so and particularly with “similar device.” Else why was the phrase “similar device” added to the specifically named items. The device designed and put together by Peterson and Clizer as above delineated is in our opinion similar to and likened to an incendiary bomb or grenade dropped by a military plane or thrown by a soldier. The “device” produced by Peterson and Clizer is a common street do-it-yourself variety of a readily hand-thrown incendiary bomb or grenade and a weapon or instrumentality of crime and violence capable of destroying property by fire. Furthermore, Congress manifestly intended to proscribe friendly things when with evil intent they are combined or joined together to produce a hostile object or device through the language used in subsections (a), (f)(3). “Any combination of parts either designed or intended for use in converting any device into a destructive device as defined in subparagraphs (1) and (2) and from which a destructive device may be readily assembled. The term ‘destructive device’ shall not include any device which is neither designed nor redesigned for use as a weapon.” Peterson and Clizer did just that. They took fusee flare segments, black powder, cotton rope and binding tape, each separately a friendly item, then with evil intent combined them and “readily assembled” a hostile destructive device likened to a Molotov cocktail of military ingenuity but a commonly used civilian weapon of crime and violence. They did not register the weapon and they exercised dominion and control of it. The counts in the indictment so alleged and the government’s evidence so showed. We conclude the District Court did not err in overruling the two motions to dismiss the indictment and the motion for a new trial or judgment of acquittal. The foregoing construction and interpretation of Section 5845 in its entirety under the facts of this case and our conclusion has support in the rationale of these authorities: United States v. Oba, 448 F.2d 892 (9th Cir., 1971) (Seven sticks of dynamite wrapped in copper wire and equipped with fuses and blasting caps intended for use in destroying property of others. Judge Browning dissenting, p. 892); United States v. Davis, 313 F.Supp. 710 (D.Conn., 1970) (Empty bottles, strips of cotton, and can of gasoline held with intent to assemble a Molotov cocktail.); and Morningstar, supra (Four sticks of black powder pellet explosive fastened together with electric tape and several unattached blasting caps.) Citing Langel v. United States, 451 F.2d 957, 962 (8th Cir., 1971) (dynamite, fuse and cap); Oba, supra; Davis, supra; and United States v. Harflinger, 436 F.2d 928, 929 n. 1 (8th Cir., 1970) (by implication — dynamite, fuse, cap, wire, clock, and battery). See, also, United States v. Posnjak, 457 F.2d 1110, note 10, p. 1119 (2nd Cir., 1972), distinguishable on facts. Apparently contra, see Judge Browning’s dissent, supra, citing United States v. Schofer, 310 F.Supp. 1292 (E.D.N.Y., 1970), both distinguishable on facts, here an assembled device. Issue No. IV The trial court rejected two government requested instructions on the definition of a “destructive device” and gave its own instruction number 9 as follows: “Now, the laws of the United States provide in part as follows, that it shall be unlawful to possess a destructive device. A destructive device includes any incendiary device, or components thereof, which may be readily assembled, the function of which device is to ignite and destroy property. It must be similar to an incendiary or fire bomb, or grenade, but need not be identical. Any article or device composed of a combustible material capable of producing sufficient heat to destroy property of any kind, and having components designed to ignite that combustible material, is under the laws an incendiary device similar to a fire or incendiary bomb or grenade. The term destructive device ¿hall not include any device which is neither designed nor redesigned as a weapon for destruction of property.” Petebson and Clizer excepted to the instruction. In short, the grounds urged were basically identical with those urged in Asáignments I, II, and III which we have cóncluded to be without merit. We approve the instruction when linked with appropriate instructions on unlawful intent and nonregistry as was done here. Issue No. V We consider the language of this assignment an overword play of the nature of the facts and circumstances surrounding Peterson and Clizer. The "well publicized infamous events or crimes” associated with “bad guys” refers to the so called “Columbia Basin hay fires incident” given widespread publicity and concern at the time. As the evidence developed, it was those “infamous events or crimes” which became the sum and substance of the conspiracy count. The facts focused their spotlight upon Peterson and Clizer and they had to suffer the brilliance. Issue No. VI Basically, this assignment attacks the so-called “Arizona system” of selection of jury and the trial court’s conduct of the voir dire thereunder. The system is extensively used in this Circuit and was approved in Amsler v. United States, 381 F.2d 37 (9th Cir., 1967), Haslam v. United States, 431 F.2d 362 (9th Cir., 1970), cert. den., 402 U.S. 912, 91 S.Ct. 1391, 28 L.Ed.2d 653 and United States v. Erickson, 472 F.2d 505 (9th Cir. 1973). If it be that the prospective jurors were not examined personally one by one to the satisfaction of Peterson and Clizer, such is attributable to their failure to accept the trial court’s invitation to submit questions aimed at eliciting the prospective juror’s frame of mind. The facts and the trial court’s rulings here just do not add up to the situation and picture presented in Silverthorne v. United States, 400 F.2d 627 (9th Cir., 1968), cert. den., 400 U.S. 1022, 91 S.Ct. 585, 27 L.Ed.2d 633. In Silverthorne, the free press had contaminated the public with prejudicial material and the trial court had made rulings on objections and exceptions held to be prejudicial to basic and constitutional rights of the defendants. Our perusal of the record of the voir dire here places the trial court’s conduct and examination of the prospective jurors well within the test of Haslam, supra, stated 431 F.2d at page 364: “This court has repeatedly held that the scope of voir dire examination and the procedures to be used are matters within the sound discretion of the trial judge, and will not be disturbed on appeal unless the procedures used or the questions propounded are so unreasonable or devoid of the constitutional purpose as to constitute an abuse of that discretion. Rodgers v. United States, 402 F.2d 830 (9th Cir. 1968); Amsler v. United States, 381 F.2d 37 (9th Cir. 1967); Alverez v. United States, 282 F.2d 435 (9th Cir., 1960); Johnson v. United States, 270 F.2d 721 (9th Cir. 1959), cert. denied 362 U.S. 937, 80 S.Ct. 759, 4 L.Ed.2d 751. An examination of the record does not show that appellant was restricted in any manner from propounding further questions to the jury through the trial judge, or that a refusal to ask any specific question was prejudicial to him. The record does not disclose that there was an abuse of discretion by the trial court.” Peterson and Clizer’s several enlargements on bail are revoked, effective now. Affirmed. . At argument on the motion to dismiss the indictment, the trial court ordered the deletion and obliterated in his own hand the numeral (7) pursuant to Rule 7 (c) Federal Rules of Criminal Procedure: Error in the “citation of the statute or other provision of law . . . alleged . . . to have (been) violated . . . shall not be a grounds for dismissal . or reversal ... if the error . . . did not mislead ... defendant to his prejudice.” The full scope of Section 5845 was under consideration and no party was misled by the erroneous numeral (7).

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UNITED STATES of America, Plaintiff-Appellee, v. Eric SIMON, Defendant-Appellant. No. 72-2371. United States Court of Appeals, Ninth Circuit. March 16, 1973. Ron Le Mieux, Los Angeles, Cal., for defendant-appellant. William D. Keller, U. S. Atty., Eric A. Nobles, John Cameron, Asst. U. S. Attys., Los Angeles, Cal., for plaintiffappellee. Before HAMLEY and MERRILL, Circuit Judges, and SCHNACKE, District Judge. Honorable Robert H. Schnacke, United States District Judge, Northern District of California, sitting by designation. PER CURIAM: Defendant was found guilty by a jury on five counts of violation of the Selective Service Act, 50 U.S.C. App. § 462, for making false representations as to the condition of his teeth. We affirm. Army Regulation 40-501, para. 7-12, provides generally that persons who wear orthodontic appliances are unacceptable for induction “as long as active treatment is required.” While defendant was undoubtedly wearing braces, there was ample evidence that, far from requiring “active treatment”, he required no treatment at all, and that he knew it. The business records of the dentist and the testimony of his assistant were properly received in evidence. Affirmed.

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Robert GRIFFIN, Petitioner-Appellant, v. W. E. HUDSON, Respondent-Appellee. No. 72-1945. United States Court of Appeals, Sixth Circuit. Argued Feb. 13, 1973. Decided March 28, 1973. Joseph O’Leary, Akron, Ohio, for petitioner-appellant. Jeffrey L. McClelland, Asst. Atty. Gen., Columbus, Ohio, for respondentappellee; William J. Brown, Atty. Gen. of Ohio, Columbus, Ohio, on brief. Before EDWARDS, PECK and McCREE, Circuit Judges. PER CURIAM. This is an appeal from the denial of the appellant’s petition for a writ of habeas corpus. In 1968, the appellant was convicted on each of four counts on an indictment charging him with display and possession of four obscene films. The arrest occurred on February 2, 1968, after the Sheriff of the county raided the appellant’s photography studio where one of the four films was being shown to a “stag party.” Deputy Sheriff Jones had been invited to attend this party, and during an intermission in the showing he left the party to advise the Sheriff, who had stationed himself outside by prearrangement, that obscene films were being exhibited. The deputy then returned to the party and seized the film in the projector when the Sheriff and others raided the premises a few minutes later. Assuming the interpretation most favorable to the appellee, the record discloses that as the Sheriff approached the door of the studio, he observed through a window the appellant putting what appeared to be film cans into a safe in his office. Upon gaining entrance, he arrested the appellant and asked him to open the safe, informing him that if he refused, the safe would be transported to the Barberton Safety-Building and opened there under court order. The appellant thereupon .opened the safe, from which three films were seized. At trial, the appellant stipulated that all four films were obscene, and his defense was that they were improperly seized. His motions to suppress were overruled, and he was convicted on all four counts. The District Court concluded that the search was incident to a lawful arrest, and denied the appellant’s petition for habeas corpus relief. The petitioner has perfected this appeal from that judgment. Inasmuch as this arrest and search occurred prior to the decision of Chimel v. California, 395 U.S. 752, 89 S.Ct. 2034, 23 L.Ed.2d 685 (1969), the constitutionality of the search is to be judged under the standards in effect prior to that decision. Williams v. United States, 401 U.S. 646, 91 S.Ct. 1148, 28 L.Ed.2d 388 (1971). The leading -pve-Chimel cases of Harris v. United States, 331 U.S. 145, 67 S.Ct. 1098, 91 L.Ed. 1399 (1947), and United States v. Rabinowitz, 339 U.S. 56, 70 S.Ct. 430, 94 L.Ed. 653 (1950), indicate that the Fourth Amendment protects only against unreasonable searches and that the reasonableness of each search is to be judged upon its own facts. Judged by any standard, the seizure of the film in the projector by Deputy Jones was proper; the Deputy was legally on the premises as an invitee, had seen a showing of the admittedly obscene film and thus he had observed the commission of an offense. Carroll v. United States, 267 U.S. 132, 156-157, 45 S.Ct. 280, 69 L.Ed. 543 (1925). Accordingly, the District Court’s denial of the writ in regards to this count of the indictment, Count Two, is affirmed. A different problem is presented with respect to the films seized from the safe. A search incident to an arrest authorizes a search of the individual validly placed in custody, Weeks v. United States, 232 U.S. 383, 392, 34 S.Ct. 341, 58 L.Ed. 652 (1914), and extends to a search of the place where the arrest is made in order to find and seize things connected with the crime or the means by which the crime was committed, and weapons and other things which might pose a threat to the arresting officer or aid an escape from custody. Agnello v. United States, 269 U.S. 20, 30, 46 S.Ct. 4, 70 L.Ed. 145 (1925). The rationale for concluding that such searches are reasonable and may be carried out in the absence of a search warrant is necessity. 339 U.S. at 72, 70 S.Ct. 430 (dissenting opinion). Officers must protect themselves from the threat of concealed weapons, and must avoid the destruction of evidence by the arrested person. These considerations are not present here where the Sheriff suspected that obscene films had been placed in a safe and locked. We can find no justification for the search of the safe over the objection of the appellant. The Trial Court indicated from the bench that the actions of the Sheriff in opening the safe constituted coercion. In addition, we note that there was some dispute concerning the question of whether the Sheriff did in fact see the appellant placing the film cans in the safe. The question of whether the Sheriff had sufficient grounds to justify opening the safe under court order were for the determination of a magistrate. “To promote neutral and objective determination of the necessity to invade people's privacy, law enforcement officials should be encouraged to seek warrants. See Chapman v. United States, 365 U.S. 610, 613-616, 81 S.Ct. 776, 5 L.Ed.2d 828 (1961).” United States v. Lewis, 392 F.2d 377, 379 (2d Cir. 1968). Only in exceptional cases may this decision be made by the police. Cash v. Williams, 455 F.2d 1227 (6th Cir. 1972). As noted in that opinion, the increased use of warrants is fostered by the assurance to law enforcement officials that when a warrant is obtained in a close case, its- validity will be upheld. United States v. Ventresca, 380 U.S. 102, 108-109, 85 S.Ct. 741, 13 L.Ed.2d 684 (1965); United States v. Desist, 384 F.2d 889, 897 (2d Cir. 1967), aff’d, 394 U.S. 244, 89 S.Ct. 1030, 22 L.Ed.2d 248, reh. denied, 395 U.S. 931, 89 S.Ct. 1766, 23 L.Ed.2d 251 (1969); United States v. Freeman, 358 F.2d 459, 461-462 (2d Cir.), cert. denied, 385 U.S. 882, 87 S.Ct. 168, 17 L.Ed.2d 109 (1966). We conclude that the coercive and warrantless search of the appellant’s safe was unreasonable and therefore unconstitutional, and that the three films seized therefrom were improperly admitted into evidence at the appellant’s trial. Accordingly, the appellant’s conviction on those three counts of the indictment, Counts 1, 3 and 4, must be vacated, and the judgment of the District Court is reversed as to those three counts. It is affirmed with respect to Count 2 of the indictment concerning the film seized from the projector. The cause is remanded to the District Court with instructions to grant the writ unless the conviction of the appellant on Counts 1, 3 and 4 of the indictment are vacated, and the appellant’s sentence on the remaining count is reconsidered in light of its being a single conviction.

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Robyn CRUMMETT, Plaintiff-Appellant, v. Donald J. CORBIN, Defendant-Appellee. No. 72-1756. United States Court of Appeals, Sixth Circuit. Argued Feb. 1, 1973. Decided March 30, 1973. Frank J. Neff, Columbus, Ohio, for plaintiff-appellant; Barkan, Barkan & Neff, Columbus, Ohio, on brief. Robert F. Howarth, Jr., Columbus, Ohio, for defendant-appellee; Charles E. Brown, Crabbe, Brown, Jones, Potts & Schmidt, Columbus, Ohio, on brief. Before CELEBREZZE and MILLER, Circuit Judges, and KENNEDY, District Judge. The Honorable Cornelia K. Kennedy, United States District Judge for the Eastern District of Michigan, sitting by designation. CELEBREZZE, Circuit Judge. This is an appeal from the District Court’s denial of Plaintiff-Appellant’s motion for a new trial after the jury returned a verdict for Defendant-Appellee on the question of liability in a personal injury suit arising out of an auto accident. Federal jurisdiction is based on diversity of citizenship. For the reasons set forth below, we vacate the judgment of the District Court and remand the case for a new trial. The accident occurred on November 25, 1967, at about 5:00 a. m. when Appellant was operating a Volkswagen Microbus in an easterly direction on U. S. Route 40, approaching the intersection of Route 38 at a speed of about 50 to 55 M.P.H. At this point, Route 40 is a four-lane, divided highway with a grass median strip. The intersection is controlled by flashing yellow lights facing traffic on Route 40 and flashing red lights and stop signs facing traffic on Route 38. Appellee was operating a tractor-trailer unit, with an overall length of 52 feet, loaded with hogs, in a northerly direction on Route 38. He stopped at the stop sign, saw the headlights of Appellant’s vehicle approaching approximately 700 to 800 feet to his left, and proceeded uninterruptedly across the intersection. Seeing the tractor-trailer unit in the intersection, Appellant turned her vehicle to the right onto the berm, passed behind the unit, lost control, and rolled over. There was no contact between Appellee’s unit and Appellant’s vehicle. As her first issue on appeal, Appellant asserts that the District Court erred in separating for trial the issues of liability and damages. In Moss v. Associated Transport, Inc., 344 F.2d 23 (6th Cir. 1965), this Court recognized that under Rule 42(b), F.R.Civ.P., the ordering of separate trials on the issues of liability and damages is within the sound discretion of the trial judge. Here Appellant contends that she was prejudiced by the fact that the jury was unable to consider evidence respecting her injuries in making its findings on the question of liability. Such consideration of evidence not related to the question of liability appears to be a type of prejudice which is to be avoided by separating the issues of liability and damages under Rule 42(b). We are thus unable to conclude that the District Court in any way abused its discretion in conducting a separate trial on the issue of liability. As her second issue, Appellant contends that the District Court erred in instructing the jury on Ohio’s assured-clear-distanee-ahead statute, Ohio Revised Code, Section 4511.21. The Court instructed the jury as follows: “. . . [N]o motorist may operate a vehicle at a greater speed then will permit him to bring it to a complete stop within the assured clear distance ahead. Assured clear distance is the distance between the vehicle he is operating and a visible object in his path of travel. As a motorist proceeds the assured clear distance constantly changes. It is measured at any moment by the distance between the motorist’s car and any visible object ahead in the same lane in which the motorist is proceeding.” With respect to Ohio’s assured-clear-distance-ahead statute, the Supreme Court of Ohio has stated as follows: “The ‘assured clear distance ahead’ referred to in Section 4511.21, Revised Code, constantly changes as the motorist proceeds, and is measured at any moment by the distance between the motorist’s car and any intermediate discernible static or forward-moving object in the street or highway ahead constituting an obstruction in the motorist’s path or lane of travel. (Paragraph one of the syllabus of Erdman v. Mestrovich, 155 Ohio St. 85, 97 N.E.2d 674, approved and followed.)” Cerny v. Domer, 13 Ohio St.2d 117, 235 N.E.2d 132 (1968) (paragraph two of the syllabus). That the statute may be applicable where a discernible object moves across a driver’s path has been established by the same Court’s decisions involving a pedestrian’s entry into a driver’s path. Paragraph two of the syllabus in Glasco v. Mendelman, 143 Ohio St. 649, 56 N.E.2d 210 (1944), provides as follows: “Where an automobile, in the night season, struck a pedestrian crossing a public highway at a place other than an intersection or cross-walk, and the evidence is to the effect that the street was well lighted; that the headlights on the automobile were burning; that the automobile was being driven in low gear for a distance of more than 75 feet before the collision; that she was struck by the right front bumper or fender; and that there was no other traffic upon the street, the question of whether the driver of such automobile was guilty of a violation of ‘the assured clear disanee ahead’ provision of the then existing statute, was properly submitted to the jury.” See also Erdman v. Mestrovich, 155 Ohio St. 85, 97 N.E.2d 674 (1951), recognizing in dictum that the statute would be applicable where “there is evidence tending to show that the pedestrian came into the operator’s assured clear distance ahead at a point sufficiently distant ahead of the motor vehicle as to have permitted the operator, in the exercise of ordinary care, to have stopped his motor vehicle before striking the pedestrian.” We are not referred to, nor do we find, any decisions by the Supreme Court of Ohio applying the statute to collisions involving vehicles traveling on intersecting roads. See Blackford v. Kaplan, 135 Ohio St. 268, 272, 20 N.E.2d 522, 525 (1939) (“The doctrine of assured clear distance has no application to drivers of automobiles approaching an intersection on different intersecting roads under ordinary circumstances.”) In Sherer v. Smith, 155 Ohio St. 567, 99 N.E.2d 763 (1951), however, application of the rule was precluded only by the fact that the defendant did not observe the plaintiff’s automobile approaching on an intersecting street until a second before the crash, affording the defendant no reasonable opportunity to stop his vehicle. We conclude that the District Court correctly determined that the evidence in the present case supported a jury instruction respecting Appellant’s duty under the assured-clear-distance-ahead statute. It was stipulated that Appellee saw Appellant’s vehicle approaching at a distance of approximately 700 to 800 feet when he pulled from the stop sign on Route 38 and proceeded uninterruptedly across the intersection. Moreover, Appellant testified that she was approximately 600 feet west of the intersection when she first observed Appellee’s vehicle, which was blocking both eastbound lanes of Route 40 at that point in time. This evidence created a question of fact as to Appellant’s compliance with the assured-clear-distance-ahead statute, warranting a jury instruction with respect thereto. We do, however, find merit in Appellant’s further claim that the District Court erred in failing to instruct the jury respecting the exception to the assured-elear-distance-ahead doctrine where another vehicle suddenly enters the driver’s path. This exception was recognized in Sherer v. Smith, 155 Ohio St. 567, 99 N.E.2d 763 (1951) (paragraph one of the syllabus) as follows: “The ‘assured-clear-distance-ahead’ rule contained in Section 6307-21, General Code, has no application in a situation where a person, motor vehicle or other object suddenly enters the path of another motor vehicle in such manner that the operator of such other motor vehicle is afforded no reasonable opportunity to stop his vehicle and avoid a collision.” The inverse of this exception was set forth in Sherer v. Smith, 155 Ohio St. 567, 99 N.E.2d 763 (1951) (paragraph two of the syllabus): “For such rule to apply it must appear that a person, motor vehicle or other object came into the view of the operator at a point sufficiently distant ahead to enable such operator, in the exercise of ordinary care, to stop his vehicle and avoid a collision. (Erdman v. Mestrovich, 155 Ohio St., 85, 97 N.E.2d 674 approved and followed.)” The evidence before the District Court established that Appellee proceeded into the path of Appellant after Appellee observed Appellant’s vehicle approaching at a distance of approximately 700 to 800 feet. Appellant testified that after first observing Appellee’s unit across both eastbound lanes when she was approximately 600 feet west of the intersection, she attempted to stop but was unable to, and she therefore swerved to the right, passing behind Appellee’s unit and losing control as she returned to the roadway. This evidence created a question of fact as to whether or not Appellant had a reasonable opportunity to stop her vehicle and thereby avoid a collision with Appellee’s unit. A finding that Appellee’s entry into Appellant’s path afforded Appellant no such opportunity would remove her from the duty otherwise imposed by the assured-clear-distance-ahead statute. The jury, however, was precluded from making such a finding on this question by the District Court’s failure to give an instruction respecting the sudden entry exception to the statute. The judgment of the District Court is therefore vacated and the case is remanded for a new trial. . It should be noted that the District Court also instructed the jury on Ohio’s right-of-way, through-highway statute and Ohio’s doctrine of contributory negligence. Under the latter, a plaintiff whose contributory negligence proximately caused the accident is totally barred from recovery. . There was nothing in the evidence which precluded a jury determination that Appellant, through the exercise of ordinary care, could or could not have stopped within the distance separating her vehicle from Appellee’s unit under the prevailing conditions. . In view of our disposition of this appeal, we find it unnecessary to expressly rule upon Appellant’s additional claim that the District Court erred in refusing to give a requested instruction on the sudden emergency doctrine. Suffice it to say that the substance of this doctrine is incorporated in the sudden entry exception to the assured-clear-distance-ahead rule discussed in the text.

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BOARD OF EDUCATION OF the SCHOOL DISTRICT OF the CITY OF DETROIT, a school district of the first class, Plaintiff-Appellant, v. Ronald BRADLEY et al., Defendants-Appellees. No. 72-1811. United States Court of Appeals, Sixth Circuit. Nov. 27, 1972. George T. Roumell, Jr., Louis D. Beer, Jane Keller Souris, Russ E. Boltz, Riley & Roumell, Detroit, Mich., for plaintiff-appellant. Theodore Sachs, Ronald R. Helveston, Detroit, Mich., for defendants-appellees. Before PHILLIPS, Chief Judge, and EDWARDS and PECK, Circuit Judges. ORDER On receipt and consideration of a motion filed in the above styled case and entitled “Emergency Motion of Board of Education of the School District of the City of Detroit to Order Governor of the State of Michigan, the Attorney General of the State of Michigan, the Treasurer of the State of Michigan, the Superintendent of Public Instruction for the State of Michigan, the Members of the State Board of Education of Michigan and Other State Officials to Provide Funds to Keep the Detroit Public Schools Operating for a Full 180 Regular Days of Instruction,” and on inspection of the record in Bradley v. Milliken (Nos. 72-1809, 72-1814), the emergency motion referred to above is hereby dismissed for want of jurisdiction. This record discloses that if this motion be conceived of as an appeal from Judge Roth’s injunctive order dated July 7, 1972, no notice of appeal has ever been filed concerning said order, and time for filing such a notice has long expired. If said motion be conceived of as a petition for equitable relief directed to the federal judicial power, it is clear to us that it must be directed in the first instance to the appropriate United States District Court with jurisdiction in the premises. We specifically note that the fact that certain of the orders entered by Judge Roth have been appealed to this court does not deprive the District Court of jurisdiction to hear petitions to alter or amend continuing injunctive orders on the basis of change of circumstances. See Kelley v. Metropolitan County Board of Education of Nashville and Davidson County, Tennessee, 463 F.2d 732 (6th Cir. 1972). The dismissal of the aforesaid motion is without prejudice to the right of the parties to seek in the District Court a modification of the order of that court dated July 7, 1972.

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UNITED STATES of America, Plaintiff-Appellee, v. Phillip L. ROGERS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Charles SPOTTS, Defendant-Appellant. Nos. 72-1305, 72-1306. United States Court of Appeals, Seventh Circuit. Argued Nov. 28, 1972. Decided March 7, 1973. See also, D.C., 329 F.Supp. 327. Darryl K. Nevers, Wauwatosa, Wis., Robert J. Lerner, Milwaukee, Wis., for def endants-appellants. David J. Cannon, U. S. Atty., David B. Bukey, Asst. U. S. Atty., Milwaukee, Wis., for plaintiff-appellee. Before DUFFY, Senior Circuit Judge, CAMPBELL, Senior District Judge, and ESCHBACH, District Judge. Senior District Judge William J. Campbell of the Northern District of Illinois is sitting by designation. District Judge Jesse E. Eschbach of the Northern District of Indiana is sitting by designation. ESCHBACH, District Judge. Defendants-appellants, along with a defendant, Jackson, subsequently acquitted, were charged in a twelve-count indictment with causing falsely made and forged securities (twelve money orders) to be transported in interstate commerce with fraudulent intent in violation of 18 U.S.C. §§ 2, 2314. Rogers was charged in Counts I through XI, and Spotts was charged in Counts I through VI as well as in Counts VIII and XII (Jackson was named in Counts IX through XI). Following submission of all the evidence in a joint jury trial, the trial court directed a verdict for defendants on Counts IX through XII for failure of the Government as a matter of law to prove as to these counts interstate movement of the money orders. On the remaining counts, the jury found the defendants guilty as charged. Each defendant was sentenced to thirty months imprisonment on each such count, the sentences to be served concurrently. Both Spotts and Rogers appeal from their convictions, which appeals were separately briefed and argued. Since these appeals result from a common trial and in part raise common questions, we will dispose of them in a single opinion. We affirm the convictions of both appellants. Both appellants claim that as a matter of law the Government has failed to prove the interstate transportation of the money orders relating to the counts on which they were convicted. Rogers additionally argues that the trial court erred in ordering Rogers to execute handwriting exemplars in the form of the allegedly forged words on the money orders and that the trial court erred in refusing to strike in its entirety the testimony of a key Government witness when she exercised her Fifth Amendment right not to answer certain questions. Spotts additionally argues that the trial court erred in not severing Count XII and that the evidence as a whole is insufficient to convict him. I. Proof of Interstate Movement of the Money Orders The jury could reasonably have found the money orders identified in Counts I through VIII were genuine American Express money orders distributed by American Express to Sears, Roebuck & Co., Milwaukee, Wisconsin. The money orders were discovered to be missing from that store sometime in early October 1970, and they were forged and cashed in Wisconsin in October 1970. The defendants argue that, assuming the Government has sufficiently tied them to these encashments, still they should have been acquitted because the Government did not present evidence from which a jury could conclude beyond a reasonable doubt that these very money orders in fact moved in interstate commerce. It is clear that such proof is necessary to sustain defendant’s convictions. Gilinsky v. United States, 368 F.2d 487 (9th Cir. 1966). For its proof, the Government relied solely upon the documents themselves and the markings thereon. On the face of each money order was printed “American Express Company agrees to pay at 65 Broadway, New York, N.Y., the sum of. . . . ” On the back of each was printed “AMERICAN EXPRESS COMPANY RESERVES THE RIGHT TO REFUSE PAYMENT OR CHARGE BACK THIS MONEY ORDER IF IT IS RAISED, ALTERED OR STOLEN OR IF ANY SIGNATURE IS OMITTED OR FORGED.” Also on the back of the orders was stamped “PRESENTED FOR AMEXCO N.Y. PAYMENT.” Defendants argue that this real evidence is insufficient to support an inference of interstate movement of these money orders and that, in any event, these markings are inadmissible hearsay. We are persuaded that the markings, any one of which might not be sufficient standing alone, taken together are sufficient to support a reasonable inference of interstate movement. The documents speak for themselves. The second quoted statement above shows that American Express Company decides whether to pay on money orders written on its paper. The first quoted statement shows that this decision is made in New York City. The third quoted statement reflects that these particular money orders were presented in New York for that decision. Directly on point is United States v. Nelson, 273 F.2d 459 (7th Cir. 1960). In that case, the court, in considering a related issue, commented upon the use and meaning of documents and markings similar to those here at issue. Each of the money orders bears the printed legend: “American Express Company, New York, New York, agrees to transmit and pay.” In our opinion this clearly indicated that the securities were payable at the American Express Company, in New York, New York. . . .' The money orders are each stamped “Paid, with an appropriate date inserted, AMEXCO, N.Y.” . . . The documents speak for themselves. They show that they were in fact paid at the American Express Company in New York, as abbreviated: “AMEXCO, N.Y.”, or “MEXCO, N.Y.” Id. at 460-461. In short, the court held that the documents, without oral elaboration, had discernible meaning in their own right, namely, that payment was to be made, and in fact was made, in New York. While it is true that the court referred to expert testimony of an American Express agent regarding the stamp on the back, the court in interpreting the words on the front relied solely upon the printed words. In light of this interpretation, there is no reason to suspect that the court meant anything less than what it said about the stamped words, which is that they speak for themselves. In the similar case of United States v. Mustin, 369 F.2d 626 (7th Cir. 1966), this court, in holding that a check and a photostat thereof by an out-of-state bank supported an inference of interstate movement, described such expert testimony as proper but cumulative. See also United States v. Cordo, 186 F.2d 144, 146 (2d Cir.), cert. den, Minkoff v. United States, 340 U.S. 952, 71 S.Ct. 572, 95 L.Ed. 686 (1951) (charge of theft from interstate commerce). The court said, “The asserted lack of evidence to prove the interstate character of the goods when stolen fails in the light of the proof that the cartons and bales were each plainly labelled with the names of the North Carolina consignor and the New York consignee.” See also United States v. Crawford, 195 F.2d 472, 474 (3d Cir. 1952) (Labelling on the cartons adequately proved interstate character of the shipment). Cf. United States v. Palumbo, 317 F.2d 607 (2d Cir. 1963) (value of goods stolen proven by amount inserted on invoice). Defendant cites the recent decision in United States v. Coleman, Case No. 68-CR-33 (E.D.Wis., July 30, 1968) (oral opinion). That case is distinguishable, however, as being a bench trial in which the judge was sitting as trier of fact and in that capacity found the Government’s evidence insufficient. In the instant case, the jury was the fact finder, and it found the evidence sufficient. Our function on appeal is not to make our own findings of fact, but to determine whether there was sufficient evidence in the record to support the fact, finder’s conclusion, and in this case there was. Defendant Rogers, in addition to making an argument of logical insufficiency, now complains that the markings quoted above are inadmissible hearsay. However, at trial he made no such specific objection, as was done in Crawford, supra, 195 F.2d at 475 n. 4, nor did he otherwise seek to limit the purposes for which the money orders were admitted, such as was done in United States v. Whitlow, 339 F.2d 975, 980 (7th Cir. 1964). Moreover, the Government did not lead him to believe that further evidence would be forthcoming on the question of interstate movement of the documents. Hence, Rogers has waived his hearsay objection. Diaz v. United States, 223 U.S. 442, 450, 32 S.Ct. 250, 252, 56 L.Ed. 500 (1912); Gibson v. Elgin, Joliet & Eastern Railway Co., 246 F.2d 834, 836 (7th Cir.) (relying upon Diaz), cert. den., 355 U.S. 897, 78 S.Ct. 270, 2 L.Ed.2d 193 (1957); American Rubber Products Corp. v. NLRB, 214 F.2d 47, 51-52 (7th Cir. 1954) (relying upon Diaz); United States v. Rosenberg, 195 F.2d 583, 596 (2d Cir.), cert. den., 344 U.S. 838, 73 S.Ct. 20, 97 L.Ed. 652 (1952). II. Handwriting Exemplars After indictment, but before trial, the Government sought a court order requiring that defendant Rogers execute examples of his handwriting. The court so ordered, and Rogers agreed to give examples in any form except the names and addresses used on the forged documents. The Government then moved in open court, with supporting affidavits, that Rogers be compelled to execute exemplars in the form objected to by Rogers. The court so ordered and Rogers complied. Rogers then sought an order suppressing use of those exemplars at trial, which motion the court denied. Apparently Rogers did not renew his objection when the exemplars were used at trial, although he reasserts the claim on appeal. Defendant by his actions has not waived his right to raise on appeal his pretrial objection. Whitlow, supra. Rogers does not appear to argue that no exemplar constitutionally could be required of him, and it is clear that such argument could not succeed. No question of right to counsel is raised in this case, and a general Fifth Amendment attack is answered by the Supreme Court’s ruling in Gilbert v. California, 388 U.S. 263, 266-267, 87 S.Ct. 1951, 1953, 18 L.Ed.2d 1178 (1967): “[A] mere handwriting exemplar, in contrast to the content of what is written, like the voice or body itself, is an identifying physical characteristic outside [the Fifth Amendment’s] protection.” As for Fourth Amendment rights, the Supreme Court has recently held that handwriting exemplars taken alone are outside the scope of the Fourth Amendment’s protection because a person has no reasonable expectation of privacy regarding his handwriting. United States v. Mara, 410 U.S. 19, 93 S.Ct. 774, 35 L.Ed.2d 99 (1973), rev’g, 454 F.2d 580 (7th Cir. 1971). See also United States v. Dionisio, 410 U.S. 1, 93 S.Ct. 764, 35 L.Ed.2d 67 (1973), rev’g in part, aff’g in part, 442 F.2d 276 (7th Cir. 1971). Moreover, there is no suggestion in the record that the exemplars were the fruit of an independently illegal seizure such as that in Davis v. Mississppi, 394 U.S. 721, 89 S.Ct. 1394, 22 L.Ed.2d 676 (1969). The appellant’s argument that it was error for the trial court to require that exemplars be in the form of allegedly forged words also has been answered by the Supreme Court and is without merit. In Dionisio, the defendant was ordered by the district court to give a voice exemplar in the exact words of a telephone conversation taped by the Government. The Court found this constitutional, stating: It has long been held that the compelled display of identifiable physical characteristics infringes no interest protected by the privilege against compulsory self-incrimination. “[T]he prohibition of compelling a man in a criminal court to be witness against himself is a prohibition of the use of physical or moral compulsion to extort communications from him, not an exclusion of his body as evidence when it may be material.” . . . Wade (United States v. Wade, 388 U.S. 218, 87 S.Ct. 1926, 18 L.Ed.2d 1149 (1967)) and Gilbert definitively refute any contention that the compelled production of the voice exemplars in this case would violate the Fifth Amendment. The voice recordings were to be used solely to measure the physical properties of the witnesses’ voices, not for the testimonial or communicative content of what was to be said. Id., at 5 of 410 U.S., 93 S.Ct. at 767, quoting Holt v. United States, 218 U.S. 245, 252, 31 S.Ct. 2, 6, 54 L.Ed. 1021 (1910). The present case is indistinguishable . from Dionisio on legal grounds. While Dionisio dealt with voice exemplars and the exemplars in the instant case are handwritten, the Court in Dionisio, as in the other leading cases on point (Mara, Gilbert, Wade), dealt with such exemplars interchangeably and without constitutional differentiation. Moreover, in the instant case the exemplars were to be used only as a standard of comparison, and the trial transcript shows that both prosecutor and handwriting expert strictly limited themselves to such use. Defendant argues on nonconstitutional grounds that the exemplar ordered was unduly prejudicial at trial. However, it is the trial court’s duty to weigh the potential prejudice from overemphasis against the usefulness of the exemplars for handwriting analysis. We cannot say that the trial court abused its discretion. Cf. United States v. Izzi, 427 F.2d 293, 295 (2d Cir.), cert. den., 399 U.S. 928, 90 S.Ct. 2244, 26 L.Ed.2d 794 (1970); Fountain v. United States, 384 F.2d 624, 632 (5th Cir. 1967), cert. den., Marshall v. United States, 390 U.S. 1005, 88 S.Ct. 1246, 20 L.Ed.2d 105 (1968); United States v. Vignera, 307 F.Supp. 136 (S.D.N.Y.1969). III. Witness Knauf’s Refusal To Answer Certain Questions A key witness for the Government was Karen Knauf a co-participant in the crimes charged. It was she who actually passed the forged money orders. She testified , that Rogers, along with Spotts, planned where and when she would cash checks and that she saw Rogers forge several of the money orders. During cross-examination, she refused to answer certain questions on the grounds that the answers might tend to incriminate her: while testifying that she loved a certain Stanley Hall, whom she identified as also being involved in the crimes charged, and that she did many things for him, she refused to say whether she had lived with him. Also, while admitting that she was using drugs during the period in which she cashed the money orders, she refused to say which drugs she used, how extensively she used them, and who supplied them. At trial, Rogers objected that these refusals to answer questions so effectively denied him his right to cross-examine the witness regarding her credibility generally and her powers to observe that her entire testimony on direct examination should be stricken. On appeal, Rogers presses only one point. He argues that while the witness was within her rights in refusing to answer questions directed to her drug use, by her so doing Rogers was precluded from establishing that the witness’ ability to observe and remember the events about which she testified was impaired. See Wilson v. United States, 232 U.S. 563, 568, 34 S.Ct. 347, 349, 58 L.Ed. 728 (1914). Rogers contends such ability goes to the reliability of the witness’ entire direct testimony. A witness’ refusal on Fifth Amendment grounds to answer otherwise permissible questions may, but need not necessarily, violate the defendant’s Sixth Amendment right as to part or all of the witness’ testimony. United States v. Collier, 362 F.2d 135 (7th Cir.), cert. den., 385 U.S. 779, 87 S.Ct. 519, 17 L.Ed.2d 439 (1966); United States v. Cardillo, 316 F.2d 606 (2d Cir.), cert. den., 375 U.S. 822, 84 S.Ct. 60, 11 L.Ed.2d 55 (1963). See also Smith v. Illinois, 390 U.S. 129, 133 n. 8, 88 S.Ct. 748, 751, 19 L.Ed.2d 956 (1968); United States v. Saletko, 452 F.2d 193, 195-196, cert. den., 405 U.S. 1040, 92 S.Ct. 1311, 31 L.Ed.2d 581 (1972). The basis for determining whether a defendant’s Sixth Amendment right was violated has been stated as follows: The ultimate inquiry is whether the defendant has been deprived of his right to test the truth of the direct testimony. . . . The distinction is generally drawn between invoking the privilege as to “collateral matters,” not requiring the striking of direct testimony, and invoking it as to “direct” matters. . . . But the line between “direct” and “collateral” is not clear, and the question in each case must finally be whether defendant’s inability to make the inquiry created a substantial danger of prejudice by depriving him of the ability to test the truth of the witness’s direct testimony. Fountain, supra, at 384 F.2d 628. Such a judgment is to be made upon the whole record, and, on the record in the instant case, we conclude that Rogers’ right to cross-examination was not so limited as to warrant striking Knauf’s testimony. In general terms, the truthfulness of Knauf’s testimony, including her ability to observe and remember events, was broadly and incisively attacked in depth by three attorneys, and the witness’ “refusal to answer [did not add] critical weight to the prosecution’s case in a form not subject to cross-examination. . . . ” Collier, supra 362 F.2d at 139 n. 4, quoting Fletcher v. United States, 118 U.S.App.D.C. 137, 332 F.2d 724, 726 (1964). More specifically, as the trial court stressed, the witness was not testifying as to a single brief occurrence for which her powers of precise observation would be specially important. Rather, she testified about a series of meetings and transactions occurring over a period of two months with individuals well known to her. Moreover, in testifying about these events, the witness generally limited herself to readily observable elements thereof; she rarely testified about elements, such as particular statements by Rogers, which would require a particularly accurate memory. Finally, the witness’ testimony as to Rogers, who alone of the defendants asserts that his right to cross-examination was too limited, was strongly supported by the testimony of the handwriting expert that Rogers forged the money orders identified in Counts I through VIII. IV. Severance of Count XII In Count XII, defendant Spotts alone was charged, and the evidence of his involvement regarding that particular money order was strong and direct. Knauf testified that Spotts supplied her with the false ID used in the encashment and that he accompanied her in the car when she went to cash the money order. The handwriting expert testified that in his opinion the writing on the order was Spotts’. The trial court ultimately directed a verdict in Spotts’ favor on this count because the Government failed to prove interstate movement of the money order. Before trial, Spotts moved for severance of Counts IX through XII, and he now asserts it was error for the trial court not to have severed Count XII (Spotts was not charged in Counts IX through XI). Admitting joinder was proper, Spots claims there was prejudice requiring severance in that the strong evidence on Count XII quite probably would be relied upon by the jury in convicting Spotts on Counts I through VI and VIII, for which the Government’s evidence was much weaker, even though in a separate trial of Counts I through VIII the evidence on Count XII would have been inadmissible. There is no merit in defendant’s contention. The trial court found joinder of defendants and counts proper under Rule 8(b), Fed.R.Crim.P., because the offenses charged appeared to be “closely related in time and manner so as to show a connectionlbetween them” and a “ ‘series’ of transactions which were part of a common plan.” Decision and Order, p. 2, filed June 21, 1971. Spotts does not attack this decision, nor could he. See United States v. Scott, 413 F.2d 932 (7th Cir. 1969), cert. den., 396 U.S. 1006, 90 S.Ct. 560, 24 L.Ed.2d 498 (1970); United States v. Spector, 326 F.2d 345, 349-351 (7th Cir. 1963); United States v. Thomas Apothecary, Inc., 266 F.Supp. 890, 892 (S.D.N.Y.1967). Moreover Spotts does not assert that evidence at trial failed to support the court’s initial finding. Joinder being proper, this court will reverse the trial court only if abuse of discretion is shown. United States v. Kahn, 381 F.2d 824, 838 (7th Cir.), cert. den., 389 U.S. 1015, 88 S.Ct. 591, 19 L.Ed.2d 661 (1967). The trial court is to balance possible prejudice to the defendant from joinder with the public interest in efficient use of judicial time through joint trial of defendants and offenses which are connected. In a case of multiple defendants, as the instant one, the showing needed for severance appears to be stronger than in a case of a single defendant with multiple counts. See Wright and Miller, Federal Practice and Procedure § 223 (1969). By any standard, however, Spotts has failed to show error on the part of the trial court. First, the record before the trial court at the time of Spotts' pretrial motion for severance (Spotts did not renew the motion at trial) falls far short of showing sufficient prejudice to Spotts to require severance. Spotts himself relies upon evidence brought forth after the motion, including important testimony at trial. It is clear, then, though this is not necessarily dispositive of defendant’s claim, that defendant’s motion for severance was properly denied when made. See United States v. Haupt, 136 F.2d 661, 673-674 (7 Cir. 1943) (no error in denying motion for severance, but upon hearing all the evidence, it was error not to grant the motion for a new trial). Secondly, a showing of differential proof as to counts is not per se a sufficient showing requiring severance or a new trial. Schaffer v. United States, 362 U.S. 511, 80 S.Ct. 945, 4 L.Ed.2d 921 (1960); United States v. Sherman, 84 F.Supp. 130 (E.D.N.Y.1947), aff’d in part, rev’d in part on other grounds, 171 F.2d 619 (2d Cir. 1948). Thirdly, prejudice requiring severance is not shown if evidence on the severed count would be admissible in the trial of the remaining counts, Drew v. United States, 118 U.S.App.D.C. 11, 331 F.2d 85, 91 (1964). Here, the trial court in its discretion could admit evidence regarding Count XII against Spotts in a trial on Counts I through VIII, not to show mere disposition to commit crime, but to show a common scheme of which both charged and non-charged activity is a part. See United States v. Birrell, 447 F.2d 1168, 1172-1173 (2d Cir. 1971), cert. den., 404 U.S. 1025, 92 S.Ct. 675, 30 L.Ed.2d 675 (1972) (count dismissed for failure to prove interstate aspect of case; evidence thereon nevertheless admissible); United States v. Weber, 437 F.2d 327, 332 (3d Cir. 1970), cert. den., 402 U.S. 932, 91 S.Ct. 1524, 28 L.Ed.2d 867 (1971); Bradley v. United States, 140 U.S.App.D.C. 7, 433 F.2d 1113, 1117-1121 (1969). Cf. United States v. Bucciferro, 274 F.2d 540 (7th Cir.), cert. den., 362 U.S. 988, 80 S.Ct. 1076, 4 L.Ed.2d 1021 (1960). Also, the evidence would lend meaning and strength to other testimony, for instance, that in prior meetings relating to Counts I through VIII with co-participant Knauf, along with co-defendant Rogers, Spotts was not merely passively present, which is insufficient to support a conviction, United States v. Carengella, 198 F.2d 3 (7th Cir.), cert. den., 344 U.S. 881, 73 S.Ct. 179, 97 L.Ed. 682 (1952), but was in fact an active participant. See United States v. Phillips, 401 F.2d 301, 305 (7th Cir. 1968). V. Sufficiency of The Evidence Against Spotts Spotts, finally, argues that the evidence against him on Counts I through VI and VIII is insufficient as a matter of law to convict him. The record, however, contains evidence from which a jury could conclude beyond a reasonable doubt not only the essential interstate movement of the orders but also could find Spotts guilty as charged in that (a) during the period when Karen Knauf was passing forged money orders, Spotts, in concert with Rogers, developed a scheme for passing forged money orders, which scheme included Knauf as the one who would actually cash the money orders, and (b) when Knauf cashed the money orders on which Spotts and Rogers were convicted, she was acting under the direction and control of both Spotts and Rogers even though both were not at all times physically present with her. Cf. Phillips, supra at 307. Accordingly, the convictions appealed from in both 72-1305 (Rogers) and 72-1306 (Spotts) are affirmed. . Rogers made no objection when the money orders supporting Counts I and II were admitted into evidence. As to the money orders named in Count III through VIII, he made no objection regarding the printing and stamp on the back, and he only objected in vague terms to “some extraneous matter written on the front of the money orders.” (Emphasis added) . On their facts Mara and Dionisio are limited to actions by a grand jury. However, the language of the Court was broad: Handwriting, like speech is repeatedly shown to the public, and there is no more expectation of privacy in the physical characteristics of a person’s script than there is in the tone of his voice. Mara, supra at 21 of 410 U.S., 93 S.Ct. 774. In Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967), we said that the Fourth Amendment provides no protection for what “a person knowingly exposes to the public, even in his home or office. ...” 389 U.S. 347, 351, 88 S.Ct. 507, 511. Dionisio, supra at 14 of 410 U.S., 93 S.Ct. 764. In any event, the facts in this case satisfy any possibly applicable Fourth Amendment standards. Schmerber v. California, 384 U.S. 757, 86 S.Ct. 1826, 16 L.Ed.2d 908. . As stated, the Dionisio case arises in the setting of a grand jury hearing, while in the instant case questions relate in part to activities at trial. There is language in Wade which suggests that a trial setting raises separate questions. (In Wade, the defendant was made at a line-up to speak words used by a robber.) However, it appears that in Wade the jury was made aware of the defendant’s exemplar. Moreover, the Court in Dionisio referred to Gilbert as being exactly on point, and in Gilbert the exemplars were clearly used at trial. In short, it is not constitutionally significant whether the words of an exemplar are in terms related or unrelated to the particular case or used at trial so long as the exemplar is treated solely as a standard of comparison.

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Noble David JELLUM, Jr., Petitioner-Appellee, v. Hoyt C. CUPP, Superintendent, Oregon State Penitentiary, Respondent-Appellant. No. 72-1418. United States Court of Appeals, Ninth Circuit. March 6, 1973. John H. Clough, Asst. Atty. Gen. (argued), Lee Johnson, Atty. Gen., Salem, Or., for respondent-appellant. L. A. Aschenbrenner (argued), of Marmaduke, Aschenbrenner, Merten & Saltveit, Portland, Or., for petitioner-appellee. Before ELY, WRIGHT and WALLACE, Circuit Judges. EUGENE A. WRIGHT, Circuit Judge: The state has appealed from a judgment of the district court, granting a writ of habeas corpus and directing the release of Jellum unless the state should reindict him. Although other issues are raised, we agree with the district court that the only substantial question is whether the statute under which Jellum was convicted is unconstitutionally vague. We agree with the district court’s conclusion that it is and we affirm. Jellum pleaded guilty to a charge of “committing an act of sexual perversity.” was sentenced, and later sought post-conviction relief in the Oregon courts. His petition was dismissed as was a petition for review by the Oregon Supreme Court. He then applied to the district court for relief. Although Jellum pleaded guilty to the state charge he may still challenge the constitutionality of the statute under which he was sentenced. Ex parte Siebold, 100 U.S. 371, 377, 25 L.Ed. 717 (1879). The Oregon Supreme Court has recognized the vagueness of the term “act of sexual perversity” and has limited its application to a narrow range of prescribed conduct. Under the state court’s construction in State v. Anthony, 179 Or. 282, 169 P.2d 587, cert. denied 330 U.S. 826, 67 S.Ct. 865, 91 L.Ed. 1276 (1946), three elements are required for a violation: (1) the direct involvement of a sex organ; (2) unnatural conduct contrary to the course of nature which (3) is performed for the purpose of accomplishing abnormal sexual satisfaction on the part of the actor. Such a narrowing construction redefines the statute and is binding on federal courts. Shuttlesworth v. Birmingham, 382 U.S. 87, 86 S.Ct. 211, 15 L.Ed.2d 176 (1965). The district court concluded that even as limited by Anthony the statute is unconstitutionally vague. The relevant criteria for vagueness are spelled out in Giaccio v. Pennsylvania, 382 U.S. 399, 402-403, 86 S.Ct. 518, 520-521, 15 L.Ed.2d 447 (1966): “It is established that a law fails to meet the requirements of the Due Process Clause if it is so vague and standardless that it leaves the public uncertain as to the conduct it prohibits or leaves judges and jurors free to decide, withodt any legally fixed standards, what is prohibited and what is not in each particular case.” Of course, we must consider the constitutionality of the statute in light of the conduct with which Jellum is charged. One to whom application of a statute is constitutional will not be heard to attack the statute on the ground that it would be unconstitutional as applied to other persons or other situations. United States v. National Dairy Products Corp., 372 U.S. 29, 83 S.Ct. 594, 9 L.Ed.2d 561 (1963); United States v. Raines, 362 U.S. 17, 80 S.Ct. 519, 4 L.Ed.2d 524 (1960). Jellum was charged with accosting a woman in a shopping center parking lot, knocking her down in a scuffle which may have indicated some intent to rape, and then urinating on her. Our inquiry then is twofold: did the statute, as limited by Anthony (1) give Jellum adequate notice that his conduct was prohibited, or (2) give jurors legally fixed standards from which they could have determined whether Jellum’s act was or was not prescribed by the statute? We do not reach the first question in our holding that the statute, as limited, supplies no legally fixed standards and constitutes a grossly unconstitutional delegation of legislative power to the prosecutor, judge and jury. In determining whether a statute is unconstitutionally vague, courts have traditionally looked to the common law background for interpretation of broad terms. Winters v. New York, 333 U.S. 507, 68 S.Ct. 665, 92 L.Ed. 840 (1948). Employing that search with reference to the phrase “unnatural conduct contrary to the course of nature,” we find that it had no definite meaning at common law. A similar term, “crime against nature,” did have a definite meaning and has generally been held to be synonymous with sodomy; however, the Oregon Supreme Court has held that sodomy is not an “act of sexual perversity.” Anthony, supra, 169 P.2d at 598. Similarly, the term “abnormal sexual satisfaction” has no common law background. Recourse to the dictionary gives us no enlightenment either. There is simply no commonly accepted, definite meaning of the phrase “unnatural conduct contrary to the course of nature.” Accordingly, we must conclude that the statute, as construed in Anthony, supplies a jury (or a judge sitting without a jury) no legally fixed standards under which to determine guilt. Further, we note that the statute does not supply any standard or basis for a trial judge to apply in submitting one case to a jury or refusing to submit another for jury consideration. This same looseness in the statutory language would allow a state prosecutor to use the statute selectively to rid the community of persons subjectively deemed guilty of committing “abnormal” or “unnatural” acts. As the trial judge stated in his well-reasoned opinion: “The varieties of human sexual behavior are encyclopedic. A beginning inventory, from arson to zooerasty, can be found in R. von Krafft-Ebing, Psychopathia Sexualis. If a statute allows the district attorney to pick through this catalog and make a felony of any sex-related act that offends his concept of ‘normal’ behavior, the statute is, of course unconstitutional.” It is not enough to say that the prosecutor, judge, and trier of fact may exercise their own common sense and good judgment in determining what is “unnatural conduct” and “abnormal sexual satisfaction.” The Oregon Supreme Court itself expressly rejected that argument in State v. Hodges, 254 Or. 21, 457 P.2d 491 (1969). That case involved a statute making it criminal to engage in conduct which “manifestly tends to cause” a minor to become delinquent. The court found this statute unconstitutionally vague because of the lack of any standards as to the causes of delinquency. Jellum’s guilty plea admitted an episode of socially obnoxious behavior which indicates the need for the State of Oregon to seek institutional care for him. However, since the terms “unnatural conduct contrary to the course of nature” and “abnormal sexual satisfaction” are so vague as to supply no standards by which the prosecutor, judge, or jury could decide whether Jellum’s conduct was prohibited or not, we hold that the State of Oregon must use other, constitutional means to secure its goal. In the district court, the state advised the court that Jellum had exhausted his state remedies. For the first time, on this appeal, the state suggests that failure to appeal to the United States Supreme Court constituted a deliberate by-pass of state remedies. The district court did not consider the question and we decline to do so, under the circumstances. The Order of the district court is affirmed. . The entire statute reads as follows : O.R.S. 167.040(1). “Any person who commits sodomy or the crime against nature, or any act or practice of sexual perversity, either with mankind or beast, or sustains osculatory relations with the private parts of any person, or permits such relations to be sustained with his private parts, shall be punished. In 1971 the Oregon legislature rewrote their laws dealing with sexual behavior, and this statute is no longer on the books. Jellum, however, was sentenced by the state court in May 1969. . Jellum v. Cupp, 4 Or.App. 210, 476 P.2d 205 (1970). . Webster’s Third New International Dictionary, for example gives us the following definitions: Unnatural :not innately characteristic of the nature of man :not being in accordance with nature :not being in accordance with normal feelings or behavior ¡PERVERSE, ABNORMAL ¡inconsistent with what is natural or expected Nature ¡normality especially as prescribed by law for sexual relations — usually used in the phrase AGAINST NATURE Normality :the quality or state of being normal ¡conformity with the norm . We note that in State v. Anthony, supra, the court relied on earlier cases which were reversed by State v. Hodges, supra.

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UNITED STATES of America, Appellee, v. Elvin Lee BYNUM et al., Appellants. Nos. 376-401, Docket 72-1857, 72-1884, 72-2101, 72-1763, 72-2142 and 72-2143. United States Court of Appeals, Second Circuit. Argued Nov. 17, 1972. Decided March 14, 1973. Henry J. Boitel, New York City, for appellant, Elvin Lee Bynum. Patrick M. Wall, New York City, for appellant, Joseph Cordovano. Aaron J. Jaffe, New York City, for appellants, Abraham Wright, Lance Small, Newbry Mitchell and Irving Birnbaum. Frederick T. Stant, Norfolk, Va., for appellants, Fannie Mae Garnett, Jacqueline Fuller Dyson, John Feroldi and Levis Nedd. Theodore Rosenberg, Brooklyn, N. Y. (Frank A. Lopez, Brooklyn, N. Y., of counsel), for appellant, Vincent Altamura. H. Elliot Wales, New York City (Michael P. Direnzo, New York City, on the brief), for appellants, John Coniglio and Charles Tuzzolino. Jerome Lewis, New York City, for appellant, Angelo Mele. W. Cullen MacDonald, Asst. U. S. Atty., S. D. N. Y., New York City (Whitney North Seymour, Jr., U. S. Atty., S. D. N. Y., New York City, and John W. Nields, Jr., and John M. Bush, Asst. U. S. Attys., S. D. N. Y., New York City, of counsel), for appellee. Before SMITH, KAUFMAN and MULLIGAN, Circuit Judges. MULLIGAN, Circuit Judge: These are appeals by Elvin Lee Bynum, Joseph Cordovano, Abraham Wright, Lance Small, Newbry Mitchell, Irving Birnbaum, Vincent Altamura, Angelo Mele, John Coniglio, Charles Tuzzolino, John Feroldi, Levis Nedd, Fannie Mae Garnett and Jacqueline Fuller Dyson from judgments of conviction entered on June 27, 28 and July 7, 1972, in the United States District Court for the Southern District of New York, after a trial before Hon. Milton Pollack, United States District Court Judge, and a jury. The Indictment- (71 Cr. 1169) containing three counts was filed on October 13, 1971. All of the appellants were charged with conspiring to obtain and sell narcotics in violation of Title 21, United States Code, §§ 173 and 174 (repealed 1970) and Title 26, United States Code, §§ 4705(a) and 7237(b) (repealed 1970). All of the defendants were found guilty. Counts Two and Three separately charged Levis Nedd and Michael Lebbers (Malachy Libbers) with unlawfully carrying a firearm in the commission of the felony charged in Count One, in violation of 18 U.S.C. § 924. Appellant Nedd was found guilty under Count Two. In view of the disposition we make here, we need not recite in detail the facts in this drug conspiracy, nor need we discuss the numerous points raised on appeal. Suffice it to say that in addition to the usual sordid operation of purchasing, cutting and packaging large quantities of cocaine and heroin, the conspiracy charged here included criminal assault, planned robberies for the purpose of procuring drugs and the planning of the murder of a suspected informant to insure the continuance of the conspiracy. The Government’s case was in the main provided by an informant Stewart, who while acting as a trusted key member of the conspiracy, was simultaneously supplying the Government with detailed information about the criminal activities of his associates. Despite the wealth of information provided by Stewart, which in several instances was corroborated by physical surveillance, the Government also introduced into evidence written transcripts and played recorded telephone conversations of defendants Bynum and Cordovano for the purpose of further supporting Stewart’s testimony. For the reasons discussed below, the admission of the evidence has, in our view, raised serious questions of statutory construction and, possibly, of constitutional interpretation, which we are loathe to decide on the basis of the sparse record before us. The defendant Bynum, the principal figure in the conspiracy, used as his headquarters, a residence on Linden Boulevard in Brooklyn which was occupied by his paramour, the defendant Garnett. On the basis of information from independent informants and the personal knowledge of agents who had worked with Bynum when he was acting as a Government informant, an application was made pursuant to the wiretap authorization provisions of 18 U.S.C. § 2516 to tap the telephone of Garnett at her residence which was believed to be the focal point of Bynum’s drug dealing operation. Other means of investigation were deemed to be inadequate. Cf. 18 U.S.C. § 2518(1)(c) & (3) (c). On January 29, 1971, Judge Anthony Travia, United States District Court, Eastern District of New York, entered an order authorizing the Government to intercept and record telephone communications to and from the Garnett telephone at Linden Boulevard. On January 28, 1971, a second telephone was installed at the Linden Boulevard address. The Government learned of this second telephone through the interception of messages on the first telephone. Judge Travia entered an order on February 12, 1971 authorizing the interception and recordation of messages on the second telephone at Linden Boulevard. Finally on February 18, 1971, an order was entered authorizing the continuance of the first telephone intercept for 14 days so that both taps terminated on March 3, 1971. The major concern we have in this appeal is whether or not the electronic surveillance of the two telephones in question was conducted in such a fashion as to minimize the interception of communications not otherwise subject to interception. The statute, § 2518(5), requires that an order authorizing such interception contain such a provision. The extension order of February 18, 1971 failed to contain the limitation; however, since it is a continuation or extension of the initial order, we consider that it incorporates by reference the minimization language of the first order. Appellants maintain, and a reading of the record would indicate, that every single conversation on these telephones from the time of the installation of the taps until March 3, 1971 was intercepted and recorded by Government agents. Appellants argue that there was no minimization effort here at all and therefore there was a violation of both the statute and the orders authorizing the taps. The Government urges in rebuttal that the appellants made no objection to the introduction of the recordings on this ground before trial, but did so only after the trial was over. At that point, counsel who had made the motion failed to appear on the return date and therefore the motion was dismissed. The Government’s argument is inaccurate. On April 13, 1971, Mr. Hochheiser, attorney for Garnett, explicitly moved for the suppression of all the tapped conversations because of the failure of the Government to minimize the interceptions. While no motion for an evidentiary hearing was made, there was a clear argument that since every conversation no matter what its nature was recorded, there could not have been any effort to minimize. Judge Pollack made no decision on the motion at this point. The motion was renewed on trial at the conclusion of the testimony of Inspector Bitzer, Bureau of Narcotics and Dangerous Drugs, who supervised the wiretap. The motion was denied after trial and dismissed when counsel failed to appear. In view of these facts we find that the minimization issue was raised in timely fashion both before and during the trial and is properly raised on appeal. The Government further urges that neither Bynum nor Cordovano has standing to raise the minimization question. Since the phone was in Garnett’s home and listed in the name of one Fred Garnett, we have no doubt that she has properly raised the issue. Moreover, Bynum was clearly an “aggrieved person” as defined in 18 U.S.C. § 2510(11) and therefore is given leave to raise the question of the legitimacy of the surveillance under 18 U.S.C. § 2518(10) Since Bynum was the central figure in the conspiracy, a reversal as to him might well render the convictions of the lesser figures in the scheme vulnerable and entitle them all to new trials. See United States v. Weiss, 103 F.2d 348, 352 (2d Cir.), rev’d on other grounds, 308 U.S. 321, 60 S.Ct. 269, 84 L.Ed. 298 (1939). The issue of minimization has never been considered by this Court. Appellants rely on United States v. King, 335 F.Supp. 523 (S.D.Cal.1971) and United States v. Scott, 331 F.Supp. 233 (D.D.C.1971), where as in this case, all conversations were monitored and since a high percentage of irrelevant or innocent conversations were intercepted, violations of the statute were found to exist. In United States v. Focarile, 340 F.Supp. 1033 (D.Md.1972), the court made the comment that if no attempt at all is made to minimize the interception of innocent calls, there would not only be a blatant violation of the statute but probably a violation of Fourth Amendment Constitutional rights (340 F.Supp. at 1046). A different approach supporting the position of the Government although not cited by the United States, is found in United States v. Cox, 462 F.2d 1293 (8th Cir. 1972). In that case again there was 100% interception of telephone conversations with a substantial number of the calls being unrelated to the drug conspiracy charged. Chief Judge Matthes found the minimization issue to be purely statutory and not of constitutional dimension. That court found that the minimization question was to be determined on a case by case basis with the practical observation that the determination of whether or not a conversation was innocent or irrelevant often could not be made until the conversation was over and the interception terminated. The court further questioned whether suppression of all intercepted conversations was in any event the proper remedy for a violation of the statute in view of the civil remedy for damages against the investigating officers provided by 18 U.S.C. § 2520. The court, however, emphasized that the District Court judge who authorized the wiretap order closely supervised the interceptions, requiring reports from the United States Attorney at five day intervals. The transcripts of these reports were made available to the Circuit Court on appeal. It seems evident that we are faced here with weighty issues of first impression in this Court which may well be raised again in other trial and appellate litigation. Unlike the district court eases which have considered the minimization problem in other Circuits, we have here no breakdown or analysis of the intercepted conversations. We do know that 198 reels of tape containing more than 3000 conversations were made available to appellants before trial. What percentage of these are irrelevant or innocuous we do not know. The record only indicates that on one phone between January 30, 1971 until February 13, 1971, some 770 completed telephone calls were intercepted. Of these, 108 allegedly relate to illegal drug traffic and 21 refer to other criminal activity. This information is provided in the affidavit of an Inspector of the Bureau of Narcotics and Dangerous Drugs in support of the extension of the initial wiretap order of Judge Travia.' A reading of the testimony of the agent who supervised the surveillance would indicate that all conversations were recorded but only those presumably inculpatory were ever transcribed. The mischief lies in the interception obviously and what was not transcribed remains unknown. Although there is an allegation that the conversations were coded and guarded, which may account for the total interception, we are provided with no explanation of why some minimization was not possible to achieve. We know nothing of the nature or tenor of those calls which might be deemed innocent. The orders of Judge Travia required the United States Attorney to make reports at five day intervals indicating the progress of the investigation and the need for continuing interception. The record does not indicate whether the reports were made, and none have been made available to us. In short we do not know how closely the wiretap was supervised under the terms of the orders. In view of the importance of the issues here involved we believe the best course to follow now is to remand to Judge Pollack for an evidentiary hearing to develop a record which will clarify the points we have discussed so that a proper determination can be made by this Court. This panel will retain jurisdiction of this matter. After findings are made below, this Court will require supplemental briefs of the parties on the minimization question, including the issue of the appropriate remedy in the event it is ultimately determined that either the minimization order issued by Judge Travia, or the minimization provision of the statute, was violated in this case. The parties will also brief the question whether such violations, if such be found, are, or are not, under the circumstances of this case, to be deemed violative of the Fourth Amendment. Remanded. . On June 27, 1972, Judge Pollack sentenced Bynum to a thirty year term of imprisonment and Cordovano to a sixteen year term of imprisonment. Each was fined $20,000. On June 28, 1972, Judge Pollack pronounced the following sentences: Mele, to a twenty year term of imprisonment and a $5000 fine; Coniglio, to a twelve year term of imprisonment and a $5000 fine; Feroldi, to a ten year term of imprisonment; Wright, Small, Tuzzolino and Mitchell to seven year terms of imprisonment; Garnett to a six year term of imprisonment; and Altamura, Dyson and Birnbaum to five year terms of imprisonment. On July 7, 1972, Judge Pollack sentenced Nedd to concurrent terms of imprisonment of fifteen years on Count One and five years on Count Two. Finding that defendants Bynum, Cordovano, Mele, Feroldi and Coniglio each presented a danger to the community, Judge Pollack denied bail and each is now imprisoned. The remaining defendants are enlarged on bail. . Libbers and another defendant, Stanley Sherman, had their motions to dismiss granted. Lillian Bynum, another defendant, had her trial severed on the motion of the Government. Defendant Charles Moody testified for the Government and later pleaded guilty to an Information charging him with participation in the conspiracy in question. Robert Wallock, George Stewart, Robert Nesbitt, Edna Collins and Morty Molin were named as co-conspirators but not as defendants. . 18 U.S.C. § 2518(5) provides in pertinent part: Every order and extension thereof shall contain a provision that the authorization to intercept shall be executed as soon as practicable, shall be conducted in such a way as to minimize the interception of communications not otherwise subject to interception under this chapter, and must terminate upon attainment of the authorized objective, or in any event in thirty days. . “Aggrieved person” means a person who was a party to any intercepted wire or oral communication or a person against whom the interception was directed. . 18 U.S.C. § 2518(10) provides in pertinent part: (a) Any aggrieved person in any trial, hearing, or proceeding in or before any court, department, officer, agency, regulatory body, or other authority of the United States, a State, or a political subdivision thereof, may move to suppress the contents of any intercepted wire or oral communication, or evidence derived therefrom, on the grounds that— (i) the communication was unlawfully intercepted; (ii) the order of authorization or approval under which it was intercepted is insufficient on its face; or (iii) the interception was not made in conformity with the order of authorization or approval. Such motion shall be made before the trial, hearing, or proceeding unless there was no opportunity to make such motion or the person was not aware of the grounds of the motion. If the motion is granted, the contents of the intercepted wire or oral communication, or evidence derived therefrom, shall be treated as having been obtained in violation of this chapter. The judge, upon the filing of such motion by the aggrieved person, may in his discretion make available to the aggrieved person or his counsel for inspection such portions of the intercepted communication or evidence derived therefrom as the judge determines to be in the interests of justice. . See, contra, United States v. George, 465 F.2d 772 (6th Cir. 1972), where there was a violation of the wiretap order authorizing surveillance only when particular individuals were using the telephone. The electronic interception was conducted without regard to the terms of the order. The court finding that the protective limitations of the order were defeated, found the wiretap evidence inadmissible and ordered a new trial which would exclude any wiretap evidence procured in violation of the order. The court found not only a violation of the statute but constitutional infirmity under Desist v. United States, 394 U.S. 244, 246, 89 S.Ct. 1030, 22 L.Ed.2d 248 (1969).

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UNITED STATES of America, Appellant, v. Ernest James COX and Ella Doris Roberts, Appellees. Nos. 72-2212, 72-2472. United States Court of Appeals, Ninth Circuit. March 12, 1973. Ronald Bain (argued), David C. Marcus, Los Angeles, Cal., for appellees. William D. Keller, U. S. Atty., Jan Lawrence Handzlik, Eric A. Nobles, Asst. U. S. Attys., Los Angeles, Cal., for appellant. Before MERRILL and CHOY, Circuit Judges, and ENRIGHT, District Judge. The Honorable William B. Enright, United States District Judge for the Southern District of California, sitting by designation. ENRIGHT, District Judge: On February 16, 1972, a two count indictment was returned charging defendants Ernest James Cox and Ella Doris Roberts with violating 21 U.S.C. § 841(a)(1), possession with intent to distribute narcotics. Before trial, a motion to suppress was made and argued; the district court granted the motion. A timely notice of appeal was filed by the government. While appeal was pending the indictment was dismissed over the objection of the United States. The government now appeals that dismissal as well as the granting of the motion. THE FACTS Defendant Cox had previously been confined for a federal violation; he was paroled in January, 1969. While on parole he became involved in further difficulties with State authorities. Charges against him were either filed or considered. A federal parole officer, hearing of these charges and believing that Mr. Cox’s parole time had not fully expired, ordered issuance of a parole warrant on January 6, 1972. But in transmitting the warrant to the United States Marshal, the parole officer appended a form letter setting forth various standard directions to the Marshal applicable in federal parole violations. In the instant letter of instruction, one of the paragraphs was marked: Please hold Warrant in abeyance. If pending charge results in no-eonviction, advise Board for further instructions. However, should subject change plea to guilty or be found guilty, place a detainer and assume custody if and when released. The warrant and instruction letter were received by the United States Marshal’s office in Los Angeles on January 10, 1972. That day, the supervising deputy of the warrant section noted receipt in his office’s warrant register. The key fact in this ease is that in his handling of the warrant, the officer did not heed the critical paragraph of the instruction letter but, rather than properly placing the letter within the files annexed to the warrant, improperly assigned the warrant to other deputies for execution. These marshals maintained possession of the warrant until January 25, 1972. On that date, upon their transfer within the Marshal’s office,’ they turned over possession of their warrants to Deputy Marshal Vilt. He carried it within his briefcase until February 7, 1972 while he worked on other warrants. On February 7, 1972, Vilt and his partner requested and gained the cooperation of the Los Angeles Police Department to effectuate the arrest. While approaching the residence, they saw the motions of shadows and heard movement. An observer was posted at the rear of the structure. The marshals then announced their presence and purpose. Mr. Cox opened the door; the marshals entered and placed him under arrest. As one of the marshals entered, he observed Ms. Roberts running from the living room through the dining room, brown paper bag in hand. He followed her' to the bathroom where she had locked herself. Through the keyhole he saw her dispose of the bag through the window. Ms. Roberts was then apprehended and returned to the living room; there the police officers had assembled other individuals present. The bag was confiscated and was found to contain narcotics. Subsequently, the marshals obtained a search warrant for the residence. A thorough search revealed a large quantity of narcotics. Prior to the arrests of the individuals present, Mr. Cox had been arrested for a parole violation during 1971. Mr. Cox filed a petition for writ of habeas corpus, contending that the Bureau of Prisons had not properly credited him with 629 days on his sentence. On January 31, 1972, District Judge Curtis granted the relief requested, and judgment was entered on February 18, 1972. The practical effect of his ruling is that Mr. Cox’s original sentence terminated on September 15, 1971. INVALIDITY OF THE WARRANT The government correctly states that a parole warrant issued while a man is on parole may be executed after the original term has expired. Cox v. Feldkamp, 438 F.2d 1, 3 (5th Cir. 1971); Williams v. United States Board of Paroles, 428 F.2d 1210 (5th Cir. 1970); Melton v. Taylor, 276 F.2d 913 (10th Cir. 1960); Schiffman v. Wilkinson, 216 F.2d 589, 591 (9th Cir. 1954), cert. denied, 348 U.S. 916, 75 S.Ct. 299, 99 L.Ed. 719 (1955). Thus, the government would have us hold that even if it were conceded that Mr. Cox was discharged from parole as of January 31, 1972, the date the habeas corpus relief was granted (i.e., before the search of the premises), rather than on February 18, 1972, the date of formal judgment (i.e., after the search), nevertheless the validity of the previously issued warrant was not affected. Appellees, on the other hand, argue that Mr. Cox’s parole status ended on September 15, 1971, notwithstanding that this determination was not made until January or February, 1972. Thus, appellees argue that the parole warrant, not having been issued within the maximum term of the original sentence, is necessarily invalid. 18 U.S.C. § 4205. We need not decide this issue for different reasons dictate the conclusion that the warrant was indeed invalid. The crux of this instant ease is what the government would term the discovery of the evidence through serendipity by marshals acting properly in the good faith performance of their duties. We cannot agree. The government cites Agnew v. City of Compton, 239 F.2d 226, 231 (9th Cir. 1956), cert. denied, 353 U.S. 959, 77 S.Ct. 868, 1 L.Ed.2d 910 (1957) for the proposition that “[n]o one has a constitutional right to be free from a law officer’s honest misunderstanding of the law or facts in making an arrest.” But that statement arose in a civil rights action and centered about the necessity of establishing an intent to discriminate or deprive one of a federal right. Here, however, the issue is not civil damages but whether a violation of the fourth amendment requires suppression. Hence, Agnew offers the government nothing of merit. The United States also relies upon Abel v. United States, 362 U.S. 217, 80 S.Ct. 683, 4 L.Ed.2d 668 (1960) and United States v. Baca, 444 F.2d 1292 (10th Cir. 1971) to establish that when officers act in good faith and in so doing make a reasonable mistake, their misunderstanding is excused to the extent that the search is held nonviolative. Abel and Baca were, however, both premised on specific findings of the respective district courts, that the agents had not acted in bad faith and that the warrant had in the regular' course of events been issued in good faith. The district court here made no such finding. Rather, Judge Williams stated: I understand further that the warrant, together with that appended note, came to the possession of the United States Marshal and that either accidentally or on purpose the marshal sought to execute or serve that warrant on or about February 7th, despite the admonition of the parole officer to hold the warrant in abeyance; Reporter’s Transcript p. 51. The government also calls this court’s attention to Hill v. California, 401 U.S. 797, 91 S.Ct. 1106, 28 L.Ed.2d 484 (1971). The Supreme Court there upheld a warrantless search incident to a warrantless arrest of a wrong man. Again, though, Hill was based upon reasonable, good faith belief. Id. at 802, 91 S.Ct. 1106. But good faith notwithstanding, Hill may be distinguished, for Hill concerns mistaken identity rather than an invalid warrant. More analogous to the instant situation is Whitely v. Warden, 401 U.S. 560, 91 S.Ct. 1031, 28 L.Ed.2d 306 (1971) in which the court held an arrest to be invalid because the warrant was deficient despite the good faith of the arresting officers. Thus, in good faith officers can search without warrant a wrong man incident to a warrantless arrest, yet in good faith officers cannot arrest the right man if the warrant be invalid. This is not an anomaly. Law enforcement agents must take suspects as they find them; verbal descriptions and even photographs are not foolproof. Common sense dictates that officers must utilize such imperfect information to their best ability. The determination of the validity of the instant warrant is not similarly hampered. Appellees cite this court to Chieppa v. Krimsky, 169 F.Supp. 337 (S.D.N.Y.1959). There petitioner argued that it was improper to defer execution of a warrant via an annexed letter; the district court found his argument spurious. “The power to defer necessarily creates the power to give implementing instructions to defer. It is an emphasis of form over substance to argue that the warrant itself must call for its delayed execution, and that an accompanying letter is insufficient.” Id. at 344. Thus, we would hold that an accompanying letter of instruction directing the officers to hold a warrant in abeyance has the same effect as if the direction had been included on the face of the warrant. Thus, the warrant being invalid, the arrest is invalid, absent of course any independent reason for an arrest. The government, nevertheless, contends that even if the warrant was defective and hence the marshals were unlawfully present, evidence of another, different crime discovered on the premises is admissible. The government relies upon United States v. Bacall, 443 F.2d 1050 (9th Cir. 1971), cert. denied, 404 U.S. 1004, 92 S.Ct. 565, 30 L.Ed.2d 557 (1971), and on United States v. Williams, 436 F.2d 1166 (9th Cir. 1970). Its reliance is misplaced. Bacall pertained to an involved investigation in which the illegal activity resulted in information — considered to be de minimis in comparison with the mass of other legitimate information — that led to the evidence sought to be suppressed. Williams involved officers gaining information from neighbors in a quest merely to find “animal sitters” after an illegal arrest and search. Here the primary illegality was the actual entrance of the marshals: what they immediately saw was neither de minimis or so attenuated by an unrelated sequence of events as to be purged under the doctrine of Wong Sun v. United States, 371 U.S. 471, 83 S.Ct. 407, 9 L.Ed.2d 441 (1963). Having concluded that the taint of the primary illegality was not purged, it is unnecessary to determine whether probable cause existed to invade the privacy of the bathroom, the decision to do so being founded merely upon the rapid movement of Ms. Roberts, paper bag in hand. DISMISSAL OF THE INDICTMENT During the pendency of the appeal on the suppression issue, the defendants moved for dismissal of the indictment. The government resisted and relied upon 18 U.S.C. § 3731 which provides, in part: “Pending the prosecution and determination of the appeal in the foregoing instances, the defendant shall be released in accordance with chapter 207 [general release provisions] of this title.” The trial judge, nevertheless, granted dismissal, concerned as he was with the aspects of the guarantee of speedy trial within the sixth amendment. We are mindful of United States v. Mitchell, 425 F.2d 1353 (8th Cir. 1970), cert. denied, 400 U.S. 853, 91 S.Ct. 85, 27 L.Ed.2d 90 (1970), but, given the circumstances of this case, we do not feel the district court erred. The orders of the district court are, therefore, affirmed. . Another individual, Manuel H. Ramirez, was present at the residence at the same time, allegedly to buy narcotics from appellee Cox. He was arrested and later indicted and eventually tried in March, 1972. During the course of the Ramirez trial, the court granted a motion to suppress certain evidence on the basis of the unlawful execution of the parole warrant for the arrest of Cox, and a mistrial was granted. The government appealed the granting of the motion, only to later dismiss its appeal. . Thus, if the arresting officer himself originally had ample probable cause to arrest, the invalidity of the warrant would not be fatal to the government’s cause. E. g., Ray v. United States, 412 F.2d 1052, 1053 (9th Cir. 1969). Here, however, the marshals had no reason, save the warrant, to invade the residence at the outset.

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PHILLIPS PETROLEUM COMPANY, a Delaware corporation, et al., Petitioners, v. FEDERAL POWER COMMISSION, Respondent, The State of New Mexico, Intervenors. Nos. 71-1659, 71-1739, 72-1134 and 72-1167. United States Court of Appeals, Tenth Circuit. Argued and Submitted July 12, 1972. Decided Feb. 20, 1973. Rehearing Denied April 10, 1973. Edwin S. Nail, Tulsa, Okl., and Kirk W. Weinert, Houston, Tex. (Kenneth Heady and John L. Williford, Bartlesville, Okl., on brief for Phillips Petroleum Co.; Edwin S. Nail, Tulsa, Okl., on brief for Amerada Hess Corp.; Edward J. Kremer, Jr., Dallas, Tex., and Charles E. McGee, of McGee & Ketcham, Washington, D. C., on brief for Atlantic Rich-field Co.; Lynn R. Coleman, J. Evans Attwell, and Vinson, Elkins, Searls & Smith, Houston, Tex., on brief for Belco Petroleum Corp. and High Crest Oils, Inc.; Cecil E. Munn, of Cantey, Hanger, Johnson, Scarborough & Gooch, Fort Worth, Tex., on brief for Beta Development Co.; Justin R. Wolf, Wolf & Case, Washington, D. C., on brief for Chevron Oil Co., Western Division; Thomas H. Burton, Houston, Tex., on brief for Continental Oil Co.; Warren M. Sparks and B. James McGraw, Tulsa, Okl., on brief for Gulf Oil Corp.; Martin N. Erck, Kirby Ellis and John R. Rebman, Houston, Tex., for Humble Oil & Refining Co.; William A. Sackmann, Findlay, Ohio, for Marathon Oil Co.; Ronald J. Jacobs, Tulsa, Okl., for Skelly Oil Co.; Stanley M. Morley, of Shannon & Morley, Washington, D. C., on brief for Sun Oil Co.; John E. Watson, Houston, Tex., on brief for Tenneco Oil Co.; J. Donald Annett, Washington, D. C., Kirk W. Weinert, John M. Young, C. Fielding Early, Jr., Houston, Tex., for Texaco Inc.; Douglas C. Gregg, George C. Bond, Robert L. Humphrey, Dee Hughes Richardson, Los Angeles, Cal., on brief for Union Oil Co. of California), for petitioners. Gordon Gooch, General Counsel (Leo E. Forquer, Solicitor; J. Richard Tiano, Deputy Solicitor; Joan E. Heimbigner, Atty., Federal Power Commission, Washington, D. C., on brief), for respondent. David L. Norvell, Atty. Gen. of New Mexico, on brief for State of New Mexico. Joel B. Burr, Jr., and William J. Cooley, Farmington, N. M., on brief for Four Corners Gas Producers Assn. Tilford Jones, Bethesda, Md., for United Distribution Co. Donald S. Graham, of Davis, Graham & Stubbs, Denver, Colo., and G. Scott Cuming, El Paso, Tex., for El Paso Natural Gas Co. William G. Webb, of Turner, Hitchins, Mclnerney, Webb & Hartnett, Dallas, Tex., for Pubco Petroleum Corp. Norman J. Provost, K. R. Edsall, and W. H. Owens, Los Angeles, Cal., for Southern California Gas Co. Barr McClellan, of Clark, Thomas, Harris, Denius & Winters, Austin, Tex., for Aztec Oil & Gas Co. Thomas G. Johnson and Dan A. Bruce, Houston, Tex., for Shell Oil Co. Before SETH, MeWILLIAMS and DOYLE, Circuit Judges. WILLIAM E. DOYLE, Circuit Judge. The Phillips Petroleum Company, together with the several intervenors, all independent producers of natural gas in the Rocky Mountain area, seek review of an order of the Federal Power Commission promulgating a rulemaking procedure for the fixing of rates of natural gas sales in interstate commerce pursuant to the Natural Gas Act, 15 U.S.C. § 717 and, particularly, §§ 4 and 5 of the Act, 15 U.S.C. §§ 717c and 717d, which grants the Commission the authority to establish “just and reasonable rates.” The peculiar aspect of this case is that the Commission has drastically changed the procedure from the traditional method involving trial-type adjudicatory proceedings to this rulemaking method. This is an informal hearing which is not conducted on the record and which does not afford an opportunity for cross-examination. It is used so as to enable the Commission to establish area rates without having an individual hearing on each producer. It calls for composition and reconciliation of written submissions of the various producers. The validity of this procedure is the issue which is presented to us. I. HISTORY OF THE CONTROVERSY The Commission’s authority to regulate interstate sales of natural gas derives from the Natural Gas Act of 1938 which declares that “the business of transporting and selling natural gas for ultimate distribution to the public is affected with a public interest.” 15 U.S. C. § 717(a). The Commission is empowered to set aside and modify any rate or contract which it determines after hearing to be “unjust, unreasonable, unduly discriminatory or preferential.” A brief history of some of the antecedent events is necessary. In 1954 the Supreme Court decided in Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035 (1954), that independent producers of natural gas are natural gas companies within the meaning of § 2(6) of the Act. From this time forward, the Commission has “labored with obvious difficulty to regulate a diverse and growing industry under the terms of an ill-suited statute.” In re Permian Basin Area Rate Cases, 390 U.S. 747, 756, 88 S.Ct. 1344, 1354, 20 L.Ed.2d 312 (1968). Following the Phillips decision, the Commission undertook the regulation of rates of approximately 2,500 producers selling gas in interstate commerce and did so on a company-by-company basis. The result of all this was somewhat ineffectual. See Permian Basin, supra, at 757 n. 13, 88 S.Ct. 1344. Thus in 1960 the Commission undertook to regulate producers on an area basis, whereby a uniform ceiling price applicable to all producers would be established based upon producers’ actual costs, area data for the flowing gas costs and national data for new gas-well costs. See Phillips Petroleum Co., 24 FPC 537, 540 (1960), aff’d sub nom. Wisconsin v. FPC, 112 U.S.App.D.C. 369, 303 F.2d 380 (1961), aff’d, 373 U.S. 294, 83 S.Ct. 1266, 10 L.Ed.2d 357 (1963). The Commission spent five years with its first area rate case which involved the establishing of rates for the Permian Basin. See Permian Basin Area Rate Proceeding, 34 FPC 159 (1965). This case was reviewed by the Supreme Court and the area rate procedure was affirmed. In re Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968). As a result of the approval given in the Permian Basin case, the Commission instituted a number of other similar proceedings. These proceedings were lengthy and cumbersome, and as a result of this experience the Commission undoubtedly considered some of the admonitions given in the Permian Basin opinion which included: the Commission should “continue to examine both the premises of its regulatory methods and the consequences for the industry’s future of its rate-making orders Permian is “the first of many steps toward a more expeditious and effective system of regulation.” Based on these statements and the ruling in the Permian case, the Commission issued a notice of proposed rulemaking which called for the issuance of rules fixing just and reasonable rates for independent producers in the Appalachian and Illinois Basin Area. In less than a year after its notice rates were prescribed for these areas. The next step was for the Commission to embark on a nationwide rulemaking proceeding, whereby it sought information on independent producers’ costs of exploring and developing natural gas, gas supply, rate of return and general revenue requirements and prices for new gas sales. 35 Fed.Reg. 11638 (1970). Public hearings of record were held and arguments were heard concerning the Commission’s attempt to promulgate rates through a rulemaking procedure. See 36 Fed.Reg. 13585 (1971). See also Order No. 435 which established some rates under § 7 of the Gas Act. This case is currently on appeal, American Public Gas Ass’n v. FPC, D.C.Cir., No. 71-1812. This led to the issuing of notice of proposed rulemaking and order procedures for the Rocky Mountain area. 36 Fed.Reg. 13621 (1971). This notice provided that just and reasonable rates would be issued for gas contracts dated before October 1, 1968. It provided also for determination as to whether the rates under Order 435 were to apply to contracts dated between October 1, 1968 and June 17, 1970. Except for these specifics contained in the notice, the rulemaking proceedings in Docket No. R-389A continued in effect. It was thus clear that informal rulemaking was being employed since the order outlined the manner in which data was to be submitted and provided that the Commission’s staff would composite and reconcile such data. It named the petitioners herein together with the purchasing pipelines. It allowed other persons to become parties by filing a notice of intention to respond by August 2, 1971. The petitioners challenged the new rulemaking procedures. These challenges were, however, unsuccessful before the Commission. Motions for rehearing and for reconsideration were made in which the present contentions as to the necessity for evidentiary hearings were made. The Commission rejected the contention that an adjudicatory hearing was required, stating that both the Natural Gas Act and the Administrative Procedure Act recognized the use of rulemaking procedures by notice to interested parties and the opportunity to submit written material. The Phillips Petroleum Company then filed its petition seeking review in this court. Amerada Hess Corporation on behalf of itself and others filed a petition for review in the Court of Appeals for the District of Columbia. This petition was transferred and consolidated with the Phillips case for the purposes of this review. The matter submitted for review herein is “Notice Instituting Proposed Rule-making and Order Prescribing Procedure”, which document was, as previously noted, issued by the Commision on July 15, 1971 in Docket No. R-425. This was called by the Commission a rule-making procedure having the purpose of more quickly effectuating the Commission’s task of fixing just and reasonable rates. The Commission ordered: (1) completion by petitioners and pipelines producing natural gas of questionnaires covering “flowing gas costs and operational data on an individual company 1969 test year basis.” (2) composition of such data by the Commission’s staff before October 22, 1971, the results being available to any party on request. (3) verified written responses to the proposed rulemaking before November 12, 1971. (4) a conference on August 3, 1971, for “developing the issues and procedures to be followed” in the proceeding, as such “appears to be warranted in the public interest.” No specific rates were set forth in the notice or release. It is noteworthy that the Commission has initiated the procedure for setting area rates and by doing so it was engaging in a rulemaking proceeding. However, its notice or release also formulated a procedure to be used in the area rate proceeding. This is also a rulemaking proceeding. Thus the question on the merits which we are called on to review is the validity of the proposed procedure of the Commission which in effect abolishes the traditional trial-type hearing and substitutes for it the informal evaluation of written submissions. II. JURISDICTION TO REVIEW Petitioners assert that there is jurisdiction pursuant to § 19(b) of the Natural Gas Act, 15 U.S.C. § 717r(b). The Commission does not deny this, for they are equally desirous of having a determination of the validity of the proposed procedure. Hence, the Commission takes the position that the orders entered are final and that the attempted review is not a premature effort. This court is obligated, however, to view the condition and determine for itself that there is jurisdiction to determine the case. See Sunray DX Oil Co. v. FPC, 351 F.2d 395, 397 (10th Cir. 1965). In the proposed rulemaking procedure, specific rates, terms or conditions are not set forth. It is a rule which prescribes standards for the setting of area rates in the Rocky Mountain region and to that end it orders submission of certain data. Thus it is clear that the Commission is presently engaged in an exercise of its rulemaking power, even though it is merely formulating the procedure to be used. The matter before us is a question of law and not of fact. However, it is procedural in its nature, even though it may have profound substantive effects, and we are mindful that mere procedural orders have been held to be not within the scope of the circuit courts of appeal. See FPC v. Metropolitan Edison Co., 304 U.S. 375, 385, 58 S.Ct. 963, 82 L.Ed. 1408 (1938). But this line of cases goes to the proposition that courts will not interfere with the administrative process and will limit themselves to review of an actual order following a hearing. See FPC v. Metropolitan Edison Co., supra; Amerada Petroleum Corp. v. FPC, 285 F.2d 737 (10th Cir. 1960); United Gas Pipe Line Co. v. FPC, 206 F.2d 842 (3d Cir. 1953); Eastern Utilities Associates v. SEC, 162 F.2d 385 (1st Cir. 1947). If the order is as bad as the petitioners claim, it would require a holding that there exists a denial of rights guaranteed by the due process clause of the Fifth Amendment and a holding also that the Commission is acting beyond the law and outside the Administrative Procedure Act as well. Violations of this magnitude would render the entire proceeding invalid, and it could be raised following the setting of rates, but there would be much wasted motion in proceeding in this manner. The statute in question, § 19(b), provides for judicial review of final agency orders and under such a statute challenges to newly promulgated agency regulations prior to their application against particular individuals have often been entertained. See FCC v. ABC, 347 U.S. 284, 74 S.Ct. 593, 98 L.Ed. 699 (1954); Columbia Broadcasting System v. United States, 316 U.S. 407, 425, 62 S.Ct. 1194, 86 L.Ed. 1563 (1942); Gardner v. Toilet Goods Ass’n, 387 U.S. 167, 87 S.Ct. 1526, 18 L.Ed.2d 704 (1967); Toilet Goods Ass’n v. Gardner, 387 U.S. 158, 87 S.Ct. 1520, 18 L.Ed.2d 697 (1967); Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). In the latter three cases Mr. Justice Harlan, writing for the Court, mentioned two applicable criteria: first, whether the issues tendered are appropriate for judicial resolution, that is to say e. g., whether specific facts were needed in order to decide the case and, secondly, whether the impact on the parties is substantial. In one of the food, drug and cosmetic act cases, Toilet Goods Ass’n v. Gardner, supra, it was determined that a question existed as to whether the threatened inspection would ever materialize. In the other two cases, Abbott Laboratories v. Gardner, supra, and Gardner v. Toilet Goods Ass’n, supra, it was held that a pre-enforcement judicial review was justified because the questions were straightforward legal ones not depending on specific facts and, secondly, that the regulations had an immediate substantial impact on the manufacturers involving large expenditures and the risk of serious penalties. In our case the petitioners present a clear-cut legal issue, alleged deprivation of procedural due process, and it could not be made any clearer by factual background. Furthermore, the impact is immediate and the cost of its application, if it proves to be invalid, is substantial. The delay which would result from remanding this case for full-scale procedure would be great and unquestionably injury would result to the petitioners and would be felt by the public at large. The words of Chief Justice Stone in Columbia Broadcasting System v. United States, 316 U.S. 407, 425, 62 S.Ct. 1194, 1204, 86 L.Ed. 1563 (1942), come to mind: The ultimate test of reviewability is not to be found in an overrefined technique, but in the need of the review to protect from the irreparable injury threatened in the exceptional case by administrative rulings which attach legal consequences to action taken in advance of other hearings and adjudications that may follow, the results of which the regulations purport to control. Accordingly, we view the present order as one which is appropriate for judicial review and resolution since it tenders a pure question of law and, secondly, the hardship to the petitioners which would result from refusal to review the question would be of great magnitude, and we conclude that the case is a proper one for the exercise of this court’s jurisdiction. III. VALIDITY OF THE PROPOSED REGULATION BY RULEMAKING UNDER THE NATURAL GAS ACT The Act does not expressly authorize the procedure which the Commission has adopted; by the same token, the Act does not prohibit it. Section 5 of the Act gives the Commission the power to fix just and reasonable rates. It does require that a hearing shall be held, and the rules of procedure regarding hearings are found in § 15 of the Act, 15 U. S.C. § 717n. Part (b) of this particular section provides that [a] 11 hearings, investigations, and proceedings . . . shall be governed by rules of practice and procedure to be adopted by the Commission, and in the conduct thereof the technical rules of evidence need not be applied. No informality in any hearing, investigation, or proceeding or in the manner of taking testimony shall invalidate any order, decision, rule, or regulation issued under the authority of this chapter. (Emphasis added.) The Commission, acting pursuant to § 16 of the Act, 15 U.S.C. § 717o, issued a rule which provides, as we have seen, for an informal hearing. This would appear to be in conformity with the plain terms of § 15 quoted above. Section 16 is entirely consistent with the particular order adopted. It provides the Commission with the “power to perform any and all acts, and to prescribe, issue, make, amend, and rescind such orders, rules, and regulations as it may find necessary or appropriate. This provision goes on to say, referring to the Commission, that it “may prescribe the form or forms of all statements, declarations, applications, and reports to be filed.” This section thus provides the Commission with a broad authority in prescribing procedures for obtaining information upon which it is to act. As was said by the Court of Appeals for the District of Columbia, a primary objective is the obtaining of information to enable the Commission to carry out effectively the provisions of the Natural Gas Act. The court went on to say that the Commission has the ability to choose with relative freedom the procedure that it will use to acquire relevant information. The Commission has the power to tailor its proceedings so as to fit the issues before it together with the information that it needs to illuminate those issues and the manner of presentation which will bring before it the information in the most efficient manner. See City of Chicago v. F.P.C., 147 U.S.App.D.C. 312, 458 F.2d 731, 743-744 (1971). After reading §§ 15 and 16, one is constrained to conclude that the Commission has a very broad discretion indeed in determining the form of its proceedings. The petitioners, on the other hand, maintain that § 5 of the Act in providing for a hearing, necessarily means a formal or adjudicative type of hearing with full right of cross-examination and participation in the preparation of a public record, a record which must be the product of the ratemaking procedure. This, so it is argued, is the method which has' been followed throughout the years and the present attempts at innovations are not authorized by the statute. It is true that the Commission has traditionally conducted individual company-by-company hearings. See, e. g., FPC v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037 (1942), which upheld the procedures under the Natural Gas Act and endorsed the adjudicative formal-type hearing. However, the Court in that instance did not consider the nature of the proceedings required under the law. It merely stated that a prerequisite to a rate order is a hearing and findings. In that ease the companies had full opportunity to cross-examine witnesses and although the Supreme Court approved the proceeding as a fair hearing, it did not establish that a formal hearing is necessary in order to comply with the Gas Act or the Constitution. The petitioners also rely on other regulatory statutes and seek to argue that in order to have a fair hearing it must be a formal proceeding. However, we cannot justifiably apply standards which have been laid down in quasi-judicial proceedings. Decisions of the Supreme Court since the rulings in the Phillips cases have pointed the way to adoption of a more flexible and less formal method for fixing the rates of gas producers. Its first effort was area rate setting, itself a departure from the adjudication process. The Supreme Court approved this early effort in FPC v. Texaco, Inc., 377 U.S. 33, 84 S.Ct. 1105, 12 L.Ed. 112 (1964), a pre-Permian Basin case. The Court, though dealing with § 7 of the Gas Act, held that the statutory requirement for a hearing under § 7 does not preclude the Commission from particularizing statutory standards through the rulemaking process and barring at the threshold those who neither measure up to them nor show reasons why in the public interest the rule should be waived. ... To require the Commission to proceed only on a ease-by-ease basis would require it, so long as its policy outlawed indefinite price-changing provisions, to repeat in hearing after hearing its conclusions that condemn • all of them. We see no reason why under this statutory scheme the processes of regulation need be so prolonged and so crippled. The decision of the Supreme Court which we regard as dispositive of the issues raised here is In re Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968). In that area rate decision Mr. Justice Harlan, writing for the Court, described in detail the difficulties experienced by the Commission in seeking to regulate the producers’ sales. It was described as the “outstanding éxample in the federal government of the breakdown of the administrative process,” citing Landis, Report on Regulatory Agencies to the President-Elect. In the Permian Basin case the Supreme Court, utilizing the price regulation analogy, stated that the Constitution does not prohibit the determination of rates through group or class proceedings and that it does not require that the separate financial position of each member of the class be evaluated. Indeed, the only limitation noted was that the prices fixed must be calculated in conformity with the constitutional limitations; that such prices must not be arbitrary, discriminatory or irrelevant to the policy which the legislature had agreed to adopt. As we view it, the present effort is, to a large degree, the result of the encouragement which the Supreme Court gave to the FPC to innováte. Thus in the Permian case the Court stated that “the breadth and complexity of the Commission’s responsibilities demand that it be given every reasonable opportunity to formulate methods of regulation appropriate for the solution of its intensely practical difficulties.” This message was many times repeated: “the width of administrative authority must be measured in part by the purpose for which it was conferred”; “the ultimate achievement of the Commission’s regulatory purposes may easily depend upon the contrivance of more expeditious administrative methods”; “administrative authorities must be permitted, consistently with the obligations of due process, to adapt their rules and policies to the demands of changing circumstances”; “ [p] rovided only that they do not together produce arbitrary or unreasonable consequences, the Commission may employ any ‘formula or combination of formulas’ it wishes, and is free ‘to make the pragmatic adjustments which may be called for by particular circumstances.’ ” The final contention of the petitioners is that there can be a valid judicial review only if there is a record. However, we do not agree that this requires that there be a record resulting from a formal evidentiary hearing. The important point is that there shall be a record which will allow an orderly review of the Commission’s findings and conclusions. Under the rule the record will consist of the written comments submitted by the respondents to the Commission together with questionnaire data filed by producer and pipeline companies and composited by the Commission staff. The submissions of the petitioners would be placed in public files and made available for public inspection. Thus the petitioners are aware of the material which will be considered together with the application of Commission expertise to the information submitted. Finally, the reviewing court is at liberty to remand the cause to the agency for further delineation, information or expression of views. In the light of the provisions of the Act, together with the Supreme Court’s comments concerning the need for streamlined procedures, we are of the opinion that the proposed rulemaking is consistent with the Natural Gas Act and is valid. IV. THE CONTENTION THAT THE ADMINISTRATIVE PROCEDURE ACT REQUIRES FORMAL PROCEEDINGS Petitioners read the Administrative Procedure Act (APA) as requiring a formal hearing whenever a hearing is called for in a particular type of proceeding. The Commission, on the other hand, contends that the key to the requirement of a formal hearing is the term “hearing on the record.” The APA expressly provides for two categories of administrative hearing and decision: rulemaking and adjudication. The term “rule” in § 2, 5 U.S.C. § 551(4), includes the approval or prescription of future rates. Unquestionably, therefore, the hearing required by the Gas Act fixing rates is a rulemaking procedure rather than adjudication. Two types of rulemaking are recognized under § 4. Informal is that generally used, and § 4 prescribes the procedure in connection with informal rule-making such as proper notice so that interested persons are given an opportunity to participate “through submission of written data, views, or arguments with or without oral presentation”; the rules adopted must incorporate a statement as to their basis and purpose. Formal rulemaking is the exception which is set forth in § 4(b) which provides: When rules are required by statute to be made on the record after opportunity for an agency hearing, sections 556 and 557 of this title apply instead of this subsection. The § 4(b) exception calls for the procedural formalities that are found in adjudication including the right to submit oral evidence and to cross-examine, This approach is a hybrid one which is in part rulemaking and in part adjudieation. The fact, as previously noted, that the Gas Act does not contain the words “on the record” furnishes a strong argument in support of the Commission’s contention that informal rule-making satisfies the requirements of the APA. If the words “on the record” were contained in the Gas Act, it would furnish a basis for the petitioner’s position. See 2 Davis, Administrative Law Treatise § 13.08, at 225 (1958). Professor Davis states that the large number of administrative statutes do not contain the words “hearing on the record.” However, there are indications that the presence or absence of these words is not conclusive. See H.R.Rep.No. 1980, 79th Cong., 2d Sess. 51, n. 9 (1946); Wong Yang Sung v. McGrath, 339 U.S. 33, 70 S.Ct. 445, 94 L.Ed. 616 (1950). A more reliable test is the congressional intent as contained in the specific statute. See United States v. Allegheny-Ludlum Steel Co., 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453 (1972). The scope and depth of the § 4(b) exception are not apparent from a reading of the Committee reports and the debates. Moreover, a study of the research materials such as the Final Report of the Attorney General’s Committee, the Committee Monograph on the FPC and the Attorney General’s Manual on the Administrative Procedure Act do not, with the exception of the Attorney General’s Manual, contain any significant evidence which would indicate a congressional intent to require formal rulemaking procedures. Comments in the Attorney General’s Manual at page 33 take for granted that rate setting hearings under the Gas Act will be on the record and thus will be formal and adjudicative. These comments are, however, not to be regarded as evidencing congressional intent because the Manual is not addressed to Congress but rather to various administrative agencies after the passage of the Administrative Procedure Act, and so this is at best very weak support for the petitioners’ contentions. Accordingly, from the legislative history of the Administrative. Procedure Act, it must be concluded that Congress intended to allow administrative agencies a broad latitude in adopting rulemaking procedures. Throughout this period the FPC had been conducting experiments with various procedures, especially in the area of proof and evidence, and the Attorney General’s Committee recommended further experimenting. Congress sanctioned such procedural experimentation in the APA. As we have seen the present proposed rulemaking stems from the suggestions of the Supreme Court in the Permian Basin case. There is no assurance, however, that this will be successful and the procedures may have to be modified or discontinued. But such flexibility was within the contemplation of the Congress when it enacted the APA, especially, where as here, formal rulemaking procedures are not required. Finally, as we have noted earlier, the hearings here involve quasi-legislative rather than quasi-judicial activities. Where this is the situation, informal proceedings are generally held to be sufficient. See Norwegian Nitrogen Prod. Co. v. United States, 288 U.S. 294, 53 S.Ct. 350, 77 L.Ed. 796 (1933); I. C. C. v. Louisville & Nashville R. R. Co., 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431 (1913) (dictum). In summary, we are of the opinion that the proposed rulemaking is in harmony with the comments of the Supreme Court contained in Permian Basin and in harmony also with the Natural Gas Act and the APA. The gas producers’ contrary argument is largely based on the FPC’s history of conducting adjudicatory hearings. Based on this history, the gas producers would seek to have the court impose a requirement that its hearings be conducted in this manner. We are convinced that such action would be unwarranted. The petition for review should be and the same is hereby denied. SETH, Circuit Judge (dissenting): I must dissent from the majority opinion filed herein as to the procedure required to be followed by the Federal Power Commission. It does not appear that the issue has been settled by the Permian Basin Area Rate Case, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312, as the opinion states. Also the specific method here sought to be used by the FPC as evidenced by its rulings and orders in this record has not been considered in reference to the doctrine of confiscation which provides the constitutional base for court review of proceedings of this nature. The specifics of rate-making include the resolution of disputed facts and a consideration of the constitutional problems attendant to the fixing of just and reasonable rates. The issue is the method of setting rates for the gas producers, and although the Supreme Court has indicated that some substantial departures from traditional methods are permitted, the complete conversion to rulemaking under the orders here concerned does not appear warranted under existing decisions. I am not prepared to anticipate a further departure in view of the constitutional limitations. Some further examination of the decisions appears to be necessary before considering some practical problems of the record, the required review by the courts, and some specific matters relative to the method here sought to be used by the FPC. In F. P. C. v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037, the Court considered the ratemaking function of the FPC under section 5 of the Natural Gas Act. The Commission then was proceeding under the typical return on “investment” ratemaking doctrines. However, the Court described at some length the function of the courts and the nature of judicial review under the Natural Gas Act, and stated: “Once a fair hearing has been given, proper findings made and other statutory requirements satisfied, the courts cannot intervene in the absence of a clear showing that the limits of due process have been overstepped.” It is this determination by the courts that is frustrated by the procedure here adopted by the FPC. The Supreme Court, prior to F. P. C. v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037, had decided Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288 (see also 304 U.S. 1, 58 S.Ct. 999, 82 L.Ed. 1129). One of the principal issues there raised and considered by the Court was the nature of the hearing required to be held under the Packers and Stockyards Act [7 U.S.C. §§ 181-229], The Court there held it was quasi-judicial and that a “full hearing” was required and said: “Nothing can be treated as evidence which is not introduced as such. Facts and circumstances must not be considered which should not legally influence the conclusion. Findings based on the evidence must embrace the basic facts which are needed to sustain the order.” This is a clear and direct reference to the procedure and to nothing else. There have been several decisions by the United States Courts of Appeals which directly concerned summary proceedings under the Natural Gas Act. Some of these are based on the Act and some on due process. One of the earlier of these cases is Mississippi River Fuel Corp. v. F. P. C., 202 F.2d 899 (3d Cir.), where the court did not permit a summary refusal by the FPC to receive a rate schedule tendered under section 4. Later in Shell Oil Co. v. F. P. C., 334 F.2d 1002 (3d Cir.), the same court held that those objecting to filings under section 4 should have an opportunity to be heard and there be a “full hearing.” See also Hill v. F. P. C., 335 F.2d 355 (5th Cir.). In Murphy Oil Corp. v. F. P. C., 431 F.2d 805 (8th Cir.), the court considered FPC action on a rate application without a hearing. The Commission had sought to handle the issue under section j.6 of the Natural Gas Act, but the court held that a “hearing” was required, which was understood to mean a formal hearing. The court in American Louisiana Pipe Line Co. v. F. P. C., 120 U.S.App.D.C. 140, 344 F.2d 525, held an evidentiary record was required with a decision based upon the facts so developed and not upon the regulatory experience of the agency. F. P. C. v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037, must be regarded as a significant case as to the issues before us. It is apparent that the nature of the proof required and the method of the Commission is now much different in the area rate cases such as the Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312, but this should not bring about a different result as to the fundamental nature of the hearings. The practices of the Commission have changed during the many years it has been in existence, but a present feeling' of urgency, as indicated in the Commission’s brief, should not overcome the statutory or constitutional requirements for a full hearing. The FPC here relies on Hunt Oil Co. v. F. P. C., 424 F.2d 982 (5th Cir.), which is important, but is cited principally for the statement in it that area rate proceedings are quasi-legislative and thus not quasi-judicial. This is useful as a generality, but it does not assist us much in our problem. The relation of the Administrative Procedure Act to the Natural Gas Act provisions has been elsewhere considered in detail and need not be repeated here other than to state the conclusion that even if the Natural Gas Act does not expressly require a full evidentiary hearing, it does require a “hearing on the record,” and thus if the Administrative Procedure Act is operative, a hearing to meet its requirements set out in 5 U.S.C. §§ 556 and 557 is necessary. On the requirements of the Administrative Procedure Act as to rulemaking by the ICC, the Supreme Court has recently decided United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453. This treats the application of 5 U.S.C. §§ 556 and 557 (the APA) when rules are required to be “on the record.” The Court there said: “Because the proceedings under review were an exercise of legislative rulemaking power rather than adjudicatory hearings as in Wong Yang Sung v. McGrath, 339 U.S. 33, 70 S.Ct. 445, 94 L.Ed. 616 (1950), and Ohio Bell Telephone Co. v. Public Utilities Comm’n, 301 U.S. 292, 57 S.Ct. 724, 81 L.Ed. 1093 (1937); and because 49 U.S.C. § 1(14) (a) does not require a determination ‘on the record’ the provisions of 5 U.S.C. §§ 556, 557, were inapplicable.” The above decision is significant here, but as the quotation indicates the Esch Act gives specifically to the ICC the authority to make “rules, regulations, and practices with respect to car service.” With this specific authority for rules for the limited subject before it in an Act which applies only to the ICC and its powers, it is not difficult to see how authority was found for the rulemaking type of hearing under the APA without use of sections 556 and 557. The Supreme Court then in United States v. Florida East Coast Ry., 410 U.S. 224, 93 S.Ct. 810, 35 L.Ed.2d 223, considered essentially the same issue as in United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453. Again it is a matter arising under the Esch Act with its limited scope of car service rules and with specific authority for rules relating to the subject. The Court there holds that evidentiary hearings are not required under the Esch Act with reference to the imposition of charges on carriers using cars of others. It also holds that the term, “hearing,” in section 1(14) (a) of the Interstate Commerce Act is not the equivalent to “on the record after opportunity for an agency hearing,” as used in section 553(e) of the Administrative Procedure Act. The Court also notes however that sections 556 and 557 of the APA could be “triggered” by other language. The opinion in Florida East Coast is in the narrow statutory area of “car rules,” but makes a general distinction between “rulemaking type proceedings” and “a proceeding devoted to the adjudication of particular disputed facts.” The Court distinguishes the Morgan case on the basis of notice to the parties. Attention is also directed in Florida East Coast to the distinction in Bi-Metallic Investment Co. v. State Board of Equalization, 239 U.S. 441, 36 S.Ct. 141, 60 L.Ed. 372, between disputed facts and general rules. It would appear also that the hearing provisions in the Federal Power Act plus the contemplated review should “trigger” the provisions of sections 556 and 557 of the Administrative Procedure Act, and the exceptions in section 553 apply because this is certainly not a matter of general policy rules. We have before us an example of the need to resolve disputed facts under the distinction made in Florida East Coast in a traditional ratemaking situation. The Commission has expressly here stated in its Order of December 16, 1971, that would decide these disputed facts “in the light of the record before it and based on its own experience.” The decision is thus to be made on these two factors even without the benefit of an evidentiary hearing. Although Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288, may be weakened by the way in which it was distinguished in Florida East Coast, it still must stand for the proposition in the following quotation from the opinion relative to the reasons for an evidentiary hearing: it “. . . The ‘hearing’ is designed to afford the safeguard that the one who decides shall be bound in good conscience to consider the evidence, to be guided by that alone, and to reach his conclusion uninfluenced by extraneous considerations which in other fields might have play in determining purely executive action. The ‘hearing’ is the hearing of evidence and argument. If the one who determines the facts which underlie the order has not considered evidence or argument, it is manifest that the hearing has not been given.” See also I. C. C. v. Louisville & Nashville R. R., 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431. By order of the FPC which instituted the rulemaking procedure, certain producers were named therein and made parties whether they wanted to be or not. Furthermore, they were “ordered and directed” to complete, “verify,” and file certain cost data within a specified time. The proceedings were directed to them specifically. Statements and “submittals” were required to be under oath. This procedure has to be unusual in a rulemaking proceeding where generally those interested may submit information if they wish. However, as to those named they are “hereby made respondents to this rulemaking proceeding,” and then ordered to respond. Thus it commences with all the compulsion used at any ratemaking hearing, but then provides for “submittals” and “responses” and “statements” which the staff “shall composite and reconcile.” After this, the Commission will “consider” the material and reach a decision, but from the record and brief references it also expects to rely on its “expertise” and the files which have been accumulated from the nationwide “hearings” previously conducted and from other sources. As indicated the FPC in its Order Denying. Motion for Cross-Examination in Docket R-425, issued December 16, 1971, said: “In a rulemaking proceeding, such as the instant one, our primary objective is the acquisition of information which will enable us, inter alia, to determine just and reasonable producer rates for jurisdictional sales in the Rocky Mountain area for contracts dated prior to October 1, 1968. The purpose is not to allow interested parties to define the issues or narrow the scope of the proceedings. On the contrary, in soliciting comments from interested parties, and in relying upon the experience gained through previous area rate proceedings, we are building a record from which we can make a determination of said producer rates. We need not, as Amerada would require us to do, lose ourselves in an excursion into detail which would obscure, rather than clarify, the issues before us.” The above quotation in the first sentence states that only one of the purposes of the hearing is to determine just and reasonable rates. If this is only one of the purposes and since “comments” are also “solicited” from other interested parties, and experience from other hearings is used, it is difficult to determine what “the record” of the “hearing” will be. It is also apparent that those ordered to be made parties will have no part in the making of the record of the proceedings, that is, through the introduction of exhibits or testimony with the right to object to or test the validity of the material. There is thus assembled material which cannot be considered a “public record,” and which is not really identifiable as having been assembled during the course of public proceedings. In a matter related to the record, the petitioners raise the issue as to how there can be judicial review of the determination to be made by the FPC in this rulemaking proceeding. The statute expressly provides for review and the preparation of a record. Review is also required on constitutional grounds under the confiscation doctrine. The hearings must thus be held in contemplation of this review, and the record so developed must be suitable for the purpose. Also for a meaningful review the courts must know the basis for the decision by the administrative body. Thus the requirement for findings, and of equal importance the decision must be based on “the record.” It must be not only based on “the record” but the agency must consider only the record as the basis for its decision. See Bi-Metallic Investment Co. v. State Board of Equalization, 239 U.S. 441, 36 S.Ct. 141, 60 L.Ed. 372, and the quotation from Morgan above. A decision cannot be properly reviewed if it is based on matters outside the record. These requirements all relate to the constitutional confiscation doctrine prevailing in all ratefixing proceedings. In the proceedings here contemplated only the staff members or the Commission know what material has been submitted. The parties have no knowledge as to what will be considered as part of the record and have no part in the development of the record as such during the course of the proceedings. This applies both to the record for decisional purposes and for review. Further, with reference to the record for decision, the Commission has not stated that its determination will be based on the record alone, but has stated that it will “consider” the material submitted by the parties. It has also said it will use its experience to resolve disputed facts. Thus the problem relates to the decisional process, the matter of review, and the preparation of a “public” record. The general method of submitting all material in writing and having the Commission staff “composite and reconcile” such data leads to a question as to whether or not the procedure is really a “hearing.” Under the Act, the Commission must determine whether rates are just and reasonable and the Act provides that if the rates are not “reasonable,” they are “unlawful.” It is apparent from the orders entered by the Commission and from the Commission’s brief that it intends to rely on much more than the submittals and responses filed by the parties in its proceedings. In the Commission’s order of December 16, 1971, denying the motion for cross-examination, the Commission stated that it was “soliciting comments” and “in relying upon the experience gained through previous area rate proceedings, we will build a record upon which we can make a determination of said producers’ rates.” The Commission further states that the rulemaking method was chosen because of “the advantages of determining rates in a more expeditious manner, based on the informed judgment and expertise of the Commission through ten years of producer regulation,” etc. The matter of cross-examination was also raised by the petitioners and expressly ruled upon by the Commission. It stated that there was no such procedure contemplated in rulemaking proceedings, and if there was it was “permissive” and could be denied entirely (as distinct from being limited). Cross-examination in the situation here considered has several well recognized purposes, all of which relate to the matter of a fair hearing and the traditional “hearing” in judicial and administrative proceedings. The first purpose of cross-examination usually considered is to test the accuracy of the matters or facts presented by a party. This purpose needs no further description. Another purpose of significance here is to test the knowledge of the witness as to the matters whereof he speaks; thus to show whether or not he is qualified or has the knowledge to so speak and thus to permit an evaluation of his testimony. The order of the Commission which sets out the procedure required the “submittals” to be under oath acknowledged in a certain way. This acknowledgment required the person to swear that “. . . he has examined the statements contained in the submittal or response, and that all such statements are true and correct to the best of his knowledge, information, and belief.” It is apparent that there is no way of telling, the extent of such person’s knowledge or information from his signature or title. There is no requirement as to the qualifications of the persons signing the submittals. Thus there is no way of testing whether the person knows whereof he speaks. The Commission does not know and the parties do not know. Another purpose served by cross-examination is to develop the rest of a story partly told. The things which are omitted upon the direct examination are usually the most interesting and most revealing. Again with ex parte “submittals” the omitted details, when no further examination is expected, can be significant. Who better knows these things than the parties in the same or a related business? As to bare conflicts in the facts which may result from the “submittals,” the Commission says in its Order Denying Cross-Examination of December 16, 1971, that: “The existence of disagreements among the several submissions does not preclude the Commission from making a reasonable determination in light of the record before it and based on its own experience.” Ratemaking after all deals with specifics, not generalities, as it can be the confiscation of the property of the regulated parties, and at the least constitutes a statutory imposition of restrictions on their earnings not so imposed on businesses in other fields. In my opinion the proceeding here concerned is well within ratemaking. It is to resolve disputed facts, to determine rates retroactively to some extent, and to decide whether within the constitutional justification for court review the rates are just and reasonable or whether they are “unlawful.” This cannot properly be done by resorting to rulemaking powers, and deciding the facts on the basis of “submittals” by anyone and which cannot be tested for accuracy or completeness, and which in turn the Commission staff will “composite and reconcile,” whatever that may be. The Commission will then “consider” the submittals and whatever else is in their files and in their “experience.” This may then be reviewed by the court. This method does not appear to be within the proper construction of the Federal Power Act nor the Administrative Procedure Act, much less in accord with the established standards for a constitutional test on the confiscation issue. We must consider what the Commission has said it is going to do in its orders, what it is going to consider and how. This is the specific procedure before us, and the issues must be so evaluated. The Commission has argued that there is a matter of urgency in view of an impending shortage of natural gas and abbreviated hearings are necessary. Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035, was decided in 1954 and the Act itself was passed in 1938. The area rate method was announced by the FPC in 1960. Congress has set up the regulatory machinery, and decided on the fact of regulation. We should act within this framework, and requests for substantial variations should be directed to Congress. The orders relative to the nature of the hearing should be set aside and the matter remanded to the Commission. . E. g., Southern Louisiana Area Rate Proceeding, 40 RPC 530 (1968), aff’d, 428 F.2d 407 (5th Cir.), cert. denied sub nom. Municipal Distributors Group v. FPC, 400 U.S. 950, 91 S.Ct. 241, 27 L.Ed.2d 257 (1970); Hugoton-Anadarko Area Rate Proceeding, 44 FPC 761 (1970), affirmed, 466 F.2d 974 (9th Cir. 1972); Texas Gulf Coast Area Rate Proceeding, 45 FPC - (May 6, 1971), appeal pending, D.C.Cir., No. 71-1828; Other Southwest Area Rate Proceeding, 46 FPC - (October 29, 1971), appeal pending, 5th Cir., No. 72-1114. . Permian Basin Area Rate Cases, supra, at 816 n. 99, 88 S.Ct. at 1385. . Id. at 772 n. 37, 88 S.Ct. at 1362. . 34 Fed.Reg. 17341 (1969). . 44 FPC 1112 (1970). Although several parties challenged the Commission’s use of its rulemaking authority to establish rates, the Commission cited American Airlines, Inc. v. CAB, 123 U.S.App.D.C. 310, 359 F.2d 624, cert. denied, 385 U.S. 843, 87 S.Ct. 73, 17 L.Ed.2d 75 (1969), and stated that no party demonstrated a need for a formal, evidentiary hearing. 44 RPC at 1119. No party appealed the Commission’s order. The Commission had further noted that our action here is not one based on a nugatory record. We fully considered the staff report, and accepted it as evidence. We received lengthy and well-considered comments from many parties, and answers to said comments made by other parties. And, we considered the staff’s minutes of the conference of June 2, 1970, and the comments of such minutes filed by Cities Service on July 24, 1970. Added to our consideration of all of this rather extensive record, we have applied the expertise gained by us in determining previous area rate proceedings, and our long experience gained from dealing with the problems of these areas. 44 FPC at 1119. . The Commission stated that there was nothing in the Natural Gas Act that required a “hearing on the record” or an adjudicatory hearing. As to the Administrative Procedure Act, the Commission said that even if § 7, 5 U.S.C. § 556, were applicable, we cannot determine how Amerada has been, or will be, prejudiced by the adoption of the procedures in Docket No. R — 425. Amerada has not pointed to specifics on which it needs to cross-examine or present live rebuttal testimony. Instead, Amerada refers to general subjects to which it, and other interested parties have filed written submissions, and states as reasons for its requests, “apparent disputes.” . The existence of disagreements among the several submissions does not preclude the Commission from making a reasonable determination in light of the record before it and based on its own experience. . Petitioners place reliance on Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288 (1936) and its successor, Morgan v. United States, 304 U.S. 1, 58 S.Ct. 999, 82 L.Ed. 1129 (1938). There the Supreme Court reversed a decision establishing rates under section 310 of the Packers & Stockyards Act of 1921, 7 U.S.C. § 211, because the administrative official making the decision did not hear the evidence, 298 U.S. at 478-479, 481 — 482, 56 S.Ct. 906, a situation not occurring in the case at bar. Moreover, the Morgan proceeding was characterized as quasi-judicial, 304 U.S. at 14, 58 S.Ct. 999, whereas area rate proceedings are quasi-legislative. Finally, it was stated that “full hearing” embraced the right to present evidence and the opportunity to know the claims of opposing parties. Id. at 18-21, 58 S.Ct. 999. Petitioners had this right and opportunity. Petitioners also misplace reliance on I.C.C. v. Louisville & Nashville R.R. Co., 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431 (1913). Not only does that case deal with the Interstate Commerce Act, but it is also a pre-Administrative Procedure Act case which is fully out of harmony with that statute. . FPC v. Texaco, Inc., supra, 377 U.S. at 39, 44, 84 S.Ct. at 1109, 1112. See Davis, Administrative Law Treatise § 7.01, at 153-54. . 390 U.S. at 790, 88 S.Ct. at 1372. . Id. at 776, 88 S.Ct. at 1364. . Id. at 777, 88 S.Ct. at 1365. . Id. at 784, 88 S.Ct. at 1369. . Id. at 800, 88 S.Ct. at 1377. . They cite in support of their argument the following cases: United States v. Alleglieny-Ludlum Steel Co., 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453 (1972); Siegel v. AEC, 130 U.S.App.D.C. 307, 400 F.2d 778, 785 (1968); Pacific Coast European Conference v. United States, 350 F.2d 197, 205 (9th Cir. 1965). . The interpretation of § 4(b) contained in the Manual conflicts to some degree with the position taken by the Attorney General’s office prior to passage of the APA. The Attorney General’s Committee specifically found in its Monograph on the Federal Power Commission that formal rulemaking had proved unsatisfactory for rate setting and was not likely to be used in the future. Sen.Doc.No.10, 77th Cong., 1st Sess. pt. 12, at 40 (1941). The Final Report of the Attorney General’s Committee also suggests that rate setting will not be restricted to formal, adjudicatory proceedings. Sen.Doc.No.8, 77th Cong., 1st Sess. 106-11 (1941).

f2d_475/html/0858-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Arthur BRUNE, Plaintiff-Appellant, v. Charles J. MORSE et al., Defendants-Appellees. No. 72-1122. United States Court of Appeals, Eighth Circuit. Submitted Oct. 19, 1972. Filed March 20, 1973. Rehearing Denied May 4, 1973. Burton H. Shostak, St. Louis, Mo., for plaintiff-appellant. Alan M. Levy, Milwaukee, Wis., for defendants-appellees. Before HEANEY and STEPHENSON, Circuit Judges, and BOGUE, District Judge. District of South Dakota, sitting by designation. HEANEY, Circuit Judge. The sole issue on this appeal is the right of Arthur Bruñe to receive pension benefits from the Central States, Southeast and Southwest Areas Pension Fund on normal retirement. The trial court, 339 F.Supp. 159, held that Bruñe was not entitled to receive benefits because he had not been employed in the “Teamster industry” for twenty continuous years. We affirm. Various Teamster affiliates and employers with whom they had collective bargaining agreements negotiated a pension plan to be effective July 1, 1964. Under the plan, an employee is eligible for normal retirement if he meets the following conditions at the time of retirement. (1) Age 57. (2) Twenty years of service in the Teamster industry. (3) Five years of service under a Teamster collective bargaining agreement. (4) Eighty weeks payment into the pension fund on his behalf. (5) Is in an employee classification status at the time of retirement. It is conceded that Bruñe meets all qualifications except the one requiring twenty years of continuous service in the Teamster industry. Service in the Teamster industry is defined in the plan as follows: “(a) Employment within a classification of work and in an industry which was at the time of such employment normally covered by Teamster contracts in the local metropolitan area; and/or “(b) Employment in the same classification of work in which employed after the Effective Date under a Teamster contract and on which pension contributions have been made on behalf of the employee; and/or “(c) Employment requiring the usual Teamster skills in traditional Teamster industries at the time of such employment ; * * * ’’ Brune worked for the International Shoe Company, in St. Louis, Missouri, from 1927 until 1960, as a lasting machine operator. That company did not have a collective bargaining agreement with a Teamster Union during that period and did not make contributions to the Central States Pension Fund. Moreover, the Teamsters Union did not have collective bargaining agreements with other shoe manufacturers in the St. Louis area during the period. The Teamsters Union did, however, have collective bargaining agreements with retail shoe repair shops in the area, and such contracts covered persons who operated lasting machines. Bruñe worked as a warehouseman at Buescher’s Wholesale in St. Louis, Missouri, from 1961 to 1969. That company had a collective bargaining agreement with the Teamsters and contributed to the Central States Pension Fund on behalf of Brune from 1967 to Brune’s retirement in 1969. When Brune retired, he applied for a pension. He added his years of service with International Shoe to his years of service with Buescher’s Wholesale to obtain the necessary twenty years. The trustees denied Brune’s application on the grounds that he did not have twenty years of credited service within the Teamster industry. They stated that Brune was entitled to credit for all years worked for Buescher’s Wholesale but not for the years worked for International Shoe. They did so on the grounds that during the years he worked for International Shoe, Brune was a production worker in a shoe factory rather than in a retail repair shop, and that there were no Teamster contracts covering production workers in shoe factories in the geographic area during the years in question. Brune commenced an action in District Court. He again contended that he was entitled to credit for his years of service with International Shoe Company. The court rejected this contention. It stated: “It is the opinion of the Court that the business of repairing shoes is not the same industry as that of manufacturing shoes although the subject matters of the two businesses are the same — shoes. Manufacturing is producing or making shoes. The logical extension of that process might well include distribution, marketing and ultimate retail sale to the consumer. However, shoe repair is a service performed at the request of and to the benefit of the shoe consumer. It is independent of and outside the process of manufacturing and producing shoes for ultimate sale to the consumer. “Black’s Law Dictionary defines ‘Industry’ as: “ ‘Any department or branch of art, occupation, or business conducted as a means of livelihood or for profit; especially, one which employs much labor and capital and is a distinct branch of trade. Chicago, R. I. & P. Ry. Co. v. State, 83 Okl. 161, 201 P. 260, 264; Dessen v. Department of Labor and Industries of Washington, 190 Wash. 69, 66 P.2d 867, 869.’ “Identical skills or crafts are utilized in different industries without altering the classification of the skill and without merging the industries into one single industry. The service of repairing shoes is a branch of trade distinct from that of manufacturing shoes. “Accordingly, the Court finds that at the time of plaintiff’s employment as a shoe production worker, that industry was not normally covered by teamster contract in the local metropolitan area. The Court concludes that plaintiff’s years of employment with International Shoe cannot be treated as years of service for which credit can be given toward a pension from the defendant Pension Fund. On appeal, Brune again contends that he is entitled to credit for his years of service with International Shoe Company. A careful review of the record and briefs convinces us that the trial court properly denied B rune’s petition for relief. On the basis of the record presented to this Court, it is clear that the trustees did not abuse their discretion in holding that shoe manufacturing was not an industry normally covered by Teamster collective bargaining agreements during the period 1927 through 1960. To the contrary, the record establishes that the Teamsters did not have shoe manufacturing companies under contract during that period. Nor did the trustees abuse their discretion in holding that Brune’s employment during the 1927 through 1960 period had not required “the usual Teamster skills in traditional Teamster industries during the time of such employment.” What evidence there is in the record on this point supports the view that this portion of the coverage language was intended primarily to cover drivers and ware-housemen. We recognize that the language of the pension plan is so broad and so ambiguous that it invites arbitrariness on the part of the trustees; but, here, the trustees’ action was consistent with the letter of the plan and in accord with the purpose of providing pensions to those for whom contributions have been made over a period of years. Moreover, the trustees’ decision, if consistently followed, will strengthen the pension fund. To set aside the trustees’ decision here would give the plan a universality not intended and make it increasingly difficult for the plan to provide adequate benefits for employees with long years of service with employers who have contributed to the fund. Affirmed. . Union participants were the Central Conference of Teamsters, the Central States Drivers Council, the Southern Conferences of Teamsters, the National Truckaway and Driveaway Conference, affiliated unions, and such other unions as the trustees may agree upon. . . “Where discretion is conferred upon the trustee with respect to the exercise of a power, its exercise is not subject to control by the court, except to prevent an abuse by the trustee of his discretion.” Restatement (Second) of Trusts § 187 (1959). See also, Roark v. Lewis, 130 U.S.App.D.C. 360, 401 F.2d 425 (1968); Miniard v. Lewis, 128 U.S.App.D.C. 299, 387 F.2d 864 (1967), cert. denied, 393 U.S. 873, 89 S.Ct. 166, 21 L.Ed. 144 (1968). . In 1965, the executive secretary of the pension fund, in response to an inquiry by a local Teamster Union, stated that employers of a recently-organized subsidiary of the International Shoe Company would be given credit for past service with the parent. Bruñe contends that this letter supports his position. We agree that it may, but this record does not contain sufficient evidence to establish that it does. Moreover, no showing has been made that the executive secretary had authority to bind the trustees. . A further consideration in sustaining the trustees’ decision is the rajiidly growing concern with respect to vesting of pension benefits. The Central States Plan requires that an employee be actively employed by a participating employer on the date he retires. Thus, persons with long years of service must continue to work within the industry until normal retirement or lose pension benefits. Yet, one who becomes a current employee near the end of his career may well be eligible for substantial benefits. If current proposal with respect to vesting becomes law, additional financial burdens will be placed on the Central States Pension Fund. Thus, the trustees cannot be faulted for giving a restrictive interpretation to the phrase “Teamster industry,” as long as they do so consistently. For recent comments on vesting, see 82 L.R.R. 46 (January 15, 1973); 80 L.R.R. 188 (July 3, 1972); 80 L.R.R. 67 (May 22, 1972); Address by Senator Javits, prepared for delivery at the New York Conference on Labor, April 17-19, 1967, 1967 Labor Relations Yearbook, 229; Address by Stanley S. Surrey, Assistant Secretary of the Treasury, American Pension Conference, May 11, 1967, 1967 Labor Relations Yearbook, 41.

f2d_475/html/0861-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America, Appellee, v. Martin H. NEFF, Appellant No. 72-1706. United States Court of Appeals, Third Circuit. Argued Nov. 28, 1972. Decided March 13, 1973. Certiorari Denied June 18, 1973. See 93 S.Ct. 3007. See also 343 F.Supp. 978. Fred T. Cadmus, III, Cadmus, Good & Patten, West Chester, Pa., for appellant. Robert E. J. Curran, U. S. Atty., John T. Thorn, Asst. U. S. Atty., Philadelphia, Pa., for appellee. Before McLAUGHLIN, ALDISERT and ADAMS, Circuit Judges. OPINION OF THE COURT PER CURIAM: Appellant Neff was convicted on five counts of selling and delivering various quantities of stimulant and depressant drugs in violation of § 301(q)(2) of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 331(q)(2). The first and apparently principal contention on behalf of Neff is the admission of testimony concerning “hippie type” persons, observed at or near the back door of Neff’s office. The defense attorney makes the brash statement that members of the trial jury would automatically associate “hippie type” with drug users. There is no justification for that statement in the entire trial record; nor was there any effort on the part of the attorney to document his insult to the integrity of the jury. Entrapment was also claimed for appellant on the spurious theory that drugs purchased from appellant by the undercover federal agents were the sole, isolated instances where Neff dispensed controlled drugs unlawfully. Actually Neff in making illegal drug sales, in some instances to people who turned out to be upholding the law, of itself did not support the entrapment charge. However, to rebut the erroneous, haphazard statement that the Government investigators were the only such buyers from Neff, evidence was introduced outlining a similar pattern and course of conduct by Neff in the past. The trial minutes indicate plainly that the prosecution was wholly concerned with the then activities of the people around the Neff office and not with their style of dress, hair, etc. It is very clear that the deliberate attempt to have appellant absolved from his conviction because among the people, in and out the Neff office back door, were some of the present younger generation. Those youngsters were just as much entitled to protection from Neff and his dangerous prohibited drugs as any other poor soul around the Neff place. They were also subject to the same palpable temptation of trying the available narcotics. The latter were being wrongfully sold by a physician, Neff who, above all other human beings, knew the awful, probable results of the misuse of those drugs, and who was directly commanded by law not to dispense them to anyone except for proper use in medical treatment. We find no error by the trial court in describing some of the younger generation who were around the Neff office at the time above mentioned. The character evidence offered by the Government is attacked by the defense as having been wrongfully allowed by the district judge, particularly that given by Mr. Hoover, the principal of Unionville High School, and Mrs. Rice, who during the critical period was a student at the High School. Mr. Hoover was very much concerned regarding his students using drugs of the prohibited kind. Mr. Hoover talked with a number of his pupils regarding the situation and the responsibility for it. He was an impressive witness. He knew of Neff and his reputation among the community and the persons making up at least one of the circles which Neff frequented. Mrs. Rice was also an important witness who had talked with other students during the local critical drug abuse stage and was familiar with what the people of the area thought of Neff. The defense would have all of the testimony of those knowledgeable witnesses thrown out because Mr. Hoover and Mrs. Rice did not know Neff personally. However, they both knew what was going on and who was to blame. The defense argues that the alluded-to witnesses had no standing under the opinion in the United States Supreme Court in Michelson v. United States, 335 U.S. 469, 69 S.Ct. 213, 93 L.Ed. 168 (1948). In that decision upon which the defense depends so much, the same factual problem arose. At page 480, 69 S.Ct. at 221 the Court held that “both the propriety and abuse of hearsay reputation testimony, on both sides, depend on numerous and subtle considerations difficult to detect and appraise from a cold record, and only on a clear showing of prejudicial abuse of discretion will Courts of Appeals disturb rulings of trial courts on this subject.” (Emphasis supplied). What we have before us is a straightforward, truthful narration of an arrogant misuse of prohibited drugs from a source relied upon, particularly by simple, decent people with the courage to tell of the unbelievable menace that had struck their quiet community from a source they had been taught to trust always. In allowing the testimony of Mr. Hoover and Mrs. Rice there was no abuse of discretion by the district court. We hold that under the Michelson decision and the facts before us the ruling of the trial judge was just and right and should not be disturbed. There is one more assertion by the defense which claims again that appellant was the victim of prejudicial error. The foreman of the jury told the judge that a character witness for appellant was known to him, the juror. The latter, foreman of the jury in this trial, was worried as to whether he should take part in the trial. The judge listened to him to see if he needed instructions and decided he did not. The juror did continue in the trial. All the law pointed to by counsel for defendant is based on giving instructions to a juror where both sides were not present. In this juror’s difficulty there were no instructions needed, and the juror remained as the jury foreman. The judge here had merely taken care of this administrative matter immediately. As is seen there was no prejudicial abuse of discretion. It was purely a proper Michelson decision. The jury foreman conscientiously advised the judge that he knew one of the persons who appeared as a character witness for Neff. The judge, confident of the juror’s integrity, rightfully considered that there was no necessity of instructions regarding the juror, who continued in the trial. Appellant cites United States v. Woodner, 317 F.2d 649 (2 Cir. 1963) which actually ruled, regarding administrative duties, as to whether a juror is qualified to sit or not especially where there is no showing of prejudice. There, as here, the conclusion by the trial judge was found not to be erroneous. In Bacino v. United States, 316 F.2d 11 (10 Cir. 1963) the court held that interviewing a juror by the trial judge in the absence of defendant and counsel, was not reversible error where the interview was limited in scope and the judge admonished the juror to refrain from discussing the case. In the instant litigation, the interview was extremely limited in scope and there was no reason for discussing the merits of the appeal. As Woodner, 317 F.2d page 652, noted, “We have enough confidence in the integrity and fairness of the District Judges to assume that they will not make unfair remarks to jurors while undertaking administrative duties of this nature.” The judgment of the district court will be affirmed. Judge Adams concurs in the result. ALDISERT, Circuit Judge (dissenting). I am in essential agreement with the court’s analysis of appellant’s contentions except for the allegation of prejudicial error emanating from the trial court’s in camera colloquy with the jury foreman. I am not satisfied that adequate safeguards inhered in that proceeding to insure that appellant received a unanimous jury verdict based solely upon the law and the evidence presented in the courtroom. I find two serious deficiencies in the brief discussion that transpired in the judge’s chambers. First, I am not satisfied that the juror ever retreated from the doubt he expressed about his inability to return an impartial verdict. When the juror confessed concern as to whether his familiarity with the character witness “would affect [his] thinking,” stating, “I don’t know. I would try not to let it, but — ,” he was interrupted by the trial judge who concluded: “I am sure it would not.” When the juror persisted in expressing concern, the judge intruded again with a statement of the judge’s personal confidence in him, described by the juror as “more confidence in me than I have in myself.” Moreover, I am unable to characterize this interview as a purely administrative obligation of the court. Both counsel should have been offered the opportunity to be present so they could have either addressed questions to the juror or have suggested inquiries to the court as to the juror’s ability to return a verdict in accordance with the juror’s oath. While there may be occasions when a trial judge is privileged to communicate with the jury or a member thereof without affording counsel the opportunity to be present, I am not persuaded that it is ever appropriate during a trial where there is an expression by a juror which is equivalent to a declaration that he may be unable to return a verdict in accordance with the evidence and the law. I would reverse and remand for a new trial. . THE COURT: The gentleman, who is No. 1 juror, has raised his hand, and we will stand in recess in order to determine what his inquiry may be of me. Ladies and gentlemen of the jury, I do not think this will take very long. You are welcome to remain in your seats or to go into the jury room. (Recess 1:52 P.M.) (In Room 2112:) THE COURT: What is your question, sir? JUROR NO. 1: Well, I have been personally acquainted with and I have had business dealings with Mr. Shoemaker [a character witness] in Downingtown for eight to ten years now. In my company at Lukens Steel Company we have a musical organization called the Lukens Steel Band of which I am business manager and have been for approximately 16 years. We played concerts in the summer months in surrounding communities. One of them is Downingtown. The Mayor and I have dealt with this business of contracts and money, and so forth, for this amount of time. I am just not sure when you — your are going to ask me now, would this affect my thinking? I don’t know. I would try not to let it, but— THE COURT: I am sure it would not. I have perfect confidence in you, sir, that you will listen, as you are sworn to do, to the testimony and that you will accept the charge of the Court as controlling the reception of evidence, and I have complete confidence that you will be completely fair and impartial. JUROR NO. 1: You have more confidence in me than I have in myself. THE COURT: No, seriously; we are free-born Americans— JUROR NO. 1: Yes. THE COURT: —and I have great confidence in the jury system, and you have a duty to perform under your oath, and I have every confidence that you will fulfill it. JUROR NO. 1: Well, other trials I have been on they wanted to know if anybody knew the witnesses, and so forth, and I— THE COURT: You have been sworn and your instructions are to abide by the charge of the Court, and I am confident that you will do so. JUROR NO. 1: O.K. Thank you. THE COURT: We will return to the courtroom. (In open court at 1:55 P.M.) THE COURT: You may proceed, Mr. Cadmus. MR. CADMUS: May we approach the bench a moment, Your Honor? THE COURT: Yes. (At side bar:) MR. CADMUS : If Your Honor please,' I must note an objection to the Court’s conference with Juror No. 1 in the absence of counsel. THE COURT: Very well. It is noted. MR. CADMUS: Thank you, sir. (End at side bar.)

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

FOREIGN STUDY LEAGUE, Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent. TRANSAMERICA CORPORATION and Trans International Airlines, Petitioners, v. CIVIL AERONAUTICS BOARD, Respondent. Nos. 72-1265, 72-1348. United States Court of Appeals, Tenth Circuit. March 20, 1973. David L. Berman, Salt Lake City, Utah (Walter D. Hansen, Washington, D. C., on the brief), for petitioners. Warren L. Sharfman, Associate Gen. Counsel, CAB (O. D. Ozment, Deputy Gen. Counsel, Robert L. Toomey and Paul W. Wallig, CAB, Thomas E. Kauper, Asst. Atty. Gen., Harold E. Shapiro, Dept, of Justice, and R. Tenney Johnson, Gen. Counsel, CAB, Washington, D. C., on the brief), for respondent. William D. Maroney, New York City, for intervenor, International Studies Assn. Before HILL and DOYLE, Circuit Judges, and O’CONNOR, District Judge. HILL, Circuit Judge. These consolidated Petitions for Review seek to set aside an order of the Civil Aeronautics Board (Board) requiring Transameriea Corporation (Transamerica) to divest its wholly owned subsidiary, the Foreign Study League (FSL). Jurisdiction was asserted by the Board over Transamerica’s 1968 acquisition of FSL under Section 408 of the Federal Aviation Act. The Board concluded that such acquisition was contrary to the “public interest” because Transamerica’s common ownership of FSL, a substantial user of chartered air transportation, and Trans International Airlines (TIA), a major United States supplemental air carrier, raised possibilities of anticompetitive consequences. Petitioners raise both jurisdictional and substantive matters in support of reversal. It is their contention the Board cannot bootstrap its 408(a) statutory jurisdiction over one acquisition so. as to require 408 Board approval of a subsequent acquisition over which the Board otherwise would not have 408(a) jurisdiction. Their second argument is that jurisdiction is lacking because FSL is not an indirect air carrier whose acquisition is subject to Board approval under 408(a)(5) of the Federal Aviation Act. The final jurisdiction argument is that although FSL is a substantial user of air transportation, it is not a person engaged in a phase of aeronautics as defined in 408(a)(6). Petitioners then charge that even if the Board has jurisdiction to decide this matter, the Board’s decision was rendered under improper legal standards and upon inadequate evidence. We believe the Board correctly exercised jurisdiction under 408(a) and 408(b) of the Federal Aviation Act and properly found the Transamerica-FSL acquisition to be contrary to the public interest. Because the Board possessed jurisdiction under 408(a) and 408(b) by virtue of the Transamerica-Trans International Airlines acquisition, it will be unnecessary to decide whether FSL was an “indirect air carrier” or “engaged in a phase of aeronautics.” The Foreign Study League is a Utah based corporation sponsoring foreign summer school programs for American students. FSL retains its own faculty, adopts its own curriculum and publishes its own textbooks. High schools in 49 of the 50 states grant credit for completed FSL courses, and several colleges give credit for student participation. Highly respected educators attest to the value of FSL’s summer program; and no party to this appeal has questioned its quality. Since its inception in 1963, FSL has grown rapidly and is now substantially larger than any of its competitors. In 1964 1,920 students participated in the program while five years later the enrollment had mushroomed to nearly 14,000 students. By 1969, FSL described itself as the oldest and largest of the concerns specializing in foreign study-travel business, about as large as all the other foreign study-travel organizations combined. In 1968 FSL, one of the nation’s largest buyers of overseas transportation, was acquired by Transamerica, one of the nation’s and world’s largest conglomerates. Transamerica has substantial holdings in a large variety of businesses ; backing these subsidiaries is the parent company’s assets which in 1969 totaled over 3.5 billion dollars. The other important link in this divestiture suit is Trans International Airlines, which Transamerica acquired in 1968. TIA, one of the largest United States certificated supplemental air carriers, is authorized to operate in the domestic, transatlantic, Caribbean, Central and South American and transpacific markets. When Transamerica elected to acquire TIA in early 1968, both corporations filed a joint application for approval with the Civil Aeronautics Board. This was necessary since Transamerica was engaged in a “phase of aeronautics” and thus required by 408(a)(5) of the Federal Aviation Act to secure Board approval. Following evidentiary hearings, the Board conditionally approved the acquisition. Subsequent to the TIA acquisition, Transamerica acquired the Foreign Study League. With Transamerica’s new acquisition, the Board reopened its record on the Transamerica TIA acquisition to determine whether the purchase of FSL constituted a change in the Transamerica-TIA relationship. A second reason for reopening the record was to decide whether FSL was an “indirect air carrier” or was “engaged in a phase of aeronautics,” thereby subjecting the TransamerieaFSL acquisition independently to § 408(a) jurisdiction. The Hearing Examiner reasoned that the Board maintained jurisdiction over the Transamerica-FSL acquisition as a result of conditions imposed on the Transamerica-TIA acquisition at time of approval. The Examiner further held that FSL is an indirect air carrier and thereby subject to Board jurisdiction under § 408(a). After settling jurisdictional issues, the Examiner concluded that acquisition of FSL by Transamerica constituted a violation of Section 7 of the Clayton Act with no balancing considerations in the public interest that would warrant approval of the acquisition. On review the Board affirmed the Examiner’s decision sustaining jurisdiction. Additionally, the Board held that FSL was engaged in a “phase of aeronautics” thereby subjecting it to Board jurisdiction. The Examiner’s determination that the FSL acquisition constituted antitrust violations was rejected, but the Board nevertheless struck it down as creating a “conflict of interest” and therefore contrary to the public interest. Petitioners first contend the Board lacks jurisdiction to order divestiture of FSL because any statutory jurisdiction over the Transamerica-TIA acquisition does not extend to the purchase of FSL. Stated another way, the Board may not use the power to condition its approval of a 408(a) acquisition under 408(b) to extend its jurisdictional power to subsequent acquisitions that were not involved in the 408(a) acquisition approved and which do not involve any factors material to the approved 408(a) acquisition. Petitioners charge the conditions imposed in the TransamericaTIA acquisition are between Transamerica’s subsidiary, DeLaval Turbine, a manufacturer of airplane component parts, and TIA, a certificated air carrier. Any subsequent developments in the Transamerica-TIA acquisition concerning the relationship between TIA and FSL have no connection whatsoever with the DeLaval-TIA association. The Board initially imposed conditions on the Transamerica-TIA acquisition as authorized by 408(b) which states in material part: Unless, after such hearing, the Board finds that the . . . acquisition of control will not be consistent with the public interest ... it shall by order approve such ... acquisition of control, upon such terms and conditions as it shall find to be just and reasonable with such modifications as it may prescribe. . The Board justifies its divestiture order of FSL by arguing that conditions imposed in the Transamerica-TIA order legitimate the order of divestiture. The condition presently in controversy is condition 8, which states: 8. That the Board shall retain jurisdiction over this proceeding for the purpose of: (1) re-examining at any time the control relationships approved herein ; and (2) imposing at any time, with or without hearing, such other conditions as it may find to be just and reasonable, including the submission of any special reports by applicants or any of their affiliates or subsidiaries that the Board may find required in the public interest. There is no question the Board can condition its approval of an acquisition if it has jurisdiction over the subject matter. Pan American World Airways, Inc. v. United States, 371 U.S. 296, 83 S.Ct. 476, 9 L.Ed.2d 325 (1963). Petitioners argue, however, that condition 8 of the Board’s order granting Transamerica’s acquisition of TIA has no effect on the subsequent FSL acquisition. We do not agree. Technically, the Board’s order requiring Transamerica to divest FSL has nothing to do with the Transamerica-FSL acquisition. What the Board is doing is reexamining its approval of the Transamerica-TIA relationship in light of subsequent developments. It is the changed condition of TIA emanating from Transamerica’s acquisition of FSL that is subject to Board jurisdiction. Certainly petitioners would not argue the Board lacked jurisdiction to consider tie-in effects of FSL and TIA if FSL had been acquired prior, to TIA. The Board, in fact, is compelled to examine such circumstances before granting its initial approval. Northern Natural Gas Co. v. FPC, 130 U.S.App.D.C. 220, 399 F.2d 953 (1968). Petitioners nevertheless state that once the initial approval is given, no review of subsequent acquisitions is permitted unless it concerns the DeLaval Turbine-TIA relationship. We do not believe Congress so restricted 408(b). Such an interpretation feeds the hunger of large conglomerates who would thereby enjoy immunity for acquisitions considered not to be in the public interest. A conglomerate could do through its subsidiaries what it cannot do on its own. Petitioners reject the Board’s conclusion that without authority to order divestiture of future acquisitions under 408(b) the Board's jurisdiction is contingent upon the order in which the acquiring party arranges its acquisitions. Petitioners apparently argue that jurisdiction only exists if the Board proves Transamerica had timed their transaction to circumvent the statute, but as no proof of intentional circumvention was presented, 408(b) jurisdiction cannot be invoked. We feel petitioners’ argument concedes the point. Jurisdiction does not depend on the parties’ intent, but on the statutory objectives to be achieved. By reexamining the Transamerica-TIA acquisition in light of changed circumstances, the Board might reasonably conclude TIA’s ownership by Transamerica was no longer in the public interest. Whether or not Transamerica intended to circumvent the statute is irrelevant. As already emphasized, petitioners’ contention that Transamerica’s control of FSL has nothing to do with the Transamerica-TIA relationship is not well founded. Transamerica’s acquisition of FSL brought under the roof of a single corporation one of the nation’s largest supplemental air carriers and the nation’s largest buyer of air transportation in the foreign study-travel business. Such a potential tie-in definitely creates possible anticompetitive consequences which must be considered. Denver & Rio Grande Western Railroad Company v. United States, 387 U.S. 485, 87 S.Ct. 1754, 18 L.Ed.2d 905 (1967). The Board must determine whether the market structure maximizing competition will be endangered by the changed circumstances in the Transamerica-TIA relationship. National Air Carrier Association v. CAB, 141 U.S.App.D.C. 31, 436 F.2d 185 (1970). Petitioners sound a note of alarm by asserting that if the Board has discretionary power to exercise jurisdiction over all subsequent transactions involving parties to the original 408(a) acquisition, then all later acquisitions regardless of their connection with the 408 approval may be subject to Board approval. The result is that if Transamerica buys a motel, the purchase is subject to Board approval. This argument is without merit. There must be some relevant connection between the Board approved acquisition and the subsequent acquisition. In the present case this connection is apparent because now living under the wings of one of the world’s largest conglomerates is one of the nation’s largest suppliers of chartered aircraft and the nation’s largest buyer of air transportation in the foreign study-travel business. Having determined the Board had jurisdiction to order divestiture of FSL, we now turn to the Board’s decision that Transameriea’s relationship with TIA and FSL is inconsistent with the public interest standard of § 408. Section 408(b) provides that “[U]nless . . . the Board finds that the . . . acquisition of control will not be consistent with the public interest ... it shall by order approve such . . . acquisition of control. . . .” Section 408 (b) further provides: That the Board shall not approve any consolidation, merger, purchase . . . or acquisition of control which would result in creating a monopoly or monopolies and thereby restrain competition or jeopardize another air carrier. . . . ” These provisions of § 408(b) compel the Board to make two independent antitrust determinations. First, the Board must determine whether the acquisition has resulted in a monopoly that restrains competition or jeopardizes another carrier. If the Board determines there are no such consequences from the acquisition, it must then determine whether the acquisition results in antitrust violations less drastic than monopoly. Although the Transamerica-FSL acquisition was not found to constitute a monopoly, the Board felt it did create potential anticompetitive conditions contrary to the public interest. Petitioners respond by charging the Board with improper application of the § 408(b) public interest provision. It is their position that applying a “conflict of interest” standard to determine public interest introduces a phrase foreign to the Federal Aviation Act’s language. The result has been findings of fact that would be unsupportable by the record if the Board had correctly applied the public interest standard. We do not believe a “conflict of interest” test is an improper standard for determining public interest. The Board is vested with statutory authority to determine the overall transportation policy which best serves the interest of the public. To comply with the mandate, the Board must consider such factors as “conflicts of interest.” Congress gave the Board authority to prohibit acquisitions which create monopolization. The Board has correctly determined that this authorization includes anticompetitive effects less extreme than monopolization if against the public interest. Logically, “conflicts of interest” must be considered when determining public interest. Such an interpretation is necessary in light of the immunity from antitrust laws conferred by § 414 of acquisitions approved by the Board. Denver & Rio Grande Western Railroad Company v. United States, supra; Seaboard Air Line Railroad Company v. United States, 382 U.S. 154, 86 S.Ct. 277, 15 L.Ed.2d 223 (1965); Butler Aviation Company v. CAB, 389 F.2d 517 (2d Cir. 1968). Our only involvement in the Board’s decisions in determining whether there is substantial evidence to support its findings. French v. CAB, 378 F.2d 468 (10th Cir. 1969); 49 U.S.C. § 1486(e). A careful review of the record convinces us there was sufficient evidence for the Board to find the potential TIA-FSL tie-in contrary to public interest. FSL is the nation’s largest foreign study-travel business. There are approximately 17 study-travel organizations competing against FSL; but with the exception of the American Institute for Foreign Study, whose operation is approximately one-half that of FSL’s there is no other organization which handles over 1,000 students. The size of FSL has increased substantially since 1963, and with this increase has come a corresponding need for more overseas transportation. Fear of a tie-in between FSL and TIA is not unfounded in light of the benefits Transamerica could derive from such an association. For example, if all of FSL’s charter business were given to TIA, that carrier would have the competitive advantage of a guaranteed base for its transatlantic program. No TIA competitor would enjoy such a guaranteed base. To maximize TIA’s competitive advantage, it could schedule FSL charters in such a manner as to position aircraft, thereby eliminating ferry mileage. TIA’s benefit would be FSL’s burden as not only would flights be chartered around TIA’s schedule, but FSL might also be charged a higher price than it could obtain from other carriers. The converse is also true. Transamerica could require the two companies to operate for FSL’s benefit. TIA could be required to give FSL lower rates, thereby unduly strengthening FSL’s position in the competitive market. By giving FSL preference in charter scheduling, maximum benefits would be engendered at the expense of competitors. The potential integration of TIA-FSL is not without factual support. For example, both before and after the acquisition FSL did business with other subsidiaries of Transamerica. Film given to students by FSL could only be processed by a Transamerica subsidiary. FSL’s student insurance in 1969 was written by Transamerica’s subsidiary Pacific Fidelity Life Insurance Company. The deferred student tuition plan was financed by Transamerica Credit Corporation. Transamerica ran an article about FSL in its employee magazine and transmitted with its quarterly dividend check to its stockholders a small booklet concerning FSL. A television station owned by Transamerica interviewed FSL on its public interview show, and on occasion Transamerica mentioned the name of FSL in its corporate advertising program. Transamerica has advertised FSL in such periodicals as the Wall Street Journal, Time Magazine and Business Week. Evidence was introduced indicating that, when all other factors are equal, subsidiaries of Transamerica do business with each other. Intersubsidiary cooperation, in fact, is encouraged by the parent corporation. As one Transamerica executive stated in a letter to the officers and directors, “ . . . we are always looking for ways to scratch each other's back.” The interrelationship between TIA and FSL already has begun. In 1967, the year prior to Transamerica’s acquisition of FSL, TIA operated no FSL flights. In each of 1968 and 1969, TIA operated only one transatlantic round trip flight. In 1970, however, TIA operated 16 of the 65 transatlantic round trip flights. This was a jump from about 1.5 percent in 1968 and 1969 to 25 percent in 1970. In light of Transameriea’s policy of encouraging its subsidiaries to work together and more specifically, in light of the potential effects of a TIA-FSL tie-in, we believe the Board’s findings of fact were based on substantial evidence and thus we are compelled to affirm its orders. . 49 U.S.C. § 1378. . 49 U.S.C. § 1378(a)(5). . 49 U.S.C. § 1378(a)(6). . 408(a) It shall be unlawful unless approved by order of the Board as provided in this section— (5) for any air carrier or person controlling an air carrier, any other common carrier, any person engaged in any other phase of aeronautics, or any other person to acquire control of any air carrier in any manner whatsoever . . . ; (6) for any air carrier or person controlling an air carrier to acquire control, in any manner whatsoever, of any person engaged in any phase of aeronautics otherwise than as an air carrier. . 49 U.S.C. § 1302. Consideration of matters in public interest by Board In the exercise and performance of its powers and duties under this chapter, the Board shall consider the following, among other things, as being in the public interest, and in accordance with the public convenience and necessity: (a) The encouragement and development of an air-transportation system properly adapted to the present and future needs of the foreign and domestic commerce of the United States, of the Postal Service, and of the national defense; (b) The regulation of air transportation in such manner as to recognize and preserve the inherent advantages of, assure the highest degree of safety in, and foster sound economic conditions in, such transportation, and to improve the relations between, and coordinate transportation by, air carriers; (c) The promotion of adequate, economical, and efficient service by air carriers at reasonable charges, without unjust discrimination, undue preferences or advantages, or unfair or destructive competitive practices; (d) Competition to the extent necessary to assure the sound development of an air-transportation system properly adapted to the needs of the foreign and domestic commerce of the United States, of the Postal Service, and' of the national defense; (e) The promotion of safety in air commerce ; and (f) The promotion, encouragement, and development of civil aeronautics. . 49 U.S.C. § 1384.

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Caselaw Access Project

2024-08-24T03:29:51.129235

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UNITED STATES of America, Appellee, v. Ronald Thomas BOHLE, Appellant. No. 645, Docket 72-1868. United States Court of Appeals, Second Circuit. Argued Feb. 23, 1973. Decided March 20, 1973. Sarah W. Salter, Syracuse, N. Y. (Anthony E. Battelle, Syracuse, N. Y., on the brief), for appellant. Robert E. Wildridge, Asst. U. S. Atty. (James M. Sullivan, Jr., U. S. Atty., N.D.N.Y., Gustave J. DiBianco, Asst. U. S. Atty., on the brief), for appellee. Before FEINBERG, MULLIGAN, and TIMBERS, Circuit Judges. FEINBERG, Circuit Judge: In January 1969, Ronald Thomas Bohle, a young man of 22, hijacked an Eastern Airlines plane then enroute from Miami, Florida to Nassau, Bahamas and diverted it to Cuba. It is not clear from the record what transpired after that, but Bohle was eventually apprehended in November 1969 when entering the United States (in the Northern District of New York) from Canada. Despite a defense of insanity, Bohle was convicted after a jury trial in the United States District Court for the Northern District of Indiana, the state of his residence, for the crime of aircraft piracy, 49 U.S.C. § 1472(i). However, the conviction was reversed by the Court of Appeals for the Seventh Circuit because of various errors in the conduct of the trial, 445 F.2d 54 (1971), and the case was remanded for a new trial. The Government apparently then concluded that venue might be more appropriate in the Noi’thern District of New York under 49 U.S.C. § 1473(a), see 445 F.2d at 58-60, and a second jury trial was held in that district before Lloyd F. MacMahon, J., sitting by designation. Bohle was again convicted, and received a mandatory minimum sentence of 20 years imprisonment. On this second appeal, we find no error and affirm the judgment of conviction. I At trial, appellant stipulated to all elements of the offense except his criminal responsibility at the time of the crime. The defense again sought to establish that Bohle was legally insane under the definition of criminal responsibility we adopted in United States v. Freeman, 357 F.2d 606, 622 (2d Cir. 1966): A person is not responsible for criminal conduct if at the time of such conduct as a result of mental disease or defect he lacks substantial capacity either to appreciate the wrongfulness of his conduct or to conform his conduct to the requirements of law. On appeal, Bohle argues that the Government’s proof of sanity was insufficient as a matter of law to sustain its burden of proving criminal responsibility beyond a reasonable doubt. We disagree. To be sure, the defense presented substantial evidence of insanity. Lay testimony, from which experts later drew factual data, established that at the time of the crime Bohle was a disturbed individual by any measure, maladjusted in high school and in the military and unsuccessful in personal relationships. There was also testimony from defense experts — two psychiatrists (the conclusions of a third were stipulated into the record), one doctor of osteopathy with five years of psychiatric practice and a clinical psychologist. Bohle was diagnosed with varying degrees of certitude as suffering from “schizophrenia, paranoid type” and subject to anxiety and psychotic episode when under stress; his thought processes were characterized as largely divorced from reality, “delusional.” Three of the doctors categorically stated that Bohle was not legally sane at the time of the crime. Quoting Dusky v. United States, 295 F.2d 743, 754 (8th Cir. 1961) (Blackmun, J.), cert. denied, 368 U.S. 998, 82 S.Ct. 625, 7 L.Ed.2d 536 (1962), appellant argues that the nature and quantum of the evidence which the government must produce to meet its burden so as to justify the submission of the insanity issue to the jury varies with the nature and quantum of the evidence indicating mental illness. Accord, Brown v. United States, 351 F.2d 473, 474 (5th Cir. 1965); Wright v. United States, 102 U.S.App.D.C. 36, 250 F.2d 4, 7 (1957). Even so, the Government’s evidence was adequate to withstand a motion for acquittal. There was testimony of passengers and airline personnel from which the jury could infer that Bohle’s actions and reactions during the hijacking, as described by the witnesses, were not those of an individual detached from reality. We do not say that this would have been sufficient standing alone, but the prosecution also offered further testimony. Its clinical psychologist testified in substance that appellant’s response to certain tests administered after the offense were within the range of normal. More significantly, a psychiatrist characterized appellant as having “a psychopathic personality, sociopathic features”' — a personality disorder — but concluded that he had no mental disease or defect. Appellant attacks the psychiatrist’s testimony on various grounds. However, the doctor’s limited opportunity to observe appellant (the course of an afternoon), though not ideal, cf. United States v. Freeman, supra, 357 F.2d at 623 n. 53, was adequate; incidents culled by the doctor from appellant’s history and used to substantiate his diagnosis were sufficient in number and probative value. The alleged shortcomings in this doctor’s testimony as compared to that of the various defense witnesses were at most matters of weight and credibility for the jury, whose role is to resolve “battles of experts” testifying as to insanity. See, e. g., Washington v. United States, 129 U.S.App.D.C. 29, 390 F.2d 444, 445-446 (1967); cf. Blocker v. United States, 110 U.S.App.D.C. 41, 288 F.2d 853, 862-864 (1961) (Burger, J., concurring). From all of the evidence, reasonable men could infer either that Bohle was schizophrenic and delusionally fleeing from reality, as the defense contended, or that he was merely mentally unstable and rationally fleeing from responsibility, as the prosecution argued. Therefore, under the legal doctrines now in effect, that question was for the jury as part of the process of guilt determination. Whether that is the best of all possible procedures is an issue we do not intend to raise here, although as to this also reasonable men can and do differ. We reject appellant’s assertion that where facts equally support inferences of guilt beyond a reasonable doubt or innocence, the court must direct acquittal. See United States v. Taylor, 464 F.2d 240, 243-245 (2d Cir. 1972). While the issue of insanity was a close one, the jury could properly conclude that Bohle was sane beyond a reasonable doubt when he unlawfully seized the aircraft. II Appellant has two further contentions. At the second trial, he elected not to testify in his own behalf. At his first trial, however, he had testified. Over objection, this former testimony was admitted in evidence at the second trial. Appellant recognizes the general rule that “a defendant’s testimony at a former trial is admissible in evidence against him in later proceedings,” Harrison v. United States, 392 U.S. 219, 222, 88 S.Ct. 2008, 2010, 20 L.Ed.2d 1047 (1968); but he contends that the general rule is inapplicable here on two grounds. He first argues that any probative value of the former testimony was far outweighed by its prejudicial effect. But Bohle’s recollection of his state of mind during the hijacking bore directly on the issue of sanity. Moreover, the evidence was not prejudicial in the technical sense of introducing evidence of other crimes or of extraneous inflammatory matters, although it may well have assisted the Government’s case, see United States v. Overton, 470 F.2d 761, 767 (2d Cir. 1972). Nor are we persuaded by appellant’s second argument against admissibility. On appeal from Bohle’s first conviction, the testimony of a psychiatrist testifying for the prosecution was held inadmissible because “the results of a test on which the doctor had in part based his opinion had not been formulated by the doctor but by someone else who was not in court. . ” United States v. Bohle, supra, 445 F.2d at 69. Appellant relies on Harrison v. United States, supra, in which the Supreme Court upset a conviction where first-trial testimony of a defendant, given after the Government’s introduction of confessions subsequently held unlawful on appeal, was introduced at a second trial following remand. Bohle asserts that his first-trial testimony should similarly have been excluded at his second trial. The argument is flawed. Harrison involved defendant testimony “impelled” by introduction of illegal confessions and thus inadmissible as “fruit of the poisonous tree.” We see no reason to extend the “fruits” doctrine to testimony “impelled” by mere evidentiary hearsay error, as distinct from unconstitutional police practices. Moreover, the Government says that Bohle testified at the first trial before its psychiatrist took the stand; the assertion has not been contradicted by appellant in a reply brief or at oral argument. Even if Harrison applies, therefore, the Government has met its burden of showing “that its illegal action did not induce [defendant’s] testimony.” 392 U.S. at 225, 88 S.Ct. at 2011. Finally, appellant argues that the trial judge erred on the last day of trial in disposing of a request for a voir dire to determine whether any juror had, during the overnight recess, heard or read anything prejudicial — apparently an unrelated skyjacking had been widely reported in the media. The request was made by the Government and apparently joined in by the defense. The trial judge was concerned, among other things, that a juror’s overly detailed response might needlessly insert prejudice where none had genuinely existed before. In the colloquy at the bench, defense counsel requested the court “to ask a simple question if they have read anything on this, period, without referring to anything?” The judge then put the general question set forth in the margin. When there was no affirmative response from the jurors, the judge allowed the trial to proceed, and defense counsel offered no objection. On this record, the judge acted within his discretion; we perceive no error, much less plain error. See United States v. Ragland, 375 F.2d 471, 475-476 (2d Cir. 1967), cert. denied, 390 U.S. 925, 88 S.Ct. 860, 19 L.Ed.2d 987 (1968). Judgment affirmed. . 49 U.S.C. § 1472(i) (1) (A) allows a jury to impose the death penalty. In United States v. Bohle, 346 F.Supp. 577 (N.D.N.Y.1972), Judge MacMahon held this part of the statute unconstitutional. See Furman v. Georgia, 408 U.S. 238, 92 S.Ct. 2726, 33 L.Ed.2d 346 (1972). . One of the defense psychiatrists was originally retained by the Government as its expert. Defense counsel brought this fact to the attention of the jury in his opening and in summation; the judge referred to it in his charge; and the jury was perfectly capable of drawing any appropriate inferences as to the consequent weight of his testimony. Thus, although appellant complains that the doctor’s testimony as to how he came into the case was improperly stricken, the claim is without substantial merit. . See generally United States v. Chandler, 393 F.2d 920, 928 (4th Cir. 1968) (en banc); Wion v. United States, 325 F.2d 420, 428 & n. 10 (10th Cir. 1963) (en banc), cert. denied, 377 U.S. 946, 84 S.Ct. 1354, 12 L.Ed.2d 309 (1964). See also Burger, Psychiatrists, Lawyers, and the Courts, Federal Probation 3, 9 (June 1964). But cf. A. Goldstein, The Insanity Defense 220-26 (1967). . Appellant’s excellent brief cites some 18 cases in which convictions have been reversed for insufficient evidence of sanity. However, as the Court of Appeals for the Fifth Circuit observed when nine of those cases were cited to it, “each holds no more than that upon particular facts in that case . . . the government had failed to discharge its burden of proving . . . sanity. . . . ” Mims v. United States, 375 F.2d 135, 147 (1967). . Appellant also asks us to reexamine the logic of the general rule. Because the Supreme Court in Harrison explicitly refused to question the rule, we decline the invitation. . The same psychiatrist testified for the Government in the second trial. On this appeal no similar objection is made to his testimony. . The judge had reminded the jurors the day before: Don’t read anything about [the ease]. Don’t watch anything on television about it. . THE COURT: Have any of you read anything on the subject of hijacking, or seen anything on television or heard anything on the radio about this case which would in any way change any of the'answers that you gave me at the time you were selected to sit as jurors in this case, which would in any way influence your opinion one way or the other in this case?

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Alfred ALTMAN and Irene Altman, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. No. 587, Docket 72-1950. United States Court of Appeals, Second Circuit. Argued Jan. 29, 1973. Decided March 8, 1973. Samuel N. Greenspoon, New York City (Harry Simon, New York City, of counsel), for petitioners-appellants. Louis A. Bradbury, Atty., Tax Division, Department of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., and Meyer Rothwacks and Richard W. Perkins, Attys., Tax Division, Department of Justice, Washington, D. C., of counsel), for respondentappellee. Before FRIENDLY, Chief Judge, and ANDERSON and MULLIGAN, Circuit Judges. MULLIGAN, Circuit Judge: This is an appeal by the petitioners from a decision of the Tax Court, Hon. Irene F. Scott, 31 CCH Tax Ct.Mem. 91, entered on April 28, 1972, holding that the petitioners had unreported taxable income for the year 1964 in the amount of $122,535.36 and determined a tax deficiency in the amount of $77,890.37. We affirm. The first question to be determined upon appeal is whether the Tax Court properly decided that the $122,535.36 received by the taxpayer Alfred Altman (Alfred) from his mother Charlotte Altman (Charlotte) on December 15, 1964 was includable in his gross income or was exempt from taxation as a gift. There is no question but that the taxpayer received checks and securities totalling $122,535.36 from his mother on that date; that it was not reported as income in the 1964 joint return of Alfred and his wife Irene Altman (Irene) and that its exclusion is sought to be justified solely on the ground that it constituted a gift (Int. Rev.Code of 1954, § 102). The burden of proving that the transfer of the securities and cash here involved constituted a gift, is upon the taxpayer. Gaugler v. United States, 312 F.2d 681, 684 (2d Cir. 1963). Moreover the crucial test for determining whether or not there was a gift, is the intention with which the transfer of the property was made. This is a question of fact to be determined under all the circumstances with primary weight being accorded to the conclusions of the trier of fact. Commissioner v. Duberstein, 363 U.S. 278, 286-290, 80 S.Ct. 1190, 4 L.Ed.2d 1218 (1960); Comtel Corp. v. Commissioner, 376 F.2d 791, 795 (2d Cir.), cert. denied, 389 U.S. 929, 88 S.Ct. 290, 19 L.Ed.2d 280 (1967). In light of these principles, we have no difficulty in finding that the determination made below was not clearly erroneous. Charlotte inherited from her husband all of his interest in the family baking business which was managed by her son Alfred after his father’s death in 1963. The primary evidence of Charlotte’s do-native intent was the testimony of Irene that at about 11 A.M. on the morning of December 15, 1964, Alfred and Charlotte came to Alfred’s home where Charlotte then announced that since Alfred had been such a good son, she had made him a gift of the funds in question. The four bank checks shown to Irene totalled $62,007.86 representing withdrawals from four local banks. All four checks were made out to Alfred and were in Irene’s presence delivered to him by his mother. Charlotte then took securities from her handbag, showed the certificates to Irene, signed the backs of them and delivered them to Alfred. The next day Alfred deposited to his bank account the four checks and delivered the stock certificates to his broker. There was further evidence by Irene purporting to establish that the relationship between Charlotte and Alfred and herself was not only amicable on that day but on the next day as well. The court below found the testimony of Irene “totally unpersuasive.” Moreover, the court indicated that even if the events testified to by Irene were factually accurate, if Alfred had in fact frightened and intimidated his mother earlier that morning, she would likely have still been under his influence so that there was no true donative intent on her part. The court indicated that the crucial factual question was what happened earlier on the morning of December 15, 1964. There was other evidence before the court which would indicate that Charlotte’s gift to Alfred was prompted by something less than maternal affection. Leon Miller, who had represented the Altman family business, testified that on December 17th Charlotte advised him that on the morning of December 15, 1964 Alfred had come to her apartment and persuaded her to open her safe on a pretext. He then threatened to throw the family business into bankruptcy and report her to the Internal Revenue Service for alleged violations. He took possession of her bank books, stock certificates and forced her to go with him to various banks and withdraw the proceeds as well as to endorse the securities. On December 18th Charlotte, Adele (Alfred’s sister) and Miller visited an assistant district attorney in New York County to bring criminal charges but were advised to seek civil redress. On December 30, 1964 Charlotte commenced a civil action in the New York Supreme Court seeking to regain possession of her property. A non-jury trial was held on April 26, 1966 and judgment was rendered on July 15, 1966. Justice Harry B. Frank wrote an eight page unreported opinion in which he essentially found that Alfred had converted the securities and cash here in question, as well as other personal property not here pertinent. The judgment directed Alfred to return all of this property, granted an accounting and awarded punitive damages in the sum of $10,000. In his opinion Justice Frank found no basis for finding that Charlotte intended any gift to Alfred but rather that the transfer was prompted by her fear of possible exposure to tax liability and of the ruination of the family business. His opinion castigated Alfred in strong terms. Appellants now urge that the admission below of the Supreme Court file in the civil action brought by Charlotte against Alfred constitutes error. It is argued that under Rule 14(b) of the Rules of Practice of the Tax Court the Commissioner should have pleaded collateral estoppel in his answer if the New York judgment was to be utilized for that purpose. Although the admission of the judgment and file below was objected to, the objection of counsel was not directed to the rule. In fact, as appellants admit in their brief, the lower court did not accept the New York judgment as conclusive under the doctrine of res judicata either as a bar or a collateral estoppel. It was admitted as evidence of its contents. If error was committed in receiving it in evidence we consider it harmless since in any event there was other ample competent evidence dehors the judgment to indicate that the transfer here was involuntary. Irene admitted on cross-examination that she knew that Alfred had a date to meet Charlotte on the morning of December 15th; that her mother-in-law Charlotte subsequently started a civil action in New York to recover the property; that she (Irene) had testified in the case; that Alfred had failed to testify although he was available and knew of the pendency of the action; that Charlotte testified in the proceeding and that she had won the case. Alfred’s failure to appear to testify either in the civil action or in the tax proceeding below is indeed significant. We are not impressed with the appellants’ argument that the court should have given significance to the failure of the Commissioner to call Charlotte as a witness. She is an octogenerian living in a nursing home. Since the burden of proof is on the taxpayer to establish do-native intent, there was more reason for the taxpayer to call her if her testimony was favorable to the present claim. An examination of Irene’s testimony on cross-examination which was at best evasive in contrast to her sharp recollection of the events of December 15, 1964, confirms the trial court’s judgment as to her credibility. While we can agree with the appellants that Charlotte did transfer her money and securities to Alfred so that the mechanical requisites of a gift were established and in fact are not in issue, there was an abject failure to establish donative intent. There is no question but that Adele and Miller were hostile to Alfred but this is no proof that the New York lawsuit was a scheme or plot on their part to defraud Alfred who has in fact fled to Australia where he remains leaving only an unsatisfied judgment behind. Their disaffection is perhaps understandable. The only remaining question is whether Irene who filed a joint return with Alfred in 1964 and is therefore liable for the tax deficiency, is entitled to avoid the joint liability under the provisions of section 6013(e) of the Internal Revenue Code of 1954 as amended. Under this section the spouse is relieved of liability if certain conditions are met. The first is that there has been an omission from gross income properly includable in the return in excess of 25 percent of the gross income stated in the return. This is conceded by the Commissioner. A second requirement (§ 6013(e)(1) (B)) is that the spouse establish that in signing the return she did not know and had no reason to know of the omission. The income tax return which was an exhibit in the proceeding below was executed by Irene on April 14, 1965 and reported a total joint income of $38,334.32. There can be no doubt but that the receipt of cash and securities valued at $122,535.36, more than three times the amount of income reported, was a significant omission from the return. There is no question but that Irene was aware of the receipt of the funds. She testified in detail as to time, place and manner of delivery. Her only claim now is that she believed they were a gift and therefore not income. As we have indicated this is hardly credible in view of the evidence to the contrary. We cannot accept the proposition that Irene had no reason to know that the money and securities received here were not gifts. The civil action to recoup them on the theory that there was a conversion had been commenced in December, 1964. A preliminary injunction restraining Alfred from selling, assigning, pledging or otherwise disposing of the securities or funds was filed on February 17, 1965. Irene was hardly an unsuspecting spouse without reason to understand that her husband had received substantial unreported income. We find that she has failed to sustain the burden imposed by section 6013(e)(1)(B) and to establish that she was the “wholly innocent spouse” that the statute was designed to succor. See S.Rep.No. 91-1537, 91st Cong., 2d Sess., in 1970 U.S.Code, Cong. & Ad.News, pp. 6089, 6090-91. Affirmed. . The securities totalling in value $60,527.50 included 200 shares of Ekco Products, Inc., 100 shares of General Motors Corp., 100 shares of Stattuck Co. and 630 shares of American Telephone and Telegraph Co. . While a majority of courts will not admit into evidence a judgment in another action (5 J. Wigmore, Evidence 1671(a) (3d ed. 1940)) there is a growing tendency to admit prior criminal convictions in subsequent civil actions involving the same transaction. See C. McCormick, Law of Evidence § 318 (2d ed. E. Cleary 1972). See also Matter of Rechtschaffen, 278 N.Y. 336, 16 N.E.2d 357 (1938); Comment, 30 Fordhnm L.Rev. 786 (1962). . 26 U.S.C. § 6013(e) (1970) provides: (1) In general. Under regulations prescribed by the Secretary or his delegate, if— (A) a joint return has been made under this section for a taxable year and on such return there was omitted from gross income an amount properly includable therein which is attributable to one spouse and which is in excess of 25 percent of the amount of gross income stated in the return, (B) the other spouse establishes that in signing the return he or she did not know of, and had no reason to know of, such omission, and (C) taking into account whether or not the other spouse significantly benefited directly or indirectly from the items omitted from gross income and taking into account all other facts and circumstances, it is inequitable to hold the other spouse liable for the deficiency in tax for such taxable year attributable to such omission, then the other spouse shall be relieved of liability for tax (including interest, penalties, and other amounts) for such taxable year to the extent that such liability is attributable to such omission from gross income. (2) Special rules. For purposes of paragraph (1)— (A) the determination of the spouse to whom items of gross income (other than gross income from property) are attributable shall be made without regard to community property laws, and (B) the amount omitted from gross income shall be determined in the manner provided by section 6501(e)(1)(A).

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Park ANDERSON, Warden, Oklahoma State Penitentiary, the State of Oklahoma, Appellant, v. Henry Edward WATT, Appellee. No. 72-1666. United States Court of Appeals, Tenth Circuit. Argued and Submitted Feb. 20, 1973. Decided March 19, 1973. Paul Crowe, Asst. Atty. Gen. (Larry Derryberry, Atty. Gen. of Oklahoma, with him on the brief), for appellant. James Goteher, McAlester, Okl., for appellee. Before SETH, McWILLIAMS, and BARRETT, Circuit Judges. PER CURIAM. The appellee, Henry Edward Watt, was tried in the Oklahoma state courts in 1967 for the “Illegal Sale of Marihuana After a Former Conviction of a Felony.” He was found guilty by the jury and also sentenced by the jury. The sentence was for thirty-seven years pursuant to the state habitual criminal act. The record showed that defendant had sold five penny matchboxes of marihuana. At the time the information for this offense was filed, he was in the Oklahoma County Jail on an eighteen-month sentence following a guilty plea to the charge of receiving a stolen credit card. Appellee’s conviction on the marihuana charge was appealed to the Oklahoma Court of Criminal Appeals where it was affirmed. Okl.Cr., 450 P.2d 227. Watt also sought a writ of habeas corpus in the Oklahoma Court of Criminal Appeals, which was denied. He then petitioned the United States District Court for the Eastern District of Oklahoma for a writ of habeas corpus. His petition was denied and he appealed to this court. This court remanded the case to the District Court for an evidentiary hearing on the issue of whether Watt had a deliberate purpose in appearing before the jury in jail coveralls with the words, “Oklahoma County Jail 44” stenciled in large letters across the back; also, if no such purpose was found, if the District Court could find, under Harrington v. California, 395 U.S. 250, 89 S.Ct. 1726, 23 L.Ed.2d 284 (1969), that beyond a reasonable doubt appellee’s right to a fair trial was not prejudiced by his appearance before the jury in jail clothing. Watt v. Page, 452 F.2d 1174 (10th Cir.). After an evidentiary hearing on remand, the District Court found that there was no “. . . deliberate desire on the part of the petitioner to be tried in his jail clothes for the purpose of sympathy or any other purpose in his behalf,” and that . . the petitioner was prejudiced to some degree by appearing before the jury in the jail clothes above described.” The District Court then granted the writ of habeas corpus, but stayed the writ for ninety days to allow the state to retry Watt. The state, through Warden Anderson, then brought this appeal. The state asserts that the trial court misinterpreted our opinion in Watt v. Page to hold that the trial of an accused in jail clothing is a per se constitutional violation, and that fact alone was the basis for the grant of the writ in this ease. This the state urges would follow Hernandez v. Beto, 443 F.2d 634 (5th Cir.), and Brooks v. Texas, 381 F.2d 619 (5th Cir.), where statements appear that it is inherently unfair to try a defendant for a crime while garbed in his jail uniform. We stated in Watt v. Page, 452 F.2d 1174 (10th Cir.), that the nature of the clothing worn by a defendant at his trial is not inherently prejudicial to his right to a fair and impartial trial. We find that the District Court correctly interpreted this decision, and granted the writ only after making a finding that appellee was prejudiced by appearing before the jury in jail clothing. Appellant also urges us to hold that the finding by the trial court that the appearance of appellee before the jury in jail clothing was prejudicial to some degree was not supported by substantial evidence. We find, however, that it was supported and the finding of the trial court will not be set aside unless clearly erroneous. There is evidence in the record that appellee was referred to during the trial as “the man in coveralls” and that during his closing argument the prosecuting attorney made reference to the appellee and “his kind.” And as we said in Watt v. Page: “The length of the sentence here imposed by the jury which also tried the petitioner could be regarded as an indication of the jury’s prejudice toward the defendant.” Thus we find that the trial court’s finding was not clearly erroneous, and that our instructions in Watt v. Page, supra, were fully complied with by the District Court. The order of the trial court is affirmed.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America, Plaintiff-Appellant, Plaintiff-Cross-Appellee, v. ONE 1965 CHEVROLET IMPALA CONVERTIBLE, Defendant-Appellee, Defendant-Cross-Appellant. UNITED STATES of America, Plaintiff-Appellant, Plaintiff-Cross-Appellee, v. ONE 1967 PONTIAC BONNEVILLE CONVERTIBLE, etc., Defendant-Appellee, Defendant-Cross-Appellant. Nos. 72-1691, 72-1692, 72-1694 and 72-1695. United States Court of Appeals, Sixth Circuit. March 22, 1973. Frederick M. Coleman, U. S. Atty., Toledo, Ohio, on brief for plaintiff-appellant. Harland M. Britz, Toledo, Ohio, for defendants-appellees and cross appellants. Before PHILLIPS, Chief Judge, and CELEBREZZE and MeCREE, Circuit Judges. CELEBREZZE, Circuit Judge. These are appeals from the District Court's orders granting in part the motions by the respective owners of the named automobiles seeking an order which would require the Government to compensate them for the value of depreciation of the automobiles from the time they were seized until the time the one was ordered returned to the owner and the other was ordered sold. The Government cross-appeals, contending that no compensation for depreciation can be allowed. The cases have been consolidated for appeal by agreement and motion of the parties. The first case involves a 1965 Chevrolet Impala convertible which was seized for forfeiture on October 22, 1966, from its owner, Robert E. Dombkowski, by special agents of the Intelligence Division of the Internal Revenue Service. Pursuant to 26 U.S.C. § 7302, the automobile was forfeited by court order on September 18, 1968, upon a finding that it had been used in violation of the Internal Revenue wagering tax laws, 26 .U.S.C. §§ 4411, 4412, 4901, and 7262. While the owner’s appeal from this judgment was pending, the Government moved for the sale of the automobile pursuant to Rule E(9)(b) of the Supplemental Rules for Certain Admiralty and Maritime Claims, F.R.C.P., 28 U.S.C. The District Court granted the Government's motion, and the automobile was sold on April 17, 1969. On October 26, 1971, in light of the Supreme Court’s decision in United States v. United States Coin and Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971), the District Court entered an order vacating the earlier judgment of forfeiture and directing that Dombkowski be paid the net proceeds from the sale of the automobile. Dombkowski thereafter filed the present motion for an order requiring the Government to reimburse him inter alia, for the value of depreciation of the automobile from the time of its seizure until the time of its sale. The District Court directed that Dombkowski be reimbursed for depreciation from September 18, 1968, the date of the forfeiture, to April 17, 1969, the date of the sale. The Court, however, disallowed any reimbursement for depreciation from the date of the seizure to the date of the forfeiture. In the second case, a 1967 Pontiac Bonneville convertible was similarly seized on October 22, 1966, from its owner, William P. Scott, Jr., and forfeited pursuant to a court order of September 18, 1968, because of its use in violation of the wagering tax laws. On November 19, 1971, again relying on the Supreme Court’s decision in United States v. United States Coin and Currency, supra, the District Court ordered the automobile returned to Scott. Scott subsequently filed the present motion requesting that the Government be required to reimburse him for the value of depreciation of the automobile from the date of its seizure until the date on which it was ordered returned to him. The District Court ordered the Government to reimburse Scott for depreciation from September 18, 1968, the date of the forfeiture, to November 19, 1971, the date on which the automobile was ordered returned, but again disallowed any reimbursement for depreciation from the date of the seizure to the date of the forfeiture. In requiring the Government to reimburse the owners for depreciation from the date of the forfeiture to the dates on which the automobiles were sold or ordered returned, the District Court reasoned that Congress had authorized the payment of such claims under 40 U.S.C. § 304j, which makes agency appropriations available “for the payment of all moneys found to be due any person upon the duly authorized remission or mitigation of any forfeiture.” Determining that this provision could not be construed as appropriating funds for preforfeiture depreciation, the Court concluded . that Congress had failed to authorize the payment of such claims. The District Court’s resort to 40 U.S. C. § 304j, appears to have been based on United States v. One Dodge Coach, 22 F.Supp. 204 (E.D.N.Y.1938), wherein Section 304j was recognized as authorization for the claim of a lienholder, as intervenor in a forfeiture proceeding, seeking an order requiring the Government to pay the owner the amount of the lien on the forfeited automobile. Without deciding whether Section 304j might be construed as authorizing such claims against the Government absent a more direct statutory authorization, we conclude that in Section 1346(a) (2) of the Tucker Act, 28 U.S.C. § 1346(a)(2) —enacted some 10 years after the decision in One Dodge Coach — Congress has directly provided for these claims against the Government relative to the unlawful forfeitures. See United States v. One 1961 Red Chevrolet Impala Sedan, 457 F.2d 1353, 1356-1357 (5th Cir. 1972); Jaekel v. United States, 304 F.Supp. 993 (S.D.N.Y.1969). Section 1346(a)(2) vests in the federal district courts original jurisdiction, concurrent with the Court of Claims, for “Any other civil action or claim against the United States, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.” In Jaekel v. United States, supra, the Court concluded that Section 1346(a)(2) afforded it subject matter jurisdiction for a suit to recover the value of an automobile seized and forfeited without adequate notice to the owner, depriving her of her property without due process of law. We quote the relevant portion of the Jaekel opinion: “The language of § 1346(a)(2) would appear to encompass the plaintiff’s claim against the United States which is founded on the seizure and forfeiture of her automobile pursuant to 49 U.S.C. § 782, 19 U.S.C. § 1607 and 19 U.S.C. § 1609, and requests an award less than $10,000.00. It is clear that § 1346(a)(2) does confer jurisdiction over claims against the United States, not exceeding $10,000.00, involving the application of a law of Congress. Compagnie General Transatlantique v. United States, 21 F.2d 465 (S.D.N.Y.1927), aff’d 26 F.2d 195 (2d Cir. 1928). Thus, where taxes, fines, or penalties are unlawfully imposed, an action may be maintained under § 1346(a)(2) to recover the money. United States v. Emery, Bird, Thayer Realty Co., 237 U.S. 28, 35 S.Ct. 499, 59 L.Ed. 825 (1915); Compagnie General Transatlantique v. United States, supra. “Though defendants argue that a forfeiture is not a fine or penalty which may be recovered in an action under § 1346(a)(2), ‘A forfeiture is clearly a penalty for a criminal offense.’ Compton v. United States, 377 F.2d 408, 411 (8th Cir. 1967); One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 85 S.Ct. 1246, 14 L.Ed.2d 170 (1965); and defendants’ argument for the proposition that a limitation should be read into the language of § 1346(a)(2) to exclude forfeitures is not persuasive.” 304 F.Supp. at 997 (footnote omitted). More recently, in United States v. One 1961 Red Chevrolet Impala Sedan, 457 F.2d 1353 (5th Cir. 1972), the Court of Appeals for the Fifth Circuit, citing the above-quoted portion of the Jaekel opinion, held that Section 1346(a)(2) provides the proper remedy for a claimant seeking the return of an automobile forfeited under 26 U.S.C. § 7302 for use in violation of the wagering tax laws when the forfeiture was unlawful in light of United States v. United States Coin and Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971). Indeed, in One 1961 Red Chevrolet Impala Sedan the Government conceded that Section 1346(a)(2) was the proper remedy for such a claim, as anticipated by the Supreme Court in United States Coin and Currency. See 401 U.S. at 723-724, 91 S.Ct. 1041; 457 F.2d at 1355-1356. We conclude that the Tucker Act, 28 U.S.C. § 1846(a)(2), rather than 40 U.S.C. § 304j, provides the jurisdictional basis for the present claims against the Government for the value of the depreciation of the automobiles. Under the Supreme Court’s ruling in United States v. United States Coin and Currency, supra, the seizures and forfeitures in these cases were in contravention of the owners’ Fifth Amendment rights, giving rise to the present claims as authorized under Section 1346(a)(2). With respect to the Government’s appeal, we reject the contention that no allowance should have been made for depreciation. Under the Government’s position, the value of the forfeited property could, due to the mere passage of time, decline 50% or 100% and this depreciation would be borne by the owner, notwithstanding a subsequent determination that the forfeiture was void. Cf. United States v. One Dodge Coach, supra, 22 F.Supp. at 205. This result would, in effect, nullify the Supreme Court’s retroactive application of the Marchetti-Grosso rule in United States Coin and Currency by imposing an irredeemable penalty on owners of depreciable property which was forfeited prior to that decision. We therefore hold that the District Court properly ordered the Government to reimburse the owners for the value of depreciation from the date on which the automobiles were seized to the dates on which they were sold or ordered returned. Turning to the cross-appeal, we agree with the owners’ contention that they are entitled to the value of depreciation occurring between the date of the seizures and the date on which the judgments of forfeiture were entered. Unlike 40 U.S.C. § 304j upon which the District Court relied, 28 U.S.C. § 1346(a)(2) contains no language which might be construed as restricting the present claims for the value of depreciation to depreciation which occurred after the date on which the judgments of forfeiture were entered. Accord Jaekel v. United States, supra, 304 F.Supp. at 999 (holding the Government liable for the value of an automobile’s depreciation from the date of seizure). No less than the value of the post-forfeiture depreciation, the value of the depreciation occurring between the seizures and the forfeitures — a period of nearly two years— constitutes a penalty, the exaction of which was constitutionally impermissible under United States Coin and Currency. We affirm that portion of the judgment of the District Court which directs the Government to reimburse the owners for the value of the post-forfeiture depreciation but remand the eases with instructions that the Government also be directed to reimburse the owners for the value of depreciation occurring between the date of the seizures and the date on which the forfeiture judgments were entered. . The motion also sought reimbursement for storage costs and expenses, totalling $486.60, which were deducted from the sale proceeds. The Government has not raised as an issue on appeal that portion of the District Court’s order directing that Dombkowski be reimbursed for these costs and expenses. . Because of the status of these cases before the District Court, we believe the Court properly received the present motions rather than requiring the owners to file new complaints under Section 1346 (a)(2). Pursuant to an order of this Court dated June 24, 1971, the original forfeiture actions under 26 U.S.C. § 7302 were before the District Court on remand in light of United States v. United States Coin and Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971). In its orders of October 26, 1971, and November 19, 1971, respectively, vacating the forfeiture judgments, the District Court ordered that the proceeds of the sale of the Chevrolet be paid to Dombkowski and that the Pontiac be returned to Scott — thus granting in part the relief which might otherwise have been sought in separate suits under Section 1346(a) (2). To have required the owners to file new actions under Section 1346(a) (2) in order to assert their claims for the value of depreciation, said claims being based on the same legal and factual premises as the above orders, would have placed an unreasonable burden on the owners and the courts. Compare United States v. One 1961 Red Chevrolet Impala Sedan, 457 F.2d 1353 (5th Cir. 1972), wherein the Court held that a separate action under Section 1346(a)(2), rather than a motion pursuant to Rule 60 (b) (4), E.R.Civ.P., under the original forfeiture proceeding, was required where no aspect of the forfeiture proceeding was still pending in the court. . We find no merit in the Government’s argument that 28 U.S.C. § 2465 (providing that a successful claimant in a condemnation or forfeiture proceeding shall not be entitled to costs) prohibits a court from requiring the Government to reimburse an owner for any depreciation of his forfeited automobile, and particularly for depreciation occurring between the seizure and the forfeiture when the forfeiture is later declared void. We understand “costs” under Section 2465 to include court costs and costs incident to the seizure. See United States v. One 1949 G.M.C. Truck, 104 F.Supp. 34 (E.D.Va.1950). In the present eases the owners seek not “costs” under Section 2465, but the value of the property itself at the time it was seized.

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CAMBIST FILMS, INC., a corporation, Appellant, v. Kobert W. DUGGAN et al. No. 72-1205. United States Court of Appeals, Third Circuit. Submitted Jan. 9, 1973. Decided March 13, 1973. David F. Alpern, Alpern & Alpern, Pittsburgh, Pa., for appellant. Norman J. Cowie, Pittsburgh, Pa., for appellees; Thomson, Rhodes & Grigsby, Pittsburgh, Pa., of counsel. Before McLAUGHLIN and VAN DU-SEN, Circuit Judges, and GREEN, District Judge. OPINION OF THE COURT PER CURIAM: This appeal is taken from the dismissal as to all defendants of a complaint which sought damages against the district attorney and the chief of detectives of Allegheny County, (Robert Duggan and Edward G. Crone, respectively) and certain detectives, for the seizure by the detectives of films which they considered to be “obscene”. Plaintiff Cambist here was the owner of distribution rights to a motion picture called “The Female”. The film was seized from certain movie theaters that were showing it. The film was taken under the following circumstances. Detectives were sent to view the film at different locations. One, sent by his superiors, viewed all but 15 minutes, believed it violated Pennsylvania criminal statutes, arrested the manager of the theater and took custody of the film. Another, acting under orders of an assistant district attorney, viewed the film and decided that it violated criminal statutes of Pennsylvania. He also arrested the theater manager and took custody of the film. A third detective acted in response to a complaint from local police. After viewing a substantial portion of the film, he too concluded that it violated Pennsylvania criminal statutes. He took custody of the film and placed the manager under arrest. Plaintiff instituted an action alleging the illegal seizure of the film. The district court, 298 F.Supp. 1148, ordered defendants Duggan and Crone to return the film prints to plaintiff, after holding that the facts presented were not sufficient to determine the films as obscene. This order was complied with. Cambist then instituted this common law action for damages which it claimed resulted from the illegal search and seizure of the film. It is generally settled principle of law that a district attorney is a “quasi-judicial officer”, Commonwealth, ex rel. Specter v. Martin, 426 Pa. 102, 232 A.2d 729 (1967), and in the performance of duties imposed on him by law, he cannot be subjected to personal liability through a common law action. Pennsylvania law has, as a general principle, that quasi-judicial officers cannot be subjected to liability, civil or criminal, for any of their judicial acts, no matter how erroneous, so long as they act in good faith. McNair’s Petition, 324 Pa. 48, 187 A. 498 (1936). See discussion 63 Am.Jur.2d § 289. Federal courts have similarly held. See Bauers v. Heisel, 361 F.2d 581 (3 Cir. 1966). Cambist here refers to the language in Bauers v. Heisel which implied that not all acts of a district attorney should be immune. That case stated that “ * * * the immunity of a prosecutor, however, is not without limitation; it is not absolute. The immunity of judges, from which immunity of prosecutors is derivative, does not extend to acts which are clearly outside their jurisdiction.” This discussion in Heisel pertains to eases involving alleged violations of the Civil Rights Act, not common law tort actions. In such eases Heisel recognized a distinction that needs be observed between excess of jurisdiction, a circumstance which would not allow liability, as opposed to the clear absence of all jurisdiction over the subject matter, which could result in liability for the judicial official in Civil Rights circumstances. Robichaud v. Ronan, 351 F.2d 533 (9 Cir. 1965); Lewis v. Brautigam, 227 F.2d 124 (5 Cir. 1955). Even considering the possible civil rights problem here, no liability can be attributed to the prosecutor in our present case because he was not acting where he clearly had no jurisdiction. He was investigating an alleged violation of the laws of Pennsylvania, which was within his powers and duties, and the actions which he proscribed in this instance were such as he felt necessary to the enforcement of those laws. Obviously, this case in no way approaches the “clear absence of jurisdiction” standard required for possible liability on the part of the prosecutor. As to liability on the part of the officers, a consideration of Restatement of Torts 2d, § 121, Comment 1, appears necessary. That states “A peace officer making an arrest without a warrant is protected in every case when he acts under a reasonable mistake as to the existence of facts which, under the rule stated in this Section, justify an arrest without a warrant. On the other hand, no protection is given to a police officer who, however reasonably, acts under a mistake of law other than a mistake as to the validity of a statute or ordinance.” We must then determine what facts justify an arrest without a warrant. The rule in Pennsylvania is that “an officer may make an arrest without a warrant where he has probable cause to believe that a misdemeanor is being committed in his presence.” Commonwealth of Pennsylvania v. Garrick, 210 Pa.Super. 124, 126, 232 A.2d 8 (1967). In the matter before us, the detectives watched the film after entering the premises as business visitors, and decided that on the facts as they viewed them, the film was obscene and in violation of 18 P.S. § 4524. Therefore,- they seized the films and arrested the theater managers. Even though it was later found in Cambist Films, Inc. v. Duggan, 420 F.2d 687 (3 Cir. 1969) that these facts were not sufficient to classify this as an obscene film, it goes without question that the facts and circumstances available to the officers at the time of seizure were such as to provide an ordinary person with a reasonable belief that an offense was being committed. It was, at most, a mistake of fact by the officers in their actions, but this does not make them liable in tort under any standard. See Pierson v. Ray, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288. Police officers are not expected to have a complete knowledge of the intricacies of ease law as appellant might try to have us hold when he cites Smith v. Crumlish, 207 Pa.Super. 516, 218 A.2d 596 (1966). The officer is only expected to act in accord with the facts and circumstances of the given situation with which he is confronted. Finally, for reasons previously discussed in respect to a district attorney’s quasi-judicial status, he is not liable under these facts for actions of his agents and detectives. As noted previously, there is no liability for the prosecutor or the detectives, and there is no basis for attempting to create liability merely because one party here is the agent of the other. The judgment of the district court will be affirmed. VAN DUSEN, Circuit Judge (concurring) . I concur in the result reached by the foregoing opinion, but differ in the reasoning to be used to support the judgment for the Chief of Detectives of Allegheny County and the detectives working under him. The plaintiff, Cambist Films, Inc., previously instituted a suit (Civil No. 69-300) in the District Court for the Western District of Pennsylvania on March 17, 1969, against Robert W. Duggan, District Attorney for Allegheny County, Edward G. Crone, Chief of Detectives of Allegheny County, Joseph M. Loughran, District Attorney for Westmoreland County, and Edward Gordon, Chief of Detectives of Westmoreland County. The plaintiff in that complaint only sought equitable relief; an injunction against the defendants and the return of the prints of its film. See Cambist Films, Inc., Inc. v. Duggan et al., 298 F.Supp. 1148 (W.D.Pa.1969), rev’d in part, 420 F.2d 687 (3d Cir. 1969). On June 2, 1969, after the decision in the district court, the plaintiffs brought the present action against, among others, Crone and named Allegheny County detectives. In the instant case, the plaintiff now claims damages. Where a plaintiff has had an opportunity to seek damages in its earlier action, its failure to combine all of its claims, legal as well as equitable, which could have been asserted and concluded in the earlier action, is fatal and the county detectives were entitled to a judgment in their favor on the basis of the doctrine of res judicata. For, as is stated by Professor Moore: “ . . . where law and equity have been united and a litigant can present all his grounds for relief, whether legal or equitable, inconsistent, alternative or hypothetical, in a single action he should be held to have but one cause of action and final judgment on the merits is res judicata as to all matters, legal and/or equitable, in support or defense of that cause of action. One fair day in court is enough.” IB Moore’s, Federal Practice, § 0.410 [1], at 1156-57 (2d ed., 1965); see also Gambocz v. Yelencsics, 468 F.2d 837 (3d Cir. 1972). The plaintiff has had its fair day. Two of four principal defendants from the previous suit were named in the instant action. The previous complaint arose out of the same factual context as the instant complaint. Compare complaint in Civil Action No. 69-300, Appellees’ App. at lb, with complaint filed June 2, 1969 (Civil Action No. 69-665, W.D.Pa.), Appellant’s App. at 7a. As stated by Judge Aldisert recently in Gambocz, supra, at 841-842: “Use of the adjective ‘collateral’ to characterize this form of estoppel grows out of the fact that the bar of the prior adjudication is not interposed directly, by parties to the prior suit, but indirectly, by new defendants, strangers to the earlier action. However, the conceptual basis of such an estoppel is closer to that of pure res judicata than pure ‘collateral estoppel,’ because the bar is interposed on the theory that the second action is but an attempt to relitigate the same cause of action, although the names of the defendants may be different. The distinction between this form of estoppel, res judicata, and ‘pure’ collateral estoppel has been frequently emphasized : Thus, under the doctrine of res judicata, a judgment ‘on the merits’ in a prior suit involving the same parties or their privies bars a second suit based on the same cause of action. Under the doctrine of collateral estoppel, on the other hand, such a judgment precludes relitigation of issues actually litigated and determined in the prior suit, regardless of whether it was based on the same cause of action as the second suit. Lawlor v. National Screen Service Corp., supra, 349 U.S. [322] at 326, 75 S.Ct. [865] at 867 [, 99 L.Ed. 1122] (emphasis supplied). See also Judge Goodrich’s opinion in Lawlor, before this court, 211 F.2d 934, 935 (3d Cir. 1965). “We previously determined that the essential allegations of the second complaint parallel those of the first. Moreover, what was averred in the original action was a conspiracy participated in by named individuals, and the sole material change in the later suit was the addition of certain defendants, some of whom had been named in the original complaint as participating in the conspiracy but had not been named as parties defendant at that time. We conclude that the relationship of the additional parties to the second complaint was so close to parties to the first that the second complaint was merely a repetition of the first cause of action and, therefore, it is barred by application of the Bruszewski [v. United States, 181 F.2d 419 (3d Cir. 1950)] doctrine.” Consequently, I would affirm the judgment of the district court as to Crone, Daily, Joller and Kumer on the basis of the principles of res judicata and collateral estoppel. Judge GREEN concurs in this opinion. . The transcript of the pre-trial conference makes clear that the Chief of County Detectives was ill in the hospital during all the events which are the subject matter of this action. . Paragraph 6 of the plaintiff’s complaint in Civil Action No. 69-300 alleged that Crone, “through [his] duly authorized agents, servants, employees or officers,” acting under color of state law in violation of 42 U.S.C. § 1983 “seized and confiscated a print of said film [‘The Female’]” contrary to the requirements of the First, Fourth and Fourteenth Amendments. . Detectives Daily, Joller and Kumer were not named in the first suit, but are referred to in paragraph 6 of the complaint in Civil Action No. 69-300. See note 2 supra. . It is, of course, recognized that whether a plaintiff should be precluded by his earlier judgment by the doctrine of res judicata “depends upon the extent to which legal and equitable remedies have been merged in the state where the judgment is rendered.” Hennepin Paper Co. v. Fort Wayne Corrugated Paper Co., 153 F.2d 822, 826 (7th Cir. 1946); Restatement of Judgments, § 66 (1942). However, it is quite clear that in the federal system actions in law and equity have been united into “one form of action to be known as ‘civil action’.” Rule 2, F.R. Civ.P.; see e. g., Wright, Law of Federal Courts, § 67 (2d ed. 1970). And, even if one looks to Pennsylvania law, a court of equity may, once it assumes jurisdiction, grant complete relief including a judgment for money. Lafean v. American Caramel Co., 271 Pa. 276, 114 A. 622, 624 (1921); see also Helmig v. Rockwell Manufacturing Co., 389 Pa. 21, 131 A.2d 622 (1957).

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Joseph Carroll ROLAND, Petitioner-Appellant, v. PEOPLE OF the STATE OF MICHIGAN, Respondent-Appellee. No. 72-1907. United States Court of Appeals, Sixth Circuit. Argued Feb. 15, 1973. Decided March 21, 1973. Joseph Carroll Roland, in pro. per. Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Stewart H. Freeman, Asst. Sol. Gen., Lansing, Mich., on brief, for respondent-appellee. Before PHILLIPS, Chief Judge, MILLER, Circuit Judge, and MeALLISTER, Senior Circuit Judge. PER CURIAM. The petitioner, Joseph C. Roland, appeals from an order of the United States District Court for the Eastern District of Michigan, denying his petition for the writ of habeas corpus. Petitioner was convicted of first degree murder in a Michigan court in 1966. Having exhausted his state remedies, he filed his petition in the court below for habeas corpus and an order was entered granting the relief sought upon the ground that the petitioner’s credibility had been impeached in the state court trial by the use of a confession which had been obtained from the petitioner without advising him with respect to his Miranda rights. Roland v. People of State of Michigan, 320 F.Supp. 1195 (E.D.Mich.1970). On appeal this Court remanded the case for reconsideration in light of the Supreme Court’s ruling in Harris v. New York, 401 U.S. 222, 91 S.Ct. 643, 28 L.Ed.2d 1 (1971), which was decided while the case was pending in this Court on appeal. Roland v. People of State of Michigan, 439 F.2d 1203 (6th Cir. 1971). Upon remand, the district court dismissed the petition in an unpublished opinion. The petitioner then filed a new petition in the district court resulting in the entry of an order of dismissal from which the present appeal was taken. The sole question presented on appeal is whether in a criminal case it is permissible for the state to undertake to impeach the credibility of a defendant by a confession obtained from him without warning him as to his rights in accordance with the Supreme Court’s decision in Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966). Upon consideration, we are of the opinion that the exact issue presented by this appeal was decided adversely to the petitioner’s position in Harris v. New York, supra. The Supreme Court there held that although a confession obtained in violation of the principles of Miranda may not be used against the defendant in the prosecution’s case in chief, it may nevertheless be used for impeachment purposes to attack the credibility of the defendant on cross-examination. That was the sole use made of the confession in the instant case. The judgment of the district court dismissing the petition for habeas corpus is therefore affirmed.

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UNITED STATES of America and Thornton J. Camfield, Special Agent, Internal Revenue Service v. WALL CORPORATION et al., Appellants. No. 72-1767. United States Court of Appeals, District of Columbia Circuit. Dec. 13, 1972. Mr. Raymond G. Larroca, Washington, D. C., with whom Messrs. Herbert J. Miller, Jr., and William H. Jeffress, Jr., Washington, D. C., were on the brief, for appellants. Mr. John Mullenholz, Arlington, Va., of the bar of the Court of Appeals of Maryland, pro hac vice, by special leave of court, with whom Messrs. Scott P. Crampton, Asst. Atty. Gen., Crombie J. D. Garrett and Robert E. Lindsay, Attys., Department of Justice, were on the brief, for appellees. Before McGOWAN, ROBINSON and MacKINNON, Circuit Judges. PER CURIAM: The questions presented by this appeal are whether an Internal Revenue Service summons, issued pursuant to 26 U.S.C. § 7602, requiring Wall Corporation to produce books, records, expense vouchers and other data relevant to the tax liability of Daniel C. and Roslyn Wall was issued for a proper purpose, and whether the District Court erred in refusing to permit Wall Corporation discovery designed to adduce the purpose of the summons. After careful consideration of Donaldson v. United States, 400 U.S. 517, 91 S.Ct. 534, 27 L.Ed.2d 580 (1970), and post-Donaldsow cases, we affirm the District Court’s rulings upholding the validity of the summons and refusing to permit discovery. This case is before this court on appeal from an order of the District Court requiring appellant, Wall Corporation, to comply with an Internal Revenue Service summons issued February 14, 1972 to produce certain documents and records. Appellant Daniel C. Wall, who sought and was granted permission to intervene in the District Court, is the subject of a tax investigation being conducted by Special Agent Camfield. During the course of his investigation, Camfield issued a summons to appellant to produce records and give testimony concerning the taxable years 1967, 1968, and 1969. On February 28, 1972 appellant Wall Corporation appeared at the hearing represented by Daniel C. Wall, its president and sole stockholder, but refused to produce the summoned documents and records. Wall Corporation and Daniel Wall were found in contempt of the District Court order on November 27, 1972. The contention by appellants that the summons was invalid and would be used solely for gathering information to be used in a criminal prosecution is not supported either by the facts of this ease or by the applicable ease law. A broad distinction must be drawn between investigation and prosecution. As the Supreme Court in Donaldson stated: We note initially that, despite the dictum, the courts of appeals in opinions issued since Reisman [Reisman v. Caplin, 375 U.S. 440, 84 S.Ct. 508, 11 L.Ed.2d 459 (1964)] was decided, appear uniformly to approve the use of a summons in an investigation that is likely to lead to civil liability as well as to criminal prosecution. The use of a summons also has been approved, even where it is alleged that its purpose is to uncover crime, if no criminal prosecution as yet has been instituted. [Footnotes omitted]. 400 U.S. at 532-533, 91 S.Ct. at 543. In United States v. Bell, 448 F.2d 40, 41-42 (9th Cir. 1971), the court, faced with the recurring problem of determining the validity of an Internal Revenue Service summons, stated: Where the Government is attempting to collect revenue under the tax laws, and no criminal case is actually pending against the taxpayer, a summons to examine the taxpayer’s records obtained pursuant to 26 U.S.C. § 7602, may be used even where its purpose is allegedly to uncover crime. In this case no recommendation for criminal prosecution has been made, and the material sought is relevant to a determination of the civil tax liability of Daniel Wall and his wife, Roslyn. On these facts, the District Court’s holding that the summons was issued for a legitimate purpose is consistent with current interpretations of Donaldson and with our own reading of it. The Eighth Circuit has said: The Donaldson case makes it clear that the summons can be successfully challenged only when a criminal prosecution has been instituted and is pending at the time of the issuance of the summons or when criminal prosecution has been recommended. . Since it is undisputed that there is no related criminal prosecution pending and none has been recommended, the procedural complaints concerning the trial court’s alleged restriction on discovery must fall. . United States v. Troupe, 438 F.2d 117, 119 (8th Cir. 1971). See also United States v. National State Bank, 454 F.2d 1249 (7th Cir. 1972). The Supreme Court ended its opinion in Donaldson by saying: We hold that under § 7602 an internal revenue summons may be issued in aid of an investigation if it is issued in good faith and prior to a recommendation for criminal prosecution. 400 U.S. at 536, 91 S.Ct. at 545. Our inquiry is not ended upon a determination that prosecution has neither been instigated nor recommended, since Donaldson also requires that a summons be issued “in good faith.” Thus, if it can be shown that the investigating agent had already formed a firm purpose to recommend criminal prosecution even though he had not as yet made a formal recommendation, issuance of the summons would presumably be in bad faith. Similarly, if the civil liability were already determined, the summons would appear to be solely for a criminal purpose. In this case the testimony elicited from Special Agent Camfield indicated that he was in the Intelligence Division, the function of which is criminal investigation, and that no other agent was working on the case. This testimony alone was insufficient to establish bad faith in the sense of a fixed purpose to recommend criminal prosecution. See United States v. Stribling, 437 F.2d 765, 773 (6th Cir. 1971); United States v. Erdner, 422 F.2d 835, 836 (3rd Cir. 1970). We find no error in the quashing of Wall Corporation’s subpoena to require Special Agent Camfield to produce memoranda relating to his investigation of the taxpayer. During examination of the agent at the hearing, appellant elicited the nature of his position and the scope of his responsibilities. Apparently Wall Corporation considered Agent Camfield’s testimony on these points sufficient to establish that the investigation was “solely for a criminal purpose” within Donaldson, for it chose to inquire no further. The existence of this opportunity to probe for bad faith, and the apparent tactical decision to exploit that opportunity to the very limited and inconclusive degree indicated, persuades us that the District Court did not err in denying further independent discovery. We conclude, therefore, that the order of the District Court granting the motion of the United States to quash the subpoena served upon Special Agent Camfield and ordering Wall Corporation to produce the documents and materials specified in the summons should be affirmed. It is so ordered. . United States v. National State Bank, 454 F.2d 1249 (7th Cir. 1972); United States v. Bell, 448 F.2d 40 (9th Cir. 1971); United States v. Pritchard, 438 F.2d 969 (5th Cir. 1971); United States v. Troupe, 438 F.2d 117 (8th Cir. 1971). . When this matter was taken under submission on the merits, there was before us a petition to stay the judgment enforcing the summons pending appeal. Learning that the briefs were filed, we asked the parties, at the argument held on the petition, to address themselves to the merits more fully than would perhaps normally be the case. The disposition we now make renders the petition moot.

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Verline OLIVER, Administratrix of the Estate of Rembert Marshall Oliver, Appellant, v. SOUTHERN RAILWAY COMPANY and General Motors Corporation. No. 71-2005. United States Court of Appeals, District of Columbia Circuit. Argued Dec. 8, 1972. Decided Dec. 29, 1972. Mr. R. Harrison Pledger, Jr., Washington, D. C., with whom Mr. Max M. Goldberg, Washington, D. C., was on the brief, for appellant. Mr. Richard W. Turner, Washington, D. C., with whom Mr. Stephen A. Trimble and Mr. Nicholas D. Ward, Washington, D. C., were on the brief, for appellee, Southern Railway Co. Mr. James C. Gregg, Washington, D. C., for appellee, General Motors Corp. Before Justice CLARK, of the Supreme Court of the United States, and McGOWAN and MacKINNON, Circuit Judges. Sitting by designation pursuant to Title 28, U.S.C. Section 294(a). PER CURIAM: Appellant’s decedent was killed when, on May 30, 1968, the unloaded 1967 General Motors Corporation flat bed truck he was driving west on Virginia Route 661 collided with the Southern Railway Company freight train engine proceeding north through the grade crossing located north of Manassas, Virginia. Appellant, decedent’s wife and administratrix of his estate, brought a diversity suit in the District Court for wrongful death under applicable Virginia law, Va.Code Ann. § 8-633 et seq. (Michie Supp. 1972), alleging in her amended complaint that Southern, by its negligence, and General Motors, by its negligence and warranty breach, did “jointly, severally and concurrently” cause the death of her husband. The trial judge directed verdicts in favor of (1) Southern at the conclusion of appellant’s opening statement and (2) General Motors after appellant’s evidence had been presented. This appeal challenges the propriety of those rulings; and, for the reasons hereinafter appearing, .we reverse as to both. I In her amended complaint against Southern, appellant asserted that the railway company was negligent with respect to both the manner in which it operated the train, and the physical conditions it permitted to exist at the site of the railroad grade crossing. In the opening statement in her behalf to the jury, it was contended that the crossing was obscured by trees and that the train failed to sound its whistle or bell as required by Virginia law. It was stated as well that the decedent attempted to apply his air brakes but that they failed due to defective formation of the brake valve assembly installed by General Motors. Southern, in moving for a directed verdict on the basis of the foregoing statement, seized upon the facts asserted by appellant as showing the negligence or warranty breach of General Motors represented by that brake failure and urged that, as a matter of Virginia law, such a failure would constitute an independent intervening cause of the accident which would operate to insulate Southern from liability. Appellant’s counsel opposed the motion on the ground that he intended to prove concurrent negligence of both defendants. Ruling that there could not be concurrent negligence and that if the jury found from the evidence that there was such a brake failure Southern would not be liable, the trial judge granted the motion. While we do not fault this statement of the substantive law, we find that the standard governing the granting of a directed verdict at this stage of a case was misapplied. Appellant does not, nor could she, challenge the inherent power of the court to direct a verdict at the conclusion of her opening statement. Best v. District of Columbia, 291 U.S. 411, 54 S.Ct. 487, 78 L.Ed. 882 (1934). See generally Annot., 5 A.L.R.3d 1405 (1966). Best does, however, require that “it must clearly appear, after resolving all doubts in plaintiff’s favor, that no cause of action exists” before the court may direct a verdict on an opening statement. 291 U.S. at 416-417, 54 S.Ct. at 489. Applying that test to the statement before us, the doubt we believe should have been resolved in appellant’s favor is the question whether General Motors would have been proven to be an independent intervening cause —a question which the trial judge himself acknowledged would turn on the jury’s view of the evidence. Indeed, he himself ultimately resolved the question in favor of plaintiff’s claim against Southern by directing a verdict in favor of General Motors. Whether properly accomplished by judge or jury, the exoneration of General Motors would remove the independent intervening cause assertedly insulating Southern, leaving the latter’s liability a question to be resolved on the evidence presented. While we intimate no view on the efficacy of its defense, given the possibility that General Motors would prevail upon its presentation, and that Southern might then be found liable if appellant proved the contentions set forth in her opening statement, we find that it was premature to absolve Southern. See Tuck v. Chesapeake & Ohio Ry. Co., 251 F.2d 180, 181 (4th Cir. 1958); Cioffi v. Queenstown Apartments, Inc., 100 U.S.App.D.C. 227, 243 F.2d 650 (1957). II As indicated above, appellant rests her claim against General Motors on the assertion that when the decedent applied his brakes to avoid the collision, the internal valve cage of the air brake application valve assembly failed due to improper design, manufacture and inspection of the assembly. This prevented the brakes from being engaged, thus causing the fatal accident which ensued. The testimony elicited from appellant’s witnesses reveals that the truck, composed of a cab and a flat body on which a hydraulic crane was installed to unload brick and cinder block, was struck by the train at the left front of the cab. Primary damage was restricted to the cab, which was demolished. The valve assembly in question, affixed to the floorboard on which the driver’s legs rest, was found 50 to 75 feet from the point of impact and was removed on the day of the accident along with the remainder of the truck wreckage to the Alexandria, Virginia yard of decedent’s employer, the J. J. Taylor Company. Approximately three weeks later the employer was prompted to inspect the valve assembly for the first time since the accident. Upon its removal it was observed that no damage had been done to the floorboard at the point of fixation, nor to the brake pedal or the connecting shaft. The operation of the assembly was described as being initiated by the application of pressure on the brake pedal. Through a linkage apparatus this pressure is transmitted to a piston which, upon its movement upward, permits the release of pressurized air through the exhaust valve into the brake system. Once sufficient pressure is applied to activate the assembly, the brakes operate with a constant force independent of any increase in pressure on the brake pedal. And, once put into operation, the brakes stop the wheels so that if the brakes remain applied, the truck will skid. There were no skid marks found at the scene of the accident. The inspection of the valve assembly disclosed that the front of the casting was broken and the bottom plate bent. The employer’s vice-president for maintenance testified that such a break would prevent the upward movement of the piston, thereby preventing operation of the air brake. He further stated that, while not knowing what caused the break, it was possible that the collision did. Appellant’s key witness, however —a metallurgist with an expertise in fracture analysis — stated that in his opinion the collision could not have caused the break. Rather, he stated it to have resulted from “normal foot action during driving,” which ultimately produced the fracture at a point in the valve assembly improperly thin to withstand the anticipated stress, and, in any event, improperly manufactured and tested in that the portion of aluminum which fractured was excessively hydrogenated and could have been detected as such by a standard examination. The expert also stated that, once activated, the air brakes would stop the wheels, and admitted the possibility of momentary braking action prior to failure which might have produced skid marks. General Motors moved for a directed verdict at the conclusion of appellant’s evidence. The trial judge granted the motion because there was no evidence for the jury to determine when the fracture occurred. He relied on the absence of evidence that the brakes were ever applied, there being no skid marks at the scene; and the Virginia vehicle inspection one day prior to the accident which found the brakes in satisfactory condition. With the injunction in mind that a directed verdict is proper only when “without weighing the credibility of the witnesses there can be but one reasonable conclusion as to the verdict,” Brady v. Southern Ry. Co., 320 U.S. 476, 479, 64 S.Ct. 232, 234, 88 L.Ed. 239 (1943), and viewing the evidence most favorably to appellant, who was entitled to every legitimate inference reasonably to be deduced therefrom, Muldrow v. Daly, 117 U.S.App.D.C. 318, 329 F.2d 886, 888 (1964), we find there was sufficient evidence to let the matter proceed at least to the conclusion of General Motors’ presentation. And, to the extent that there was conflicting testimony with regard to the cause of the brake failure, it was within the jury’s province to resolve. Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 700-701, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962); Kendall v. Gore Properties, Inc., 98 U.S.App.D.C. 378, 236 F.2d 673, 682 n. 30 (1956). First, the successful vehicle inspection is not inconsistent with appellant’s theory of General Motors’ liability. Second, the opinion of appellant’s expert and the absence of damage around the brake pedal and floorboard area were clearly enough evidence to support a view that normal foot pressure, and not the collision, caused the fracture of the valve assembly. Finally, there was sufficient evidence which would permit the inference that the decedent did attempt to apply his brakes prior to the collision. Appellant is faced with a difficult burden in establishing this fact since there were no eyewitnesses to the accident. But we believe it to be a fair assumption that, without a showing to the contrary as suggested in note 3, supra, decedent as a licensed truck driver would be attentive to his driving responsibilities, would have seen the train ahead of him, at least as it emerged from the obscuring foliage, and would have attempted to stop his truck. This is particularly so in view of the facts that the decedent was familiar with the railroad crossing in question, and had himself once been temporarily stalled on a crossing in the face of an oncoming train, both tending to increase the probability of his attentiveness prior to the fatal collision. We find as well that the absence of skid marks alone does not operate to withdraw from the realm of reasonable inference the possibility that the decedent did, unsuccessfully, attempt to apply his brakes. Reversed. . Specifically, appellant alleged inter alia in her pretrial statement that Southern operated the train at an excessive speed, and permitted the crossing to become obscured by foliage while failing to provide adequate warning devices for vehicular traffic. . Despite appellant’s reliance at trial on proof of concurrent negligence, it is clear from her amended complaint quoted above that she was also alleging “several” liability. In view of the complaint and the facts set forth in her pretrial and opening statements, we do not think it justifiable to limit the grounds for appellant’s opposition to that stated at trial. See Lampka v. Wilson Line of Washington, Inc., 117 U.S.App.D.C. 55, 325 F.2d 628, 629 (1963). . At oral argument there were intimations that the train engineer was present at the trial to testify for one or both defendants. To illustrate the possibility suggested, we need only suppose his testimony would reveal inattention on the decedent’s part such that he would not have attempted to apply his brakes. . The skidding phenomenon was also said to result if either of the two brake back-up systems were engaged — one automatic, applied as soon as system air pressure dropped below 60 psi; one manual, applied by pulling a lever to release air through another exhaust valve. . In addition to suggesting that properly functioning brakes were not applied, the lack of skid marks just as strongly suggests that brakes that malfunctioned were applied, as appellant’s expert witness so attested. While the witness conceded that momentary successful application of the brakes might cause skidding prior to failure, aside from the uncertain effect of a fleeting release of air into the system, it is also possible that the brakes were applied lightly at the curve less than a mile before the crossing. This might have caused a fracture that left decedent wholly without brakes during a later attempt to stop. Regarding the operation of the back-up brake systems, supra note 4, it appears to us not improbable that the circumstances would suspend decedent’s ability to apply the manual system. The automatic system would not necessarily engage for, as appellant’s expert testified, upon failure of the valve assembly the exhaust valve would reseat, merely blocking the passage of pressurized air into the brake system — not permitting an escape of air such as to reduce the pressure below 60 psi as was required to activate the automatic brake.

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AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent. No. 71-1751. United States Court of Appeals, District of Columbia Circuit. Argued April 14, 1972. Decided Jan. 4, 1973. Mr. Gary Green, Washington, D. C., with whom Mr. J. Raymond Needham, Washington, D. C., was on the brief, for petitioner. Mr. Arthur A. Horowitz, Washington, D. C., also entered an appearance for petitioner. Mr. Warren L. Sharfman, Associate Gen. Counsel, Litigation and Research, C. A. B., with whom Messrs. R. Tenney Johnson, Gen. Counsel, O. D. Ozment, Deputy Gen. Counsel, Robert L. Toomey, Alan R. Demby, Attys., C. A. B., and Howard E. Shapiro, Atty., Dept, of Justice, were on the brief, for respondent. Before BAZELON, Chief Judge, DANAHER, Senior Circuit Judge, and FRANK A. KAUFMAN, United States District Judge for the District of Maryland. Sitting by designation pursuant to 28 U.S.C. § 292(c) (1970). BAZELON, Chief Judge: Petitioner Air Line Pilots Association challenges CAB approval of an agreement, pursuant to Section 412 of the Federal Aviation Act of 1958, 49 U.S.C. § 1382, providing for multilateral reduction of scheduled seating capacity in four major domestic markets. Petitioner contends that the Board was required to hold a hearing because of the anti-competitive aspects of the agreement; that the Board was required to hold a hearing because of the impact on carrier employees in order to determine whether labor protective provisions should be applied to the agreement; and that, in the absence of such hearings, the Board’s findings are insufficient and unsupported by the record. We hold that the Board was not required to hold a hearing with respect to the anti-competitive aspects of the agreement. However, we are unable to determine the basis on which the Board denied a hearing on the impact of the agreement on carrier employees; since we will not construct a proper justification here, we remand to the Board for a new determination. The Agreement In 1970 American Airlines, Inc. (American), Trans World Airlines, Inc. (TWA), and United Airlines, Inc. (United) were experiencing heavy financial losses due in substantial part to excess seating capacity in many major domestic routes. The excess capacity was caused by a decline in the traffic levels and the introduction of large, higher capacity aircraft. Efforts at unilateral reduction-appear to have failed to alleviate the excess both because of the magnitude of the problem and the traditional fear of each carrier that unilateral reduction would lead to a loss of the carrier’s market share. Section 412 of the Federal Aviation Act of 1958 gives to the CAB authority to approve agreements among carriers “for controlling, regulating, preventing, or otherwise eliminating destructive, oppressive or wasteful competition, or for regulating stops, schedules, and charter of service. . . .” Board approval confers anti-trust immunity by virtue of Section 414 of the Act. In August of 1970, American, TWA and United entered into such an agreement providing for multi-lateral reduction of scheduled seating capacity in 15 markets for a two year period in the hope of stemming financial losses. While the Board disapproved this particular agreement, it suggested that it “would be prepared to consider applications for authority to engage in discussions, under the appropriate safeguards, looking toward multilateral agreements to reduce capacity in markets in which excess capacity is presently being operated.” The Board agreed that the severe economic plight of the carriers was due in large part to overcapacity being operated in many large markets. The respondents applied for, and the Board approved, discussions which led to an agreement on June 21, 1971, providing for mutual reduction in four city-pair markets for one year. Application for Board approval was made on June 23, 1971, and interested parties were given 15 days to file comments. In its comment petitioner raised substantially the same issues raised here on appeal. The CAB denied petitioner’s request for a hearing and approved the agreement August 19, 1971, Order 71-8-91. It is the approval of this agreement which is before us today. We turn first to petitioners contention that a hearing was required because of the anti-competitive aspects of the agreement. Petitioner argues that the agreement is so “at odds with established concepts of anti-trust law” and raises questions of such substantial importance as to require a hearing. Without a hearing, say petitioners, the Board lacked sufficient grounds for approval of the agreement. Of course, most Section 412 agreements will have anti-trust implications. Furthermore, “the [mere] fact that these questions are difficult and important . . . does not mean an evidentiary hearing is an essential prerequisite to their satisfactory resolution.” National Air Carriers Ass'n v. C.A.B., 141 U.S.App.D.C. 31, 40, 436 F.2d 185, 194 (hereinafter NACA I). As we have said before, there is no statutory requirement for a hearing as a precondition to Board approval under Section 412. It is true that in certain cases the anti-trust issues may not lend themselves to a satisfactory disposition without a hearing. But we have made it quite clear that the Board should have a degree of latitude in determining whether a full evidentiary hearing will be necessary in a particular case. NACA I at 194, National Air Carriers Ass’n v. C.A.B., 143 U.S.App.D.C. 140, 141, 442 F.2d 862, 864 (hereinafter NACA II). In reviewing this determination, this court will not substitute its own view for that of the Board. Rather, the question for us is whether there exist substantial and material disputed issues of fact or whether by refusing to conduct a hearing the Board “denied [itself] the materials requisite for a rational decision.” NACA II, 143 U.S.App.D.C. at 146, 442 F.2d at 868. Here, petitioner was afforded an opportunity to present whatever facts it believed might be relevant. Petitioner did not offer any facts, nor did it suggest what facts it might offer at a hearing. Furthermore, the record does contain information as to prior unilateral capacity reductions and their effects, projections as to traffic growth, and impact upon competing carriers in other markets. While there was some disagreement as to the course of conduct which would be pursued by the three carriers, there was not the kind of disagreement as to material and substantial factual questions which would require a full evidentiary hearing. Moreover, this was a limited agreement, confined to only four, city-pair markets and lasting a single year. We have heretofore upheld Board determination to proceed without an evidentiary hearing where the agreement was novel and of an “interim” or short term nature. In cases of this kind it may well be that “a month of experience will be worth a year of hearings.” American Airlines v. C.A.B., 123 U.S.App.D.C. 310, 319, 359 F.2d 624, 633 (1966), cert. denied, 385 U.S. 843, 87 S.Ct. 73, 17 L.Ed.2d 75. Here, the Board emphasized in approving the agreement that it would maintain jurisdiction in order to condition the agreement, shorten its term, or terminate it if circumstance should dictate. In light of the seriousness of the problem facing the industry, the delay necessitated by a hearing, the limited nature of the agreement, and the adequate information at hand, we cannot say that a hearing was required by law. The Impact on Labor Petitioner also claims that the Board should have held a hearing on the impact of the agreement on carrier employees in order to determine whether to apply labor protective conditions. Petitioner contends that since the Board made no findings as to the impact on employees, the Board’s approval of the agreement is without adequate support. The CAB appears to respond that since labor protective conditions are for policy reasons inapplicable to reduction agreements, no inquiry is necessary as to the impact of the agreement on labor in this case. The Board also argues that a hearing would have delayed implementation of the agreement and that any conditions imposed would amount to a financial burden on the carriers. This, says the Board, would run counter to the purpose of the agreement: reduction of carrier losses. But the CAB response misses the mark on both counts. In approving agreements under Section 412 the Board must find that the agreement is not adverse to the public interest. It has long been held that the welfare of displaced employees is a legitimate factor within the public interest. As the Board itself stated in United Western, Acquisition of Air Carrier Property: On balance, [the agreement] must benefit the public as a whole; otherwise we would disapprove it. Very often, the benefits to the stockholders and to the public will be at the expense of some of the employees of the companies involved. We think it only equitable that in such circumstances the hardships borne by adversely affected employees should- be mitigated by provisions for their benefit. Thus it may be that an agreement will be disapproved because its impact on carrier employees outweighs the positive aspects of the agreement; or that an agreement will be approved only because its impact on carrier employees is mitigated by labor protective provisions; or it may be that the impact on carrier employees is so small as to require neither disapproval of the agreement nor imposition of labor protective conditions. In any case, while the decision to impose conditions is a policy question left largely to the discretion of the Board, we cannot believe that the Board would as a matter of policy simply ignore entirely the impact of the agreement upon carrier employees. Such a decision could amount to a refusal even to consider what may develop to be a legitimate factor in balancing all elements essential to a just determination of the public interest. But it is not clear from the Board's order whether the Board concluded that it may as a general policy refuse to consider the impact of reduction agreements on carrier employees, or whether the Board merely determined that the adverse impact on employees was overborne by the positive aspects of the agreement in this particular case. On the one hand, the Board seems to have concluded that consideration of employee welfare was unnecessary since “the instant agreement does not create changes in any carrier’s operational authority.” But whether operational authority changes or not, the impact on employees may be the same, and such a distinction does not erase the Board’s duty to consider the welfare of carrier employees under the public interest standard when it approves agreements under Section 412. On the other hand, it appears possible that the Board assumed adverse impact on employees, but determined the impact overborne by competing interests. We hesitate to uphold the Board where this aspect of its decision appears to be so unclear. S.E.C. v. Chanery Corp., 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1943). “The function of the court is to assure that the agency has given reasoned consideration to all the material facts and issues. This calls for insistence that the agency articulate with reasonable clarity its reasons for decision. . . . ” Therefore, we remand to the Board so that it may clarify its reasons for approving the agreement over the claims of adverse impact on carrier employees. We do not mean to say that without more the Board must necessarily hold a hearing to resolve this issue. We leave this to the discretion of the Board subject to the guidelines discussed above. But the Board must, at a minimum, address the question of adverse impact on carrier employees and set forth clearly its reasons for concluding that the public interest lay in approval of the agreement. While the agreement in question has now run its course, we note that the CAB recently approved a six month extension. Petitioner did not file comment with respect to this extension; but this may not be surprising in view of the Board’s earlier decision which might have been taken to mean that the Board would never consider the impact of such agreements on carrier employees as a matter of policy. On this remand we think the Board should now invite comments from petitioner as to the impact the agreement has had, and will be expected to have, on carrier employees. Furthermore, the public interest issue should be reappraised if such comments are received. Because the agreement has not evoked specific complaints from labor during its operation, and because of the disruption which would result from outright termination of the agreement, we leave it to the Board’s discretion to permit the agreement to continue pending re-consideration by the Board. In view of the short term nature of the extension, we assume that the Board will proceed most quickly to a resolution. . Air Line Pilots Association is the certified bargaining representative of flight crew members of a number of air carriers, representing over 15,000 pilots, stewards and stewardesses employed by United and TWA. . In 1970, TWA, United, and American incurred losses of $65 million, $40 million, and $26 million respectively. Between 1970 and 1971 the carriers reduced the number of flights in the four markets by 13%; however, there was still a 13% increase in non-stop capacity. The overall load factor dropped by 19% to 32%, well below levels considered sound by the CAB. Application of TWA et al, Order 71-8-91, August 19, 1971. . Section 412 [72 Stat. 770, 49 U.S.C. § 1382]; Section 414, [72 Stat. 770, 49 U.S.C. § 1384]. . See Agreement between American, TWA and United, Order No. 70-11-35, November 6, 1970. Among other things, the Board found that the two year period was too long and the agreement was too flexible. Under the proposed agreement, the airlines were not required to reduce capacity in any specific market as long as the total capacity was reduced in the aggregate of the markets. “Given the extremely competitive history of the carriers in such major markets as New York-Los Angeles, for example, it is highly possible that the carriers would choose to maintain their competitive pressures in these markets and comply with their agreement by reducing service in their two-carrier markets (e. g., Memphis-Los Angeles) or in satellite-type markets (e. g., Newark-San Jose). In such later instances, satellites like Ontario or San Jose could lose the relatively little transcontinental service they now have.” Id. . Id. . By reducing the number of flights, an airline reduces the number of seats available. Unless demand is affected to the same extent, a reduction in available seats will normally result in a higher “load factor.” “Load factor” refers to the percentage of available seats actually used. The proposed reductions are as follows: To May 31, 1972 NY-LA NY-SF CHI-SF WASH-LA NY-LA NY-SF CHI-SF WASH-LA Present Level Weekly Nonstop Bound Trips 4 185 143 147 73 Proposed Level 132 89 105 66 June 1 to September 16,1972 Present Level Weekly Nonstop Round Trips 4 185 143 147 73 Proposed Level 157 121 126 69 Percent of Reduction 28.9 38.0 28.6 10.2 Percent of Reduction 15.4 15.7 14.3 6.1 It was the objective of the agreement to raise the load factors in the three markets from a level of 26-36% to 50-60%. . National Carrier Ass’n v. C. A. B., 141 U.S.App. 31, 436 F.2d 185 (1970) (hereinafter NAGA I); National Air Carrier Ass’n v. C. A. B., 143 U.S.App.D.C. 140, 442 F.2d 862 (1971) (hereinafter NAGA II). As we said in NACA II, 143 U.S.App.D.C. at 141, 442 F.2d at 864. . See NACA I, 141 U.S.App.D.S. 31, 436 F.2d 185 (1970); Marine Space Enclosures, Inc. v. FMC, 137 U.S.App.D.C. 9, 17-18, 420 F.2d 577, 585-586 (1969); Citizens for Allegan County, Inc. v. FPC, 134 U.S.App.D.C. 229, 232-233, 414 F.2d 1125, 1128-1129 (1969). . Some concern was expressed that capacity released from the four markets under the agreement might be diverted to other markets or charter service in competition with other air carriers. The applicant carriers represented that this would not occur and the Board approved the agreement upon this condition and with the authority “to impose conditions [to prevent diversion of capacity] at a later date” if it should prove necessary. . See, e. g., National Air Carriers Ass’n v. C. A. B., 141 U.S.App.D.C. 31, 436 F.2d 185. . United States v. Lowden, 308 U.S. 225, 235-236, 60 S.Ct. 248, 84 L.Ed. 208; Seven States Area Investigation, 30 CAB 473, 475-577 (1960); North Atlantic Route Transfer Case, 14 CAB 910, 916-917 (1951). . 11 CAB 701, 708 (1950). Aff’d sub nom. Western Air Lines v. C. A. B., 194 F.2d 211, 213-215 (C.A. 9, 1952). . Cf. Air Line Pilots Association, International v. C. A. B., 148 U.S.App.D.C. 24, 458 F.2d 846, 852 (1972). . Operational authority refers to the authority given to carriers by the Board to operate between given points. The CAB states that it has been in cases where there is a change in operational authority that labor protective conditions have been applied. The Board argues that where it grants a change in operational authority the Board assumes a different obligation to employees than in cases where “fluctuations, rises and falls, and changes in volume or character of employment [are] brought about solely by other causes.” Here, says respondent, “the Board has merely facilitated realization of a state of affairs which should have come to pass long before” as a “product of the basic economic law of supply and demand.” But even mergers are only products of supply and demand. In each case the Board is granting an exception to a general rule which prohibits reacting to supply and demand in ways which may in the long run threaten competition. In any case, the Board’s duty under the public interest standard derives from the requirement of Board approval of such agreements and not from the nature of the agreement. . Greater Boston Television Corp. v. F. C. C., 143 U.S.App.D.C. 383, 393, 444 F.2d 841, 851. . For instance, what impact upon petitioner can be expected from the statistics set forth in footnote 19, page 7, of the order under review?

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LOCAL UNION 13410, UNITED MINE WORKERS OF AMERICA, Appellant, v. UNITED MINE WORKERS OF AMERICA et al. No. 71-1272. United States Court of Appeals, District of Columbia Circuit. Argued Oct. 25, 1972. Decided Jan. 5, 1973. Mr. Jack H. Olender, Washington, D. C., with whom Mr. James P. Donovan, Washington, D. C., was on the brief for appellant. Mr. Harold H. Bacon, Washington, D. C. , for appellee, United Mine Workers of America, Welfare and Retirement Fund. Mr. Charles L. Widman, Washington, D. C., for appellees, United Mine Workers of America and Edward L. Carey. Mr. Jo V. Morgan, Jr., Washington, D. C., with whom Mr. John J. Wilson, Washington, D. C., was on the brief, for appellee, The National Bank of Washington. Mr. Allen Jones, Jr., Washington, D. C., for appellee, Hamilton Leasing Corporation. Before FAHY, Senior Circuit Judge, and ROBINSON and WILKEY, Circuit Judges. WILKEY, Circuit Judge: Appellant is a local labor organization composed of clerks, medical assistants and hospital clerks. The members of the Local are employed in various clerical and administrative capacities by the United Mine Workers of America Welfare and Retirement Fund. In turn the Fund is partially controlled by and receives a substantial portion of its assets from members of the United Mine Workers of America, an international labor union and appellee herein. The net result was that members of the Local were indirectly but essentially employed by the organization [International] which was supposed to represent them against their employer [Fund], an interrelationship which continued for twenty years. I. Actions of the Trial Examiner and District Court Twenty years was sufficient to bring this situation to the attention of the ever-watchful National Labor Relations Board. After hearing a Trial Examiner found that the employer (Fund) was engaged in unfair labor practices with respect to the Local. A major basis for this finding was the participation of supervisory personnel of the Fund in the affairs of the Local. The Trial Examiner also found that the Local was disqualified to represent the Fund’s employees by reason of the Local’s affiliation with the International. Since the Fund’s payroll goes to the employees which the International represents, and the International helps to name the Fund’s trustees, the Trial Examiner found an unacceptable conflict of interest to exist. After posting the required notice, the Local met to consider the effect of the Examiner’s decision. The remedial action decided upon was to take a secret ballot on a resolution providing for both disaffiliation from the. International and-separation of the Local’s Death Benefit Fund. Based on the Examiner’s opinion, fifty-eight alleged supervisory personnel were notified of their purported ineligibility for membership and were thus not allowed to vote on the resolution. Alleging that the disqualification of the supervisors and various other .acts constituted a breakdown in democratic procedures, the International placed the Local under a trusteeship. This trusteeship froze the Local’s bank account, impounded the ballots on the disaffiliation resolution, and took over management of the Local’s affairs. The Local responded by bringing suit against the International seeking a temporary restraining order, followed by a preliminary and permanent injunction, and damages. The District Court granted the temporary restraining order and permitted the ballots to be counted, revealing that the resolution to disaffiliate had passed by the decisive margin of 203 to 33. After trial on the merits, the District Court found for the International, holding the disaffiliation vote to be invalid and denying preliminary and permanent injunctions and the request for damages. The Local now seeks reversal of this action of the trial court. The Local argues that the passage of the disaffiliation resolution effectively disassociated the Local from the International, and therefore a permanent injunction is justified to prevent meddling by the International in the affairs of the now unrelated Local. The trusteeship, however, was imposed before the disassociation became effective, and was specifically intended to prevent the disaffiliation of the Local. If the trusteeship was valid, the vote for separation came too late to be effective. The validity of the trusteeship is thus the principle issue upon which this dispute turns. II. The Actions of the Local The Labor-Management Reporting and Disclosure Act provides that a labor organization shall impose a trusteeship over a subordinate body for certain specified purposes, including “restoring democratic procedures.” The International claims that the Local abrogated “democratic procedures” by three specific courses of action. A. Expulsion of Members The International first claims that the notice to fifty-eight supervisory employees stating that the Local had “been informed” of their ineligibility for membership was an illegal expulsion. The letter’s language and the surrounding circumstances, however, suggest that no members were expelled by this or any other act of the Local prior to imposition of the trusteeship. There is evidence that the supervisory employees were not in fact taken off the membership rolls of the Local. In addition, they were given an opportunity to appeal their classification; this suggested that no final action had been taken. The International protests that requirements under 29 U.S.C. § 411(a)(5) of specific charges, time to prepare a defense, and full and fair hearing were not met. The section relied upon, however, is entitled “Safeguards against improper disciplinary action” and provides that “no member . may be . expelled, or otherwise disciplined” without the enumerated safeguards. Even assuming the Local had taken final action to expel the supervisors, that action was not disciplinary in nature. The supervisory personnel were not being removed in order to punish them but rather to comply with a decision of the NLRB Examiner. The Local was not obligated to conform to the specific provisions of § 411(a)(5). Strictly speaking, the Local may not have been obligated to expel the supervisors since such individuals may be non-voting members of unions. The Local could have simply amended its bylaws to provide for this special non-voting status. As noted, however, the supervisors were not actually expelled by the letter. Indeed, they were specifically invited to show why they ought not to be expelled. The supervisors could have raised the possibility of a non-voting membership at that time. The Local’s notice, therefore, met the minimum standards required by due process under the circumstances. B. Denial of Vote to Supervisors The tangible and final action which the Local did take with respect to the fifty-eight supervisors was barring them from voting on the disaffiliation resolution. This provides no basis whatever in support of the International’s position. First, the NLRB Examiner’s decision, as it then stood and as it was later adopted with modifications by the Board, specifically provided that voting by such supervisors was improper. Second, even a unanimous vote by the fifty-eight against the resolution would still not have defeated it. Third, the Local’s Death Benefit Fund, in which the supervisors had an interest, was merely separated, not dissolved. No pecuniary interest of the supervisors was threatened by that action; in fact, if the supervisors were not to remain members of the Local, separation of the Fund was desirable to protect the supervisors’ financial interest. Thus, the only possible result of permitting the supervisors to vote would have been to invalidate the entire ballot by violating the Examiner’s order, and creating a greater potential of disqualification of the Local as bargaining representative of the non-supervisory employees. To accede to the International’s claim would have required the Local to maintain union democracy by allowing what the NLRB had found to be an unfair labor practice. The Local’s good faith attempt to comply with the law cannot be used by the International as the basis for imposition of a trusteeship. C. Other Claimed Procedural Defects The International claims the meeting following the Hearing Examiner’s decision was called with inadequate notice to the farflung membership of the Local. Inasmuch as the posted notice complies precisely with the Local’s by-laws, the International has been unable to illustrate what more could be required of the Local. A further claim charges that the resolution contains two separate clauses (disaffiliation from the International and separation of the Death Benefit Fund) but allowed only one “yes” or “no” vote. Aside from the International’s inability to cite any authority for the proposition that joint resolutions of this type are impermissible, this court finds it difficult to describe a procedure regularly followed in Congress as a breakdown in the democratic process. In any event, if the resolution for disaffiliation had carried, and the supervisors under the NLRB decision were no longer to be members of the Local, it was necessary to separate the Death Benefit Fund from purely Local administration to protect the interests of the non-member supervisors. The possibility of inconsistent votes on the two related questions was wisely not allowed. Finally, the International objects to language within the resolution and accompanying it which can arguably be described as advocacy for passage of the resolution by the Local’s leadership. Admittedly the challenged language does not go out of its way to point out that the Trial Examiner’s decision on the need to disaffiliate might not be the final NLRB action. Someone had to send out the ballots and characterize the issues, however. Absent an outright distortion of the facts and issues as reasonably perceived, we shall not presume that the Local’s characterizations and comments on the issues were improper. D, An Injunction Against Future Interference In short, no valid factual basis existed for the International’s conclusion that “democratic procedures” had been abrogated. The District Court erred in holding that a breakdown in democratic procedures, requisite to establish a valid purpose for the trusteeship, had occurred in this case. What broke down —and for perfectly valid and understandable reasons — was support in the Local for continued affiliation with the International. The real (and invalid) purpose behind the International’s imposition of the trusteeship was its desire to retain control of the Local’s affairs. This clearly justifies a permanent injunction to prevent the International from interfering further with the affairs of the Local. III. The Initial Validity of the Trusteeship Our discussion in Part II illustrates that there was in fact no reason to permit the International to impose a trusteeship on the Local. This issue of the initial validity of the trusteeship is important in this case because the Local is asking that its vote to disaffiliate from the International be held valid and that the International be assessed damages for the harm done the Local as a consequence of the trusteeship. If the trusteeship was unlawfully imposed, it could have no effect upon the validity of the disaffiliation election. The Local should also be permitted to recover whatever monetary damages it suffered due to the wrongful imposition of the trusteeship. Most obviously, the imposition of the trusteeship would be invalid if at the time of the imposition there was no rational basis for the International’s belief that democratic procedures were in jeopardy. Under the circumstances as they appeared at the time, the International’s assertion that democratic procedures in the Local were endangered appears more as an afterthought justifying abrupt and arbitrary action taken. While the letter informing the supervisory personnel of their ineligibility to vote might have led the International to conclude that some of its members might eventually be expelled from the Local without any valid justification derived from NLRB action, yet the letter clearly invited response from the supervisors affected. The implicit promise of further consideration by the Local hardly provided a legal justification for the precipitate takeover by the International through the frequently abused device of a trusteeship. The purported apprehensions of the International have been shown to be legally incorrect; on this ground alone the establishment of a trusteeship by the International would have been invalid, but to our mind an even stronger reason exists for invalidating the trusteeship. IV. Failure to Provide for a Hearing The Local advances a second basis for holding the trusteeship to have been invalid. This claim relies upon the fact that the trusteeship was imposed without giving the Local an opportunity for a hearing. Such a hearing is arguably required by the language of 29 U.S.C. § 464(c), and indubitably would have been helpful in this situation, since a hearing would have given the Local an opportunity to explain that no one was actually being expelled. Once reassured, the International would no longer have had an arguable basis for believing that a trusteeship was necessary. Thus the International’s failure to afford the Local a chance to be heard prejudiced the Local by depriving it of an opportunity to remove the purported basis for the International’s belief that democratic procedures had broken down. If the International was required to allow a hearing and did not do so, the imposition of the trusteeship must be held invalid. The section relied upon by the Local does not, by its specific terms, make a hearing mandatory whenever a trusteeship is imposed. Upon superficial examination the statute seems simply to say that a trusteeship will be presumed valid if a hearing is held — not that a trusteeship will be invalid if one is not held. The legislative history of § 464(c), as well as policy considerations, however, compel a holding that without a hearing a trusteeship is invalid. The rationale for such a construction was recently articulated by the Fifth Circuit. The court began by noting that in passing § 464 Congress was extremely concerned with the frequent imposition of trusteeships over subordinate locals for illegitimate purposes. The court then stated: Under the common law prior to the passage of the . . . [statute], a trusteeship imposed upon a subordinate body was invalid unless the subordinate body was granted a fair hearing. Plentty v. Laborers’ Int. Union of No. America, supra 302 F.Supp. 332 at 338. Congress was aware of this when it enacted the . [statute]. The purpose of the trusteeship provisions of the . . . [statute] was to prevent abuses of union trusteeships and to require disclosure of the reasons for union actions in matters touching the governance of local union affairs, and it would be contrary to that purpose to hold that a fair hearing is not required for authorization or ratification of a trusteeship over a local union, because to so hold would mean that in an important aspect, a union could more easily impose a trusteeship of a subordinate body after passage of the [statute] than it could before. We agree with this characterization of § 464’s purpose and effect. Both the House and Senate committees that considered the statute observed that prior to its passage “A trusteeship will ordinarily be set aside unless the local is given a fair hearing including notice of the charges and an opportunity to defend.” The Reports contained language that made it clear Congress did not wish to diminish the procedural protections afforded an affiliate: [A trusteeship is presumed valid] only if the trusteeship was instituted in procedural conformity with the constitution and bylaws of the international labor organization and authorized or ratified after a fair hearing either by its executive or other body provided in its constitution. This limitation will encourage the use of fair procedure within the union. . [I]f dishonesty or bad faith is proved, the bill provides a direct and effective remedy. This court will not frustrate the clear intent of Congress by making the remedies available to the Local less effective than they were before Congress acted. Policy considerations, other than those stated by Congress when it passed § 464, support our conclusion that the Local should be given a fair hearing before the imposition of the trusteeship. As we observed, a hearing would have resolved misapprehensions that democratic procedures had been abrogated. In general it is wise to encourage consultation and negotiation before permitting the use of so drastic a measure as a trusteeship. If the International had been acting in good faith, it would have gained as much by hearing the Local’s explanations as would the Local in having an opportunity to give them. In order for the remedy of a hearing to be as “direct and effective” as possible, it is desirable for it to take place before the imposition of a trusteeship. A hearing would be virtually useless if the parent union could impose a trusteeship and then set a hearing for a year later. The hearing should, if possible, be held prior to trusteeship. There is no absolute requirement that a hearing be held prior to imposition, since the statute states that a hearing may either “approve or ratify” the trusteeship. The possibility of “ratification” implies that under some circumstances a hearing may occur after a trusteeship is imposed. We can imagine extreme emergencies that might compel action without prior notice and hearing. Even in such an emergency situation, however, a hearing date could he set when the trusteeship was imposed and held shortly thereafter. In this case, the International neither made an attempt to hold a hearing prior to imposition nor later. In the facts of this case we see no emergency situation that required action without providing the Local with a fair hearing. The letter to the supervisors indicated that they had not been finally and formally expelled. Even if the vote on the resolution was unfair, arguably there was time for some hearing procedures between the mailing of the ballots and the time the disaffiliation was to become effective. If the International felt it possible to take the considerable trouble to create a trusteeship, it could certainly go one small step further and permit the Local to explain why such an action was unnecessary. The actual course chosen here was summary action by fiat that cannot be justified, particularly where the sole alleged purpose of the trusteeship was to restore union democracy. Under the facts of this case, some sort of prior hearing was both possible and required for the trusteeship to be valid, hence the International had no excuse to flout accepted concepts of due process. For future guidance to unions attempting to abide by the law and courts reviewing union activity, our holding on this point may be summarized as follows. Absent a reasonable belief in the necessity for immediate action, all practical steps must be taken to afford a hearing before a trusteeship is imposed. A trusteeship may be imposed without a hearing only where a parent union could reasonably believe that an emergency situation does not allow time for such a hearing. Even in such emergency situations, at the time the trusteeship is imposed a hearing should be scheduled for the earliest practicable date thereafter. If the parent union does not comply with these requirements, any trusteeship will be treated as void ab initio. Y. Conclusion We find that the Local did not in fact violate any democratic procedures in its attempt to disassociate itself from the International. We also find that the trusteeship was not properly imposed, hence had no effect upon the validity of the disaffiliation vote. We therefore reverse the trial court’s denial of a permanent injunction and its dismissal of the Local’s plea for damages. The case is remanded to the District Court for an order dissolving the trusteeship, enjoining future intervention by the Internátional in Local affairs, for hearings on the amount of damages due the Local, and for any other action deemed appropriate and consistent with this opinion. So ordered. . The Fund is a trust, created pursuant to Section 302(c) (5), Labor-Management Relations Act of 1947, 29 U.S.C. § 186(c) (5) (1970). One trustee is appointed by the bituminous coal operators signatory to the National Bituminous Coal Wage Agreement of 1968, a second by the International, and a third trustee by the other two trustees. The three trustees administering the Fund at all times relevant herein were W. A. Boyle, appointed by the UMWA, who is also the president of the UMWA; C. W. Davis, appointed by the signatory bituminous coal operators; and Josephine Roche, selected by the other two trustees, who also acted as Director of the Fund. . UMWA Welfare and Retirement Fund, No. 27-OA-2667 (4 Aug. 1970) (reprinted in Joint App., Yol. I at 22.) . Joint liability for damages, and further injunctive relief, were claimed against (1) the National Bank of Washington for allegedly “freezing” the Local’s funds upon receipt of notice of the trusteeship, (2) Hamilton Leasing Corporation for failing to turn over the ballot box to the Local without a court order, and (3) the Fund for allegedly conspiring with the International to interfere with the internal affairs of the Local. The District Court dismissed the Local’s claims as to these parties. On this appeal the Local has made no real attempt to show that this holding by the District Court as to these three defendants was improper. After argument we therefore affirmed from the bench the District Court’s dismissal as to the Fund, the National Bank of Washington, and the Hamilton Leasing Corporation. Order and Judgment, No. 2778-70, 3 Nov. 1972. . Local Union 13410, UMWA v. United Mine Workers of America, 325 F.Supp. 1107 (1971). . The Local also argues that the trusteeship is invalid because the International’s constitution does not include specific provisions on either the procedure or the grounds for imposing a trusteeship. Despite the lack of such requirement in the statute, a few cases in other jurisdictions have intimated that specific provisions are necessary. United Bhd. of Carpenters and Joiners of America v. Brown, 343 F.2d 872, 883 (10th Cir. 1965); Local No. 2, Int’l Bhd. of Tel. Workers v. Int’l Bhd. of Tel. Workers, 261 F.Supp. 433, 434-435 (D.Mass.1966). Still other jurisdictions have held to the contrary. Luggage Workers U. Local 167 v. Int’l L. G., P. & N. W. U., 316 F.Supp. 500, 504-505 (D.Del.1970); Int’l Bhd. of Elec. Workers, Local 1186 v. Eli, 307 F.Supp. 495, 503 (D.Hawaii 1969). Since we find for the Local on other grounds, we do not decide this important issue in this opinion. . The International argues that the Local has failed to exhaust its intra-union remedies and has not therefore complied with 29 U.S.C. § 464(a) (1970). In light of the reasons given to justify the action taken by the International, and which officials took the action, it is obvious that attempts at intra-union adjudication would have been futile. Under such circumstances the Local is not obligated to exhaust every possible intra-union avenue of relief. See, e. g., Parks v. Int’l Bhd. of Elec. Workers, 314 F.2d 886, 924-925 (4th Cir. 1963). . 29 U.S.C. § 462 (1970). . The letter is reprinted in Joint App., Vol. Ill at 550. . In a letter to one of the supervisors the president of the Local said, “I would like to advise you again that you remain on the membership rolls of this Union.” Letter from Robert A. Olds to Harold H. Bacon, 9 Nov. 1970, Joint App., Vol. Ill at 476. . The letter to the 58 supervisors said: “If you feel you do not occupy a position that is supervisory or exempt in nature, I would appreciate you advising me in writing your reasons so that we might re-consider your eligibility.” Letter from Local President Robert A. Olds to 58 Supervisory Personnel, Joint App., Vol. Ill at 550. . 29 U.S.O. § 411(a)(5) (1970). . 29 U.S.O. § 164(a) (1970). . See note 10, supra. . UMWA Welfare and Retirement Fund, No. 27-OA-2607 (4 Aug. 1970) (reprinted in Joint App., Vol. I at 22, 38), modified in part, 192 N.L.R.B. No. 120 (25 Aug. 1971). . Joint App., Yol. Ill at 479. . The disaffiliation resolution was phrased with a number of “Whereas” clauses. The resolution is reprinted in Joint App., Vol. III at 546. . “In any proceeding pursuant to this section a trusteeship . . . authorized or ratified after a fair hearing . shall be presumed valid for a period of eighteen months from the date of its establishment and shall not be subject to attack during such period except upon clear and convincing proof that the trusteeslnp was not established or maintained in good faith for a purpose allowable under section 462 of this title.” 29 U.S.C. § 464(c) (1970). . Ibid. . Jolly v. Gorman, 428 F.2d 960 (5th Cir. 1970). . Id. at 967 (emphasis added). . Two cases other than Jolly v. Gorman have held that § 464 requires a hearing. See Bailey v. Dixon, 429 F.2d 1321 (5th Cir. 1970); Local No. 2, Int’l Bhd. of Tel. Workers v. Int’l Bhd. of Tel. Workers, 261 F.Supp. 433, 435-436 (D.Mass. 1966). See also Parks v. Int’l Bhd. of Elec. Workers, 314 F.2d 886, 912 (4th Cir. 1963). . Senate Report No. 187, U.S.Code Cong. & Admin.News, 86th Cong., 1st Sess., 1959, Vol. 2 at 2318; House Report No. 741, id., at p. 2424. . Senate Report No. 187, note 22, supra, at p. 2334; House Report No. 741, note 22, supra, at p. 2436. . In the Order revoking the charter of the Local, the International said that the Local could ask for a hearing. Joint App., Vol. III at 533. It is clear, however, that no attempt was made to afford a hearing prior to the imposition of the trusteeship. . The formulation we enunciate here is somewhat different from that stated by the Fifth Circuit in Jolly v. Gorman, notes 18-20, supra, and accompanying text. In Jolly the court considered the issue of when a hearing should be held: The determination of whether a trusteeship has been authorized or ratified by a fair hearing is necessarily made on a case-by-case basis. For example, under some circumstances, a lapse of eleven months from the time that a trusteeship is imposed to the time that a fair hearing is held and ratification made, may be considered unreasonable and insufficient to fullfill the requirement of a fair hearing to authorize or ratify the imposition of a trusteeship. 428 F.2d at 968, n. 2. This standard was repeated in Bailey v. Dixon, 429 F.2d 1321, 1322 (5th Cir. 1970). We, of course, agree that the particular facts of a case may be relevant to the disposition; facts suggesting the existence of an emergency may permit the imposition of a trusteeship without prior hearing. Hopefully, the standard we enunciate will give unions a clearer understanding of what is expected of them and will provide a more objective standard for courts to apply when asked to review union action.

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Ralph NADER v. John VOLPE, Secretary of Transportation, et al., Appellants. No. 71-1211. United States Court of Appeals, District of Columbia Circuit. Jan. 12, 1973. Mr. Walter H. Fleischer and Mrs. Greer S. Goldman, Attys., Dept, of Justice, were on the motion for appellants. Mr. Howard A. Heffron, Washington, D.C., was on the opposition to the motion for appellee. Before WRIGHT, TAMM and McCREE, Circuit Judges. Of the Sixth Circuit, sitting by designation pursuant to 28 U.S.C. § 291(a) (1970). J. SKELLY WRIGHT, Circuit Judge: Appellee Nader brought an action in the District Court seeking a declaration that appellant Secretary of Transportation had exceeded his authority under the National Traffic and Motor Vehicle Safety Act of 1966, 15 U.S.C. § 1381 et seq. (1970), by granting Checker Motors Corporation a temporary exemption from the effective date of a Motor Vehicle Safety Standard promulgated by the Secretary. Appellants sought to have the action dismissed as moot since the exemption had been withdrawn and Checker had come into compliance prior to the hearing before the District Court. The District Court, relying on a post-hearing memorandum by the Government which stated that the Secretary continued to believe the Department of Transportation had authority to grant exemptions to a single manufacturer in situations not encompassed by 15 U.S.C. § 1410 (1970) and would, in appropriate circumstances, consider granting them, found the case not moot and reached the merits, holding that the Secretary had no power to grant exemptions except in those cases expressly authorized in Section 1410. See Nader v. Volpe, D.D.C., 320 F.Supp. 266 (1970). We affirmed the case by order dated September 28, 1972, noting our general agreement with the reasons stated by the District Court. Judge Tamm dissented from that order on the ground that the case should have been dismissed as moot. The Secretary has now moved to vacate our decision on the ground that on October 25, 1972, subsequent to our decision, Congress enacted Public Law No. 92-548, 86 Stat. 1159, amending 15 U.S.C. § 1410 (1970), thereby mooting the controversy and preventing the Government from seeking Supreme Court review of our judgment. We do not agree that Public Law No. 92-548 moots this case and accordingly deny the Secretary’s motion. Before discussing the effect of Public Law No. 92-548 on the mootness question, it would be helpful if we explain in greater detail our reason for initially deciding the case was not moot. Where a court is asked to adjudicate the legality of an agency order, it is not compelled to dismiss the case as moot whenever the order expires or is withdrawn. Consideration of important legal issues “ought not to be, as they might be, defeated, by short terms orders, capable of repetition, yet evading review * Southern Pacific Terminal Co. v. I. C. C., 219 U.S. 498, 515, 31 S.Ct. 279, 283, 55 L.Ed. 310 (1911). See also Moore v. Ogilvie, 394 U.S. 814, 816, 89 S.Ct. 1493, 23 L.Ed.2d 1 (1969); Jeannette Rankin Brigade v. Chief of the Capitol Police, 137 U.S.App.D.C. 155, 157, 421 F.2d 1090, 1092 (1969). In this case, the District Court properly found, on the basis of the Government’s own post-hearing memorandum, that temporary exemptions such as the one granted to Checker would be granted to Checker or to other manufacturers in the future, and that to dismiss cases challenging the legality of such exemptions simply because the exemption had been withdrawn or had expired would prevent courts from ever deciding the important question of whether or not the Secretary has authority to issue such exemptions. Enactment of Public Law No. 92-548 does not affect the mootness question. Although it authorizes the Secretary to grant temporary “hardship” exemptions to manufacturers such as Checker whose total motor vehicle production is less than 10,000 vehicles per year, there is no indication that the authorization is to have retroactive effect. Even assuming arguendo this law has retroactive effect, the exemption granted to Checker would not be authorized thereunder since the law authorizes the Secretary to grant exemptions only after certain procedures have been followed, and it is clear from the record in this case that these procedures were not followed when the Secretary granted the Checker exemption. The only other manner in which the present motion might affect the mootness question is if the motion constituted a retraction by the Secretary of his earlier position, expressed in the Government's post-hearing memorandum, that he continues to believe he has implied authority, in cases not encompassed by Section 1410, to grant a temporary exemption to a single manufacturer and/or to postpone the effective date of a safety standard for a single manufacturer. Having carefully read the Secretary’s present motion, we cannot find any such retraction. In light of these facts, the issue that the District Court decided still requires judicial resolution. And we think it clear, both under the version of Section 1410 initially before us and under Section 1410 as amended by Public Law No. 92-548, that the Secretary’s sole authority to exempt a manufacturer from a safety standard, even if that exemption takes the form of a postponement of the effective date of the safety standard for a single manufacturer, derives from Section 1410. There is no implied authority to grant exemptions or postponements in situations not encompassed by that section. Motion to vacate denied. TAMM, Circuit Judge, dissenting: As I did with respect to the judgment of affirmance entered in this case, I dissent, believing that the court’s opinion in Alton & Southern Railway Co. v. International Ass’n of Machinists & Aerospace Workers, 150 U.S.App.D.C. 36, 463 F.2d 872 (1972), requires dismissal of this case on the ground of mootness.

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Philip BERRIGAN, Daniel J. Berrigan, Appellants, v. Maurice SIGLER, Chairman of the Board of Parole, and all members of the said Board of Parole (all of whom have their offices at room 354 HOLC Building), et al. No. 73-1049. United States Court of Appeals, District of Columbia Circuit. Argued Jan. 16, 1973. Decided Jan. 17, 1973. Morton Stavis, Newark, N. J., for appellants. Gil Zimmerman, Asst. U. S. Atty., with whom Harold H. Titus, Jr., U. S. Atty., and John A. Terry and Arnold T. Aikens, Asst. U. S. Attys., were on the pleadings, for appellees. Before BAZELON, Chief Judge, and WRIGHT and MacKINNON, Circuit Judges. ORDER PER CURIAM: This case came on for consideration of the motion for emergency relief by way of summary reversal, and the court heard argument of counsel. While the denial of a temporary restraining order is normally not appealable, an exception is made where the denial serves for all practical purposes to render the cause of action moot or where appellant’s rights will be irretrievably lost absent review. See McSurely v. McClellan, 138 U.S.App.D.C. 187, 191, 426 F.2d 664, 668 (1970); Dilworth v. Riner, 5 Cir., 343 F.2d 226, 229 (1965). Since it is evident that invitations to visit North Vietnam are granted sparingly and that the present invitation is subject to a time restriction which is soon to expire, the Parole Board’s refusal to grant appellants permission to travel to North Vietnam and the District Court’s order denying a temporary restraining order against such refusal will irretrievably deny appellants the opportunity presently afforded them and may well moot this case. Accordingly, we find that this court has jurisdiction to hear this appeal. With respect to the question of the likelihood of success on the merits as it pertains to the District Court’s denial of a temporary restraining order, it is uncontroverted that the Parole Board’s refusal to approve appellants’ proposed visit to North Vietnam interferes with their right to travel and their First Amendment right to freedom of association. The Parole Board has offered two justifications for this interference, arguing that the trip will interfere with Parole Board efforts to rehabilitate appellants and is contrary to the national interest as determined by the State Department. We find neither justification persuasive. The proposed visit to North Vietnam will be of short duration, and it is clear that it will not interfere with the rehabilitation of appellants, especially since the Board has made no active effort to rehabilitate appellants since the date of their release. While the proposed trip undoubtedly raises questions of the national interest in light of the current status of relationships between the United States and the government of North Vietnam, the Parole Board has no special competence in the area of foreign policy and such matters as these are best left in the control of the State Department, subject to the limitations imposed by law. See Lynd v. Rusk, 128 U.S.App.D.C. 399, 389 F.2d 940 (1967). In view of the foregoing, we can find no interest, compelling or otherwise, served by the Board’s refusal to approve appellants’ proposed trip, and their right to travel and to freedom of association must prevail. See Sobell v. Reed, S.D.N.Y., 327 F.Supp. 1294 (1971). It is therefore ordered by this court that the order of the District Court denying a temporary restraining order be, and it is hereby, vacated; and It is further ordered by the court that appellee Parole Board members be, and they are hereby, temporarily restrained from withholding their approval of appellants’ proposed trip to North Vietnam; and It is further ordered by the court that this case is remanded to the District Court for further proceedings not inconsistent with this order. Chief Judge BAZELON’S statement concurring, joined in by Circuit Judge J. SKELLY WRIGHT, is attached. Circuit Judge MacKINNON’s statement dissenting is also attached. It is further ordered by the court that, on application of the United States, this order is stayed until 6:00 p. m. today, January 17, 1973. Statement of Chief Judge BAZELON, in which Circuit Judge J. SKELLY WRIGHT joins: I would grant the Berrigans the relief they seek. That relief is not an order directing the government to permit them to travel to North Vietnam. Rather, it is an injunction restraining one federal agency — the United States Parole Board —from withholding permission for the trip. The authority — if any — of the Department of State to grant or deny its permission is not at issue in this case. The most troublesome problem on these appeals is jurisdictional. By statute, our review is limited to final orders. The denial of a temporary restraining order does not commonly fall into that category. It is well-established, though, that the question of finality is a pragmatic one. Brown Shoe v. United States, 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962); McSurley v. McClellan, 138 U.S.App.D.C. 187, 426 F.2d 664 (1970). If the effect of denying the temporary restraining order is to preclude the trip altogether, it is, for practical purposes, a final determination and is accordingly ripe for review. The Berrigans have represented to us that their opportunity to make the trip is fleeting; that they have a single, limited invitation from the North Vietnamese ; that passenger flights to Hanoi are infrequent; and that failure to leave the United States on schedule will cause them to miss essential connections further on. In short, they maintain that any delay in resolving their claim will be tantamount to a denial. Absent refutation, we should accept those representations. On that basis, the case appears to be appropriate for appellate review. The question on the merits is the Berrigans’ claim that their Constitutional right to travel, Aptheker v. Secretary of State, 378 U.S. 500, 84 S.Ct. 1659, 12 L.Ed.2d 992, has been denied. We consider this claim in the awareness that the Berrigans are presently under the legal authority of the Parole Board. The Board’s authority can be exercised, however, only in accordance with the rule of law. That historic check on governmental power is central to our democratic traditions. A fundamental principle of law is that every governmental agency —including the Parole Board — must respect the rights of every citizen. The Board has offered two explanations for its refusal to permit this particular trip: 1) The Board would be unable to exercise its “supervisory responsibilities looking to rehabilitation” of the two priests during the 10 days they are overseas. 2) It would be improper to permit travel to North Vietnam because the State Department has “informally” informed the Board that the trip would not be in the national interest. The Board’s first contention is so transparently unrealistic as to cast doubt on its entire presentation in this proceeding. Other than admitting the two brothers to parole, there is no indication that the Board has made any effort toward rehabilitation in regard to either of them. Since he was granted parole, Father Daniel Berrigan has traveled extensively in Europe and the United Kingdom, Never until now has the Board suggested that overseas travel would interfere with its unspecified supervisory activities. During his brief period as a parolee, Father Philip Berrigan’s sole contact with the Board has been his request to come to this court for argument on his motion. Yet the Board claims that the need for rehabilitative supervision during the next ten days is so great as to justify the denial of a Constitutional right. In light of its prior record of inactivity, the Board’s stated rationale cannot even be described as “facially legitimate and bona fide”. Kleindienst v. Mandel, 408 U.S. 753, 92 S.Ct. 2576, 33 L.Ed.2d 683 (1972). By implication, then, the Board’s second point must be the real basis for its decision; but for the State Department’s viewpoint, presumably, the Board would permit the trip. The Board concedes that the “impropriety” of this trip is a question within the State Department’s “foreign relations competence”. The Board also concedes that numerous Americans from all walks of life — including other priests, other pacifists, and other convicted felons — have traveled to Hanoi without objection from the State Department. It may be that the Berrigans’ visit will be different. But that kind of delicate diplomatic determination is properly the province of the Secretary of State. Accordingly, the Parole Board should be enjoined from refusing the Berrigans’ request for permission to travel to North Vietnam based on the reasons asserted and relied upon by the Board. Cf. Perkins v. Elg, 307 U.S. 325, 59 S.Ct. 884, 83 L.Ed. 1320 (1939). The matter appears to be one for the consideration of the Secretary of State in light of the applicable law and regulations. MacKINNON, Circuit Judge, dissenting: Philip and Daniel Berrigan, brothers, were convicted of federal felonies growing out of their opposition to the United States position in the Vietnam war. The trial court adjudged a lengthy sentence of imprisonment which has been partially served. They were then granted parole for the remainder of their sentence, which still has in excess of two years to run. The parole was granted subject to certain conditions. The parole of Philip Berrigan was effected by a “Certificate of Parole” given by the United States Board of Parole on the 16th day of December, 1972 which provided: that he be PAROLED on December 20, 1972, and that he remain within the limits of District of Maryland until September 14, 1975 .... This CERTIFICATE OF PAROLE will become effective on the date of release shown on the reverse side. If the parolee’s continuance on parole becomes incompatible with the welfare of society, or if he fails to comply with any of the conditions listed on the reverse side, he may be retaken on a warrant issued by a Member of the Board of Parole, and reimprisoned pending a hearing to determine if the parole should be revoked. CONDITIONS OF PAROLE 1. You shall go directly to the district shown on this CERTIFICATE OF PAROLE (unless released to the custody of other authorities). Within three days after your arrival, you shall report to your parole advisor if you have one, and to the United States Probation Officer whose name appears on this Certificate..... 3. You shall not leave the limits fixed by this CERTIFICATE OF PAROLE without written permission from the probation officer. It is assumed that these conditions are applicable to appellants. In addition to the foregoing conditions of parole, regulations promulgated by the Department of Justice provide: § 2.28 Same: travel by parolees and mandatory releases. Except as otherwise provided in this section, it is the general rule of the Board that a parolee may travel outside his supervision district only with the prior approval of the Board. Travel outside a district without prior Board approval may be authorized by a probation officer subject to the following-described limitations. (a) Board approval shall be required for vacation trips outside the district. (c) Board approval shall be required for travel outside the continental limits of the United States, including travel or work aboard ship. (d) Board approval shall be required in any case in which specific travel conditions have been imposed upon the parolee by the Board. 28 C.F.R. § 2.28. With their prison release posture being in the foregoing status, appellants were invited by the “Hanoi Solidarity Committee” to visit North Vietnam for the alleged purpose of meeting with members of certain religious groups, and others termed “coalitionists,” for the avowed purpose of furthering the aims and objectives of such group in North Vietnam and in the United States. Appellants, as required by the terms of their parole, applied to the probation officer of the United States Parole Board for written permission to go to Hanoi in response to the invitation of the “Hanoi Solidarity Committee” and said application was denied. Thereafter appellants brought this proceeding in the United States District Court for the District of Columbia, and requested a temporary restraining order directing the U.S. Board of Parole to grant written permission to travel to North Vietnam. Following oral argument the District Court denied the motion on January 15, 1973 and set the matter down for hearing on the motion for preliminary injunction on January 18, 1973 at 9 A.M. Notwithstanding this procedural status, the appellants appealed to this court and the appeal on the denial of the temporary restraining order was heard on January 16,1973. By affidavit of an official of the Board of Parole it is stated that: The Board’s reasons for denial of the current requests of Daniel and Phillip [sic] Berrigan (presently serving under parole supervision within the jurisdiction of the U. S. Board of Parole) for permission to travel to Hanoi are as follows: 1. Total lack of any means of control to effectuate the Board’s supervisory responsibilities looking to the rehabilitation of the parolees, where they would be visiting in an area where the United States has no diplomatic representative of its own or, in lieu thereof, any foreign power to represent it or its interests. 2. The impropriety of the U. S. Board of Parole, an agency of the United States Government giving approval, within its area of responsibility, to conduct directly contrary to the expressed policy determination of the Secretary of State, acting within his foreign relations responsibilities, that such conduct is not in the national interest of the United States. In addition, the brief of the United States Attorney, representing the Board of Parole, states: Note: We have been informally advised that the Department of State is of the view that, insofar as it can perceive, there is no basis for its determining that appellants’ proposed travel to North Vietnam would be “in the national interest of the United States” within the meaning of 22 C.F.R. § 51.-73. Since appellants have represented to this court that they do not expect their trip to last over two weeks, any discussion of reason (1) in the Board’s affidavit is unnecessary. The length of time appellants would be outside the Board’s supervision is not sufficient to justify refusal of their request on this ground. However, the second ground is “facially legitimate and bona fide” within Kleindienst v. Mandel, 408 U.S. 753, 769-770, 92 S.Ct. 2576, 33 L.Ed.2d 683 (1972), and must be sustained. This ground has additional force because the nature of the offenses committed by appellants, and for which offenses they are still serving their sentences, involved their violation of federal statutes in connection with their support of the position of the North Vietnamese government as opposed to that of the United States. The restriction here is thus reasonably related to the basic cause of the imprisonment. There is thus every justification for the Board of Parole to take the position it has taken and this court has no authority to set aside that decision. As a matter of fact, it is customary for parole boards to impose parole conditions which require parolees to abstain from involvement in matters which led to their convictions. In addition, this court is without jurisdiction to hear this appeal because appellants’ right to travel to North Vietnam will not be irretrievably lost if they do not go to Hanoi at this time. Allen v. Hickel, 138 U.S.App.D.C. 31, 37, 424 F.2d 944, 954 (1970); Women Strike for Peace v. Hickel, 137 U.S.App.D.C. 29, 36, 420 F.2d 597, 604 (1969); Austin v. Altman, 332 F.2d 273, 275 (2d Cir. 1964); see 28 U.S.C. § 1651(a) and cases thereunder. Appellants contend that the temporary restraining order is a final appealable order because any further delay would moot the issue as to the relief sought. While this may be appealable if that were, in fact the reality of the situation, I feel there has been a wholly insufficient showing on that issue. While it may be more inconvenient to go at a later time, and while there is a possibility that the invitation will not be renewed; this is hardly the kind of permanent, irreparable damage that requires our review of an otherwise nonreviewable temporary restraining order. In short, I am not convinced that if the appellants are not allowed to go to North Vietnam, now, they never will. Therefore, we have no jurisdiction but to deny the motion for summary reversal and dismiss the appeal. This raises another major ground for denying the relief requested. That is that our review of the denial of this alleged de facto preliminary injunction is controlled by the familiar test of Virginia Petroleum Jobbers Ass’n v. Federal Power Commission, 110 U.S.App.D.C. 339, 293 F.2d 527, cert. denied, 368 U.S. 940, 82 S.Ct. 377, 7 L.Ed.2d 339 rehearing denied, 368 U.S. 979, 82 S.Ct. 477, 7 L.Ed.2d 441 (1962). I find the denial of the Berrigans’ right to travel to North Vietnam at this time does not constitute the kind of irreparable injury that requires us to invoke our extraordinary equity powers. Moreover, in light of the Parole Board’s inherent authority to restrict the travel of a convicted criminal. I see little likelihood that appellants will finally succeed on the merits. Lastly, the public interest clearly lies on the side of the Parole Board as explicitly enunciated by the State Department. It is thus concluded that the District Court properly exercised its discretion in denying appellants’ motion for a temporary restraining order. The other members of the panel imply that the Secretary of State has authority to restrict appellants’ travel to North Vietnam. That statement is completely unfounded. Thé power rests with the Board of Parole and they have consulted the State Department. There is no force or logic to the contention that the procedure is invalid unless the order is reversed as between the respective agencies supplying the impetus to the decision. To merely state the claim exposes its invalidity. It clearly was within the original jurisdiction of the Parole Board in its authority over convicted criminals to refuse to consent to this proposed travel outside the United States. . 27 days ago. His brother Daniel was paroled previously. The conditions of Ms parole are “identical.” . Appellants are both ordained Catholic priests. . 22 C.F.R. § 51.73 provides: § 51.73 Special validation of passport for travel to restricted areas. (a) An application of a TJ.S. national for validation of his passport for travel to, in or through a restricted country or area will be considered only when such action is determined to be in the national interest of the United States. (b) An application will be considered to be in the national interest of the United States if: (1) The applicant is a professional reporter, the purpose of whose trip is to obtain, and make available to the public, information about the restricted area; or (2) The applicant is a doctor or scientist in the field of medicine or public health, the purpose of whose trip is directly related to his professional responsibilities ; or (3) The applicant is a scholar with a postgraduate degree, or its equivalent, the purpose of whose trip is to obtain for public dissemination, further information in his field of research; or (4) The applicant is a representative of the American Red Cross. (c) In the discretion of the Secretary, an application may be considered to be in the national interest of the United States, depending upon the restricted area to be visited, the benefit to the United States of such a visit, and the applicant’s need to visit the restricted area, if: (1) The applicant, although not a reporter by profession, establishes that one of the news media has indicated an interest in publishing a report of the applicant’s trip; or (2) The applicant’s activities in cultural, athletic, commercial, educational, professional, or other fields or in public affairs demonstrate that his visit to the restricted area would be of benefit to the United States ; or (3) The applicant establishes that his trip is justified by compelling humanitarian considerations. (d) An application for validation of a passport for travel to a restricted area must be accompanied by evidence that the applicant falls within paragraph (b) or (c) of this section or would otherwise serve the national interest of the United States. . A recent example of such a restriction which is well within public memory was the condition on the release of James R. Hoffa that he abstain, from certain union activity.

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Robert H. TURTLE, Appellant, v. INSTITUTE FOR RESOURCE MANAGEMENT, INC., et al. No. 71-1251. United States Court of Appeals, District of Columbia Circuit. Jan. 22, 1973. Leslie Scherr, Washington, D. C., wa’s on the brief for appellant. Benny L. Kass, Washington, D. C., was on the brief for appellee, A. Harvey Block. Norment Custis, Washington, D. C., was on the brief for appellee, Lawrence M. White. Before TAMM and MacKINNON, Circuit Judges, and WADE H. McCREE, Jr., United States Circuit Judge for the Sixth Circuit. Sitting by designation pursuant to 28 U.S.G. § 291(a) (1970). '• McCREE, Circuit Judge: .Under 28 U.S.C. § 1291, the United States courts of appeals have jurisdiction to review “final decisions” of the United States district courts. A “final decision” is one which disposes of the whole case on its merits, e. g., John Thompson Beacon Windows, Ltd. v. Ferro, Inc., 98 U.S.App.D.C. 109, 232 F.2d 366, 368 (1956), by rendering final judgment “not only as to all the parties, but as to the whole subject matter and as to all causes of action involved.” Tauzin v. Saint Paul Mercury Indemnity Co., 195 F.2d 223, 225 (5th Cir. 1952). When there are multiple parties and/or multiple claims involved, Fed.R.Civ.P. 54(b) provides an exception to this requirement by allowing a district court to direct the entry of final judgment upon less than all of the claims or with respect to less than all of the parties if the court expressly determines that there is no just reason for delay and expressly directs the entry of such judgment. In the absence of such determination and direction, an appeal of an order terminating the litigation with respect to less than all of the claims or parties involved must be dismissed. Chvala v. D. C. Transit System, Inc., 110 U.S.App.D.C. 331, 293 F.2d 519 (1961), judgment rev’d, 113 U.S.App.D.C. 171, 306 F.2d 778 (D.C.Cir.1962); Southern Parkway Corp. v. Lakewood Park Corp., 106 U.S.App.D.C. 372, 273 F.2d 107 (1959). Accordingly, dismissal of this appeal for lack of jurisdiction is required because of lack of compliance with Rule 54(b). This is so either because the complaint was dismissed with respect to only two of the defendants, Bailey v. Rowan Drilling Co., 441 F.2d 57 (5th Cir. 1971); Levin v. Wear-Ever Aluminum, Inc., 427 F.2d 847, 848 (3d Cir. 1970); Lehrer v. McCloskey Homes, Inc., 242 F.2d 190 (3d Cir. 1957), judgment rev’d, 245 F.2d 11 (3d Cir. 1957), or because defendant Block’s counterclaim is still pending before the District Court. Illinois Tool Works, Inc. v. Brunsing, 378 F.2d 234 (9th Cir. 1967), judgment aff’d, 389 F.2d 38 (9th Cir. 1968); Williams v. Bernhardt Bros. Tugboat Service, Inc., 357 F.2d 883 (7th Cir. 1966). If, following the issuance of our mandate in this case, the District Court makes the determination and direction required by Rule 54(b), or if plaintiff agrees to the dismissal of his complaint with respect to the remaining defendants with(out) prejudice and defendant Block agrees to the dismissal of his counterclaim with(out) prejudice, plaintiff’s appeal will be considered by this court on the briefs and record heretofore filed. See Illinois Tool Works, Inc. v. Brunsing, supra; Southern Parkway Corp. v. Lakewood Park Corp., supra.

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NATIONAL LABOR RELATIONS BOARD, Petitioner, v. SCHWARTZ BROTHERS, INC., and District Records, Inc., Respondents. No. 72-1150. United States Court of Appeals, District of Columbia Circuit. Argued Nov. 2, 1972. Decided Jan. 23, 1973. Paul J. Spielberg, Atty., N. L. R. B., with whom Marcel Mallet-Prevost, Asst. Gen. Counsel, N. L. R. B., was on the brief, for petitioner. John M. Bray, Washington, D. C., with whom Allen G. Siegel, Washington, D. C., was on the brief, for respondents. David J. Berman, Washington, D. C., also entered an appearance for respondents. Before TAMM and LEVENTHAL, Circuit Judges, and CHARLES E. WYZANSKI, Jr., Senior United States District Judge for the District of Massachusetts. Sitting by designation pursuant to 28 U.S.C. § 294(d) (1970). TAMM, Circuit Judge: This case comes to us on Application for Enforcement of an Order of the NLRB, relating to purported violations of 29 U.S.C. § 158(a)(5) and (1) (1970) (§ 8(a)(5) and (1) of the National Labor Relations Act) for refusal on the part of the respondent, Schwartz Brothers, Inc., to bargain with the duly certified representative of its employees. We grant enforcement. I. Facts On September 14, 1970, Warehouse Employees Local Union No. 730, affiliated with the International Brotherhood of Teamsters, Chauffeurs, Warehouse-men and Helpers of America [hereinafter “Union”], filed a petition for a representation election among the warehouse employees of Schwartz Brothers, Inc. [hereinafter “Company”]. The election was set by the Regional Director of the NLRB for December 15, and the Company's Request for Review of the Director’s action was denied by the Board. Five days immediately prior to the election the Company discharged Christopher Jeato from its employ, and subsequently posted the following notice on the warehouse bulletin board: “Notice of Discharge — Christopher Jeato has been fired because he was the No. 1 union man here.” The Union, claiming it had intended to use Jeato as its observer at the election, disclosed at a meeting of Company, Board, and Union representatives on the morning of the 15th that it would not have an observer present at the election. As a result, the Board agent in attendance was given a list of nine employees (subsequently pared to seven) appearing on the Company’s eligibility list whom the Union wished to challenge. The agent, aware of his delicate position of neutrality in representation elections, advised the Union that he would try to honor their challenge list on the basis of the reasons cited but would not be responsible if he failed to do so. Despite continued insistence by the Union that Jeato be allowed as their observer, the Company refused to allow him on the premises except to cast a challenged ballot — thus, as the polls opened only the Company observer and Board agent were present at the election table. Eleven individuals were challenged during the course of the election: (a) Three individuals whom the Regional Director had found ineligible appeared to vote, and to each of them the agent stated: “Your vote is being challenged by the NLRB pursuant to its Decision and Direction of Election.” (b) Jeato was challenged by the Company’s representative and the Board. The Board agent stated: “You are being challenged by the Board because your name does not appear on the eligibility list and by the [Company] on the ground that you have been terminated.” (c) When each of the seven individuals on the Union’s list appeared, the Board agent stated “The Union has challenged your right to vote” and added the specific basis for the challenge. All of the challenged individuals were advised on how to cast a challenged ballot. The election results showed 50 employees voted for representation by the Union, 24 against, and 11 east challenged votes. Six days thereafter the Company filed timely objections concerning the conduct of the election, contending that “when an NLRB agent, acting as the agent of the Union, challenges the ballots of employees whose names appear on the eligibility list, employees are led to believe that the NLRB favors the Union, and the neutrality and objectivity of the Board in the conduct of the election is destroyed.” In support of its contention the Company submitted only an affidavit of its own election observer, which essentially recited the facts as stated above and added that “[m]any of the seven challenges [“on behalf” of the Union] made by [the Board agent] occurred while other employees were in the voting area.” The Company additionally brought attention to the Board’s own Field Manual, which at § 11338 reads in pertinent part: Any observer has the right to challenge a voter for cause. The Board agent must challenge anyone whose name is not on the eligibility list. Also, he must challenge a voter if he knows or has reason to believe that the voter is ineligible to vote, but, in this instance, he should not challenge until and unless none of the parties voices a challenge. The Board Agent will not make challenges on behalf of the parties, whether or wot such parties have observers present. (Emphasis added.) The Regional Director in his Supplemental Decision and Certification of Representative considered that although a departure from the literal mandate of § 11338 had possibly occurred, it was justified in view of the Company’s questionable behavior in discharging Jeato, the failure (understandable in view of the fate of Jeato) of the Union to produce another observer, and the necessity to avoid “a situation in which potentially ineligible voters could have cast unchallenged ballots and thus could have affected the results of the election.” The Company subsequently filed a request for review with the Board, alleging that the failure to fully comply with § 11338 had destroyed the “laboratory” conditions necessary in representation elections. The Board denied the request, finding that it raised no substantial issues warranting review. The Certification proceedings thus completed, the Company nonetheless refused to negotiate and on July 20, 1971, the Union filed charges under § 8(a)(5) and (1) of the Act. The Regional Director issued his Complaint and Notice of Hearing, the Company responded, and the General Counsel moved the Board for summary judgment. In response to the Board’s Notice to Show Cause, in opposition to the motion for summary judgment, the Company renewed the § 11338 issue and for the first time contended that the Regional Director should have directed an evidentiary hearing in the representation proceeding. The Board on November 11, 1971, issued its Decision and Order finding that the Company had indeed violated § 8(a)(5) and (1) of the Act, and ordered appropriate corrective action. Now, finally, the Board brings this action for enforcement of the Order. II. Discussion The Employer argues that when the Board agent stated the challenges raised by the Union, in the absence of a Union observer, he contravened the Field Manual procedure, destroyed the neutrality so necessary in representation elections, and thus voided the results. To accede to such a line of reasoning we would be required to adopt a definition of the word “make,” as used in § 11338, which would be much broader in scope than “originate” or “initiate” — one which would include stating challenges already raised by a party but unable to be “voiced” by the party due to its unexpected absence. We decline to adopt such a definition. We disagree that favoritism or loss of Board neutrality is the concern to which § 11338 is aimed. Rather, we find the section directed at fostering a policy mandated by the Board’s position in representation elections: namely, that the responsibility for initiating challenges on behalf of the parties lays with the parties rather than the Board agent. Thus, § 11338 directs itself to the question of whom the Board agent must challenge — those whose names are not on the eligibility list, and those whom the Board agent knows or has reason to know are ineligible to vote, so long as none of the parties first challenges — and mandates that in all other instances the challenges must be made by the parties. Here no challenge was made on behalf of the Union; rather, a challenge made by the Union was stated by the agent. “Make” in the sense of “make ... on behalf of the parties” means “originate” or “initiate,” and clearly here there was only a statement of an already existing challenge. We note that with regard to Jeato the Board agent stated a challenge made by the Company, just as he stated other challenges already made, originated, by the Union. We reject the Company’s contention that the Board agent acted in contravention of § 11338. We do recognize the weighty responsibility of the Board to maintain so-called “laboratory conditions” in the conduct of representation elections. General Shoe Corp., 77 N.L.R.B. 124, 127 (1948). Paraphrasing the words of Mr. Justice Frankfurter, impartiality must satisfy the appearance of impartiality. Therefore, we feel that three guidelines should be established in instances similar to that sub judice where it becomes necessary for the Board agent to state a challenge in the absence of the originating party: (1) The Board agent must be completely impartial, and show no favoritism in any manner in stating the challenge. As the facts above amply demonstrate, neutrality was maintained in the manner in which the challenges were stated. (2) The Board agent must not resort to action similar to that involved herein except when necessitated by an unexpected occurrence. Just as the parties are expected to initiate their own challenges, so should they generally be required to state them. Clearly this requirement is met here. (3) If a charge is levied that the Board agent was not completely impartial, the burden shall be on the alleging party to prove the partiality. As is always the case, the challenging party has the burden of showing that the election was not fairly conducted, for it is not up to the Board to establish the validity of the election. NLRB v. Mattison Machine Works, 365 U.S. 123, 124, 81 S.Ct. 434, 5 L.Ed.2d 455 (1961). The single affidavit submitted by the Company was woefully inadequate in this respect. At no stage in the representation proceedings did the Company demand an evidentiary hearing, and the simple assertion in the observer’s affidavit that “[m]any of the seven challenges made by [the Board agent] occurred while other employees were in the voting area” did not, in our opinion, bring material and substantial facts into issue. 29 C.F.R. § 102.69(c). The Order of the Board finding that Schwartz Brothers, Inc. engaged in unfair labor practices in violation of § 8(a)(5) and (1) of the National Labor Relations Act is accordingly supported by substantial evidence, Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951), and entitled to enforcement. Judgment accordingly. . 29 U.S.C. § 158(a) (5) (1970): It shall be an unfair labor practice for an employer — • to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 159 (a) of this title. 29 U.S.C. § 158(a)(1) (1970) : It shall be an unfair labor practice for an employer— to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title. . As a result of Jeato’s discharge the Union filed § 8(a)(3) and (1) charges against the Company. The charges were withdrawn when Jeato was reinstated by the Company a few days after the election. . The Field Manual is, the Board asserts, intended essentially for the guidance of Board personnel. The Manual states at § 10000 that it “is intended as a guide to the professional employee in the field with respect to ease handling procedures.” Later, in the same section, it further states: “Recognizing, however, that no guidelines or instructions can fully anticipate the many and varied situations encountered by professional employees in their day-to-day work, the provisions and guidelines herein must be tempered in appropriate circumstances with responsible, professional judgment.” Its provisions are not published in the Federal Register. . Schwartz Bros., Inc., 194 N.L.R.B. No. 13 (Nov. 15, 1971). . See Offutt v. Unted States, 348 U.S. 11, 14, 75 S.Ct. 11, 13, 99 L.Ed. 11 (1954): “Therefore, justice must satisfy the appearance of justice.”

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UNITED STATES of America, v. Benjamin J. THOMPSON, Appellant. No. 71-1182. United States Court of Appeals, District of Columbia Circuit. Jan. 24, 1973. Allen M. Hutter, Washington, D. C. (appointed by this Court), was on the brief for appellant. Thomas A. Flannery, U. S. Atty. at the time the brief was filed, John A. Terry, Herbert B. Hoffman, and Guy H. Cunningham, III, Asst. U. S. Attys., were on the brief for appellee. Before BAZELON, Chief Judge, and ROBINSON and ROBB, Circuit Judges. PER CURIAM: In support of his claim of ineffectiveness of counsel, appellant asserts that his trial attorney failed to interview or call at least four known witnesses who would have testified on appellant’s behalf, corroborating his version of the events leading up to his arrest. Counsel on appeal (who is not trial counsel) has presented to this court affidavits indicating that these witnesses would, indeed, have offered testimony favorable to the defense. The decision to call a witness is not, as the government asserts, one totally immune from review. The failure to investigate or call particular witnesses surely may amount to ineffectiveness of counsel in certain circumstances. The allegations of ineffectiveness cited to this court by a responsible member of the Bar are certainly serious enough to warrant judicial scrutiny. But, the affidavits are not properly before us and the record alone does not provide a satisfactory basis for considering the issue of ineffectiveness. Appellant is not relegated to his post-conviction remedies to secure a hearing on his claim. “[H]e may raise and more fully support [that] claim on a motion for a new trial without excusing that action with a showing of earlier ‘due diligence.’ ” ROBB, Circuit Judge, concurring: I concur in the result. I cannot approve an attempt to retry a criminal case in this court on affidavits presented by appellate counsel. . Trial counsel in this case was the same lawyer who was found to have rendered ineffective assistance in Matthews v. United States, 145 U.S.App.D.C. 323, 449 F.2d 985 (1971) and United States v. Hammonds, 138 U.S.App.D.C. 166, 425 F.2d 597 (1970). . Counsel on appeal has also submitted affidavits from a number of potential character witnesses whom he alleges were never contacted or interviewed. No witnesses other than the appellant were presented by the defense at trial. . A claim of ineffectiveness is said to require “a more powerful showing of inadequacy” to sustain a collateral attack than to warrant an order for a new trial by the District Court or on direct appeal. Bruce v. United States, 126 U.S.App.D.C. 336, 340, 379 F.2d 113, 117 (1967). . United States v. Smallwood, 153 U.S.App.D.C. 387, at 393, 473 F.2d 98 at 104 (1972) (Bazelon, Chief Judge, concurring); see Fed.R.Crim.P. 33; Marshall v. United States, 141 U.S.App.D.C. 1, 6 n. 11, 436 F.2d 155, 161 n. 11 (1970).

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Charles C. WINDSOR, Appellant, v. Marjorie Mansfield LEONARD et al. No. 71-1863. United States Court of Appeals, District of Columbia Circuit. Argued Dec. 14, 1972. Decided Jan. 25, 1973. Stanley Worth, Washington, D. C., for appellant. Michael F. Curtin, Washington, D. C., filed a brief for appellees. Before BAZELON, Chief Judge, TAMM, Circuit Judge, and HARRISON WINTER, Circuit Judge for the Fourth Circuit. Sitting by designation pursuant to Title 28, U.S.C. § 291(a). PER CURIAM: D.C.Code § 19-113 entitles a surviving husband or wife to renounce his rights under his spouse’s will and elect instead a statutory share “not to exceed one-half of the net estate bequeathed and devised by the will . . . ”. This case raises a question as to what should be included in a decedent’s “net estate” for purposes of determining the statutory share. In May, 1969, Mrs. Virginia Windsor established a revocable trust and transferred to it assets worth some $190,000. The beneficiaries of the trust were various friends and charities. Mrs. Windsor died in December, 1970, leaving an estate valued at $110,000, exclusive of the amount in the trust. In her will, Mrs. Windsor left about 10 per cent of this estate to her husband, LCDR Charles C. Windsor, USN (ret.). LCDR Windsor has renounced his rights under the will and elected to take one-half of the “net estate”. In this action, he claims the “net estate” should include not only the $110,000 passed by Mrs. Windsor’s will but also the $190,000 constituting the trust corpus. The District Court held that the trust assets should not be included in the “net estate”. However, the court expressed a degree of uncertainty and asked the parties to “take it upstairs and get a controlling decision.” LCDR Windsor’s primary argument is that the revocable trust would be included in Mrs. Windsor’s estate for tax purposes. We need not pursue this point. The proper basis for deciding this case is not tax law but rather the Maryland case law on marital property rights. In enacting the D.C.Code provisions on marital rights, Congress made it clear that courts interpreting those provisions should follow precedents under the similar Maryland statute. Maryland Court of Appeals has set forth certain “controlling rules” to be applied in determining whether or not an inter-vivos transfer is an improper circumvention of the marital rights of the surviving spouse. Obviously any transfer of property will decrease the statutory share of the spouse, but courts in Maryland and elsewhere have been hesitant to set aside such transfers if they were made in good faith. To determine whether or not a particular transaction meets this test, the “controlling rules” are applied to the facts at hand. These rules, as set forth in Whittington v. Whittington, 205 Md. 1, 106 A.2d 72, include: —“completeness” of the transfer; —motive for the transfer; —participation by the transferee in the alleged fraud on the surviving spouse; —amount of time between the transfer and death; —degree to which the surviving spouse is left without an interest in the decedent’s property or other means of support. Applying these tests to Mrs. Windsor’s trust, we find no basis for holding that the trust is an improper evasion of LCDR Windsor’s statutory rights. In creating the trust, Mrs. Windsor reserved, in addition to the power of revocation, the right to all income during her lifetime, the right to draw from principal, and the right to amend the terms of the trust. These powers, however, have not been held to render an otherwise valid transfer “incomplete” in cases such as this. There is no evidence to indicate that Mrs. Windsor or the beneficiaries of the trust had any unusual or fraudulent motive for the transaction. Mrs. Windsor created the trust at the age of fifty-four, some 18 months before she died; this is hardly the kind of “brink of death” transfer that might indicate bad faith on the part of the transferor. Finally, LCDR Windsor is left with a 50 per cent share in an estate exceeding $100,000 in addition to his personal holdings worth some $140,000. We conclude that the assets of Mrs. Windsor’s trust were properly excluded from her “net estate” in determining her husband’s statutory share. The judgment of the District Court is accordingly Affirmed. . See H.R.Rep.No.679, 87th Cong., 1st Sess., p. 3, and S.Rep.No.822, 87th Cong., 1st Sess., p. 3. These reports concerned D.C.Code § 18-211, which was recodified as § 19-113 in 1965. . Gianakos v. Magiros, 234 Md. 14, 21, 197 A.2d 897, 905. . Annot., 39 ALR 3d 17. . Brown v. Fidelity Trust Co., 126 Md. 175, 94 A. 523 (1915); cf. Restatement (Second), Trusts, § 57. . Thus this ease differs from Mushaw v. Mushaw, 183 Md. 511, 39 A.2d 465 (1944), where a 75-year-old heart attack victim created four trusts five days before his death.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America v. Emanuel W. SIMPSON, Appellant. No. 24817. United States Court of Appeals, District of Columbia Circuit. Argued Sept. 8, 1972. Decided Jan. 26, 1973. Rehearing Denied March 15, 1973. Dennis G. Lyons, Washington, D. C., with whom Douglas G. Robinson, Washington, D. C., was on the brief, for appellant. Broughton M. Earnest, Asst. U. S. Atty., with whom Thomas A. Flannery, U. S. Atty., at the time the brief was filed, John A. Terry and John T. Kotelly, Asst. U. S. Attys., were on the brief, for appellee. John G. Gill, Jr., Asst. U. S. Atty., also entered an appearance for appellee. Before BAZELON, Chief Judge, and WRIGHT and LEVENTHAL, Circuit Judges. PER CURIAM: This case, involving appellant’s petition under 28 U.S.C. § 2255 to set aside his plea of guilty to an armed robbery charge, has been before this court on two prior occasions. Following the second remand, a hearing was held on petitioner’s allegation that his assigned counsel falsely represented to him that the trial judge had given assurance that defendant would be sentenced under the Youth Corrections Act. We conclude that the preponderance of evidence supports the judgment rejecting petitioner’s claim. The record is not entirely free from doubt, particularly in view of the fact that the attorney assigned to represent appellant at trial, had at best an uncertain recollection as to this case and was unable to produce any file of the case in response to subpoena. He grounded his denial of appellant’s allegations primarily upon his unequivocal, emphatic and reiterated assertion that he had never been in Judge Gesell’s chambers. Yet at the remand hearing, Richard Hopkins, Esq., attorney for appellant’s co-defendant, not only recalled in considerable detail a conference that both he and appellant’s trial counsel attended in Judge Gesell’s chambers, but also highlighted its importance. At this conference, said Mr. Hopkins, Judge Gesell asked whether the case would go to trial, was informed that defendant was considering a suggestion to plead guilty to one count but had not yet decided on his course, and then told both counsel that if the case were not disposed of by plea in five minutes he would proceed to trial as scheduled. While we do not credit the recollection of appellant’s trial counsel, we think the record requires affirmance in view of the clearcut testimony of Mr. Hopkins that, following the session in Judge Ge-sell’s chambers, he attended the conference that appellant had with his trial counsel, and that at this critical conference in which appellant shortly agreed to plead guilty, there was no representation such as appellant alleged. There is corroboration, to some degree, of Mr. Hopkins’ account in the circumstance of the strong evidence of guilt that confronted all concerned — appellant and his co-defendant were apprehended shortly after the crime, in a “hot pursuit” situation, hiding in a nearby house; and both the proceeds of the robbery and the weapon purportedly used in its commission were recovered from the same premises. Appellate counsel suggests that Mr. Hopkins’ testimony should not be given critical weight, since he was an intruder, and represented a different interest— the prosecutor would not accept co-defendant’s plea of guilty unless defendant pleaded guilty; and the co-defendant, being younger than appellant and having had fewer previous brushes with the law, had a better prospect for Youth Corrections Act treatment. The case is not free from difficulty. We are by no means confident of the reasons for, or propriety of, the prosecutor’s approach, as reported. And we are not comfortable with the notion that the critical conference was not held under conditions permitting confidentiality of communication. Yet none of these elements has been put forward to us as having constituted undue pressure on this appellant. We cannot develop a blanket rule prohibiting testimony by a third party who attended a conference between client and attorney. Such attendance is not necessarily improper — if consented to by both client and attorney —and when it exists it precludes application of the rule protecting confidentiality. This has been a most difficult proceeding, involving as it does the allegation that a member of the bar has fallen short of minimum standards. We are indebted to Dennis Lyons, Esq., for the way he has shouldered the burden we have placed on him with our assignment of what is inevitably an unpleasant task; he has shown unremitting application and perservance in his conduct of what is an unwelcome, yet necessary, aspect of the functioning of an officer of the court. One result of the proceedings has been to refocus the attention of all reflective judges on the need for provision of counsel who meet minimum standards of competence and diligence. This case involves an attorney who was, unfortunately, plagued with a drinking problem, who did not even have an office, who had to be summoned by warrant to attend the 2255 proceedings. If we take pride in our system of justice, as we generally do, that pride must be eroded by records like this one. The case is a warning against complaisant acquiescence in any assumption that the mere assignment of some counsel is enough to meet the constitutional guarantee of effective assistance of counsel. Affirmed. BAZELON, Chief Judge, dissenting: In the narrow view of the majority this case turns on whether Simpson’s attorney told him that the trial judge had agreed to impose a Youth Corrections Act sentence in return for the plea. I agree that the record does not show that such a representation was made. But two successive hearings ordered by this court have opened up new vistas on what else Simpson’s Trial Counsel did not do. Based on this showing I would vacate Simpson’s plea on the ground that his attorney displayed “such an extraordinary inattention to a client’s interests as to amount to ineffective assistance of counsel cognizable under Section 2255.” Dillane v. United States, 121 U.S.App.D.C. 354, 355, 350 F.2d 732, 733 (1965); see Bruce v. United States, 126 U.S.App.D.C. 336, 344, 379 F.2d 113, 121 (1967). Moreover, I think that this case raises questions about the ability of the judiciary to ensure that any guilty plea compoi-ts with the requirements of the Constitution. Those questions can only be resolved if we specify that trial judges must precede acceptance of any guilty plea with an inquiry into counsel’s preparation of the case. Because the majority’s statement of the sordid facts of this case focuses only on the events of the day of trial, a further exposition of the record is necessary. Trial Counsel was appointed to represent Simpson on October 11, 1968. Prior to the morning the case was first scheduled for trial, March 10, 1969, he communicated with Simpson once. That lone meeting occurred when Trial Counsel appeared to argue a motion for pretrial release that Simpson himself had filed in December, after Trial Counsel failed to respond to Simpson’s request to act. Before appearing to argue that motion, Trial Counsel had failed to appear at arraignment and had failed to appear at the first hearing set for consideration of Simpson’s motion for release. In fact, Simpson had resorted to the device of writing Trial Counsel to remind him of the rescheduled hearing. Simpson’s motion was, not too surprisingly, denied. When the ease came up for trial on March 10, Trial Counsel had not prepared. He had filed no motions. He had, according to his own testimony on our first remand, interviewed no victims or potential witnesses — except that he “may have” talked to the arresting officer. Like the majority, I do not credit this selfserving speculation. Finally, he testified that he had not worked with counsel for Simpson’s codefendant, nor did he know what that attorney had done to prepare. Indeed, Mr. Hopkins, the attorney who represented Simpson’s codefendant — and who had prepared— testified that he informed Trial Counsel that the Government had a strong case while the two of them were on a 30 minute call before the scheduled trial. The case was not tried March 10, but was put over for two successive days. During that period Trial Counsel interviewed Simpson twice in the presence of Mr. Hopkins, and may have talked with him a third time without Mr. Hopkins. Concerning the situation on March 12, Trial Counsel testified as follows on our first remand: Q. Mr. [Trial Counsel], would you have been prepared for trial if the Defendant had not, after [the final conversation that immediately preceded entry of the plea], agreed to plead guilty ? A. I don’t know whether I would have proceeded to trial under the facts known to me. It would have called for an exercise of my professional judgment, and 7 believe that I would have perhaps sought to be relieved of my appointment? These, then, are the facts of this case other than those recounted by the majority concerning the questionable “joint plea” demanded by the prosecutor, Trial Counsel’s general qualifications as an attorney (including his disability due to alcoholism, his failure to respond to court process, and his failure to preserve documents), and the “interviews” at which Mr. Hopkins — who had been placed in an adverse position by the prosecutor’s demand for a joint plea— was present. A plea of guilty constitutes a waiver of the bulk of the accused’s constitutional rights. Before such a waiver can be accepted, the trial judge must determine that the plea is both voluntary and knowing. And, in deciding whether to plead, the accused has a constitutional right to the assistance of counsel. A brief examination of the procedures that currently surround the acceptance of guilty pleas will demonstrate that the effective assistance of counsel is not merely a prophylactic measure, but is a necessity if a plea is to be knowing and voluntary. Rule 11 of the Federal Rules of Criminal Procedure requires that the trial judge address “the defendant personally” and determine “that the plea is made voluntarily with understanding of the nature of the charge and consequences of the plea.” The Resolution of the Judges of the "U.S. District Court for the District of Columbia, which was promulgated in 1959 to give further content to rule 11, requires that the trial judge determine only that the defendant knows that he is forfeiting the “right to a speedy trial by jury with the aid of counsel,” and understands “the nature of the charges against him” and “the consequences of entering the plea of guilty.” These requirements ensure only that the defendant understands one of his alternatives. As to the other alternative — that of requiring that the Government prove his guilt — rule 11 and the Resolution of the Judges do not require that the defendant know anything at all. They require only that the trial judge satisfy himself that there is a “factual basis for the plea.” Thus, the only device that operates to ensure that the accused can make a “knowing” choice between his alternatives is his right to the assistance of cotinsel. The majority apparently invokes the Government’s overwhelming cast to quiet doubts about the voluntariness of Simpson’s plea. That, like the trial judge’s determination that the plea has a “factual basis,” is not in point. The point is that the right to' be tried belongs to the accused, and his decision to give up that right must be “voluntary” and “knowing.” On this record, I believe that Simpson has established by a preponderance of the evidence that Trial Counsel showed the “extraordinary,” indeed total, “inattention” to Simpson’s case which this court has heretofore indicated it would find to constitute ineffective assistance of counsel. Indeed, there is a solid basis for arguing that Trial Counsel did nothing but show up and, with the aid of an attorney who had an adverse interest, pressure Simpson into pleading guilty. This is not to argue that the right to the effective assistance of counsel and the right to a knowing and voluntary plea are coextensive. A guilty plea may be rendered void despite counsel’s efforts — for example, a defendant may be coerced by a judge’s promise of a light sentence. On the other hand, counsel’s duties in a guilty plea case may extend beyond his duty to inform his client adequately before the client pleads — assistance at sentencing is one example. But unless counsel has acquired a full grasp of the facts and law of the case before he counsels a client to enter a plea of guilty, his client cannot enter a knowing and voluntary plea. This case points up the need for procedures which assure that a defendant is adequately advised by his attorney before pleading. At present neither rule 11 nor the Resolution of the Judges establishes any device whereby the trial judge is informed that such advice has been provided. Nor is there even a fortuitous chance that the attorney’s preparation will be reviewable on appeal, for no record of his performance is kept. Most troublesome of all, the attorney knows that he will not be required to demonstrate any preparation if his client pleads guilty. As a result of these procedural defects, the courts are burdened with collateral attacks that require a full hearing to determine what counsel did. And defendants are systematically deprived of the protection of constitutional waiver requirements that place the burden of proof on the Government. Relegated to collateral attack, they must prove ineffectiveness — and the resulting unintelligent plea — by a preponderance of the evidence. If constitutional waiver standards are to be judicially enforceable, there must be some external cheek on the quality of counsel’s assistance in the plea bargaining process. In fairness to the defendant and the courts, that check should occur at the stage of the proceeding when the burden of showing a knowing and voluntary waiver is on the Government. I would require that trial judges determine that the defendant’s decision to plead guilty is a properly informed choice by including in the record a showing that counsel has made “an independent examination of the facts, circumstances, pleadings and laws involved and then [offered the defendant] his informed opinion as to what plea should be entered.” Developing precise contours for this requirement might take some experience with actual cases, but we could well begin by requiring that the attorney indicate, orally or in writing, the extent and results of his investigation of the facts of the case and a concise breakdown of his steps in its preparation. APPENDIX SUPERIOR COURT FOR THE DISTRICT OF COLUMBIA July 14, 1972 TO: Counsel Appointed Under the Criminal Justice Act FROM: Criminal Justice Committee of the Superior Court RE: Supplemental Voucher Information To inform the Judges more fully concerning the nature of services rendered by counsel appointed under the Criminal Justice Act, and to insure that compensation claims accurately reflect the work performed, the Court has deemed it appropriate to require completion of a “Supplemental Voucher Information” form in each Criminal Justice Act case. This form, properly filled out, must accompany each voucher for compensation (CJA Form 20) submitted to the Criminal Justice Act Office or, for Family Division cases, to the Attorney Advisor’s Office. ********** It is obvious that, in order to complete the form properly, accurate records must be kept by the attorney on each case. These records should be preserved so that they wül be available for production when circumstances warrant. The Supplemental Voucher Information Form will be required in all cases where counsel is appointed on or after Tuesday, July 10, 1972. . United States v. Simpson, 141 U.S.App.D.C. 8, 486 F.2d 162 (1970) (evidentiary hearing ordered); United States v. Simpson, (No. 24,817, July 19, 1971) (order remanding for further hearings). . On March 20, 1968, eight days after petitioner entered his plea of guilty, his attorney was convicted of contempt in the District of Columbia Court of General Sessions for appearing intoxicated in court. This judgment was subsequently reversed on the ground that, while ostensibly conducting a summary proceeding, the court had in fact relied on unsworn testimony of an expert witness. A rule to show cause issued, and on retrial after a formal hearing appellant’s trial counsel was again convicted in the Court of General Sessions (June 24, 1969). . The attorney who represented Simpson from before his arraignment until after his sentencing will be referred to as “Trial Counsel” in this opinion. His name is not important — the fact that the criminal justice system allows such actions is. Trial Counsel should be sharply distinguished from Mr. Dennis Lyons, who was appointed by this court to represent Simpson in this collateral proceeding. Mr. Lyons, as the majority points out, has earned the court’s gratitude by a display of selfless dedication through two successive remands of a case that has not been pleasant either to judge or to litigate. . Hearing of October 12, 1970, at 50, United States v. Simpson, Cr. No. 2010-68 (D.D.C.) (emphasis added). The next question was also of interest: Q. Mr. [Trial Counsel], did you see Mr. Simpson at all between the time of his plea and the time of sentencing? A. I don’t believe so. Id. 50-51. . If the record also showed that Simpson was aware of these facts, and either ignorant of his right to ask the court to dismiss Trial Counsel or fearful that such a dismissal would result in a substantial increase in his term of pretrial incarceration, I believe that we would have a case of an involuntary plea. . See Santobello v. New York, 404 U.S. 257, 92 S.Ct. 495, 30 L.Ed.2d 427 (1971); Boykin v. Alabama, 395 U.S. 238, 242, 89 S.Ct. 1709, 23 L.Ed.2d 274 (1969). . See Rule 11, Fed.R.Crim.P. . See Williams v. Kaiser, 323 U.S. 471, 65 S.Ct. 363, 89 L.Ed. 398 (1945); Walker v. Johnston, 312 U.S. 275, 61 S.Ct. 574, 85 L.Ed. 830 (1941). . Rule 11, Fed.R.Crim.P. . See Everett v. United States, 119 U.S.App.D.C. 60, 61 n.3, 336 F.2d 979, 980 n.3 (1964) (Resolutions 1, 3, & 8). . See Comment 119 U.Pa.L.Rev. 527 (1971). . 336 F.2d 980 n.3 (Resolution 4). . The practical implications of this term are apparent. The Supreme Court has not determined the legal content of the requirement that the plea be “knowing.” But, in Boykin v. Alabama, 395 U.S. 238, 242, 89 S.Ct. 1709, 23 L.Ed.2d 274 (1969), the Court held that the waiver standards that apply to other constitutional rights, including the right to counsel, apply to guilty pleas. And, in Von Moltke v. Gillies, 332 U.S. 708, 68 S.Ct. 316, 92 L.Ed. 309 (1948), Mr. Justice Black, writing for a plurality of the Court, spoke of the waiver of the right to counsel in the following terms: To be valid such waiver must be made with an apprehension of the nature of the charges, the statutory offenses included within them, the range of allowable punishments thereunder, possible defenses to the charges and circumstances in mitigation thereof, and all other facts essential to a broad understanding of the whole matter. A judge can make certain that an accused’s professed waiver of counsel is understandingly and wisely made only from a penetrating and comprehensive examination of all the circumstances under which such a plea is tendered. 332 U.S. at 724, 68 S.Ct. at 323. . The American Bar Association’s Standards Relating to Pleas of Guilty also places this responsibility squarely on counsel : 3.2 Relationship between defense counsel and client. (a) Defense counsel should conclude a plea agreement only with the consent of the defendant, and should ensure that the decision whether to enter a plea of guilty or nolo contendere is ultimately made by the defendant. (b) To aid the defendant in reaching a decision, defense counsel, after appropriate investigation, should advise the defendant of the alternatives available and of considerations deemed important by him or the defendant in reaching a decision. Approved Draft, 1968. Like rule 11 and the Resolution of the Judges, however, the Draft lacks procedural protections adequate to ensure this assistance. It omits any inquiry into counsel’s role at the stage where the judge receives the plea, §§ 1.4-1.7, and places the onus of showing ineffective assistance on the defendant, to be exercised by a motion to withdraw the plea. § 2.1(a) (ii) (1). . Majority opinion at 935. . In Bruce v. United States, 126 U.S.App.D.C. 336, 379 F.2d 113 (1967), this court did require that a petitioner show he was deprived of a substantial defense by his plea. But the court pointed out that extraordinary inattention would constitute ineffective assistance standing alone. Id. at 344, 379 F.2d at 121. . Dillane v. United States, 121 U.S.App.D.C. 354, 355, 350 F.2d 732, 733 (1965); see Bruce v. United States, 126 U.S.App.D.C. 336, 344, 379 F.2d 113, 121 (1967). . The right to the effective assistance of counsel at sentencing is well established. Gadsen v. United States, 96 U.S.App.D.C. 162, 165, 223 F.2d 627 (1955). For a discussion of the particular duties imposed on counsel by this requirement, see United States v. Martin, 154 U.S.App.D.C. - at -, 475 F.2d 943 at 954-956 (1973) (Bazelon, C. J., dissenting). . The American Bar Association’s Standards Relating to The Prosecution Function and The Defense Function aptly points out, in this regard: The lawyer’s duty to investigate is not discharged by the accused’s admission of guilt to him or by his stated desire to enter a plea of guilty. The accused’s belief that he is guilty in fact may often not coincide with the elements which must be proved in order to establish guilt in law. . . . The accused may not be aware of the significance of facts relevant to his intent in determining his criminal liability or responsibility. § 4.1, Approved Draft, 1971 (Commentary, page 226). . The Resolution of the Judges does provide that the trial judge should ensure that the accused “has discussed the entry of his plea of guilty fully with his attorney.” 336 F.2d at 980 n.3 (Resolution 10). This, however, says nothing about the lawyer’s duties. . The nature of this burden, and the difficulties involved in determining the nature of the review required in this type of collateral attack, are set forth at length in our first opinion in this case. United States v. Simpson, 141 U.S.App.D.C. 8, 436 F.2d 162 (1970). . See Von Moltke v. Gillies, 332 U.S. 708, 721, 68 S.Ct. 316, 322, 92 L.Ed. 309 (1948) (Black, J., delivering the judgment of the Court and,an opinion): A waiver of the constitutional right to the assistance of counsel is of no less moment to an accused who must decide whether to plead guilty than to an accused who stands trial. See Williams v. Kaiser, 323 U.S. 471, 475 [65 S.Ct. 363, 366, 89 L.Ed. 398]. Prior to trial an accused is entitled to rely upon his counsel to make an independent examination of the facts, circumstances, pleadings and laws involved and then to offer his informed opinion as to what plea should be entered. . The Superior Court of the District of Columbia presently requires appointed counsel to submit a concise statement of his steps in preparation of the case. To demonstrate that such a requirement would be neither unrealistic nor overly burdensome to counsel, 1 attach as an appendix to this opinion a copy of the relevant portions of the Superior Court form and explanatory memorandum (Emphasis in Appendix added). A more rigorous requirement is set forth in Tigar, Foreward, The Supreme Court 1969 Term, 84 Harv.L.Rev. 1, 23-24 (1970): If the Johnson [v. Zerbst, 304 U.S. 458 [58 S.Ct. 1019, 82 L.Ed. 1461] (1938) ] concept of waiver is to have any real meaning in the plea bargaining context, lawyers and judges must ensure that decisions to plead guilty are made by defendants who are fully aware of the rights and privileges they forego by not insisting on a trial. [The judge should thoroughly question the defendant.] The judge should then question the lawyer carefully about the factors involved in pleading his client guilty, including the availability of legal defenses .... The judge must be an active participant in the process of informing the defendant, ensuring that the lawyer and defendant have taken current judicial decisions into account and weighed the possibility of their application. The defense and prosecuting attorneys should be asked to reveal the nature and extent of their conversations concerning the case, including their relative assessments of the legal and factual problems .... See also Finer, Ineffective Assistance of Counsel, to be published in the May 1973 issue of Cornell Law Review.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America v. George A. MARTIN, Appellant. No. 71-1457. United States Court of Appeals, District of Columbia Circuit. Argued June 7, 1972. Decided Jan. 26, 1973. Durward M. Taylor, Washington, D. C., with whom Belford V. Lawson, Jr., Washington, D. C., was on the brief (both appointed by this Court), for appellant. Thomas H. Queen, Asst. U. S. Atty., with whom Harold H. Titus, Jr., U. S. Atty., John A. Terry and Warren L. Miller, Asst. U. S. Attys., were on the brief for appellee. Before BAZELON, Chief Judge, and McGOWAN and TAMM, Circuit Judges. TAMM, Circuit Judge: Appellant George A. Martin was tried before a jury and convicted of assault on George R. Thompson with intent to kill while armed and assault with a dangerous weapon on Robert B. Clark. He was sentenced to concurrent terms of ten years to life on the former count and one to three years on the latter. Appellant alleges numerous errors, none of which were raised at trial. After careful consideration of the record and arguments advanced by the parties, we find no substantial error which would merit reversal and evidence which overwhelmingly supports the verdict. Accordingly, we affirm. I The sequence of events immediately surrounding the assault must be gleaned primarily from the testimony of the three parties involved, Messrs. Thompson, Clark and Martin, there being no other eyewitnesses to the crime. The testimony of Thompson and Clark was consistent and corroborating. On the evening of April 11, 1970, shortly before 11:00 p. m., Robert B. Clark, dressed in a tuxedo and accompanied by a female companion, parked his car at the corner of 18th and P Streets, N.W., from whence he proceeded on foot less than one block to a nightclub near Dupont Circle. When he parked the car, his suspicion had been aroused by a man “leaning on the traffic light and looking at [he] and [his] date and looking at [his] car . . . [who] acted a little strangely.” Apprehensive because he had left his overcoat in the car, Mr. Clark decided that it would be wise to return and move the vehicle to another location. He escorted his companion to the doorway of the nightclub where he encountered an acquaintance, George Thompson, who also planned to attend the nightclub dance. He asked Thompson to accompany him back to the car. The two men embarked, and as they approached the intersection of 18th and P Streets, Thompson noticed that there was a man, the appellant herein, apparently trying to force open the window of Clark’s car. As Thompson and Clark approached, the man crossed over to the other side of the automobile where he was apparently trying to force the other window open. Thompson and Clark both yelled for him to “get away from that car.” At this point appellant was standing near the rear of Mr. Clark’s car on the street side; Mr. Thompson had crossed in front of Clark’s car to the street side and was about six feet from appellant; and Clark was still on the sidewalk proceeding towards the rear of his car. Thompson testified that Clark next yelled to appellant to the effect that it was Clark’s car. Thereupon appellant, who was standing with his hands at his side in a relaxed position, lunged at Thompson and struck him on the side of the neck. By this time Clark had proceeded to the street behind the appellant, and appellant turned on him. Clark hit appellant, causing him to strike his head on the rear of the car and fall to the pavement. As he fell, a knife scooted from his hand and Thompson retrieved it. It was then that Thompson discovered that his own neck had been slit, a wound of about six inches which exposed the jugular vein and required thirty-two stitches to close. Clark testified that upon observing a scuffle breaking out between appellant and Thompson he ran around the rear of the car to the street side. He observed Thompson going to his knees and appellant with one arm raised as if to strike another blow. He allegedly tapped appellant on the shoulder shouting “What are you doing,” at which point appellant turned and swung at Clark’s face with a knife or other sharp object. Clark ducked and then struck appellant several times causing him to fall and hit his head on the’ rear of the car thereby breaking the taillight. The Government introduced Metropolitan Police Officer Landon H. Lewis, who had arrived at the scene shortly after the incident and found appellant in a semi-conscious state, with Mr. Clark assisting in administering first aid. According to his testimony, shortly after the incident in question appellant was taken to George Washington hospital for treatment. After questioning several individuals on the scene and seeing that Mr. Thompson was properly ministered to, Officer Lewis also proceeded to George Washington Hospital. By 1:00 a. m. appellant had been treated and had regained full consciousness and Officer Lewis testified that he was coherent and appeared to be cognizant of his surroundings. Appellant was then informed of the injury to Mr. Thompson, placed under arrest and advised of his rights. At that point, according to Officer Lewis, appellant said “Why am I here and why am I in this condition? I am good with a knife. The guy should be dead.” Upon being released from the hospital and transported to the police station appellant also said “I should have killed the guy.” According to appellant, who testified in his own behalf, he had been at the home of his girlfriend where he had taken a “few drinks” while awaiting her return. He left the apartment and walked to the corner to await the bus, where he “might have been leaning on Mr. Clark’s car.” Mr. Clark, according to appellant, then came up behind him and asked him something. Appellant did not see him. Clark then allegedly hit him on the head “with a pipe or something,” rendering appellant unconscious. Later appellant claimed that the “few drinks” amounted to a quart of Vodka, all contrary to the testimony of his purported girlfriend who stated that there was never any liquor in her apartment and that when she arrived home shortly after appellant left there were absolutely no signs of drinking. During cross-examination appellant substantially revised his testimony. While still maintaining that he did not see Mr. Clark or the object with which he was purportedly struck, he stated that Clark had hit him on the front of the head with the object. The following colloquy then occurred: Q. [Prosecuting Attorney] The first thing that happens is Mr. Clark comes and hits you with an object and you wake up in the hospital, is that correct? A. [Martin] That’s correct. Q. And you never struck Mr. Clark or Mr. Thompson, is that correct? A. That is correct. Q. Then, how do you explain how Mr. Thompson as he was falling back happened to cut his throat? . A. I believe — I didn’t fall down the first time he hit me with this object. He hit me I’d say two maybe three times. As he was hitting me with this object the other fellow, Mr. Thompson, had grabbed me trying to pull me down and as I was falling he fell down with me. Appellant further testified that as he fell, Thompson must have cut his throat on the taillight of the car, which presumably was already broken. This was not only contrary to the testimony of Clark and Thompson, but was also refuted by Dr. Harris Slavick, the physician who treated Thompson. Dr. Slavick testified that, in his opinion, a wound as clean and sharp as the one in question must have been caused by a knife, razor or other similar instrument, and could not have been caused by a broken taillight. Appellant also introduced the testimony of Mr. and Mrs. Hampton, friends with whom he had briefly conversed just prior to the incident. On direct examination they testified that appellant was drunk, although on cross-examination they both conceded that appellant manifested none of the physical signs commonly associated with intoxication. Moreover, Thompson and Clark had both testified, concordant with the testimony of Officer Lewis, that from their observations appellant did not appear to be intoxicated. II As a threshold matter appellant failed to preserve any of the issues which he now raises by timely objection at trial. This is contrary to Fed.R.Crim.P. 51, which provides that a party should make “known to the court the action which he desires the court to take or his objection to the action of the court and the grounds therefor . ” The significance of this requirement lies not only in the important “need for a record, developed by adversary processes, on which appellate consideration and resolution can safely proceed,” but also in considerations of fairness to the parties and the public in bringing litigation to an end after a full and fair opportunity has been afforded to present all issues of fact and law. Moreover, the rule serves the simple purpose of apprising the trial judge of errors so that he may correct them immediately and thereby maximize the likelihood of a just outcome. Rucker v. United States, 92 U.S.App.D.C. 336, 206 F.2d 464 (1953). The circumstances are particularly unfavorable to appellant since he alleges error in the jury instructions. Rule 30 specifically provides that no party may assign any portion of the charge as error unless he objects before the jury retires and distinctly states the matter to which he objects and the grounds for his objection. The matter would end here were it not for Rule 52(b) which permits the reviewing court to take notice of “[p]lain errors or defects affecting substantial rights.” Having carefully considered the record as a whole, we are now of the opinion that appellant has demonstrated only one error that merits comment. We proceed to a discussion of whether that error affected substantial rights. Ill Appellant was convicted of one count of assault with intent to kill while armed, a crime requiring specific intent. See, e. g., United States v. Bryant, 137 U.S.App.D.C. 124, 420 F.2d 1327 (1969). It is beyond dispute that the burden of proof rests with the Government and that, once the defense of intoxication is interjected, the burden rests with the Government to establish that at the time the offense was committed the defendant had the capacity to form the requisite specific intent. See, e. g., Womack v. United States, 119 U. S.App.D.C. 40, 336 F.2d 959 (1964); Heideman v. United States, 104 U.S.App.D.C. 128, 259 F.2d 943 (1958), cert. denied, 359 U.S. 959, 79 S.Ct. 800, 3 L.Ed.2d 767 (1959); and Edwards v. United States, 84 U.S.App.D.C. 310, 172 F.2d 884 (1949). According to appellant, the trial court committed prejudicial error by shifting the burden of proof to the defendant when the following instructions were issued: Now, as you know, ladies and gentlemen of the jury, mere drinking is not intoxication. You must find beyond a reasonable doubt that the defendant at the time and place in question if he did perform the act was in such a mental state that he was not capable of forming the specific intent in question. (Emphasis added.) Standing alone, this instruction is plainly erroneous. However, the numerous occasions on which we have examined alleged errors in jury instructions have resulted in the emergence of several propositions to assist us in our evaluation. Paramount among them is the principle that jury instructions are to be considered as a whole, rather than as isolated passages. A not entirely dissimilar case is Suggs v. United States, 132 U.S.App.D.C. 337, 407 F.2d 1272 (1969). In a conviction for robbery, the trial judge had correctly instructed the jury that one of the essential elements of robbery was that the defendant took the property unlawfully and with the intent to convert it permanently to his own use. The judge went on to instruct that the specific intent necessary for robbery could not be formulated if defendant was too intoxicated to form it. Immediately thereafter, however, the jury was incorrectly informed that they might infer that defendant was guilty if he knowingly had in his possession without adequate explanation property recently taken from complainant. Noting that counsel had failed to object to these instructions, this court held that those instructions, considered as a whole, did not constitute error within the meaning of Fed.R. Crim.P. 52(b). In so doing, the court cautioned against isolating a portion of the whole charge to the jury: It is not difficult of course to isolate an individual sentence in a series of jury instructions thereby highlighting its special meaning and obscuring the collective impact of the jury instructions taken as a whole. Such an approach, however, tends to focus on the trees and misses the forest. Nor can we accept the notion that jurors give instructions the supercritical scrutiny which an appellate court can provide. We are satisfied that considered as a whole, rather than dealing with parts taken out of context, the charge abundantly covered the essential elements. 407 F.2d at 1276-1277. Similarly, in Howard v. United States, 128 U.S.App.D.C. 336, 389 F.2d 287 (1967), where the judge had improperly charged the jury in a murder trial that malice could be inferred from the use of deadly weapons, the court refused to reverse. Not only did the defendant fail to object to the charge, but also the proof of malice was strong and the court was “aided, too, by the trial court’s final words on malice, which helped to correct the error . . . . Even if a portion of a trial court’s instructions is incorrect, an appellate court need not reverse if the error is ‘cured by a subsequent charge or by a consideration of the entire charge . ’ ” Howard illustrates a second point to be considered in our evaluation — strong evidence supports a finding of no prejudice. Accord, Cooper v. United States, 123 U.S.App.D.C. 83, 357 F.2d 274 (1966); Scurry v. United States, 120 U.S.App.D.C. 374, 347 F.2d 468 (1965), cert. denied, 389 U.S. 883, 88 S.Ct. 139, 19 L.Ed.2d 179 (1967); and Nixon v. United States, 114 U.S.App.D.C. 21, 309 F.2d 316 (1962), cert. denied, 385 U.S. 963, 87 S.Ct. 405, 17 L.Ed.2d 307 (1966). While these propositions are necessary ingredients of our analysis, they do not elucidate the ultimate question which relates to the standard we must apply in determining whether error affecting substantial rights has occurred. The Government urges that the relevant standard was articulated by this court in United States v. Thurman, 138 U.S.App.D.C. 349, 417 F.2d 752, 753 (1969), cert. denied 397 U.S. 1026, 90 S.Ct. 1269, 25 L.Ed.2d 535 (1970): In evaluating an asserted error in a portion of a jury instruction we must, of course, examine the charge as a whole to determine whether there was a likelihood of misleading the jury to the extent that it is more probable than not that an improper verdict was rendered. (Emphasis added.) In Thurman, however, the court based its holding on the fact that defense counsel not only failed to object to the charge, but also specifically requested and urged the judge to give the instruction objected to on appeal. Moreover, Thurman involved an allegedly ambiguous instruction on the issue of self-defense, whereas we are concerned here with one of the fundamental components of due process — the burden of proof beyond a reaonable doubt. We have recently had occasion to enunciate the appropriate standard in United States v. Hayward, 136 U.S.App.D.C. 300, 420 F.2d 142 (1969), a case involving an appeal from a conviction for first degree murder. The defendant’s primary defense had been alibi, and the trial judge had correctly instructed the jury that if the Government failed to satisfy the jury beyond a reasonable doubt that the defendant was present at the time and place where the offense was allegedly committed, they must find him not guilty. The jury was then instructed, however, that if the Government had proven beyond a reasonable doubt that defendant was at the scene of the crime, they must convict him. By instructing the jury that they must convict under these circumstances the trial judge undermined an essential element of the jury function. Since a jury trial is a constitutional right guaranteed by the sixth amendment, the applicable standard for determining whether the error was harmless was that established by the Supreme Court in Chapman v. California, 386 U.S. 18, 24, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967): [B]e£ore a federal constitutional error can be held harmless, the court must be able to declare a belief that it was harmless beyond a reasonable doubt. See also Harrington v. California, 395 U.S. 250, 89 S.Ct. 1726, 23 L.Ed.2d 284 (1969). The Court has recently illuminated the standard in Milton v. Wainwright, 407 U.S. 371, 92 S.Ct. 2174, 33 L.Ed.2d 1 (1972), a case involving the admission into evidence of multiple confessions by defendant, the last of which was tainted, where it concluded: Our review of the record, however, leaves us with no reasonable doubt that the jury at petitioner’s . . . trial would have reached the same verdict without hearing [the testimony of a police officer who posed as petitioner’s cellmate in order to obtain a confession]. [T]he use of the additional evidence challenged in this proceeding and arguably open to challenge was, beyond reasonable doubt, harmless. 407 U.S. at 377-378, 92 S.Ct. at 2178. Chapman and its progeny therefore exhort an examination of the evidence by the reviewing court with a view toward determining whether the error meant the difference between acquittal and conviction. Thus, in considering the alleged error in the present case, we must determine, beyond a reasonable doubt, whether the same result would have been reached had the judge omitted the erroneous sentence in his instructions or had he correctly explained the burden in that sentence. IV In the present case, while instructing the jury on the general burden of proof prior to issuing the erroneous sentence, the trial judge had on numerous occasions directed the jury’s attention to the fact that the entire burden was on the Government. Moreover, the paragraph in question was followed immediately by two correct paragraphs on the issue of intoxication: On the other hand, if you find that the Government has failed to prove beyond a reasonable doubt that at the time of the commission of the alleged offense the defendant was capable of determining or of forming the specific intent to commit the offense with which he is charged or the offenses, and that the specific intent to do so— then you must if you find that the Government has failed to prove that the defendant in this case was capable of forming the specific intent then you may find the defendant not guilty. If you find that the Government has in this particular case, that if there is doubt in your mind, then the doubt may be determined in favor of the defendant so far as the intent. We have already indicated the nature of the evidence presented on the issue of intoxication. Three Government witnesses testified that appellant did not appear to be intoxicated. When appellant took the stand, his testimony on the issue was inconsistent and contradictory. One of the three witnesses presented by appellant admitted in open court that appellant had offered to bribe her; while the other two, friends of the appellant, testified that he displayed none of the physical manifestations of intoxication. Finally, the very nature of the acts in question, whereby appellant was able to lunge nearly six feet and deliver a nearly fatal wound to one adversary and then turn and attempt to overcome a second, supports the conclusion that he was in full possession of his faculties. In view of the instructions considered as a whole and the substantial evidence presented at trial, we are convinced beyond a reasonable doubt that appellant was not prejudiced. Accordingly we affirm. BAZELON, Chief Judge (dissenting): I agree with the majority that the standard to be applied in reviewing the trial judge’s erroneous instruction is the one set out in Chapman v. California. Since proof beyond a reasonable doubt is essential to the constitutional right to due process, the erroneous instruction of the trial judge concerning the burden of proof amounted to constitutional error and the Chapman standard must apply. But because I cannot conclude beyond a reasonable doubt that the jury would have reached the same verdict if instructed properly as to intoxication, I would reverse and remand for new trial. I Once the issue of intoxication is raised, the burden rests on the government to show beyond a reasonable doubt that defendant’s drinking did not destroy his capacity to form the requisite intent for the crime. After he instructed the jury on the requirement of specific intent, the judge noted that the issue of intoxication had been raised and that intoxication “may be introduced into evidence to determine state of mind. . ” He then explained: [Ijntoxieation pertains to the intent, an essential element of the offense with which the defendant is charged. As you have already been told, specific intent is one of the essential elemerits. Even if the defendant in this particular case may have been intoxicated to some degree, if you, as jurors, determine from the evidence that the Government has proved beyond a reasonable doubt that the defendant was capable of knowing, that is, knowing what he was doing so far as the specific intent is concerned, to commit the offense in question, then you may find that the Government may have proved beyond a reasonable doubt all the essential elements of the offense. Thus far, the jury knew only that intoxication pertained to intent, an essential element of the crime on which the prosecution had the ultimate burden of proof. The trial judge then went on to discuss what constitutes “intoxication”: [MJere drinking is not intoxication. You must find beyond a reasonable doubt that the defendant at the time and place in question if he did perform the act was in such mental state that he was not capable of forming the specific intent in question. The instruction is clearly erroneous and a lay jury could easily have concluded that intoxication is a defense which is to be considered only when the defendant proves beyond a reasonable doubt that his drinking was so severe as to destroy his capacity to form the intent. In other words, by defining “intoxication” as a state of being in which the defendant is unable to form intent, and by placing a heavy burden on the defendant to show that his drinking amounted to such “intoxication,” the court removed the state’s burden of showing beyond a reasonable doubt that the defendant had the capacity to form the intent. Of course, as the majority states, jury instructions must be considered as a whole rather than in isolated passages. The majority believes that any harm resulting from the erroneous instruction was purged by other language which emphasized that the burden was on the government to prove beyond a reasonable doubt that the defendant was capable of forming the specific intent charged. But I find that the court’s instructions were, as a whole, far from clear on the matter of intent. And even if the jury were crystal clear as to who had the burden on this issue, the jury could have concluded that just drinking was not relevant to intent until the defendant had shown that the drinking amounted to “intoxication” — that it diminished his capacity. Appellant certainly had a colorable intoxication defense. He testified that shortly before the scuffle he had drunk a quart of vodka; a witness, who later claimed the appellant had wanted her to lie but that she had refused, nonetheless testified that the defendant was drunk; two other defense witnesses testified that he was drunk; and even his victims testified that he acted strangely, as if he were drunk. In these circumstances I cannot conclude beyond a reasonable doubt that the erroneous instruction of the trial judge was harmless error. II As the majority notes, the issues which appellant now raises were not preserved at trial by his court-appointed attorney. The record indicates that counsel not only failed to object to the judge’s clearly erroneous jury instructions, but also failed to object to the Government’s introduction of certain inculpating statements made by the appellant to a police officer, after being taken into custody. The improper admission of this damaging confession would surely be an error affecting substantial rights. And I am persuaded that the evidence on the record does not sustain the heavy burden on the government to show a valid waiver of the appellant’s privilege against self-incrimination. As this Court held in United States v. Frazier, the burden on the government to show a valid waiver requires it to prove that the accused received Miranda warnings before making his inculpatory statement and that he “was capable of understanding” the warnings when given. It is not clear from this record whether the Miranda warnings were given before the admissions were made. The incriminating statements and the circumstances in which they were secured are described in the testimony of Officer Lewis: A. At the hospital I placed Mr. Martin [the defendant] under arrest and advised him of his rights. Q. Did he regain consciousness in your presence? A. Yes. Q. And he did appear cognizant of his surroundings? A. Yes. Q. Now, when you placed him under arrest and advised him of his rights what, if anything, did he state at that time? A. He began looking through his trouser pockets. He asked where his knife was. He wanted to know why he was here. Why he was in this condition. Q. Did he say anything else ? A. Yes, he said, “Why am I here and why am I in this condition. I am good with a knife. The guy should be dead.” On cross examination the officer elaborated on this story: Q. . . . Now, when you placed Mr. Martin under arrest what did you advise him that he was under arrest for? A. I advised him he was under arrest for assault with a dangerous weapon . Q. Was there any mention made that someone had been cut and just what had happened and why he was charged with assault? A. Yes sir. Q. He was advised of this ? A. Yes sir. Clearly the evidence is ambiguous as to when the warnings were given. And the appellant’s statement went directly to the all important question of his intent. Moreover, there are strong indications that the appellant lacked capacity to understand the warnings even if they were timely. There was testimony that he had consumed a great deal of liquor earlier in the evening. He was unconscious for some time before and perhaps right up until his exchange with Officer Lewis. Officer Lewis testified that there were lacerations on the appellant’s head,.-which was heavily bandaged, and that his face was swollen. This suggests that appellant may have suffered a Serious head injury. It is very unclear what state of consciousness the appellant was in when the warnings were read to him. All of this presents a substantial question as to whether the appellant was capable of a knowing and voluntary waiver of his rights under Miranda; On the basis of the evidence presented, the trial juge hardly had sufficient information on which to base a conclusion that the appellant’s statements were admissible. Since the appellant chose to testify, under the Supreme Court’s ruling in Harris v. New York, his inculpatory statements might have been introduced for impeachment purposes even though Miranda criteria were not met. However, this does not appear to be the basis on which the government introduced those statements. First, the government contended at trial that it had met the burden of Miranda; the government did not argue that the statements were introduced to impeach the appellant. Second, the statements were introduced before the appellant testified. If the statements were not introduced for impeachment purposes, the government failed to meet its burden under Miranda. If the admissions could fall within the Harris exception, the circumstances dictate that a limiting instruction was required. Defense counsel cannot be held to have waived a limiting instruction here, particularly since it appears that neither he, the judge, nor the prosecutor believed that the evidence was being introduced only for impeachment purposes. If this were the only issue presented by this case, I would remand for a hearing to determine whether there was a custodial interrogation and, if so, whether there was a valid waiver. Ill Even if I were not pursuaded that this case should be reversed and remanded for a new trial, I would remand for resentencing. The Supreme Court has recognized that a defendant’s 6th Amendment right to counsel extends to sentencing, and this court has long since held that the right to counsel at sentencing, as at other stages, is the right to the effective assistance of counsel That right includes, at a minimum, . the aid of counsel in marshaling of facts, introducing evidence of mitigating circumstances and in general aiding and assisting the defendant to present his case as to sentence. . . . The approved draft of the American Bar Association’s Project on Standards for Criminal Justice includes minimum standards for the role of defense counsel at sentencing. These standards recognize the following duties: first, counsel should ascertain and explain to his client and the court the alternative dispositions available, including the consequences of each; second, if the presentence report is available to him counsel should seek to verify and supplement the information and evaluate the conclusions contained therein; third, if a report is not available, he should develop his own report for presentation to the court in which he should urge any ground that supports a proper disposition favorable to the accused; fourth, he should make special efforts to investigate dispositions particularly appropriate to his client so that he can suggest a program of rehabilitation based on his knowledge of the defendant and available community resources ; fifth, he should insure that all the information relevant to sentencing appears in the record. The record before us suggests that counsel in this case failed to do any of these things. He had only the following to offer at sentencing: I have nothing to add to the information I am certain is in the probation report, if your honor please. And I believe Mr. Martin doesn’t desire to make any statements. Counsel’s remarks make it doubtful that he even saw the presentence report, or “[took] steps to see that [the] sentence was not predicated on misinformation.” Effective representation requires the services of a conscientious and diligent advocate. Where counsel offers but a pro forma appearance at sentencing, as on the record before us, clearly the accused has been denied the effective assistance of counsel at that crucial “step in the proceedings against him.” The problem of ineffective assistance —particularly in cases involving indigent defendants — is not new to this court, though it is an issue we have come to face more often of late. Nor is ineffectiveness always a result of a lawyer’s incompetence or lack of diligence. Particularly in regard to sentencing, it may be more of an institutional problem, reflecting a common misunderstanding of counsel’s role and a prevalent but far too narrow conception of an appointed attorney’s obligations to his client. But that is all the more reason why we can no longer delay confronting the problem. In any case, our real concern is not the culpability of counsel or the reason for his failure. It is the denial of the defendant’s 6th Amendment rights. A remand for resentencing on the grounds of ineffectiveness represents no infringement on the trial judge’s discretion in sentencing. On the contrary, its purpose is to insure that the sentencing judge has adequate information on which to base that exercise of discretion. Because the judge will often possess a great deal of doubt about the nature and character of the defendant and the appropriate sentence to be imposed, [e]ven the most self-assured judge may well want to bring to his aid every consideration that counsel for the accused can appropriately urge. Since the appellant was denied his constitutionally guaranteed right to the effective assistance of counsel at sentencing, I would vacate his sentence and remand the case for resentencing. . Miss Dickerson, appellant’s reputed girlfriend, further testified that appellant had asked her to perjure herself in court— indeed, had offered to bribe her — by claiming that she was an eyewitness and lying about the incident. . Specifically, one or both testified that they could understand appellant when he spoke, that he did not stagger, bang the sides of the wall or in any other way act offensive or obnoxious, and that he appeared to understand all that was said to him. . United States v. Lewis, 140 U.S.App.D.C. 40, 433 F.2d 1146, 1152 (1970). . United States v. Atkinson, 297 U.S. 157, 159, 56 S.Ct. 391, 80 L.Ed. 555 (1936) and Johnston v. Reily, 82 U.S.App.D.C. 6, 160 F.2d 249 (1947). While we realize that such arguments have more force in the context of civil proceedings than in criminal proceedings, a criminal defendant is protected by the further safeguard of Fed.R.Crim.P. 52(b) which is considered below. . However, as the court stated in United States v. Ostendorff, 371 F.2d 729, 731 (4th Cir. 1967), cert. denied, 386 U.S. 982, 87 S.Ct. 1286, 18 L.Ed.2d 229 (1967), “it was never intended that Rule 52(b) be applied in such a way as to destroy Rule 30 . . . . The converse of Rule 52(b) under the facts of this case is Rule 52(a), which provides: Harmless Error. Any error, defect, irregularity or variance which does not affect substantial rights shall be disregarded. These rules will therefore be used interchangeably throughout much of the opinion. . See, e. g., United States v. Gaither, 142 U.S.App.D.C. 234, 440 F.2d 262 (1971); United States v. Johnson, 140 U.S.App.D.C. 54, 433 F.2d 1160 (1970); Carter v. United States, 138 U.S.App.D.C. 349, 427 F.2d 619 (1970); United States v. Porter, 139 U.S.App.D.C. 19, 429 F.2d 203 (1970); United States v. Thurman, 135 U.S.App.D.C. 184, 417 F.2d 752 (1969), cert. denied, 397 U.S. 1026, 90 S.Ct. 1269, 25 L.Ed.2d 535 (1970); Suggs v. United States, 132 U.S.App.D.C. 337, 407 F.2d 1272 (1969); United States v. Hayward, 136 U.S.App.D.C. 300, 420 F.2d 142 (1969); Bynum v. United States, 133 U.S.App.D.C. 4, 408 F.2d 1207 (1968), cert. denied, 394 U.S. 935, 89 S.Ct. 1211, 22 L.Ed.2d 466 (1969); Jones v. United States, 131 U.S.App.D.C. 212, 404 F.2d 212 (1968); Howard v. United States, 128 U.S.App.D.C. 336, 389 F.2d 287 (1967); Scurry v. United States, 120 U.S.App.D.C. 374, 347 F.2d 468 (1965), cert. denied, 389 U.S. 883, 88 S.Ct. 139, 19 L.Ed.2d 179 (1967); Nixon v. United States, 114 U.S.App.D.C. 21, 309 F.2d 316 (1962), cert. denied, 385 U.S. 963, 87 S.Ct. 405, 17 L.Ed.2d 307 (1966); McFarland v. United States, 85 U.S.App.D.C. 19, 174 F.2d 538 (1949); and McAffee v. United States, 70 App.D.C. 143, 105 F.2d 21 (1939). . 389 F.2d at 291, citing for authority Southern Pac. Co. v. Souza, 179 F.2d 691, 694 (9th Cir. 1950) and Redfield v. United States, 117 U.S.App.D.C. 231, 328 F.2d 532 (1964), cert. denied, 377 U.S. 972, 84 S.Ct. 1654, 12 L.Ed.2d 741 (1964). . See In re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 25 L.Ed.24 368 (1970); Davis v. United States, 160 U.S. 469, 488, 16 S.Ct. 353, 40 L.Ed. 499 (1895); and United States v. Powell, 145 U.S.App.D.C. 332, 449 F.2d 994, 997-98 (1971). As the Court stated in In re Winship, 397 U.S. at 364, 90 S.Ct. 1068, 1072: [T]he reasonable-doubt standard is indispensible, for it “impresses on the trier of fact the necessity of reaching a subjective state of certitude of the facts in issue.” Moreover, use of the reasonable-doubt standard is indispensible to command the respect and confidence of the community in applications of the criminal law. It is critical that the moral force of the criminal law not be diluted by a standard of proof that leaves people in doubt whether innocent men are being condemned. It is also important in our free society that every individual going about his ordinary affairs have confidence that his government cannot adjudge him guilty of a criminal offense without convincing a proper factfinder of his guilt with utmost certainty. (Citations omitted.) . Consider the following passages from the instructions: The defendant is not required to establish his innocence under our system of jurisprudence. The law never imposes upon a defendant in a criminal case the burden or the duty of calling any witness or producing any evidence whatsoever in his defense .... And this presumption of innocence attends him throughout the progress of the trial and it remains with him until it is overcome by evidence proving his guilt to your satisfaction beyond a reasonable doubt. Now, in order to find the defendant guilty of the offense the Government must prove beyond a reasonable doubt the following essential elements of the offense. Second, that he did so with specific intent to kill the complainant. . Chief Judge Bazelon wrote a carefully reasoned dissenting opinion in Suggs v. United States, supra, which serves as an excellent device to illustrate that the facts in the present case are even more convincing in terms of affirmance than those in Suggs. First, Judge Bazelon stressed that the incorrect instruction was the last of a series of sentences, and that it was imbedded by the trial judge’s terminology in the jury’s minds: The incorrect statement concerning unexplained possession was the last thing the jury heard in connection with the robbery charge, and they were told that it represented a “further principle” to the rule that intoxication is a defense. 407 F.2d at 1278. Neither is true in this case — indeed, the exact opposite is true since the two correct paragraphs followed the erroneous sentence. Judge Bazelon also argued persuasively that should the jury have accepted the inference incorrectly related to them, they may well have concluded that it was unnecessary to even resolve the issue of specific intent and may, in fact, have disregarded it altogether. In the present case, on the other hand, the jury had to reach the issue of intent and the defense of intoxication. At issue is the burden of proof with which they resolved it. Finally, Judge Bazelon urged that an “apparently substantial” defense of intoxication was presented by the appellant in Suggs, drawing particular attention to the fact that the alleged thief made off only with a pair of false teeth. Here, of course, we are considering an assault by one allegedly intoxicated individual on two other individuals in which the former was able to inflict swift and telling damage before succumbing. . 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967) (where an error affecting constitutional rights is to be held harmless, it must be found to be harmless beyond a reasonable doubt). . In re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 1073, 25 L.Ed.2d 368 (1970): Lest there remain any doubt about the constitutional stature of the reasonable-doubt standard, we explicitly hold that the Due Process Clause protects the accused against conviction except upon proof beyond a reasonable doubt of every fact necessary to constitute the crime with which he is charged. . See, e. g. Womack v. United States, 119 U.S.App.D.C. 40, 336 F.2d 959 (1964). . Compare Suggs v. United States, 132 U.S.App.D.C. 337, 407 F.2d 1272 (1969) (Chief Judge Bazelon dissenting). . The instruction immediately following the erroneous charge, which the majority quotes at length, is also confusing and its conditional language could easily have reenforced the jury’s misconception: . [I]f you find that the Government has failed to prove that the defendant in this case was capable of forming the specific intent then you may find the defendant not guilty. (emphasis added) . The judge’s subsequent clarification of his instructions on the difference in the intent elements for assault with intent to kill and assault with a dangerous weapon also could be taken as characterizing intoxication as a positive defense (to be proven by the defendant) : [T]he court has already advised you that counts 3 and 6, and counsel has argued to you in his final argument, that intoxication is not a defense because assault with a dangerous weapon is a general intent as separated or taken out from specific intent. And therefore, you need not consider the defense of intoxication so far as counts 3 and 6 are concerned. (Emphasis added.) . The majority points out that both prosecution and defense witnesses testified that the appellant did not show many of the usual “physical manifestations of intoxication.” However, beyond the testimony referred to in the text, there was testimony by one witness describing appellant’s speech as sounding like “he had a load of cotton in his mouth.” In any case, for our purposes, intoxication is a question of mental not physical agility. . In applying rule 52(b) to cases which (like the one before us) involve the failure of a court appointed attorney to object to an error of the court, we might keep in mind an observation made by the Supreme Court of Illinois many years ago: [T]he court owed it to . . . [the defendant] to see that no advantage came to the state by reason of the [inadequacy] of the counsel selected by the court for him. People v. Blevins, 251 Ill. 381, 393, 96 N.E. 214, 219 (1911). . Miranda v. Arizona, 384 U.S. 436, 475, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966). . 155 U.S.App.D.C. -, 476 F.2d 891 at p. 892 (1973) (en banc). See also Frazier v. United States, 136 U.S.App.D.C. 180, 187, n.31, 419 F.2d 1161, 1168 n.31 (1969). . It is quite clear that the confession was made while the appellant was in custody. Hicks v. United States, 127 U.S.App.D.C. 209, 382 F.2d 158 (1967), urged by the prosecution as precedent for admission, is therefore inapposite. Although Officer Lewis’ testimony is suggestive of an interchange initiated by the police, hence a custodial interrogation, that question is far less dear and should be determined on remand. . Officer Lewis testified to a second statement made by the appellant at the police station. That testimony appears below: . He stated to me [at the station] that he was good with a knife. He-said “I should have killed the guy.” He couldn’t understand why he was in the condition he was. Again, it is unclear whether the appellant had yet been given Miranda warnings that he could understand, what his mental condition was, or what gave rise to this remark — particularly whether it was made in the course of a discussion of his earlier “confession.” . 401 U.S. 222, 91 S.Ct. 643, 28 L.Ed.2d 1 (1971). . The prosecution relied on a case which did not involve capacity to understand but rather whether refusal to sign a waiver was sufficiently probative of actual misunderstanding to render the waiver invalid. Pettyjohn v. United States, 136 U.S.App.D.C. 69, 419 F.2d 651 (1969), cert. denied 397 U.S. 1058, 90 S.Ct. 1383, 25 L.Ed.2d 676 (1970); see United States v. Frazier, 155 U.S.App.D.C. -, at -, 476 F.2d 891, at 897 n. 6 (1973) (en banc). . When faced with a challenge to a confession raised for the first time on appeal, this court remanded for a hearing on the admissibility of the confession rather than for a new trial in Frazier v. United States, 136 U.S.App.D.C. 180, 188, 419 F.2d 1161, 1169 (1969). For the same reasons, I would remand this ease for a hearing on the confession issue, if it were not for the jury instruction discussed at part I of this opinion. . Mempa v. Rhay, 389 U.S. 128, 88 S.Ct. 254, 19 L.Ed.2d 336 (1967); see Moore v. Michigan, 355 U.S. 155, 78 S.Ct. 191, 2 L.Ed.2d 167 (1957). . Gadsden v. United States, 96 U.S.App.D.C. 162, 165, 223 F.2d 627, 630 (1955): The right to effective assistance of counsel at the sentencing stage of the proceeding is guaranteed by the Constitution. See McConnell v. Rhay, 393 U.S. 2, 4, 89 S.Ct. 32, 34, 21 D.Ed.2d 2 (1968): The right to counsel at sentencing must, therefore, be treated like the right to counsel at other stages of adjudication. . Mempa v. Rhay, supra, 389 U.S. at 135, 88 S.Ct. at 257 (1967); see Von Moltke v. Gillies, 332 U.S. 708, 721, 68 S.Ct. 316, 92 L.Ed. 309 (1948). . Standards Relating to the Defense Function, Approved Draft, 1971, American Bar Association Project on Standards for Criminal Justice (1971) § 8.1. The standards set out here provide a good basis for assessing whether an attorney has rendered effective counsel to his client. Accord, Standards Relating to Sentencing Alternatives and Procedures, Approved Draft, 1971, American Bar Association Project on Standards for Criminal Justice (1971) § 5.1; see Dash, The Defense Lawyer’s Role at the Sentencing Stage of a Criminal Case, 54 F.R.D. 315, 316 (1968). . The Offender Rehabilitation Division of the District of Columbia Public Defender Service has a professional staff which conducts investigations so that an appointed defense lawyer can go to court armed with a thorough and accurate presentence report and a positive rehabilitation plan. This program is commended by the ABA study, Standards Relating to Sentencing Alternatives and Procedures, supra note 19 at 251, which observes that the D.C. program “could well make the difference between an offender who languishes in jail and will wind up there again and an offender who successfully supports his family while at the same time receiving the help he needs.” See also Pye, The Administration of Criminal Justice, 66 Colum.L.Rev. 286 (1966). . The prosecutor “urge[d] the court to impose a maximum sentence of life imprisonment,” because of appellant’s “prior felony convictions” and the lack of “mitigating circumstances.” Appellant was sentenced to a prison term of 10 years to life. He was eligible to receive as little as a 2 year sentence. Defense counsel never pointed out what was clear even from the presentence report; that appellant’s “criminal record does not show any criminal conduct since 1960,” that none of his prior convictions were for crimes of violence, and “that he apparently has been able to maintain himself financially and has been living at one place of residence approximately seven years.” But, it is necessary to point out that defense counsel cannot rely on the Probation Service presentence report. Such reliance represents a substantial abdication of defense counsel’s role. See text at note 19, supra,. Just how serious is the danger of unreliability in these reports appears from the following. The Federal Probation Service currently has 808 authorized staff positions nationwide. In order to meet the minimum standards for presentence and supervision functions set by the President’s 1967 Crime Commission report for fiscal (FY) 1974, the agency would have to nearly triple its staff by adding 1438 new officers. The Judicial Conference has recommended that Congress authorize just 340 new positions. For the previous year (FY1973), Congress granted only one-half of the Conference’s recommendation. The implication of these figures canont be lost on diligent defense counsel. . That this is a responsibility of counsel was recognized in Mempa v. Rhay, 389 U.S. at 133, 88 S.Ct. 254, quoting Townsend v. Burke, 334 U.S. 736, 741, 68 S.Ct. 1252, 92 L.Ed. 1690 (1958). . Tate v. United States, 123 U.S.App.D.C. 261, 269, 359 F.2d 245, 253 (1966). (Counsel must act not as a passive friend of the Court but as a diligent, conscientious advocate). The ABA suggests that counsel should “assume the same position of advocacy [at sentencing] that is his duty at the trial.” ABA Standards Relating to Sentencing Alternatives and Procedures, supra note 19 at 246. . United States v. Hammonds, 138 U.S.App.D.C. 166, 173, 425 F.2d 597, 604 (1970) (A pro" forma defense does not meet the minimum requirements for effective assistance of counsel). . “[The accused] requires the guiding hand of counsel at every step in the proceedings against him. ... If that be true of men of intelligence, how much more true is it of the ignorant and illiterate, or those of feeble intellect.” Powell v. Alabama, 287 U.S. 45, 69, 53 S.Ct. 55, 64, 77 L.Ed.2d 158 (1932) (in regard to the right to counsel at the guilt determining phase, but the right was later extended to the sentencing stage, see note 16, supra). Thus the Supreme Court recognized how essential the effective assistance of counsel is, particularly to indigent defendants like the one before us today. . Gadsden v. United States, 96 U.S.App.D.C. 162, 223 F.2d 627 (1955), where we found that appellant was denied effective counsel at sentencing when there was no showing that substituted counsel was prepared, or had the opportunity to prepare, and at the hearing counsel made no effort to speak on behalf of his client. See, e. g., Jones v. Huff, 80 U.S.App.D.C. 254, 152 F.2d 14 (1945). . United States v. Benn & Hunt, 155 U.S.App.D.C., 476 F.2d 1127 (1972) (Chief Judge Bazelon dissenting); United States v. Burks, 152 U.S.App.D.C. 284, 470 F.2d 432 (D.C.Cir. Oct. 19, 1972) (Chief Judge Bazelon concurring); United States v. Smallwood, 153 U.S.App.D.C. 387, 473 F.2d 98 (1972) (Chief Judge Bazelon concurring); Matthews v. United States, 145 U.S.App.D.C. 323, 449 F.2d 985 (1971); United States v. Hammonds, 138 U.S.App.D.C. 166, 425 F.2d 597 (1970); Bruce v. United States, 126 U.S.App.D.C. 336, 379 F.2d 113 (1967). . As the commentary to the ABA Standards observes: It is unfortunately too often the case that the defense attorney considers his job completed once he has assisted the defendant through the guilt phase of the proceedings and perhaps jockeyed for the most lenient sentencing judge. ABA Standards Relating to Sentencing Alternatives and Procedures, supra note 19 at 241. . It is deserving of mention that according to a recent survey of federal offenders sentenced during 1970, those with appointed counsel received considerably longer sentences than those with retained attorneys. The average sentence weight for defendants with assigned counsel was 7.2 as compared to 5.7 for those with retained counsel. In regard to assault and homicide offenses, the category of the charges in the case before us, the average sentence weight for defendants with court appointed lawyers was 8.3 as compared to 6.8 for those with retained counsel. Table 9a in Administrative Office of the United States Courts, Federal Offenders in the United States District Courts — 1970 at 49 (1972). . Carter v. Illinois, 329 U.S. 173, 178, 67 S.Ct. 216, 220, 91 L.Ed.2d 172 (1946); see Martin v. United States, 182 F.2d 225, 227 (5th Cir. 1950): There is then a real need for counsel [at sentencing]. Then is the opportunity afforded for presentation to the Court of facts in extenuation of the offense, or in explanation of defendant’s conduct; to correct any errors or mistakes in reports of the defendants’ past record ; and, in short, to appeal to the equity of the Court in its administration and enforcement of penal laws. Any Judge with trial Court experience must acknowledge that such disclosures frequently result in mitigation, or even suspension, of penalty.

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Murray A. KIVITZ, Petitioner, v. SECURITIES AND EXCHANGE COMMISSION, Respondent. No. 71-1602. United States Court of Appeals, District of Columbia Circuit. Argued Oct. 27, 1972. Decided Jan. 31, 1973. Joseph A. Fanelli, Washington, D. C., for petitioner. Jacob H. Stillman, Asst. General Counsel, Securities and Exchange Commission, with whom Walter P. North, Associate General Counsel and Michael J. Roach, Attorney, Securities and Exchange Commission were on the brief, for respondent. Before DANAHER, Senior Circuit Judge, and McGOWAN and ROBB, Circuit Judges. DANAHER, Senior Circuit Judge: Before us is a petition to set aside a Commission order suspending for a period of two years the right of Petitioner Kivitz, an attorney, to practice before the Commission. The order stemmed from the Commission’s conclusion that Kivitz had engaged five years earlier in purportedly unethical and improper conduct unrelated to Commission practice. I This whole episode arose from efforts of one Robert Acides, president of Houses of Plastic, Inc. (hereinafter Plastic), to have processed through the Securities and Exchange Commission a satisfactory registration statement respecting a proposed offer of twelve million shares of Plastic stock at $1 per share. We are speaking specifically of the alleged wrongdoing on the part of Kivitz. The Commission found, in essence, that Kivitz had allowed one Harold G. Quase, a layman, to set the terms of a proposed fee to be received by Kivitz. The Commission opinion correctly recognized that there was an “absence of direct testimony in the record that respondent agreed to divide the fee with Quase,” but went on to observe that this was “not conclusive.” The Commission opinion next recited that the record clearly supported the “inference” that Quase and Kivitz anticipated Quase would receive a portion of the Kivitz fee. There was no direct testimony on this point, either. The opinion continues that as a further part of the “inference” Kivitz was to allow Quase to receive a portion of the Kivitz fee “purportedly to pay for political influence to clear the registration statement to be prepared” by Kivitz. Neither “purportedly” nor otherwise can we find any evidence that Kivitz intended to share some portion of his fee to pay for political influence designed to secure SEC clearanee for the registration statement in behalf of Plastic. On the contrary, it developed according to the record, that Quase either in person or by telephone conversations with people interested in the Plastic program, had made various representations concerning his ability to promote the interests of Plastic and that one David Doane of Boise, Idaho, as attorney for Houses of Plastic, Inc., had come to Washington for the express purpose of a conference with Quase. On the morning of October 29, 1964, Doane first went to the office of one Mary Jo Freehill, a public stenographer at the Mayflower Hotel. She telephoned to Quase, set up an appointment and then escorted him to the Quase office and introduced Doane. The latter warmly welcomed Attorney Doane. Quase exhibited one photograph of himself with President Kennedy and another with President Johnson. Described later by Doane as a “puffer,” Quase boasted of his “organization” and of his alleged qualifications to undertake the promotion of the interests of Plastic respecting clearance of the registration statement which Ackles had vainly sought on two prior occasions. Mrs. Freehill was later to testify that eventually a young man came and joined the conference. She had never met him and had never heard his name mentioned. For the record at the hearing she identified Kivitz. Kivitz canvassed with Doane the inadequacies of the earlier documentation of the Plastic statement and Doane later testified that Kivitz was knowledgeable as to SEC problems. Quase talked of a retainer proposal which would involve a down payment of $20,000 with a further payment of $30,000 upon completion of the SEC filing with some stock allocation on a basis to be the subject of mutual agreement. He suggested that Attorney Doane and Kivitz work up a retainer letter-offer. Attorney Doane and Kivitz thereafter collaborated in the preparation of a proposal which outlined the basis upon which Kivitz would undertake preparation of an adequate registration statement. The retainer called for a certified check to be made payable to Kivitz. Plastic did not go through with the proposed arrangement. Kivitz filed no papers with the Commission. He received no fee. He divided nothing with Quase. Whatever representations Quase or anyone else might have made to Doane before the October 29, 1964 conference, there was no evidence whatever that Kivitz had any knowledge of such representations or that he had been a party to any prior conferences or that anyone had any authority to speak for him. Attorney Doane, having secured the Kivitz retainer-offer sought out an ex parte approach to a commissioner the very afternoon after his conference with Kivitz. The substance of what he then said was brought out by the Hearing Examiner as will be seen from Doane’s testimony in our appendix to this opinion. Five years later, Kivitz found himself charged with unethical conduct, largely spelled out of representations of which he had no knowledge and attributable over a period of some two weeks either to or by people who, with one exception, Quase, were utter strangers to him, and who had never even heard his name. He finally stood “convicted” despite his flat denial of culpable complicity. II To bolster the case Commission counsel was seeking to establish through the testimony of Attorney Doane, there were offered in evidence statements of Mary Jo Freehill and other witnesses, and tape recordings of telephone conversations between various witnesses. Repeated objections by counsel for Kivitz stressed that such conversations failed to involve Kivitz in any way; it was never developed that he had knowledge of them, and there was nothing to show that Kivitz had been engaged in some joint venture with Quase. The Hearing Examiner overruled various objections observing “all of this evidence is being received subject to connection with the respondent, Mr. Kivitz; absent such a connection, the case would simply fail for want of proof.” There was one person who might have testified, and that was Quase. Although summoned by the Commission staff, Quase appeared and refused to testify unless granted immunity. Counsel for the Commission declined to seek immunity for Quase. The Hearing Examiner in his Initial Decision viewed the statements attributed to Quase, e. g., as “verbal acts.” Certainly to show the state of mind of Quase, the Examiner might assess those representations as “statements and representations [which] were not hearsay.” Were this a proceeding against Quase, the Examiner might have gone farther in this resort to and acceptance of what Quase had said. See 3d Ed. VI Wigmore, Evidence §§ 1766, 1789. Cf. Proposed Fed.R.Evid.Rules 801(c), 802, 803(3) and comment at 116. Here, however, it is abundantly clear that such evidence as to Kivitz was hearsay which went far beyond merely permissible circumstantial application. It was utilized to establish testimonially as true, the nature and the scope of the representations made by Freehill and Quase. It is in this phase that we find Kivitz saddled by adverse evidence which never should have been received against him. His alleged complicity was being established from the very testimony, the admissibility of which we reject for it had never been connected up to him. The Supreme Court has pointed out that “men [are not] to be convicted on unsworn testimony of witnesses — a practice which runs counter to the notions of fairness on which our legal system is founded.” Bridges v. Wixon, 326 U.S. 135, 153, 154, 65 S.Ct. 1443, 1452, 89 L.Ed. 2103 (1945). For example, such use was made of the statements by Mary Jo Freehill as she escorted Ackles to the Quase office in mid-October. She told Ackles that Quase could “fix the thing” and that if Ackles were to achieve success at SEC, this was the “way” he would “have to go.” Moreover, we find Quase telling Ackles that he had a “hick” lawyer, that Quase “had a direct line to the White House,” and that if Ackles would “put up some money,” he would have no problem. Indeed, Quase assured Ackles that he might as well quit unless Quase received money “to be put around to various people,” and added that he knew where it should go. We deem it indisputable that such statements, and others of like import, were used testimonially by the Examiner and later by the Commission to establish that Kivitz contemplated a division of fees with Quase with the intention that the latter was “to pay for political influence to clear the registration statement to be prepared by the respondent.” Simply to convey the flavor of what was happening here, testimony was received as to Doane’s office conference two thousand miles away when his partner Manweiler returned to Boise with Ackles. Taped telephone conversations between Doane in Washington and Ackles in Michigan and between Quase in Washington and Doane in Boise were admitted. Since there was no suggestion whatever that Kivitz was a party to any such relationships, it is difficult to perceive how Kivitz could possibly protect himself by cross-examination or otherwise. Surely under such circumstances no inference can be drawn, with respect to culpability on the part of Kivitz, no matter what plans Quase might have conceived or what Doane said. Indeed the circumstances, everything considered and viewed in the light of the record in its entirety, even operate to reduce the quality and the weight of such competent evidence as was offered by Doane concerning his own part in the episode. The insubstantiality of the Commission’s showing based upon such evidence is inevitably apparent. On the other hand, during the 1969 hearing some seven character witnesses attested to the excellent professional reputation of Kivitz. During his eighteen years at the bar there had never been a complaint about his conduct in any respect. Throughout most of that period he had specialized in SEC practice. Never had he shared a legal fee with the promoter, Quase. On the contrary, Quase had referred to Kivitz as counsel, matters such as the formation of a corporation, a domestic relations problem and legal services for a company in which Quase was interested. Kivitz had been compensated in such instances. Some might say that the good moral character of an attorney has no special bearing on his life pattern until it becomes a point at issue, but it then may become controlling. Mr. Justice Black deemed evidence of good moral character favorably important in Schware v. Board of Bar Examiners, 353 U.S. 232, 77 S.Ct. 752, 1 L.Ed.2d 796 (1957). Other courts have long been cognizant of the significance in human experience of good moral character. Indeed, the Supreme Court has said that under some circumstances “a man’s reputation may be sufficient, by itself, to raise a reasonable doubt of his guilt.” We think the Sixth Circuit put it just about right in Klopp v. Securities and Exchange Commission, 427 F.2d 455, 460 (6 Cir. 1970). There the court noted that an exemplary life “will stand a man in good stead when he is accused of shabby or criminal conduct which he denies, and when.he is cast in a contest against accusers whose own lives present nothing special to support assertions of integrity. Character witnesses affirmed Klopp’s good life and reputation until he fell afoul of the SEC.” So here. Ill Of course, we quite understand as to matters arising under the Securities Exchange Act of 1934, that the findings of the Commission as to the facts “if supported by substantial evidence” shall be conclusive, and that the issue of credibility is initially for the hearing examiner to resolve and then for the Commission. So to say is by no means the end of the matter. Instructed by Mr. Justice Frankfurter we know that we are not barred from setting aside an agency decision when, as a reviewing court, we “cannot conscientiously find that the evidence supporting that decision is substantial, when viewed in the light that the record in its entirety furnishes,” including the body of evidence opposed to the agency’s view. Certainly mere hearsay and emotional speculation are not to take the place of factual evidence. Rather, Reviewing courts must be influenced by a feeling that they are not to abdicate the conventional judicial function. Congress has imposed on them responsibility for assuring that the Board keeps within reasonable grounds. That responsibility is not less real because it is limited to enforcing the requirement that evidence appear substantial when viewed, on the record as a whole, by courts invested with the authority and enjoying the prestige of the Courts of Appeals. The Board’s findings are entitled to respect; but they must nonetheless be set aside when the record before a Court of Appeals clearly precludes the Board’s decision from being justified by a fair estimate of the worth of the testimony of witnesses or its informed judgment on matters within its special competence or both. Here we have not been confronted with an issue which depends upon the Commission’s expertise so often involved in the agency’s administration of its special field. This was a non-public proceeding arising under Rule 2(e) of the Commission’s Rules of Practice, 17 CFR 201.2(e). We do not say that an administrative agency may not so proceed, Schwebel v. Orrick, 153 F.Supp. 701 (1957), aff’d on other grounds, 102 U.S.App.D.C. 210, 251 F.2d 919, cert. denied, 356 U.S. 927, 78 S.Ct. 716, 2 L.Ed.2d 759 (1958); Herman v. Acheson, 108 F.Supp. 723 (1952), aff’d sub nom., Herman v. Dulles, 92 U.S.App.D.C. 303, 205 F.2d 715 (1953). But we have always viewed an attorney’s license to practice as a “right” which can not lightly or capriciously be taken from him. Laughlin v. Wheat, 68 App.D.C. 190, 191, 95 F.2d 101, 102 (1937); and see Willner v. Committee on Character, 373 U.S. 96, 102, 83 S.Ct. 1175, 16 L.Ed.2d 224 (1963). This disbarment case involves a lawyer’s reputation in the community, his livelihood, his self-esteem — his “right.” It is not concerned with some specialty developed in the administration of the Act entrusted to the agency. Rather, this case arises in an area we know something about. Every now and then any trial lawyer, any judge, may well draw upon situations he has seen develop within the purview of the observation of Chief Justice Warren in Greene v. McElroy, 360 U.S. 474, 496, 79 S.Ct. 1400, 1413, 3 L.Ed.2d 1377 (1959), that often . the evidence consists of the testimony of individuals whose memory might be faulty or who, in fact, might be perjurers or persons motivated by malice, vindictiveness, intolerance, prejudice, or jealousy. We think it not unreasonable — and here, quite apropos — to appraise what has happened in the words of Judge Major in General Foods Corp. v. Brannon, 170 F.2d 220, 225 (7 Cir. 1948): . It is true, of course, as asserted by the government, that strict rules of procedure, including the admissibility of evidence, inherent in criminal and common law proceedings are not applicable to administrative proceedings. But no court, so far as we are aware, and we do not propose to be the first, has held in an administrative proceeding or any other kind that one person can be held responsible for the actions and statement of another in the absence of a conspiracy or agreement. IV According a fair estimate of the worth of the competent testimony of the witnesses to the case as a whole, taking account of the excellent professional standing of the petitioner, eliminating the inadmissible evidence which erroneously had been read against Kivitz, we “cannot conscientiously find that the evidence supporting” the Commission’s position is “substantial,” as required by 15 U.S.C. § 78y. And see Universal Camera Corp. v. Labor Bd., 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951). Accordingly we are bound to remand the case to the Commission with directions to vacate the order here challenged and to dismiss the proceeding as to Kivitz. Reversed, for disposition accordingly. APPENDIX As Attorney Doane was concluding his testimony, Hearing Examiner Markun stated that he had one or two questions. Then the record shows the following: HEARING EXAMINER MARKUN: Do I infer correctly that from some of your testimony that when you made your trip to Washington you were not doing it with a view to entering into a serious negotiation with Mr. Quase for his services in this matter, but instead you were coming here with a view to [329] garnering evidence against him for some purpose ? THE WITNESS: That is right. HEARING EXAMINER MARKUN: When did this purpose or intention on your part become formulated ? THE WITNESS: It became formulated when we discussed it right after Mr. Ackles got back from Washington, D.C. He was so upset with the procedures and having talked to Dr. Quase, Dr. Quase had convinced him that the only way he going to get this done was by going through Dr. Quase’s organization and that made him mad. Being a layman, not understanding these things, and that is when he made all of these remarks that made Quase mad back here about dealing with the Russians. He came home and he referred to Mr. Quase as a crook, or something to that effect, and he said either he ought to be put in jail or something. So we spent Saturday and Sunday, after I said I didn’t believe Quase told you that, and we got the tape recording and, apparently, he did. And we spent Saturday and Sunday hunting out in the field and at that time, Ackles was torn between putting his product that he thought was going to be the great benefacting product in mankind for low cost housing, he was going to get that out with the help of a crook or else he was going to catch a crook and try to figure out how to do it some other way. And that is what was bothering him. And Mary Jo implied we might get it done with Quase’s money. HEARING EXAMINER MARKUN: When you came here, you [330] still were not certain how this would turn out, whether Quase would put up some money or not? THE WITNESS: No, as far as I was concerned, I was not going to mess with Quase because I wanted to catch him— that was about the time Bobby Baker was going on and we didn’t like the smell of that where I come from. HEARING EXAMINER MARKUN: If Quase had not asked for $20,000 advance, would you have engaged him? THE WITNESS: I might have for Ackles, but I would have disassociated my law firm from the operation. I don’t want anything to do with him, anything more than Howard Manweiler did, but I did want to know what he was up to. HEARING EXAMINER MARKUN: Ackles was willing to put up hard cash to have you come back here? THE WITNESS: Yes, he was. HEARING EXAMINER MARKUN: Before coming here, did either you or Ackles advise any Government agency of your purpose in this respect ? THE WITNESS: No. HEARING EXAMINER MARKUN: When did you first advise any Government agency of what you were doing? THE WITNESS: I told Mr. Budge about it. HEARING EXAMINER MARKUN: How, at what time? THE WITNESS: After we — after the morning — the conversation in Quase’s office, on Thursay, October 29. The [331] only previous conversation, if you recall, I had with him was a telephone call. At that time, we had an idea about Quase. HEARING EXAMINER MARKUN: You told Mr. Budge this after you first called to Michigan or. prior to either of your two phone calls ? THE WITNESS: I told him that in person. I came out to his office after I talked — after the afternoon conversation in Quase’s office. HEARING EXAMINER MARKUN: After the afternoon conference, was it before or after either of your calls ? THE WITNESS: It was in between. HEARING EXAMINER MARKUN: It was between your two calls to Mr. Ackles? THE WITNESS: Right. HEARING EXAMINER MARKUN: On that day? THE WITNESS: Yes. HEARING EXAMINER MARKUN: What, precisely, did you tell Mr. Budge that your were doing ? THE WITNESS: I walked in and said, Homer, what kind of an outfit are you running. He says, what do you mean? I said, Howard Manweiler was just scared to death and he came back here and seen Howard (sic) before, and he said somebody told him they knew what he was doing every minute of the time he was here and he got in a plane and came home thoroughly disgusted. My client got in a plane and came back to Boise, told [332] me that the only way he could get a SEC registration was to go through an outfit that was going to charge a whole lot of money and that he thought it was unreasonable, he thought it was not entirely within the law and he was upset with your outfit. And I get back here and it gets pretty well confirmed. And he said, what do you mean, you are implying there is bribing going on in the SEC? And I said that that is the implication. They put the money in the right places and distribute the fee in the right areas, I call — that is an implication. He said I want to know all about that. I said, I didn’t come here to give it to you right now, but I will cooperate in any way. He said, you save those tapes and I said that I will. I said that I will be glad to turn over anything you want to your people or the FBI or anybody else. We didn’t know who Quase was from Adam Stall. He said, if he is part of the Bobby Baker operation, if he is an independent, but somebody ought to investigate him. I didn’t hear anything until the people in the SEC — I don’t know which branch contacted me — asked me for the information. And then, I gave the information, as disclosed in the record, to both the SEC officials and the FBI. This business of Mr. Murray Kivitz, that is an incidental development, a side issue, as far as I am concerned. [337] Q The only documentary evidence that you drew out of this meeting is a perfectly reasonable offer to a legitimate company, isn’t it? A Sure, that is what I would expect to come out of that [353]. . Kivitz was admitted to the bar in the District of Columbia in 1951, had actively practiced before the Commission for some twelve years at the time of the events here in question, and so practiced thereafter. This court stayed the effectiveness of the Commission’s order of suspension pending the instant review. . The Commission opinion speaks of “improper fee arrangements involving the proposed use of political influence to secure registration, and by the possible inclusion in the registration statement of financial statements prepared by an accountant willing to ‘stretch a point.’ ” The Commission opinion refers to these aspects as “misconduct,” which provides a “sufficient basis” for the Commission’s disciplinary action. There is no evidence that Kivitz at any time or in any way contemplated “proposed use of political influence to secure registration,” no matter what Quase might have said. Moreover, when Attorney Doane and Kivitz worked up the proposed letter retainer, it is apparent that both attorneys agreed that “Houses will provide, at its own cost, all required accounting statements ... as may be needed for the Securities and Exchange Commission registration.” . Doane then telephoned to Aekles in Michigan explaining in detail the terms of the proposed retainer letter and a basis upon which outside capital might become available. The tape of the telephone conversation further discloses that Doane reported the dealings so far as having been perfectly above board and across the table. He added that “it really doesn’t look too bad to me because you don’t have to, you don’t have to sign anything or go on any proposition unless it’s agreeable to you.” . Michelson v. United States, 335 U.S. 469 at 476, 69 S.Ct. 213, 93 L.Ed. 168 (1948); and see Weedin v. United States, 380 F.2d 657, 660 (9 Cir. 1967); Johnson v. United States, 269 F.2d 72, 74 (10 Cir. 1959). . 15 U.S.C. § 78y; see Hughes v. Securities and Exchange Commission, 85 U.S.App.D.C. 56, 61, 174 F.2d 969, 974 (1949) . . Cf. Consolo v. Federal Maritime Comm’n., 383 U.S. 607, 618, 619, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). . Universal Camera Corp. v. Labor Bd., 340 U.S. 474, 488, 71 S.Ct. 456, 465, 95 L.Ed. 456 (1951). . Id. 340 U.S. at 490, 71 S.Ct. at 466. And see Offutt v. United States, 348 U.S. 11, 15, 75 S.Ct. 11, 99 L.Ed. 11 (1954). . Cf. Tashof v. Federal Trade Commission, 141 U.S.App.D.C. 274, 276, et seq., 437 F.2d 707, 709, et seq. (1970); WEBB, Inc. v. Federal Communications Commission, 136 U.S.App.D.C. 316, 320, et seq., 420 F.2d 158, 164, et. seq. (1969). . “We are bound by the Board’s findings of fact as to matters within its jurisdiction, where the findings are supported by substantial evidence; but we are not bound by findings which are not so supported. [Citations omitted.] The rule as to substantiality is not different, we think, from that to be applied in reviewing the refusal to direct a verdict at law, where the lack of substantial evidence is the test of the right to a directed verdict. In either ease, substantial evidence is evidence furnishing a substantial basis of fact from which the fact in issue can reasonably be inferred; and the test is not satisfied by evidence which merely creates a suspicion or which amounts to no more than a scintilla or which gives equal support to inconsistent inferences.” Appalachian Electric P. Co. v. National Labor R. Board, 93 F.2d 985, 989 (4 Cir. 1938), cited with approval in Consolidated Edison Co. v. Labor Board, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938).

f2d_475/html/0964-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

BALTIC INVESTMENT COMPANY, Appellant, v. William Robert PERKINS, Jr., et al. No. 71-1601. United States Court of Appeals, District of Columbia Circuit. Argued Nov. 11, 1972. Decided Feb. 21, 1973. Norment Custis, Washington, D. C., with whom Edwin Shelton and Marshall P. Johnson, Washington, D. C., were on the brief, for appellants. Albert Ginsberg, Silver Springs, Md., with whom Joseph H. Schneider and Herbert D. Horowitz, Silver Springs, Md., were on the brief, for appellees. Before SIMON E. SOBELOFF, Senior Circuit Judge for the Fourth Circuit, and TAMM and LEVENTHAL, Circuit Judges. Sitting by designation pursuant to Title 28, U.S.C. § 294(d). TAMM, Circuit Judge: Appellant brought this action in the district court to clear a purported easement from title to land owned by it in the vicinity of 15th Street and Rhode Island Avenue, N.W. The land in question consists of lots 118 and 119, both owned by appellant, and lot 120, owned by appellee Perkins, in square 210 of the District of Columbia. These lots, along with a fourth not involved in the present controversy (lot 811), all enjoy brief frontage on Rhode Island Avenue between 15th Street on the west and an alley on the east. Lot 118 is the western corner lot, abutting 15th Street on the west as well as Rhode Island Avenue on the south, with lot 119 adjacent to it on the east. Lot 120 is contiguous to the eastern border of lot 119, and lot 811 is contiguous to lot 120 on the east. The purported easement, five feet in width, runs across the northern portion of lots 118 and 119 to the benefit of the dominant estate, lot 120, thereby permitting access from 15th Street to the rear of the premises located on that lot. . Appellee answered the complaint by claiming, in the alternative, that he had a deeded right of way across the specified portions of lots 118 and 119 or that he had acquired a prescriptive easement for such use. Appellee thereafter moved for summary judgment, relying upon certified copies of title records filed with the recorder of deeds for the District of Columbia, a statement of material facts as to which there was no genuine issue, and sworn affidavits of appellee — who has owned the property since 1947 — and Blanche Richardson — who has continuously been employed on the premises since 1924. Appellant, after receiving additional time to respond, filed an opposition to appellee’s motion which consisted primarily of points and authorities in support of its opposition but which was unaccompanied by any documents, depositions, answers to interrogatories or affidavits. The trial judge granted appellee’s motion. Since the reason for granting summary judgment is not apparent, we must examine both claims asserted by appellee. He first claims a deeded easement for right of way across lots 118 and 119. A brief examination of the title records before us illustrates that this contention cannot stand. The land was once owned by Webster Edgerly,- who subdivided the plot into the three lots in question in 1906. Lot 119 was conveyed in 1907 by duly recorded deed, with an easement for right of way reserved in the grantor and his heirs and assigns. In 1908, again by duly recorded deed, lot 120 was conveyed by Edgerly. While the lot was conveyed together with all “easements, privileges and appurtenances to the same belonging,” nothing in the deed indicated that an easement for right of way over lot 118 was transferred, nor was any supplementary evidence presented to that effect. Thus, when Edgerly ultimately transferred lot 118 in 1920, although words designed to reserve an easement for the benefit of “other lots in said subdivision” appeared in the deed, the easement failed. A grantor cannot, by one and the same conveyance, grant a fee simple estate in a lot to one party while reserving an easement in a stranger to the transaction. See Dawson v. Western Maryland R. Co., 107 Md. 70, 68 A. 301 (1907); Herbert v. Pue, 72 Md. 307, 20 A. 182 (1890); 2 American Law of Real Property § 8.29 (A. J. Casner ed. 1952); and 2 G. Thompson, Commentaries on the Modern Law of Real Property § 334 (4th ed. 1961). Furthermore, no evidence was presented which would indicate that the easement had been transferred to appellee’s predecessors in title prior to the sale of lot 120 and therefore that the words of limitation in the deed to lot 118 acted as an exception. Thus, the trial judge necessarily found that appellee had acquired title prescriptively through open, notorious, continuous and adverse use for the statutory period. Kogod v. Cogito, 91 U.S.App.D.C. 284, 200 F.2d 743 (1952). The touchstone of his decision is provided in Fed.R.Civ.P. 56(e): [A]n adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him. (Emphasis added.) Thus, on the basis of the information filed by the parties and the inferences which may fairly be drawn therefrom, we must determine whether the trial judge was justified in concluding that there was no genuine issue as to any material fact, as opposed to mere formal issues which are unsupported in the record. See Dewey v. Clark, 86 U.S.App.D.C. 137, 180 F.2d 766, 772 (1950). It has been noted that the record deeds for Edgerly’s conveyance of both lots 118 and 119 contained words attempting to reserve an easement in favor of other lots in the subdivision. Successive conveyances followed, culminating in appellant’s acquisition of lot 118 in 1963 by way of deed containing reference to the easement, and lot 119 by way of deed in 1964, also containing reference to the easement. Appellee’s father acquired lot 120 in 1919 from Edgerly’s successors in interest and appellee inherited the lot in 1947. According to the uncontradicted affidavits of Blanche Richardson and appellee, he and his father first used lot 120 as their residence for approximately 20 years. In addition, during that time and continuously thereafter the property has been used as a medical office by the family. Since at least 1924 the purported easement has continuously been used for ingress and egress to the rear (north) of the premises by appellee, his father, their employees, tradesmen, deliverymen, trash collectors and others. The alley is paved for its entire length, and from at least 1924 until 1965 it was bordered on both sides by a wooden fence eight feet in height “with access doors to lots 118 and 119 and full use into Lot 120.” Since the destruction of the fence in 1965, painted lines have marked the dimensions of the alley. Appellant has done nothing to refute the fact that appellee and his father occupied lot 120 and used the purported easement for access to that property openly, notoriously and continuously for more than 40 years. Rather, he contests the adversity of use, relying solely upon a letter ostensibly written by Webster Edgerly in 1919 to persons unknown which was discovered, unacknowledged, in the title records relating to lot 120. The letter was apparently written in response to concern expressed by a representative of appellee’s father that no agreement had been entered for an easement for right of way over lot 118. In the letter Edgerly discussed his plans for disposing of the only lot in the subdivision which remained unsold (lot 118). The letter is not in the least supportive of appellant’s argument that “by deduction the letter can only be interpreted to indicate that [appellee’s father] . . . was using the right of way by permission. The permission thus granted has continued until today.” Quite the contrary, the concluding sentence strongly implies adverse use: You and [appellee’s father] must understand that he has no legal or equitable remedy in this claim, or desire for a right of way Moreover, even if we were to accept appellant’s argument, the license or permission to use the property was revoked when it was transferred by Edgerly in 1920. While the burden of establishing a prescriptive easement is quite obviously on he who asserts the interest, where the claimant has made a prima facie showing of the essential elements it is incumbent upon the landowner to introduce contradictory evidence. Indeed, many jurisdictions further hold that where an alleged easement has been used openly, notoriously and continuously for the statutory period, the burden is on the landowner to prove that the use was permissive. See, e. g., Clayton v. Jensen, 240 Md. 337, 214 A.2d 154 (1965). Here we are faced with open, notorious and continuous use for a period far exceeding that required by statute. Appellee succeeded in prima facie establishing the elements of a prescriptive easement, and the only material introduced by appellant to overcome this evidence not only failed to support appellant’s claim, but actually served to enhance the contention of appellee. The trial judge was fully justified in granting appellee’s motion for summary judgment. Affirmed. . Apparently in opposition to appellee’s statement of material facts as to which there is no genuine issue, which primarily sought admissions drawn from an abstract of title filed by appellee, appellant filed a motion to strike. This motion was properly denied by the trial judge as unresponsive and without merit. See U.S. District Court Rules — D.C.Rule 9(h) (1970). . It is not entirely clear from the record whether the easement was intended to run in favor of lot 118, 120 or both, although the latter is the most logical interpretation. . With respect to the applicability of Maryland law and common law to the District of Columbia, see D.C.Code § 49-301 (1967). . It is unnecessary for us to resolve the apparent conflict under the facts of this case between D.C.Code § 12-301 (1967), which provides a 15 year statute of limitations, and D.C.Code § 16-3301 (1967), which provides a 20 year statutory period, because on the record appellant has not successfully refuted appellee’s evidence of open, notorious and continuous use for a period in excess of 40 years. . Affidavit of William Robert Perkins. . Plaintiff’s Opposition to Defendant’s Motion for Summary Judgment at 5. . 2 G. Thompson, Commentaries on the Modern Law of Real Property § 345 (4th ed. 1961). . Id. § 350. . Accord, Waidlich v. Farmers Bank of Mercersburg, 149 F.Supp. 741 (M.D.Pa.1957); Walter G. Brix, Inc. v. Brown, 145 Cal.App.2d 177, 302 P.2d 74 (1956); Stetson v. Youngquist, 76 Mont. 600, 248 P. 196 (1926); Hall v. Backus, 92 W.Va. 155, 114 S.E. 449 (1922); and Bridwell v. Beerman, 190 Ky. 227, 227 S.W. 165 (1921). . Appellant’s alternative claim that we use our equitable powers to relocate the easement is without merit for reasons recently set forth in Fields v. District of Columbia, 143 U.S.App.D.C. 325, 443 F.2d 740, 745 (1970): The troublesome part of such disposition, however, is that it would take away appellants’ rights . . . without their agreement and contrary to their desires and substitute an easement they do not desire. Such decree crosses the boundaries of equitable relief and the relief amounts to the reordering of property rights between private parties.

f2d_475/html/0968-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

NATURAL RESOURCES DEFENSE COUNCIL, INC., Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent (two cases). FRIENDS OF THE EARTH, INC., et al., Petitioners, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Petitioners, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent, Commonwealth of Kentucky, Intervenor. Nos. 72-1522, 72-1598, 72-1810, 72-1941, 72-1982, 72-1985, 72-2028 and 72-2159. United States Court of Appeals, District of Columbia Circuit. Argued Jan. 22, 1973. Decided Jan. 31, 1973. David G. Hawkins, Washington, D. C., for petitioners. Asst. Atty. Gen. Kent Frizzell and Edmund B. Clark, Atty., Dept, of Justice, for respondent. Before BAZELON, Chief Judge, and WRIGHT and MacKINNON, Circuit Judges. ORDER PER CURIAM: These causes came on for consideration of petitioners’ motion for summary reversal, and the court heard argument of counsel. We must initially determine whether we have jurisdiction over all óf these consolidated cases. Section 307(b)(1) of the Clean Air Act, 42 U.S.C. § 1857h-5(b) (1) (1970), provides that a petition for review of the Administrator’s action in approving or promulgating any implementation plan “may be filed only in the United States Court of Appeals for the appropriate circuit.” We agree with petitioners and with the Court of Appeals for the First Circuit, see Natural Resources Defense Council, Inc. v. Environmental Protection Agency, 1 Cir., 465 F.2d 492 (1972), that by the phrase “the appropriate circuit” Congress did not intend that all suits involving approval of state implementation plans be brought in the judicial circuit where the state is located. Instead, Congress intended to adopt a flexible approach to determine which circuit is appropriate, and application of this approach to the facts of these cases and the legal issues we are presently called upon to decide permits us to hear all of these consolidated cases. First, elsewhere in the Act, in a provision concerning judicial review of another kind of action by the Administrator, Congress expressly provided that judicial review shall be in the “court of appeals for the circuit which includes such State.” See Section 110(f)(2)(B), 42 U.S.C. § 1857e-5(f)(2)(B). That it did not use the same language in Section 307(b)(1) and instead used the vague phrase “the appropriate circuit” indicates that Congress intended the latter phrase to mean something other than the more specific review provision in Section 110(f)(2)(B). Secondly, we might note that failure to interpret Section 307(b)(1) in a flexible manner would produce some anomalous results. The Administrator has informed us that implementation plans in several metropolitan areas cover jurisdictions falling within several circuits. In our own metropolitan area of the District of Columbia and the surrounding Virginia and Maryland suburbs, for. example, adoption of the Administrator’s narrow interpretation of the statute would require review of the Administrator’s approval of the D. C. metropolitan area implementation plans to take place in both our own court and the Court of Appeals for the Fourth Circuit. We doubt that Congress intended such a result, especially in light of the indication elsewhere in the Act of a strong congressional concern for coordinated decision-making with respect to metropolitan areas crossing over several jurisdictions. See 42 U.S.C. §§ 1857C-1, 1857C-2. 'Applying this flexible approach to the cases presently before us, it is clear from the record that all of these cases raise identical legal issues. None of these issues involve facts or laws peculiar to any one jurisdiction; rather, all concern uniform determinations of nationwide effect made by the Administrator. Requiring these cases to be prosecuted in the several circuits will only lead to delay on a question where time is literally of the essence, and will needlessly tax the agency’s legal resources. We therefore hold that we have jurisdiction to hear these cases. We also note, before considering the merits, that regardless of whether this court has jurisdiction to review the approval of implementation plans of jurisdictions other than the District of Columbia, all parties agree that we have jurisdiction to review the legality of the Administrator’s approval of the implementation plan for the District of Columbia and surrounding Maryland and Virginia suburbs, and should our jurisdiction as to other areas successfully be challenged, our order is intended to remain in force limited to the local area. Turning to the merits, we find that the Administrator acted in the best of faith in attempting to comply with the difficult responsibilities imposed on him by Congress. Nevertheless, he did not conform to the strict requirements of the Clean Air Act of 1970 in permitting several states to delay submission of transportation control portions of their implementation plans until February 15, 1973, and in granting extensions until mid-1977 for attainment of the national primary ambient air standard without following the procedures established in Section 110(e), 42 U.S.C. § 1857c-5(e). The combined effect of these unlawful actions has been to interfere with the congressional purpose of attaining clean air by a date certain, May 31, 1975, subject only to certain limited and well defined statutory extensions. The Act plainly does not permit extensions of the statutory time for submission by each state of an implementation plan which will permit attainment of the standards by 1975. Whether or not the technology for implementation of or compliance with the plan is available is a matter for the grant of extensions under Sections 110(e) and (f) after the plan is filed. In order to remedy these violations of the Act, the Administrator and the states must return to the procedures and the timetable established by the Congress. Accordingly, it is ordered by this court that: (1) The Administrator shall formally rescind, through notice to the states and through publication in the Federal Register, the February 15, 1973 extension granted to several states to submit the transportation control portions of their implementation plans. (2) The Administrator shall formally rescind, through notice to the states and through publication in the Federal Register, the extension granted to several states to delay implementation of their plans or portions thereof until May 31, 1977. (3) The Administrator shall inform all states concerned, by direct notice and through publication in the Federal Register, that all states which have not yet submitted an implementation plan fully complying with the requirements of the Clean Air Act of 1970 must submit such a plan by April 15, 1973. That plan must satisfy each and every requirement of Sections 110(a)(2)(A) through (H) if it is to be approved by the Administrator. In particular, it must provide for the attainment of the primary standard as expeditiously as practicable but in no case later than May SI, 1975, and it must include “emission limitations, schedules, and timetables for compliance with such limitations, and such other measures as may be necessary to insure attainment and maintenance of such primary or secondary standard, including, but not limited to, land-use and transportation controls.” (4) The Administrator shall, within two months after the date required for submission of a plan under paragraphs (3) or (9) of this order, approve or disapprove such plan or each portion thereof pursuant to the requirements of Section 110(a)(2). (5) If any state fails to comply with the requirements of paragraphs (3) or (9) of this order, or if any state plan is determined by the Administrator not to be in accordance with the requirements of Sections 110(a)(2)(A) through (H) and with the requirements of paragraphs (3) or (9) of this order, the Administrator shall prepare, publish and promulgate regulations setting forth an implementation plan, or portion thereof, for the noncomplying state, following the procedures established in Section 110(e) except that any such regulation shall be promulgated within four months after the date required for submission of such plan under paragraphs (3) or (9) of this order. (6) The Administrator shall not grant any state an extension for attainment of the primary standard unless he first complies with the procedures established in Section 110(e), namely: He must first have before him a plan which provides for attainment of the national ambient air quality primary standard by May 31,1975. He must determine, on the basis of a submission by the governor of the state, that one or more emission sources (or classes of moving sources) are unable to comply with the requirements of such plan for the reasons set out in Section 110(e) (1) (A). He must determine that the state has considered and applied as a part of its plan reasonably available alternative means of attaining the primary standard and has justifiably concluded that attainment of the primary standard by May 31, 1975 cannot be achieved. He must determine that the state plan provides for application, by May 31, 1975, of the requirements of the plan which implement the primary standard to all emission sources other than the sources (or classes) which he has determined are unable to comply. Finally, he must determine that the state plan provides for such interim measures of control of the sources (or classes) which he has determined are unable to comply with the implementation plan as are reasonable under the circumstances." (7) The Administrator shall permit the public to comment on any state plan submitted pursuant to paragraphs (3) or (9) of this order and on the request by the governor of any state for an extension of the date for attainment of the primary standard beyond May 31, 1975. Such opportunity may be limited to the filing of written comments without the necessity of a hearing. (8) The Administrator shall, in approving or disapproving, any state plan submitted pursuant to paragraphs (3) or (9) of this order and in approving any extension for attainment of the primary standard beyond May 31, 1975, state his reasons for taking such action, considering both the material submitted by the states and that submitted by the public, see Kennecott Copper Corp. v. Environmental Protection Agency, 149 U.S.App.D.C. 231, 462 F.2d 846 (1972); Environmental Defense Fund, Inc. v. Ruckelshaus, 142 U.S.App.D.C. 74, 87-88, 439 F.2d 584, 597-598 (1971). (9) In view of the competing contentions with respect to whether or not each state plan approved by the Administrator provided for maintenance of the primary and secondary standards beyond the May 31, 1975 attainment date, and in view of the absence of any definite indication in the present record as to whether or not such a state-by-state determination was made, the Administrator shall, within 30 days from the date of this order, review the maintenance provisions of all state implementation plans presently approved. Those plans which do not provide for measures necessary to insure the maintenance of the primary standard after May 31, 1975, and those plans which do not analyze the problem of maintenance of standards in a manner consistent with applicable regulations, see 40 C.F.R. § 51.12(a) (1972), shall be disapproved. In such a case, the state should be directed to prepare a new implementation plan for maintenance of standards by April 15, 1973. All new plans for maintenance shall be dealt with by the Administrator in the manner set out in paragraphs (4) and (5) of this order. It is so ordered. Circuit Judge MacKinnon’s concurring statement follows. MacKINNON, Circuit Judge, concurring: The foregoing order is technically in conformance with the statute but in some respects it ignores reality. The statute contemplates and requires each state to submit transportation control plans as part of their implementation plans to enforce primary standards of' air quality within certain fixed time limits. The Administrator is authorized to extend the time limits “[u]pon application of a Governor of a State at the time of submission of any plan implementing a national ambient air quality primary standard ... if after review of such plan the Administrator determines that” the necessary technology or other alternatives will not be available so as to permit attainment of the objectives within the earliest statutory time limits. Section 110(e). (Emphasis added.) In the event any state fails to submit an implementation plan within the time prescribed the Administrator is directed to prepare an implementation plan for the State. Section 110(c). Recognizing this design of the Act, and the existing state of the technology necessary to achieve the desired results within the earliest statutory time limits, the Administrator concluded that if the duty devolved upon him he would be unable to develop supportable plans for the states in question. The reasonableness of this conclusion is not denied. The Administrator stated his position in 37 Fed.Reg. 10844 (1972): The Environmental Protection Agency had already begun an assessment of the extent to which various transportation control measures, including motor vehicle inspection and installation of emission control devices on in-use automobiles, could be expected to produce improvements in air quality, but it was apparent that the results would not be available within the time allowed for development of State plans. Accordingly, the States were advised that adoption of transportation control schemes could be deferred beyond the statutory deadline for submittal of implementation plans but that State plans would have to define the degree of emission reduction to be achieved through transportation control measures and identify the measures being considered. In reaching this practical conclusion the Administrator did not walk through all the steps provided by the statute and our order requires that he do so. Petitioners do not deny that complete workable plans for all the states are not presently feasible, but they contend something might be gained by the states and the agency towards achieving the results sought by the Act if the states are required to literally comply with all the formal steps provided by the statute; particularly those contained in Section 110(e)(2) which require states to implement the primary standards by interim measures of control where final implementation plans are technically infeasible. The extent to which compliance with these requirements might produce benefieial results is not known, but since something might conceivably be gained, I concur in the order. These states should include all those listed in paragraphs 1, 2 and 5 of the stipulation between petitioners and the EPA in Addendum to Petitioners’ Motion for Summary Reversal.

f2d_475/html/0973-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

TEXTILE WORKERS UNION OF AMERICA, AFL-CIO, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. No. 71-1469. United States Court of Appeals, District of Columbia Circuit. Argued March 8, 1972. Decided Feb. 1, 1973. Alan S. Gordon, New York City, with whom Patricia E. Eames, New York City, was on the brief, for petitioner. William R. Stewart, Atty., N.L.R.B., of the bar of the Supreme Court of Indiana, pro hac vice, by special leave of court, with whom Marcel Mallet-Prevost, Asst. Gen. Counsel, N.L.R.B., was on the brief, for respondent. Corinna Metcalf, Atty., N.L.R.B., also entered an appearance for respondent. Before BAZELON, Chief Judge, and TAMM and ROBINSON, Circuit Judges. PER CURIAM: We are called upon to review the twelfth in a series of orders of the National Labor Relations Board, issued in what by now seems a quixotic attempt to convince J. P. Stevens and Company to respect the rights conferred on its employees by section 7 of the National Labor Relations Act, 29 U.S.C. § 151 et seq. (1970). Apparently believing that the Board should try harder— rather than more often — the Textile Workers Union of America has petitioned for review of the Board’s refusal to order more stringent remedies. Because we find the Board’s stated reasons for refusing the requested relief inadequate, we remand the ease for further consideration. Following the customary charge, complaint, and hearing, the Trial Examiner below issued an opinion finding that J. P. Stevens, a textile manufacturing concern with numerous plants located in several states, had committed violations of sections 8(a)(1) and (3) by discriminatorily reducing the overtime work afforded one employee at its Statesboro, Georgia, plant, and violations of sections 8(a)(1), (3), and (4) by discriminatorily refusing to grant a wage increase and promotion to another employee at the same plant. The Trial Examiner’s recommended order would have required the company to cease and desist, to take affirmative action to make whole the two employees who suffered the unfair labor practices, and to post penitent notices at its Statesboro plant for a period of 60 days. The Union filed exceptions requesting further affirmative relief, and those exceptions were considered by a three-member panel acting for the Board. Their opinion purported to adopt the “findings, conclusions, and recommendations of the Trial Examiner,” with one “correction,” but actually culminated in an order considerably more favorable to the Union than that recommended by the Examiner. The panel based this expansion squarely on the company’s unfair labor practice history: Upon review of all the relevant factors herein, including Respondent’s companywide history of extensive unfair labor practices as reflected by our Decisions in [Stevens I through XI), we are persuaded that “the conventional remedies would not be adequate to disabuse the employees of the effects of Respondent’s flagrant conduct” in the instant case. But the Board refused the four Union requests that had the greatest potential. Those requests, and the Board’s reasons for denying them, are best presented by quoting the Board’s opinion: Inasmuch as there has been no evidence or finding in the instant matter that Respondent committed independent violations of Section 8(a)(1), we decline to adopt the Charging Party’s requested Notice to Employees. For reasons stated in Stevens (VIII), we also deny the Charging Party’s request to extend the scope of the Order herein so as to include all of Respondent’s plants in North Carolina; South Carolina, and Georgia. Likewise, we deny the Charging Party’s request for a list of the job classifications, wage rates, and length of tenure of Respondent’s employees because, unlike a list of employees’ names and addresses, such a list will not tend to facilitate the Union's communications with these employees. Moreover, because this case does not involve a refusal to bargain by Respondent, and in light of our policy announced in Ex-Cell-O Corporation, 185 NLRB No. 20, reversed and remanded on this point, 449 F.2d 1046 (C.A.D.C., 1971), we reject the Charging Party’s request that Respondent make, whole all of its employees for those contractual benefits which speculatively might have accrued to them had Respondent not committed unfair labor practices and had a collective-bargaining agreement been concluded. As is apparent from the italicized language in this statement of reasons, the Board justified its refusal solely by pointing out what was not involved in this particular case. The apparent reliance on the reasoning of J. P. Stevens VIII, as a ground for refusing multistate relief, does not alter this fact. In Stevens VIII, the Board refused multistate relief on the basis of a footnote, which stated: We do not think that the circumstances of this case justify an extension of the Order beyond the plants located in the Roanoke Rapids area as recommended by the trial examiner. Under section 10(c) of the National Labor Relations Act, upon finding that an unfair labor practice has been committed, the Board must issue an order “requiring such person to cease and desist from such unfair labor practice, and to take such affirmative action ... as will effectuate the policies of this subchapter.” The Board’s power under this section is a “broad discretionary one, subject to limited judicial review,” Fibreboard Paper Products Corp. v. N.L.R.B., 379 U.S. 203, 216, 85 S.Ct. 398, 406, 13 L.Ed.2d 233 (1964). But that discretion is founded on the fact that the Board derives from its experience advantages in determining how best to relate “remedy to policy.” Phelps Dodge Corp. v. N.L.R.B., 313 U.S. 177, 194, 61 S.Ct. 845, 85 L.Ed. 1271 (1941). It does not extend further and exempt the Board from the requirement that it support its actions with adequate reasons. In this case, the Board has allowed itself to lapse into a tempting, and easier, way of disposing of its workload. By choosing to ignore J. P. Stevens’ history when considering the Union’s objections, it has provided itself with two versions of the relevant facts: one to use in rebutting the Union’s claims and the other to use in supporting its order. The package of remedies chosen by the Board in this case may be entirely appropriate, or at least within the rather wide limits of its discretion. There is no question that the Board has the power to take J. P. Stevens’ history of recalcitrance into account in designing its order. Indeed, it has an obligation to do so. See N.L.R.B. v. J. H. Rutter-Rex Mfg. Co., 396 U.S. 258, 90 S.Ct. 417, 24 L.Ed.2d 405 (1969); International Union of Electrical Workers v. N.L.R.B., 426 F.2d 1243 (1970). But the Board’s reasons for its choice of remedies in this case are at least incomplete, and potentially inconsistent. This is no minor problem. It forces us to choose between a de novo selection of an appropriate set of remedies and an uncritical acceptance of the Board’s choice. Neither of these approaches would comport with the command of the National Labor Relations Act. Although the courts will not lightly interfere with Board orders, the Board is under a complementary obligation to set forth in rational fashion the relationship between the case and the remedy it orders. The Board failed to explain why J. P. Stevens’ history of unfair labor practices does not warrant the broader relief that the Union has requested. It chose instead to explain a case that was not before it: one in which a history of many years of obstinance was lacking. Accordingly, the petition for review is granted, and the case is remanded to the Board for further proceedings not inconsistent with this opinion. TAMM, Circuit Judge, dissenting: I would affirm the action of the Board in this case. It is my view that the Board has acted completely within its legal authority and power under § 10(c) of the National Labor Relations Act, under which section the Board’s power is a “broad discretionary one, subject to limited judicial review.” Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 216, 85 S.Ct. 398, 406, 13 L.Ed.2d 233 (1964). . J. P. Stevens & So., Inc., 186 NLRB No. 34; Black Hawk Corp., 183 NLRB No. 34; J. P. Stevens & Co., Inc., 183 NLRB No. 5, enforced, 461 F.2d 490 (4th Cir. 1972); J. P. Stevens & Co., Inc., 181 NLRB No. 97, enforced in part and denied in part, 449 F.2d 595 (4th Cir. 1971); J. P. Stevens & Co., Inc., 179 NLRB No. 47, enforced, 441 F.2d 514 (5th Cir. 1971); Black Hawk Corp., 177 NLRB No. 120, enforced in part and denied in part, 431 F.2d 900 (4th Cir. 1970); J. P. Stevens & Co., Inc., 171 NLRB No. 163, enforced, 417 F.2d 533 (5th Cir. 1969); J. P. Stevens & Co., Inc., 167 NLRB No. 38, enforced with modifications, 406 F.2d 1017 (4th Cir. 1968); J. P. Stevens & Co., Inc., 167 NLRB No. 37, enforced with modifications, 406 F.2d 1017 (4th Cir. 1968); J. P. Stevens & Co., Inc., 163 NLRB No. 217, enforced, 388 F.2d 896 (2d Cir. 1967); J. P. Stevens & Co., Inc., 157 NLRB 869, enforced with modifications, 380 F.2d 292 (2d Cir. 1967) (hereinafter designated as Stevens I through Stevens XI). . The Union is, of course, a “party aggrieved” within the meaning of § 10 (f), 29 U.S.C. § 160(f) (1970). See American Federation of Labor v. N. L. R. B., 103 F.2d 933 (D.C.Cir.1939). The Board has not cross-petitioned for enforcement, and J. P. Stevens is not a party to this suit. Although this casts a shadow over the Union’s request that we enter and enforce our own order in this case, our remand disposes of any need to elaborate on this point. . 190 NLRB No. 139 (1971). The order was explicitly limited to J. P. Stevens’ Statesboro plant, but did provide four new remedies: Union access to bulletin boards for one year; a list of the names and addresses of all employees, to be updated for one year; a revised notice to be read to the employees on company time; and the mailing of that notice to the homes of all employees. . Id. at n. 3. The Board concluded that it should enter an order conforming to that in Stevens V, J. P. Stevens & Co., Inc., 171 NLRB No. 163, enforced, 417 F.2d 533 (5th Cir. 1969). Aside from the defects in the Board’s reasoning that are discussed in the text, this determination raises an additional problem. It is not clear that an order issued in Stevens V is “adequate”— to use the Board’s word — in Stevens XII. On remand, the Board should undertake to explain this problem as well. . 190 NLRB No. 139, at n,3 (emphasis and bracketing added). . 181 NLRB No. 97 (1970), enforced in part and denied in part, 449 F.2d 595 (4th Cir. 1971). . Id. at n.1 (emphasis added). . 29 U.S.C. § 160(c) (1970). . See International Union of Electrical Workers v. N. L. R. B., 426 F.2d 1243, 1249 (D.C.Cir.1970); SEC v. Chenery Corp., 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1943). . See J. P. Stevens & Co., Inc., v. N. L. R. B., 441 F.2d 514 (5th Cir. 1971).

f2d_475/html/0977-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America, Appellant, v. Gwendolyn E. JOHNSON. No. 71-1715. United States Court of Appeals, District of Columbia Circuit. Argued June 7, 1972. Decided Feb. 14, 1973. As Amended May 11, 1973. James A. Adams, Asst. U. S. Atty., with whom Thomas A. Flannery, U. S. Atty., at the time the brief was filed, John A. Terry and Brian W. Shaughnessy, Asst. U. S. Attys., were on the brief, for appellant. Edwin C. Brown, Alexandria, Va., for appellee. Before BAZELON, Chief Judge, and McGOWAN and TAMM, Circuit Judges. McGOWAN, Circuit Judge: The issue raised by the Government’s appeal in this prosecution for federal narcotics offenses, 26 U.S.C. § 4704(a) and 21 U.S.C. § 174, is the correctness of the trial court’s pretrial suppression of evidence of narcotics found in appellee’s purse. We hold that the order granting appellee’s motion to suppress was in error; and we reverse. I On or about January 5, 1971, members of the Narcotics Branch of the Metropolitan Police Department obtained a warrant authorizing a search for narcotics of the entire apartment of one James L. Stewart, subsequently indicted as a codefendant with appellee. The warrant was issued upon an affidavit which recited that within the preceding two weeks information had come to the police from a reliable informant that narcotics were being sold in Stewart’s apartment, and that on January 5 an agent of the Department had purchased narcotics at that apartment. In the early morning of January 6, approximately seven members of the Department gained access to Stewart’s apartment building and, leaving some of their party outside, proceeded to his apartment, knocked, and announced their identity and purpose. The officers waited nearly a minute, then heard a noise within the apartment followed by the sound of a window breaking, whereupon they forced the door open. The first officers to gain entry observed Stewart apparently attempting to escape from the apartment through the bedroom window. He was apprehended, and, after the bedroom search revealed narcotics, was arrested. Other officers had entered the living room, where appellee was found sitting on the couch. A purse, which was on a coffee table in front of the couch, was immediately searched, yielding narcotics, and appellee was placed under arrest. Before entering Stewart’s apartment, the police detail had been advised that appellee was a visitor on the premises. The District Court granted appellee’s motion on the ground, as stated by it on the record, that the search of the purse preceded her formal arrest, and therefore could not be sustained as incident thereto. Since, in ruling on her motion, the trial judge assumed probable cause existed to arrest appellee prior to the search of her purse, we need not inquire into its existence even though the crime for which he believed she could be arrested is unclear. Neither do we find it necessary to pursue the question of whether the formal placing under arrest of a criminal suspect is invariably a condition precedent to a lawful search incident to an arrest, although we note the trial judge’s view is at variance with the decisions in this circuit. What we do find is that, in the circumstances disclosed by this record, the search of appellee’s purse was lawful as having been within the scope of the warrant to search the premises. II The prohibition of the Fourth Amendment is against “unreasonable” searches and seizures. In determining whether under the circumstances of this case the search of appellee’s purse violated that standard, the protection of individual privacy embodied in the Fourth Amendment must be weighed against the public interest in effective law enforcement with respect to narcotics violations. The specific question for resolution is whether the scope of the search warrant embraced an object in the ap- . parent possession nf_a person not an oceqpflnt. n.f_t.ha — n.ramises searched. Although the District Court did not expressly consider this issue, its suppression of the evidence contained the implicit holding that appellee’s purse fell without the warrant. Turning first to the privacy element of the question, we note that the search was of a purse resting separately from the person oUits owner. As such, it was not being “worn” by appellee and thus did not, constitute an extension of her person so as to make the search one of her person. United States v. Teller, 397 F.2d 494 (7th Cir. 1968); United States v. Riccitelli, 259 F.Supp. 665 (D.Conn.1966). The invasion of appellee’s privacy was therefore of a lesser degree than if she had been subjected to a search of her clothing or of objects being held by her. On the Government’s side of the balance lies both the information presented in the affidavit supporting the warrant, indicating that Stewart’s apartment was a place where narcotics were sold as well as stored; and the delay, the suspicious noises that preceded the executing officers’ entry into the apartment, and the apparent effort of Stewart to escape through the bedroom window, all suggesting attempts to thwart discovery of the illegal activity that the police suspected was being carried out on the premises. With emphasis on the limited nature of the circumstances presented, we hold that the search of appellee’s purse was consistent with the demands of the Fourth Amendment. Under these facts, the police could reasonably have — h&Ueved that items sought and described in the warrant naü peen concealed in the nurse. and, notwithstanding appellee’s status as a visitor on the premises, could have searched the purse in nnrsm.t.of items for winch the warrant issued In Walker v. United States, 117 U.S.App.D.C. 151, 327 F.2d 597, 600 (1963), cert. denied, 377 U.S. 956, 84 S.Ct. 1635, 12 L.Ed.2d 500 (1964), this court permitted the search of a wallet and bag held by one who shared occupancy of the residence searched under authority of a warrant, holding that a contrary result “would be to suggest that a warrant to search premises may be frustrated by the device of simply picking up the guilty object and holding it in one’s hand.” Similarly here, frustration of the warrant’s purpose should not be permitted where the facts reveal that to be the likely result were the purse not searched. See Clay v. United States, 246 F.2d 298, 304 (5th Cir.), cert. denied, 355 U.S. 863, 78 S.Ct. 96, 2 L.Ed.2d 69 (1957); Nicks v. United States, 273 A.2d 256 (D.C.Ct.App.1971); and dictum in United States v. Festa, 192 F.Supp. 160, 163 (D.Mass.1960) (Wyzanski, J.); State v. Wise, 284 A.2d 292, 294 (Del.Sup.Ct.1971). Accordingly, we reverse the District Court’s order of suppression, and remand the case for trial. It is so ordered. BAZELON, Chief Judge, concurring in part and dissenting in part: I agree that this suppression order cannot be sustained on the record before us. I do not agree, however, that this record supports a holding that the evidence was admissible. I would instead hold that the search of Mrs. Johnson’s purse was not authorized by the search warrant, and would remand for a determination whether the police had probable cause to arrest Mrs. Johnson when they initiated the search of her purse. The majority says that “The specific question for resolution is whether the scope of the search warrant embraced an object in the apparent possession of a person not an occupant of the premises searched.” Answering that question in the affirmative, the court rules the contents of the purse admissible and reverses the trial court. In my view, the principle the majority applies would be applicable only if Mrs. Johnson had not been in apparent possession of her purse. But she was. Moreover, the police arrested her for possession of the contraband immediately after discovering it and without verifying ownership of the purse. I think that these facts sufficiently establish that the police knew that they were invading Mrs. Johnson’s “reasonable expectations of privacy.” The search of the purse was thus not directed at the owner and occupant of the apartment, but at Mrs. Johnson. The warrant, however, authorized the search of an apartment that was, in the words of the supporting affidavit, “occupied by John Doe alias Pete described as a Negro male, 49-50 yrs. 165 lbs., 5'6", Medium Complexion.” I do not doubt that this authorized the search of “Pete” as well as his apartment. But the warrant did not authorize a search of an individual the police knew to be a mere visitor in the apartment. Nor, in my view, did the affidavit contain sufficient information to justify the issuance of such a warrant. The Supreme Court has told us that “the Fourth Amendment protects people, not places.” One does not give up that protection by simply entering the private residence of another. Giving effect to this personal guarantee may make the drawing of lines difficult, but we must make the attempt. I would hold that a warrant to search individuals who are not occupants of an apartment may issue only if the police establish probable cause to believe either that any individual found in the apartment possessed seizable material, or that certain identified individuals possessed seizable materials. The former might be established, to give one example, by a showing that the apartment was a “shooting gallery,” that is, a place used exclusively for the injection of narcotics. But this warrant did not contain information from which one might reasonably infer that any non-occupant discovered in the apartment was subject to search. The incorporated affidavit recited only (1) that a reliable informant had reported that “Pete” “was selling illicit narcotic drugs within” the apartment, (2) that the informant “had purchased” such drugs in the past, and (3) that the officers had taken the informant to the premises, sent him in, and the informant had returned with narcotics. Probable cause to believe than any non-occupant found in the apartment possesses seizable objects is not established merely by showing that someone has purchased narcotics in the apartment two or more times. The reviewing magistrate could not have determined from the affidavit whether offenders made up ninety percent of the visitors to the apartment or one percent. The majority seems to view this as a single search because, despite the fact that it included two people, it covered a single place. In so doing, it constructs what is to me a new exception to the warrant requirement, applicable to any individual who happens to be in that place. The court first states that the police may search wherever the objects of the warrant might reasonably be, including places in which they might have been hidden during the moments between the announcement of the search and the actual entry. It then recognizes the fourth amendment rights of those who are known to be merely present in the premises by applying a balancing test. Under that test, we would weigh the degree of the “invasion” of the bystanders’ rights against the Government’s justifications for believing that the objects of the warrant might have been transferred to them. But the Fourth Amendment already requires that all searches be “reasonable.” The majority has, in effect, deleted the requirement of a warrant issued upon probable cause to believe that the bystander has seizable objects. Exceptions to the warrant requirement are not new, but this one has a second troublesome aspect. It appears that the court has not prefaced this one with a requirement that the police have probable cause to believe, for example, that the bystander has seizable objects that, because of the threat of destruction must be immediately seized. Instead, it proceeds immediately to a consideration of whether the degree of the invasion of the bystander’s rights was “reasonable.” I know of no authority for searching an individual, or that space in which he has a “reasonable expectation of privacy,” without probable cause to believe either that he possesses seizable objects or that he has committed a criminal offense. Perhaps the temper of the times requires that such a change be made. Perhaps, also, the concept of personal privacy articulated by the Supreme Court must yield to some degree as a result. But the majority ought to expressly reveal that it is cutting back on the protection of privacy as we have heretofore known it and explained why that is necessary. It does not serve the law nor the public well to hide this important change. I would decide this case by looking to the existing justifications for a search. Under that analysis, the police had two distinct ways of establishing authority to search Mrs. Johnson’s purse while it was in her control. First, armed with sufficient foreknowledge, they could have obtained a warrant that covered her or all individuals the police found in the apartment. Second, in the absence of foreknowledge, they could have relied upon one of the existing exceptions to the warrant requirement that may be invoked if the police have probable cause. And, of course, they could use the information they had acquired in their efforts to obtain a warrant to search “Pete’s” apartment as part of their showing that they had that probable cause to search Mrs. Johnson. But in this case the police have not yet shown that they had either. Although the warrant and affidavit recited that narcotics transactions had taken place in the apartment, nothing was said about the probability that an unidentified individual discovered on the premises would be a participant in such a transaction. That, of course, cannot be cured at this late date. And, limited to the record before us, I cannot say that the Government has presented facts that would justify the search under some exception to the warrant requirement. This was no mere weapons frisk. There is no showing that the police had probable cause to arrest Mrs. Johnson. And, while the “emergency” doctrine that is applied in some cases in which the destruction of evidence is threatened might apply here, it would add nothing to the requirements imposed by the arrest exception. Mere possession of the narcotics is a criminal offense, and probable cause to search would have constituted probable cause to arrest. The police did have probable cause to believe that there were narcotics in the apartment. But the only evidence adduced at the hearing to indicate that Mrs. Johnson possessed narcotics were the sounds the police heard after they announced themselves and before they gained entry. These sounds were described as “suspicious noises” and the sound of a breaking window. The latter, if even probative, made it less likely that Mrs. Johnson had narcotics. The former, “suspicious noises,” is simply meaningless. Although it is conceivable that further elaboration of the character of these noises would point more directly to Mrs. Johnson as a probable offender, this record is bare of such information. On this appeal, the Government has suggested an alternative offense for which the police might have had probable cause to arrest Mrs. Johnson: presence in an illegal establishment, 22 D.C. Code § 1515(a) (1967). The record will not support that assertion either, for the few facts that were developed at the hearing tended to negate any inference that she had knowledge of the nature of the establishment she was in, see Jones v. United States, 271 A.2d 559, 560 (D.C.App.1970), or that she was chargeable with such knowledge by reason of the obviousness of the situation. See Cook v. United States, 272 A.2d 444, 446 (D.C.App.1971). The record is deficient in these respects because the trial judge focused exclusively on whether the search preceded a formal arrest. As the majority notes, the issue should have been whether probable cause to arrest preceded the search. For this reason, I would reverse and remand with directions to hold a new suppression hearing. . While the record is silent concerning the trial judge’s thoughts on this matter, at oral argument appellant asserted that the crime thought to be involved was presence in an illegal establishment. 22 D.O.Code § 1515. . United States v. Brown, 150 U.S.App.D.C. 113, 463 F.2d 949 (1972). Where circumstances constituted lawful detention amounting to arrest, we had earlier held that “[e]ven if the formal arrest was not made until after the search, the search will be upheld so long as there is probable cause for an arrest before the search is begun.” Bailey v. United States, 128 U.S.App.D.C. 354, 389 F.2d 305, 308 (1967). . It was also a reasonable belief that, in light of the affidavit, appellee might-have been a customer who had purchased narcotics and planed.them ip her purse. The warrant was issued on allegations that the apartment was a place where narcotics were being sold; and the purposes of the warrant would seem to include the seizure of narcotics still on the premises but which had been sold there to a customer. . The ADI Model Code of Pre-Arraignment Procedure § 220.3(5) (Official Draft No. 1, 1972) states that the scope of a search warrant shall be only such as is “reason-n.hhi mer.ps.in,rn t.o discover the things specified therein.” (emphasis added). In this case the opening of appellee’s purse was so necessary for the discovery of the narcotics which were tlie supject or-the search warrant. . Our purposeful emphasis on the precise factual context of this case reflects our view that the narcotics located in the apartment (in purses or elsewhere) — and not appellee — was the central focus of the search authorized by the warrant. The facts shown by the warrant and affidavit as to the narcotics-retailing nature of the premises warranted the construction of the scope of the warrant placed upon it by the police. Indeed, our failure to uphold that construction would divert the vital law enforcement effort against narcotics traffic here involved to alternatives unwise from both a practical and legal standpoint. To obtain a warrant permitting the search of anyone found on the premises would, apart from being unnecessary in these circumstances, appear to be unsupportable as lacking the particularity constitutionally required, see, e. g., Wise, supra, 284 A.2d at 294. To justify inclusion in the warrant of appellee by name would require an investigative effort not reasonably to be expected of officers seeking only the narcotics owned and retailed by, and the narcotics paraphernalia of, the occupant. And to detain appellee and preserve the status quo while a warrant to search the purse was obtained would constitute a more serious invasion of appellee’s privacy than did the search at issue. Contrary to the holding of the court in Nicks, supra, 273 A.2d at 258, which permitted evidence to be seized from the hand of the appellant there on authority of a warrant to search the premises for narcotics and the likelihood appellant would destroy the evidence sought— which the dissent here would seem to uphold as an exemption from the warrant requirement, see note 9 infra — we hold only that the purse, not appellee’s person, was embraced by the warrant. . Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967). . This result is the same whether the inquiry is based on “reasonable expectations of privacy” or one’s physical control over the premises. See White, Effective Consent to Search & Seizure, 113 U.Pa.U.Rev. 360, 373 (1964). . Katz v. United States, 389 U.S. 347, 351, 88 S.Ct. 507, 511, 19 L.Ed.2d 576 (1967). See Note, From Private Places to Personal Privacy: A Post-Katz Study of Fourth Amendment Protection, 43 N.Y.U.L.Rev. 968 (1968). . See Katz v. United States, 389 U.S. 347, 352, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967). In United States v. DiRe, 332 U.S. 581, 587, 68 S.Ct. 222, 225, 92 L.Ed. 210 (1948), the Supreme Court said, in suppressing the fruits of a search of a passenger in an automobile: The Government says it would not contend that, armed with a search warrant for a residence only, it could search all persons found in it. . How then could we say that the right to search a car without a warrant confers greater lattitude to search occupants than a search by warrant would permit. See also State v. Bradbury, 109 N.H. 105, 243 A.2d 302 (1968). . The likelihood that any individual present is engaged in conduct described in the warrant is inextricably related to the other uses to which the premises are put, the amount of traffic through the area, and the fluctuations of time. Five or even fifty narcotics transactions would have a far different result depending on whether the place to be searched was a home, a vacant store or a restaurant with hundreds of patrons. . A protective frish for weapons is another matter. See Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 1 (1968). And in Walker v. United States, 117 U.S.App.D.C. 151, 327 F.2d 597 (D.C.Cir. 1963), discussed by the majority at page 979, supra, the detective executing the warrant saw the objects passed from one occupant of the residence to another occupant. Further, the affidavit supporting the warrant had recited that both individuals were selling narcotics from the residence. Id. at 598. . See United States v. Robinson, 153 U.S.App.D.C. 114, 471 F.2d 1082 (1972) (en banc). . See United States v. Rabinowitz, 339 U.S. 56, 70 S.Ct. 430, 94 L.Ed. 653 (1950). Rabinowitz, the commonly cited authority for this proposition, was “overruled” by Chimel v. California, 395 U.S. 752, 89 S.Ct. 2034, 23 L.Ed.2d 685 (1969). In fact, only that part of Rabinowitz that would have allowed a search beyond the immediate control of the arrestee was disapproved. . See Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1925). . See Chambers v. Maroney, 399 U.S. 42, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970). . The court ruled: With reference to the Defendant Gwendolyn E. Johnson, the Court finds that probable cause possibly did exist for her arrest, but the search preceded her arrest and the search was improper. Hearing Transcript at 30. . See Bailey v. United States, 128 U.S.App.D.C. 354, 389 F.2d 305, 308 (1967); majority opinion at note 2.

f2d_475/html/0983-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Joseph LESTER, a minor, by and through his father and next friend, Robert Lester, et al., Appellants v. H. Searl DUNN, Appellant Joseph LESTER, a minor, et al. v. H. Searl DUNN, Appellant Ann DeLaVal Dunn Nos. 71-1879, 71-1880. United States Court of Appeals, District of Columbia Circuit. Feb. 21, 1973. James B. Goding, Washington, D. C., was on the brief for appellants in No. 71-1879 and appellees in No. 71-1880. John J. O’Neill, Jr., Washington, D. C., was on the brief for appellant in No. 71-1880 and appellees in No. 71-1879. Before WRIGHT and ROBB, Circuit Judges, and MATTHEWS, Senior District Judge. Of the United States District Court for the District of Columbia, sitting by designation pursuant to 28 U.S.O. § 294(c) (1970). PER CURIAM: Plaintiffs-appellants claim that the trial court erred in denying their motion for a new trial in a personal injury action, the ground of the motion being that the jury’s award of damages in the amount of $1,000 for the injured boy’s father and nothing for the injured boy himself was arbitrary as a matter of law. Defendant-appellee has cross-appealed, contesting the District Court’s denial of his motion for judgment notwithstanding the verdict. Also in dispute is the propriety of a directed verdict entered by the District Court against one of the plaintiffs, Susan Lester, the mother of the injured boy. We reverse the denial of a new trial and the directed verdict against Mrs. Lester, and affirm the denial of cross-appellant’s motion for judgment notwithstanding the verdict. The facts relating to the liability of cross-appellant are set out at length in our prior decision in this case and need only be summarized here. See Lester v. Dunn, 141 U.S.App.D.C. 146, 436 F.2d 300 (1970). Joseph Lester, a nine-year-old boy, was injured when he fell from a “Tarzan swing” rigged up in the Dunns’ back yard. The evidence of liability, which the jury must have accepted since it found for plaintiffs, indicated that Joseph was an invited guest of Mr. Dunn’s son, that the swing involved an unreasonable risk to children in that when allowed to swing forward its arc ended some 22 feet above a creek, that Mr. Dunn knew of the risk as he had seen children using the swing and knew that two children had already hurt themselves falling from it, and that Mr. Dunn failed to take reasonable care either to make the swing safe or to warn Joseph of the danger. Much of the evidence of damages was either stipulated or uncontroverted. Mr. Lester, the boy’s father, claimed out-of-pocket hospital expenses amounting to $3,390. He also claimed out-of-pocket expenses for taxicabs, parking fees and baby-sitter charges which he and Mrs. Lester spent in order to visit Joseph in the hospital over a period of six weeks. These expenses, added to those for orthopedic devices, amounted to another $870, bringing total out-of-pocket expenses to $4,260. The injured boy himself claimed damages for his pain and suffering. The uncontroverted evidence showed that Joseph suffered a comminuted fracture of the right thigh, a serious and painful injury. He was in a hospital, in traction with a pin through the bone of his leg, for about six weeks and was at home in a cast for some five weeks more. He was permanently disabled in that one leg was slightly shorter than the other; in addition, there was a slight limp, inability to squat, and a 20-degree limitation of full flexion of the right knee. Both Mr. and Mrs. Lester sought damages based on the allegation that they “have been and will be obligated to spend considerable time in taking care of their minor son at home interfering with the normal and usual living in plaintiffs’ home and causing plaintiff Robert Lester to lose time from his usual and gainful occupation, and all to their great damage.” The trial court felt that this kind of injury was “damnum absque injuria” in the eyes of the law. Since all of Mrs. Lester’s claim for damages fell within this category, the court granted a directed verdict against her. To ensure that the jurors would not consider these items as recoverable elements of damage with respect to Mr. Lester, the court prevented plaintiffs from introducing evidence as to this aspect of the case, and refused a jury instruction which would have directed that Mr. Lester be compensated for “the inconvenience and interference with his usual and normal activities which you find to have been caused by the injuries sustained by his minor son.” The jury returned separate verdicts as to the claims of the two remaining plaintiffs, Joseph Lester and his father. The jury found for both plaintiffs on the issue of liability and awarded Joseph $0 and Mr. Lester $1,000. I That the court acted properly in denying appellee’s motion for judgment notwithstanding the verdict was settled in our earlier opinion, where we held that the District Court had erred in granting a directed verdict for the defendant. Judgment notwithstanding the verdict is nothing more than a directed verdict granted after, rather than before, the jury has had an opportunity to bring in a verdict. See Rule 50(b), Fed.R.Civ.P. Since we earlier held “there was a case for the jury” and that a directed verdict was improper, it is clear that the court acted properly in denying the motion for judgment notwithstanding the verdict. II With respect to the claims of Mr. and Mrs. Lester for the time they spent caring for Joseph, for the interference with their normal and usual living, and for loss of income to Mr. Lester because he had to lose time from work in order to visit his son in the hospital, it was wrong to label all these items mere “inconveniences” and we think some of the claimed items were compensable in damages. All parties have agreed that the law to be applied in this case is that of the State of Maryland, the place where the tort occurred. The Supreme Court of Maryland decided long ago that when a minor is injured his mother is entitled to recover for the care and labor of nursing him. See County Commissioners of Harford County v. Hamilton, 60 Md. 340 (1883). This is consistent with the generally accepted view. Where a child is injured, the parent may recover “the reasonable expenses of procuring medical treatment and care” and where the parent provides that care him- or herself, “[t]he value of the parent’s own services, as nurse or otherwise, is recoverable * * C. McCormick, Law of Damages 328-329 & n.6 (1935), and cases there cited. Where “circumstances render it necessary or advisable for the parent to quit work to attend the child, rather than employ another to attend him, it would seem that the parent should recover the loss of wages.” Id. at 329 n.6. We think Mrs. Lester’s claim for damages should have gone to the jury. Plaintiffs would have shown that, under doctor’s directions, Mrs. Lester visited Joseph in the hospital three times a day, spending about an hour each time, including commuting time. When Joseph came home, he was in a cast covering most of his body from his armpits to his toes. He was, in the words of the doctor, “like a solid piece of rock * * * about 5 feet long * * Mrs. Lester would have shown the jury that his care required her almost constant attendance, and she is entitled to compensation for those services just as if she had hired a nurse to assist her son rather than doing it herself. Similarly, the above principles would allow Mr. Lester to obtain damages for a loss in income caused by his having to take time off from work in order to care for Joseph. Of course, this is not to say that Joseph’s parents have any right to recover for the mental anguish or suffering caused them by his injury. See generally W. Prosser, Law of Torts 333-335 (4th ed. 1971). But they do have a right to be compensated for the services they provided above and beyond those normally incident to the parent-child relationship. Ill Although the question of damages is within the province of the jury, a jury verdict should be set aside when it is so inadequate as to indicate prejudice, passion or partiality on the part of the jury, or where it must have been based on oversight, mistake or consideration of an improper element. See 25A C.J.S. Damages § 196 at 262 (1966). In the present case, since the jury awarded Mr. Lester less than his stipulated out-of-pocket expenses, the award must have been based either on prejudice or on consideration of an improper factor. The jurors’ decision to award the injured boy nothing at all, in light of the painful injury and the permanent partial disability demonstrated at trial, is simply arbitrary. Defendant has referred us to several cases in which a court sustained a jury’s verdict where the jury found for the plaintiff and awarded zero damages, but these cases involve either situations where such a verdict may be interpreted as a verdict for the defendant, see Royal Indemnity Co. v. Island Lake Township, 177 Minn. 408, 409, 225 N.W. 291, 292 (1929), or where the facts of the case are such that no damages were in fact shown, see, e.g., Spears v. Hough, 8 Cir., 458 F.2d 529, 531 (1972). In this case, however, we cannot interpret the jury verdict as one for the defendant, since the jury did assess some damages against the defendant. Nor is this a case where no damages were proved, since counsel for the defendant conceded in his closing argument to the jury that, in addition to his painful injuries, the boy suffered some permanent disability. Where a jury has in fact assessed some damages, and where those damages are consistent with the uncontroverted evidence as to out-of-pocket loss, an appellate court is reluctant to upset the trial court’s denial of a motion for a new trial merely because it feels that the pain and suffering merited a larger award. See, e.g., Rankin v. Shayne Brothers, Inc., 98 U.S.App.D.C. 214, 217, 234 F.2d 35, 38 (1956). But where, as in the present case, the verdict is inconsistent with stipulated evidence as to out-of-pocket loss, and whete the jury arbitrarily abdicated its responsibility to assess damages for one <Jf the plaintiffs, the interests of justice require a new trial. Since the irrationality of the jury’s award here is such that even speculation as to why it afited as it did is unrewarding, the propel course is to have a new trial on all issües, rather than one limited to the question of damages. Therefore, the judgment is Reversed and the case is remanded for a new trial. ROBB, Circuit Judge, dissenting: As indicated in the court’s opinion the decisions are uniform that when a child is injured a parent is entitled to recover from the tort-feasor the reasonable value of the care or attendance rendered by the parent to the child. See, in addition to the authorities cited by the majority, Johnson v. Rhuda, 156 Me. 370, 164 A.2d 675 (1960); Annot. 90 A.L.R.2d 1335 (1963); 59 Am.Jur.2d, Parent and Child, § 120 (1971); 22 Am.Jur.2d, Damages, § 207 (1971); 25 C.J.S. Damages § 91(3) (1966). To this extent I agree with the majority. I do not agree, however, that the parent may recover wages or salary lost by her because of her attendance upon the child. She should recover only the amount for which reasonably competent nursing and attendance by others could have been obtained. For example, a motion picture actress who voluntarily withdraws from her lucrative occupation to care for her injured child should not be allowed to charge her loss of income to the defendant. Sedlock v. Trosper, 307 Ky. 369, 211 S.W.2d 147 (1948); Armstrong v. Onufrock, 75 Nev. 342, 341 P.2d 105, 76 A.L.R.2d 946 (1959); Johnson v. St. Paul & W. Coal Co., 131 Wis. 627, 111 N.W. 722 (1907); Barnes v. Keene, 132 N.Y. 13, 29 N.E. 1090 (Ct.App.1892). Cf. Adams v. Erickson, 394 F.2d 171 (10th Cir. 1968). Assuming that the majority is entirely correct in its view of the law on these points I still cannot accept its conclusion. The flaw in the majority opinion is that the plaintiffs never presented a claim for the reasonable value of the care or attendance they rendered to their child, nor did they make any claim for lost wages. The statement of special damages which they filed listed no such items. Their counsel at trial repeatedly informed the court that their claim was only for damages for “an interference and deprivation of usual and normal activities of both of these parents”. (TR. 108, 109, 110, 111, 133). Nothing was said about the reasonable value of the parents' services, nor was there any mention of lost wages, or any offer of proof on these subjects. Finally, the instruction on damages requested by the plaintiffs did not mention the possibility of any recovery of lost wages or compensation for the value of the parents’ services. Thus, the district court’s ruling on the claim actually presented was correct. The plaintiffs could not recover on the theory they advanced. Now the majority recasts the theory of the plaintiffs’ case, substituting a new proposition for the untenable one on which the plaintiffs relied. The majority intimates that plaintiffs’ counsel may have been at fault in failing to focus upon a valid theory of recovery; but a litigant is bound by the actions of his counsel at trial and it is not for us to build a case for him. Since the case is to be retried I agree with the majority that the proper course is to have a new trial on all issues, rather than one limited to the question of damages. Simmons v. Fish, 210 Mass. 563, 97 N.E. 102, 106 (1912). Nevertheless, I cannot agree that the verdict of the jury was so arbitrary that it must be reversed. The jury may well have believed that the disability of the minor plaintiff was slight, since he testified that he could “walk good” (TR. 53) and that although he could not squat and could not run and swim as fast as he could before the accident there was no change in his ability to get around and play. (TR. 25). He still played kickball and baseball, rode a bike and swam. (TR. 27). In short, although I might have reached a different conclusion I think the jury acted within the limits of its discretion. A further explanation for the verdict is found in Exhibit 5, introduced in evidence by the plaintiffs to establish the medical expenses they had incurred. This exhibit is a statement on the stationary of Group Health Association, Inc., entitled “Statement for Insurance Reimbursement”. A note from the fore-lady of the jury, which is in the file, reads “We would like to see all the exhibits introduced”, indicating that the exhibit went to the jury room. Exhibit 5 reflects that the plaintiffs paid less than $100 for the medical services rendered to the minor plaintiff; the balance of approximately $3,400 was paid by the insurance company. Conceivably, the jury believed that the plaintiffs should not recover for this balance which they had not paid. On this premise the award of $1,000 to the plaintiff father was no doubt made to cover the additional expenses, amounting to about $900, which he had proved. Of course, the plaintiffs were entitled to recover notwithstanding the payments by the insurance company, but they did not request an instruction to this effect and none was given. In these circumstances they are not in a position to complain that the jury made a mistake. Bryant v. Mathis, 107 U.S.App.D.C. 339, 278 F.2d 19 (1960). In that ease the jury did not allow recovery for lost earnings although the uncontradicted testimony showed that the plaintiff had sustained such a loss. We held that the verdict was not “so arbitrary that it must be reversed as a matter of law.” Explaining, we said: “Conceivably, the jury Believed that appellant had been paid during her absence from work, and thus did not allow recovery for lost earnings. Although she was entitled to an instruction that lost wages are recoverable notwithstanding compensation from a collateral source, she requested no such instruction and none was given. . . . ” (Citations omitted.) 107 U.S.App.D.C. at 340, 278 F.2d at 20. See also, Rankin v. Shayne Bros., Inc., 98 U.S.App.D.C. 214, 234 F.2d 35 (1956), a case in which we expressed “considerable wonderment” about a verdict, but refused to disturb an award of $123.90 for the death of an infant. I respectfully dissent. . Although the trial court asked plaintiffs’ counsel to provide some legal authority for the principle that the boy’s mother was entitled to compensation for the time spent caring for him after his injury, counsel failed to provide the trial court with the precedents which he now provides ' this court and upon which we rely in part in reversing the trial court. Indeed, plaintiffs’ counsel failed to provide any legal authority on this point. Since this same failing of trial counsel was noted in our opinion on the first appeal of this case, see Lester v. Dunn, 141 U.S.App.D.C. 146, 148 n.1, 436 F.2d 300, 302 n.1 (1970), we take this opportunity to remind counsel that it is in the interest of fair and efficient administration of justice, as well as in the interest of his own clients, for counsel to prepare the legal aspects of Ms case prior to trial so the trial court can be fully advised of the legal principles upon which he relies.

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In re ESTATE of Paul Latimer WEIR, Deceased. Margaret Partee WEIHS, Appellant, v. Elizabeth HOLMEAD. No. 72-1444. United States Court of Appeals, District of Columbia Circuit. March 8, 1973. Earl H. Davis, Washington, D. C., was on the brief for appellant. Mark P. Friedlander, Jr., Washington, D. C., was on the brief for appellee. Before McGOWAN, MacKINNON and WILKEY, Circuit Judges. Judge MacKinnon did not participate in the consideration or decision of this case. PER CURIAM: This case involves a challenge to a will executed by the caveator’s uncle on June 6, 1966, which named an 80-year old woman, the caveatee and appellee herein, as principal beneficiary under the will. Testator, Paul Weir, was a lifelong bachelor who was predeceased by a sister who had no children and a brother who left two surviving children, a son and a daughter, Margaret Weihs, the caveator and appellant herein. Mr. Weir, an engineer, met Elizabeth Holmead, a widow of approximately the same age, shortly after World War II, and they became close friends until Mr. Weir’s death on February 19, 1971. Although they had separate apartments, they shared each other’s company, traveled together, and took their meals together; in short, they became constant companions until testator’s death. On February 9, 1956, Mr. Weir executed a will which left a life estate to Mrs. Holmead and the remainder to his brother, or if he be not living, to his brother’s heirs. In 1965, Mr. Weir’s brother died. Then, on June 6, 1966, Mr. Weir executed a new will which left $10,000 each to his nephew and niece, the caveator, and the remainder of his estate to Mrs. Holmead. Upon testator’s death in 1971, the niece filed a caveat challenging the 1966 will, claiming lack of due execution, lack of testamentary capacity, undue influence by Mrs. Holmead and others, and fraud and deceit. The District Court, at the conclusion of caveator’s evidence, directed a verdict for the caveatee on all issues, finding that there was no evidence upon which a reasonable juror could have found for the caveator. Caveator has appealed, and for the reasons stated below, we affirm the District Court’s decision. Appellee contends that the District Court erred in directing a verdict in this case. A review of the District Court record convinces us otherwise. The contentions of lack of due execution and fraud and deceit were completely unsupported in District Court and are not pressed upon appeal. The evidence introduced as to lack of testamentary capacity was that the testator dressed conservatively, was occasionally forgetful, sometimes untidy (he left his socks on the floor), and had some strange habits such as picking up dust from the floor and inspecting it. For example, Mrs. Lay, a retired nurse, who lived in an adjoining apartment and had prepared some meals for testator, testified that she believed testator lacked testamentary capacity at the time of the execution of the 1966 will. Upon cross-examination, it became clear that the only basis for this conclusion was the fact that testator sometimes picked up dust and wore torn trousers, and her feeling that she “couldn’t understand why he wouldn’t want to” leave his entire estate to his blood relatives. Mr. Lauten, a trust officer of National Savings & Trust Company, executor of the first (1956) will, testified that he believed testator didn’t have all his “faculties” at the time of the making of the 1966 will. Mr. Lauten testified that he somehow got the impression that testator was unsatisfied with the 1966 will, but could give no basis for this hunch, or for his bare assertion that the testator didn’t have all his “faculties.” Caveator testified that she believed testator lacked testamentary capacity because her middle name was misspelled in the 1966 will and she didn’t believe that her uncle would have signed anything with that name misspelled since it was a family name that was very important to him. Also introduced into evidence was a letter from the caveator to testator, received in 1966, which was stamped “Received May 21, 1963, P. L. Weir.” The letter was initialed by testator. This was the substance of caveator’s evidence on testamentary capacity. Although caveator’s evidence perhaps presented interesting tidbits, the District Court was correct in concluding that there was not enough evidence to go to the jury on the issue of testamentary capacity. In order to make a valid will, testator must be “of sound and disposing mind and capable of executing a valid deed or contract.” In this jurisdiction, as in most others, sound and disposing mind simply means that “the decedent must have had, at the time of execution of the instrument, sufficient mental capacity to dispose of his property or estate with judgment and understanding, considering the nature and character of the estate as well as the relative claims of different persons, who would be the natural objects of [his] bounty." In -cases where testamentary incapacity has been found there has been a considerably stronger showing that testator lacked a sound and disposing mind. For instance, evidence that testator was extremely ill or under heavy sedation at the time of the execution of the will has been sufficient to allow the issue of testamentary capacity to go to the jury. We have discovered no case, and appellant cites none, where the issue of testamentary capacity was allowed to go to the jury on such speculative and meaningless testimony as was presented below. There was simply no evidence introduced by caveator that would have permitted a jury to conclude that testator did not understand, precisely what he was doing when he executed the contested will. Similarly, the evidence presented as to undue influence was insufficient to allow the jury to take that issue. All the witnesses testified without qualification that testator and Mrs. Holmead had great affection for each other, and that with the exception of Mrs. Holmead, testator had no close friends. He saw his niece and nephew very infrequently, and only rarely spoke with them on the phone. Although testator’s nephew testified that he believed Mrs. Holmead exercised a “wifely” influence on his uncle, neither nephew or niece could recite anything in particular that Mrs. Holmead ever did or said to unduly influence their uncle. Unfortunately for the caveator, influence gained by years of mutual affection is not sufficient in law to establish undue influence. Undue influence is influence gained by improper means. As this court stated in MacMillan v. Knost, 75 U.S.App.D.C. 261, 262, 126 F.2d 235, 236, cert. denied, 317 U.S. 641, 63 S.Ct. 32, 87 L.Ed. 516 (1942): Influence gained by kindness and affection will not be regarded as “undue,” if no imposition or fraud be practiced, even though it induces the testator to make an unequal * * * disposition of his property in favor of those who have contributed to his comfort, * * * if such disposition is voluntarily made. Confidential relations existing between the testator and beneficiary do not alone furnish any presumption of undue influence. * * * One has the right to influence another to make a will in his favor. He may * * * lay his claims for preferment before the testator. They may be based on kinship or friendship or kindness or service or need or any other sentimental or material consideration. One can use argument and persuasion so long as it is fair and honest and does not go to an oppressive degree where it becomes coercive. The court then added that the “possibility or suspicion of undue influence is not enough.” In rejecting a contention that undue influence was exerted by testatrix’s daughter, this court, in Brooke v. Barnes, 61 App.D.C. 161, 163, 58 F.2d 887, 889 (1932), stated: It is no ground of criticism that others might have made a different will. . It will be remembered that it is not influence, but undue influence, that is charged, and is necessary to overthrow a will. The court emphasized that the fact one requests the testator to make a will a particular way does not establish undue influence. The cases cited by appellant are completely inapposite, and the distinguishing facts of each one only serve to illustrate the lack of any evidence of undue influence in this case. Where the issue of undue influence had been permitted to go to the jury in the cases cited by appellant, there had been testimony which strongly indicated that the testator was peculiarly in a position to be coercively influenced. For example, the testatrix was extremely ill and prevented, by false representations of a nurse, from seeing her relatives, or the testatrix was subject to threats of physical abuse while under sedation to compel her to execute a will. In contrast, there was absolutely no testimony in this case indicating any coercion exercised by Mrs. Holmead, or anyone else. If the caveatee exercised any influence whatsoever over testator, it was the influence that arises from genuine mutual affection. And, as noted above, “influence gained by kindness and affection” is not regarded as undue. If the long-standing salutary policy of our law favoring free and untrammeled disposition of one’s property means anything, it means that the District Court would have erred in allowing this case to go to the jury. Only through sheer speculation could the jury have found lack of testamentary capacity or undue influence. Affirmed. . On February 5, 1973, acting on appellee’s motion to advance this appeal for hearing on the summary calendar, we ordered, under Rule 11(e) of the General Rules of this court, that this case be considered and decided without oral argument. . Two of the three attesting witnesses testified as to the due execution of the will, the absence of the third witness being satisfactorily explained. Joint Appendix (J. A.) 134a-158(a). A will is valid in the District of Columbia if it is in writing and signed by the testator and attested and subscribed in the presence of the testator by at least two credible witnesses. D.C. Code § 18-103. As to the claim of fraud and deceit, both the caveator and nephew testified that they knew of not one false statement made by Mrs. Holmead to testator to influence the making of the will. J.A. 195a, 129a. There was absolutely no evidence presented by appellee establishing fraud or deceit. . Rather than establishing testamentary incapacity, caveator’s evidence only indicated that testator, like most of us, had some peculiarities that marked him as an individual. . J.A. 56a. . J.A. 60a. It should be noted that the fact that testator has made a so-called “unnatural disposition” is not, in and of itself, an indication of incapacity. See, e. g., Morgan v. Morgan, 30 App.D.C. 436, 449 (1908). . J.A. 210a. . J.A. 212a. . J.A. 197a. . D.C.Code § 18-102. . Thomas v. Young, 57 App.D.C. 282, 284, 22 F.2d 588, 590 (1928). See also Thompson, v. Smith, 70 App.D.C. 65, 73, 103 F.2d 936, 944 (1939), where this court stated: To make a valid will it is not necessary that the testator should be endowed with a high order of intellect, or even an intellect measuring up to the ordinary-standards of mankind. Nor is it necessary to the making of a valid will that the party should have a perfect memory, and that his mind should be wholly unimpaired by age, sickness or other infirmities. If the party possess memory and mind enough to know what property he owns and desires to dispose of, and the person or persons to whom he intends to give it, and the manner in which he wishes it applied by such person, and generally, fully understands his purposes and the business he is engaged in, in so disposing of his property, he is, in contemplation of law, of sound and disposing mind. See also 1 Page on Wills, § 12.21 (3rd ed. 1959). . See, e. g., McCartney v. Holmquist, 70 App.D.C. 334, 335, 106 F.2d 855, 856 (1939); Thomas v. Young, 57 App.D.C. 282, 283, 22 F.2d 588, 589 (1928). In Labofish v. Berman, 60 App.D.C. 397, 398, 55 F.2d 1022, 1023 (1932), this court held there was sufficient evidence to go to the jury where testator, in addition to being in poor health, subject to fainting attacks, irritable, and unable to properly attend to business, frequently accused his mother and wife of robbing him and his children of trying to poison him. And he “eurs[edj his mother on her deathbed and at her funeral, and, during her burial, threatening to kill himself.” Id. This type of evidence is in stark contrast to that presented in this case. . There is, of course, a presumption in favor of testamentary capacity. See, e. g., Morgan v. Adams, 29 App.D.C. 198, 206 (1907). . J.A. 116a, 196a.' . J.A. 187a, 196a. . J.A. 130a. . J.A. 129a, 197a. . 75 U.S.App.D.C. at 262, 126 F.2d at 236. See Beyer v. LeFevre, 186 U.S. 114, 126, 22 S.Ct. 765, 46 L.Ed. 1080 (1902). . The court was quoting from Beyer v. LeFevre, 186 U.S. 114, 122-124, 22 S.Ct. 765, 46 L.Ed. 1080 (1902). . 61 U.S.App.D.C. at 163, 58 F.2d at 889. In this case there was not even any testimony that Mrs. Holmead ever requested testator to dispose of his estate in a particular way. . Duckett v. Duckett, 77 U.S.App.D.C. 303, 134 F.2d 527 (1943); McCartney v. Holmquist, 70 App.D.C. 334, 106 F.2d 855 (1939). . Thomas v. Young, 57 App.D.C. 282, 22 F.2d 588 (1927). . MacMillan v. Knost, 75 U.S.App.D.C. at 262, 126 F.2d at 236. . See, e. g., Simmons v. Pinney, 126 U.S.App.D.C. 184, 185, 375 F.2d 929, 930 (1967); Barbour v. Moore, 4 App.D.C. 535, 547 (1894).

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Flaviana B. NOVEDA, Appellant, v. Honorable Elliott L. RICHARDSON. No. 71-2061. United States Court of Appeals, District of Columbia Circuit. Argued Jan. 26, 1973. Decided March 2, 1973. Richard B. Wolf, Washington, D. C., for appellant. Thomas H. Queen, Asst. U. S. Atty., with whom Harold H. Titus, Jr., U. S. Atty., John A. Terry, and J. Michael McGarry, III, Asst. U. S. Attys., were on the brief for appellee. Before GEORGE C. EDWARDS, Jr., Circuit Judge for the Sixth Circuit, ROBB, Circuit Judge, and GERHARD A. GESELL, District Judge, United States District Court for the District of Columbia. Sitting by designation pursuant to 28 U.S.C. § 291(a). Sitting by designation pursuant to 28 U.S.C. § 292(a). PER CURIAM; Appellant applied for parent’s insurance benefits under the Social Security Act. Her claim was denied by the Secretary of HEW and his action was affirmed by the District Court on cross-motions for summary judgment. We reverse and remand with directions on the basis of our decision in Radlinska v. Secretary, HEW, 147 U.S.App.D.C. 200, 454 F.2d 1043 (1971), a holding subsequent to the ruling of the District Court. The Secretary gave principal reliance to a statement made by appellant on her first application in 1959. Appellant, aged 73, is an impoverished, illiterate widowed mother who was apparently confused at the time the statement was recorded for her. When her answer is properly discounted in the light of Radlinska, supra, and the record as a whole, it is clear that she received sufficient support for a three-month period to qualify under 20 C.F.R. § 404.350(e)(3). It is conceded a remand for reconsideration will serve no purpose for the record is complete. The case is accordingly remanded to the District Court with directions to enter an order declaring appellant’s eligibility. It is so ordered.

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PAGE COMMUNICATIONS ENGINEERS, INC., Appellant, v. Robert T. FKOEHLKE, Secretary of the Army, et al. PAGE COMMUNICATIONS ENGINEERS, INC. v. Robert T. FROEHLKE, Secretary of the Army, et al., Appellants. National Surety Corporation, Defendant on counterclaim, Federal Electric Corporation, Defendant-Intervenor. Nos. 72-1104, 72-1105. United States Court of Appeals, District of Columbia Circuit. Argued Jan. 31, 1973. Decided March 12, 1973. W. Stanfield Johnson, Washington, D. C., with whom Eldon H. Crowell, Washington, D. C., and Robert H. Rawson, Jr., Shaker Heights, Ohio, were on the brief, for appellant in No. 72-1104 and appellee in No. 72-1105. Anthony J. Steinmeyer, Atty., Dept of Justice, with whom Harold H. Titus, Jr., U. S. Atty., and Walter H. Fleischer, Atty., Dept, of Justice, were on the brief, for appellants in No. 72-1105 and appellees in No. 72-1104. Harold H. Titus, Jr., U. S. Atty., John A. Terry and William H. Schweitzer, Asst. U. S. Attys., entered appearances for appellants in No. 72-1105 and appellees in No. 72-1104. David V. Anthony, Washington, D. C., with whom William H. Butterfield, Washington, D. C., was on the brief, for-Federal Electric Corp., defendant-intervenor. Before LEVENTHAL and ROBB, Circuit Judges, and CHARLES RICHEY, United States District Judge of the United States District Court for the District of Columbia. Sitting by designation pursuant to 28 U.S.C. § 292(a). PER CURIAM: The Department of the Army awarded Federal Electric Corporation a contract to perform field engineering and other work required for an integrated communications system in the Republic of South Vietnam. Page Communications Engineers, Inc., an unsuccessful offeror, brought an action against the Department and the Secretary of the Army to enjoin any performance pursuant to that award. Federal Electric intervened in the action. Upon motion by Page the District Court on November 3, 1970 issued a preliminary injunction prohibiting any steps toward performance of the contract for a period of forty-five days, or until the General Accounting Office ruled on a protest of the award filed by Page, whichever event occurred earlier. The court required Page to post a bond conditioned upon the payment of “all damages not to exceed the sum of one hundred thousand & 00/000 dollars ($100,000.00) suffered or sustained by reason of wrongfully and inequitably suing out the injunction”. The defendants appealed to this court from the order granting a preliminary injunction. On December 4, 1970 the order was summarily reversed and the case was remanded for further proceedings. The order of reversal was stayed for fifteen days. On December 16, 1970 the Comptroller General issued his decision denying the Page protest. On December 23, 1970 the District Court denied Page’s motion for an extension of the preliminary injunction. Thereafter, Page filed an amended complaint and the government and Federal Electric answered. The government also filed a counterclaim for damages in the amount of $300,000 alleged to have been “sustained as a result of the preliminary injunction herein”. The District Court granted Page’s motion to dismiss the counterclaim for damages in excess of the face amount of the injunction bond. The government and Federal Electric then moved for summary judgment and Page moved for summary judgment on two of the twelve causes of action alleged in its amended complaint. On September 16, 1971 the District Court granted the defendants’ motions for summary judgment and denied the Page motion. The District Court also dismissed the government’s counterclaim and declined to assess damages against Page under the bond. Page appeals from the orders granting the defendants’ motions for summary judgment and denying Page’s motion. The government appeals from the order dismissing its counterclaim and rejecting its claim for damages. In support of its orders on the motions for summary judgment the District Court recited in detail the facts which it found to be undisputed and determinative. (J.A. 343-353). Without recounting these facts it is enough to say that in our judgment the orders of the District Court on the motions were correct. Our conclusion is reinforced by the candid statement of Page in its brief (p. 7, footnote 3) that Although Page disagreed with the District Court’s treatment of the summary judgment motions * * * Page was satisfied with the practical outcome and would not have appealed, had not the Army persisted in its attempt to impose liability upon Page. Accordingly, we turn to the court’s refusal to assess damages. The District Court filed a memorandum opinion explaining its reasons for refusing to assess damages against the plaintiff. Citing Russell v. Farley, 105 U.S. 433, 26 L.Ed. 1060 (1881), and Greenwood County v. Duke Power Co., 107 F.2d 484, 489 (4th Cir. 1939), cert. denied, 309 U.S. 667, 60 S.Ct. 608, 84 L.Ed. 1014 (1940), the court held: * * * this Court has the discretion, in the interests of equity and justice, to rule that no liability be imposed on the injunction bond -X- -X- * -X- Continuing, the court said in part: This was not a frivolous lawsuit, and plaintiff has raised some solid questions. * * * While the award to Federal Electric is justified as having a reasonable basis, the procedures followed herein were not so clearly defined and free of ambiguity as not to raise doubts as to the fairness of this procurement. This Court was persuaded to grant the preliminary injunction after a lengthy evidentiary hearing (and thus to afford time for meaningful review by the Comptroller General) more by questions raised by the Army evaluation records than by plaintiff’s allegations. At this hearing the Army did not present and the Court was unable to consider a comparative cost study which later became significant in the Comptroller General’s determination and in this Court’s decision not to reinstate the preliminary injunction. This Court might not have issued the preliminary injunction had defendants at that time made the same strong showing, including the comparative cost study, which was made subsequently to the Comptroller General. In the light of those circumstances, it is inequitable to hold plaintiff to liability on the injunction bond. The record discloses that before the evidentiary hearing on the motion for preliminary injunction the government agreed in open court to produce all “records relating to the evaluation of proposals submitted” by the various offerors, and all “documents setting forth the basis for award to Federal Electric Corp.” The comparative cost study described by the District Court as “significant” was among the requested documents, but was not produced at the hearing. Later, the study was furnished to the General Accounting Office. In Russell v. Farley, 105 U.S. 433, 435, 26 L.Ed. 1060 (1881), relied upon by the District Court, the plaintiff obtained an injunction upon giving a bond conditioned upon payment to the defendants of “ * * * such damages as they * * may sustain by reason of the writ, if the court finally decide that the party was not entitled thereto -x- -x- *» The circuit court thereafter held that in part the injunction should not have issued, but the court de-' dined to award damages. The circuit court’s decree was affirmed. The Supreme Court said (105 U.S. at 441-442, 26 L.Ed. 1060): Since the discretion of imposing terms upon a party, as a condition of granting or withholding an injunction, is an inherent power of the court, exercised for the purpose of effecting justice between the parties, it would seem to follow that, in the absence of an imperative statute to the contrary, the court should have the power to mitigate the terms imposed, or to relieve from them altogether, whenever in the course of the proceedings it appears that it would be inequitable or oppressive to continue them * * * * In the course of the pears that it would be inequitable or oppressive to continue them traordinary security ought not to be retained as a basis of further litigation between the parties; that the suit has been fairly and honestly pursued or defended by the party who was required to enter into the undertaking, and that it would be inequitable to subject him to any other liability than that which the law imposes in ordinary cases. In such a case it would be a perversion, rather than a furtherance, of justice to deny to the court the power to supersede the stipulation imposed. The government says Russell v. Farley is not controlling, first because the injunction issued in that case was never entirely dissolved, and second because Rule 65(c), F.R.Civ.P. is “an imperative statute” which mandates the posting of a bond and thereby deprives the court of discretion to refuse to award damages on the bond if it develops that an injunction was wrongfully issued. We do not agree. Although Rule 65(c) required a bond here, it does not follow that the District Court was bound to award damages on the bond, without considering the equities of the case. The Rule did not make judgment on the bond automatic, upon a showing of damage. On the contrary, the court in considering the matter of damages was exercising its equity powers, and was bound to effect justice between the parties, avoiding any result that would be inequitable or oppressive for either party. The Rule was not intended to negate the court’s duty in this regard. Thus, we hold that the court had discretion to refuse to award damages, in the interest of equity and justice. This conclusion is consistent with the provision of the Rule which gives the court discretion to fix bond in a nominal amount; clearly the Rule does not contemplate that a defendant who is wrongfully enjoined will always be made whole by recovery of damages. We think the District Court did not abuse its discretion in declining to assess damages. As the court said, this “was not a frivolous lawsuit”; indeed we made it clear in our unreported opinion reversing the injunction order that we did “not say that the competing eonsiderations would, on balance, necessarily preclude preliminary or final injunctive relief * * * *"(J.A. 61). The good faith of Page cannot be doubted. Moreover, it appears that the injunction might not have issued if the government had timely filed the comparative cost study, an important and relevant document. In light of all these circumstances we think the district judge was correct in holding that it would be inequitable and a perversion of justice to hold Page to liability in damages. The judgment is affirmed. . Rule 65(c) Security. No restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained. No such security shall be required of the United States or of an officer or agency thereof. The provisions of Rule 65.1 apply to n surety upon a bond or undertaking under this rule.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Fred E. WILSON, Appellant, v. George R. SHULTZ, Secretary of the Treasury, et al. No. 23898. United States Court of Appeals, District of Columbia Circuit. Argued Dec. 1, 1972. Decided March 15, 1973. John P. Witsil, Washington, D. C., submitted on the brief for appellant. Kenneth Michael Robinson, Asst. U. S. Atty., with whom Thomas A. Flannery, U. S. Atty. at the time the brief was filed, John A. Terry and Nathan Dodell, Asst. U. S. Attys., submitted on the brief for appellees. Harold H. Titus, Jr., U. S. Atty., also entered an appearance for appellees. Before FAHY, Senior Circuit Judge, and WRIGHT and WILKEY, Circuit Judges. FAHY, Senior Circuit Judge: In the District Court appellant, Wilson, sued the Secretary of the Treasury and the Commissioner of the Bureau of Narcotics in the Treasury to have declared involuntary a resignation he had signed as an employee of the Bureau, and for related relief. On the basis of the pleadings, memoranda of the parties and the administrative record compiled in the Civil Service Commission, the District Court granted the motion of the officials, appellees, for summary judgment. The Commission’s Board of Appeals and Review had sustained a decision of its Appeals Examining Office that the resignation was voluntary. The court held this decision to be supported by evidence of substance in the record. Appellant, an American citizen, was employed in the Bureau of Narcotics at Beirut, Lebanon, where he resided with his wife and children. In March, 1963, two Inspectors of the Bureau, conducting an audit, attributed to appellant what they advised him were certain financial irregularities in the Beirut office. There ensued for the next few days considerable discussion between the Inspectors and appellant and between appellant and others as to the course he should adopt, revolving principally around whether he should or would resign. On March 6, 1963, he submitted a resignation to the Inspectors, to be effective March 16, 1963. Before that date arrived he returned to the United States with his family and promptly advised the Commissioner of Narcotics, by letter of his attorney under date of March 11, 1963, that his “tendered resignation is now withdrawn and we intend to take all steps necessary to see that his good name is protected and his status remains unimpaired.” Appellant maintained that the resignation was not voluntary. No response was made to the withdrawal letter, although under date of March 12, 1963, the Conimissioner acknowledged receipt of appellant’s resignation, “accepted effective March 16, 1963. ” Appellant on May 23, 1963, appealed to the Appeals Examining Office of the Civil Service Commission, stating that the resignation had been obtained through “force and coercion.” Upon request he submitted by affidavit of June 6, 1963, a detailed statement of his position. The Appeals Examining Office on July 18, 1963, decided that the resignation had been voluntary. Appellant then appealed to the Board of Appeals and Review, which, deeming the record inadequate, required further proceedings at the level of the Appeals Examining Office. These followed, including a hearing, but resulted on April 3, 1964, in the same conclusion. The decision states: The jurisdiction of the Commission to review the appellant’s case depends upon whether his separation from the Treasury Department was a discharge within the meaning of the Veterans’ Preference Act of 1944. Since we have found it was not, the appeal is rejected for want of jurisdiction. On appeal to it again the Board of Appeals and Review, on September 16, 1964, affirmed the decision of the Appeals Examining Office. On September 30, 1964, appellant filed suit in the District Court. For two basic reasons now to be explained we reverse and remand. I We conclude that summary judgment for appellees was unwarranted. The administrative record leaves unresolved the factual issue as to the voluntariness of the resignation. The decision of the Appeals Examining Office, affirmed by the Board of Appeals and Review, sets forth at some length the conflicting evidence upon the issue and tlien disposes of it in the following manner upon the basis solely of appellant’s “own representation” : Turning back to his original statement submitted to us over Mr. Wilson’s signature under oath, Mr. Wilson says, (1) that he was advised a resignation would stop an investigation of his claims regarding expenditures at Beirut, (2) that he was faced with the fear that if he was discharged in Beirut he would have to pay his own passage home, (3) that he sought advice and was told to go ahead and sign the resignation; get transportation home; he could get the whole thing set aside in the United States. Thus, on the face of the appellant’s own representation, it does not appear he acted in fear of economic loss— hardship to his family, but acted out a plan with forethought to stop an investigation in Beirut, get himself and his family home and arrive in the United States in status quo Criminal Investigator, GS-12. This contraction of appellant’s affidavit of June 6, 1963, is incomplete in numerous respects. The affidavit stated that he was told that if he did not resign forthwith he would not be given transportation to the United States for his wife, children or household effects, that “It’s a long swim,” that the Inspectors would make a report which would make it virtually impossible for him again to obtain government employment, that being unable to obtain proper counsel he consulted an official connected with the Embassy and was advised by Embassy personnel that in view of the undue influence exercised upon him “he should submit the resignation which would be without validity since it was done under duress and the situation could be rectified upon his return to the United States.” Even as condensed by the Appeals Examining Office his representations do not support the Office’s conclusion that “it does not appear he acted in fear of economic loss — hardship to his family . ,” for the decision itself demonstrates that he did in part act out of fear that if he did not resign he would be stranded in Beirut, and if he did resign then he, his family, and his household goods would be returned at Government expense — “that he was faced with the fear that if he was discharged in Beirut he would have to pay his own passage home.” We accordingly cannot agree that in light of appellant’s representations there was no genuine or material issue of fact as to the voluntariness of the resignation. The administrative record did not authorize the summary judgment for appellees. It did not support the basis upon which the decision was made. Moreover, the administrative record was incomplete in an important respect. It has been noted that a substantial factor bearing upon the resignation was the representation by the Inspectors, and consequent belief on the part of the appellant, that it was necessary for him to resign to obtain transportation home for himself and family at government expense. As the Chairman of the Board of Appeals and Review advised appellant’s counsel: The Board finds that Mr. Wilson had . reason to be apprehensive . It would have been quite natural for this apprehension or anxiety to encompass not only the question of his own future Government career but also the question of his entitlement to Government-paid transportation back to the United States for himself, his family and his household goods in the event that he did not resign but was removed from service while overseas. The Board finds that faced with these questions, Mr. Wilson finally decided freely and voluntarily to submit his resignation when he was told that he could do so for personal reasons and that the Government would pay for the cost of transportation of himself, his family and his household goods. Letter of September 16, 1964, from the Chairman to appellant’s counsel at that time. The situation thus disclosed gave rise to a question in our minds whether a government employee faced with the threat of discharge in a foreign land could be left stranded there with wife and children unless he resigned. After submittal of the case we inquired of the parties as to the legal requirements and government practice in this regard. In response the Government has submitted to the court “Field Information Circular No. 26” of the Bureau of Narcotics, and explained the purport of Rule 6 of this Circular as follows: if a person completed two years at a foreign duty assignment post, or if he fails to complete two years at such post but such failure is due to circumstances beyond his control (such as being discharged for cause), then such person is entitled to one-way transportation expenses for returning his immediate family, household goods and personal effects from the post of duty to his place of actual residence. We are also advised by the Government that appellant had been transferred to Beirut on February 27, 1961, where he served until he submitted his resignation on March 6, 1963, more than two years thereafter. No reference was made to this Circular in connection with any of the circumstances of the resignation or proceedings with respect thereto. Whether the resignation is considered in terms of coercion alone, deception or an otherwise unacceptable withholding of essential information, the importance of this Circular is obvious. The judgment for appellees not being supported for the reasons we have given, the District Court now has the responsibility of deciding independently whether or not the resignation was involuntary or otherwise ineffective. If so found, appellant’s separation from the service must be held to have been a discharge, note 5, supra. In that event appellant, under the Veterans’ Preference Act, 5 U.S.C. § 7512 (1970), would be entitled, so far as now appears, to procedural rights which have not been accorded, including formal notice of charges and a hearing with respect to them. The District Court may in its sound discretion permit the record before the court, largely the administrative record, to be supplemented by the parties with additional evidence if so advised. II A separate basis for our reversal and remand is now considered. In Goodman v. United States, 138 U.S.App.D.C. 1, 424 F.2d 914 (1970), a government employee submitted a resignation after formal charges which might have eventuated in separation from the service for cause. The employee underwent a change of mind prior to the effective date of the resignation and withdrew it, as the court construed his action. He claimed the resignation had been due to coercion and deception by the agency’s representatives. In proceedings before the Civil Service Commission it was there determined that the resignation was voluntary. The Commission rejected the employee’s position and held that the resignation had not been effectively withdrawn, relying upon section 2-3, subchapter 2 of chapter 715 of its Federal Personnel Manual, which reads: A resignation is binding on the employee once he has submitted it. However, the agency may, in its discretion, permit an employee to withdraw his resignation at any time until it has become effective. The District Court in upholding the Commission granted summary judgment for the Government. This court reversed. We pointed out that it was unnecessary to explore the content of “acceptance” or “submission” of a resignation, since in any event authority was expressly vested in the agency by the above regulation to permit withdrawal until the resignation had become effective. We said: That authority is, of course, characterized as reposing in the agency’s discretion, and it is asserted to us that, there being no challenge to the validity of the regulation generally, we must leave undisturbed the particular exercise of discretion under it represented by the agency’s declination of consent in this instance. That does not follow at all. Insofar as we can tell from this record, there was not even any meaningful effort to exercise discretion, except as discretion may have been equated with an automatic purpose to frustrate any invocation of the rights conferred upon appellant by the Veterans Preference Act. (Footnote omitted.) We decide only that, on this record, we can discern no exercise of discretion in denying the resignation withdrawal which we can take to be an effective withholding of consent. In these circumstances, we think that fidelity to the purposes of the Veterans Preference Act dictates that the resignation be deemed to have been withdrawn, and that appellant is entitled to have the appeal he filed with the Civil Service Commission determined on the merits of the charges made against him, and not dismissed, as it was, for lack of jurisdiction because of the resignation. We view the status of this matter after remand to be as it was when appellant’s initial effort to appeal to the Commission was turned down for want of jurisdiction. All issues relating to the merits of the charges remain open. (Footnote omitted.) Goodman v. United States, supra, 138 U.S.App.D.C. at 6-7, 424 F.2d at 919-920. And see Cunningham v. United States, 191 Ct.Cl. 471, 423 F.2d 1379, at 1384-1385 (1970). There is also not the slightest indication of the exercise of discretion by the agency in appellant’s case with respect to honoring the withdrawal of his resignation. On the record before us we find no meaningful distinction between Goodman and Wilson’s case on the issue of withdrawal. The legal developments disclosed by Goodman and Cunningham occurred subsequently to the decisions by the Commission and the District Court in our case. The withdrawal, however, had not been abandoned. If under the principles of Goodman and Cunningham it should have been considered as honored, the court should honor it now, though the particular legal principles enunciated the Goodman and Cunningham were not relied upon until the case reached this court. Since,- however, there may be reasons why those principles do not control, which the Government should have an opportunity to advance if so advised, the impact of Goodman and Cunningham upon appellant’s case is left initially to the District Court on the remand. Reversed and remanded for further proceedings consistent with this opinion. . The Bureau of Narcotics was formerly part of the Treasury Department. In 1966, it was renamed the Bureau of Narcotics and Dangerous Drugs and made part of the Department of Justice. . At the same time appellant’s motion for summary judgment was denied. . Appellant then, and thenceforth, maintained he had done no wrong. . The letter directed appellant upon arrival in Washington and until the close of business March 15, 1963, to report to the Bureau’s headquarters office, and authorized the expenses of his return, and that of his immediate family, household goods and personal effects, to be charged to a stated appropriation. . Under the case law as it has developed, and been followed by the Commission, a voluntary resignation is not adverse personnel action of the agency subject to Civil Service Commission review as to its validity. If, however, the resignation is involuntary the separation of the employee by reason of such a resignation is simulated as a discharge. Dabney v. Freeman, 123 U.S.App.D.C. 166, 358 F.2d 533 (1965), citing Paroczay v. Hodges, 219 F.Supp. 89 (D.D.C.1963); Goodman v. United States, 138 U.S.App.D.C. 1, 424 F.2d 914 (1970); Cunningham v. United States, 191 Ct.Cl. 471, 423 F.2d 1379 (1970). . In its decision the District Court adverted to the pleadings and memoranda. Nothing in them detracts from our position based upon the administrative record. . The decision of the Appeals Examining Office contains the following presentation of appellant’s representations: [Appellant], in his affidavit of June 6, 1963, . . . says they [the Inspectors] told him if he did not resign forthwith, that he would not be given transportation back to the United States for his wife and children nor would his household effects be transported. He says the inspectors remarked “it’s a long swim,” threatened to tie up “his Civil Service Retirement” and make reports which would make it “virtually impossible for the affiant to again obtain employment in the service of the United States.” He says he consulted with an official of the U. S. Embassy in Beirut and was unable to obtain proper counsel but however was advised by certain of the personnel in the Embassy that in view of the circumstances be should submit the resignation which would be without validity since it was done under duress and the situation could be rectified upon his return to the United States. The appellant stated he expressed his belief that the Bureau would not abandon him and his family in a foreign country. He said the Inspector replied he didn’t know anything about an abandonment but if the appellant wished to become an expert on the subject he could by refusing to sign the resignation. He said the Inspecor remarked he could sign the resignation or swim back; threatened to tie up salary due and retirement benefits and said the appellant would never be able to get another job with the government if he did not sign the resignation. . The circular was issued on April 1, 1958, pursuant to the Act of August 31, 1954, ch. 1155, 68 Stat. 1008. . Rule 6 of Circular No. 26 provides as follows : Allowable expenses prior to employees return, (a) An employee shall be allowed one-way transportation expenses for returning his immediate family and his household goods and personal effects from his post of duty to his place of actual residence in the continental United States, one of its territories or possessions, not to exceed those allowed over a usually traveled route between the post of duty and place of actual residence at time of assignment to such post, and will be paid not in excess of one time during such agreed upon period of service, when: (1) The employee has acquired eligibility for return transportation by satisfactorily completing the agreed upon two-year period of service. . He was transferred to Beirut from Rome, Italy, where he had been assigned since October 5, 1959. . Dabney v. Freeman, 123 U.S.App.D.C. 166, 358 F.2d 533 (1965) does not chart the course to be adopted in this case. Aside from differences there exposed with respect to questioned resignations, in terms of the standards for judicial review, reflected in the dissenting opinion, the course followed in that case does not control this case because we are convinced that the basis for the finding of voluntariness is not supported by the administrative record. . The letter withdrawing the resignation as we have seen was submitted to the Bureau on March 11, 1963. The Commissioner’s letter of March 12, 1963, acknowledging receipt of the resignation made no mention of its withdrawal. Official Form 50, entitled, Notification of Personnel Action, dated March 27, 1963, and signed by the Commissioner of the Bureau of Narcotics also failed to indicate that appellant had submitted a withdrawal. . The District Court’s decision issued on December 5, 1969, whereas the Goodman and Cunningham decisions occurred in 1970. . The District Court considered the withdrawal, stating in its order as follows: Plaintiff’s contention that his resignation was not accepted before he sought to withdraw it is barred by the doctrine of exhaustion of administrative remedies, and in any event is not sustained by the record .... The question under Goodman is not whether the resignation had been accepted but whether its withdrawal had been submitted before the effective date of the resignation. If so, the agency was required to consider it; and the Goodman case to that effect having been decided subsequently to the pendency of appellant’s case before the agency and the Commission, the exhaustion doctrine we think does not preclude the courts from applying the principles of Goodman in now deciding Wilson’s case.

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2024-08-24T03:29:51.129235

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In the Matter of MESA FARM COMPANY, a partnership composed of James V. Pettitt and George W. Ross, Bankrupt No. 110092, and Mesa Farms, Inc., a California corporation, Bankrupt No. 110091, Appellants, v. UNITED STATES of America, Appellee. No. 71-1121. United States Court of Appeals, Ninth Circuit. March 9, 1973. Henry Cohen (argued), Burlingame, Cal., for appellants. Anthony J. Steinmeiyer, Atty. (argued), Alan S. Rosenthal, Morton Hollander, Leonard Schaitman, Attys., L. Patrick Gray, III, Asst. Atty. Gen., Dept, of Justice, Washington, D. C., James L. Browning, Jr., U. S. Atty., San Francisco, Cal., for appellee. Before HAMLIN and TRASK, Circuit Judges, and SOLOMON, District Judge. The Honorable Gus J. Solomon, Senior Judge, United States District Court, Portland, Oregon. HAMLIN, Circuit Judge. Mesa Farm Company and Mesa Farms, Inc., appeal from a denial by the United States District Court for the Northern District of California of a petition for review of the Referee in Bankruptcy’s order directing them to pay an additional $22,200 into the-Referees’ Salary and Expense Fund (hereinafter Fund). The sole issue presented is a question of first impression, to wit: whether the Judicial Conference of the United States validly promulgated a rule requiring that payment made to the Fund be based upon the fair market value of all assets coming into the bankrupt’s estate, irrespective of whether such property is liquidated in the estate by the trustee. We uphold the rule’s validity and affirm. In June, 1968, Mesa Farm Company and Mesa Farms, Inc. each filed a petition for arrangement under Chapter XI of the Bankruptcy Act. When no arrangement was consummated, both consented to an adjudication in bankruptcy. The facts relevant to the instant proceeding were submitted to the District Court on an Agreed Statement of Facts: “Prior to adjudication MESA FARMS COMPANY, a partnership, owned a fee-simple interest in that realty known as Mahoney Ranch, a leasehold interest in that realty known as Echenique Ranch, and operating agricultural machinery and equipment. MESA FARMS, INC., a corporation, conducted an agricultural business on said realty, using the machinery and equipment. MESA FARMS, INC. had no assets. None of said assets of MESA FARM COMPANY were liquidated in the Chapter XI Proceedings prior to adjudication. “Subsequent to adjudication the leasehold on the Echenique Ranch was sold to the Echeniques free and clear of liens thereon for $225,000.00. There being more than $225,000.00 of liens on the leasehold, the proceeds were distributed to the lienors. “During the pendency of the bankruptcy, Paul Masson, Inc. made an offer to the Trustee to purchase the Ma-honey Ranch, subject to a first deed of trust, for a total price, including the amount of the first deed of trust, of $800,000.00. Also during the bankruptcy, Almadén Vineyards, Inc. approached JAMES V. PETTITT and GEORGE W. ROSS, the partners of MESA FARMS COMPANY to purchase the Mahoney Ranch for $850,-000.00. After negotiations between the partners, their attorneys, and Almadén, it was ultimately agreed that the property should be sold free and clear of liens for the price of $1,050,-000.00 cash, the amount being an approximation of that necessary to pay all creditors, secured and otherwise, of MESA FARMS COMPANY and MESA FARMS, INC., taxes, attorneys fees, costs and all expenses of administration. The sale would be made by the partnership to Almadén and was contingent upon dismissal of the bankruptcy proceedings prior to the conclusion of the sale. The machinery and equipment were appraised by an outside appraiser at $60,000.00 and were agreed to be sold by the partnership, contingent upon dismissal of the bankruptcy, to another corporation for $60,000.00 free and clear of liens in satisfaction of its claim against MESA FARM COMPANY on an unsecured loan, which with interest to May 31, 1969, amounted to $60,956.-52. “On June 6, 1969, a petition to approve the Masson sale and a petition to dismiss the bankruptcies came on simultaneously for hearing. Upon being advised at the hearing of the Almadén offer, representatives of Paul Masson, Inc. withdrew the Mas-son offer. The Referee approved the dismissal conditioned upon the court retaining jurisdiction to determine the amounts payable, if any, to the Referee’s Salary and Expense Fund. Subsequent to the Order of Dismissal, also on June 6, 1969, a Contract of Sale for the Mahoney Ranch to Almadén was signed and escrow was closed less than a week thereafter. The machinery and equipment were thereafter transferred to the creditor corporation. “The purchase price for the Mahoney Ranch was given to the attorneys for the bankrupt; they have paid all creditors in full except those whose claims are disputed, and some five creditors who have agreed to a reduction of their claims in the event that the moneys payable to the Referee’s Salary and Expense Fund is such that all claims cannot be paid at one hundred cents on the dollar.” The dismissed bankrupts, appellants herein, paid into the Fund $4,750.00, the amount which would have been owed if the fees were based solely upon the $225,000.00 received from the Echenique Ranch leasehold. The referee held, however, that under a rule of the Judicial Conference of the United States, the payment to the Fund must be based upon $1,335,000.00, i.e., the fair market value of all assets coming into the hands of the trustee. Such assets included the $1,050,000.00 received for the Mahoney Ranch and the $60,000.00 received for the machinery and equipment subsequent to bankruptcy dismissal, in addition to the $225,000.00 received for the leasehold in the bankruptcy proceeding. Accordingly, the referee ordered appellants to pay an additional $22,200.00 into the Fund. Appellants petitioned the District Court for review of the referee’s order, contending that the Conference rule was invalid. The petition was denied and this appeal followed. Section 40c(2)(a) of the Bankruptcy Act, 11 U.S.C. § 68(c)(2)(a), provides: “(2) Additional fees for the referees’ salary and expense fund shall be charged, in accordance with the schedule fixed by the conference (a) against each estate wholly or partially liquidated in a bankruptcy proceeding, and be computed upon the net proceeds realized * * * (emphasis added) Section 40e(2)(c) provides in pertinent part: “The Director [of the Administrative Office of the United States Courts], with the approval of the [Judicial Conference, may make, and from time to time amend, rules and regulations prescribing methods for determining net proceeds realized in asset cases * * * .” The Judicial Conference promulgated the following rule with reference to determining “net proceeds realized” : “Determination of net proceeds réalized. “In determining the amount of net proceeds realized in asset cases for the purpose of Section 40c(2) of the Bankruptcy Act as amended, the term ‘net proceeds realized in asset cases’ shall mean, in the case of sale or liquidation, the amount of money coming into the estate of the bankrupt as assets of such estate, which shall include the entire sale price of encumbered property when sold free and clear of all liens, or, if not sold or liquidated, the fair cash market value of all property coming into the estate as assets of such estate * * * Appellants contend that the Judicial Conference has exceeded its statutory authority as delegated in section 40e(2)(c) by defining “net proceeds realized” to include the fair market value of all property coming into the hands of the trustee in bankruptcy for the purposes of computing amounts due to the Fund, whether or not such property is liquidated in the estate by the trustee. They urge that the phrase “net proceeds realized” necessarily imports a concept of the result of the sale or liquidation efforts. Specifically, appellants claim “net proceeds realized” refer to those proceeds realized by the trustee only as a result of a liquidation of assets in the bankruptcy proceedings. In Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965), the Supreme Court enunciated the standard of review that courts must employ when faced with problems of statutory construction: “[T]his Court shows great deference to the interpretation given the statute by the officers or agency charged with its administration. ‘To sustain the Commission’s application of this statutory term, we need not find that its construction is the only reasonable one, or even that it is the result we would have reached had the question arisen in the first instance in judicial proceedings.’ Unemployment Comm’n v. Aragon, 329 U.S. 143, 153 [67 S.Ct. 245, 250, 91 L.Ed. 136]. See also, e. g., Gray v. Powell, 314 U.S. 402 [62 S.Ct. 326, 86 L.Ed. 301]; Universal Battery Co. v. United States, 281 U.S. 580, 583 [50 S.Ct. 422, 74 L.Ed. 1051]. ‘Particularly is this respect due when the administrative practice at stake “involves a contemporaneous construction of a statute by the men charged with the responsibility of setting its machinery in motion; of making the parts work efficiently and smoothly while they are yet untried and new.” ’ Power Reactor Co., v. Electricians, 367 U.S. 396, 408, 81 S.Ct. 1529, 6 L.Ed.2d 924.” The present section 40c of the Bankruptcy Act originated in the Referees’ Salary Act of 1946, 60 Stat. 323, which placed referees on a salary basis and abolished the theretofore practice whereby referees derived compensation directly from fees imposed on their cases. See generally, 2 Collier on Bankruptcy § 40.01 [4] (1971). The 1946 Act also created two trust funds to be used to pay referees’ salaries and expenses. The trust funds were supported by “a simplified system based upon two essential levies: (1) a fixed filing fee [Section 40c(l)] and (2) an additional fixed charge in asset, arrangement, and wage earner cases according to the size of the estate. [Section 40c(2)].” H.R.Rep.No. 1037, 79th Cong., 1st Sess. 5 (1945); S. Rep.No. 959, 79th Cong., 2d Sess. 6 (1946). The 1946 Act “sought to make the system self-sustaining and paid for by those who use it * * * .” United States v. Kras, 409 U.S. 434, at 448, 93 S.Ct. 631 at 639, 34 L.Ed.2d 626 (1973). Pursuant to the terms of section 40c(2), the Judicial Conference promulgated rules and regulations prescribing the methods for determining, inter alia, “net proceeds realized in asset cases.” The Conference’s construction of that phrase to include all property coming into the estate, supra, is herein challenged. The rule is the contemporaneous construction of section 40e(2) by those charged with administering the referee salary and expense system, supra. As such, the Conference rule is entitled to great deference. Udall v. Tallman, supra. “[T]heir construction should be given effect unless plainly unreasonable or in conflict with the plain intent of the legislature.” Brotherhood of Railroad Trainmen v. Akron & B. B. R. Co., 128 U.S.App.D.C. 59, 385 F.2d 581, 612 (D.C.Cir. 1967), cert. den. 390 U.S. 923, 88 S.Ct. 851, 19 L.Ed.2d 983 (1968). The propriety of the challenged rule is buttressed by the fact that it appears consistent with congressional intent. Congress contemplated that the fee paid into the Fund would be assessed “according to the size of the estate,” in support of a self-sustaining system. H. R.Rep.No. 1037, supra, at 5-6, S.Rep.No. 959, supra, at 6; United States v. Kras, supra. The cash proceeds received from a partial liquidation of an estate are not necessarily related to the estate’s size. In the instant case, an estate valued at over $1,335,000.00 produced only $225,000.00 cash. In light of the foregoing, the Conference rule interpreting “net proceeds realized” to include all assets coming into the estate is justifiable. Furthermore, the Conference rule effectively negates the possibility of a bankrupt’s estate being negotiated so as to avoid payment to the Fund after lengthy pendency of bankruptcy proceedings. In sum, there appear to be rational bases for the Conference definition of “net proceeds realized.” Certainly, we can find no abuse of its broad Udall discretion. Accordingly, the District Court’s order denying the appellants’ petition for review is affirmed. . 11 U.S.C. §§ 701-799. . Appellants challenge only the rule’s validity, and not its application to the facts of this case. . Conference Report, May 2, 1947, pp. 41— 42. . Appellants cite several judicial definitions supportive of their restrictive interpretation of the term “proceeds.” The Government has been equally astute in noting judicial definitions supportive of their broader interpretation of the term. We can only conclude that the term “proceeds” is “a word of great generality.” Phelps v. Harris, 101 U.S. 370, 380, 25 L.Ed. 855 (1879). . Appellants’ contention that the Udall standard is inapplicable to the Judicial Conference, on the premise that it is not a regulatory agency, is contradicted by the case law. See American Guaranty Corp. v. United States, 401 F.2d 1004, 185 Ct.Cl. 502 (1968). . The two funds were combined in 1959 to form the present day Referees’ Salary and Expense Fund. 73 Stat. 259. . The “Agreed Statement of Facts” contains no reference to the motives of either appellants or Almadén in their consummation of the Mahoney Ranch sale. . Indeed, the leading bankruptcy commentators, 2 Collier on Bankruptcy ¶ 40.05 [2.5] (1971) and 6 Remington, Bankruptcy Law § 2729 (1952), and several courts, In re Street, 184 F.2d 710 (3rd Cir. 1950); Reconstruction Finance Corp. v. Cohen, 179 F.2d 773 (10th Cir. 1950) and In re Stephen R. Jackson and Co., 82 F.Supp. 966 (D.Del.1949), have relied upon the challenged rule without questioning its propriety. Cf., In re La Rowe, 91 F.Supp. 52 (D.Minn.1950).

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Yolanda M. NAUCK, Petitioner, v. IMMIGRATION AND NATURALIZATION SERVICE, Respondent. No. 35609. United States Court of Appeals, Second Circuit. Argued Jan. 15, 1973. Decided March 5, 1973. Edward L. Dubroff, Brooklyn, N. Y. (Thomas T. Heeht, New York City, on the brief), for petitioner. Stanley H. Wallenstein, Sp. Asst. U. S. Atty., New York City (Whitney North Seymour, Jr., U. S. Atty., New York City, and Joseph P. Marro, Sp. Asst. U. S. Atty., New York City, on the brief), for respondent. Before FRIENDLY, Chief Judge, OAKES and TIMBERS, Circuit Judges. PER CURIAM: This petition for review raises the issue whether the recipient of full and legally-prescribed notice of a proposed change in visa status, after being informed of the nature and implication of the change and after waiving by silence the various options available, can overturn the findings of an INS Special Inquiry Officer and the Board of Immigration Appeals that she knowingly abandoned the desired status. We deny the petition for review of an order of the Board of Immigration Appeals finding petitioner deportable. Petitioner, a native and citizen of Brazil, entered the United States on July 1, 1963 under a permanent resident visa. In October 1964, she became employed by Lloyd Brasileiro, an agency of the Brazilian government. Upon the commencement of that employment, the Brazilian Embassy notified the Secretary of State, who in turn notified the INS, of petitioner’s entitlement to a foreign government employee status, under 8 U.S.C. § 1101(a) (15) (A) (ii) (1970). As a result, the INS on June 28, 1966 informed petitioner that it proposed to adjust her status from permanent resident to nonimmigrant employee of a foreign government in accordance with 8 U.S.C. § 1257 (1970). Included in the notice was information regarding such options as the right within ten days to file an answer or to request a hearing (at which representation by counsel would be permitted), as well as the further right to retain her permanent resident status by signing a waiver of all rights, privileges, exemptions, and immunities resulting from her employment with a foreign government agency. Copies of the waiver form were attached to the notice. Upon petitioner’s failure to respond, the INS notified her on September 13, 1966 that her status had been changed to a nonimmigrant employee of a foreign government. Soon afterwards, petitioner was sent an identification card reflecting her new status. On March 13, 1968, petitioner returned from a three month visit to relatives in Brazil, and was admitted as a nonimmigrant employed of a foreign government. Five days later her employment with Lloyd Brasileiro was terminated. Petitioner nevertheless remained in the United States. This development eventually came to the attention of the INS and on September 15, 1969 it issued a show cause order and a notice of hearing regarding the alleged deportability of petitioner under 8 U.S.C. § 1251(a)(2) (1970). A hearing was held before a Special Inquiry Officer, the result of which was a finding that petitioner was deportable, with an allowance of voluntary departure within ninety days in lieu of an order of deportation. That decision was appealed to the Board of Immigration Appeals. The Board dismissed the appeal, but petitioner was again allowed voluntary departure within thirty days of the order. This petition for review followed. Petitioner’s challenge to the order is based on her claim that, because she did not truly comprehend the nature of the proposed change in status, she could not have knowingly abandoned her permanent resident status. In Moser v. United States, 341 U.S. 41 (1951), the Court overturned an order debarring from United States citizenship a native of Switzerland who had claimed exemption from United States military service, on the view that the alien did not have “an opportunity to make an intelligent election between the diametrically opposed courses” available to him. Unlike Moser, however, this case does not present a situation of an alien being misled as to the implications of his acts, nor is it a case requiring a particular inference to be drawn from an ambiguous overt act of an alien. Cf. Afroyim v. Rusk, 387 U.S. 253 (1967) (naturalized citizen voting in foreign election); Gastelum-Quinones v. Kennedy, 374 U.S. 469 (1963) (permanent resident attended meetings of, and paid dues to, Communist Party). Here, conversely, the record convincingly shows that petitioner was given full and adequate notice of the impending change in status, that she visited the INS for the first time following receipt of the notice that the change had been effected, and that the failure to take timely action as outlined in the initial notice was either wilful or grossly negligent. We note, moreover, that under § 247 of the Act, 8 U.S.C. § 1257, the INS is without discretion in a case of this sort — an alien who, upon receipt of the proper notice under 8 C.F.R. § 247 (1972), fails to exercise any of the available courses of action, is in all cases to be adjusted to nonimmigrant status. The record here clearly indicates that petitioner was given the opportunity to make a factual showing that she had not knowingly abandoned her permanent resident status. Both the Special Inquiry Officer and the Board of Immigration Appeals expressly and emphatically rejected that contention. We hold that conclusion to have been “supported by reasonable, substantial, and probative evidence on the record considered as a whole”, 8 U.S.C. § 1105a(a)(4) (1970), and accordingly dismiss the petition for review. . Except for petitioner’s visit to the INS office on that date, see note 2, infra, no inquiries or protests concerning this change were made either before or after its effective date until June 14, 1967, when Lloyd Brasileiro wrote the District Director of the INS requesting a reinstatement of petitioner’s permanent resident status. The INS file on petitioner’s case indicates that it followed up Lloyd Brasileiro’s letter with a phone call on February 28, 1968. At that time, however, petitioner was on a lengthy visit to Brazil, and the INS was therefore informed that no reply to the letter would be necessary. On February 19, 1969, petitioner’s former attorney wrote the INS indicating petitioner’s “desire to resume her status as a permanent resident.” . Petitioner’s testimony at the hearing before the Special Inquiry Officer disclosed that at this visit to the INS petitioner and an officer of the Service had a conversation during which, according to petitioner, the officer “asked me whether I was going to chango my visa and asked me to give him my green card [indicating permanent resident status] and I told him that I had lost it.” When asked whether she had said anything regarding her desire to retain her “A”, or permanent resident, status, petitioner replied, “I don’t remember what the conversation was about..” . As in the two prior fora, no contention is made here that the notice to petitioner at each stage was anything but in full compliance with the statutory requirements.

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In the Matter of APPLIANCE PACKING & WAREHOUSING CORP., Bankrupt. No. 72-2104. United States Court of Appeals, Second Circuit. Argued Feb. 21, 1973. Decided March 20, 1973. Howard Karasik, New York City, for appellant, Joseph Gould, Trustee in Bankruptcy of Appliance Packing & Warehousing Corp. Morton L. Gitter, New York City (Lawrence Bauchner, and Otterbourg, Steindler, Houston & Rosen, P.C., New York City, of counsel), for Warren Schwartz, Trustee in Bankruptcy of Arista Trading Co. Before FEINBERG, MULLIGAN and TIMBERS, Circuit Judges. MULLIGAN, Circuit Judge. This is an appeal from a decision of the United States District Court for the Southern District of New York, Hon. Constance Baker Motley, D.C., 358 F. Supp. 84 setting aside an order of the Referee in Bankruptcy, Hon. Roy Babitt, which had subrogated the trustee in bankruptcy of Appliance Packing & Warehousing Corp. (Appliance) to whatever rights Westinghouse Electric International Co. (Westinghouse) has against Arista Trading Company (Arista), also a bankrupt. We affirm the decision of the District Judge. Arista, a partnership, purchased appliances from Westinghouse for ultimate resale in the export market. Appliance, a corporation whose sole shareholders were the two partners of Arista, packaged and warehoused appliances for export; the greater part of its business was attributable to Arista. By July, 1964, Arista owed Westinghouse about $147,000. On July 28, 1964 Arista and Appliance jointly executed a $142,000 promissory note, payable in 24 installments, to Westinghouse. The note was secured by a mortgage on Appliance’s real property. Arista’s financial position continued to be unstable and in 1965, Arista defaulted on the note with an outstanding indebtedness of $97,000. To preserve Arista’s business, Appliance on May 26, 1965 executed a further guarantee of all obligations owed by Arista to Westinghouse. Within a few weeks, Appliance gave another mortgage on its real property to Westinghouse as collateral for all amounts it guaranteed under the May 26 agreement. Neither the guarantee nor the new mortgage made any explicit reference to the 1964 promissory note. Arista continued to be unable to meet the periodic payments. On June 19, 1966, Arista and Appliance executed another installment promissory note, in the sum of $37,500, payable to Westinghouse. One month later, on July 19, 1966, Appliance executed an “extension of mortgage” agreement, in reference to the mortgage given as security for the July 28, 1964 note. Westinghouse simply agreed to extend the time for payment of some $97,000 due on the 1964 promissory note, until July 1, 1967. When Arista and Appliance were both adjudicated bankrupts, Westinghouse filed a claim for $111,639.16 in Appliance’s proceeding for the unpaid balances due on both notes. Appliance’s trustee objected and Westinghouse agreed to accept $50,000 from Appliance in partial satisfaction of its claims, together with an unsecured claim for the balance. Arista likewise filed a claim in the Appliance proceeding, and this led the trustee of Appliance to seek to subrogate Appliance to Westinghouse’s rights on the notes against Arista and to offset these rights against Arista’s claim. Appellant, the trustee of Appliance, claims that the note originally executed on July 28, 1964 is governed by the New York Uniform Commercial Code and that pursuant to § 3-415 (McKinney 1964) of the Code, Appliance was an accommodation party to the note and is now entitled to full indemnity from Arista. The trustee of Arista claims that the former New York Negotiable Instruments Law governs the rights of the parties on the note. Under that statute, he argues, Appliance cannot be an accommodation party, but rather must be considered a co-maker, entitled only to contribution from Arista. The Referee in Bankruptcy held that the Uniform Commercial Code was applicable and that Appliance was entitled to full indemnity. On Arista’s petition to review, the District Court held that the Negotiable Instruments Law governed the note and that Arista was entitled to contribution, i. e., one-half of the excess of payments made by Appliance over payments made by Arista on the note, might be set off against Arista’s claim against Appliance. The crucial question to be determined is whether the Uniform Commercial Code or the Negotiable Instruments Law is applicable. The New York Uniform Commercial Code “applies to transactions entered into and events occurring on and after” September 27, 1964. N.Y.U.C.C. §§ 10-101 & 10-105 (McKinney 1964). Relying on the term "events,” the Referee held that the Commercial Code governed since “all of the operative facts determining the extent of indebtedness to [Westinghouse] followed the enactment of the Uniform Commercial Code.” The District Judge reversed on the basis of § 10-102(2) (McKinney Supp.1972) which provides in pertinent part: Transactions validly entered into before the effective date specified in Section 10-105 of this Act and the rights, duties and interests flowing., from them remain valid thereafter and” may be terminated, completed, consummated or enforced as required or permitted by any statute or other law repealed or modified by this Act as though such repeal or modification had not occurred .... By the terms of the 1964 note, some 22 of the scheduled 24 installment payments were due after the effective date of the Commercial Code in New York. While §§ 10-101 and 10-105 have been criticized as somewhat vague, we interpret § 10-102(2) to mean that the mere fact that these payments were to be made after the effective date of the Code, does not make the Code applicable to the 1964 note. See James Talcott, Inc. v. Shulman, 82 N.J.Super. 438, 198 A.2d 98 (App.Div.1964); cf. Gem Corrugated Box Corp. v. National Kraft Container Corp., 427 F.2d 499, 502 n. 2 (2nd Cir. 1970). The “extension of mortgage” agreement merely extended the time for payment of the note until July 1, 1967, and in our view did not alter Arista’s and Appliance’s liabilities on the instrument. The May 26, 1965 guarantee, the other mortgage and the $37,500 promissory note, were in our view separate transactions which did not modify or relate to the 1964 note. Therefore the guarantee could not give Appliance any greater rights against Arista for payments made on account of the note. A. J. Armstrong Co. v. Janburt Embroidery Corp., 97 N.J.Super. 246, 234 A.2d 737 (Super.Ct.1967), cited by the appellant, is inapposite. There a series of 72 promissory notes were made prior to the effective date of the Uniform Commercial Code in New Jersey. The parties agreed to a refinancing of the notes, and one new promissory note payable in 48 installments was executed after the effective date of the Code. On these facts, the court held the Uniform Commercial Code applicable to the refinanced transaction. No substitute note was given here, the date, of the original note was merely extended and the subsequent guarantee, mortgage and promissory note did not purport to alter the 1964 instrument. These developments do not demonstrate the parties’ intent to refinance or replace this instrument. Cf. Lack’s Stores, Inc. v. Waisath, 464 S.W.2d 220 (Tex.Civ.Ct.App.), rev’d in part on other grounds, 474 S.W.2d 444 (Tex.1971). We cannot agree with Appliance’s suggestion that it is an “accommodation party” under the Negotiable Instruments Law. The relevant section, N.Y. Negotiable Instruments Law § 55 provides: An accommodation party is one who has signed the instrument as maker, drawer, acceptor or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party. Our inquiry is whether Appliance can be considered to have received “value” for the instrument. See W. Britton, Bills and Notes, § 93, at 219 (2d ed. 1961). We do not accept the position that Appliance is to be deemed an accommodation party because it did not directly receive the proceeds of the note. Such a restricted reading of § 55 would collide with the broad definition of “value” as “any consideration sufficient to support a simple contract,” contained in § 51. Rather, any substantial benefit or consideration accruing directly or indirectly to Appliance by way of Westinghouse’s extension of credit to Arista, is sufficient to deny Appliance accommodation status. Williams v. Reed, 48 Cal.2d 57, 307 P.2d 353 (1957); Brayer v. Edell, 163 N.Y.S. 989 (Sup.Ct.1917); 1 J. Daniel, Negotiable Instruments § 216, at 277 (7th ed. T. Calvert 1933). Both the District Court and the Referee (in dictum) believed that Appliance was so interested in the Westinghouse-Arista transaction, that it had received “value” within the meaning of § 55. The two business entities were commonly owned and controlled; Appliance was the' packer and warehouser of the products Arista purchased from Westinghouse. The fact is that Appliance’s own welfare, as well as Arista’s, was dependent upon Westinghouse’s extension of credit. Clearly Appliance must be considered to have received “value” for the promissory note. Affirmed. . This amounts to approximately $3,000. Arista had paid some $44,000 on the note, and Appliance has given Westinghouse $50,000. It should be noted that the present appeal deals only with the promissory note executed on July 28, 1964 for $142,000. Arista’s trustee states that the June 19, 1966 note for $37,500 is governed by the New York Uniform Commercial Code and that Appliance, as an accommodation party, is entitled to full indemnity for whatever it pays Westinghouse on this obligation. . See Janover & Dulles, The Application of the Transition Provisions of Uniform Commercial Code Article 10 to Chattel Security Piling, 39 N.Y.U.L.Rev. 1027 (1964). Compare N.Y.Negotiable Instruments Law § 6. . The only authority relied upon to equate accommodation party status with nonreceipt of proceeds of the note is Salzberg v. Deutsch, 150 Misc. 870, 270 N.Y.S. 595 (Mun.Ct.1934). That case does not refer to the pertinent provisions of the Negotiable Instruments Law and there is no indication that the two co-signers of the note there received any benefit from the instrument. . In the May 26, 1965 guarantee given to Westinghouse, Appliance represented that it was “financially interested in the affairs of [Arista] or expect [ed] to derive advantage either directly or indirectly” from Westinghouse’s extension of credit to Arista.

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UNITED STATES of America, Plaintiff-Appellee, v. Alvin KLUPT and Purchasing Corporation of America, Defendants-Appellants. Nos. 602, 603, Docket 72-2197, 72-2198. United States Court of Appeals, Second Circuit. Argued Feb. 23, 1973. Decided March 19, 1973. Sidney A. Soltz, Miami, Fla., for appellants. George W. F. Cook, U. S. Atty. for the District of Vermont (William B. Gray, Asst. U. S. Atty., on the brief), for appellee. Before FEINBERG, MULLIGAN and TIMBERS, Circuit Judges. FEINBERG, Circuit Judge: Alvin Klupt and his controlled corporation, Purchasing Corporation of America, appeal from judgments of conviction, after a ten-day jury trial before Chief Judge James S. Holden in the United States District Court for, the District of Vermont, on various counts charging fraudulent concealment of the assets of a bankrupt corporation, Fair Haven Slate Company, Inc., and related violations. 18 U.S.C. §§ 2, 152, 153, 371, 2314, 2315. One of the ten counts in the indictment was dismissed. Klupt was sentenced to concurrent terms of one year in prison, but execution of that sentence was suspended, and he was placed on probation for two years; he was also fined $3,000. Purchasing Corporation was fined $1,500. Klupt acquired control of Fair Haven in early October 1970 after the company’s principal creditor, Proctor Trust Company, had suggested that somebody be brought in “to salvage the business and keep it going.” At the time, Fair Haven was in a precarious financial position; and Proctor, which had loaned the company about $310,000, of which $200,000 was still outstanding, hoped to keep the enterprise functioning by bringing in new management. Shortly after Klupt’s takeover, Fair Haven petitioned for a Chapter XI arrangement and received permission to continue its business as a debtor in possession. Although not personally holding any of Fair Haven’s stock, Klupt directed its operations through its president, a business associate named Cutler, whom he had appointed. Cutler was named in the indictment as a co-conspirator, but not as a co-defendant, and was one of the principal witnesses for the Government at trial. Before its acquisition by Klupt, Fair Haven had been factoring its accounts receivable with Proctor. Fair Haven would submit to Proctor an invoice covering a shipment to a customer and would receive an advance of 70 per cent of the face value. The account receivable would be assigned'to Proctor to cover the advance and an interest charge; when Fair Haven received payment from its customer, the company would transmit the assigned money to Proctor. In late October 1970, however, Proctor decided to discontinue this arrangement because of Fair Haven’s weakened financial condition. The financing of the accounts was taken over, pursuant to bankruptcy court authorization, by Klupt’s own company, defendant Purchasing Corporation. This arrangement continued until January 1971, when Proctor resumed the factoring of Fair Haven’s accounts. The actions that are the subject of the indictment took place in February and March of 1971. During this period Fair Haven received but failed to turn over to Proctor, allegedly on the order of Klupt, 11 checks that had been assigned to that company. Instead, seven of the checks, totalling $8,241.65, were retained by Fair Haven and deposited in its payroll account. The other four, worth $5,727.-95, were sent to Purchasing Corporation, which placed them in its own account in Miami, Florida. The proceeds of these four checks were soon returned to Fair Haven and deposited in the same payroll account except for $927.95, which Cutler placed in his own account. Subsequently, all the money was paid over to Proctor. Throughout the early months of 1971, the financial condition of Fair Haven worsened, and in early April an order was entered adjudging the company a bankrupt. During the subsequent bankruptcy proceedings, Proctor claimed $27,806.70 as money due for loans to Fair Haven secured by assignment of accounts receivable. The referee found the security interest on these claims invalid because Proctor had filed its financing statement in the wrong town. However, he also found that the loans were a proper expense of the administration of the debtor’s estate. At trial, the principal issue for the jury was the role of Klupt in the admitted diversion of checks. In testimony, Klupt denied any involvement other than unexpectedly receiving and promptly returning the four checks sent to Purchasing Corporation, and he claimed that Cutler had told him that the money had been sent by mistake. However, a number of witnesses reported that Klupt had stated to them in substance that he had ordered the diversion of all 11 checks in retaliation for the apparently inadvertent prior clearance by Proctor of two checks that had been sent to it but should have gone to Purchasing Corporation. The jury obviously refused to accept Klupt’s version of what had occurred. Appellants’ principal argument is based upon the finding of the bankruptcy referee that Proctor’s lien on the accounts receivable was invalid. Appellants assert that because of this, Proctor was only a general creditor, that as a debtor in possession Fair Haven could use the receivables to pay for the operation of the business and that, therefore, depositing the checks in the company’s payroll account did not constitute concealment under the statute. This reasoning is manifestly inapplicable to the four checks sent to Purchasing Corporation, which are the subject of seven of the substantive counts in the indictment on which appellants were convicted. As to these, although appellants imply that the return of the' money by Purchasing Corporation to Fair Haven purged them of criminal responsibility, this theory is simply without foundation. Cf. United States v. Diorio, 451 F.2d 21 (2nd Cir. 1971) (per curiam), cert. denied, 405 U.S. 955, 92 S.Ct. 1173, 31 L.Ed.2d 232 (1972). Therefore, as to the bulk of the substantive counts, appellants’ violation was clear. We turn then to the one remaining substantive count, which involves the seven checks deposited directly in Fair Haven’s account and which does raise more difficult issues. Although the referee ruled that Proctor, as against the later-appointed bankruptcy trustee, could not assert a lien on the accounts receivable because of the incorrect filing, the referee did not hold, as appellants suggest, that the assignment of receivables to Proctor was unauthorized and invalid. That Proctor, by reason of the referee’s decision, was only a general creditor in the later bankruptcy liquidation is not controlling on the issue before us. The statute in question —18 U.S.C. § 152 — covers in terms all creditors. As a debtor in possession, Fair Haven could, as the bankruptcy referee found, finance its receivables by assigning them to Proctor. Once this was done, the deliberate and unrevealed diversion of the assigned checks to uses other than payment to Proctor permitted a finding of concealment. See 1 Collier on Bankruptcy [ 1.07, at 58 (14th ed. 1971) (concealment includes “placing assets beyond the reach of creditors or withholding knowledge thereof by failure or refusal to divulge owed information”) ; 2 id. ¶ 29.05 [2.2], [2.3]; cf. United States v. Zimmerman, 158 F.2d 559 (7th Cir. 1947) (failure to list assets on property schedule is concealment despite actual knowledge of assets by creditors and trustee). It is true that depositing the seven checks in the debt- or’s payroll account directly benefitted the debtor rather than Klupt, but this does not change the result. Cf. Duggins v. Heffron, 128 F.2d 546 (9th Cir. 1942) (absence of diminution of debtor’s estate is not defense to claim of concealment); Kolesinski v. Mashey, 127 F.2d 528 (2nd Cir. 1942) (concealment need not be from all creditors). While these cases and the other authorities cited above are obviously not squarely on point —indeed we could find no case dealing with the precise issue raised here — the language of the statute, see note 7 supra, seems squarely to cover this situation. Compare with 18 U.S.C. § 153 (“Whoever knowingly and fraudulently appropriates to his own use . . . . ”). Moreover, the failure to follow procedures that the bankruptcy court had authorized and prescribed was, in a basic sense, a fraud on the court as well as on the creditor. Appellants also argue that Judge Holden erred in refusing one requested charge and modifying another. The former would have required the jurors to acquit if they determined that the funds in question ultimately had been used to pay Fair Haven's other creditors. We have already indicated that it was not a defense that the seven checks initially deposited in Fair Haven's payroll account had been used to pay the debtor’s employees or that Purchasing Corporation had ultimately returned to the debtor the proceeds of the other four cheeks. Therefore, such a charge would have been incorrect and was properly refused. The other proposed instruction stated that if the jurors found that the checks had been returned to Fair Haven’s account, they “should” give this fact “great consideration” in deciding whether defendants had possessed the requisite criminal intent. In charging the jury, Judge Holden changed the word “should” to “may.” While the return of the money might be relevant to a determination of defendants’ initial intent, it did not necessarily reflect an absence of fraudulent purpose. Its probative value on that score was for the jury, not the judge, to weigh. The modification of the requested charge was not erroneous. Appellants also claim that a mistrial should have been declared when the prosecutor stated in the presence of the jury that he was handing over to defense counsel the grand jury testimony of the next two witnesses; that, in violation of Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), defendants’ attorney was not shown possibly exculpatory evidence in the Government’s files; and that the prosecutor failed to make clear, when cross-examining Klupt’s daughter, that some of his earlier questions to her had been based on allegedly prejudicial factual assumptions that he had since learned were incorrect. As to the first argument, while we do not approve of the practice followed here, see United States v. Gardin, 382 F.2d 601, 605 (2nd Cir. 1967), it does not call for reversal in this case. The second claim is without merit, and the third is de minimis. Judgment affirmed. . Counts one and two charged fraudulent concealment of assets from the bankrupt’s creditors; counts three and four charged receipt and aiding and abetting receipt of property from a bankrupt for purposes of defeating the bankruptcy law; counts five and six charged transportation and aiding and abetting transportation in interstate commerce of converted securities; counts eight and nine alleged receipt and concealment and aiding and abetting such receipt and concealment of converted securities; and count ten charged a conspiracy to violate the bankruptcy law. . In view of the mildness of the sentences imposed, we withhold any comment as to the appropriateness, on the facts of this case, of a ten-count indictment. . A majority of Fair Haven’s stock was distributed to Klupt's daughter and lesser amounts to the company’s president and quarry manager. A qualifying share was also issued to Fair Haven’s lawyer. . Because of this diversion of funds, Proctor again terminated its factoring of Fair Haven’s accounts in March 1973. . Thus, for example, Bernard Dick, Fair Haven’s court-appointed attorney, testified : Well, [Klupt] said “they took my funds,” and he said, “So, it is all right for me to take their funds,” then he used, I can remember this favorite term, “hanky-panky, — if they are playing hanky-panky with my funds, I can play hanky-panky with their funds.” . The argument also applies to the conspiracy conviction, which involved all 11 checks. . Whoever knowingly and fraudulently conceals . . . from creditors in any bankruptcy proceeding, any property belonging to the estate of abankrupt .... . It is true that the bankruptcy court authorization for Fair Haven to assign its accounts named Purchasing Corporation as the assignee and that the subsequent substitution of Proctor was not pursuant to a court order. However, as the referee observed: This Court and all parties who attended the hearings within two months after the date of said Order [authorizing the assignment of accounts to Purchasing Corporation] were well aware that Proctor had been substituted for Purchasing and . . . this amounted to implied authority.

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2024-08-24T03:29:51.129235

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UNITED STATES of America, Plaintiff-Appellee, v. Brian CAREY, D.P.M., Defendant-Appellant. No. 72-1440. United States Court of Appeals, Ninth Circuit. March 19, 1973. John P. Hanrahan, John G. Davies, Los Angeles, Cal., for defendant-appellant. William D. Keller, U. S. Atty., Eric A. Nobles, Robert C. Bonner, Asst. U. S. Attys., Los Angeles, Cal., for plaintiffappellee. Before HAMLEY and WRIGHT, Circuit Judges, and POWELL, District Judge. Honorable Charles L. Powell, Senior United States District Judge for the Eastern District of Washington, sitting by designation. PER CURIAM: On June 25, 1971, the appellant, a podiatrist licensed under California law, was indicted in a nine-count indictment with violations of 18 U.S.C. § 1001. The indictment alleged offenses on nine different dates and charged the defendant with knowingly making false and fictitious statements to various insurance intermediaries acting as paying agents for the Social Security Administration for Medicare. Prior to trial the Court dismissed Counts three, eight and nine. The trial commenced November 30, 1971. Following the trial the Court granted the defendant’s motion for acquittal as to Counts one and two. After three days’ deliberation the jury found the defendant guilty of Counts four and seven but was unable to agree on a verdict as to Counts five and six. The defendant was sentenced and fined $2500 on each of Counts four and seven. SUFFICIENCY OF THE EVIDENCE In 1966 Congress enacted the medical insurance program called Medicare. The overall administration of the program was delegated to the Social Security Administration. That administration entered into contracts with insurance companies to pay the covered medical expenses. Occidental Life Insurance Company and Travelers Insurance Company were two of such “carriers”. Medicare claims were submitted by physicians and others on a Request for Medicare Payment, Social Security Form 1490. Appellant Brian Carey, a doctor of podiatric medicine in Los Angeles, California, submitted requests for medicare payments on Form 1490 to the insurance carriers as charged in Counts four and seven. The claims were for operations on two of his patients, which claims the Government alleged were false. In his brief the appellant argues the evidence in detail and asserts that it was not sufficient to warrant the finding of the jury convicting the appellant on the two counts from which this appeal is taken. The jury found the appellant guilty on proper instructions. From an examination of the entire record it is determined that the evidence is sufficient to sustain the verdict of the jury. Since the Government is entitled to have the evidence viewed in the light most favorable to it, the verdict must be sustained on appeal. United States v. Knight, 416 F.2d 1181, 1183 (9 Cir. 1969). MOTION FOR NEW TRIAL A motion for new trial based upon newly discovered evidence is addressed to the Court’s discretion and must meet certain well recognized requirements. They are enumerated in Lindsey v. United States, 368 F.2d 633, 634 (9 Cir. 1966), cert. denied, 386 U.S. 1025, 87 S.Ct. 1383, 18 L.Ed.2d 465 (1967). The motion here is supported by' affidavits. A perusal of them shows that the motion, with its supporting documents, does not meet the requirements of the Ninth Circuit as set forth in the Lindsey case. The evidence offered to support the motion for new trial is cumulative and impeaching. There is no showing of the reason for failure to discover it earlier, or that due diligence was exercised in attempting to discover it for use at the trial. The evidence does not appear to be such as would be likely to produce an acquittal on retrial. MOTION FOR ACQUITTAL AS TO COUNTS FIVE AND SIX The jury was unable to agree on a verdict on Counts five and six. The Court therefore declared a mistrial and continued the trial as to these two counts. The evidence, we find, was sufficient to present the case to the jury. The defendant is attempting to appeal from a portion of the judgment holding the two counts in abeyance pending this appeal. It is not a final and appealable order. The denial of the motion for acquittal is not a final order in this context. United States v. Kaufman, 311 F.2d 695 (2 Cir. 1963). MOTION TO DISMISS FOR PRE-INDICTMENT DELAY The delay complained of by the appellant occurred prior to the filing .of the indictment against this appellant. Appellant’s reliance on Rule 48 is misplaced. United States v. Marion, 404 U.S. 307, 319, 92 S.Ct. 455, 463, 30 L.Ed.2d 468 (1971). “No federal statute of general applicability has been enacted by Congress to enforce the speedy trial provision of the Sixth Amendment, but Rule 48(b) of the Federal Rules of Criminal Procedure, which has the force of law, authorizes dismissal of an indictment, information or complaint ‘[i]f there is unnecessary delay in presenting the charge to a grand jury or in filing an information against a defendant who has been held to answer to the district court, or if there is unnecessary delay in bringing a defendant to trial . . . . ’ The rule clearly is limited to post-arrest situations.” (Emphasis supplied.) The Marion rule controls here. There is no claim that there was delay in the trial of this action following the filing of the indictment. The defendant's motion was properly denied. FAILURE TO INSTRUCT CONCERNING LESSER AND INCLUDED OFFENSE We do not agree with the appellant that 42 U.S.C. § 408 defines a lesser and included offense in the offense charged under 18 U.S.C. § 1001. To be necessarily included in the greater offense the lesser offense must be such that it is impossible to commit the greater without first having committed the lesser. The offense must not require some additional element not needed to constitute the greater. Moreover, the lesser offense must be included in, but not be encompassed by, the greater offense. Olais-Castro v. United States, 416 F.2d 1155, 1157 (9 Cir. 1969). This contention is not well founded for a further reason. Under Rule 30 F.R.Cr.P. no error may be assigned on appeal unless an exception was taken to the instructions given to the jury or to the failure to give an instruction requested by appellant. No such exception was taken and no instruction was requested by the appellant during the trial setting out the claimed lesser and included offense. See Britton v. United States, 112 U.S.App.D.C. 207, 301 F.2d 531 (1962). See also, Higgins v. Wainwright, 424 F.2d 177, 178 (5 Cir. 1970). We find no merit in other claims of appellant. Affirmed.

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2024-08-24T03:29:51.129235

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UNITED STATES of America, Plaintiff-Appellee, v. Frederick Isiah GRANGER, Defendant-Appellant. No. 72-2201. United States Court of Appeals, Ninth Circuit. Feb. 5, 1973. Certiorari Denied June 4, 1973. See 93 S.Ct. 2757. M. Van Elgort, Deputy Federal Public Defender, argued, Alan Issacman, Deputy Federal Public Defender, John K. Van De Kamp, Federal Public Defender, Los Angeles, Cal., for defendant-appellant. Darrell W. MacIntyre, Asst. U. S. Atty. (argued), Eric A. Nobles, Vincent J. Marella, Asst. U. S. Attys., William D. Keller, U. S. Atty., Los Angeles, Cal., for plaintiff-appellee. Before HAMLEY, BROWNING and WRIGHT, Circuit Judges. HAMLEY, Circuit Judge: Frederick Isiah Granger appeals from his conviction, after a jury trial, on counts three and four of a four-count indictment pertaining to the transfer, delivery and possession of counterfeit money in violation of 18 U.S.C. §§ 472 and 473. All of Granger’s arguments on appeal relate to his sole defense of entrapment. We affirm. Granger first contends that the trial court erred in refusing to give his requested jury instruction No. 1 on entrapment. We quote the essence of the proposed instruction in the margin. This requested instruction is based on what has been termed the “Government Conduct Theory” of entrapment which has its origins in the separate opinion of Mr. Justice Roberts for himself and two other justices in Sorrells v. United States, 287 U.S. 435, 453, 53 S.Ct. 210, 77 L.Ed. 413 (1932), and the concurring opinion of Mr. Justice Frankfurter, for himself and three other Justices, in Sherman v. United States, 356 U.S. 369, 378, 78 S.Ct. 819, 2 L.Ed.2d 848 (1958). Instead, the trial court gave an entrapment instruction designed to apply the so-called “Predisposition Theory,” adopted by the Supreme Court in the opinions by Mr. Chief Justice Hughes in Sorrells, and by Mr. Chief Justice Warren in Sherman. With exceptions to be noted below, the Ninth Circuit has consistently applied the “Predisposition Theory.” Granger, however, calls attention to two recent decisions of this court which, in his view, demonstrate that, as currently conceived, the principal issue raised by the entrapment defense is the moral character of the police activity. These decisions are Greene v. United States, 454 F.2d 783 (9th Cir 1971), and United States v. Russell, 459 F.2d 671 (9th Cir. 1972), cert. granted 409 U.S. 911, 93 S.Ct. 226, 34 L.Ed.2d 172 (1972). It is fair to state that these two decisions carve out a narrow exception to the theretofore prevailing rule in this circuit that an entrapment defense is not available to one who is shown to have a predisposition to commit the kind of offense in question. In Greene, the defendant was shown to have a predisposition to commit offenses associated with bootlegging. Under the unique circumstances of that case, however, it was established that the Government, through its agent, directly and continuously involved itself in the creation and maintenance of the criminal operations. Because predisposition to commit such offenses was shown, we acknowledge that Greene is not a typical entrapment ease. But we nevertheless set aside the conviction on the ground that “when the Government permits itself to become enmeshed in criminal activity, from beginning to end, to the extent which appears here, the same underlying objections which render entrapment repugnant to American criminal justice are operative.” 454 F.2d at 787. In Russell, the defendant was convicted on three counts of violating the Federal Food and Drug laws in manufacturing, processing, delivering, and selling a prohibited depressant or stimulant drug, namely methamphetamine, in violation of 21 U,S.C. §§ 831(q)(1), (2); 360a (b). The evidence showed that a Special Agent of the Bureau of Narcotics and Dangerous Drugs met with Russell and Several of the latter’s codefendants. The agent claimed that he represented an organization anxious to control the manufacture and distribution of methamphetamine in the Pacific Northwest. He offered to supply the chemical Phenyl-2-Propanone in exchange for one-half of the methamphetamine to be manufactured therewith. An agreement was reached, and several days later, the agent provided the Phenyl-2-Propanone, and the methamphetamine was produced with the agent’s assistance. He received his share and also purchased, from Russell, an additional amount of the finished product. We noted in Russell the defendant’s concession that he may have harbored a predisposition to commit the charged offenses. We nevertheless reversed, holding that a defense to such a charge may be founded upon an intolerable degree of governmental participation in the criminal enterprise. We declined to label the defense, in this context, an entrapment defense, but held the conduct of the government agent equally repugnant, if not more so, than the conduct of the government agent in Greene. Nothing approaching the unique circumstances of Greene or Russell is present here, even accepting at full value all of the evidence favorable to Granger. The offenses of which he was convicted occurred on August 27, 1971. Granger had previously, by his own admission, engaged in similar transactions on May 29, 1971. The May 29 offense was preceded by considerable contact between Granger and Carl Birge, an acquaintance Granger met while serving a sentence in state prison. Birge, a government informer, introduced Granger to a government agent who acted as a prospective buyer of counterfeit money. While Birge and the government agent had, prior to May 29, made persistent attempts to get Granger to find a source of counterfeit currency, they made no effort to assist in the manufacture, transportation or concealment of counterfeit currency. They did not even offer to compensate Granger for his assistance although he hoped to receive some clothes or jewelry. After completion of the May 29 transaction, activities got under way leading to the August 27 transaction on which Granger’s conviction is based. Again, the activities of Birge and the government agent were limited to attempts to persuade Granger to find a source of counterfeit money. But the contacts were now somewhat less persistent. Granger was told that he would profit from his assistance. Finally, Granger did locate a source and, in order to obtain sample counterfeit bills, he met with the government agent and received one hundred dollars in genuine United States currency to be used to purchase samples. On August 27, 1971, Granger gave the agent a counterfeit one hundred dollar bill and two counterfeit twenty dollar bills. When Granger’s source decided to drop out of the picture, Granger was arrested. The government agent’s efforts to have Granger find a source of counterfeit currency was perhaps more persistent and continuous than in many cases which come to mind. But, in essence, they were activities of the same kind which have been held permissible in dealing with other persons predisposed to commit the relevant offenses. Thus this appears to us to be, essentially, a typical instance for application of the rule that the entrapment defense is not available to one predisposed to commit the crime. In Greene and Russell we have evidenced our willingness to set aside convictions for offenses in which government agents were, in a very real sense, actual participants in the crime, notwithstanding predisposition by the defendant. Those cases involved government participation to the extent that agents actually exercised control over the criminal activity and aided in the manufacture, production, or transfer of the contraband. See also, United States v. McGrath, 468 F.2d 1027 (7th Cir. 1972). This is not such a case. Granger’s remaining points are without merit. On the whole we believe the trial court’s initial and supplemental instructions on the law of entrapment were clear and fair. One could find fault with some nuances which can be drawn from these instructions, but we conclude that any such defects were minor and did not prejudice Granger. The evidence bearing upon entrapment was clearly sufficient to overcome the contention that Granger was entrapped as a matter of law. Needless to say, what we have recounted above concerning the facts relevant to entrapment reflects only Granger’s version, since his entitlement to a particular entrapment instruction must be measured by his version of the evidence. But when it comes to the sufficiency of the evidence to support the verdict, we consider the evidence favorable to that verdict. Here, the Government’s evidence pertaining to entrapment varied widely from that offered by Granger. According to the Government’s case, Granger was about as active in contacting the government agents as they were in contacting him. This left just a credibility question for the jury. Robison v. United States, 379 F.2d 338, 343 (9th Cir. 1967). Affirmed. . “The defendant asserts that he was a victim of entrapment as to the crime charged in the indictment. “When a person is induced to commit a crime by the persuasion or pressure of Government agents or informants, he is a victim of entrapment, and the law as a matter of policy forbids his conviction in such a case. “If you find that the criminal design or intent to commit the offense charged originated with the Government, through their agents or informants and that the defendant's course of conduct was a product of the informants and agents inducements then it is your duty to acquit the defendant.” . For example, see United States v. Tatar, 439 F.2d 1300, 1302-1303 (9th Cir. 1971); United States v. Walton, 411 F.2d 283, 288 (9th Cir. 1969); Nordeste v. United States, 393 F.2d 335, 338 (9th Cir. 1968); Robison v. United States, 379 F.2d 338, 343 (9th Cir. 1967). Cf. Hughes v. United States, 427 F.2d 66, 69 (9th Cir. 1970). . The government agent participated in the guise of a partner in the illegal undertaking. He offered to provide a still, still site, still equipment, and an operator. He provided, at wholesale prices, a ton of sugar for use in the bootleg operation. . A codefendant, Joe Dell Whitaker, was charged in counts one and two of the indietment with offenses growing out of the May 29, 1971, incident. Granger was charged as an aider and abettor in count one, but was not charged in count two. Whitaker was found guilty on counts one and two. Granger was acquitted of the aiding and abetting charge under count one.

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UNITED STATES of America, Plaintiff-Appellee, v. Pedro Miguel CRISTANCHO-PUERTO, Defendant-Appellant. No. 72-2511 Summary Calendar. United States Court of Appeals, Fifth Circuit. Jan. 10, 1973. Rehearing Denied April 18, 1973. J. V. Eskenazi, Federal Public Defender, Miami, Fla. (Court appointed but not under ACT, Charlene H. Sorrentino, Miami, Fla., for defendant-appellant. Robert W. Rust, U. S. Atty., William R. Northcutt, Asst. U. S. Atty., Miami, Fla., for plaintiff-appellee. Before JOHN R. BROWN, Chief Judge, and GOLDBERG and MORGAN, Circuit Judges. Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York, 5 Cir. 1970, 431 F.2d 409, Part I. GOLDBERG, Circuit Judge: Appellant, Pedro Miguel Cristancho-Puerto, who is a citizen of Colombia, brings this appeal from a judgment convicting him of having violated 21 U.S.C. §§ 841(a)(1) and 952(a) by illegally importing cocaine and by possessing cocaine with intent to distribute. The sole issue before us is whether the trial court erred in denying appellant’s motion to suppress evidence of the cocaine and statements made in connection with its seizure. We hold that the evidence was properly admitted. On May 18, 1972, appellant arrived at Miami International Airport aboard a flight from Bogota, Colombia. When appellant reported for immigration inspection, the immigration officials became suspicious of the authenticity of his travel documents. Appellant was taken before a secondary immigration inspector, who advised him that because of the questions regarding his papers, he would have to choose either (1) to withdraw his application for admission and voluntarily return to Colombia, or (2) to continue seeking admission to the United States with the knowledge that immigration officials were suspicious about his compliance with the entry laws. Appellant chose the latter course of action. He was then taken into custody, warned of his rights, and searched —but no contraband was discovered. Appellant was held overnight at an office of the I.B.I. Security Agency and his luggage was placed with I.B.I. for storage. The next day, Friday, May 19, 1972, after further investigations and interviews had been completed, appellant was arrested, charged with violating 18 U.S.C. § 1546 (fraudulent entry documents), searched, and placed in the Dade County Jail. On Monday, May 22, 1972, appellant was taken before a United States Magistrate, who advised him of his rights and set bond. Appellant was returned to the Dade County Jail, where he was again searched. On May 25, 1972, a Special Agent with the Bureau of Narcotic and Dangerous Drugs allegedly received a confidential informant’s tip that appellant was boasting to his jail-mates that he had cocaine in his possession that had not been discovered despite the many searches. The Special Agent notified the Immigration and Naturalization Service, then went to the jail with agents from the INS and from the United States Customs Bureau. Appellant was taken to an interrogation room where all three federal agents interviewed him. After appellant had been warned of his rights, the Customs Bureau Agent asked him, “Will you take off your shoes?" Appellant replied, “Of course,” and did so. The agents immediately examined the shoes and found a substance later identified as cocaine concealed in the soles. A subsequent search of the luggage stored at I.B.I. led to the discovery of additional cocaine hidden in the soles of shoes in appellant’s suitcase. It is stipulated that no warrants were sought or obtained for either search. Appellant was indicted on June 15, 1972, for the cocaine violations. His motion to suppress was denied following an evidentiary hearing, and a jury subsequently found him guilty on both counts. Appellant was sentenced to serve eight years imprisonment on each count, the sentences to be served concurrently. Appellant appeals solely on the ground that the motion to suppress evidence should have been granted. Appellant correctly premises his argument on the settled principle of law that where a search is conducted without a warrant, “[t]he burden is upon the government to show that the search fell within one of the exceptions to the Fourth Amendment requirement of a warrant.” Brett v. United States, 5 Cir. 1969, 412 F.2d 401, 405; Barnett v. United States, 5 Cir. 1967, 384 F.2d 848. Although in denying the motion to suppress the evidence the trial judge failed to state which exception he thought was applicable, we find that this search was justified under a particularly narrow category of border searches. We think it clear that appellant had not been fully “admitted” into the United States and that his legal status at the time of the search was that of a man “standing at the border.” Appellant was indeed taken past the physical border, but he was brought across that visible boundary only by» virtue of his being placed in “deferred inspection parole status.” 8 U.S.C. § 1182(d)(5) states as follows: “The Attorney General may in his discretion parole into the United States temporarily under such conditions as he may prescribe for emergent reasons or for reasons deemed strictly in the public interest any alien applying for admission to the United States, but such parole of such alien shall not be regarded as an admission of the alien and when the purposes of such parole shall, in the opinion of the Attorney General have been served the alien shall forthwith return or be returned to the custody from which he was paroled and thereafter his case shall continue to be dealt with in the same manner as that of any other applicant for admission to the United States.” (emphasis added) On the precise facts of this case, we find this statute to be dispositive. We are not dealing here with an alien who has been placed in deferred inspection parole status and then allowed to remain either at liberty or at large. Rather, we hold only that an alien who is brought into the country under the provisions of this law and who is being held in physical custody by entry officials, having never for a moment been allowed to move about free of custody, continues to stand at the border for customs and border search purposes. Nor do we suggest that his special legal status could be continued indefinitely. If the entry officials allow the alien to remain at large pending investigation under the statute, the alien would not remain at the door. Similarly, if a criminal trial begins against the alien, he would not be “at the door” because the government at that point would no longer be holding the alien pending some future action. Finally, we do not mean to imply that there could never be a period of time for which an alien is held under the statute that would be too long to be reasonable. Here, appellant was searched one week after his physical entry into the country. Because the search occurred only one week later, at a time when the alien had been held in continuous physical custody by entry officials, pending prosecution and pursuant to section 1182(d)(5), we hold that the search was a border search. As such, the search was proper, 19 U.S.C. § 482, and the evidence obtained thereby was introducible against appellant. Affirmed. ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC PER CURIAM: The Petition for Rehearing is denied and the Court having been polled at the request of one of the members of the Court and a majority of the Circuit Judges who are in regular active service not having voted in favor of it, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 12) the Petition for Rehearing En Banc is also denied. Before JOHN R. BROWN, Chief Judge, and WISDOM, GEWIN, BELL, THORNBERRY, COLEMAN, GOLDBERG, AINSWORTH, GODBOLD, DYER, SIMPSON, MORGAN, CLARK, INGRAHAM and RONEY, Circuit Judges. SIMPSON, Circuit Judge, with whom GODBOLD, Circuit Judge, joins (dissenting) : I respectfully dissent from the refusal to reconsider the panel opinion by the Court en banc. I think the panel opinion makes an unwarranted application of the border search doctrine to this case. At the outset, the statutory argument by which the appellant was defined as a person “standing at the border” creates difficulties. I question the use of a statute which defines the status of a person for entry purposes under the immigration law being used as sole authority for conducting a border search. Title 19, U.S.C., Section 482, the statutory authority under which border searches are conducted, designates a border crossing rather than the legal status of a person as the event giving rise to the authority to conduct a border search. Alexander v. United States, 9 Cir. 1966, 362 F.2d 379, cert. denied 385 U.S. 977, 87 S.Ct. 519, 17 L.Ed.2d 439. It is clear however that at some point a person becomes fully admitted to the United States and may no longer be subjected to a border search, cf. Carroll v. United States, 1925, 267 U.S. 132, 134, 45 S.Ct. 280, 69 L.Ed. 543. The border or “extended border” has uniformly heretofore been defined in terms of physical distance or geographical travel time from the actual border, and authority to conduct border searches has been made dependent upon traditional border search or extended border search analysis. Despite the fact that they may be illegal entrants into the United States, aliens as well as citizens enjoy Fourth Amendment protection, cf. Au Yi Lau v. United States Immigration and Naturalization Service, 1971, 144 U.S.App.D.C. 147, 445 F.2d 217, 223. In my view the panel opinion creates a precedent fraught with dangerous implications that the validity of warrantless searches of aliens may in the future be made to depend upon administrative classifications of status made by the Bureau of Immigration and Naturalization. Further the panel opinion approves the introduction of evidence which was the fruit of a warrantless search of the appellant’s clothing in the jail property room. Title 8, U.S.C., Section 1182(d) (5), which is relied on to place the appellant in “deferred inspection parole status” applies facially to persons and not to baggage and personal effects. It is unclear to me how this “deferred inspection parole status” can apply to baggage and personal effects that the appellant was incapable of reaching because of his incarceration. Even if Cristancho-Puerto was “standing at the border” he was still entitled to a separate and distinguishable Fourth Amendment right to the security of his clothing in the jail property room. Brett v. United States, 5 Cir. 1969, 412 F.2d 401, so holds for this Court. A warrantless search must fall within one of the narrow “jealously and carefully drawn” exceptions to the Fourth Amendment. Jones v. United States, 1960, 357 U.S. 493, 78 S.Ct. 1253, 2 L.Ed.2d 1514. An immigration statute which defines status is not in my judgment a valid basis for engrafting an additional exception upon the warrant requirement of the Fourth Amendment. A search must be reasonable under the Fourth Amendment. Ker v. California, 1963, 374 U.S. 23, 83 S.Ct. 1623, 10 L.Ed.2d 726. Simply classifying this search as a border search is not a ground for obviating inquiry into the surrounding circumstances to determine reasonableness. Even absent the normal requirements of a search warrant for the existence of probable cause, border searches still must be reasonable under Fourth Amendment imperatives. United States v. Hill, 5 Cir. 1970, 430 F.2d 129, 130; Henderson v. United States, 9 Cir. 1967, 390 F.2d 805. The particular search here of course does not comport with the historical origin and justification for an “extended border search”— a border search occurring at some point of time other than an actual border crossing. Cf. United States v. Glaziou, 2 Cir. 1968, 402 F.2d 8, 13-14, Note 3. Ordinarily the justification for an “extended border search” is that individuals who have recently crossed a border or who have been in a border area may elude customs officials because of high mobility. Glaziou, supra. But in this case the appellant was in custody and government agents had ample opportunity to secure a warrant if the informer’s tip was reliable and sufficient to constitute probable cause. Border searches occurring at some point after an initial border crossing usually involve considerations of both distance and time from the initial crossing. Alexander v. United States, supra. No other case which I have found sanctions a border search conducted eight days after entry into the United States. Neither the panel opinion nor the briefs make clear the actual reason for the appellant’s incarceration at the time of the search when the cocaine was discovered. The opinion (see slip opinion, pages 2 and 3) states that appellant was charged with violating Title 18, U.S.C., Section 1546 (possession of fraudulent entry documents), arraigned before a United States Magistrate on that charge, searched and jailed, being searched both at the time of the arrest and at the time of his return to jail following arraignment. These searches were unproductive. If Cristancho-Puerto was at the time of the search which located the cocaine incarcerated under the Section 1546 charge, his status on “deferred inspection parole” was seriously diluted if not completely destroyed. The petition for rehearing asserts that his remaining in jail was solely by reason of his inability to post a $2500.00 bail bond on the Section 1546 charge. If this contention is true it negates his status as a man “standing at the border” and therefore subject to a border search within the scope of the panel opinion. It also raises a question suggested in the petition for rehearing that he was discriminated against solely by reason of indigency. See Tate v. Short, 1971, 401 U.S. 395, 91 S.Ct. 668, 28 L.Ed.2d 130; Williams v. Illinois, 1970, 399 U.S. 235, 90 S.Ct. 2018, 26 L.Ed.2d 586. It deeply disturbs me that this panel opinion says for our Court that the United States can arrest a man and charge him with a crime but still have the benefit of conducting warrantless searches of his person and effects because he is “standing at the border”. The two concepts are contradictory. The panel opinion recognized this dilemma by saying that a man would no longer be “standing at the border” if a criminal trial begins against him. I suggest that the initiation of criminal proceedings by arrest and arraignment is more logically the appropriate time for an alien to cease “standing at the border”. Granted that the expansion of the border search doctrine approved by the panel opinion is narrowly framed, I think that the problems it raises are of sufficient gravity to warrant en banc re-examination. For these reasons I dissent. . Theories mentioned in the briefs on appeal are: (1) border search; (2) “alien-status” search; (3) customs search, see 19 U.S.C. § 1595(a); (4) search by consent, compare Perkins v. Henderson, 5 Cir. 1969, 418 F.2d 441, with United States v. Resnick, 5 Cir. 1972, 455 F.2d 1127; and (5) prison search. We should not be understood as having in any way considered any exception to the Fourth Amendment warrant requirement other than that discussed in the body of this opinion.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Richard M. COURSON, Appellee, v. MARYLAND CASUALTY COMPANY, Appellant. Nos. 72-1480, 72-1481. United States Court of Appeals, Eighth Circuit. Submitted Feb. 14, 1973. Decided March 20, 1973. Dennis L. Shackleford, El Dorado, Ark., for appellant. Richard E. Griffin, Crossett, Ark., for appellee. Before GIBSON and ROSS, Circuit Judges, and BENSON, Chief District Judge. ROSS, Circuit Judge. Richard Courson (Courson) brought this action against Maryland Casualty Company (Maryland) in the Circuit Court of Ashley County, Arkansas, to recover the sum of $10,000.00 under the uninsured motorist clause of an automobile insurance policy theretofore issued to Courson by Maryland. Maryland removed the case to the United States District Court for the Western District of Arkansas pursuant to the provisions of 28 U.S.C. § 1441. The trial court entered judgment in favor of Courson for the sum of $10,000.00 plus penalty and attorneys fees and Maryland appealed to this Court. We affirm but make one modification to the judgment. On August 23, 1969,, Courson was involved in an automobile collision with a car driven by Earnest Green (Green), an uninsured motorist. The Courson car and the Green car were traveling in opposite directions and a collision occurred shortly after a third car driven by Robert Crane, Jr. (Crane) had entered the highway from a side road at a point between the Courson car and the Green car. Crane was insured by State Farm Mutual Insurance Company (State Farm). Courson brought suit in state court against both Green and Crane on February 4, 1970, and at that time advised Maryland’s claim agent of the suit, “in order that they [Maryland] may properly defend in behalf of Earnest Green and Robert Crane.” (At this point Courson’s attorney erroneously believed that Crane was also an uninsured motorist.) On February 6, 1970, Maryland’s agent acknowledged receipt of the letter and stated that “We are notifying the Maryland Casualty Company, the insurance carrier for Mr. Courson, this date.” On May 4, 1970, Courson’s lawyer advised Maryland’s claim agent that Green’s attorney had advised that Green was uninsured, that the case was set for trial on June 9, 1970, and that he was interested in settling the case. He asked Maryland to contact State Farm, Crane’s carrier, to see if some kind of settlement could be made. He received no response from Maryland’s claims representative. On May 25, 1970, he again wrote the claims representative, advising him of the impending trial and giving him the name of the attorney for Crane. He further stated that “My investigation reveals that probably the primary liability lies with the uninsured defendant, Earnest Green.” He then asked the claims representative to advise him concerning Maryland’s intentions in the matter. Again he received no response. Courson’s lawyer wrote the claims representative again on June 1, 1970, asking for a response to his earlier letter, but received none. Prior to trial, Crane and his insurance carrier settled the claim of Courson against Crane for $5,000.00 and Courson executed a release and indemnity agreement without further notice to Maryland and without Maryland’s consent. On June 9, 1970, Courson recovered a judgment against Green for $16,000.00 and promptly demanded payment of $10,000.-00 by Maryland under the uninsured motorist clause in the policy Maryland had issued to Courson. Maryland declined on the alternate grounds that (a) the policy was inapplicable under the exclusion provision since the insured made a settlement with another person without the written consent of the insurer; (b) any amount payable under the uninsured motorist clause should be reduced by the amount recovered from Crane’s insurance carrier under Ark.Stat.Ann. 66-4006 (Repl.1966) and under the express provisions of the policy; and (c) that in any event, Maryland was entitled to recover or set off the sum of $2,074.55 to which the Arkansas Workmen’s Compensation Commission had theretofore determined Maryland was entitled to receive in subrogation, from the settlement of $5,000.00 obtained by Courson from Crane's insurance carrier. In United States District Court, after Maryland had interposed these defenses to Courson’s action on the uninsured motorist provision in his policy, the trial court retried the issue of negligence of all of the parties to the accident and found that the accident was caused solely by the negligence of the uninsured motorist, Green. It rejected Maryland’s defenses and allegations regarding the credits, except its claim for a setoff for the amount which the Arkansas Workmen’s Compensation Commission had already found to be owing to Maryland (as compensation carrier) as a result of Courson’s settlement with Crane. However, in a supplemental opinion, the court reconsidered the latter setoff, and also disallowed it. The court found that Courson’s damages were in the amount of $15,657.36, reduced that amount by the $5,000.00 which Courson received from Crane in settlement, and found that Courson was entitled to $10,657.36. Recognizing that the uninsured motorist policy was limited to $10,000.00, judgment was entered accordingly in that amount, plus 12 percent statutory penalty and attorneys fees. SETTLEMENT EXCLUSION PROVISION The uninsured motorist provision of the policy contained the following exclusion: “I. COVERAGE U — UNINSURED MOTORISTS (Damages for Bodily Injury) Exclusions This insurance does not apply: (a) to bodily injury to an insured with respect to which such insured, his legal representative or any person entitled to payment under this insurance shall, without written consent of the company, make any settlement with any person or organization who may be legally liable therefor . ” The trial court held this policy provision to be contrary to public policy and therefore invalid citing MFA Mutual Ins. Co. v. Bradshaw, 245 Ark. 95, 431 S.W.2d 252 (1968), and MFA Mutual Ins. Co. v. Lovins, 248 F.Supp. 108 (E.D.Ark.1965). In Lovins the United States District Court for the Eastern District of Arkansas had determined that a clause providing forfeiture of insurance coverage, by an insured who prosecuted a suit to judgment against an uninsured motorist without the written consent of the insurer, was against the public policy of the state and void. In Bradshaw, supra, 431 S.W.2d at 254, the Supreme Court of Arkansas indicated its agreement with that holding. However, in this ease the exclusion is claimed to result from settlement with an insured motorist without the consent of the insurer, which is a different situation from that which was present in Lovins and in Bradshaw. Although the “settlement exclusion,” by its very terms is referred to as an exclusion, it is, in fact, a forfeiture. All coverage under the uninsured motorist policy provisions is “excluded” in the event that a settlement is made without the consent of the company. Under the law of Arkansas as in nearly all states, forfeitures are not favored. Home Mutual Fire Ins. Co. v. Riley, 480 S.W.2d 957 (Ark.1972). See generally, 1 R.Anderson, Couch on Insurance 2d § 15:95 (1959). In Riley, supra, 480 S.W.2d at 958-959, the Supreme Court of Arkansas stated the rule as follows: “This court will grasp any circumstances which indicate an election to waive a forfeiture. In American Life Ass’n v. Vaden, 164 Ark. 75, 261 S.W. 320 (1924), we said: The doctrine is firmly established by the highest courts in this country, and approved by us in numerous eases, that ‘forfeitures are not favored in the law,' and that ‘courts are always prompt to seize hold of any circumstances that indicate an election to waive a forfeiture, or an agreement to do so, on which the party has relied and acted. Any agreement, declaration, or course of action, on the part of an insurance company, which leads a party insured honestly to believe that, by conformity thereto, a forfeiture of his policy will not be incurred, followed by due conformity on his part, will and ought to estop the Company from insisting upon the forfeiture, though it might be claimed under the express letter of the contract.’ ” In this case, Courson gave Maryland every opportunity to participate in the settlement negotiations with Crane and his insurance carrier. His requests for participation were completely ignored and Courson was entitled to assume that if any objection to the settlement was going to be made by Maryland, it would have been communicated prior to the time he attempted to collect on the judgment entered on June 9, 1970. We are satisfied that the Supreme Court of Arkansas would hold this failure to act constitutes sufficient proof of circumstances indicating “an election to waive a forfeiture.” Home Mutual Fire Ins. Co. v. Riley, supra, 480 S.W.2d at 958. See also Pickering v. American Employers Ins. Co., 282 A.2d 584 (R.I.1971); Volkswagen Ins. Co. v. Taylor, 201 So.2d 624 (Fla.App.1967); Allstate Ins. Co. v. Pietrosh, 85 Nev. 310, 454 P.2d 106 (1969). CREDIT AGAINST POLICY LIMITS FOR $5,000 SETTLEMENT The lower court reduced the amount of damages that it found Green was liable for, by the $5,000.00 settlement sum which Courson received from Crane. However, since the total damages were over $15,000.00, Maryland was still found to be liable for the full amount of the policy limits of $10,000.00. The provisions under which Maryland claims reduction from the policy limits for the settlement are the following: “HI. LIMITS OF LIABILITY Regardless of the number of insureds under this policy, the company’s liability is limited as follows: (b) Any amount payable under the terms of this insurance because of bodily injury sustained in an accident by a person who is an insured under this coverage shall be reduced by (1) all sums paid on account of such bodily injury by or on behalf of (ii) any other person or organization jointly or severally liable together with such owner or operator for such bodily injury, including all sums paid under the bodily injury liability coverage of the policy . . . .” “VI. ADDITIONAL CONDITIONS G. Trust Agreement In the event of payment to any person under this insurance : (a) the company shall be entitled to the extent of such payment to the proceeds of any settlement or judgment that may result from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury because of which such payment is made; (b) such person shall hold in trust for the benefit of the company all rights of recovery which he shall have against such other person or organization because of the damages which are the subject of claim made under this insurance; (c) such person shall do whatever is proper to secure and shall do nothing-after loss to prejudice such rights . . . (Emphasis added.) The provisions of the section entitled “LIMITS OF LIABILITY” are clear in that they require a reduction of the amount payable under the terms of the insurance equal to the amount of any payments made on behalf of another person who is jointly or severally liable. The purpose of such a provision is undoubtedly to eliminate the possibility that the insured will recover from both the insurance company and another person “legally responsible.” Maryland does not appear to contend that the liability and damage determination made by the district court is not binding on it, nor does it dispute the substance of that determination. The district court specifically held that: “By this ruling the Court concludes there is substantial evidence from the testimony of the witnesses and exhibits that the accident was not due to the negligence of Robert E. Crane, Jr., notwithstanding, the agreed settlement and release agreement in lieu of a trial in the state court.” Arkansas has adopted the general rule that contracts, if clear and unambiguous, should be enforced as written, giving the language the common and ordinary meaning under the situation, and that words of limitation are to be construed strictly against the insurer. Phillips v. Midwest Mutual Ins. Co., 329 F.Supp. 853 (W.D.Ark.1971); Washington Fire and Marine Ins. Co. v. Ryburn, 228 Ark. 930, 311 S.W.2d 302 (1958). Although the word “liable” has been construed by the Arkansas Supreme Court to mean less than “an absolute legal and fixed liability,” Pacific Fire Ins. Co. v. Murdoch Cotton Co., 193 Ark. 327, 99 S.W.2d 233, 235 (1936), the district court’s order seems to preclude a finding in this situation that even “a condition out of which legal liability may arise” exists. Id. In our opinion a clear reading of this entire provision therefore precludes Maryland from reducing the policy limits by the amount of the settlement. The same reasoning applies to the “Trust Agreement” clause in the policy. It refers to a credit for the proceeds of any settlement or judgment resulting from the exercise of a right to recover from a person or organization “legally responsible for the bodily injury because of which such payment is made.” Thus, in view of the district court’s determination that Crane was not in any way legally responsible for the accident, Maryland is not entitled to any settlement credit under this section of the policy. “SETOFF” FOR CRANE SETTLEMENT Maryland was not only Courson’s uninsured motorist carrier, but was also the workmen’s compensation carrier for Courson’s company, Richard M. Courson, Inc., and as such paid a sum of $5,305.75 to Courson for the injuries received in the accident in issue. When Courson settled with Crane for $5,000.00, the Arkansas Workmen’s Compensation Commission found that after reducing the $5,000.00 by the cost of collecting the settlement sum, Courson was entitled to one-third ($1,037.28) and Maryland, as compensation carrier, was entitled to two-thirds ($2,074.55). However, since the entire settlement had been sent to Courson, Maryland was merely credited with the sum owed it, against “future liability which might accrue to them by reason of the aforesaid injury.” Maryland contends that this amount should now be credited against the amount of any judgment rendered against it on its uninsured motorist coverage. Courson maintains that this issue is not properly before this Court as the lower court was not presented with it, but only with the question of whether workmen’s compensation benefits can directly reduce uninsured motorist coverage. It is true that the issue of reduction of the uninsured motorist coverage by the amount of the workmen’s compensation benefits was presented by Maryland and was properly rejected by the trial court on the basis of Travelers Ins. Co. v. National Farmers Union Property and Casualty Co., 252 Ark. 624, 480 S.W.2d 585 (1972), but Maryland also specifically raised the “setoff” claim in its amended answer and the lower court spoke to that issue directly in initially granting the setoff. The trial court held: “[P]ursuant to Act 40 of the Workmen’s Compensation Act, supra, and the order entered September 17, 1971, by the Workmen’s Compensation Commission approving the settlement between the plaintiff and the third-party as provided by the section that the defendant, Maryland Casualty Company, is entitled to the credit of $2,074.-55 against any future liability by reason of the plaintiff’s injury. This, therefore, reduces the judgment which the plaintiff is entitled to have against the defendant to the amount of $7,925.45. An order will be entered accordingly.” Subsequently, in a supplemental opinion, and after Courson filed a motion to modify the judgment, the trial court disallowed the credit to Maryland on the basis that the Arkansas Supreme Court had subsequently ruled on the issue in Travelers Ins. Co. v. National Farmers Union Property and Casualty Co., supra, 480 S.W.2d at 588-589. That case involved an action by the administratrix of a deceased’s estate against an insurer to recover under uninsured motorist coverage which included a clause permitting the insurance company to reduce the amount payable thereunder by any workmen’s compensation benefits received by the insured. The workmen’s compensation insurer intervened seeking subrogation by virtue of the payments that it had made to the deceased. The court held: (1) the clause in the uninsured motorist policy provisions which attempted to reduce the amount payable under that policy by the amount of any workmen’s compensation benefits received by the insured on account of the bodily injury, was void and unenforceable; and (2) the workmen’s compensation carrier is not entitled to subrogation by way of lien on the amounts which the employee or his dependents may receive by virtue of the uninsured motorist coverage. In the Travelers case, supra, the compensation carrier was attempting to procure a first lien upon two-thirds of the net proceeds of the insured’s recovery from the uninsured motorist carrier under Ark.Stat.Ann. 81-1340(a) (1) (Repl. 1960) and the court held that such a broad reading of that section was not countenanced; that the recovery on uninsured motorist coverage is not a tort recovery subject to the lien provided in that section; and that the compensation carrier has no right to expect the employee to purchase uninsured motorist coverage so as to supplement the carrier’s statutory lien. Travelers Ins. Co. v. National Farmers Union Property and Casualty Co., supra, 480 S.W.2d at 588-589. The trial court characterized Maryland’s attempt to set off the portion of Courson’s settlement with Crane, which the Arkansas Workmen's Compensation Commission found should be credited against future liability of Maryland, as an assertion of a lien through the right of subrogation under Ark.Stat.Ann. 81-1340 (Repl.1960) against the uninsured motorist carrier (also Maryland) and therefore it applied Travelers. Although the Travelers decision undoubtedly required the lower court to deny any reduction from the uninsured motorist coverage for amounts of workmen’s compensation benefits received by Courson from Maryland, as compensation carrier, it does not, in our opinion, have any effect upon Maryland’s right to claim a portion of the settlement with Crane pursuant to the statute. Courson is entitled to the full $10,000.00 provided for by the uninsured motorist coverage but Maryland is entitled to $2,074.55 from the settlement with Crane as a result of the determination of the Commission that this amount was Maryland’s share of the Crane settlement pursuant to the Arkansas statute permitting this allocation. We do not read the Travelers case as rejecting all claims that a compensation carrier may have against an employee who also has uninsured motorist coverage, but only as forbidding the compensation carrier from attempting to claim a lien by subrogation for workmen’s compensation paid to an employee on a percentage of the proceeds of the employee’s uninsured motorist coverage. In his brief, Courson does not contend that Travelers alone would disallow this setoff, but rather relies on the fact that Maryland did not present this issue to the lower court. The record is not clear as to whether or not Maryland will be able to recover the $2,074.55 from the future workmen’s compensation payments by Maryland and the trial court did not, except by implication in its original opinion, reach the question as to whether or not the $2,074.55 setoff pleaded by Maryland is a proper counterclaim under Fed.R.Civ. P. 13. For this reason we do not determine those questions at this time. We only decide that the case of Travelers Ins. Co. v. National Farmers Union Property and Casualty Co., supra, is not a bar to the recovery by Maryland of the $2,074.55 portion of the Crane settlement and we remand the case to the trial court for a re-determination of whether this amount should be allowed as a setoff in this action under Fed.R. Civ.P. 13. With this modification, the judgment of the trial court is affirmed. . Maryland also insured Courson’s employer, R. M. Courson, Inc., for its workmen’s compensation liability and bad paid out workmen’s compensation benefits to Courson in the sum of $5,305.75. . In Bradshaw the Supreme Court of Arkansas held valid a policy paragraph providing that a judgment obtained against an uninsured motorist without the written consent of the insurer was not conclusive between the insured and the insurer. Based on that decision, the trial judge in this case retried the issues of liability and damages and determined that the uninsured motorist, Green, was liable to Courson in the sum of $15,657.36. . This finding: was made pursuant to Ark. Stat.Ann. 81-1340 (Repl.1960) which provides that the workmen’s compensation insurer is entitled to be subrogated to the rights of the insured as to two-thirds of the amount of such a settlement after deducting the reasonable cost of collection,

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UNITED STATES of America, Plaintiff-Appellee, v. Patrick Warren McDOWELL, Defendant-Appellant. No. 72-2514. United States Court of Appeals, Ninth Circuit. Feb. 9, 1973. Robert Michael Zweig (argued), of Hodge, Green & Zweig, San Francisco, Cal., for defendant-appellant. William B. Shubb, Asst. U. S. Atty. (argued), Dwayne Keyes, U. S. Atty., Sacramento, Cal., for plaintiff-appellee. Before HAMLEY and MERRILL, Circuit Judges, and SCHNACKE District Judge. The Honorable Robert H. Schnaeke, United States District Judge for the Northern District of California, sitting by designation. HAMLEY, Circuit Judge: Patrick Warren McDowell appeals from his conviction on a charge of possessing an unregistered 9 mm. machine gun, in violation of 26 U.S.C. § 5861(d). On appeal, McDowell argues that the firearm in question, seized incident to defendant’s arrest, was obtained unlawfully. The seizure was unlawful, defendant asserts, because there was no probable cause for his warrantless arrest, and the scope of the search which led to the seizure was unreasonable. We affirm. The facts pertaining to the arrest and search, as set out below, were developed during a pretrial hearing on McDowell’s motion to suppress. At about 1:25 a. m., on February 8, 1971, Sgt. Melton E. McDougal of the Placer County, California, Sheriff’s Office, received a radio report of an armed robbery at the Sugar Bowl Ski Lodge on Donner Summit, in Placer County. This call came from the Sheriff’s dispatcher. Sgt. McDougal and other law enforcement officers converged on the scene of the robbery. While doing so, Sgt. Mc-Dougal received another radio report from Dispatcher Doyle of the California Highway Patrol. According to this report there were two suspects, one wearing a white ski parka and dark clothing and the other wearing a red parka and dark clothing. The suspect with the white parka was reported to be about six feet tall, weighing between one hundred sixty-five and one hundred eighty pounds, and wearing black ski boots laced up and tied with red laces and white stitching along the side. Sgt. Mc-Dougal was told, over the radio, that both men were armed, one with an automatic weapon. When he reached the robbery area, Sgt. McDougal was joined by Deputy John A. Pyle of the Nevada County, California, Sheriff’s Department, and a civilian named Sayer. It was then approximately 2:30 a. m. According to another report Sgt. McDougal then received, two prowlers were observed near the rear of a residence at the Donner Ski Ranch. The weather was clear but it was extremely cold and there were five or six feet of snow on the ground in this area. Sgt. McDougal and Officer Pyle instituted a search in the vicinity in which the prowlers had been observed. Sgt. McDougal, approaching a tree with a flashlight, saw a man lying on the snow, on his back, with his feet towards the tree and with a back-pack next to him. The man turned out to be defendant McDowell. Sgt. McDougal called to McDowell to remain still, and approached to within twenty or twenty-five feet of the man. Sgt. McDougal then ordered McDowell to stand. By this time Officer Pyle had joined Sgt. McDougal. Both officers were armed with loaded shotguns and sidearms. Sgt. McDougal observed that McDowell was about five feet ten or eleven inches tall and weighed between one hundred sixty-five and one hundred eighty pounds. He was attired in a light blue coat and pants. He was wearing black laced-up ski boots with red laces and white stitching up the sides. By this time Sgt. McDougal decided to arrest McDowell. Before doing so, however, he asked McDowell for his name and received a correct reply. He also asked McDowell how long he had been there and what he was doing. McDowell replied that he had been there three or four hours and was spending the night there. Sgt. Mc-Dougal then asked McDowell to step away from his back-pack and to place his hands in the air. McDowell stepped away about five or six feet and raised his hands. He was then frisked and handcuffed. No weapons were found on McDowell’s person. The officers had no arrest or search warrant. Sgt. McDougal then patted the backpack and felt a solid object in one of the outside pouches which was closed by a zipper. The officer unzipped the pouch and found the butt-plate for an automatic weapon. The two officers then took McDowell through the snow to a patrol car. Sgt. McDougal testified that he was not afraid that McDowell might obtain possession of the back-pack and get a gun from it while the three were standing near the tree. Nor was the officer worried that the contents of the back-pack might be destroyed. Sgt. Mc-Dougal did testify, however, that he was concerned about his own self-protection, presumably while getting McDowell to the patrol car. In determining whether the part of a weapon, seized in the manner described above, was admissible in this federal prosecution it is immaterial that .the search and seizure were made by state rather than federal officers. See Elkins v. United States, 364 U.S. 206, 223, 224, 80 S.Ct. 1437, 4 L.Ed.2d 1669 (1960). Whether a warrantless arrest, made by a state or federal officer, is constitutionally valid depends upon whether, at the moment of arrest, the officers had probable cause to make it. Arresting officers have probable cause if, at the moment of arrest, “the facts and circumstances within their knowledge and of which they had reasonably trustworthy information were sufficient to warrant a prudent man in believing that the . . . [arrested person] . had committed or was committing an offense.” Beck v. Ohio, 379 U.S. 89, 91, 85 S.Ct. 223, 225, 13 L.Ed.2d 142 (1964). In applying that test, the facts as they appeared to the arresting officer must be judged against an objective standard, the subjective good faith of the officer is not dispositive. Beck, supra, at 95, 85 S.Ct. 223; United States v. Tramontana, 460 F.2d 464, 467 (2d Cir. 1972). Applying the stated standards to the facts of this case, we are convinced that Sgt. McDougal had probable cause to arrest McDowell before he patted or searched the back-pack. He had information from a reliable source (official radio reports from law enforcement officers), that two armed men had engaged in the robbery, they were attired in ski clothing and boots, and were of described heights and weights. Within perhaps two hours of the robbery, McDougal discovered a man of about the indicated height and weight lying in the snow in an area not far from the robbery. While his clothing did not correspond, in all particulars, with the description given over the radio, there was a general similarity as to clothing and a close similarity as to footgear. Probable cause can exist even though the broadcast description of the suspect does not exactly match the defendant’s appearance. United States v. Moore, 148 U.S.App.D.C. 336, 459 F.2d 1360, 1361 (1972). See also, United States v. Maynard, 439 F.2d 1086 (9th Cir. 1971). Before making the arrest, McDougal questioned McDowell as to his reason for lying in the snow on that very cold night, and received the incredible answer that he intended to stay there all night. All of this objective information, considered in totality was, in our opinion, trustworthy and sufficient to warrant Sgt. McDougal, as a prudent man, in believing that McDowell had committed the robbery earlier that night. See United States v. Mitchell, 457 F.2d 513, 514 (6th Cir. 1972). It was therefore permissible for Sgt. McDougal to arrest McDowell and to make a search and seizure incident to that arrest, providing the search was not unreasonable in scope. As we stated above, Sgt. McDougal made this search and seizure for the specific purpose of safeguarding his personal security. While he testified that he had no fear that McDowell could seize a weapon from the back-pack while they were standing by the tree, he made it clear that he was concerned about his own self-protection. He knew he would have to take McDowell through deep snow, during the night time, to the patrol car and that it would be necessary to take the back-pack along rather than leaving it unattended in the snow. Mc-Dougal also had reason to believe that McDowell had an armed confederate in the area who might make an attempt to free McDowell. Under these circumstances, and despite the fact that McDowell was handcuffed and Officer Pyle was present to assist, we think it not unreasonable for Sgt. McDougal, as a further precaution, to remove any weapon that might have been in the back-pack. It is not an abandonment of the objective-standard test of Beck v. Ohio, 379 U.S. 89, 95, 85 S.Ct. 223, 13 L.Ed.2d 142 (1964), to recognize that an officer or officers who- encounter one whom they reasonably believe to be a desperate criminal, in the dead of night, in bleak mountain country deep with snow, knowing that an armed accomplice might be nearby, and knowing that there must be a hazardous trek to the patrol car, might reasonably take precautions which may seem unnecessary when later calmly reviewed in the serene and protected atmosphere of a court room. The exigency of the moment, as it may reasonably appear to a law enforcement officer at the time, is a factor which must not be overlooked in deciding, long afterwards, whether a search and seizure was reasonable. On the dark and wintry night of February 8, 1971, Sgt. McDougal had no opportunity to pore over law books or consult the county attorney on the niceties of the law of search and seizure. He could not tell McDowell to “resume your position stretched out on the snow while I think for a while about my authority, to search your back-pack.” It was a time for immediate and decisive action and Sgt. Mc-Dougal took it. Placing ourselves, as best we can, in the circumstances which faced Sgt. Mc-Dougal on the night in question, we think his search of the back-pack was prudent and reasonable, and entirely consistent with McDowell’s rights under the Fourth Amendment. Affirmed. . Defendant relies on United States v. Colbert, 454 F.2d 801 (5th Cir. 1972). Colbert is distinguishable from the present ease. The search of the brief cases in Colbert was made while the defendants were sitting in a police car. None of the circumstances threatening the officer’s safety present in this ease were present in Colbert.

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James D. HODGSON, Secretary of Labor, U. S. Department of Labor, Plaintiff-Appellee, v. The BEHRENS DRUG COMPANY, Defendant-Appellant. No. 72-1680. United States Court of Appeals, Fifth Circuit. Feb. 12, 1973. As Amended March 7, 1973. Tracy Crawford, Tyler, Tex., Wilford W. Ñaman, Waco, Tex., for defendant-appellant. Richard F. Schubert, Sol. of Labor, U. S. Dept, of Labor, Washington, D. C., M. J. Parmenter, Regional Sol., U. S. Dept, of Labor, Truett E. Bean, U. S. Dept, of Labor, Dallas, Tex., Carin Ann Clauss, Donald S. Shire, Anastasia T. Dunau, U. S. Dept, of Labor, Washington, D. C., for plaintiff-appellee. Before RIVES, THORNBERRY and GOLDBERG, Circuit Judges. RIVES, Circuit Judge: In this case brought by the Secretary of Labor under the Fair Labor Standards Act, the district court found that Behrens Drug Company (hereinafter Behrens) discriminated against certain female employees by compensating them at a lower rate than their male counterparts. Behrens appeals, arguing that each contested male-female wage differential rests on legitimate grounds — that the males involved are either participating in a bona fide training program or performing unequal work. The Equal Pay Act of 1963, 29 U.S.C. § 206(d)(1), an amendment to the Fair Labor Standards Act of 1938, prohibits sex-based wage discrimination between employees performing equal work under similar conditions. The Secretary of Labor, commissioned champion of the female worker by the Act, brought this action on behalf of several female employees in Behrens’ Tyler, Texas, warehouse. The district court, after finding that Behrens breached the Equal Pay Act, entered judgment enjoining Behrens from further violations of the Act’s equal pay requirements and restraining the continued withholding of $17,423.99 in back wages found due as a result of Behrens’ violations. The district court ruled that Behrens paid four separate categories of female workers a diseriminatorily low wage. Behrens appeals the ruling as to each category. I. ORDER CLERKS For many years Behrens has employed females in its Tyler division warehouse as “order clerks.” The principal responsibilities of an “order clerk” include: arranging merchandise on the warehouse shelves, filling customer orders by gathering the requested stock and sending it along to the “checker,” and restocking the shelves. [App. 211.] Behrens admitted and the district court found that certain male employees, designated “sales trainees,” performed work substantially equal to that of the female “order clerks” during the period in question. [App. 211.] Behrens acknowledged that the male “sales trainees” were paid a higher wage than “order clerks” for doing the same work, but sought to justify this wage discrepancy as based on a bona fide training program, purportedly constituting a legitimate distinguishing factor other than sex. 29 U.S.C. § 206(d)(1) recognizes four exceptions to the general prohibition of disparate wage payments between workers of the opposite sex. The first three exceptions to the Equal Pay Act are specific (a seniority system, a merit system, and a system which measures earnings by quantity or quality of production), but the last is stated in general terms— “any other factor other than sex,” 29 U.S.C. § 206(d) (l)(iv). 29 C.F.R. § 800.148, the Secretary’s Interpretative Bulletin, expressly designates bona fide training programs as one factor other than sex which may validly produce a male-female wage gap. Behrens contends that its male “sales trainees” are all participants in a bona fide training program, providing a legitimate basis for their higher wage rate than that of female “order clerks.” In order to verify the structure of its training program, Behrens offered the testimony of its president, treasurer, Tyler division manager, and four salesmen. Behrens’ president, W. Lacy Clifton, admitted that his company’s sales training program has never included a woman. [App. 553.] He sought to explain the program’s male dominance by reference to its origin: “I would say that when this program was started [1946] that females were never considered as suitable for traveling. . . .You think about putting a female out on a job where she might have a flat tire at night.” [App. 546.] In recent years, Clifton claimed, inclusion of females in the sales training program has been considered, and one woman, Annette Neeley, was offered a sales job on a temporary basis. Miss Neeley turned the job down for reasons which are contested. However, Clifton admitted that present company policy calls for active solicitation of young men as sales trainees, but not women, and Miss Neeley, while she was offered a sales job, was not offered a position as a sales trainee. [App. 554.] The district court found and both parties, with minor exceptions, agree that the Behrens’ sales training program has the following characteristics: 1) No written or formal plan of training; 2) a regular system of rotation through each of the different warehouse jobs with progression to the next position based on satisfactory familiarity with the position before it; 3) no specific identifiable point of termination; 4) sales trainees are informed upon hiring that they are entering a training program; 5) some formal sales training, including meetings, study of sales literature and travel with current salesmen, is provided upon reaching the final job in rotation — the city order desk. [Although the district court made no express finding on this point, testimony to that effect appears at App. pp. 580-582.] In addition, uncontradicted testimony established that a male trainee carries out productive work and rotates through the training program without regard to personnel 'needs, except that the final advance to the position of salesman is contingent upon an opening in that slot. [App. 561, 562.] In the seminal case interpreting the bona fide training program exception to the Equal Pay Act, Shultz v. First Victoria National Bank, 5 Cir. 1969, 420 F.2d 648, this Court ruled that two separate male-dominated “executive training programs” for bank tellers did not constitute a factor other than sex which would permit payment of lower wages to female tellers not included in the training programs. Those particular programs were found to be merely “post-event justifications for disparate pay to men and women from the commencement of employment up through advancement.” Shultz, supra, at 655. The elements of the two bank training programs in Shultz, which that court listed as conclusive of their fatal imprecision, were: 1) Employees were not hired with the knowledge that they were trainees. 2) The plans were not in writing. 3) The “rotation” of trainees through the various bank positions did not follow any definite sequence, but depended on personnel needs. 4) No formal instruction was offered at either bank. 5) Neither program had ever included a woman. 6) Advancement to the next position was unpredictable and sporadic. Faced with these amorphous bank training plans and strongly influenced by the fact that both programs excluded females, the Shultz court reasoned that judicial recognition of such prografns would allow “the exception will swallow the rule” and effectively undermine the congressional purpose for passing the Equal Pay Act. A cursory comparison of the training programs belatedly offered as justification for the unequal pay in Shultz with the program at issue here reveals that the latter is far more concrete than were the former. The Behrens training plan is not a post-event justification. Behrens’ sales trainees enter employment with explicit knowledge of their training status. They rotate through the initial warehouse positions without regard to personnel needs, and they receive some formal sales training while serving as city order clerks. Yet, because of the crucial weaknesses in the Behrens training program, which will be treated subsequently, coupled with the genuine concern for women’s rights which prompted the Act, we feel that the principles enunciated in Shultz are applicable here. The Behrens sales training program suffers from two principal weaknesses. First, the Behrens trainee’s ultimate advancement to the position of salesman depends on, not only satisfactory completion of the training program, but also the fortuitous event of a sales opening. In other words, the termination point of the program is not determinable prior to its actual occurrence, and that termination point is subject to the vagaries of the business climate and the company’s personnel needs. Second, the Behrens program is male dominated. No woman has ever participated in the program. While it is true that the issue of whether trainee positions should be open to women is a question to be ultimately resolved only in an action under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e (1970), in the manner pursued in Diaz v. Pan American World Airways, Inc., 5 Cir. 1972, 442 F.2d 385; see Hodgson v. Golden Isles Convalescent Homes, 5 Cir. 1972, 468 F.2d 1256, it is also true that “training programs which appear to be available only to employees of one sex will * * * be carefully examined to determine whether such programs are, in fact, bona fide.” 29 C.F.R. § 800.148. Male-dominated training programs subject to the close scrutiny required by § 800.148 have failed to pass appellate tests with increasing frequency. See Hodgson v. Security National Bank of Sioux City, 8 Cir. 1972, 460 F.2d 57, reversing a district court decision ruling that a male-dominated bank management training program was bona fide. See also Hodgson v. Fairmont Supply Co., 4 Cir. 1972, 454 F.2d 490, where the Fourth Circuit (reversing the district court) found a violation of the Equal Pay Act, and declined to recognize a sex-oriented sales training program. The spirit behind the Equal Pay Act was eloquently depicted in Shultz v. Wheaton Glass Co., 3 Cir. 1970, 421 F.2d 259, 265: “The Act was intended as a broad charter of women’s rights in the economic field. It sought to overcome the age-old belief in women's inferiority and to eliminate the depressing effects on living standards of reduced wages for female workers and the economic and social consequences which flow from it.” In light of this enunciation of the clear purpose of the Equal Pay Act, a training program coterminus with a stereotyped province called “man’s work” cannot qualify as a factor other than sex. Hodgson v. Fairmont Supply Co., supra, 454 F.2d at 498. In the instant case, Behrens’ president, Clifton, testified that women are not solicited as sales trainees because “females were never considered as suitable for traveling.” This is a clear example of the attitude of male suitability designed to be nullified by the Equal Pay Act. Behrens’ sales training procedure is not illusory, nor does it constitute a mere post-event justification for disparate wage payments. Nevertheless, the program has never included a female, and its completion — advancement to a sales job — is entirely dependent on personnel needs. These two program characteristics compel the conclusion that Behrens’ training procedure is not a factor other than sex which should excuse denial of equal pay to female workers and remove them from the aegis of the Equal Pay Act. “An exemption from the coverage of the Act ‘must be narrowly construed.’ Phillips, Inc. v. Walling, 324 U.S. 490, 493, 65 S.Ct. 807, 808, 89 L.Ed. 1095 (1945) and Mitchell v. Stinson, 1 Cir., 1954, 217 F.2d 210, 214. The exemptions must be applied only to those ‘plainly and unmistakably within its terms and spirit.’ Philips, Inc. v. Walling, supra, 324 U.S. at 493, 65 S.Ct. 807. See also Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 456, 4 L.Ed.2d 393 (1960).” Hodgson v. Colonnades, Inc., 5 Cir. 1973, 472 F.2d 42. Until they reach the position of city desk clerk, Behrens’ sales trainees participate in no training activities independent of their regular, productive jobs. This fact reinforces the conclusion that male trainees through most of the training period engage in exactly the same activities as female nontrainees and do not warrant statutory exemption from the Equal Pay Act. Behrens advances two subsidiary arguments in support of its training program. First, it contends that the term “bona fide training program” contained in 29 C.F.R. § 800.148 means simply “in good faith without fraud.” Although the traditional, common law definition of “bona fide” may be as liberal as Behrens’ claims, see Ware v. Hylton, 3 U.S. (3 Dall.) 199, 1 L.Ed. 568, the term as used in the regulation at issue here must be construed in light of the statute which that regulation implements. The Equal Pay Act clearly mandates the demise of sex-based wage differences except in special, narrow circumstances A bona fide training program to constitute a valid exception to the Equal Pay Act must represent more than an honest effort; such a program must have substance and significance independent of the trainee’s regular job. Behrens also argues that to rule its “training program” invalid would discriminate against small companies, like itself, who cannot maintain-expensive, formal training courses. Certainly, a small corporation with limited resources need not implement as elaborate a training program as those of the corporate giants. But the fact that a corporation is small does not relieve that corporation of its duty to establish a “bona fide training program,” if it wishes to escape -the mandate of the Equal Pay Act. In addition, all “training programs” which exclude females, whether originated by large companies or small, carry a stigma of suspect validity. II. CITY ORDER DESK EMPLOYEES Employees assigned to work at the city order desk in Behrens’ Tyler warehouse take orders by telephone from local customers and fill out the necessary order blanks. The district court found that during the period in question three females and four males worked as city order desk employees in the Tyler division. Those employees were found to have engaged in equal work, but female employees were paid at substantially lower rates. [App. 214.] Behrens concedes that male and female city desk clerks perform equal work for which the females receive lower pay, but contends that its “sales training program” removes that difference from the interdiction of the Equal Pay Act. For the reasons already stated, we disagree. III. DATA PROCESSING DEPARTMENT SUPERVISORS A. Equal Work From January 1, 1964 until June 1, 1966, Behrens employed David K. Blavier, a male, as supervisor of its data processing department in the Tyler division. On termination of Blavier’s employment in June 1966, Delores Wooley, a female, took charge of the data processing department. The district court found that David Blavier was paid a salary of $435.00 per month, the equivalent of $2.06 per hour, at the time of his resignation. [App. p. 217.] Delores Wooley, on the other hand, was started in the supervisor job at $1.55 an hour, and her employment has continued at rates substantially less than those paid Mr. Blavier at the time’ of his resignation. Behrens argued at trial that the disparate wage payment between Blavier and Wooley was justified by extra work which Blavier performed while employed as supervisor. The district court rejected Behrens’ argument and ruled that, “These male and female employees [Blavier and Wooley] during their respective periods of employment were employed to perform equal work on jobs, the performance of which required equal skill, effort and responsibility, and they worked under similar working conditions although their employment was not concurrent. 29 U.S.C. § 206(d). Shultz v. First National Bank of Orange, 61 L.C. 32,269; Wirtz v. Koller Craft Plastic Products, Inc., 58 L.C. 32,076 [296 F.Supp. 1195], Department of Labor Regulation, Code of Federal Regulations, Title 29, Part 800, Section 800.114(b) & (e).” [App. 223.] Although the Secretary has the burden of proving that the work is equal, Congress in prescribing “equal” work intended to codify a remedial measure which requires not that jobs be identical, but only that they must be substantially equal. Shultz v. Wheaton Glass Co., supra, 421 F.2d 259, 265, cert. denied 398 U.S. 905, 90 S.Ct. 1696, 26 L.Ed.2d 64; Hodgson v. Brookhaven General Hospital, 5 Cir. 1970, 436 F.2d 719, 725. And the Equal Pay Act applies to jobs held in immediate succession, as well as simultaneously. 29 U.S.C. § 206(d)(1) requires equal pay for “equal work on jobs the performance of which requires equal skill, effort and responsibility and which are performed under similar working conditions.” In Hodgson v. Brookhaven General Hospital, supra, this Court surveyed the expanding number of cases wrestling with the critical criterion of “equal effort,” and described the emerging doctrine as holding that, “jobs do not entail equal effort, even though they entail most of the same routine duties, if the more highly paid job involves additional tasks which (1) require extra effort, (2) consume a significant amount of the time of all those whose pay differentials are to be justified in terms of them, and (3) are of an economic value commensurate with the pay differential.” 436 F.2d at 725. Thus, employers may not be permitted to frustrate the purposes of the Act by calling for extra duty from male employees only occasionally, or by requiring male employees to perform tasks normally done by full-time personnel at a lower rate of pay. The district court found that the primary responsibilities of the data processing room supervisor included: managing the activities of department employees, adjusting malfunctioning data processing machines, and assuming responsibility for departmental errors and priorities. [App. 217.] Both Blavier and Mrs. Wooley performed these functions. Blavier testified in the district court that while serving as data processing room supervisor he performed several extra duties in addition to management of the data processing department. He worked several hours on Saturday mornings taking orders and delivering merchandise to customers. [App. 648, 669-671.] He occasionally took telephone orders at the city order desk [App. 648], and he drove a delivery truck, infrequently, when specially requested [App. 664]. In addition, he participated in Sunday sales shows two or three times a year [App. 670]. Behrens contends that Blavier’s extra duties, not performed by Mrs. Wooley, entail sufficient extra effort on the part of Blavier to justify his higher wage rate. We disagree. Blavier admitted that his primary and principal responsibility was working in the data processing room. [App. 664.]. The extra duties performed by Blavier do not satisfy the three-pronged test for inequality of effort delineated in Hodgson v. Brookhaven General Hospital, supra. Some of the activities Blavier engaged in did not consume a significant amount of time, and those which did, specifically the Saturday morning duties, were ordinarily performed by full-time employees compensated at a lower rate. See Shultz v. Wheaton Glass Co., supra, 421 F.2d at 263. The district court’s interpretation of the facts, leading to its conclusion of equality of effort, strongly reinforces this holding. The extra duties performed by Blavier, not only fail to meet the Hodgson v. Brookhaven General Hospital standard, but also take on reduced significance viewed in light of the fact that the majority of those extra duties were performed on the weekend, while the crucial issue is one involving a discriminatory hourly wage rate. B. Limitations The statute of limitations applicable to actions brought under the Equal Pay Act provides that “ * * * every such action shall be forever barred unless commenced within two years after the cause of action accrued.” 29 U.S.C. § 255(a). Appellant argues that, since Mrs. Wooley began her duties as supervisor on May 6, 1966, and suit was not brought until December 17, 1970, the cause of action accrued in 1966 and the statute bars this suit. We disagree. Sex-based, discriminatory wage payments constitute a continuing violation of the Equal Pay Act. See Shandelman v. Schuman, E.D.Pa.1950, 92 F.Supp. 334, 335, and Mitchell v. Lancaster Milk Co., M.D.Pa.1960, 185 F.Supp. 66, 70, holding that illegal minimum wage and overtime payments constitute continuing violations. The court in Mitchell, quoting Shandelman, stated that, “It is well settled that ‘A separate cause of action for overtime compensation accrues at each regular payday immediately following the work period during which the services were rendered and for which the overtime compensation is claimed.’ ” To hold otherwise would permit perpetual wage discrimination by an employer whose violation of the Equal Pay Act had already lasted without attack for over two years. Appellant’s reliance on Unexcelled Chemical Corp. v. United States, 1953, 345 U.S. 59, 73 S.Ct. 580, 97 L.Ed. 821, and United States v. Lovknit Mfg. Co., 5 Cir. 1951, 189 F.2d 454, cert. denied 342 U.S. 896, 72 S.Ct. 229, 96 L.Ed. 671 (1952), is misguided. Those eases held only that a cause of action accrues, giving rise to liability for liquidated damages under the Walsh-Healey Public Contracts Act when the minor in question is employed, is not relevant here. That narrow holding Behrens’ wage discrimination is a continuing violation of the Equal Pay Act, and wages due under the Act for the two years preceding this suit are recoverable. IV. CHECKERS In ruling on the third category of workers, designated “checkers” or “double checkers,” the district court found that two female workers were employed in that capacity during the period in question — Edna Newland from January 1, 1968 to June 1, 1970, and Ruth Taylor from November 1, 1970 to December 31, 1970. The court also found that during the same period Behrens employed two males as “checkers” — Julius Horton from January 1, 1968 to June 22, 1968, and Mark Meadows from March 1, 1970 to October 3, 1970. Male and female “checkers” performed the same principal duty — they checked the merchandise to be shipped against the customer’s order to prevent shipment of unordered items. The female “checkers” were paid at rates below those paid to the male “checkers.” yet, they were found to have performed work “requiring substantially equal skill, effort and responsibility.” [App. 215.] Behrens raises several objections to the district court’s holding with respect to “checkers.” First, it challenges the ruling that Mrs. Newland, while checking in the middle aisle, performed work equal to that of Horton who checked at the end of the aisle. Behrens claims that the end of the aisle checker was responsible for checking narcotics, an obligation not imposed upon the middle of the aisle checker and purportedly requiring sufficient extra responsibility and effort to render the positions unequal under the Act. Although checking narcotics certainly entails increased responsbility, the mechanical aspects of the task merely require preparation of a few extra forms. [App. 301.] The developing law of remunerative equality has increasingly been viewed as a question of fact to be determined on a case by case basis. See Hodgson v. Golden Isles Convalescent Homes, supra, and Hodgson v. Brookhaven General Hospital, supra. Evidence clearly exists to support the district court’s finding that Mrs. Newland and Horton performed equal work. In fact, the pay schedule reveals that Mrs. Newland’s salary was not immediately increased when she became close-out checker, suggesting that the narcotics handling aspect of that job was not by itself determinative of higher pay. Second, appellant argues that no male worked as a close-out checker between February 2,1970 and June 19, 1970 when Mrs. Newland performed that task. Horton, Mrs. Newland’s predecessor at the close-out point, received $1.65 an hour, the same wage Mrs. Newland received after February 2, 1970. Thus, no equal pay violation occurred as between Horton and Mrs. Newland for that period. The district court found, however, that another male employee, Mark Meadows, performed work equal to that of a checker at a higher pay than Mrs. Newland during the February to June period. Meadows was officially designated a shelver, but job content, not job description is the critical issue. Hodgson v. Brookhaven General Hospital, supra. This contention of unequal work, like Behrens’ first argument, is basically a disagreement over the court’s factual determination. Ample facts support the district court’s finding and that finding is not clearly erroneous. Rule 52, F.R. Civ.P. Ruth Taylor was found to be due $558.94 in back wages for the period from December 21, 1968 to November 16, 1971. She worked as order filler prior to November 1, 1970, and from that date to November 16, 1971 she worked as close-out checker. The parties agree that her compensation as close-out checker was not in violation of the Act’s equal pay provisions. Accordingly, the amount of restitution awarded her by the district court should be reduced by the amount which was computed to have accrued from November 1, 1970 to November 16, 1971. (Behrens’ Brief, p. 45; the Secretary’s Brief, p. 31 n. 14.) The district court’s judgment should be modified by so reducing the judgment in favor of Ruth Taylor. In all other aspects the judgment is affirmed. Modified and affirmed. . “(d)(1) No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system ; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, ^ reduce the wage rate of any employee.” . 29 U.S.C. § 206(d) (3) provides the authority for the Secretary to act on behalf of the woi'kers by stating that, “For purposes of administration and enforcement, any amounts owing to any employee which have been withheld in violation of this subsection shall be deemed to be unpaid minimum wages or unpaid overtime compensation under this chapter.” And 29 U.S.C. § 216(c) empowers the Secretary to bring civil action on behalf of employees to recover such “minimum wages or unpaid overtime compensation.” . “§ 800.148 Examples — training programs. “Employees employed under a bona fide training program may, in the furtherance of their training, be assigned from time to time to various types of work in the establishment. At such times, the employee in training status may be performing equal work with non-trainees of the opposite sex whose wages or wage rates may be unequal to those of the trainee. Under these circumstances, provided the rate paid to the employee in training status is paid, regardless of sex, under the training program, the differential can be shown to be attributable to a factor other than sex and no violation of the equal pay standard will result. Training programs which appear to be available only to employees of one sex will, however, be carefully examined to determine whether such programs are, in fact, bona fide. In an establishment where a differential is paid to employees of one sex because, traditionally, only they have been considered eligible for promotion to executive positions, such a practice, in the absence of a bona fide training program, would be a discrimination based on sex and result in a violation of the equal pay provisions, if the equal pay standard otherwise applies.” . App. p. 438. The Secretary contends that Miss Neeley refused the job because she was not offered an increase in pay or the incentive of the normal commission arrangement, while Behrens argues that pay was never discussed. . Behrens concedes that its training program lasts for an indefinite period of time, but argues that it ends at an identifiable point — when familiarity with all the warehouse jobs is satisfactorily accomplished and a sales position opens. This circuitous reasoning fails to focus upon an identifiable termination point. Theoretically, a job slot cannot be filled until the training program is successfully completed. Thus, to say that the program ends when the job slot opens implies that completion of the program is not a prerequisite to beginning a sales job. If that is true, then the program’s validity is cast in a questionable light. . “Sec. 2. (a) The Congress hereby finds that the existence in industries engaged in commerce or in the production of goods for commerce of wage differentials based on sex — (1) depresses wages and living standards for employees necessary for their health and efficiency; (2) prevents the maximum utilization of the available labor resources ; (3) tends to cause labor disputes, thereby burdening, affecting, and obstructing commerce; (4) burdens commerce and the free flow of goods in commerce; and (5) constitutes an unfair method of competition. “(b) It is hereby declared to be the policy of this Act, through exercise by Congress of its power to regulate commerce among the several States and with foreign nations, to correct the conditions above referred to in such industries.” Public Law 88-38 (1963), 77 Stat. 56. . “Representative Donahue speaking in behalf of this legislation characterized the need for the Equal Pay Act to eliminate these assumptions: “ ‘We all realize that the origin of the wage rate differential for men and women performing comparable jobs is the false concept that a woman, because of her very nature, somehow or other should not be given as much money as a man for similar work. This antiquated concept has been long and completely demonstrated to be false and it is indefensible from every standpoint. This being so, we may wonder why this legislation is necessary. “ ‘The answer is furnished to us in the authoritative information provided by witnesses before the House Committee on Education and Labor and the impressive array of statistics unhappily proving that discrimination in wage payments, on the basis of sex alone, continues to exist even in this modem space age. “ ‘Recognizing that the concept of wage payment discrimination against women is false; having before us the surprising but overwhelming evidence that such discrimination still continues to exist; * * * this measure represents the correction of basic injustice being visited upon women in many fields of endeavor * * * extending simple wage justice to the increasing corps of America’s working women.’ 109 Cong.Rec. 9212.” Shultz, supra, 420 F.2d at 656 n. 17. . We note in passing that Behrens’ annual sales volume has regularly exceeded $1,-000,000. Thus, Behrens is only small in relation to the corporate giants. . The district court found as a matter of fact that female order fillers were paid substantially less than male “trainees” performing the same work. [App. 211.] Behrens contests the validity of that factual finding, but after careful study of the record, we do not find the district court clearly erroneous. . App. pp. 212, 213. Females: Annette Neeley — Jan. 1, 1968 to Dec. 31, 1970 Treva Coomer — Oct. 1, 1968 to Dec. 31, 1970 Patricia Kolb — Nov. 30, 1970 to Dec. 31, 1970 Males: Jack Carney — Jan. 1, 1968 to Mar. 2, 1968 Martin Connor — Jan. 1, 1968 to Mar. 2, 1968 Tommy Ball — Feb. 28, 1970 to July 4, 1970 Thomas Bailey — Dec. 7, 1970 to June 1, 1971 . 29 C.E.R. § 800.114(b): “(b) Section 6(d)(1) prohibits discrimination on the basis of sex in the payment of wages to employees ‘for equal work on jobs’ which are equal under the standards which it provides (emphasis supplied). (See the discussion in § 800.119, et seq.) The legislative history of the Equal Pay Act expressly refers to the War Labor Board experience as furnishing a guide for testing ‘the relationship between jobs’ and determining ‘equal work’ and ‘equal skills’ for purposes of a ‘practical’ administration and application of the Act’s ‘equal pay policy’ (see, e. g., S. Rept. 176, 88th Gong. 1st sess., to accompany S. 1409; H.Rept. 309, 88th Gong. 1st sess., to accompany H.R. 6060). Some of the earliest eases confronting the War Labor Board on the application of the ‘equal pay for equal work’ principle involved situations in which women were being hired to replace men as a result of the manpower shortages. The Board consistently ruled that the principle applied to these situations, as well as to situations where male and female employees performed the same work concurrently and interchangeably, and therefore that women assigned ‘to take the place of men’ to perform substantially the same jobs ‘formerly performed by men’ were entitled to the same rate of pay as the men whom they replaced. Rotary Cut Box Shook Industry, 12 W.L.B. Rept. 605, 606, 608; General Electric Co., and Westinghouse Electric Co., supra [Case Nos. 111-17208-D and 111-17209-D, Dec. 12, 1945], at pp. 668-669, 677, 686.” . At one point Behrens advanced, but did not fully develop, the theory that Blavier was a “supervisor” while Mrs. Wooley was merely a “chief operator.” See App., p. 731 and appellant’s brief, p. 38. But the controlling factor under the Equal Pay Act is not job description, but job content. Hodgson v. Brookhaven General Hospital, supra, 436 F.2d at 724; 29 C.F.R. § 800.121 (1970). . Plaintiff’s Exhibit No. 6—Schedule P-10, App. pp. 170-171, documents this wage discrepancy.

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2024-08-24T03:29:51.129683

UNITED STATES of America, Appellee, v. Alphonso MOSCA, Sr., et al., Appellants. Nos. 354, 355, Dockets 72-1750, 72-1764. United States Court of Appeals, Second Circuit. Argued Nov. 10, 1972. Decided March 5, 1973. Certiorari Denied June 18, 1973. See 93 S.Ct. 3003, 3019. H. Elliot Wales, New York City (Gretchen White Oberman, New York City, on the brief), for appellants Alphonso Mosca, Sr., and Alphonso Mosca, Jr. Henry Mark Holzer, Brooklyn, N. Y., for appellant Wolfson. Allen Lashley, Brooklyn, N. Y., for appellant Zavod. Marshall G. Kaplan, Brooklyn, N. Y., for appellant Emmons. Sidney M. Glazer, Atty., Dept, of Justice, Washington, D. C. (Robert A. Morse, U. S. Atty., Brooklyn, N. Y., Denis E. Dillon, Liam S. Coonan and Shirley Baccus-Lobel, Attys., Dept, of Justice, Washington, D. C., on the brief), for appellee. Before FRIENDLY, Chief Judge, and MANSFIELD and TIMBERS, Circuit Judges. TIMBERS, Circuit Judge; Appellants Alphonso Mosca, Sr., Alphonso Mosca, Jr., Nathan Wolfson, Joseph Zavod and William Emmons appeal from judgments of conviction entered upon jury verdicts returned November 16, 1971 after an eleven day trial before John F. Dooling, District Judge, in the Eastern District of New York, finding each appellant guilty on one count of wire fraud, in violation of 18 U.S.C. § 1343 (1970), and on one count of conspiring to commit mail and wire fraud and of conspiring to harbor a fugitive, in violation of 18 U.S.C. § 371 (1970). The chief issue raised on appeal by all appellants is whether the trial judge erred in denying their motions to set aside the verdicts and for new trials on the ground that the government failed upon request to make available to appellants a potential witness whose whereabouts was known to the government but not to appellants. Other subordinate claims of error are raised by several of the appellants. We affirm. I. In view of the issues raised on appeal, a summary description of the fraudulent scheme and conduct for which appellants were convicted will suffice. Essentially the evidence established that defendants organized and used a straw corporation with a grossly misleading statement of assets (this corporation being funded by worthless debentures of another straw corporation) to purchase construction loan mortgages by the issuance of commitment letters. Such commitment letters were in the nature of guaranties; they commanded sizeable fees; but they were in fact worthless because of the absence of any assets in the issuing corporation. Judge Dooling succinctly described the fraud charged as follows: “Broadly, the charge of the indictment was that the defendants had formed a scheme to defraud those seeking and those granting mortgage loans by forming a straw company having no real assets which would for a fee issue commitment or ‘take-out’ letters by which it bound itself to purchase construction loan mortgages made by lending institutions. Such commitment letters were meant to enable prospective borrowers to obtain mortgage financing for construction projects which the lending institutions would not otherwise finance because of their unwillingness to make long term real estate mortgage loans. The fraud consisted in defrauding prospective borrowers of the fees they paid for the worthless commitment letters and defrauding the lending institutions by inducing them to lend in reliance on the worthless commitment letters.” There was a great deal of evidence adduced at the two week trial in support of the foregoing charges. The evidence of course must be viewed in the light most favorable to the government at this stage of the case. United States v. D’Avanzo, 443 F.2d 1224, 1225 (2 Cir.), cert. denied, 404 U.S. 850 (1971). With the exception of appellant Wolfson, none of the appellants challenges the sufficiency of the evidence. II. What each of the appellants does challenge, however, is the trial judge’s denial of their motions to set aside the verdicts and for new trials. Such motions were based on the claim that the government had sequestered a potential witness whose whereabouts was known to the government but not to appellants. A statement of the facts and proceedings in the trial court involving this claim is necessary to an understanding of our ruling thereon. The witness in question was Mrs. Edward Wuensche. She was the wife of Edward Wuensche, a named co-eonspirator but not a defendant. He was the government’s principal witness at the trial. It was he whom defendants were charged with having harbored as a fugitive. They allegedly furnished him with false identification papers so that, under a fictitious name, he could act as an officer of the straw corporation formed to issue commitment letters. The question of the whereabouts of Mrs. Wuensche was first raised during cross-examination of Edward Wuensche by counsel for defendant Emmons. He demanded that the government either produce Mrs. Wuensche or disclose her whereabouts so she could be subpoenaed. Government counsel informed the court that she was a British national, that she was not within the continental United States and that she was beyond the process of the court. While there was much backing and filling during the balance of the trial on the demand for production of Mrs. Wuensche and numerous proposals were made to provide her testimony or its equivalent in some form, the primary purpose of defense counsel at the time of trial was to lay a basis for requesting the court to charge that the jury might infer from the withholding of a witness within a party’s control that the testimony of such witness would be unfavorable to the party failing to call the witness. As counsel for defendant Emmons candidly stated, “Judge, all I want is this Charge.” The court eventually charged the jury on this issue substantially as requested by defense counsel. Going back for a moment to the point in the trial when the evidence had been concluded, on Thursday, November 11, 1971, the court excused the jury until the following Monday, November 15, but recessed the trial to the following day, November 12, at which time counsel and defendants were present. After an extended colloquy on November 12 between counsel and the court on the unavailability of Mrs. Wuensche as a witness, there finally emerged from counsel for defendant Emmons an unequivocal application for issuance of a subpoena to compel her attendance as a witness. The court immediately granted the application. It ordered that a subpoena made returnable the following Monday, November 15, be served on Mrs. Wuensche, and that she be tendered sufficient government funds to provide for her transportation to the courthouse. On the next court day, November 15, government counsel informed the court that over the weekend efforts had been made by a United States Marshal to serve the subpoena on Mrs. Wuensche and that she had been tendered transportation expenses. She refused to accept service of the subpoena and refused to come to the trial. Government counsel further reported that his efforts to speak with Mrs. Wuensche by telephone had been met with a refusal on her part to come to the phone. And finally government counsel reported that his efforts to have Mr. Wuensche persuade Mrs. Wuensche to appear at the trial likewise had failed to produce the witness. Despite such efforts, defense counsel continued to press for an explanation as to why the witness was beyond the subpoena reach of the court. Government counsel stated that the present location of Mrs. Wuensche reflected a decision of the McClellan Subcommittee of the Senate Judiciary Committee, before which Mr. Wuensche had appeared as a witness at an earlier date. When defense counsel pointed out that there was no evidence of that in the record, Judge Dooling stated that “if the defendants wanted a full dress investigation [the Court] would request the Government to delay the trial and afford defendants an opportunity to take Mrs. Wuensche’s deposition at some place other than her then place of refuge on the issue of her willingness to appear as a witness, the reason why she was where she was and what her apprehensions were.” Counsel for defendant Emmons immediately responded, “Well, I am ready to sum up, Judge.” He indicated that in summation he intended simply to tell the jury that “Mrs. Wuensche had not appeared to support her husband’s testimony.” He did. Following summations by all counsel, Judge Dooling charged the jury, including the instruction requested by the defense on the government’s failure to call Mrs. Wuensche as a witness. This concluded the November 15 trial proceedings. On the following day, November 16, the jury returned its verdict convicting appellants on Counts One and Two and acquitting them on Count Three. After the jury had been discharged, Judge Dooling invited counsel to file any appropriate motion to determine (a) the facts with respect to Mrs. Wuensche’s availability as a witness; (b) the explanation of her unavailability if it existed; (c) whether she was testimonially qualified as a witness in the case; and (d) if so, what the contents of her testimony would have been. Upon the filing of such a motion by appellants Emmons, Wolf son and Zavod, Judge Dooling entered an order on February 7, 1972 authorizing counsel for Emmons (representing Wolf son and Zavod as well) to attend the taking of Mrs. Wuensche’s deposition in London, England, and to be reimbursed by the government for his expenses in doing so. Pursuant to a commission issued to counsel for Emmons, the deposition of Mrs. Wuensche was taken at the American Embassy in London on March 9 before an American Vice-Consul. The witness was examined on direct by counsel for Emmons, on cross by government counsel. The deposition, after being transcribed, was signed and sworn to by Mrs. Wuensche on March 16. It was filed in the district court on April 6. The complete deposition, consisting of 139 pages, is included in the Supplemental Appendix For Appellee on the instant appeal. III. The deposition of Mrs. Wuensche, to the extent it is relevant to the essential issue raised on this appeal, may be briefly summarized. Mrs. Wuensche was in England with her seventeen year old daughter at the time she was subpoenaed to testify at the trial of the instant case in November 1971. She had been born in England and had never become a United States citizen by naturalization or otherwise. While in the United States, both she and her daughter travelled on British passports. Mrs. Wuensche had left the United States about October 1, 1971 (one month before the trial below began), aceompanied by her daughter and husband. They departed the United States from Washington, D. C., where they had been while Mr. Wuensche was testifying before the McClellan subcommittee. During this period they were in the protective custody of United States marshals who told them to remain in their rooms and not to talk to anyone. Upon the completion of Mr. Wuensche’s testimony before the subcommittee, they were told (presumably by the subcommittee staff) that they could leave the United States. Mr. Wuensche bought their airplane tickets at the Washington airport in the presence of Mrs. Wuensche and the marshals. The marshals drove Mr. and Mrs. Wuensche and the latter’s daughter to the airport in a government vehicle. The marshals assisted them in boarding the plane which took them to England. Mrs. Wuensche testified that she had left the United States at the first opportunity because of certain threats that had been made upon her life. Such threats were communicated to her by Joseph Gold (a co-conspirator and a government witness at the trial) on behalf of defendants Wolfson and Emmons. The gist of the threats was that appellants Wolfson and Emmons would “work over” Mrs. Wuensche if she would not give them the name of a certain individual in Tennessee. She continually asserted that she did not know any such person; but she became frightened because in the past she had heard the alleged co-conspirators speak of others they had “worked over”, including one man who was said to have been shot five times and who ended up with a hatchet through his head. She testified that as a result of these threats she refused to return to the United States, even when she was served in November 1971 with a subpoena to appear at the trial of this case (in which her husband had already testified). With respect to the business transactions that led to the instant indictment, Mrs. Wuensche admitted having been at the scene of many meetings concerning the company in question, but denied having any substantive knowledge or understanding of its structure or workings. She testified to the presence at some or all of these meetings of each of the alleged co-conspirators. The dates, places, and participants which she mentioned in connection with these meetings generally conformed to the trial testimony given earlier by her husband. She further testified that appellants unquestionably were aware of the fact that Mr. Wuensche had been sought by the FBI for alleged parole violations, and implied that the various changes in name and situs resorted to by the Wuensches during this period were within the knowledge, and perhaps at the direction, of the alleged co-conspirators. Regarding the government’s involvement in her departure from the United States, Mrs. Wuensche consistently maintained that the decision to depart was her own and was due to the apprehension caused by the threats she had received. She also testified that at various times prior to her departure she had been interviewed by counsel for the McClellan subcommittee, by the FBI, and by members of the staff of the United States Attorney’s office. As indicated above, her actual departure was facilitated by the United States marshals. IV. It seems clear from the foregoing summary of Mrs. Wuensche’s deposition, as well as the context in which it was taken, that appellants failed to demonstrate any prejudice resulting from their inability to call Mrs. Wuensche as a witness at trial. Her deposition indicated that, if called, she would have simply corroborated in certain respects the testimony of her husband, the government’s chief witness. None of Mr. Wuensche’s testimony was in any way contradicted by Mrs. Wuensche. Indeed, the one likely effect of in-court testimony by Mrs. Wuensche would have been to establish appellants' knowledge of Mr. Wuensche’s parole violation, thereby damaging appellants on the fugitive harboring count upon which they were acquitted. The principal question before us, therefore, is whether the government’s involvement in making Mrs. Wuensche unavailable as a trial witness requires reversal despite the absence of any showing of prejudice to appellants. We hold that it does not. Under Fed.R.Crim.P. 52(a), an error at trial shall be disregarded on appeal if it “does not affect substantial rights”; and see 28 U.S.C. § 2111 (1970). In Kotteakos v. United States, 328 U.S. 750, 764-65 (1946), the test for determining whether that standard had been met was said to be, “[i]f, when all is said and done, the conviction is sure that the error did not influence the jury, or had but very slight effect, the verdict and the judgment should stand, except perhaps where the departure is from a constitutional norm or a specific command of Congress.” That test was refined by our Court in Kyle v. United States, 297 F.2d 507 (2 Cir. 1961), where the government allegedly had suppressed or lost certain letters which the defendant claimed had come into the government’s possession prior to the trial. In ordering that a hearing be held on that claim, we first noted the defendant’s weak showing of prejudice and materiality, but concluded that that fact, in and of itself, was not necessarily dis-positive : “[T]he standard of how serious the probable effect of an act or omission at a criminal trial must be in order to obtain the reversal or, where other requirements are met, the vacating of a sentence, is in some degree a function of the gravity of the act or omission; the strictness of the application of the harmless error standard seems somewhat to vary, and its reciprocal, the required showing of prejudice, to vary inversely, with the degree to which the conduct of the trial has violated basic concepts of fair play. The reason why the showing of prejudice required to bring down the balance in favor of a new trial will vary from case to case is that the pans contain weights and counterweights other than the interest in a perfect trial. Sometimes only a small showing of prejudice, or none, is demanded because that interest is reinforced by the necessity that ‘The administration of justice must not only be above reproach, it must also be beyond the suspicion of reproach,’ People v. Savvides [1 N.Y.2d 554, 557, 154 N.Y.S.2d 885, 887, 136 N.E.2d 853, 854-55 (1956)] and by the teachings of experience that mere admonitions are insufficient to prevent repetition of abuse. See Mapp v. Ohio, 367 U.S. 643, 650-653, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961). In other cases, where the conduct of the trial has been less censurable, or not censurable at all, a greater showing of prejudice is demanded, because the interest in obtaining an ideal trial, with the trier of the facts considering all admissible evidence that has ever become available, and nothing else, is not thus supplemented and may be outweighed by the interest in avoiding a retrial unlikely to have a different outcome — an interest especially weighty when, as is normally true on collateral attack, the second trial will come long after the first.” 297 F.2d at 514. This two-dimensional approach, in which the requisite showing of prejudice will vary inversely to the gravity of the misconduct, has been repeatedly applied by our Court. E. g., United States v. Mayersohn, 452 F.2d 521, 525-26 (2 Cir. 1971); United States v. Keogh, 391 F.2d 138, 146-48 (2 Cir. 1968); cf. United States v. Mele, 462 F.2d 918, 924 (2 Cir. 1972) . As we summarized the rule in United States v. Mayersohn, supra, 452 F.2d at 526, “the more egregious the suppression, the less material to the verdict need be the evidence suppressed to justify a new trial. Where the suppression is deliberate, the interest in enforcing the second principle becomes paramount. Where the suppression is inadvertent, the principles reach equipoise and a careful analysis of the extent to which the evidence suppressed harmed the defendant is required.” (footnotes omitted). Here, there can be no doubt that the government’s conduct reflects indiscretion and a lack of candor which the district court appropriately denounced as “unfortunate in the extreme and [indicative of] a recklessness of procedure on the Government’s part which is to be emphatically deplored.” 355 F.Supp. at 273. We further agree with the district court, however, that “it cannot be said that any substantial interest of any defendant was sacrificed or prejudiced by what occurred.” 355 F.Supp. at 273. What saves this case from reversal is our agreement, based on our independent examination of the record, with the district court’s finding that “[i]f any general inference is to be drawn from the entire transcript of the testimony of Mrs. Wuensche it would be that if either side had been disposed to call her as a witness it would have been the Government and that the probability that, after interview, the defendants would have decided not to call her as a witness is all but overwhelming.” 355 F.Supp. at 273. Cf. United States v. Mendez-Rodriguez, 450 F.2d 1 (9 Cir. 1971). That fact must be considered in the context of the failure of appellants to take any steps that might have allowed them to locate, and ultimately to depose, Mrs. Wuensche prior to her departure from the country, despite the district court’s finding that “The potential usefulness of Mrs. Wuensche as a witness was necessarily obvious to each of the defendants.” 355 F.Supp. at 272. In that context, we conclude that the government cannot be said to have “deliberately” sequestered and removed a witness “whose high value to the defense could not have escaped the prosecutor’s attention”. United States v. Keogh, supra, 391 F.2d at 146-47. Thus, while it cannot be said that the departure of Mrs. Wuensche without prior notice to appellants was “inadvertent”, neither can it be said that thé government’s conduct was so egregious as to preclude the court from considering the harm that resulted therefrom. United States v. Mayersohn, supra, 452 F.2d at 526. As we have noted above, no substantial interest of any appellant was prejudiced by the absence of Mrs. Wuensche as a trial witness. Unlike other cases which have dealt with problems of this sort, see United States v. Mendez-Rodriguez, supra, 450 F.2d at 3, we are not under the disability of having to speculate as to the existence of prejudice. We have had the benefit of being able to scrutinize the deposition of Mrs. Wuensche; and we are left with the firm conviction that her testimony, had it been available at trial, would have had no effect on the outcome of the case, except possibly to strengthen the government’s evidence on the fugitive harboring count upon which appellants were acquitted. Cf. United States v. Miller, 411 F.2d 825, 832 (2 Cir. 1969). We therefore hold that, while the government’s conduct with respect to Mrs. Wuensche was deplorable, it nevertheless did not sink to such a level as to remove from the balance pans to be weighed on appeal the harm that resulted; that appellants have failed to demonstrate any prejudice resulting from their inability to call Mrs. Wuensche at trial; and, consequently, that no basis for reversal has been shown. V. Appellants’ only other claim of error which warrants brief mention is the claim of misconduct on the part of the government in permitting co-defendant Scially to participate in conferences with other defendants, including pretrial conferences, after he began to cooperate with the government. Four months after the filing of the indictment, in a development unknown to his co-defendants, Scially began cooperating with the government. Thereafter, he participated as a defendant in two pretrial conferences held in the presence of the trial judge and counsel for both sides. Appellants, in support of their claim of error in this regard, rely chiefly upon two decisions by the Court of Appeals for the District of Columbia Circuit for the proposition that a surreptitious invasion by a government agent into the legal camp of the defense may violate the protection of the Sixth Amendment, at least where the invasion is sufficiently pervasive and pernicious. Caldwell v. United States, 205 F.2d 879 (D.C.Cir.1953); Coplon v. United States, 191 F.2d 749 (D.C.Cir.1951), cert. denied, 342 U.S. 926 (1952). Cf. Hoffa v. United States, 385 U.S. 293, 306 (1966). The facts of the instant case fall far short of the mark of those cases. First, it appears that the only important contact that Scially had with the other defendants following the commencement of his cooperation with the government was at the two pre-trial conferences mentioned above, in the presence of both the trial judge and counsel for the parties. Moreover, the government categorically denies that it received any information from Scially regarding defense strategy. Cf. United States ex rel. Cooper v. Denno, 221 F.2d 626, 629 (2 Cir.), cert. denied, 349 U.S. 968 (1955). Further, there was no attempt whatever to elicit at trial any testimony from Scially as to conversations overheard by him subsequent to his decision to cooperate. Thus, while we believe that such tactics are beneath the high standards of professional conduct expected of government counsel, we do not find such tactics to be so condemnable as to warrant automatic reversal. Prejudice to appellants must be considered. Finding none, we hold that no substantial right of appellants has been infringed. VI. We have carefully considered the other claims of error raised by appellants and find them to be without merit. Finally, the most noteworthy aspect of this case, in our view, is the highly commendable manner in which Judge Dooling handled the difficult problems with which he was confronted. At every stage of the proceedings, his skill and fairness in protecting the rights of the parties comported with the highest standards of the federal judiciary. Affirmed. . The indictment, returned March 24, 1971, also charged defendants Harry Riccobene and John Scially, as well as the five appellants, with wire fraud (Count Two). The conspiracy count (Count One), in addition to charging the seven defendants referred to in Count Two, also named Edward Wuensche, Joseph Gold and Bernard Solomon as co-conspirators, but not as codefendants, in conspiring to commit mail and wire fraud and in conspiring to harbor a fugitive. On the first day of the trial, Riccobene’s case was severed; but wc have not been informed as to what became of his case thereafter. Also on the first day of the trial, Scially pleaded guilty to the conspiracy count; he testified as a government witness; and on March 3, 1972 he was sentenced to a five year term of probation on Count One, the other two counts being dismissed on motion of the government. The indictment also charged the five appellants, as well as Riccobene and Scially, in Count Three, with harboring a fugitive (Edward Wuensche), in violation of 18 U.S.C. § 1071 (1970). The jury acquitted all appellants on this count. On June 16, 1972, Judge Dooling sentenced the five appellants to concurrent terms of imprisonment on Counts One and Two as follows: Mosca, Jr., one year and a day; Emmons and Wolfson, two years under 18 U.S.C. § 4208(a) (2) (1970) ; and Zavod and Mosca, Sr., two years under 18 U.S.C. § 4208(a)(1) (1970), each to become eligible for parole after four months imprisonment. . Judge Dooling’s opinion of June 5, 1972 denying appellants’ motions to set aside the verdicts and for new trials. 355 F.Supp. 267, 268 (E.D.N.Y.1972). . We shall assume familiarity with Judge Dooling’s detailed findings of fact on this issue which are set forth in his opinion of June 5, 1972. Supra note 2, 355 F.Supp. at 268-72. . It was trial counsel for defendant Emmons who pressed the issue at trial as to the whereabouts of Mrs. Wuensche; and it was he who, together with government counsel, took her deposition in England, referred to below. Nevertheless, counsel for all appellants now avail themselves of the claim that the government improperly sequestered her. And we treat the claim as one raised by all appellants. . The court charged the jury on this issue as follows: “The unexplained failure of Government to call a witness who was indicated by the evidence to be in a position to give material and relevant testimony that would not be merely cumulative of other testimony, warrants you in inferring that the testimony of such witness, if called, would not be favorable to the Government, as a party having the burden of proof on the issues, on which that witness could testify, provided you are satisfied from the evidence that the witness is available to be called, and if called, would testify.” . None of the defendants had testified and no witnesses had been called to testify on their behalf. . Supra note 2, 355 F.Supp. at 270. . In summation, counsel for defendant Emmons stated: “And, incidentally, you may have noticed that even though Wuensche testified without contradiction a couple of times that he was living with his wife and that apparently his wife didn’t think enough of the story to come here and support it in any respect.” . Supra note 5. . Supra note 2, 355 F.Supp. at 270. . Appellants Mosca, Sr. and Mosca, Jr. specifically disassociated themselves from this motion. . As Judge Dooling did, we accept as true Mrs. Wuensche’s deposition testimony for purposes of determining the issue raised on appeal. Counsel for appellants and for the government were present and participated in the examination of the witness. . Mrs. Wuensche had been in the United States continuously since 1967 (except for brief periods in Canada). She had been living with Mr. Wuensche for most of the time since then, both before and after their marriage in September 1969, including the time period relevant in this case. Mrs. Wuensche was in protective custody in the United States from March 1971 until she left this Country in October. . No memoranda or records of such alleged interviews by the FBI and by Mr. Lynch, an Assistant United States Attorney for the Eastern District of New York, were in the government files. . Historically, both the rule and the statute have been taken to apply only to errors by the trial judge. In United States v. Ravich, 421 F.2d 1196, 1201-02 (2 Cir.), cert. denied, 400 U.S. 834 (1970), however, we found “no good reason for holding police officers to a standard of perfection while excusing error’s by judges that do not affect substantial rights.” We shall therefore assume here, as we often have done, e. g., Kyle v. United States, 297 F.2d 507, 512-14 (2 Cir. 1961), that errors by the prosecution may similarly be treated under the harmless error doctrine. We also recognize that inherent in appellants’ claim is the alleged denial of the Sixth Amendment right to compulsory process. The limited applicability of the harmless error rule to constitutional claims was first noted by the Supreme Court in Chapman v. California, 386 U.S. 18, 21-24 (1967), and has since been reinforced in such cases as Harrington v. California, 395 U.S. 250, 254 (1969), and United States v. Schor, 418 F.2d 26, 30 (2 Cir. 1969). We hold under the circumstances of this case that denial of appellants’ right to compulsory process, if error at all, was harmless beyond a reasonable doubt. Chapman v. California, supra, 386 U.S. at 42-45. . The government had complete control over Mrs. Wuensche for a six month period, until just prior to the start of the trial. It should have been obvious that her presence with her husband during the period relevant to the trial and her knowledge of the meetings relevant to the conspiracy charge made her a potential witness for both sides, and that defense counsel would want the opportunity to interview her, just as counsel for the government had already done. Despite this, the government kept her incommunicado during the pretrial period and then, one month before the trial was set to begin, allowed her to leave the Country and go beyond the power of the district court to compel her attendance. . In Mendez-Rodriguez, the throe witnesses obviously -wanted to stay in the United States but were returned to Mexico by the government. In the instant case, Mrs. Wuensche wanted very mucin to return to England. We do not regard the government’s failure to keep her here when she wanted to return to England as serious as its spiriting an unwilling witness out of tine Country. . Prior to his testimony at trial, Seially’s cooperation consisted primarily of appeariug, in July 1971, before the same grand jury that had returned the instant indictment. . Caldwell involved a paid informant who frequently attended defense meetings and reported these conversations to the government. In Coplon, the government had wiretapped the defendant’s telephone and intercepted privileged communications between her and her attorney. . This, presumably, was largely the result of a direction by the trial judge that Scially’s testimony was to be limited to events which occurred prior to the filing of the indictment,

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Julius HELLMAN, Plaintiff-Appellant, v. COLONIAL INSURANCE COMPANY, Defendant-Appellee. No. 71-1143. United States Court of Appeals, Ninth Circuit. March 19, 1973. L. R. Bretz (argued), Great Falls, Mont., for plaintiff-appellant. Clayton R. Herron (argued), Helena, Mont., Patrick F. Hooks, Townsend, Mont., for defendant-appellee. Before BARNES and DUNIWAY, Circuit Judges, and PECKHAM, District Judge. Honorable Robert F. Peckham, United States District Judge for the Northern District of California, sitting by designation. PER CURIAM: In this action, plaintiff was injured in an accident occasioned by a runaway Mack tractor and trailer operated in Montana by a driver for Produce Dispatch, Inc., a California Corporation, who had obtained the use of the truck from one Bye, a former owner of the truck, who, with the new owner’s permission, had obtained control and possession of the truck, and had rented the truck out to other persons, from time to time. The owner of the truck, one Kuffel, a resident of the state of California, had insured the truck with the defendant Colonial Insurance Company. The insurance policy herein limited the insurer’s liability to the use of the insured vehicle “within the state of California . and any other use or operation beyond the territorial limitations of this policy shall make it void.” (Ex. 1, Tr. 2). There was testimony that the truck had once been used outside the State of California (in Nevada) for five or ten miles, but the owner, Kuffel, testified he knew of this only after the fact. He had no knowledge the truck was being used in Montana, and Bye had denied it was in Montana on the day of the accident, in a conversation with Kuffel in Los, Angeles on that day. The sole issue before us is whether the decision and judgment of the District Court is to be affirmed. Such a judgment is not to be disturbed if supported by substantial evidence and is not erroneous as a matter of law. United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746 (1948); Glens Falls Ind. Co. v. United States, 229 F.2d 370, 373 (9th Cir. 1955). While there was no omnibus clause in the policy as written, the District Court held the territorial exclusion was void, calling into effect the provisions of both Sec. 415 of the California Vehicle Code (now Sec. 16451 in Financial Responsibility Section of that Code), and the vicarious liability statute (Sec. 17150 of California Vehicle Code). Nevertheless, said sections do not aid plaintiff, for each section specifies they are applicable only if the use of the vehicle is “with the permission, express or implied, of the owner.” By the court’s findings III and VIII he ruled “there had been no permission, express or implied, of the owner” to the use in Montana. These findings are not attacked, but appellant urges that the “liberal” or Arizona rule that a “general consent” is sufficient to govern the California Vehicle Code, rather than the “conservative” view, that if no consent is proved for the vehicle’s use outside the state, then no coverage exists. The latter is the California view, Henrietta v. Evans, 10 Cal.2d 526, 75 P.2d 1051 (1938); Rose v. Porter, 101 Cal. App.2d 333, 225 P.2d 245 (1950). The burden of proof to establish requisite permission is on the plaintiff, and is a question of fact. Garmon v. Sebastian, 181 Cal.App.2d 254, 5 Cal.Rptr. 101 (1960); Couch on Insurance, § 45.460, p. 447. The judgment of the district court is not erroneous as a matter of law, and we are bound by its findings of fact which have substantial support in the record before us. We need not discuss other points. Affirmed.

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MERCHANTS INDUSTRIAL BANK, a corporation organized and existing under the laws of the State of Colorado, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. No. 72-1397. United States Court of Appeals, Tenth Circuit. Argued and Submitted Jan. 10, 1973. Decided March 20, 1973. Richard R. Helmick, Denver, Colo. (Helmick, Conover & Burkhardt and H. Edward Kluver, Denver, Colo., on the brief), for petitioner-appellant. Richard Halberstein, Atty., Tax Div., Dept, of Justice (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks and Bruce I. Kogan, Attys., Tax Div., Dept, of Justice, on the brief), for respondent-appellee. Before BREITENSTEIN, McWILLIAMS, and BARRETT, Circuit Judges. BREITENSTEIN, Circuit Judge. In this appeal from the Tax Court, the petitioner-appellant Merchants Industrial Bank contends that the Commissioner of Internal Revenue improperly disallowed portions of the taxpayer’s additions to a reserve for bad debts in each of the years 1965, 1966, and 1967. The Tax Court sustained the Commissioner. T.C.Memo. 1972-18. Taxpayer is a bank which makes high-risk loans to persons whose credit does not qualify them for loans from the usual commercial banks. Because of the risk, it charges an average of 20% simple interest per annum. Loans are made for periods of six months to five years with approximately 42% of the dollar amount represented by five-year loans. About half of the loans are secured by second or third real estate mortgages and the other half either secured by chattel mortgages or unsecured. Stated in terms of percentage of loans outstanding at the end of each year, the taxpayer’s net loss was: 1965 — 1.0%; 1966 — 1.1% ; 1967 — 1.3%. In its brief taxpayer says that its claimed deductions for additions to a reserve for bad debts “totalled slightly less than the total net bad debts actually charged off” during the years in issue. The Commissioner allowed such additions in the amount of .8% of the taxpayer’s outstanding loans for each pertinent year. This resulted in deficiency assessments of $361.59 for 1965, $279.98 for 1966, and $3,968.96 for 1967. Section 166(a) of the Internal Revenue Code of 1954, 26 U.S.C. § 166(a), permits an income tax deduction of “any debt which becomes worthless within the taxable year.” Section 166(c) provides that “In lieu of any deduction under subsection (a), there shall be allowed (in the discretion of the Secretary or his delegate) a deduction for a reasonable addition to a reserve for bad debts.” The reserve method of taking bad debt deductions has been a part of the revenue laws since 1921. See 42 Stat. 227, § 234(a)(5). Historically, the treatment of a bank’s bad debt reserves has been subject to various administrative pronouncements and policies. Under Mimeograph 6209, 1947-2 Cum.Bull. 26, banks were administratively permitted to establish bad debt reserves at three times their average annual loss experience. See First National Bank in Olney v. Commissioner, 7 Cir., 368 F.2d 164, 165-166. In 1965, Rev.Rul. 65-92, 1965-1 Cum.Bull. 112, established a uniform reserve ratio, which was codified by the Tax Reform Act of 1969 as § 585 of the Internal Revenue Code. Rev.Rul. 65-92 is important to the consideration of the instant case. The bad debt reserve method permits taxpayers to defer taxes on income in amounts of reasonable additions to the reserve each year, but such deferrals are justified under § 166(c) only when the Commissioner is satisfied that such reserve additions are reasonable. A taxpayer attacking the Commissioner’s determination that bad debt reserve additions are excessive has the burden of establishing that the additions were reasonable and that the denial of the additions was an abuse of discretion. Business Development Corporation of North Carolina v. United States, 4 Cir., 428 F.2d 451, 453, cert. denied 400 U.S. 957, 91 S.Ct. 355, 27 L.Ed.2d 265, and United States v. Haskel Engineering & Supply Co., 9 Cir., 380 F.2d 786, 789. By electing to use the bad debt reserve method the taxpayer subjects himself to the reasonable discretion of the Commissioner. American State Bank v. United States, 7 Cir., 279 F.2d 585, 589, cert. denied 364 U.S. 881, 81 S.Ct. 170, 5 L.Ed.2d 103. Before discussing Rev.Rul. 65-92, we note that revenue rulings do not have the force and effect of law but are for the information and guidance of taxpayers, IRS officials, and others concerned, and though entitled to consideration, they are accorded less weight than regulations. United States v. Eddy Brothers, Inc., 8 Cir., 291 F.2d 529, 531. Sections 3, 4, and 5 of Rev.Rul. 65-92 establish a uniform reserve ratio and allow additions to the reserve until the reserve “equals 2.4% of loans outstanding at the close of the taxable year.” Section 6 reads: “Notwithstanding the provisions of sections 4 and 5 of this ruling, the addition to the reserve that a bank will be permitted in a taxable year through the use of the uniform reserve ratio shall not exceed an amount equal to 0.8 percent of the loans outstanding at the end of the taxable year, or an amount sufficient to bring the reserve to 0.8 percent of loans outstanding at the end of the taxable year, whichever amount is greater.” For the years in question the taxpayer’s bad debt reserve, stated in percentages of loans outstanding at the end of the taxable year, was: 1965 — 2.9%; 1966 — 3.0%; 1967 — 2.9%. The Commissioner limited the allowable deductions to .8% of the outstanding loans. The taxpayer claims the right to make a reserve addition in the amount of the actual bad debt loss for each year which varied from 1.0% to 1.3%. The taxpayer contends that a bank which has a 1.0% or greater bad debt loss and which is allowed only a .8% addition to the reserve must inevitably suffer a diminution of the reserve. The Commissioner points out that § 6 of Rev.Rul. 65-92 permits an annual reserve addition of an amount sufficient to bring the reserve to .8% of the outstanding loans. This provides a floor of .8% for the reserve. Taxpayer urges that this method discriminates against high loss banks and favors commercial banks whose annual loss runs about .2% by permitting the commercial banks to have a 2.4% reserve whereas the high risk bank, in a succession of years when the loss factor is greater than .8% may find itself with a total reserve of only .8%. This result is possible. However, the record shows no invidious discrimination in fact, and we are not concerned with the appropriateness of Rev.Rul. 65-92 but rather with the validity of the specific actions of the Commissioner in disallowing the claimed additions to the reserve. The taxpayer is critical of the statement of the Tax Court that the inquiry is “whether at the end of the year the reserve is sufficient to absorb the bad debts anticipated during the subsequent taxable year.” The applicability of such a principle to the taxpayer which has 42% of the dollar amount of its loans for five-year periods is difficult to justify. Indeed, in his brief the Commissioner takes an ambivalent position. At one point he says that the annual adjustment of the reserve balance must “correctly reflect that portion of the debt reasonably estimated to become worthless in subsequent years.” At another point he says that the question is whether the balance is “sufficient to absorb the bad debts that are anticipated during the subsequent taxable year.” In Nash v. United States, 398 U.S. 1, 2, 90 S.Ct. 1550, 26 L.Ed.2d 1, the Supreme Court refers to the reserve method of accounting permitted by § 166(c) and says that the year-end adjustment equals that portion of the receivables “estimated to become worthless in subsequent years.” The use of the plural rejects the concept that the adjustment takes into consideration only the next taxable year. We are not here concerned with the wisdom or propriety of § 6, Rev.Rul. 65-92. Our question is whether the Commissioner abused his discretion in determining that the additions claimed by the taxpayer were not reasonable. The taxpayer says that the Commissioner’s interpretation of Rev.Rul. 65-92 flies directly in the face of Treasury Regulation § 1.166-4(b) which says: “What constitutes a reasonable addition to a reserve for bad debts shall be determined in the light of the facts existing at the close of the taxable year of the proposed addition. The reasonableness of the addition will vary as between classes of business and with conditions of business prosperity. It will depend primarily upon the total amount of debts outstanding as of the close of the taxable year, including those arising currently as well as those arising in prior' taxable years, and the total amount of the existing reserve.” This listing of factors to be considered in determining reasonableness is helpful but not determinative of the validity of the Commissioner’s action. The taxpayer is entitled under the statute to a reserve for bad debts and may make reasonable additions thereto. Rev.Rul. 65-92 permits a reserve of 2.-4% of the net outstanding loans. During the years in question the percentage of the taxpayer’s bad debt reserve to net loans outstanding varied from 2.9% to 3.0%, thus exceeding the 2.4% prescribed by Rev.Rul. 65-92. We find nothing in the record to establish that the taxpayer needed a greater reserve. It may be that in the future the Treas. Reg. 1.166-4(b) factors will justify a higher reserve but we are concerned with the record presented, not with speculations over the future. We take § 6, Rev.Rul. 65-92, as advisory only. The issue is whether, in using the formula which it recognizes, the Commissioner wrongfully held that the additions to the reserve were unreasonable and so abused his discretion. See Patterson v. Pizitz, Inc., 5 Cir., 353 F.2d 267, 268-269, cert. denied 383 U.S. 910, 86 S.Ct. 895, 15 L.Ed.2d 666; Krim-Ko Corp., 16 T.C. 31, 37. On the record presented we find no abuse of discretion. If future developments result in an inadequacy of the uniform reserve provisions of §§ 3, 4, 5, and 6, Rev.Rul. 65-92, to provide the reasonable addition to a reserve for bad debts permitted by § 166(c) of the 1954 Code, the taxpayer has the alternative of using the probable experience method outlined in § 7, Rev.Rul. 65-92. Affirmed.

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2024-08-24T03:29:51.129235

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Matthew JOHNSON, Petitioner-Appellee, v. Wayne K. PATTERSON, Warden, Colorado State Penitentiary, Respondent-Appellant. No. 72-1136. United States Court of Appeals, Tenth Circuit. Argued and Submitted Sept. 19, 1972. Decided March 22, 1973. Tennyson W. Grebenar, Asst. Atty. Gen., Denver, Colo. (Duke W. Dunbar, Atty. Gen., John P. Moore; Deputy Atty. Gen., Denver, Colo., with' him on the brief), for respondent-appellant. Earl S. Wylder, Denver, Colo., for petitioner-appellee. Before LEWIS, Chief Judge, and MURRAH and BREITENSTEIN, Circuit Judges. LEWIS, Chief Judge. This is an appeal from judgment of the United States District Court for the District of Colorado granting Matthew Johnson’s petition for a writ of habeas corpus. Johnson was tried and convicted for rape in the state of Colorado and the judgment of conviction was affirmed on direct appeal. Johnson v. Colorado, Colo., 172 Colo. 406, 473 P.2d 974. The sole issue presented here, which was given full consideration on direct appeal, is whether the prosecution’s questions during cross-examination and comments during closing argument infringed upon Johnson’s right to remain silent under the fifth amendment. During trial Johnson testified that he had intercourse with the complainant but with her consent and at her invitation. He testified he caught her attempting to take his car and she offered to have intercourse with him if he WQuld not call the police. During cross-examination of Johnson, the following questions and answers took place: Q. Now, Mr. Johnson, you didn’t tell the police this, did you? A. No, sir. Q. The first time then that anyone has heard this is here today in court, is that correct? A. No, sir. I told Mr. Hellerstein when he came out to see me in the County Jail. Q. Mr. Hellerstein, your attorney, is that correct? A. Yes, sir. During closing argument the prosecution again referred to Johnson’s failure to tell the police his story. And isn’t it interesting that this is the first time that he has decided to tell the truth other than, of course, he testified that he told his lawyer, and didn’t bother to tell the police. Johnson maintains that an accused’s silence at the time of arrest cannot be the subject of comment at trial, relying principally on Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694; United States v. Arnold, 10 Cir., 425 F.2d 204; United States v. Nolan, 10 Cir., 416 F.2d 588, cert. denied, 396 U.S. 912, 90 S.Ct. 227, 24 L.Ed.2d 187. The Colorado Supreme Court distinguished these authorities and held: The cross-examination and the brief comment by the district attorney in his rebuttal closing argument does no more than approach the danger point of potential prejudice involving the defendant’s Fifth Amendment rights. In our view, this cross-examination and the brief comment by the district attorney does not constitute reversible error. 473 P.2d at 977. The appellant argues that the Colorado Supreme Court was correct in distinguishing Nolan and Arnold and further argues that the recent case of Harris v. New York, 401 U.S. 222, 91 S.Ct. 643, 28 L.Ed.2d 1, is dispositive and Nolan and Arnold should be overruled insofar as they are inconsistent with Harris. The federal district court relied on Nolan and Arnold in holding Johnson’s constitutional rights had been violated. Moreover, the court considered Harris and found it not controlling. The reasoning of the district court is sound and we affirm the order granting petitioner’s writ of habeas corpus. Griffin v. California, 380 U.S. 609, 85 S.Ct. 1229, 14 L.Ed.2d 106, held that it was reversible error for the prosecution or the court to comment on an accused’s failure to take the stand and testify in his own behalf. To allow this would impose a penalty on the exercise of a constitutional right. The Supreme Court further refined this principle in Miranda. The Court stated therein: In accord with our decision today, it is impermissible to penalize an individual for exercising his Fifth Amendment privilege when he is under police custodial interrogation. The prosecution may not, therefore, use at trial the fact that he stood mute or claimed his privilege in the face of accusation. 384 U.S. at 468, n. 37, 86 S.Ct. at 1625. In both Nolan and Arnold comment was made that the defendant had exercised his right to remain silent after arrest and that this silence was tantamount to guilt. This was considered plain error in both cases. The appellant maintains that the instant case is distinguishable as no direct comment was made that Johnson exercised his right to remain silent or that his silence was an indication of guilt. This distinction is not well taken. A penalty is levied on the exercise of his constitutional right in any event, and the jury may as easily draw prejudicial inferences. See United States v. Nielsen, 7 Cir., 392 F.2d 849. Nor can we agree with the Colorado Supreme Court that the comments do not constitute reversible error because they “no more than approach the danger point of potential prejudice.” 473 P.2d at 977. We said in United States v. Arnold, supra, that we “decline to weigh comparative prejudice when the calibrator can only be the quantity of comment violative of constitutional rights.” 425 F.2d at 206. Appellant argues that the comment on Johnson's failure to tell his story to the police was used to impeach his testimony and therefore falls within the ambit of Harris v. New York, supra. We do not so read Harris. But see United States v. Ramirez, 5 Cir., 441 F.2d 950, cert. denied, 404 U.S. 869, 92 S.Ct. 91, 30 L.Ed.2d 113. Under Harris the prosecution can use prior inconsistent statements to impeach testimony of a defendant who has taken the stand, even if those prior inconsistent statements were taken in contravention of the safeguards announced in Miranda. The underlying rationale of Harris is that the fifth amendment rights of an accused cannot be used to sanction perjury. A defendant cannot be allowed to testify without fear of impeachment from prior inconsistent statements as this would impair enforcement of a witness’ obligation to speak truthfully. When a defendant makes a statement at trial which is inconsistent with an earlier statement his credibility is clearly in question. This rationale does not follow with silence at the time of arrest. As the trial court properly found in the instant case, silence at the time of arrest is not an inconsistent or contradictory statement. Silence at the time of arrest is simply the exercise of a constitutional right that all persons must enjoy without qualification. See Gillison v. United States, 130 U.S.App.D.C. 215, 399 F.2d 586. It would indeed be irregular and anomalous to warn an accused that he has the right to remain silent, that if he says anything it may be used against him, however, if he does remain silent that too may be used against him. See McCarthy v. United States, 6 Cir., 25 F.2d 298; United States v. Brinson, 6 Cir., 411 F.2d 1057; Fowle v. United States, 9 Cir., 410 F.2d 48. This would be the practical effect of allowing the prosecution to use at trial the fact that an accused remained silent, clearly making the assertion of the constitutional right costly. See Griffin v. California, supra. The judgment and order of the trial court granting petitioner’s writ of habeas corpus is affirmed. BREITENSTEIN, Circuit Judge (dissenting) . Believing that the majority opinion throws yet another roadblock to impede the search for truth in the administration of criminal justice, I respectfully dissent. The majority permits a defendant, who by testifying in his own behalf has cast aside the cloak of immunity, to put that coat back on when the cross-examination becomes discomfiting. This is a state prisoner habeas corpus in which the district court granted relief. Defendant, who was charged with rape, testified in his own behalf and said that the intercourse was consensual. Orr cross-examination, and without objection, he said that before trial he had mentioned the consent defense only to his lawyer. In closing argument, and again without objection, the prosecutor referred to the pre-trial silence. The majority does not discuss what to me is the crux of the controversy. We have here a conflict between the Fifth Amendment privilege against self-incrimination and the principle that a witness shall testify truthfully. By emphasizing the Fifth Amendment right and glossing over the policy which demands truth of a witness and which regards adversary proceedings as a search for the truth, the majority loses sight of the balance which must be maintained. The effect of the majority decision is to suppress a fact which reasonably bears on credibility and, hence, on truth. As said in Tate v. United States, 109 U.S.App.D.C. 13, 283 F.2d 377, 381, “the theory that judicial suppression of truth has a beneficial effect on the administration of justice is unproved and perhaps unprovable.” The thrust of the majority opinion is that under the Fifth Amendment a defendant has the right to remain silent. I agree. The difficulty here is that the defendant took the stand and thereby waived his constitutional right. Under the majority opinion there can be a partial waiver of a constitutional right, a premise which I decline to accept. The Supreme Court has said, and we have said, that by taking the stand a defendant subjects himself to cross-examination on matters reasonably related to the subject matter of his direct examination. McGautha v. California, 402 U.S. 183, 215, 91 S.Ct. 1454, 28 L.Ed.2d 711; Sinclair v. Turner, 10 Cir., 447 F.2d 1158, 1165, cert. denied 405 U.S. 1048, 92 S.Ct. 1329, 31 L.Ed.2d 590. The majority says nothing about this principle but seemingly relies on Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694, Griffin v. California, 380 U.S. 609, 85 S.Ct. 1229, 14 L.Ed.2d 106, and Tenth Circuit decisions to be mentioned later. The applicability of Miranda is destroyed by Harris v. New York, 401 U.S. 222, 226, 91 S.Ct. 643, 28 L.Ed.2d 1, which says that Miranda is not a license for the use of perjury in defense. Griffin is not pertinent because in that case the defendant did not take the stand. The case at bar differs from Harris in that there the impeachment was by prior inconsistent statements. Here we have silence. The majority opinion ignores Raffel v. United States, 271 U.S. 494, 497, 46 S.Ct. 566, 568, 70 L.Ed. 1054, which permitted cross-examination on pre-trial silence and said that “having once cast aside the cloak of immunity, he may not resume it at will, whenever cross-examination may be inconvenient or embarrassing.” Raffel was reexamined, but not overruled, in Grunewald v. United States, 353 U.S. 391, 418, 424, 77 S.Ct. 963, 1 L.Ed.2d 931. In holding that in the circumstances of Grünewald, cross-examination over objection on a pre-trial claim of the Fifth Amendment was improper, the Court did not base its decision on any constitutional right but instead said that it was acting under its supervisory power over the administration of criminal justice. 353 U.S. at 424, 77 S.Ct. 963. In the case before us there was no contemporaneous objection either to the cross-examination or to the remark in argument. I say that, in the circumstances presented, to permit the defendant to rearm himself with the constitutional shield is to convert a criminal trial from a search for the truth into a game to be won by the cleverest player. Cf. Walder v. United States, 347 U.S. 62, 65, 74 S.Ct. 354, 98 L.Ed. 503. The action of the Supreme Court in placing its Grünewald decision on its supervisory power is significant. Federal courts have no supervisory power over the administration of criminal justice in state courts. Federal habeas corpus relief is available to a state prisoner when he has been deprived of a right secured to him by the United States Constitution. I do not know what federal constitutional right has been denied the defendant. The only possible reliance can be on the immunity from self-incrimination and that must be based on the acceptance of the idea of a partial waiver. I know of no decision of the Supreme Court which permits a partial waiver of a constitutional right. The approval of such an idea will open a veritable Pandora’s box. The majority mentions three Tenth Circuit decisions. The first is United States v. Nolan, 10 Cir., 416 F.2d 588, 593-594, cert. denied 396 U.S. 912, 90 S.Ct. 227, 24 L.Ed.2d 187. The facts in Nolan are analogous to those in the case at bar except that Nolan was a federal prosecution and here we have a state prosecution. So far as Nolan is concerned it is enough to say that, for the reasons stated in this dissent, I would consign the case to oblivion. The majority quotes from United States v. Arnold, 10 Cir., 425 F.2d 204, 205-206, to the effect that the court will not weigh comparative prejudice. Be that as it may, Arnold is not in point because there the defendant did not take the stand. The exculpatory evidence was introduced through others. United States v. Julian, 10 Cir., 450 F.2d 575, 578-579, permitted cross-examination on silence. The majority says that Julian is inapposite to the instant case because the comment there related to the competence of the defendant. Competence is a mental state; so also is credibility. I am unable to understand why, if testimony as to silence is admissible on competence, it is not also admissible on credibility. My position is that when a defendant testifies he may be impeached like any other witness. The use of pre-trial silence for impeachment depends on whether, in the circumstances presented, there is such inconsistency between silence and testimony as to reasonably permit the use of silence for credibility impeachment. In the case at bar the trial court did not exercise the discretion which it has in this area because there was no contemporaneous objection. I believe that the cross-examination was proper for impeachment purposes because common sense teaches that on arrest for forcible rape an accused will claim consent if such be the fact. Beyond question, a person has the right to remain silent when arrested, and when accused of a crime. That silence may not be used against him to establish the commission of a crime. The difficulty here is that the defendant did not maintain the silence. Instead, he took the stand in his own defense. When he did so, he subjected himself to pertinent cross-examination. The situation was of his making, not the making of the prosecution. The admission of pre-trial silence was not per se inculpatory. In considering the case at bar the Colorado Supreme Court recognized the competition between the protection against self-incrimination and the mandate that a witness shall testify truthfully and held that there was no reversible error. Johnson v. People, Colo., 473 P.2d 974, 977. Nothing in the federal Constitution requires a contrary holding in this habeas proceeding. I would reverse and remand the case with directions to dismiss the habeas petition. . Harris held that statements taken during custodial interrogation in contravention of rights delineated in Miranda may be used at trial for the limited purpose of impeachment if said statements are inconsistent with current testimony of the accused and they satisfy legal standards of trustworthiness. . Appellant also argues that the instant ease is more in line with our recent decision of United States v. Julian, 10 Cir., 450 F.2d 575. Julian is inapposite to the instant case as the comment therein related to the competency of the defendant. We did not limit the rule of Nolan and Arnold but rather held it was not determinative under the peculiar circumstances of Julian. . The premise of Ramirez is that silence at time of arrest is an act inconsistent with the testimony given at trial. 441 F.2d 950, 954. We simply deny the validity of the premise.

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Dan SULLIVAN, by next friend, Daniel H. Sullivan, et al., Plaintiifs-Appellees, and Paul Kitchen, by next Friend, Anthony Kitchen, Plaintiff-Appellee-Cross Appellant, v. HOUSTON INDEPENDENT SCHOOL DISTRICT, et al., Defendants-Appellants-Cross Appellees. No. 71-2494. United States Court of Appeals, Fifth Circuit. March 15, 1973. Rehearing and Rehearing En Banc Denied April 30, 1973. William Key Wilde, Kelly Freís, Brace-well & Patterson, Houston, Tex., for appellants. Robert E. Hall, Erie H. Nelson, Houston, Tex., for appellees. Before GEWIN, THORNBERRY and CLARK, Circuit Judges. THORNBERRY, Circuit Judge: This case arises from the unauthorized distribution of an “underground” newspaper near a high school campus, and presents the now-familiar clash between claims of First Amendment protection on the one hand and the interests of school boards in maintaining an atmosphere in the public schools conducive to learning, on the other. We vacate the supplemental grant of injunctive relief to plaintiff-appellee Paul Kitchen. In doing so, we hope to furnish guidelines that will prove helpful to all parties— students, school officials, and courts — in balancing the competing interests in this delicate and crucial area of the law. The case is here on appeal from an order of the district court, 333 F.Supp. 1149, supplementing a 1969 permanent injunction. The facts giving rise to that first permanent injunction are set out at 307 F.Supp. 1328, and need not be recounted here. Suffice it to say that Dan Sullivan and another student at Sharpstown High School in Houston had been summarily expelled for distributing, free of charge, a publication of their own creation, Pflashlyte. This disciplinary action had been taken ostensibly as punishment for the boys’ violation of an extremely vague regulation of the Houston Independent School District and of the school principal’s unwritten and unannounced interpretation of that regulation. The boys filed suit in the court below seeking declaratory and injunctive relief under 42 U.S. C. § 1983. After issuing a comprehensive memorandum, Judge Woodrow Seals set out detailed requirements to be met by the School District in regulating student distribution of literature on or near the campus and in disciplining students for violations of school regulations. The School District appealed from this order, but the appeal was dismissed on the District’s own motion on May 21, 1970. Rather than prosecute the appeal, the School District chose to formulate a new set of regulations. A biracial committee of students, school officials, parents, attorneys, and representatives of other interested groups held hearings and developed an extensive set of regulations dealing with various aspects of school discipline. The rules required prior submission to the school principal of all publications, not sponsored by the school, which were to be distributed on the campus or off campus in a manner calculated to result in their presence on the campus. The principal was given one working day to review the publication before general distribution. If, in the opinion of the principal and School District attorneys, the publication contained “libelous or obscene language or advocate [d] illegal action or disobedience to published rules on student conduct adopted by the Board of Trustees,” then the principal could withhold his approval of the publication and it could not be distributed. The rule provided, however, that distribution could not be prohibited because the publication “contained the expression of any idea, popular or unpopular.” Besides requiring prior submission, the regulation expressly permitted distribution before and after school hours on school premises, absolutely prohibited the sale of publications on school premises and the distribution of political campaign material or material consisting primarily of commercial advertising, and required that the publication contain the names of the contributors, editors, and publishers. In addition to these provisions governing distribution of publications, the new regulations contained specific provisions governing suspension procedures. For violation of any published regulation of the School District governing student conduct, a student could be suspended for a reasonable time not exceeding three school days upon the giving of written notice to parents or guardian of the reasons for the suspension. If the suspension was to last for more than three school days or for an indefinite period, the student and his parents or guardian were entitled to written notice of the reasons for suspension and were to be offered a prompt hearing before the principal, at which they could produce witnesses and be assisted by counsel. The student was to be given the right to appeal the principal's decision to the assistant superintendent for a de novo hearing. The assistant superintendent could affirm the principal’s decision if the de novo hearing produced substantial evidence supporting it, and the student could appeal the assistant superintendent’s decision to the School Board. The School Board adopted the new regulations in February or March 1970, and copies were posted in each school building in the District. Several months later, the event occurred that forms the basis for the instant appeal. Before classes started on the morning of October 20, 1970, Paul Kitchen, a junior student at Waltrip Senior High School, was standing near an entrance to the campus selling Space City!, an “underground” newspaper, to students as they entered the campus. Gordon Cotton, the Waltrip principal, purchased a copy and scanned its contents. On the second page he noticed a letter, captioned “High Skool is F. . .ed” and containing several other instances of coarse language. Mr. Cotton told Paul that he was selling the papers in violation of the prior submission rule, and asked him to stop. Paul continued selling the papers. At this point, Mr. Cotton determined to suspend Paul for his failure to comply with both the prior submission rule and Mr. Cotton’s request that he stop selling the papers. Before Paul was sent home, Mr. Cotton notified both his parents by telephone that Paul was being suspended and told them the reasons for his decision. Mr. Cotton requested that both parents come to the school for a conference, but Mr. Kitchen replied that his job would prevent his attending a conference until six days later. A conference was agreed to be held on October 26, 1970, and it was agreed that Paul would remain on suspension until that date. As Paul was leaving Mr. Cotton’s office after being informed that he was to be suspended, he slammed the door and shouted “I don’t want to go to this goddamn school anyway” within the hearing of two of Mr. Cotton’s female assistants. During the period of Paul’s agreed suspension between October 20 and October 26, he returned to the campus several times purportedly to talk with his teachers. Each time school officials told him to leave the campus because students were not allowed on school premises while under suspension. On the morning of October 26, the day on which the conference with Paul’s parents was scheduled, Paul was again at the entrance to the campus selling Space City! to students on their way to school. Mr. Cotton showed Paul a copy of the prior submission rule, and told him that if he did not stop selling the papers he would call the police. In response, Paul shouted “the common Anglo-Saxon vulgarism for sexual intercourse” in apparent reference to Mr. Cotton. Paul was taken to the police station but was released without charges having been filed. Mr. Kitchen obtained legal counsel and failed to appear for the scheduled conference with Mr. Cotton. Later that day, Mr. Cotton notified Paul’s parents in writing that he was suspending Paul for violating the prior submission rule and using profanity in the presence of his secretary, and informed them of the suspension procedures available to students and parents under the new regulations. On October 29, 1970, Mr. Cotton conducted a hearing at which Paul was represented by counsel. Following the hearing Mr. Cotton suspended Paul for the remainder of the semester, on the basis of Paul’s violation of the prior submission rule and his use of profanity toward Mr. Cotton. A de novo appellate hearing was conducted before the assistant superintendent on November 9, 1970. Paul appeared with his father and an attorney; an extensive evidentiary hearing was held during which witnesses were cross-examined and testimony was transcribed by a court reporter. The assistant superintendent affirmed Mr. Cotton’s decision; and the transcript of the appellate hearing was reviewed by the Deputy Superintendent for Secondary Schools and the Superintendent for Instruction and Administration, who both affirmed the suspension. On November 23, 1970, Paul and his father applied in the court below for an order holding the School District in contempt for violating the 1969 permanent injunction, and for supplementary injunctive relief and damages in aid of the injunction. On the following day the court entered an ex parte temporary restraining order directing that Paul be permitted to attend classes at Waltrip High School; without the consent of the School District, this temporary restraining order was extended for ten-day periods for a total of fifty-nine days. At the direction of the court, a four-hour hearing was held before the School Board,' at which Paul and his father, represented by counsel, presented and cross-examined witnesses. The Board declined to entertain a facial challenge to the new regulations, ordered Paul suspended for an additional two weeks beginning January 4, 1971, and directed that he be placed on probation for the remainder of the school year. Following a hearing, the court below chastised Paul for not challenging the new regulations by orderly means, found that he had been unlawfully suspended, ordered that he be allowed credit for school work missed during the suspension, and declined to hold the School Board in contempt or award damages or attorney fees because the defendants had acted in good faith. On October 7, 1971, the court issued a supplementary injunctive decree, clarifying and elaborating the terms of its original 1969 injunction. Both sides appeal, urging a myriad of contentions regarding the trial court’s refusal to vacate the 1969 permanent injunction, the reasons for suspending Paul, the procedures used in his suspension, and the failure to award damages and attorney fees. The view we take of this case makes it necessary for us to address only a few of these contentions. I On appeal and in the court below, Paul Kitchen’s position has been, basically, that his selling the newspaper was an activity protected by the First Amendment. Pointing to the fact that sale of the newspaper created little, if any, disruption of normal school activities — let alone the “material and substantial” disruption required by Tinker v. Des Moines Independent Community School District, 393 U.S. 503, 89 S.Ct. 733, 21 L.Ed.2d 731 (1969), and its progeny — he argues that the prior submission rule was unconstitutionally applied to him. He claims further that the language in the newspaper was not constitutionally obscene and that therefore the school officials could not suppress it. In our view, however, Paul’s conduct in the instant case outweighs his claim of First Amendment protection, and gave school officials sufficient grounds for disciplining him. As the court below recognized when it rebuked Paul for failing to challenge the prior submission rule by “lawful” means, Paul’s conduct can hardly be characterized as the pristine, passive acts of protest “akin to pure speech” involved in Tinker, supra. Rather, Paul defied Mr. Cotton’s request that he stop selling the newspapers, persisted in returning to the campus during the initial six-day suspension period, and twice shouted profanity at Mr. Cotton within the hearing of others. Paul’s reappearance on the campus and continued sale of the newspapers on October 26 served only to exacerbate the situation. Moreover, Paul never once attempted to comply with the prior submission rule. Given the widespread publicity accorded the new rules, it taxes credulity to say that on October 20 Paul was unaware of the rule requiring prior submission; he most certainly knew about the rule after Mr. Cotton showed him a copy on October 26 before suspending him for a second time. Had Paul submitted the newspaper prior to distribution and had it been disapproved, then he could have promptly sought relief in the courts without having been first suspended from school. Having chosen to disregard established school policy regarding distribution of off-campus literature, Paul’s opportunity for obtaining relief from the principal’s decision was delayed by several months of administrative appellate héarings, during which his academic career suffered severely from continued suspension. Considering Paulis flagrant disregard of established school regulations, his open and repeated defiance of the principal’s request, and his resort to profane epithet, we cannot agree that the school authorities were powerless to discipline Paul simply because his actions did not materially and substantially disrupt school activities. In the years since Tinker was decided courts have refused to accord constitutional protection to the actions of students who blatantly and deliberately flout school regulations and defy school authorities. Thus, in Schwartz v. Schuker, E.D.N.Y.1969, 298 F.Supp. 238, a high school student disregarded several prior warnings of the principal not to distribute literature without prior permission. The court declined to reach the student’s constitutional arguments and refused to grant him injunctive relief because he had failed to challenge the principal in an orderly manner. The same result was reached in Graham v. Houston Independent School District, S.D.Tex.1970, 335 F.Supp. 1164, where Judge Ingraham of this court, sitting as a district judge by designation, based his denial of injunctive relief on the student’s disregard of established school regulations. See also Duke v. North Texas State Univ., 5th Cir. 1972, 469 F.2d 829; Esteban v. Central Missouri State College, 8th Cir. 1969, 415 F.2d 1077; Quarterman v. Byrd, 4th Cir. 1971, 453 F.2d 54, 60 n. 11. Finally, in Healy v. James, 408 U.S. 169, 92 S.Ct. 2338, 33 L.Ed.2d 266 (1972), the Court approved the principle that the open disregard of school regulations is a sufficient and independent ground for imposing discipline, when, citing Esteban, supra, it held that a student group’s announced refusal to abide by campus regulations would be a proper reason for denying university recognition to the group. 92 S.Ct. at 2351-52. It may be noted that the regulations in the instant case are the product of an extensive and good faith effort by the School District to formulate a valid code of student conduct. This court has recognized that there is nothing per se unreasonable about requiring a high school student to submit written material to school authorities prior to distribution. Shanley v. Northeast Independent School Dist., 5th Cir. 1972, 462 F.2d 960. And it cannot be seriously urged that this prior submission rule is unconstitutionally vague or over-broad; this court has recently upheld a statute cast in more general terms than is the rule in question here. Pervis v. LaMarque Independent School Dist., 5th Cir. 1972, 466 F.2d 1054. Finally, it is undisputed that substantial evidence supported Paul’s suspension. Accordingly, we limit our review of his suspension to the question whether the School District accorded him due process. We hasten to point out that by thus limiting our review in this case we do not invite school boards to promulgate patently unconstitutional regulations governing student distribution of off-campus literature. Nor, needless to say, do we encourage school authorities to use otherwise valid regulations as a pretext for disregarding the rights of students. Today we merely recognize the right of school authorities to punish students for the flagrant disregard of established school regulations; we ask only that the student seeking equitable relief from allegedly unconstitutional actions by school officials come into court with clean hands. II As to the procedures used in his suspension, the thrust of Paul’s attack is that the October 29 hearing before Mr. Cotton was not the “fair and dispassionate” hearing required by due process and by the original permanent injunction. Although this court has never adopted a rule that school administrative personnel involved in the initiation and investigation of charges are per se disqualified from conducting hearings related to those charges, see Murray v. West Baton Rouge Parish School Bd., 5th Cir. 1973, 472 F.2d 438; Duke, supra; Lance v. Thompson, 5th Cir. 1970, 432 F.2d 767; cf. Wasson v. Trowbridge, 2nd Cir. 1967, 382 F.2d 807; Jones v. State Bd. of Educ., M.D.Tenn. 1969, 279 F.Supp. 190, aff’d, 6th Cir. 1969, 407 F.2d 834, cert. dism’d, 397 U.S. 31, 90 S.Ct. 779, 25 L.Ed.2d 27 (1970), we have uniformly recognized that the facts of a case may demonstrate that a school official’s involvement in an incident is such as to preclude his affording the student an impartial hearing. E. g. Murray, supra; cf. Mayberry v. Pennsylvania, 400 U.S. 455, 91 S.Ct. 499, 27 L.Ed.2d 532 (1971). In our view, Paul Kitchen made such a showing in the instant case. The incidents for which Paul was suspended were east largely in terms of a personal confrontation with Mr. Cotton. On two occasions Paul used profanity toward him, and Paul’s appearance on the campus on October 26 to resume sales of the newspaper was clearly a direct challenge to Mr. Cotton’s earlier demand that Paul stop selling the newspaper. Under these circumstances it is difficult to imagine that Mr. Cotton could have given Paul an impartial hearing. Indeed, it is not surprising that Mr. Cotton’s primary aim in conducting the October 29 hearing was not to hear Paul’s side of the story but rather, as Mr. Cotton testified in the district court, to hear Paul apologize. It is, however, well settled that a procedural defect in an initial hearing before school officials can be cured by subsequent hearings. Murray, supra; Speake v. Grantham, 5th Cir. 1971, 440 F.2d 1351, aff’g S.D.Miss.1970, 317 F.Supp. 1253. In the instant case, Paul was afforded two extensive de novo appellate hearings at which he was represented by counsel and presented and cross-examined witnesses. In our view, the procedural fidelity that characterized these appellate hearings cured the procedural defect in the hearing before Mr, Cotton. We believe that a further word is necessary with regard to the timing of Paul’s hearings, although neither party raises the issue directly. The question whether, and under what circumstances, disciplinary action must be preceded by a hearing has recently been before this court on a number of occasions. Black Students of North Fort Myers Jr.Sr. High School v. Williams, 5th Cir. 1972, 470 F.2d 957 [1972] (hearing required before imposition of up to ten days’ suspension); Pervis, supra (“an even more basic tenet of due process is . that punishment cannot be imposed before a hearing is given”); Dunn v. Tyler Independent School Dist., 5th Cir. 1972, 460 F.2d 137 (no hearing required for “minor” punishment such as three days’ suspension); Banks v. Bd. of Public Instruction, S.D.Fla.1970, 314 F.Supp. 285 (3-Judge court), vacated for entry of single-judge order, 401 U.S. 988, 91 S.Ct. 1223, 28 L.Ed.2d 526 (1971), aff’d after remand, 5th Cir. 1971, 450 F.2d 1103 (no prior hearing required for suspension up to ten days). In this case, Paul was suspended initially for an agreed period of six days without having been given a prior hearing. The lack of a hearing, however, was due to the unusual requirements of Mr. Kitchen’s work which prevented his attendance until six days after the suspension had been imposed. On October 26, Mr. Cotton again suspended Paul, this time indefinitely. No hearing was held until three days later. But it must be recalled that the October 26 hearing would have taken place and the second suspension might not have occurred if Paul had not returned to campus on October 26 and resumed selling the newspapers, an event that triggered Mr. Cotton’s calling the police and Mr. Kitchen’s refusal to attend the October 26 hearing. Under these circumstances, and considering Paul’s part in the delay, we decline to hold that the lack of a prior hearing was a denial of due process. The hearing was held as soon as circumstances would permit. All that remains is the question whether the court below abused its discretion in denying the School District’s motion made pursuant to Rule 60(b), F.R.Civ.P., to vacate the original 1969 permanent injunction. The School District’s position is that, by promulgating new regulations that literally comply with the conditions set out in the injunction, the 1969 judgment has been “satisfied,” and there is no longer any need to keep the School District under threat of a contempt judgment for violating the injunction. Granting relief pursuant to Rule 60(b) is largely within the discretion of the trial court, Elgin National Watch Co. v. Barrett, 5th Cir. 1954, 213 F.2d 776, and we are unable to say that the court below abused that discretion in failing to vacate the injunction. The original injunction dealt not only with the promulgation of regulations, but also with their enforcement. The School District has failed to show that continuation of the 1969 injunction is unnecessary to insure that the rules will not be unconstitutionally applied to students in the future. Although the District cites extensive authority for the familiar proposition that school discipline is primarily a matter for school authorities, the treatment that we give the instant case recognizes the District’s right to impose punishment for violation of its established regulations. We decline to disturb the trial court’s choice not to vacate the 1969 permanent injunction. With the exception of that part of the order denying the School District’s motion to vacate the 1969 injunction, the supplemental injunction decree entered on July 6, 1971, and the supplementary permanent injunctive decree entered on October 7, 1971, are vacated with instructions that the suit be dismissed. Vacated with instructions. . That regulation read as follows: The school principal may make such rules and regulations that may be necessary in the administration of the school and in promoting its best interests. He may enforce obedience to any reasonable and lawful command. . The School District stipulated that the rule [quoted above] is construed by responsible officials of the Houston Independent School District to prohibit the type of publication and distribution engaged in by Michael Fischer and Dan Sullivan in February and March of 1969. . In a permanent injunction decree and declaratory judgment rendered on December 30, 1969, Judge Seals enjoined the School District from promulgating or enforcing any regulation dealing with the production, or distribution of written materials by tenth, eleventh, and twelfth grade students, unless the regulation was in writing and students were given notice of the rule, and unless it met the following conditions: (1) The rule must be specific as to places and times where possession and distribution of published materials is prohibited. (2) The rule must be understandable to persons of the age and experience of covered students. (3) The rule must not prohibit or inhibit conduct which is orderly, peaceful and reasonably quiet and which is not coercive of any other person’s right to accept or reject any written material being distributed subject to the rule. (4) The rule may prohibit such distribution at times and in places where normal classroom activity is being conducted. Such rule may not prohibit such distribution at other times and places unless such prohibition is necessary to prevent substantial and material interference with or delay of normal classroom activity or normal school function. . . . [There follow definitions of “normal classroom activity” and “normal school function.”] (5) The rule must not subject any covered student to the threat of discipline because of the reaction or the response of any other person to the written material, provided, however, that defendants and their successors in office may prohibit distribution of obscene material or of libelous material for which a cause of action may exist in some person.” In addition, the decree set out the following requirements that the District was to meet in imposing “substantial discipline” (i. e., suspension for more than three days, or for an indefinite period) : (1) The covered student and at least one of his parents or guardian shall be furnished, either in person or by mail directed to the student’s last known address, with written notice of the charges and of the nature of the evidence against such covered student. (2) The covered student and at least one of his parents or guardian shall be offered a formal hearing after sufficient time to prepare a defense or reply at which hearing evidence in support of the charge shall be presented by school officials and the affected covered student or his parent or guardian shall have ample opportunity to present any defense or reply. (3) The decision of school officials to impose such discipline shall be based upon a dispassionate and fair consideration of substantial evidence that the covered students committed the acts for which discipline is to be imposed and that such acts are in fact a proper reason for such discipline. . Both Shanley and Eisner v. Stamford Bd. of Educ., 2nd Cir. 1971, 440 F.2d 803, require that prior submission rules include procedures for prompt administrative review of a decision not to permit distribution. The regulations of the Houston Independent School District contain no. such procedure for appellate review. However, since Paul never submitted the newspaper for prior approval in the first place and since he was given two extensive de novo appellate hearings in which he could have urged approval of the newspaper for distribution, this defect in the prior submission rule should not affect the result in the instant case. . We note that the facts of the instant case are distinguishable from those in Pervis, supra, where no hearing was held until three months after the students’ summary-suspension.

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INTERNATIONAL WIRE, Plaintiff-Appellant, v. LOCAL 38, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, Defendant-Appellee. No. 72-1688. United States Court of Appeals, Sixth Circuit. Argued Jan. 31, 1973. Decided March 20, 1973. Louis S. Belkin, Cleveland, Ohio, Jeffrey A. Belkin, Belkin & Belkin Co., L. P. A., Cleveland, Ohio, on brief, for plaintiff-appellant. Thurlow Smoot, Cleveland, Ohio, for defendant-appellee. Before WEICK, EDWARDS and CELEBREZZE, Circuit Judges. PER CURIAM. Appellant International Wire appeals from the dismissal of its § 303 complaint on appellee’s motion for summary judgment. Labor-Management Relations Act, 29 U.S.C. § 187 (1970). Appellant had charged Local 38, International Brotherhood of Electrical Workers with a secondary boycott. Appellant simultaneously filed proceedings in the form of an unfair labor practice before the National Labor Relations Board and the instant § 303 action in the United States District Court for the Northern District of Ohio. A full hearing was held before an NLRB Trial Examiner. The Trial Examiner and the Board found that no unfair labor practice, as charged in the complaint, had been proved and dismissed the complaint. Thereafter appellee filed a motion for summary judgment in the District Court action, asserting that under the determination by the Board, appellant’s § 303 complaint was either barred by the doctrine of res judicata or appellant was collaterally estopped from denying the findings and conclusions of the NLRB. In two well-reasoned memorandum opinions which dealt appropriately with the authorities relied upon by appellant, the District Judge found that the issues before the Labor Board and the issues in the instant action were identical. He found the Labor Board decision had become final and no petition to review same had been filed by appellant in this court, as provided by law. He also found that there was no contention in this case that plaintiff had been denied a full and fair hearing at the administrative level. He thereupon granted the motion for summary judgment dismissing plaintiff’s complaint. We believe the doctrine of collateral estoppel applies to bar this § 303 action under the reasoning set forth in the Memorandum Opinions of the District Judge and under the authority cited by him therein. United States v. Utah Construction and Mining Co., 384 U.S. 394, 86 S.Ct. 1545, 16 L.Ed.2d 642 (1966); Tipler v. duPont Co., 443 F.2d 125 (6th Cir. 1971). The judgment of the District Court is affirmed.

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UNITED STATES of America, Appellee, v. James Leroy COCHRAN, Appellant. No. 72-1322. United States Court of Appeals, Eighth Circuit. Submitted Feb. 13, 1973. Decided March 9, 1973. Norman S. London, St. Louis, Mo., for appellant. William C. Martin, Asst. Lf. S. Atty., St. Louis, Mo., for appellee. Before GIBSON and ROSS, Circuit Judges, and BENSON, District Judge. Judge Benson, Chief Judge of the District Court for North Dakota, sitting by designation. GIBSON, Circuit Judge. The defendant James Leroy Cochran was convicted of robbing the federally insured Cass Federal Savings and Loan Association, St. Louis, Missouri, in violation of 18 U.S.C. § 2113(a) and (d). The jury found him not guilty of three counts of abducting various persons in violation of 18 U.S.C. § 2113(e) (Count II) and 18 U.S.C. § 1201 (kidnaping, Counts III and IV). Defendant was sentenced to 25 years imprisonment for the robbery conviction. On appeal, the defendant raises four issues: (1) the admission of evidence of criminal conduct by the defendant that was not charged in the indictment, (2) the failure to declare a mistrial after a courtroom disturbance by defendant, (3) the admission of testimony on cross-examination concerning a medical report by a doctor not present at the trial as violating the hearsay rule, and (4) 'the exclusion of expert testimony on the nature and effect of prison life. We find none of the contentions merits reversal and affirm. Since the defense was lack of mental responsibility, the Government’s evidence was substantially uncontradicted. On October 21, 1971, the defendant and another individual, both carrying pistols, entered Cass Federal Savings and Loan Association and robbed the association of $10,245. Responding to a robbery report, St. Louis police officers pursued a 1971 car driven by the defendant. During the ensuing chase, shots were fired from the vehicle at the officers. The defendant lost control of the car, which stopped in a service station lot. He then exited, engaged in a ten minute gun battle with several officers, and fled to nearby Northwest High School, where he held a gun to the head of a high school administrator, Don LePlante, and threatened to kill him. When the defendant learned that LePlante did not have a car, he fled to the home of Mr. and Mrs. Lucas. There he told Mr. Lucas that he had shot a police officer. After holding the Lucas couple and several children captive, the defendant forced Mr. Lucas to drive him to Illinois, which was the subject of Count II (abduction or kidnaping). The defendant sometime later turned up in Boon-ville, Missouri, and forced a lady to drive him to St. Louis, where he accosted John Dorrell III on October 23, 1971, and forced him to drive the defendant to Gallup, New Mexico, and back to St. Louis. The Dorrell abduction formed the basis of Count III. After abducting Dorrell, the defendant forced Mr. Darían to drive him, Mrs. Darían, and Mr. and Mrs. Greenlee to Columbus, Ohio, where the Darians and Greenlees were released. The abduction of these couples constituted Count IV. The defendant proceeded to drive Darian’s car to Kentucky, where he abandoned the ear at a rest stop and later surrendered to FBI agents. First, the defendant contends that the admission of evidence of criminal conduct not charged in the indictment— shooting at police officers, holding a gun to LePlante’s head and threatening him, abducting a lady in Boonville, and stating to Lucas that he shot a police officer —inflamed the jurors, created undue prejudice, disparaged the defendant’s character, and denied him a fair opportunity to defend against the indicted charges. Well established rules have developed concerning the admission of evidence of other criminal conduct. Although this evidence is generally inadmissible since it suggests that the defendant has a propensity to commit crime, the trial court can in its discretion admit relevant evidence of other criminal acts and reversal is only commanded when “it is clear that the questioned evidence has no bearing upon any of the issues involved.” Wakakson v. United States, 367 F.2d 639, 645 (8th Cir. 1966), cert. denied, 386 U.S. 994, 87 S.Ct. 1312, 18 L.Ed.2d 341 (1967). The trial court in determining admissibility weighs the prejudicial effect against the probative value of the evidence of the other criminal conduct. Drew v. United States, 118 U.S.App.D.C. 11, 331 F.2d 85, 90 (1964). In applying this weighing analysis, trial courts are aided by recognized exceptions to the admissibility of evidence of other crimes or criminal conduct. Such evidence is relevant to prove “(1) motive, (2) intent, (3) the absence of mistake or accident, (4) a common scheme or plan embracing the commission of two or more crimes so related to each other that proof of one tends to establish the other, and (5) identity of the person charged with the commission of the crime on trial.” Drew v. United States, supra, 331 F.2d at 90 (footnote omitted), quoted in Love v. United States, supra, 386 F.2d at 266; United States v. Lewis, 423 F.2d 457, 459 (8th Cir. 1970); Proposed Rules of Evidence for United States Courts and Magistrates, Rule 404(b), 51 F.R.D. 315, 346. The questioned evidence in this case concerns “an uninterrupted course of action” that is relevant to aid in proving motive, intent, absence of mistake, and a common plan or scheme to commit the alleged abduction crimes in avoiding apprehension on the bank robbery offense. The objected to evidence was a part and parcel of the criminal spree of bank robbery and the consequent acts of abduction, threats, and intimidation to avoid apprehension. The trial court did not abuse its discretion in admitting the evidence of other criminal conduct since that evidence had a bearing on the issues involved. In addition, there was no prejudice at all since defendant did not contest the indicted acts, but sought to excuse them on the -grounds of mental incompetency. Second, the defendant argues that the District Court should have declared a mistrial due to a disruption at trial by the allegedly mentally disturbed defendant. When the District Attorney during cross-examination of a defense psychiatrist was attempting to prove that the defendant might have misinformed the psychiatrist, the defendant leaped to his feet and yelled that he had never lied. FBI agents, United States marshals, and the courtroom deputy restrained the defendant at the court’s direction, handcuffed him in presence of the jury, and removed him from the courtroom. Restraining an unruly defendant and removing him from the courtroom are within the “constitutionally permissible ways for a trial judge” to handle a defiant defendant and to insure the dignity, order, and decorum of court proceedings. Ulinios v. Allen, 397 U.S, 337, 343-344, 90 S.Ct. 1057, 25 L.Ed.2d 353 (1970). The defendant, however, argues that a different standard should apply to mentally ill defendants who disrupt court proceedings. The question of courtroom disturbances by mentally ill defendants presents, as Mr. Justice Douglas said, “a perplexing problem.” Illinois v. Allen, supra at 352, 90 S.Ct. 1057 (Douglas, J., concurring). However, we decline to promulgate judicial standards for such disturbances when the record offers little basis for the defendant’s claim of mental illness during the trial. In addition, the jury found the defendant responsible at the time of committing the robbery, and the court determined that the defendant was competent to stand trial. Third, the defendant argues that references during cross-examination by Dr. Blaekmun, a defense witness, to a diagnosis prepared by Dr. John Baker, an osteopath at Missouri State Penitentiary, who diagnosed the defendant as having no psychiatric problems, were inadmissible as hearsay evidence. The Government contends that this cross-examination of Dr. Blaekmun was being conducted to determine the basis of the witness’ opinion concerning the defendant’s mental health. Upon objection to this line of questioning the court restricted the testimony to what the defendant told the witness about Dr. Baker. We think that it was proper for the District Court to allow Dr. Blackmun to testify as to what the defendant said to Dr. Blackmun. In the first place, no definite statement was made by Dr. Blackmun concerning the medical report by Dr. Baker. Dr. Black-mun only said that “supposing a Dr. Baker has met” the defendant “and claims he’s perfectly well.” This inconclusive answer did not prejudice the defendant. Second, the limitation of the question as to what the defendant told Dr. Blackmun is entirely proper, since a statement made for the purposes of medical diagnosis is a hearsay exception. Louisiana & Arkansas Ry. Co. v. Johnson, 214 F.2d 290, 293 (5th Cir.), cert. denied, 348 U.S. 875, 75 S.Ct. 111, 99 L.Ed. 688 (1954); United States v. Calvey, 110 F.2d 327, 330 (3rd Cir. 1940); United States v. Nickle, 60 F.2d 372, 373-374 (8th Cir. 1932); Shell Oil Co. v. Industrial Commission, 2 Ill.2d 590, 119 N.E.2d 224, 231 (1954); Proposed Rules of Evidence for United States Courts and Magistrates, Rule 803(4), 51 F.R.D. 315, 419-420. Fourth, the defendant contends that the District Court should not have excluded the testimony of Dr. Donald Plot-nick, who attempted to express as an expert opinion that incarceration in a federal penitentiary “could create mental problems which could lead to one not knowing right from wrong and being able to act within the reasonable law.” Dr. Plotnick, a past inmate for eleven months at Lewisburg Penitentiary, is a practicing podiatrist, who also is preparing a book on prison life with the aid of interviews with inmates of several institutions. The doctor had never talked to the defendant and knew nothing about the conditions of the prisons in which defendant had been incarcerated. The District Court held that Dr. Plotnick was not an expert and could not testify as a lay witness. Determination of the qualifications of an expert and the question of whether expert opinion upon the objected matter should be permitted are questions usually left to the discretion of the trial court and will not be reversed unless the ruling is prejudicial. White v. United States, 399 F.2d 813, 819 (8th Cir. 1968). It was well within the discretion of the District Court to determine that a podiatrist, who had never met the defendant and did not know the conditions experienced by this defendant at Leavenworth Prison, could not qualify as an expert on all federal prisons and mental health so as to make such a broad opinion that all federal prisoners could have mental problems that would relieve them from subsequent criminal responsibility. The attempted hypothesis with its obvious syllogism had no adequate scientific or experimental background. Under its pervasive cloak all inmates of penitentiaries are deranged and thus irresponsible for their aberrant behavior. This has not proved to be the case. Judgment of conviction affirmed. . James Andrew Lucas (Couni, Two), John Dorrell III (Count Three), and Mr. and Mrs. Darían and Mr. and Mrs. Greenlee (Count Four). . A state murder charge was nolle prossed after this action was tried. . Love v. United States, 386 F.2d 260, 266 (8th Cir. 1967), cert. denied, 390 U.S. 985, 88 S.Ct. 1111, 19 L.Ed.2d 1286 (1968). . United States v. Stubblefield, 408 F.2d 309, 310 (6th Cir. 1969). . The District Attorney did not accuse the defendant of lying. He sought to elicit from the doctor that he relied on information furnished by defendant and that misinformation could lead to an erroneous diagnosis. After a number of attempts along that line of questioning, the following colloquy occurred: “Q. Now, sir, I will ask you specifically, and we’ll get it right down so the layman can understand. I’m a layman, I’m not a psychiatrist. If a patient gives you misinformation, wouldn’t that have some effect or possibly help mislead you in j'our diagnosis? “A. Actually when wo are trained as exports we expect— “Q. Sir, will you please answer my question without giving us a lecture? “The Cotirt: Pardon me, let the doctor answer. “A. We expect to weigh the answers. Even when they’re misstatements they may fit into a picture of illness or not illness and we can evaluate what a person tells us and the kind of emotion with which those statements are made, whether they fit into an illness pattern or not. So expertise is to cut through some misstatements and discern the facts which become— “The Court: Now, Mr. Martin, you may re-ask the question, sir. “Q. Now, sir, I’ll get to specifically Mr. Cochran’s case. “A. Yes, sir. “The Defendant: That’s what you’re trying to do, you’re trying to call me a liar, you goddamn — the police has lied to me all the time. I have never lied, don’t ever tell me that I’m a liar, you understand me, you— “The Court: Just a minute, restrain him.” . The extent and scope of cross-examination lies within the trial court’s discretion and reversal is only commanded when “an abuse of discretion leads to prejudice.” United States v. Hiken, 458 F.2d 24, 26 (8th Cir. 1972), cert. denied, 409 U.S. 842, 93 S.Ct. 41, 34 L.Ed.2d 81 (1972).

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Edward B. BENJAMIN, Plaintiff-Appellant, v. WESTERN BOAT BUILDING CORPORATION, Defendant-Appellee. No. 71-2313. United States Court of Appeals, Ninth Circuit. March 15, 1973. Gerry A. Reitsch (argued), Judson T. Klingberg, of Klingberg, Houston, Reitsch, Cross & Frey, Longview, Wash., William A. Porteous, III, of Porteous, Toledano, Hainkel & Johnson, New Orleans, La., for plaintiff-appellant. James J. Mason (argued), of Binns, Petrich, Mason & Hester, Tacoma, Wash., Jack P. Scholfield, of Guttormsen, Scholfield, Willits & Ager, Seattle, Wash., for defendant-appellee. Before KOELSCH and WRIGHT, Circuit Judges, and BELLONI, District Judge. Honorable Robert C. Belloni, United States Distict Judge, District of Oregon, sitting by designation. PER CURIAM: This is an appeal from an order granting summary judgment in favor of the defendant. The trial court ruled that all claims were barred by the statutes of limitation. We hold that those counts sounding in contract and breach of warranty are time barred but a material issue of fact remains on the fraud count. Edward Benjamin (plaintiff) entered into a contract with Western Boat Building Corporation (defendant) for the construction of a steel yacht. The vessel was delivered to plaintiff in 1959. Plaintiff first noticed rust and corrosion on the exposed surfaces of the vessel in 1961. Plaintiff, at that time, conducted an immediate check of the vessel for additional rust and corrosion, limiting his examination to the accessible and unsealed portions of the yacht. Plaintiff maintains that the corrosion which he observed in 1961 was normal, could have been anticipated in any well constructed vessel, and that no reason presented itself to conduct any further search. In 1969, a marine surveyor discovered that corrosion had eaten through the hull of the vessel from the inside out. The vessel was then partially stripped and dismantled, at which time plaintiff learned of corrosion in sealed areas that were ordinarily inaccessible. Plaintiff brought an action on these facts for breach of contract, breach of warranty and fraud. The district court issued on order granting summary judgment for the defendant based on its conclusion that there was “no genuine issue as to any material fact under Fed.R.Civ.P. 56 because the causes of action were barred by the Washington Statutes of Limitation.” Under Washington law which governs the relevant periods of limitation, Dam v. General Electric Company, 265 F.2d 612 (9th Cir. 1958), plaintiff’s claim for breach of contract and breach of warranty are time-barred. Plaintiff urges this court to rule that contract and warranty actions commence at the time of discovery of the breach. However, the Washington Supreme Court has held to the contrary, Taylor v. Puget Sound Power & Light Co., 64 Wash.2d 534, 392 P.2d 802 (1964), Nelson v. Sponberg, 51 Wash.2d 371, 318 P.2d 951 (1957), and its decisions are dispositive. The fraud count alleged that defendant wilfully concealed the fact that the vessel was constructed with poor quality steel and not in accordance with plans and specifications. The State of Washington provides a three year statute of limitations period in actions for fraud. RCW 4.16.080(4). That period commences to run “when there is discovery by the aggrieved party of the facts constituting the fraud. RCW 4.16.080(4), supra. Actual knowledge of the fraud will be inferred if the aggrieved party, by the exercise of due diligence, could have discovered it.” Strong v. Clark, 56 Wash.2d 230, 232, 352 P.2d 183, 184 (1960). Plaintiff filed an affidavit and supporting exhibits which raised an issue as to when he discovered the alleged fraud or should have discovered it. Summary judgment was inappropriately granted as to the fraud claim insofar as there existed a controversy over a material fact. Reversed in part and remanded.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

MERCURY MOTOR EXPRESS, INC., et al., Plaintiffs-Appellants, v. Norman C. BRINKE, Defendant-Appellee. No. 72-1110. United States Court of Appeals, Fifth Circuit. March 15, 1973. George D. Gold, Bernard C. Pestcoe, Miami, Fla., for plaintiffs-appellants. James J. Kenny, William G. Earle, Miami, Fla., J. Raymond Clark, Washington, D. C., for defendant-appellee. Before RIVES, THORNBERRY and GOLDBERG, Circuit Judges. THORNBERRY, Circuit Judge: Plaintiffs below sought a temporary restraining order, a preliminary injunction, and a permanent injunction to prevent defendant Brinke from unlawfully operating as a freight forwarder without an Interstate Commerce Commission (ICC) permit. The district court denied preliminary injunctive relief and in the same order stayed further proceedings pending final action by the ICC on Brinke’s freight forwarder permit application. Invoking this court’s jurisdiction under 28 U.S.C.A. § 1292(a)(1), plaintiffs appeal from both parts of the interlocutory order. Initially, this appeal presents a question of appellate jurisdiction to review the district court’s stay order. Concluding that we have jurisdictional power to review the stay order as well as the denial of injunctive relief, we vacate the stay and affirm the denial of a preliminary injunction. The eight plaintiffs in this case are freight forwarders who operate as such under statutorily required ICC permits. A freight forwarder may be described as follows: - • A freight forwarder is one who in the ordinary course of business assembles and consolidates small shipments into a single lot, assumes responsibility for the transportation of such property from a point of receipt to a point of destination, utilizes the services of carriers by rail, water or motor vehicle to help accomplish the movement, breaks the consolidated shipment up into its component parts, and distributes the goods to their destination point. Since the original shipments are usually small, the customer is charged on a basis of freight rates applicable to less-than-trucldoad or less-than carload shipments. The freight forwarder, who consolidates multiple small shipments into one large one, secures the cheaper transportation rate applicable to full truckload or carload lots. The difference between the two freight rates accounts for his gross profit. Household Goods Carriers’ Bureau v. United States, N.D.Cal.1968, 288 F.Supp. 641, 642, aff’d per curiam, 393 U.S. 265, 89 S.Ct. 477, 21 L.Ed.2d 426; see also Acme Fast Freight, Inc. v. United States, S.D.N.Y.1940, 30 F.Supp. 968, 969-971, aff’d per curiam, 309 U.S. 638, 60 S.Ct. 810, 84 L.Ed. 993. Freight forwarders are to be distinguished on the one hand from rail or pipe line carriers, water carriers, and motor carriers, which are expressly excluded from the statutory freight forwarder definition, and on the other hand from brokers, who generally perform the more limited role of arranging for transportation by motor carrier without consolidating or distributing shipments or assuming responsibility for the property en route. An appropriate ICC certificate or license is required for lawful operation as a carrier or a broker, just as a permit is required for doing business as a forwarder. Defendant Brinke holds an ICC broker’s license, which was issued to him in 1964, but he has no freight forwarder permit. He applied to the ICC for a freight forwarder permit in December of 1963, about a month before he applied for the broker’s license, but his application, adrift on an administrative odyssey which has already lasted over nine years, has not yet received final action. Plaintiffs alleged in their complaint below that Brinke, despite his lack of an appropriate permit, is functioning as a freight forwarder in blatant violation of the permit requirement of 49 U.S.C.A. § 1010, and that they are injured by competition from his unlawful enterprise. Suing under § 417(b)(2) of the Interstate Commerce Act, 49 U.S.C.A. § 1017(b)(2), which confers jurisdiction on the district court to enjoin a “clear and patent violation of section 1010” on application of “any person injured thereby,” plaintiffs sought a temporary restraining order and a preliminary injunction as well as a permanent injunction to halt Erinke’s allegedly unlawful operation. Brinke appears not to have contested the characterization of his business as a freight forwarding operation. He moved to dismiss, however, on the theory that his broker’s license at least colorably authorizes the services he renders so that there was no “clear and patent” violation of § 1010, and he moved alternatively for a stay of proceedings pending final action by the ICC on his freight forwarder permit. The district court after a hearing granted the alternative motion to stay, reserved ruling on the motion to dismiss, and denied plaintiffs’ application for a temporary restraining order and a preliminary injunction. Plaintiffs then took this interlocutory appeal from the stay order and denial of injunctive relief. I. Jurisdiction It is clear that this court has jurisdiction under 28 U.S.C.A. § 1292(a)(1) to review an order denying a preliminary injunction, but not an order denying a temporary restraining order. See, e. g., Smith v. Grady, 5th Cir. 1969, 411 F.2d 181; Connell v. Dulien Steel Products, 5th Cir. 1957, 240 F.2d 414, see also C. Wright, Federal Courts § 102 (2d ed. 1970). Accordingly, we shall consider the propriety of the district court’s denial of the preliminary injunction and pretermit consideration of the denial of the temporary restraining order. The basis of appellate jurisdiction to review the portion of the order staying proceedings is less obvious, but no less certain. Plainly, the stay order is not appealable as a final order under 28 U.S.C.A. § 1291. Further, we can say with certainty that the stay order standing alone — that is, considered independently of the order denying a preliminary injunction — would not be appealable under § 1292(a)(1). The settled rule governing appealability of stay orders is: An order staying or refusing to stay proceedings in the District Court is appealable under § 1292(a)(1) only if (A) the action in which the order was made is an action which, before the fusion of law and equity, was by its nature an action at law; and (B) the stay was sought to permit the prior determination of some equitable defense of counterclaim. Jackson Brewing Company v. Clarke, 5th Cir. 1962, 303 F.2d 844, 845, cert. denied, 371 U.S. 891, 83 S.Ct. 190, 9 L.Ed.2d 124, reh. denied, 371 U.S. 936; 83 S.Ct. 305, 9 L.Ed.2d 272; J. S. & H. Construction Company v. Richmond County Hospital Authority, 5th Cir. 1973, 473 F.2d 212 [1973]; see generally 9 Moore’s Federal Practice 1] 110.20 [3] (2d ed. 1972); C. Wright, Federal Courts § 102 (2d ed. 1970). In this case, the first requirement of the jurisdictional rule is not met since the action for injunctive relief under 49 U.S.C.A. § 1017(b)(2) is clearly equitable in nature. See Ephraim Freightways, Inc. v. Red Ball Motor Freight, Inc., 10th Cir. 1967, 376 F.2d 40, cert. denied, 389 U.S. 829, 88 S.Ct. 92, 19 L.Ed.2d 87. Thus, the stay is not itself an appealable order. Because this case is properly before the court as an appeal from the denial of an injunction under 28 U.S.C.A. § 1292(a)(1), however, our permissible scope of review extends to the stay order as well. A court of appeals normally will not consider the merits of a ease before it on an interlocutory appeal except to the extent necessary to decide narrowly the matter which supplies appellate jurisdiction, e. g., Time, Inc. v. Ragano, 5th Cir. 1970, 427 F.2d 219, but this rule is one of orderly judicial administration and not a limit on jurisdictional power. “[O]nce a case is lawfully before a court of appeals, it does not lack power to do what plainly ought to be done.” 9 Moore’s Federal Practice ¶ 110.25 [1] (2d ed. 1972); see also Kohn v. American Metal Climix, Inc., 3rd Cir. 1971, 458 F.2d 255, cert. denied, 409 U.S. 874, 93 S.Ct. 120, 34 L.Ed.2d 126 (1972); Korn v. Franchard Corporation, 2d Cir. 1971, 443 F.2d 1301, 1306; Semmes Motors, Inc. v. Ford Motor Company, 2d Cir. 1970, 429 F.2d 1197; Carter v. American Telephone & Telegraph Company, 5th Cir. 1966, 365 F.2d 486, cert. denied, 385 U.S. 1008, 87 S.Ct. 714, 17 L.Ed.2d 546; 3 W. Barron & A. Holtzoff, Federal Practice and Procedure § 1440 (Wright ed. Supp.1971). The Supreme Court has affirmed the power of an appellate court to reach the merits of a case before it on an interlocutory appeal and dismiss the action. Deckert v. Independence Shares Corporation, 1940, 311 U.S. 282, 61 S.Ct. 229, 85 L.Ed. 189; Smith v. Vulcan Iron Works, 1897, 165 U.S. 518, 17 S.Ct. 407, 41 L.Ed. 810. The Second Circuit has exercised its broad jurisdictional power on an interlocutory appeal from denial of a preliminary injunction to direct the entry of judgment for the plaintiffs. Hurwitz v. Directors Guild of America, Inc., 2d Cir. 1966, 364 F.2d 67, cert. denied, 385 U.S. 971, 87 S.Ct. 508, 17 L.Ed.2d 435. This court has previously exercised its jurisdictional power to review an otherwise non-appealable stay order in an interlocutory appeal from the denial of a preliminary injunction under § 1292(a)(1), and we think it is appropriate to exercise this power power for the same purpose in this case. Carter v. American Telephone & Telegraph Company, supra, see also Semmes Motors, Inc. v. Ford Motor Company, supra. II. The Stay Order The district court stayed further proceedings below pending final action by the ICC on Brinke’s freight forwarder permit because it concluded that central issues in the case lay “within the particular expertise and primary jurisdiction of the Interstate Commerce Commission.” We do not believe, however, that the doctrine of primary jurisdiction may properly be invoked to stay a suit brought under 49 U.S.C.A. § 1017(b)(2). The judge-made doctrine of primary jurisdiction comes into play when a court and an administrative agency have concurrent jurisdiction over the same matter, and no statutory provision coordinates the work of the court and of the agency. The doctrine operates, when applicable, to postpone judicial consideration of a case to administrative determination of important questions involved by an agency with special competence in the area. It does not defeat the court’s jurisdiction over the case, but coordinates the work of the court and the agency by permitting the agency to rule first and giving the court the benefit of the agency’s views, see 3 K. Davis Administrative Law Treatise § 19.01 (1958). Mr. Justice Harlan has summarized the development of the primary jurisdiction doctrine and the considerations which underlie it and govern its application: The doctrine of primary jurisdiction, like the rule requiring exhaustion of administrative remedies, is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties. “Exhaustion” applies when a claim is cognizable in the first instance by an administrative agency alone; judicial interference is withheld until the administrative process has run its course. “Primary jurisdiction,” on the other hand, applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views. General American Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 433, 60 S.Ct. 325, 331, 84 L.Ed. 361. No fixed formula exists for applying the doctrine of primary jurisdiction. In every case the question is whether the reasons for the existence of the doctrine are present and whether the purposes it serves will be aided by its application in the particular litigation. These reasons and purposes have often been given expression by this Court. In the earlier cases emphasis was laid on the desirable uniformity which would obtain if initially a specialized agency passed on certain types of administrative questions. See Texas & Pacific Railroad Company v. Abilene Cottonoil Company, 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553. More recently the expert and specialized knowledge of agencies involved has been particularly stressed. See Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576. United States v. Western Pacific Company, 1956, 352 U.S. 59, 63-64, 77 S.Ct. 161, 165, 1 L.Ed.2d 126; see also Watts v. Missouri-Kansas-Texas Railroad Company, 5th Cir. 1967, 383 F.2d 571, 581; Carter v. American Telephone & Telegraph Company, 5th Cir. 1966, 365 F.2d 486, 493-498, cert. denied 385 U.S. 1008, 87 S.Ct. 714, 17 L.Ed.2d 546. Primary jurisdiction reference to an agency is favored when it will promote even-handed treatment and uniformity in a highly regulated area or when “sporadic action by federal courts would disrupt an agency’s delicate regulatory scheme.” United States v. Radio Corporation of America, 1959, 358 U.S. 334, 348, 79 S.Ct. 457, 466, 3 L.Ed.2d 354. The importance of uniformity has been recognized especially in cases involving reasonableness of tariffs or rates. E. g., Arrow Transportation Company v. Southern Railroad Company, 1963, 372 U.S. 658, 83 S.Ct. 984, 10 L.Ed.2d 52; Texas & Pacific Railroad Company v. Abilene Cottonoil Company, 1907, 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553. Similarly, primary jurisdiction reference is favored when the agency possesses expertise in a specialized area with which the courts are relatively unfamiliar. In Watts v. Missouri-Kansas-Texas Railroad Company, supra, 383 F.2d at 583, for example, this court in affirming the applicability of the primary jurisdiction doctrine acknowledged judicial lack of expertise in technical questions of railroad financing. With these principles in mind, we turn to the case at hand. We note at the outset that plaintiffs have not sued under a traditional common law of equity theory or under a statute which is arguably foreign or inimical to the regulatory scheme of the Interstate Commerce Act, but under a section of the Act itself—§ 417(b)(2), 49 U.S.C.A. § 1017(b)(2). Further, the statute itself is not silent on the problem of coordinating the work of the district courts and the ICC in this type of action, but makes express provision for coordination. Section 1017(b) (2) provides, “The Commission may appear as of right in any such action,” and Section 1017(b) (3) explicitly gives the ICC the power to assert primary jurisdiction in an appropriate case: In any action brought under paragraph (2) of this subsection [§ 1017(b) (2)], the Commission may notify the district court of the United States in which such action is pending that it intends to consider the matter in a proceeding before the Commission. Upon the filing of such notice the Court shall stay further action pending disposition of the proceeding before the Commission. The statute thus gives the ICC power to effect a stay of a § 1017(b)(2) action, but conspicuously omits mention of any corresponding power in the district court when the ICC does not intervene. We think the conferring of power to stay only on the Commission in this thoughtfully designed procedural provision, enacted as an integral part of the regulatory legislation, strongly suggests that Congress intended to supersede and replace the judicial primary jurisdiction doctrine in § 1017(b) (2) suits. The high jurisdictional threshold of § 1017(b) (2) reinforces our conclusion that application of the primary jurisdiction doctrine is inappropriate in suits brought under it. The section gives the district court power to enjoin only a “clear and patent violation of section 1010.” Baggett Transportation Company v. Hughes Transportation Company, 8th Cir. 1968, 393 F.2d 710, 716, cert. denied, 393 U.S. 936, 89 S.Ct. 297, 21 L.Ed.2d 272. That this requirement of a “clear and patent violation” was intended as a jurisdictional one appears clearly in the documents recording the legislative history of the 1965 amendment (P.L. 89-170, 79 Stat. 648) which became § 1017(b). The Conference Report on the bill emphasized this construction: The conferees wish to emphasize that the words “clear and patent” in the amendments made by the conference substitute two sections 222(b) and 417(b) of the Interstate Commerce Act are intended as a standard of jurisdiction rather than a measure of the required burden of proof and that the district courts of the United States should entertain only those actions under these sections, as amended, which involve clear and patent attempts to circumvent regulation in the areas involved. Conference Report No. 810, 89th Cong. 1st Sess. (1965), 1965 U.S.C. Cong, and Admin.News, pp. 2942, 2943. The fact that the district court has power to enjoin only obvious violations largely removes from § 1017(b) (2) litigation the reasons which underlie the primary jurisdiction doctrine. The courts are unlikely to conflict among themselves or with the ICC in deciding clear cases, and judicial action without prior reference to the Commission therefore would not jeopardize uniformity in the administration of the regulatory scheme. Further, the value of the agency’s specialized knowledge and expertise is at a minimum in cases involving “clear and patent” violations. An analysis of the purposes of the 1965 amendment which became the present § 1017(b) (2) further confirms the inappropriateness of applying the primary jurisdiction doctrine in this type of litigation. A major purpose was to hasten enforcement procedures in cases of clear violations. See Baggett Transportation Company v. Hughes Transportation Company, supra at 715. Before 1965 only the ICC could sue to enjoin unlawful operations; the 1965 amendment allowed broader use by the ICC of this enforcement method by modifying requirements for service of process and, in addition, for the first time gave injured private parties the right to “apply directly to the courts for injunctive relief” without the necessity of prior, potentially time consuming administrative proceedings. Commenting on the 1965 amendment, Congressman Oren Harris, Chairman of the Committee on Interstate and Foreign Commerce, made clear the congressional intent to avoid delay in the procedures created and to provide a relatively speedy remedy: We firmly believe this new enforcement tool will be a good, one. It should not be subverted by any practice which will avoid or delay prompt settlement of the issues. 111 Cong.Rec. 9679. Judicial application of the primary jurisdiction doctrine would re-route plaintiffs through administrative proceedings the amendment entitles them to avoid and permit a delay of precisely the type that Congress sought to eliminate in cases of clear violations. In sum, we conclude that application of the judicial primary jurisdiction doctrine is inappropriate in § 1017(b)(2) litigation because (1) the statute expressly provides a method for coordinating the work of courts and the ICC, (2) judicial action which is limited to enjoining “openly and obviously unlawful” operations will not jeopardize the uniform administration of the regulatory system or require a high degree of specialized knowledge on the part of the courts, and (3) primary jurisdiction reference of cases brought under § 1017(b) (2) would thwart Congress’s intention to provide a relatively speedy enforcement procedure and remedy for injured parties. If a plaintiff cannot show a “clear and patent” violation, the proper disposition of his complaint is dismissal for want of jurisdiction; if he can, he is entitled to injunctive relief. III. Denial of Preliminary Injunction The district court denied the preliminary injunction sought by plaintiffs because it found: Plaintiffs have failed to show irreparable injury as a consequence of defendant’s activities. Defendant, on the other hand, has been continuously providing transportation services of the same nature since issuance of its broker’s license previously referred to and would suffer irreparable injury if required to terminate such operations. It is well established that the granting or denying of a preliminary injunction is a matter addressed to the sound discretion of the district court. Exhibitors Poster Exchange, Inc. v. National Screen Service Corporation, 5th Cir. 1971, 441 F.2d 560; see 7 Moore’s Federal Practice ¶ 65.04 (2d ed. 1972). The intended function of a preliminary injunction is to preserve the status quo pendente lite, and in deciding whether to issue it, the district court in this case properly weighed the damage the injunction would cause the defendant against the harm plaintiffs would suffer without it. We think the district court was clearly correct in finding that denial of the preliminary injunction sought would best preserve the status quo pendente lite and prevent irreparable injury to either party. Perceiving no abuse of discretion, we affirm the denial of the preliminary injunction. Affirmed in part; vacated in part; and remanded. . Interstate Commerce Act, § 410(a) (1), 49 U.S.C.A. § 1010(a) (1). . The statutory definition of freight forwarder is found in § 402(a)(5) of the Interstate Commerce Act, 49 U.S.C.A. § 1002(a)(5): The term “freight forwarder” means any person which (otherwise than as a carrier subject to chapters 1, 8, or 12 of this title) holds itself out to the general public as a common carrier to transport or provide transportation of property, or any class or classes of property, for compensation, in interstate commerce and which, in the ordinary and usual course of its undertaking, (A) assembles and consolidates or provides for assembling and consolidating shipments of such property, and performs or provides for the performance of break-bulk and distributing operations with respect to such consolidated shipments, and (B) assumes responsibility for the transportation of such property from point of receipt to point of destination, and (C) utilizes, for the whole or any part of the transportation of such shipments, the services of a carrier or carriers subject to chapters 1, 8, or 12 of this title. . The statutory definition of broker is found in § 203(a) (18) of the Interstate Commerce Act, 49 U.S.C.A. § 303(a) (18) : The term “broker” means any person not included in the term “motor carrier” and not a bona fide employee or agent of any such carrier, who or which, as principal or agent, sells or offers for sale any transportation subject to this chapter, or negotiates for, or holds himself or itself out by solicitation, advertisement, or otherwise as one who sells, provides, furnishes, contracts, or arranges for such transportation. . For carriers a certificate of public convenience and necessity issued by the ICC is required. See Interstate Commerce Act, § 1(18), 206(a)(1), 309(a), 49 U.S. C.A. §§ 1(18), 306(a)(1), 909(a). . A broker must obtain from the ICC a license. See Interstate Commerce Act, § 211(a), 49 U.S.C.A. § 311(a). . The opposite conclusion would be required if the stay order itself had the effect of denying a preliminary injunction. Glen Oaks Utilities, Inc. v. City of Houston, 5th Cir. 1960, 280 F.2d 330. . Judge Jones has observed, “The operation of the stay order is the same in the action equitable as in the action legal and if a right of appeal should be allowed or denied in one, the same should be true in the other,” and has suggested that the framers of the Federal Rules of Civil Procedures intended to lay to rest procedural rules such as the above-quoted one governing appealability of a stay which depend on the law-equity distinction. Glen Oaks Utilities, Inc. v. City of Houston, 5th Cir. 1960, 280 F.2d 330. Nevertheless, the rule is well established. Professors Moore and Wright have suggested that Congress or the Supreme Court should establish more rational rules in this area, but as yet neither body has undertaken to do so. See 9 Moore’s Federal Practice ¶ 110.20 [3] at 245 (2d ed. 1972); C. Wright, Federal Courts § 102 at 460 (2d ed. 1970). . The pertinent conclusions of law of the district court are: 2. The interpretation of the broker’s license held by defendant and a determination of the lawfulness of the activities of defendant conducted pursuant thereto are matters within the particular expertise and primary jurisdiction of the Interstate Commerce Commission. 3. In view of the pendency of a proceeding before the Interstate Commerce Commission in which the issue has been raised as to the lawfulness of defendant’s present activities, it is not appropriate for this Court to exercise jurisdiction until final disposition of the matter by the Commission. . We do not suggest that the necessary computations are purely esoteric or arcane to courts, but we know that the Commission has insights and experience denied judges. The subleties of railroad financing, encased in jargon and tucked into the intricacies of the administrative scheme may escape us. Watts v. Missouri-Kansas-Texas Railroad Company, 5th Cir. 1967, 383 F.2d 571, 583. . The ICC’s power to investigate violations and compel compliance with the statute, rules, or its own orders does not depend on the filing of a complaint by an injured party; it may undertake such action on its own initiative. Interstate Commerce Act, § 403(f), 49 U.S.C.A. § 1003(f). . Baggett deals with § 222(b)(2) of the Interstate Commerce Act, 49 U.S.C.A. § 322(b)(2), a section enacted in the same 1965 amendment (P.L. 89-170, 79 Stat. 648) as § 1017 (b) (2) and identical to it except that § 322(b) (2) deals with violations by motor carriers and brokers rather than violations by forwarders. The conclusions of the Baggett court regarding the purposes and jurisdictional requirements of § 322(b)(2) are clearly applicable to § 1017 (b) (2) as well. . House Report No. 253, 89th Cong. 1st Sess. (1965), 1965 U.S.C.Cong. and Admin.News pp. 2923, 2924. . In Baggett Transportation v. Hughes Transportation Company, 8th Cir. 1968, 393 F.2d 710, cert. denied 393 U.S. 936, 89 S.Ct. 297, 21 L.Ed.2d 272, the Eighth Circuit noted Congressman Harris’ statement and commented: The congressional concern evidenced by Congressman Harris’ remarks is well placed. The goal of seeking more efficient action through the administrative process than can be obtained through the courts has not always been realized. There is in the first instance the undue delay that may result from the administrative decision-making process itself. See 1 Davis, Administrative Law § 8.08, pp. 548-50. Further delay in effectively enforcing the administrative decision can result from lengthy review proceedings of the administrative action in the courts. For example, a three year delay in enforcing the administrative regulation in the Covington Mills case eventually succeeded in rendering a valid administrative decision moot. Mitchell v. Covington Mills, 1955, 97 U.S.App.D.C. 165, 229 F.2d 506, cert. denied, 1956, 350 U.S. 1002, 76 S.Ct. 546, 100 L.Ed. 865, see, Gelhorn & Byse Administrative Law, pp. 232-35. The over nine-year long pendency of Brinke’s freight forwarder permit application before the ICC provides a striking example of the delay that sometimes characterizes the administrative decision-making process. . House Rep. No. 253, 89th Cong. 1st Sess. (1965), 1965 U.S.C.Cong. and Admin.News, pp. 2923, 2931.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Plaintiff-Appellant, v. DEEL MOTORS, INC., d/b/a Deel Ford, and R. L. Nunn, Individually, Defendants-Appellees. No. 72-2192. United States Court of Appeals, Fifth Circuit. March 27, 1973. Richard F. Schubert, Solicitor of Labor, Donald S. Shire, Carin Ann Clauss, U. S. Dept, of Labor, Washington, D. C., Beverley R. Worrell, Regional Solicitor, Edwin G. Salyers, Atty., Dept, of Labor, Atlanta, Ga., Sylvia Ellison, U. S. Dept, of Labor, Washington, D. C., for plaintiff-appellant. Donald B. Harden, Charles Kelso, Atlanta, Ga., for defendants-appellees. Before GEWIN, SIMPSON and RO-. NEY, Circuit Judges. GEWIN, Circuit Judge: In this action, the Secretary of Labor appeals from the judgment of the district court dismissing his claim for injunctive relief under § 17 of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (1971), against the appellees, Deel Motors, Inc. and its vice president, Robert L. Nunn. The basis for the claimed relief is the alleged failure of the appellees to pay overtime wages as required by the Act to certain of their employees. This is a test case and there appear to be no controlling precedents except cases dealing with the rules of statutory construction. After a careful examination of the facts and the legal arguments presented, we find that the lower court properly disposed of this case and therefore affirm. The pertinent facts are undisputed and may be summarized with brevity. Appellee, Deel Motors, Inc., a Florida corporation, is a franchised automobile dealership engaged in selling new and used cars, automobile parts, and mechanical services. Appellee, Nunn, is a company vice president, responsible for implementing the company pay plans for its various employees. Part of Deel’s staff consists of four employees variously titled as “service writers”, “service advisors”, or “service salesmen.” These service salesmen work directly with customers co-ordinating the sale of numerous goods, services, and mechanical skills provided by the appellees. The service salesmen diagnose each customer's problem with his automobile and then refer the car to an appropriate department within appellees’ business operation for needed repairs or additional equipment desired. They monitor the work while in progress, keeping track of the parts or additions used, and then determine whether a satisfactory job has been done. When the Secretary’s investigation of Deel began, these salesmen were compensated by a weekly wage and a percentage commission on each service order written. Additionally, commissions termed “spiffs” were given service salesmen who sell certain products and services being promoted by the appellee Deel. Presently, pending outcome of this litigation, the salesmen are being paid on a straight commission basis plus “spiffs.” The Secretary contends that these employees fall within § 7 of the Act, 29 U. S.C. § 207 (1971), and are therefore entitled to overtime premium pay. However, the real dispute presented by this appeal is whether the general overtime premium pay requirements of § 7 are made inapplicable to the present fact situation by the exemption found in § 13(b)(10), 29 U.S.C. § 213(b) (10) of the F.L.S.A. This exemption from the general overtime premium pay provisions applies to: any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles ... if employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles to the ultimate purchasers. We feel that the best interpretation of this section calls for the inclusion of these service salesmen within the scope of this exemption. The Secretary contends that the overtime exemption is limited to salesmen of the vehicles, while appellees counter that such language encompasses all salesmen employed by an automobile dealership. Both parties have presented lengthy arguments as to the Congressional intent in the enactment of § 13(b)(10) leading to contradictory conclusions. We feel that appellees have presented the better reasoned interpretation of the section and that a common sense interpretation and application of this exemption mandates inclusion of service salesmen within its scope. First, there is no dispute of the fact that these four salesmen are “employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles to the ultimate purchasers, as required by the last clause of § 13(b) (10). Second, these service salesmen are functionally similar to the mechanics and partsmen who service the automobiles. All three work as an integrated unit, performing the services necessary for the maintenance of the customer’s automobile. The mechanic and partsman provide a specialized service with the service salesman co-ordinating these specialties. Each of these service employees receive a substantial part of their remuneration from commissions and therefore are more concerned with their total work product than with the hours performed. § 13(b) (10) exempts from the overtime pay requirements those employees of automobile dealerships who are “primarily engaged in selling or servicing” the vehicles. In the absence of clear intent to the contrary, we can not assume that Congress intended to treat employees with functionally similar positions differently, especially when the exemption by its own terms refers to “any salesman . . . engaged in selling or servicing automobiles . . . ” This is exactly what a service salesman does. They promote and attempt to sell the goods and services provided by Deel. Their remuneration is substantially based on their success in these endeavors. They openly solicit business by telephone and through written circulars to prospective and past customers. Their hours may be irregular, depending on the special needs of their customers. The intended scope of § 13(b) (10) is not entirely clear. Indeed, the Secretary's own interpretation of the coverage of that section is not altogether consistent. This court has previously recognized that this section “was not intended to be interpreted in the broad sense.” See, Shultz v. Louisiana Trailer Sales, Inc., 428 F.2d 61, 66 (5th Cir. 1970). However, exemptions are “drawn to meet particular needs.” The enactment of § 13(b) (10) was an implicit recognition by Congress of the incentive method of remuneration for salesmen, partsmen, and mechanics employed by an automobile dealership. The judgment of the district court is affirmed. . Formerly § 13(a) (19) of the Act exempted “any employee of a retail or service establishment which is primarily engaged in the - business of selling automobiles, trucks, or farm implements” from both minimum wage and overtime requirements. See, 29 U.S.C. § 213(a) (19) (1964). . As originally introduced in the House of Representatives § 13 (a) (19), 29 U.S.C. § 213(a) (19) (1964), would have simply been repealed. See, H.R. 8259, 89th Cong., 1st Sess. (1965). However, during the hearings on the proposed amendments, Sam H. White, Chairman of the Governmental Relations Comm, of the National Association of Automobile Dealers, testified in opposition to the repeal of § 13(a) (19). (Hearings on H.R. 8259 before the Gen.Comm. on Education and Labor of the House Comm, on Education and Labor, 89th Cong., 1st Sess., Pt. 1, pp. 366-67 (1965). At the next session the House committee, after deliberation reported out H.R. 13712. This new bill contained an exemption, 13(b) (10), which included “any salesman, mechanic, or partsman employed by an establishment which is primarily engaged in the business of selling automobiles ... to the ultimate purchaser.” (H.R.Rept.No.1366, 89th Cong., 2d Sess., p. 71 (1966), U.S. Code Cong. & Admin.News 1966, p. 3002. H.R. 13712 was passed by the House on May 26, 1966 (112 Cong.Rec. 11653). The Senate Committee on Labor and Public Welfare rewrote Section 13(b) (10), restricting that exemption to “any salesman (other than partsman) or mechanic primarily engaged in selling or servicing automobiles, trailers, trucks, farm implements, or aircraft if employed by a non-manufacturing establishment primarily engaged in the business of selling such vehicles to ultimate purchasers.” (S. Rept. No. 1487, 89th Cong. 2d Sess. p. 62 (1968)). The Committee Report explained : It is the intent of this exemption to exclude from the coverage of Section 7 all mechanics and salesmen employed by an automobile dealership, (at 31-32). Emphasis added. The House refused to accept the Senate amendments and the conflicting versions were referred to a Conference Committee (112 Cong.Rec. 21228 (1966)) which reported § 13(b) (10) in its present form. The exemption was restored for partsmen of automobile dealers. The Conference Report explained: The conference substitute conforms to the House provision regarding partsmen except that such exemption shall be available only to salesmen, partsmen and mechanics primarily engaged in selling or servicing such vehicles. (Conference Report No. 2004, 89th Cong., 2d Sess., p. 19 (1966), U.S.Code Cong. & Admin.News 1966, p. 3002. The Conference Report was accepted by the House on September 7, 1966, (112 Cong. Rec. 21949) and the Senate on September 14, 1986, (112 Cong.Rec. 22669). . Initially, the Secretary held that § 13(b) (10), did exempt individuals with the duties of service salesmen. See, Wage-Hour Opinion Letter No. 630, July 6, 1967. ¶ 30,620 C.C.H.Lab.Law Rep. One month later the Administrator ruled that the exemption did not apply to employees “variously described as “service salesmen” who are not themselves primarily engaged in the work of a salesman, partsman or mechanic.” See Wage-Hour Opinion Letter No. 660, August 4, 1967, ¶ 30,652 COH Lab.Law Rep. This opinion is now codified in 29 C.F.R. 779.-372(C)(4). (Supp.1972). After the depositions in this case were submitted, the Secretary attempted to voluntarily dismiss this action. We do not cite these actions as controlling but simply to show that the issue here is a close one and we feel that appellees have met their burden of persuading the court that their employees fall within the exemption. The letter seeking dismissal is as follows: “January 21, 1972 Honorable Joe Baton United States District Judge Post Office Box 4941 Miami, Florida 33101 Re: Hodgson v. Deel Motors, Inc., d/b/a Deel Ford and Robert L. Nunn USDC SD Florida Civil Action File No. 71-1283-Civ-JE Dear Judge Eaton: The evidence disclosed by the taking of depositions in this case has led us to the conclusion that we should no longer urge our position. Accordingly, we would like to dismiss this case. We have discussed dismissal with counsel for the defendants in the hope that they would have no objection to a dismissal. To date, the defendants have not indicated either approval of or opposition to a dismissal. We assume that if the defendants oppose dismissal, the court will be advised of this opposition. Respectfully, Beverly R. Worrell Regional Solicitor Enclosure cc: Mr. Donald B. Harden Attorney at Law” . We find support for this interpretation that all salesmen of an automobile dealership fall within the exemption by Congressman Dent, the author of H.R. 13712, when he replied to his colleagues, concerning the Congressional intent by the inclusion of 13(b) (10). See, 112 Cong.Ree. 11289-11290 (1966). The following is a part of that exchange: Mr. ANDREWS of North Dakota. . . I want to make .sure that the intent of Congress is that those who are primarily retail dealers engaged in selling Ford and Chevrolet automobiles have this exemption for their commission employees such as parts men and salesmen and mechanics. (Emphasis added) Mr. DENT. The answer is still “Yes” as far as I can tell. (Id. at 11290). The exemption provided by 13(a) (19) was to be continued for salesmen and mechanics in recognition of the traditional incentive pay plans and irregular hours of such employees.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America, Plaintiff-Appellee, v. M. Murray SCHECHTER, Defendant-Appellant. No. 72-2822. United States Court of Appeals, Fifth Circuit. March 23, 1973. Rehearing Denied April 20, 1973. E. David Rosen, Richard M. Gale, Miami, Fla., for defendant-appellant. Robert W. Rust, U. S. Atty., Charles O. Farrar, Asst. U. S. Atty., Miami, Fla., Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Joseph M. Jabar, Attys., Tax Div., Dept, of Justice, Washington, D. C., for plaintiff-appellee. Before BELL and THORNBERRY, Circuit Judges, and GROOMS, District Judge. GROOMS, District Judge: This appeal is to review a judgment of conviction by the court after a non-jury trial on a two count indictment which charged appellant with knowingly and wilfully evading and defeating his income tax for the years 1967 and 1968 in violation of 26 U.S.C. § 7201. Appellant insists that the evidence was insufficient to sustain the conviction, and that the court erred in two particulars in its rulings upon evidence. Appellee upholds the sufficiency of the evidence, and the correctness of the rulings. Appellant, a physician, for the year 1967 reported gross receipts of $203,-496.00 and taxable income of $165,100.-00. For 1968 gross receipts of $213,-633.00 and taxable income of $167,162.-00. He omitted taxable income for the year 1967 in the amount of $21,958.15 and for 1968 in the amount of $43,910.-74. An additional tax liability of $14,-054.00 for 1967 and $31,953.00 for 1968 resulted from these omissions of income. Appellant’s secretary kept a daily record showing: (1) “charges,” (2) “cash,” and (3) “Rec’d on account.” All the entries on the daily record book were correctly entered. Generally at the end of the month appellant would personally transpose the totals of each day’s business to monthly summary sheets. Discrepancies arose when the totaled figures in the daybooks were transcribed to the summary sheets. These discrepancies were of two types. One type was the transposition of an understated number to the summary sheets occasioned by the omission of the initial digit or some other digit in the number. The other type was “underfooting,” or the adding of a column of figures and entering an amount for a total which was less than a true addition of that column of figures. For the year 1967 there were twenty transposition discrepancies in the amount of $14,813.40 and eleven underfooting discrepancies in the amount of $7,144.76. All of the former and all but one of the latter, amounting to forty cents, were in favor of appellant. For the year 1968 there were twenty-five transposition discrepancies in the amount of $32,265.94 and ten underfooting discrepancies in the amount of $11,-644.80. All but one of the former, amounting to $2.76, and all of the latter were in appellant’s favor. When the time arrived for the preparation of his return appellant took his monthly and annual summaries and his daily record books to an accountant. He would sit next to the accountant and would read the figures from his recap sheets. The accountant would write the figures as they were called out to him on his own recap sheets, occasionally checking to see if they were the same figures as those appearing on appellant’s sheets. The books were made available to the accountant, but he never checked the figures other than totaling the amounts read to him to see if they were the same as the totals on appellant’s summary sheets. This procedure was followed from 1957 forward. The accountant was not employed to audit appellant’s books. To counter the evidence as to the discrepancies in the particulars detailed, appellant offered evidence that the adding machine used by him was defective, and that appellant, who reported on a cash basis, made non-taxable errors of a similar nature when he transposed the totals in the daily charge columns to the charge columns on the monthly summary sheets for both years. The adding machine appears to have been used for only a couple of months after it was found to be out of order and was then exchanged for a new machine. There were seven discrepancies in the charge column summaries for 1967, fourteen for 1968, and with one day in each year entirely omitted. The rule is now well established that in considering the sufficiency of the evidence this court does not determine whether it establishes guilt beyond a reasonable doubt, but only whether the evidence would permit the trier of fact to find the defendant guilty beyond a reasonable doubt, Gordon v. United States, 438 F.2d 858, 867 (5 Cir.). The judgment of conviction must be sustained if there is substantial evidence, taking the view most favorable to the Government, to support it. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680; Gordon v. United States, supra. A finding of guilty, whether at the hands of court or jury, is not to be overturned unless there is no substantial evidence to support it. Cohen v. United States, 363 F.2d 321, 327 (5 Cir.). The following facts stand out in the record: the substantial amount of the taxable income omitted; the significant effect of that omission ; the number of the discrepancies; the odds against their occurrence in appellant’s favor as inadvertent routine errors; appellant’s personal assumption of the simple mechanical task of compiling the monthly summaries; the appearance of the discrepancies conjoined with the performance of that task; and his action in personally calling off the totals appearing on the summaries in lieu of leaving them with the accountant for the preparation of his returns. These facts together with all the other evidence, including the non-taxable discrepancies, which could be construed as a part of a pattern designed to defraud and not as innocent errors, constituted a sufficient basis upon which to rest the court’s conviction in keeping with the guidelines spelled out in the decisions above noted. Appellant asserts a violation of his Fifth Amendment rights against against self-incrimination arising from the court’s action in overruling his motion to strike the following question propounded to him: “Did you furnish the summary sheets?” Immediately preceding this question he had been asked if the agent had asked to examine his records for 1964, 1965, 1966. There was no objection and he replied that the agent had asked to examine his 1966 records, but that he did not recall that he asked for his 1964 or 1965 records. Following a colloquy between court and counsel in the course of which the court observed that the agent had a right to look at his 1966 records, the question was withdrawn and never answered. We find no error or violation of Fifth Amendment rights in any action taken or statement made by the court at that point in the trial. Likewise, the court did not err in sustaining an objection to a hypthetical question propounded to an expert in accounting concerning good accounting practices in using a client’s records, including daybooks, summary sheets, and adding machine tapes, in preparation of an income tax return. The question was irrelevant. The adequacy or quality of the accountant’s services was not in issue. Blumberg v. United States, 222 F.2d 496, 499 (5 Cir.). He had never been employed to audit appellant’s books to determine the accuracy of the summary sheets. He was hired simply to prepare the tax returns from information supplied to him by appellant. The judgment of the trial court is Affirmed. . Section 7201. Attempt to evade or defeat taw Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law,- be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution. . Appellant was in the 58% bracket and would need to gross approximately $120,000.00 in order to net an amount equal to the tax on the amount of income omitted. . It will be presumed that the trial judge relied only upon properly admitted and relevant evidence. United States v. Dillon, 436 F.2d 1093 (5 Cir.).

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2024-08-24T03:29:51.129235

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SECURITY INSURANCE COMPANY OF HARTFORD, Plaintiff-Appellee, v. A. G. WIMPY and A. G. Wimpy Company, Inc. et al., Defendants-Appellants. No. 71-1839. United States Court of Appeals, Fifth Circuit. March 8, 1973. W. Woodrow Stewart, Joe K. Telford, Gainesville, Ga., for defendants-appellants. B. Carl Buice, Gainesville, Ga., for plaintiff-appellee. Before JOHN R. BROWN, Chief Judge, and INGRAHAM and RONEY, Circuit Judges. JOHN R. BROWN, Chief Judge. As a rare animal too often neglected and overlooked as aggrieved parties survey the appellate zoo, this case comes to us on an agreed statement, F.R.A.P. 10(d). It presents for decision the computation of correct premiums under a retrospective rating plan where the Insurer cancels before the expiration of the last year of a three year policy period because of adverse loss experience on the part of the Assured. The trial court held for the Insurer and the Assured appeals. We reverse. In the quest for the answer the problem comes down to making sense out of non-sense. In more austere language, the problem is interpreting, or more accurately trying to interpret, the specific terms of the cancellation provision of Plan D. The facts are extremely simple. The Insurer issued its first policy to Assured on April 3, 1965. On April 3, 1966, Insurer issued a similar renewal policy for another year’s coverage. Because of Assured’s poor loss experience during the first two years of coverage, Insurer decided on April 3, 1967, that it would issue a policy effective only until June 15, 1967. By any realistic view of the facts this action must be classed as a cancellation of present and future insurance coverage. Assured paid the standard premium for this twenty-six months’ coverage. Insurer then determined that the very same loss experience for which it can-celled the insurance warranted it in assessing the 150% maximum additional premium under the Retrospective Premium Endorsement. The applicability of Retrospective Premium Plan D in the event of such a cancellation presents the legal issue of contract construction. Assured contends that the relevant contract provisions are ambiguous and, therefore, the general canon of construction for standard form contracts obliges us to construe them against Insurer. American Fidelity and Casualty Co. v. St. Paul Mercury Indemnity Co., 5 Cir., 1957, 248 F.2d 509; Retona Chemical Corp. v. Globe Indemnity Co., 5 Cir., 1968, 404 F.2d 181; Southeastern Fidelity Insurance Co. v. McDonald, Ga., 1972, 125 Ga.App. 394, 188 S.E.2d 162. On this work-a-day problem we first must examine the provisions of the insurance policy and Plan D to see whether the language fairly construed the parties’ intentions for this contingency. Paragraph 5 of Plan D provides that the “cancellation or non-renewal, prior to the end of the three year period of any policy designated in Table I shall be deemed to be cancellation of the retrospective rating plan” (see par. 5 [i], note 4, supra). Assuming that this phrase means what it says, Insurer’s claim to the additional premiums based on the Retrospective Rating Plan up to the date of cancellation cannot stand. Insurer contends, however, that the phrase merely effectuates a cancellation of the Retrospective Rating Plan for future coverage and does not affect the earned premium to date. It buttresses this contention by emphasizing clause (ii): “and the premium for insurance subject to Plan D for the period such policies have been in force shall be computed in accordance with the other provision of this endorsement” (par. 5 [ii], note 4, supra). But this hardly helps Insurer. First, if as Insurer contends the “other provision of this endorsement” means the retrospective rating plan, then the entire cancellation clause would read as follows: “The cancellation or non-renewal, prior to the end of the three year period of any policy designated in Table I shall be deemed to be cancellation of the retrospective rating plan, and the premium for insurance subject to Plan D for the period such policies have been in force shall be computed in accordance with the retrospective rating plan.” That is either ambiguous or question-begging in the sense that it does not provide the answer to just what the retrospective rating plan would then prescribe. And probably what is more important, the argument conveniently ignores that little, simple but often troublesome, portentous “provided”. Provided what? Provided what? is the key to this case. And it leads us to a decision not reached elsewhere or in the Court below. Article 5 (note 4, supra) specifically takes care of several situations. In 5(a) the policy deals with cancellations by the Assured. By the operation of sub-par (1) the minimum retrospective premium is the [i] standard premium for all closed years plus [ii] the short rate standard premium for the period covered in the year of cancellation. The Assured gets no possible benefit from good experience since it must pay the standard premium for closed years and bear the much higher short rate premiums for the incompleted period of cancellation. But as proof that the Plan D is to penalize — and hence discourage cancellation by the Assured — it may even be much worse. Clause (2) fixes maximum retrospective premium as the sum of the audited standard premium, not up to the end of the closed years, but up to the date of cancellation, and the estimated standard premium to the end of the third year. Under this formula Assured can get no benefit from good experience although under the maximum formula just summarized it may have to bear a substantial added burden for bad experience to the extent that (i) its completed experience justified a refund or (ii) the estimated standard premium for the remainder of the policy term exceeded what would be payable either under short rate or actual experience or both. In short, 5(a) prescribes in detail the consequences in terms of the added costs imposed on a cancelling Assured. For this situation the “provided” makes clause 5 [i] absolute and obliterates almost altogether any operative effect of clause 5 [ii] because it is now clear that it is standard and short rates, actual or estimated, which alone control. When it comes to cancellation by Insurer the Provided what? is limited to cancellations for non-payment of premiums by Assured. This is again a powerful stimulant not only to continue coverage but to pay premiums. For the consequence on Assured is the same as 5(a)(2). Provided what? does not even begin to cover cancellation for bad loss experience. In view of that, there is no proviso to clause 5 [ii] which clearly prescribes that the premium for the period the insurance is effective “shall be computed in accordance with the other provisions of” Plan D. This brings into play paragraph 4 covering computations of premiums on a continuous three year retrospective basis. Under par. 4 the concept of this rating plan (see note 4, supra [from AGS] is that Assured will be allowed to average his experience over the three year period. The computation is remade as each successive year is closed. If on the three year basis the loss experience calls for additional premiums, Assured must, up to 150%, pay them. If, on the contrary, loss experience calls for lesser premiums, Insurer must repay them. Obviously it would be unfair in the absence of clear language to the contrary to allow Insurer to unilaterally cut off the right of Assured to have the benefit under the premium formula of what the post-cancellation experience would have afforded. On the other hand there are no equities which would justify affording Assured more benefits than would have been received had Insurer not cancelled. And certainly nothing in the words used in Plan D either require or suggest such a result. In this way the concept of leveling-off is kept intact. Neither party is prejudiced. Each is required merely to live up to his obligation to pay more or refund depending on loss experience. And it keeps faith with the plain words of clause 5 [ii]. Insurer may make the beguiling argument that allowing cancellation as we do (note 8, supra) this further application of par. 4 of Plan D anomously calls for continuation of the insurance without receipt of premiums. This is not so at all. Assured has no coverage from the date of cancellation. But, in computing the adjusted premium for the period from the attachment of the risk to the time of cancellation Assured’s loss experience for the post-cancellation period has to be taken into account with the pre-cancellation experience. What this really amounts to is an application of the law’s traditional technique used in a variety of situations of determining or measuring consequences for past conduct by subsequent events. This course seems eminently preferable to following the easy way out of finding an ambiguity and then giving the full break to Assured, thus in effect imposing the full burden on Insurer for the cancellation we have held to be permissible. And this is so even though other Courts have taken the ambiguity route to reach opposite results. Perhaps we add to the ambiguity by not relying on it. But we think we finally make sense of non-sense, interpret the bargain thereby, hold both parties to it and leave to the District Court the task of determining on remand and further proceedings the dollar consequences which this reading requires. Reversed and remanded. RONEY, Circuit Judge (dissenting): I agree that the judgment of the district court should be reversed, but I would hold that the plaintiff insurance company is entitled to standard premiums only and is not entitled to collect retrospective premiums. This is a diversity case from Georgia and should be decided under Georgia law. The only Georgia case cited to us is Travelers Indemnity Co. v. Horace F. Allison d/b/a H. F. Allison Contract Hauling, Civil Action No. K-12,658, July 15, 1968, Hall County Georgia Superior Court. Although not compelling authority, it is the only Georgia law on point and is from a Georgia court located within the jurisdiction of the district court. There is no reason for a federal court not to follow it. The Georgia court recognized that there are good arguments on both sides of this question, but held that the ambiguity of the policy requires the resolution of the conflict against the insurer, which wrote the policy. Of the cases cited from other jurisdictions which involved the identical cancellation clause, two were decided in favor of the insured, Bituminous Casualty Corp. v. Swartout, 270 Minn. 216, 133 N.W.2d 32 (Minn.1965); Traveler’s Insurance Co. v. Jeffries-Eaves, Inc., 166 Colo. 220, 442 P.2d 822 (1968), and one was decided in favor of the insurer, Bituminous Casualty Corp. v. Lewis Crane Service, Inc., 173 So.2d 715 (Fla.App.1965). The wording of the cancellation clause was materially different in Wimpy v. Maryland Casualty Co., 223 F.2d 649 (5th Cir. 1955). . The trial submission was virtually all on stipulation. . The agreed statement (AGS) states: “Restrospective rating is based on premiums, which have been developed through past experience, or other individual rating of risk. Manual rates are adjusted to reflect the experience of the individual concern, as it differs from the industry as a whole. This is experience rating, and is prospective rating. In other words, the experience of the past is taken as an indication of the experience expected for the renewal policy period. Restrospective Rating is nothing more than a practical method of determining current rates from the basis of current losses and this is superimposed upon the experience rate. The plan utilized in connection with the policies concerned in this action was Plan ‘D’. The basic premium is expressed as a percentage of the standard premium, and includes such items as acquisition cost, branch office expense, home office administration and audit expense, engineering and bureau expenses, profit and contingencies. The minimum premium is the least amount of money that the insurance company may charge in the event of excellent experience on behalf of the insured, and is usually expressed as a percentage of the standard premium. The maximum premium on the other hand is the maximum amount of money the insurance company may charge, if the loss record of the insured is poor, and this is expressed as a percentage of the standard premium. # * * The formula used in determining the final Retrospective Premium is as follows: Retrospective Premium = [basic premium + excess loss premium -|- (incurred losses x loss conversion factor)] x tax multiplier, subject to minimum and maximum retrospective premiums.” . “To make this plan more attractive it is usually written for more than one year. The plan in the instant case was written for three years.” (AGS). We agree, however, with Insurer that this contemplated the issuance of renewal policies for the second and third years. . For ease of reference we have inserted [i] and [ii] in the introductory par. 5: 5. Cancelation. The cancelation or non-renewal, prior to the end of the three-year period, of any policy designated in Table I shall [i] he deemed to he cancelation of the retrospective rating plan, and [ii] the premium for insurance subject to Plan D for the period such policies have been in force shall he computed in accordance with the other provisions of this endorsement, provided: (a) Cancelation hy the named insured. In the event of cancelation by the named insured, (1) the standard premium shall be computed as the sum of the audited standard premium for all completed annual periods and the short rate standard premium for the period in which cancelation is effective; the minimum retrospective premium shall be the standard premium so computed; (2) in computing the maximum retrospective premium, the standard premium shall be computed as the sum of the audited standard premium to the date of cancelation and the estimated standard premium from the date of cancelation to the end of the throe year period. ¡(b) Cancelation hy the company. In the event of cancelation by the company because of non-payment of premium by the named insured, the maximum retrospective premium shall be computed on the basis of the audited standard premium from the beginning of the three year period to the date of cancelation and the estimated standard premium for the balance of the three year period. (c) Cancelation of part of insurer’s operations. Neither the insured nor the company may cancel the insurance applying to a part of the operations of the insured. (Emphasis supplied). . Applying Plan D under •which the minimum retrospective premium was 60% of the standard premium, and the maximum 150%, the Insurer claimed and the Court awarded: . The only possible operative effect left by 5[ii] is perhaps to put a ceiling of 150% on the maximum. . 4. Payments and Computations of Premium for Insurance Subject to Plan D. (a) Standard Premium. The named insured shall pay the standard premium to the company in accordance with the provisions of the policies, other than this endorsement, specifying the manner of premium payment. (b) Retrospective Premium. A computation of the retrospective premium applicable to the first annual period, based upon the standard premium and incurred losses for such period, such losses to be valued as of a date six months after the expiration of such period, shall be made by the company as soon as practicable after such valuation date. A computation of the retrospective premium, applicable to the first two annual periods, based upon the standard premium and incurred losses for such periods, such losses to be valued as of a date six months after the expiration of the second annual period, shall be made by the company as soon as practicable after such valuation date. A computation of the retrospective premium, based upon the standard premium and incurred losses for the three year period, such losses to be valued as of a date six months after the expiration of such period, shall be made by the company as soon as practicable after such valuation date. Such computation of the retrospective premium for the three year period shall be final if (1) all claims have been closed or it is apparent that the retrospective premium will exceed the maximum retrospective premium, and (2) within ninety days from approval of such computation by the organization having jurisdiction, the company, with the agreement of the insured, requests of such organization that the computation be final. If such computation is not final, a further computation of the retrospective premium, based upon incurred losses valued as of a date eighteen months after termination of the policies, shall be made by the company as soon as practicable after such valuation date. Such further computation shall be final unless, within ninety days from approval of such computation by the organization having jurisdiction, the company or the named insured requests of such organization that a further computation be authorized. Any subsequent computations, to be made only at intervals of twelve months, shall each be subject to a similar procedure. If the named insured disposes of his entire interest in the operations covered by the policies, or makes an assignment for the benefit of creditors, or is in a legal proceeding reorganized or declared bankrupt or insolvent, and if the retrospective premium as of the date of such change of status is greater than the standard premium for insurance to such date, the company may compute the retrospective premium as of such date, as soon as practicable thereafter. After each computation, if the premium thus computed exceeds the premium paid for insurance subject to Plan D, the named insured shall pay the difference to the company; if less, the company shall return the difference to the named insured. . This is not to hold in a left-handed way that Insurer could not cancel for bad experience. We simply say that exercising that right, Insurer had to recognize that for the balance of the three year term it runs the risk of substantial credits if Assured’s post-cancellation experience warrants it. . The correct method of computation we leave to the trial Court on remand, but it is not as complex as might first appear. On the hypothesis that post-cancellation would produce a credit for refund there would be no occasion for an offset for the premiums theoretically payable (but not paid) for the post-cancellation period. On the other hand, if post-cancellation experience would not produce a credit it would mean that Assured would be liable for the full retrospective premium computed on the basis of the experience from inception to cancellation not to exceed, of course, 150% of the standard premium for that period. In this way Assured would get the benefit of any post-cancellation credit, but in no ease would Assured be liable in excess of the retrospective rating premium computed to date of cancellation solely on the basis of precancellation loss experience. Nor should it be, since the most Insurer should get is the maximum amount permitted under the formula for coverage afforded to date of cancellation. . Falling back on ambiguity to give Assured here the standard premium basis where it is less than the retrospective rate would, as a Georgia -Brie precedent, compel us to apply this reading of Plan D to the next case of an Insurer preexpiration cancellation where the standard premium would be more than Assured’s retrospective rate up to date of cancellation. The doctrine of ambiguity permits the Court to construe it most favorably to Assured. But the process is construction, not contemporary equitable adjustment. Once construed, it must be applied evenhandedly, not on a basis of achieving the least dollar cost to Assured in the case of the day. . Bituminous Casualty Corp. v. Lewis Crane Service, Inc., Fla.App., 1965, 173 So.2d 715, held that the language involved clearly contemplated application of the retrospective rating plan to periods of past coverage regardless of who cancelled the policy or why. See also Wimpy v. Maryland Casualty Co., 5 Cir., 1955, 223 F.2d 649, involving different policy language. Two others found the policies to be severely lacking in clarity, Bituminous Casualty Corp. v. Swartout, Minn., 1965, 270 Minn. 216, 133 N.W.2d 32; Traveler’s Insurance Com. v. Jeffries-Eaves, Inc., Colo., 1968, 166 Colo. 220, 442 P.2d 822, and limited recovery to the standard premium. . We do not have to determine whether we should apply the suggestion in Boston Insurance Co. v. Gable, 5 Cir., 1965, 352 F.2d 368, 370, that when courts arrive at contrary conclusions on identical wording it must be ambiguous. This simplified approach submerges local policy considerations which frequently vary from state to state, especially in insurance problems. See American Agricultural Chemical Co. v. Tampa Armature Works, 5 Cir., 1963, 315 F.2d 856, 862-863 (Brown, J. concurring). Cf. United States v. Seckinger, 1970, 397 U.S. 203, 90 S.Ct. 880, 25 L.Ed.2d 224, reversing 5 Cir., 1969, 408 F.2d 146. . We are not the first tribunal to toil in this field. Several appellate courts have muddled along in an attempt to make sense of non-sense and find the golden fleece — “provided what?”. See note 11 supra. Perhaps our efforts have been somewhat clumsy. But if the result is unsatisfactory, it is not the responsibility of the judiciary. Speaking from the disinterested vantage of the judiciary, we can only express our hope that if the insurance fraternity is displeased with this result, that it will do the natural thing and provide what.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America, Appellant, v. Vincent ROLLINS, Defendant-Appellee. No. 699, Docket 72-2399. United States Court of Appeals, Second Circuit. Argued March 2, 1973. Decided March 13, 1973. John W. Nields, Jr., and Dean C. Rohrer, Asst. U. S. Attys., New York City (Whitney North Seymour, Jr., U. S. Atty., S. D. N. Y., on the brief), for appellant. Phyllis Skloot Bamberger, New York City (Robert Kasanof, The Legal Aid Society, New York City, on the brief), for appellee. Before KAUFMAN and MANSFIELD, Circuit Judges, and BRYAN, District Judge. United States District Court, Southern District of New York, sitting by designation. IRVING R. KAUFMAN, Circuit Judge: We are called upon to interpret a provision of this Court’s Rules Regarding Prompt Disposition of Criminal Cases, often referred to as the Second Circuit Speedy Trial Rules. In all candor, this case is somewhat of an anachronism in a legal system, such as ours, that contemplates precedential use of judicial decisions, inasmuch as the Speedy Trial Rules will shortly be replaced by a new Circuit plan for the Prompt Disposition of Criminal Cases, adopted pursuant to Rule 50(b), F.R.Cr.P., and under which the problem before us could not have arisen, see, infra, at 1111. At issue in this case is the procedural interplay between Rule 4 and Rule 5(h) of the Speedy Trial Rules. Rule 4 requires the Government to be ready for trial in all criminal cases within six months from the date of arrest, service of summons, detention or the filing of a complaint or of a formal charge (other than a sealed indictment) upon which a defendant is to be tried, whichever is earliest in time. Unless the government is granted an extension of the six-month period under one or more of the exceptions found in Rule 5, the charge, upon proper application, must be dismissed. In Hilbert v. Dooling, 476 F.2d 355 (2 Cir., 1973), the Court, sitting en banc, announced that dismissals under Rule 4 are with prejudice. Rule 5(h), the provision pertinent to our review of this matter, provides: 5. In computing the time within which the government should be ready for trial under rules 3 and 4, the following periods should be excluded: (h) Other periods of delay occasioned by exceptional circumstances. The question presented on "this appeal is whether the Government, if it wishes to secure a Rule 5(h) extension, must do so by motion prior to the expiration of the six-month period; and whether, having failed to do so, and also having failed to be ready for trial within six months, the Government must suffer dismissal of the charge against a defendant, despite the fact that it may have a valid 5(h) claim to raise in opposition to the defendant’s motion to dismiss. The facts in this ease are quite simple. In a complaint dated March 30, 1972, the Government charged Vincent Rollins with the sale of heroin to an undercover agent. Rollins was arrested on March 30, and an indictment charging him with the distribution of heroin was filed on April 28, 1972. Rollins pleaded not guilty to the charge on May 15. On October 13, 1972, six months and thirteen days after commencement of the six-month period, Rollins moved to dismiss the charge under the Second Circuit Rules for Prompt Disposition of Criminal Cases. During argument before Judge Tyler, the Government stated that it had been making good faith efforts to dispose of the case and thus avoid the necessity of proceeding to trial. It appeared that the undercover narcotics agent who allegedly had purchased heroin from the defendant had himself come under investigation for improper narcotics transactions. It was the Government’s view that if the charges of misconduct alleged against the undercover agent were in fact true, it “would affect his credibility and usability ... in this case.” The Assistant United States Attorney in charge of the Rollins prosecution stated that he had been in contact with defense counsel, attempting to negotiate a possible disposition, “and the six-months date, quite frankly, slipped past . . . Although the Government pressed its claim for an extension of the six-month period due to “exceptional circumstances,” as provided in Rule 5(h), Judge Tyler, who himself had sought on a number of occasions, and without success, to determine the Government’s intentions concerning prosecution, concluded that “if the rule is to have any meaning at all” it must require the Government to move for a Rule 5(h) extension prior to the expiration of the six-month period. He believed that “the precept of this rule really is that even where the government, the prosecution, or, indeed, the Court, are guilty of an oversight, that’s not sufficient to carry the day.” Thus, despite the fact that Judge Tyler believed, as he stated, that a Rule 5(h) exception might have been justified had a motion for an extension been made prior to October 1, he concluded that he was foreclosed from reaching the merits of the Government’s Rule 5(h) claim. Accordingly, he granted the defendant’s motion to dismiss. We are of the view, however, that neither the language nor the purpose of the Circuit’s Speedy Trial Rules justifies the position taken by the district judge. Although the Rules are silent on whether such a request by the Government must be made prior to, or may be made after, expiration of the six-month period, we believe that the Rules, when considered in their entirety, provide for a more flexible and more rational procedural scheme than that insisted upon by the judge below. The drafters of the Rules, when they wished to require parties to move prior to expiration of the six-month period, knew how to provide for it, as evidenced by language in Rules 5(b) and 5(c), quoted in the margin. These subsections emphasize that under certain circumstances the six-month period will not be tolled unless either defense counsel or the prosecuting attorney has previously moved for a continuance and been granted one by the district court. Continuances are granted under Rules 5(b) and (c) only after motion by counsel made prior to the expiration of the six-month period. If the drafters had intended the Government to move within the six-month period for an “exceptional circumstances” continuance under Rule 5(h), they would have followed the clear pattern of Rules 5(b) and 5(c). Because “Other periods of delay occasioned by exceptional circumstances,” was intended to cover extraordinary occasions that the drafters could not envision, they opted for a broader exception to be exercised at any time at the judge’s discretion. Moreover, it must be recalled that the Second Circuit’s Rules Regarding Prompt Disposition of Criminal Cases was designed to secure “the interests of the public and the rights of defendants” in speedy trials. See, Statement of the Circuit Council to Accompany Second Circuit Rules Regarding Prompt Disposition of Criminal Cases. Neither the public interest nor the rights of defendants are diluted when the Government is permitted to make its request for an extension under Rule 5(h) after expiration of the six-month period. Ordinarily, the issue arises when the defendant has moved for a dismissal under the Speedy Trial Rules. At that time the court may consider whether “exceptional circumstances” justified the Government's failure to file a notice of readiness. If indeed there are mitigating “exceptional circumstances,” the six-month period is tolled, an outcome identical to that which would have resulted had the Government moved prior to expiration of the six-month period. If the court does not find “exceptional circumstances,” the case will be dismissed because the Government failed to file a notice of readiness. In either instance, neither the defendant nor the public will have suffered prejudice. In fact, if policy were to be our guide, this Circuit’s recently adopted plan for achieving prompt disposition of criminal cases, under the authority of Rule 50(b), F.R.Cr.P., clearly indicates that the Government’s position in this appeal is the correct one. Rule 4 of the new 50(b) plan, which modifies Rule 4 of the Circuit’s old Speedy Trial Rules, now provides: In all cases the government must be ready for trial within six months. . . . If it should appear that sufficient grounds existed for tolling any portion of the six months period under one or more of the exceptions in Rule 5, the motion [to dismiss] shall be denied, whether or not the government has previously requested a continuance (Emphasis supplied) Had this case arisen under the new 50(b) plan, little more than a citation to the above-quoted provision would have been necessary to dispose of the matter. Clearly, then, although Judge Tyler may have believed that Rule 4 would not “have any meaning at all” if the Government were permitted to move for a Rule 5(h) extension after expiration of the six-month period, the circuit and district judges who approved the new Rule 4 were of a different view. We conclude with respect to a Rule 5(h) extension, that the new Rule is not a departure from the practice prescribed by Rule 4 of the old Speedy Trial Rules, but simply clarifies that which we believed was inherent in the old Rule. Finally, recent decisions of this court in United States v. Scafo, 470 F.2d 748 (1972), and United States v. Valot, 473 F.2d 667 (1973), would be rendered wholly inexplicable if the position argued for by appellee Rollins in this case were to prevail. In those cases, defendants had moved in the district court to dismiss charges against them due to the Government’s failure to be ready for trial within six months. In each case, the Government successfully opposed the motion on the grounds that “exceptional circumstances,” as provided in Rule 5(h), justified the delay. On appeal, we remanded to the district court for further findings concerning the specific nature and content of the “exceptional circumstances.” Since in neither case had the Government moved tor a 5(h) extension prior to expiration of the six-month period, our remand for further findings would have been wholly inappropriate if the court had held to the view that even a proper showing of “exceptional circumstances” could not have justified tolling the six-month period. The clear import of the decisions in Scafo and Valot is that the Government’s failure to move for a 5(h) extension prior to termination of the six-month period is not fatal to its claim, raised in opposition to a defendant’s motion to dismiss for failure to file a timely notice of readiness, that “exceptional circumstances” warranted delay. To the extent, therefore, that Judge Tyler relied upon an erroneous interpretation of this Court’s Speedy Trial Rules in dismissing the charge against appellant, that dismissal cannot stand. Accordingly, we yacate the order, and remand to the district court for consideration of the Government’s claim that its delay in filing a notice of readiness in this ease was justified in light of “exceptional circumstances.” Perforce, we express no opinion on the merits of that claim but state simply that the district judge was not foreclosed by the Speedy Trial Rules, as he believed he was, from considering the Government’s excusing argument. Vacated and remanded for proceedings not inconsistent with this opinion. . By vote of the Second Circuit Judicial Council on February 28, 1973, the Circuit’s Rule 50(b) plan will take effect on April 1, 1973. On that date, the Second Circuit Rules Regarding Prompt Disposition of Criminal Cases will be effectively repealed. . 5. In computing the time within which the government should be ready for trial under rules 3 and 4, the following periods should be excluded: (b) The period of delay resulting from a continuance granted by the district court at the request of, or with the consent of, the defendant or his counsel. The district court shall grant such a continuance only if it is satisfied that postponement is in the interest of justice, taking into account the public interest in the prompt disposition of criminal charges. A defendant without counsel should not be deemed to have consented to a continuance unless he has been advised by the court of his rights under these rules and the effect of his consent. (c) The period of delay resulting from a continuance granted at the request of a prosecuting attorney if: (i) the continuance is granted because of the unavailability of evidence material to the government’s case, when the prosecuting attorney has exercised due diligence to obtain such evidence and there are reasonable grounds to believe that such evidence will become available within a reasonable period; or (ii) the continuance is granted to allow the prosecuting attorney additional time to prepare the government’s case and additional time is justified by the exceptional circumstances of the case. . There is some language in Judge Tyler’s opinion below indicating that the dismissal in this case may have rested upon Rule 48(b) F.R.Cr.P., which authorizes the court to dismiss an indictment “if there is unnecessary delay in bringing a defendant to trial.” Rule 48(b) authorizes a district judge to dismiss, in his discretion, with or without prejudice, whereas a dismissal under the Speedy Trial Rules, under our en banc decision in Hilbert v. Dooling, supra, must be with prejudice. Under the circumstances the district judge need not consider application of Rule 48 to the defendant’s motion for dismissal of the charges against him. If the court, in deciding that motion, is of the view that “exceptional circumstances” justified the Government’s delay, and that a Rule 5(h) extension is warranted, there would not have been an “unnecessary delay in bringing a defendant to trial” such as would warrant dismissal with or without prejudice under Rule 48(b). If, on the other hand, the court finds that the Government’s delay was not excused by “exceptional circumstances” within the meaning of Rule 5(h), dismissal with prejudice will be required. In either event, consideration of Rule 48(b), F.R.Cr.P., would appear to be irrelevant to the district court’s ultimate disposition.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Harry DEAKTOR et al., Plaintiffs-Appellants, v. FOX GROCERY COMPANY, a Pennsylvania corporation and John F. Fox, Defendants-Appellees. No. 72-1327. United States Court of Appeals, Third Circuit. Argued Feb. 13, 1973. Decided March 27, 1973. James H. McConomy, John McN. Cramer, John C. Unkovic, Reed, Smith, Shaw & McClay, Pittsburgh, Pa., for appellants. Ralph H. German, John D. Houston, II, Thomas E. Lippard, Houston, Cooper, Speer & German, Pittsburgh, Pa., for appellees. Before VAN DUSEN and ADAMS, Circuit Judges, and BRODERICK, District Judge. OPINION OF THE COURT ADAMS, Circuit Judge. The basic issue on this appeal is whether plaintiffs’ evidence regarding damages was adequate to support a claim for alleged antitrust violations. Fox Grocery Company (Fox), franchisor of retail supermarkets doing business under the “Foodland” name in Western Pennsylvania, discussed with Harry Deaktor, an experienced supermarket operator, the possibility of opening a Foodland franchise store, in the Squirrel Hill section of Pittsburgh, under the management of Mr. Deaktor. E. D. Foods, Inc. was formed to operate the proposed supermarket, and in November, 1966, Harry Deaktor and his wife Edith signed an agreement prepared by Fox dealing with the ownership of E. D. Foods, Inc. and the operation of the store. Under the agreement, the supermarket was financed by an investment by the Deaktors of $14,700. for 49% of the issued stock, and an investment of $15,-300. provided by Fox for 51% of the issued stock. The Deaktors also lent E. D. Foods, Inc. $6,300. in cash and approximately $6,000. worth of equipment. Substantial corporate borrowings were secured by the guaranty of Fox and the Deaktors and by a pledge of the Deaktors’ assets. The agreement provided in part that if after one year E. D. Foods, Inc. did not show a net profit of 1% on sales before taxes, Fox had the right, among other alternatives, to purchase the Deaktors’ stock in the corporation at its then book value. The supermarket was opened on November 30, 1966. On March 17, 1968, Fox advised the Deaktors that because the store had failed to produce a 1% net profit, as provided by the agreement, it was exercising the option to purchase the Deaktors’ stock. Suit was brought in the district court by the Deaktors individually and derivatively on behalf of E. D. Foods, Inc. against Fox and its president, John Fox. The complaint contained five counts: I. Derivative action on behalf of E. D. Foods, Inc. for alleged violations of the antitrust laws, including price-fixing and tie-in sales. II. Action on behalf of Harry and Edith Deaktor for damages allegedly caused to them by the same alleged antitrust law violations. III. Action on behalf of Harry and Edith Deaktor for violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 of the Securities and Exchange Commission by the alleged publication of false and misleading information in connection with the acquisition of the Deaktors’ stock in E. D. Foods, Inc. by Fox. IV. Action on behalf of Harry and Edith Deaktor for alleged common law fraud on the same facts as Count III. V. Action on behalf of Harry and Edith Deaktor for alleged breach of the fiduciary duty owed a minority shareholder by a majority shareholder based upon the alleged antitrust violations in Counts I and II. After extensive discovery, both defendants moved for summary judgment or dismissal of the complaint. By opinion and order dated October 12, 1971, the district court, 332 F.Supp. 536, dismissed Count II of the complaint for failure to state a claim upon which relief can be granted, granted summary judgment for the defendants on Count III, and dismissed Count IV, which was grounded upon pendent jurisdiction, as a discretionary matter. The case came on for jury trial in February, 1972 on Counts I and V of the complaint. At the conclusion of the plaintiffs’ evidence, the court granted the defendants’ motion for a directed verdict as to Count I on the alternative grounds that “the evidence as to causal connection between the alleged antitrust violations and the damages which it is alleged that E. D. Foods suffered is too speculative to submit to the jury, and that the evidence as to the alleged damages suffered by E. D. Foods is too speculative to submit to the jury.” Having carefully examined the record below and considered the contentions presented in briefs and at oral argument, we affirm the judgment of the district court. There was clearly no error committed by the district court’s actions concerning Counts II, III, and IV of the complaint. Count II sought relief on behalf of the Deaktors individually for damages allegedly caused to them (loss of income and loss of equity investment) by Fox’s alleged antitrust violations. This Court’s decision in Kauffman v. Dreyfus Fund, Inc., 434 F.2d 727 (3d Cir. 1970), cert. denied, 401 U.S. 974, 91 S.Ct. 1190, 28 L.Ed.2d 323 (1971), established that shareholders of a corporation, qua shareholders, have no antitrust claim for harm suffered as a consequence of injury to the corporation allegedly caused by a defendant’s conduct in violation of the antitrust laws. The Deaktors argue that the Kauffman principle is inapplicable to the present case because they are seeking relief for injury caused directly to them, not for injury caused to E. D. Foods, Inc. It is unnecessary, however, for this Court to examine the implications of this proffered distinction, for the district court’s disposition of Count II must be affirmed in any event. The basis for the Deaktors’ claim that they were personally and directly injured by Fox’s alleged antitrust violations is the contention that Fox’s conduct caused the failure of the supermarket to produce a 1% net profit, thus triggering Fox’s right to purchase the Deaktors’ stock and thereby depriving them of their income and equity investment. As the district court concluded, and as this Court holds today, infra, the Deaktors were unable to demonstrate satisfactorily in support of Count I, which rests upon the same contention as that urged to uphold Count II, that Fox’s activity caused the financial losses of Deaktor’s Foodland. Under these circumstances, it would serve no purpose, even assuming a distinction between this case and Kauffman, to remand this case to the district court to enable plaintiffs to endeavor to prove that which they have already failed to establish. With respect to. Count III of the complaint, the district court held that even assuming misrepresentations (accounting errors) regarding Fox’s purchase of the Deaktors’ stock, such were not material and, thus, not actionable under Rule 10b-5 of the Securities and Exchange Commission. 17 C.F.R. § 240.-10-5. The parties disagreed as to the relevant date from which the agreement’s one-year period commenced in determining whether the store was operating at a 1% net profit. The district court committed no error in concluding that the provision, “on or after one year from the date hereof,” meant on or after one year from the date of the agreement. Because, as the Deaktors conceded,, the store always operated at a loss, any alleged accounting errors could at most have varied the amount of the store’s loss and, if corrected, would not have placed the supermarket above the 1% net profit figure. Therefore, such errors, even if they existed, were not material. The district court’s ruling as to Count IV must also be affirmed. Pendent jurisdiction for this common law fraud claim depends upon the relationship between the facts alleged in support of Count III and those alleged in Count IV. To the extent that Count IV is based upon the same facts as those alleged in support of Count III, the district court’s conclusion as to the immateriality of any alleged accounting errors, which we affirm, supra, serves as an adequate foundation for the rejection of both claims, since materiality is an essential element of common law fraud. To the degree that Count IV is based on facts different from those alleged in support of Count III, (1) if those facts are still sufficiently similar to conclude that only one constitutional “case,” under the United Mine Workers v. Gibbs principle, fn. 2, supra, is presented, we hold that the district court did not abuse its discretion in dismissing Count IV, and (2) if the facts are sufficiently different so as not to present one constitutional “case,” we conclude that the district court lacked power to adjudicate the Count IV claim. Upon these alternative bases, therefore, we affirm the district court’s disposition of Count IV. The primary thrust of the Deaktors’ argument on appeal has been directed toward the issues underlying Count I of the complaint. Mr. Deaktor testified that Fox required Deaktor’s Foodland to sell at suggested retail prices. He also testified that the store was required, as a condition of obtaining a Foodland franchise and of not having to pay higher rent, to purchase products exclusively from Fox Grocery Company. Price-fixing and tie-ins, if proved, are illegal under the antitrust laws. See, e. g., Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969) (tie-in); Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968) (maximum price-fixing); Siegal v. Chicken Delight, Inc., 311 F.Supp. 847 (N.D.Cal.1970), aff’d, 448 F.2d 43 (9th Cir. 1971), cert. denied, 405 U.S. 955, 92 S.Ct. 1172, 31 L.Ed.2d 232 (1972) (tie-in). In order to recover under the antitrust laws, however, a plaintiff must, in addition to demonstrating an antitrust violation, prove: (1) a causal relationship between the antitrust violation and the alleged injury, and (2) measurable damage to his business or property. Even assuming that the Deaktors have satisfied their burden of proving that Fox was engaged in price-fixing and tie-in sales, after our own independent examination of the record we cannot say that the district court erred in concluding that the plaintiffs’ evidence on damages was too speculative to send to the jury. The Deaktors’ theory of recovery is that the prices fixed by Fox for the Foodland stores were too low and the cost of merchandise tied to the Food-land franchise and the low rent too high to realize a net profit. Plaintiffs’ sole witness on the amount of damages was Harry Deaktor, who testified that if he had been permitted to buy meat from a relative and produce directly from the produce yards, and to raise the store’s selling prices by 2 or 3%, in his opinion, Deaktor’s Foodland would have realized a gross profit of 21%. Other than the unsupported statement that net profit would have increased in the same amount as gross profit, the record was barren of evidence concerning net profit. Furthermore, the 21% gross profit figure itself was characterized by Mr. Deaktor as an “objective” and a “goal.” Mr. Deaktor’s testimony was ambiguous concerning the supermarket’s competitors, the extent to which he would have been able to raise prices absent Fox’s alleged price-fixing, and the relevant cost figures necessary to determine net profit. Plaintiffs’ failure to produce evidence concerning the factors essential to establish net profit as opposed to gross profit, in effect, meant that the jury would have had to speculate as to the amount of damages. The district court committed no error in concluding that plaintiffs did not meet their burden of establishing the quantum of damages. In addition, the plaintiffs’ causation theory was conjectural. Their own expert witness, Professor Applebaum, testified regarding the various reasons that might cause a retail supermarket to be unprofitable, but assigned no specific cause for the financial losses of Deaktor’s Foodland. The district court did not err in concluding that, based upon Professor Applebaum’s and Mr. Deaktor’s testimony, the evidence concerning causation was speculative. An order will be entered affirming the judgment of the district court. Costs taxed against appellants. . The district court denied defendants’ motion for a directed verdict as to Count V. On joint motion of both parties, the court continued the hearing of Count V until decision by this Court of the present appeal. Under these circumstances, we intimate no view concerning the issues raised by Count V, except to note that the potential liability of the individual plaintiffs on their guarantees made to secure the borrowings of E. D. Foods, Inc. may be covered by this Count. . Under the doctrine of pendent jurisdiction, federal courts have power to adjudicate claims based upon state law whenever there is a substantial federal claim “and the relationship between that claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional ‘case’.” United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). Exercise of the power is discretionary and depends upon such considerations as judicial economy, convenience, and fairness to the litigants. Id. at 726, 86 S.Ct. 1130. . See id. at 725, 86 S.Ct. 1130. . In this regard, it is appropriate to note that plaintiffs’ failure to satisfy their burden of proving the amount of damages “was so only because [they] chose to rely almost entirely on one expert witness and one lay witness for [their] proof of damages. Any inadequacy which may have resulted should be attributed to [plaintiffs’] own presentation of [their] case rather than to the law or the court’s application of it here.” Farmington Dowel Products Co. v. Forster Mfg. Co., 421 F.2d 61, 83-84 (1st Cir. 1969).

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

In the Matter of SCHOOL BOARD OF BROWARD COUNTY, FLORIDA. SCHOOL BOARD OF BROWARD COUNTY, FLORIDA, Petitioner, v. DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, UNITED STATES OFFICE OF EDUCATION, Respondent. No. 72-3215. United States Court of Appeals, Fifth Circuit. March 21, 1973. Edward J. Marko, Edward G. Stephany, Fort Lauderdale, Fla., for petitioner. Thomas M. Larson, Education Section, U. S. Dept, of Justice, Michael Lottman, Office of General Counsel, James W. Moore, Asst. Deputy Comm, for Emergency School Assistance, Duane J. Mattheis, Deputy Comm., S. P. Marland, Jr., U. S. Commissioner of Educ., Office of Education, Brian K. Landsberg, Civ. Rights Div., Dept, of Justice, Washington, D. C., Henry C. Barrett, Jackson, Miss., for respondent. Before GEWIN, GOLDBERG and DYER, Circuit Judges. DYER, Circuit Judge: The question presented for our decision is whether a determination by the Commissioner of Education issued in administrative proceedings to enforce the Emergency School Assistance Program (P.L. 91-380, 84 Stat. 800) and the regulations of the Office of Education (45 C.F.R. Part 181) is subject to judicial review here. We conclude that this Court is without jurisdiction and accordingly dismiss the petition. Petitioner, School Board of Broward County, Florida, applied for assistance under the ESAP program on August 10, 1971, and was awarded a grant of $1,-737,000 on September 1, 1971. The petitioner was later notified that because of its failure to comply with assurances made in its application for ESAP funds the Commissioner of Education would seek to have the grant terminated and declared void ab initio. Subsequent to a hearing and an appeal to the Commissioner, the petitioner was ordered to repay all funds received by it under the 1971-72 grant. The petitioner filed in this Court a Petition for Review of the decision of the Commissioner. The respondent, United States Department of Health, Education, and Welfare, moved to dismiss the Petition for Review. Pointing out that the statutes and regulations upon which the administrative proceedings in this matter were based do not authorize courts of appeals to hear petitions for review of the decisions of the Commissioner, HEW contends that unless empowered by statute or rule, this Court has no jurisdiction to consider an appeal or petition for review. Petitioner responds by taking us on a circuitous and unnecessary journey, not to a special statutory review provision but to the Administrative Procedure Act, 5 U.S.C.A. §§ 701-706. The petitioner’s starting point is 45 C.F.R. § 181.15(c) which is clearly inapposite to the question of our jurisdiction. That section provides that the procedures established by the Office of Education regulations shall not preclude the Commissioner from pursuing any other remedies authorized by-law, and then states: Proceedings pursuant to Part 80 of this title with respect to the eligibility of an applicant for assistance under Title VI of the Civil Rights Act (42 U.S.C. 2000d) shall be governed by the regulations in that part or Part 81. We, of course, are not here concerned with proceedings under the Civil Rights Act, but with proceedings to enforce the Emergency School Assistance Program, P.L. 91-380, and the regulations of the Office of Education, 45 C.F.R. Part 181. Petitioner nevertheless continues on the wrong road to 42 U.S.C.A. § 2000d-2 which, although not applicable here because its provisions are specifically limited to actions taken under the Civil Rights Act of 1964, provides inter alia that any persons aggrieved because of the termination of financial assistance, upon a finding of failure to comply with any requirement imposed pursuant to regulations adopted by the federal agency making the grant may, if the action is not otherwise subject to judicial review, obtain such judicial review in accordance with 5 U.S.C.A. § 1009 (now 5 U.S.C.A. §§ 701-706, the Administrative Procedure Act). The short of it is that there is “no special statutory review proceeding” contained in either the Emergency School Assistance Program, P.L. 91-380, the Office of Education regulations promulgated thereunder, or the Civil Rights Act of 1964 (relied on by petitioner, but clearly inapplicable). “Petitioner is thus driven, by the absence of provisions for special statutory review, to the provisions of Sec. 1009 [5 U.S.C.A. § 703], only to find that these provisions for review by ‘any applicable form of legal action’ deal not with appellate court review but with review by an original action in a court of competent jurisdiction. The court of appeals is not such a court unless specially authorized by statutory grant of power. We are not in any doubt that this court has no such jurisdiction and that the petition must be dismissed.” City of Dallas, Texas v. Rentzel, 5 Cir. 1949, 172 F.2d 122, 123. See Arizona State Department of Public Welfare v. Department of Health, Education and Welfare, 9 Cir. 1971, 449 F.2d 456, 464; Rettinger v. F.T.C., 2 Cir. 1968, 392 F.2d 454, 457; Schwab v. Quesada, 3 Cir. 1960, 284 F.2d 140, 143; cf. State of Wisconsin v. F.P.C., D.C.Cir. 1961, 110 U.S.App.D.C. 260, 292 F.2d 753, 755. The Petition for Review is dismissed without prejudice to a request by petitioner for relief in a district court. Petition dismissed. . There is likewise no such authority in the statutes underlying the ESAP appropriation, i. e., Part D of the Education Professions Development Act (20 U.S.C.A. §§ 1119-1119a-1) ; the Cooperative Research Act (20 U.S.C.A. §§ 331-332b) ; Title IV of the Civil Rights Act of 1964 (42 U.S.C.A. §§ 2000c to 2000c-9) ; section 807 of the Elementary and Secondary Education Act of 1965 (20 U.S.C.A. § 887); section 402 of the Elementary and Secondary Education Amendment of 1967 (20 U.S.C.A. § 1222); Title II of the Eeonomie Opportunity Act of 1964 (42 U. S.C.A. §§ 2781-2837) ; and the Education Amendments of 1972, P.L. 92-318. . The general jursidictional statute, 28 U.S.C.A. § 1291, is obviously inapplicable. It provides in pertinent part: The courts of appeals shall’have jurisdiction of appeals from all final decisions of the district courts of the United States * * * except when a direct review may be had in the Supreme Court. . 5 U.S.C.A. § 70S provides in pertinent part: The form of proceeding for judicial review is the special statutory review proceeding relevant to the subject matter in a court specified by statute or, in the absence or inadequacy thereof, any applicable form of legal action, including actions for declaratory judgments or writs of prohibitory or mandatory injunction or habeas corpus, in a court of competent jurisdiction * * *.

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UNITED STATES of America, Plaintiff-Appellee, v. Raymond Edward STACEY, Defendant-Appellant. No. 72-2937. United States Court of Appeals, Ninth Circuit. Feb. 12, 1973. Kevin J. Mclnerney, of Mclnerney, Milchen & Frank, San Diego, Cal., for defendant-appellant. Harry D. Steward, U. S. Atty., Stephen G. Nelson, Jeffrey F. Arbetman, Asst. U. S. Attys., San Diego, Cal., for plaintiff-appellee. Before HAMLEY and WALLACE, Circuit Judges, and REAL, District Judge. The Honorable Manuel L. Real, United States District Judge for the Central Distriet of California, sitting by designation. PER CURIAM: Raymond Edward Stacey appeals from his conviction on counts one and two of a three-count indictment charging counterfeiting offenses in violation of 18 U.S.C. § 485. His only points on appeal are that the trial court abused its discretion in not granting him an opportunity to depose the jurors as to whether, at the time of their deliberations, they understood that specific intent to defraud was an essential element of the offenses charged in counts one and two, and in denying defendant’s motion for a new trial based on jury misconduct and in the interest of justice. In support of his request to depose the jury and his motion for a new trial, defendant filed a “declaration” in which his attorney alleged substantially as follows: Within twenty minutes after the verdict was returned, Stacey’s counsel met with three of the jurors and was told that, had they known that intent to defraud was an element of the offense, they would have acquitted Stacey. The jurors stated that the reasons for their misunderstanding were: (1) the unanswered question, in the jury room, of one juror as to whether intent to defraud was not an element, and (2) a request, also in the jury room, by another juror for a copy of the indictment so that she might learn whether intent to defraud was an element, and the response by another juror that a copy was unnecessary. During the course of instructing the jury, the counts of the indictment, containing the element of specific intent to defraud, were read aloud and the court also expressly instructed the jury that one essential element of the offenses charged was intent to defraud. After a verdict is returned a juror will not be heard to impeach the verdict when his testimony concerns his misunderstanding of the court’s instructions. Walker v. United States, 298 F.2d 217, 226 (9th Cir. 1962), This rule does not violate a defendant’s constitutional rights. See Stein v. New York, 346 U.S. 156, 178-179, 73 S.Ct. 1077, 97 L.Ed. 1522 (1953). Stacey’s contention that this case is distinguishable from Walker and that the rule there applied should not be applied here is incorrect. It is true that some jurors had the knowledge which would enable them to testify, objectively, of incidents tending to indicate that other jurors may have misunderstood the court's instructions on the elements of the offense. However, the inquiry would still concern the mental processes by which the jurors reached their decision and would therefore be barred by the nonimpeachment rule. The reason for a rule barring a juror from testifying concerning his own mental processes — frankness and freedom of discussion in the jury room, Stein, supra, at 178, 73 S.Ct. 1077 — applies with equal force to testimony by other jurors concerning objective manifestations of those processes. See American Bar Association, Standards Relating to Trial by Jury, § 5.7(a) 164-173 (1968). Affirmed. . Since the facts alleged in counsel’s declaration do not demonstrate any jury misconduct, our decision in Smith v. Cupp. 457 F.2d 1098, 1100 (9th Cir. 1972) also requires this holding. See also, American Bar Association, Standards Relating to Trial by Jury, § 5.7(a) 164-173 (1968) ; 8 Wigmore, Evidence. §§ 2345-2346 (McNaughton Rev.1961). The same rule is stated, in effect, in Rule 606(b), Rules of Evidence for United States Courts and Magistrates, and the Advisory Committee Note thereon. These Rules of Evidence are not to become effective until July 1, 1973, but at least with respect to Rule 606(b), the rules purport to codify the existing federal law.

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William TAYLOR, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee. No. 72-2012. United States Court of Appeals, Sixth Circuit. Submitted Feb. 14, 1973. Decided April 5, 1973. Joseph G. Glass, Louisville, Ky., for petitioner-appellant. Gorge J. Long, U. S. Atty., James H. Barr, Asst. U. S. Atty., Louisville, Ky., for respondent-appellee. Before WEICK and EDWARDS, Circuit Judges, and WILSON, District Judge. Honorable Frank W. Wilson, Chief Judge, United States, District Court for the Eastern District of Tenessee. PER CURIAM. In his appeal, Taylor is attacking the validity of a thirty-year sentence imposed upon him in the District Court where he was resentenced on two convictions for violation of the narcotics laws in 1967 and 1968. The 1967 conviction was on a two-count indictment numbered Cr. 26,943 which charged him with selling heroin on July 5, 1967. He was originally sentenced to twenty (20) years imprisonment and fined $5,000 on Count 1 of the indictment, and ten (10) years imprisonment on Count 2 — the sentences to be served consecutively. In imposing this sentence, the District Court treated Taylor as a second offender because he had previously been convicted of a narcotics violation in the United States District Court for the Northern District of Ohio. The 1968 conviction was also on a two-count indictment, numbered Cr. 26,942, charging Taylor with selling heroin on August 1, 1967. He was sentenced to thirty (30) years imprisonment on each of two counts of the indictment — -the same to be served concurrently with each other and concurrently with the sentences imposed in the 1967 conviction, Cr. 26,943. The second conviction made him a third offender. Taylor’s conviction in the Northern District of Ohio was reversed on appeal for errors of law occurring at the trial and a new trial was ordered. United States v. Rudolph, 403 F.2d 805 (6th Cir. 1968). The record does not show that the new trial was ever conducted. Taylor then filed a motion in the District Court asserting that his sentences of thirty years as a “second offender” were invalid. The District Court granted the motion and set aside the sentences. In Case No. Cr. 26,943 he reduced the sentences by one-half imposing a sentence of ten (10) years on Count 1 and five (5) years on Count 2. In Case Cr. No. 26,942 he reduced the sentences by one-half imposing a sentence of fifteen (15) years on Count 1 and fifteen (15) years on Count 2, to be served concurrently with each other but consecutively with the sentences imposed in Cr. No. 26,942. The result of the resentencing was that Taylor was sentenced to a total of thirty (30) years on the two convictions which was the same as the total previous sentences. In his appeal, Taylor asserts two grounds of error in the re-imposed sentences of thirty years. First, he contends that he has, in effect, been penalized for appealing his original conviction in the Northern District of Ohio in that the District Court did not reduce his heroin conviction sentences when the prior Ohio conviction was set aside. He relies on North Carolina v. Pearce, 395 U.S. 711, 89 S.Ct. 2072, 23 L.Ed.2d 656 (1969), and Pendergrass v. Neil, 456 F.2d 469 (6th Cir. 1972). Second, he asserts that he should have been resentenced under the Comprehensive Drug Abuse Prevention and Control Act of 1970, 21 U.S.C. §§ 801 et seq., and not under 26 U.S.C. § 7237(d) which was repealed by the Act after his conviction but before his resentencing. I. Taylor’s first contention has no merit for two reasons. His appeal from his conviction in the Northern District of Ohio did not result in a longer sentence on that charge for he was never retried. He never appealed from his two narcotics convictions in the District Court in the present case and they have become final. He does not claim that these convictions are invalid. Actually, the second indictment for an identical offense committed on a later date made him a second offender. Furthermore, in the resentencing, his sentences were not increased. The total time to be served remained the same. North Carolina v. Pearce, supra, and Pendergrass v. Neil, supra, are inapposite. II. Taylor’s contention that he should have been resentenced under the provisions of the Comprehensive Drug Abuse Prevention and Control Act rather than under 26 U.S.C. § 7237(d) was rejected by the Supreme Court in Bradley v. United States, 410 U.S. 605, 93 S.Ct. 1151, 35 L.Ed.2d 528 (decided March 5, 1973), and resolved the conflict which existed in the Circuits on this issue. The sentence originally imposed by the District Judge, while severe, was well within his statutory authority. He expressed a desire to deter others from trafficking in narcotic drugs, which is commendable. We do not find that in the resentencing the District Judge abused his discretion. However, it does seem to us that in the resentencing the District Judge was presented with an entirely different picture than he was in the original sentencing. Taylor had served five years of his sentence. His prison record was good. He may have been rehabilitated in the prison. The severe original sentence had already accomplished whatever deterrent effect it could. The District Judge, upon remand, has jurisdiction to reconsider the sentence and may want to do so, particularly if requested. Rule 35, Federal Rules of Criminal Procedure. Affirmed.

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Angus J. De PINTO, Cross-Complainant, Appellee, v. Hjalmar B. LANDOE, Cross-Defendant, Appellant. Angus J. De PINTO, Cross-Complainant, Appellee, v. Francis I. SABO, Cross-Defendant, Appellant. Nos. 71-1486, 71-1487. United States Court of Appeals, Ninth Circuit. Feb. 12, 1973. Joseph B. Gary (argued), Hjalmar B. Landoe (argued), Thomas I. Sabo, Bozeman, Mont., for appellants. Herbert Mallamo (argued), Elsing & Crable, Phoenix, Ariz., for appellee. Before BARNES, HAMLEY and JERTBERG, Circuit Judges. PER CURIAM: This appeal involves another phase of the litigation pertaining to the diversion of assets of United Security Life (United), an Arizona stock insurance corporation, which has been before this court for many years. In its present posture the case is so unique that our decision herein will be of little interest to anyone except the parties. In the following discussion we will accordingly write mainly for the parties and will assume that the reader is completely familiar with what has gone before. It will nevertheless be necessary to make some reference to past proceedings. Following our last decision herein, announced in De Pinto v. Landoe, 411 F.2d 297 (9th Cir. 1969), Angus J. De Pinto, against whom Provident Security Life Insurance Company (Provident) had obtained a $314,794.19 judgment, continued with his efforts to collect this amount from various cross-defendants, including Hjalmar B. Landoe and Francis I. Sabo. He did so by filing a motion for summary judgment against the cross-defendants. Landoe and Sabo resisted this motion and filed cross motions for summary judgment. All pending motions for summary judgment were then denied. A pretrial order was later entered limiting the trial to one issue — the liability of the cross-defendants, if any, to United as a result of their alleged conduct and thus their liability over to cross-complainant De Pinto “under principles analogous to subrogation.” Landoe and Sabo then filed new motions for summary judgment, based upon the ground that settlement agreements they made with Provident, as a result of which Provident executed Covenants Not To Sue, precluded De Pinto from recovering from Landoe and Sabo upon the theory of subrogation or upon principles analogous thereto. These motions were denied and we permitted Landoe and Sabo to take this interlocutory appeal. For the reasons stated in the memorandum and order of the district court, filed January 20, 1971 (D.C.Ariz.1971), we hold that, under the special circumstances of this case, the settlements which Landoe and Sabo entered into with Provident, including Provident’s Covenant Not To Sue, do not preclude De Pinto from seeking recovery over from Landoe and Sabo on the theory of subrogation or principles analogous thereto. Landoe and Sabo also urge, however, that in any event De Pinto is not entitled to the benefits of the equitable remedy of subrogation for the reason that he does not have clean hands in relation to Provident and clean hands concerning the subject matter of this litigation. This was not a ground stated in Landoe’s and Sabo’s motions for summary judgment now under consideration. The only ground there relied upon was that the settlement Landoe and Sabo made with Provident precluded De Pinto from recovering on the theory of subrogation or principles analogous thereto. In Landoe’s memorandum filed in support of his last motion for summary judgment, there are some observations which might be construed as a tangential reference to the doctrine of clean hands, although no specific reference is made to that doctrine. There may also have been similar indirect references to the doctrine of clean hands in the oral argument before the district court on these motions. The district court apparently did not consider that the “clean hands” issue was involved in the new motions for summary judgment. The memorandum and order under review makes no reference to such an issue. Accordingly we do not regard this issue as ripe for consideration at this time, although it may ultimately come to this court for decision. Note has previously been taken of the fact that Landoe may occupy a different position than does Sabo or other cross-defendants, with reference to any liability any of them may have to De Pinto. See 411 F.2d, at 301. Nothing said in this opinion is intended to indicate a view that all of the cross-defendants are necessarily equally liable to De Pinto. The judgment is affirmed and the cause is remanded for further proceedings consistent with this opinion. . The first decision involving this controversy was rendered in Mauser v. United Security Life, 267 F.2d 3 (9th Cir. 1959). Subsequent decisions are referred to in De Pinto v. Provident Security Life Insurance Company, 374 F.2d 37, 40-41, n. 2 (9th Cir. 1967); and De Pinto v. Landoe, 411 F.2d 297, 299, n. 6 (9th Cir. 1969). . The quoted words were taken from the following' statement in our opinion in De Pinto v. Landoe, 411 F.2d 297 (9th Cir. 1969): “De Pinto’s right to obtain indemnity from Landoe, Pegram and Sabo for their alleged derelictions therefore arises not from the existence of a joint tort-feasor relationship he shares with them, but by reason of the consensual relationship between De Pinto and United, out of which De Pinto’s fiduciary duty to United arose. Upon the theory of subrogation or upon principles analogous thereto, he stands in the place of United. He is entitled to recover from Landoe, Sabo and Pegram (assuming that they participated in the raid on United) what they should have paid to United’s successor and what he, in effect, has paid in their behalf.” 411 F.2d, at 300. . There may have been more direct referenees to this doctrine in previous motions for summary judgment and written or oral argument advanced in their support. But those arguments were not before the court in connection with the order now under review,

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NATIONAL LABOR RELATIONS BOARD, Petitioner, v. SAN FRANCISCO LABOR COUNCIL, AFL-CIO, Respondent. No. 72-1013. United States Court of Appeals, Ninth Circuit. March 27, 1973. Marjory S. Godfreed, Atty. (argued), Marcel Mallet-Prevost, Asst. Gen. Counsel, Peter G. Nash, Gen. Counsel, NLRB, Washington, D. C., for petitioner. Victor J. Van Bourg (argued), Michael B. Rogers, of Levy & Van Bourg, San Francisco, Cal., for respondent. Before MERRILL, WRIGHT and KIL-KENNY, Circuit Judges. EUGENE A. WRIGHT, Circuit Judge: We are asked to enforce a Board order and must determine whether the findings of the Board are supported by substantial evidence. Respondent San Francisco Labor Council also argues that the Regional Director acted arbitrarily in refusing to accept an informal settlement agreement after the complaint was issued and asserts that enforcement should be denied on equitable considerations. Because of a labor dispute between the United Farm Workers Organizing Committee, AFL-CIO and some California grape growers, the Executive Council of the AFL-CIO voted in May 1968 to conduct a boycott of California table grapes. Respondent Labor Council, composed of a number of affiliated local unions, undertook in concert with the AFL-CIO, Farm Workers, and other local unions an effort to influence food retailers in the San Francisco Bay area to cease selling table grapes. Meetings were arranged between representatives of the food retailers and representatives of the Labor Council, AFL-CIO, Farm Workers, and the Retail Clerks union. The Board heard evidence that at these meetings representatives of the Labor Council told the food retailers that, if they would not cooperate by ceasing to sell California table grapes, the boycott would expand to include picketing of their stores. They were further told that the boycott might be extended to the docks and warehouses, and that it “might not be simply informational in nature.” The Labor Council representatives also indicated that all unions were supporting the boycott, that they would attempt to “cut off the grapes at the source,” and implied that there might be trouble on the picket lines and general harassment. Two employers filed unfair labor practice charges against the AFL-CIO, Farm Workers, Retail Clerks, and the Labor Council. Charges were dismissed or settled informally as to all but the Labor Council and a complaint was issued against it in July 1969. The complaint alleged a violation of § 8(b)(4)(ii)(B) of the National Labor Relations Act. The hearings before a trial examiner did not take place until January-1971. The facts were in the main undisputed. The evidence shows that respondent did more than sympathize with the Farm Workers. Its efforts were not merely directed to inform the public or union members of the Farm Workers labor struggle. Rather, the facts disclose that respondent did “threaten and coerce” certain food retailers to induce them to cease selling California table grapes. In short, there was substantial evidence to support the Board’s order. The Labor Council contends, however, that we should not enforce the Board’s order because the Regional Director refused to accept an informal settlement agreement. Settlement of unfair labor practice charges is to be encouraged, and we note that the Board itself provides for and encourages both informal and formal settlement agreements (29 C.F.R. §§ 101.7 and 101.9). The informal settlement agreement in question here was not executed by the Labor Council until after the complaint was issued. In such cases, 29 C.F.R. § 101.9 provides that a formal settlement agreement may be approved by the Board, or that an informal settlement agreement, of the type executed by respondent here, may be approved by the Regional Director at his discretion. Here the Regional Director refused to accept the informal settlement agreement and elected to proceed to formal hearings. As the Director stated in a letter notifying the Labor Council of his decision, the charging parties had refused to enter into the settlement agreement, and his investigation in related cases indicated that the Labor Council might be continuing its § 8(b)(4) unfair labor practices. In such circumstances, we find that the Regional Director did not abuse his broad discretion in refusing to accept an informal settlement agreement. The Board’s petition for enforcement of its order is granted. . Section 8(b) (4) (ii) (B) of the Act provides that it shall be an unfair labor practice for a labor organization or its agents: (ii) to threaten, coerce or restrain any person engaged in commerce, or in an industry affecting commerce, where in either case an object thereof is— (B) forcing or requiring any person to cease using, selling, transporting, or otherwise dealing in the products of any other producer, processor, or manufacturer, or to cease doing business with any other person . . . . Provided, That nothing contained in this clause (B) shall be construed to make unlawful, where not otherwise unlawful, any primary strike or primary picketing. . The regulations indicate that the Board favors a formal settlement agreement after the issuance of a complaint. The agreement executed by the Labor Council was not a formal settlement agreement, as outlined in 29 C.F.R. § 101.9(b)(1) : In such an agreement, the parties agree to waive their right to hearing and agree further that the Board may issue an order requiring the respondent to take action appropriate to the terms of the settlement. Ordinarily the formal settlement agreement also contains the respondent’s consent to the Board’s application for the entry of a decree by the appropriate circuit court of appeals enforcing the Board’s order.

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Carrie Dell COPELAND and Betty Bennett, Individually and for all Others Similarly Situated, Plaintiffs-Appellants, v. Herschel SAUCIER, Director of the Division of Family and Children Services, Defendant-Appellee. No. 72-2698. United States Court of Appeals, Fifth Circuit. April 4, 1973. See also, D. C., 330 F.Supp. 383. Jay E. Loeb, Michael H. Terry, Atlanta, Ga., for plaintiffs-appellants. Arthur K. Bolton, Atty. Gen., Timothy J. Sweeney, Asst. Atty. Gen., Atlanta, Ga., for defendant-appellee. David A. Webster, Atlanta, Ga., for other interested parties. Before BELL, INGRAHAM and RONEY, Circuit Judges. PER CURIAM: This appeal arises out of the welfare system. The recipients of welfare are entirely dependent on the government for sustenance. They cannot subsist absent their monthly checks, else they would not qualify for welfare in the first instance. Complainants sought relief from what they contend are inordinate delays on the part of Georgia in replacing lost or stolen welfare checks. The district court denied relief after a careful study of the Georgia method of replacement. We affirm. Georgia has not adopted a system of requiring welfare recipients to obtain their monthly checks by hand. Instead, the checks are forwarded to recipients in the United States mail. The problem comes in the fact that some checks are lost or stolen before delivery. In such cases, the intended recipient is rendered destitute pending replacement of the check. The questions presented are (1) whether Georgia must immediately replace the lost or stolen check pending a hearing or, in the alternative, (2) whether the delay in the process which is employed in replacing the lost or stolen checks is so unreasonable as to constitute a denial of due process of law. It is the position of petitioners that such cheeks should be replaced in a maximum period of eight days after the initial report of the missing check. We hold that the district court did not err in rejecting the first contention of complainants. We are unable to find any support in the appertaining statutes or regulations which makes the circumstances of replacing lost or stolen checks tantamount to cutting off welfare funds with the result of mandating a hearing and an immediate interim replacement of the lost or stolen check. As to the claim of a due process denial in the delay in replacing checks, it appears that a missing check which has not been cashed is replaced within an average of 15 days after the initial report of non-receipt. The average is 45 days in those cases where the check has been cashed. A good deal of the delay in this latter type case is consumed in having the bank credit the state’s bank account. The state contends that this must be done to make the necessary funds available. It can be argued, of course, that these times could be reduced by more expeditious practices on the part of the state and the banks which are involved. We do not doubt this contention and it does appear that the state recognizes the seriousness of the problem and is attempting to reduce the time lags. Assuming arguendo a due process right couched in terms of reasonably prompt replacement of lost or stolen welfare checks once the welfare system is constituted, there is no basis in the record before us for holding that the district court erred in concluding, based on the underlying facts, that the delays here were not unreasonable. Moreover, the record is that the delays in Georgia are substantially in line with the delay in the federal process of replacing lost or stolen Social Security checks. This is not to say that two wrongs make a right; it is to say that a parallel is a factor to be considered. Affirmed. . Georgia has not yet adopted an emergency assistance program for use in the circumstances presented by complainants here and is not required to do so since such a program is optional to the states. 42 U.S.C.A. §§ 603(a) (5), 606(e).

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UNITED STATES of America, Plaintiff-Appellee, v. Alex POPEKO, Defendant-Appellant. No. 72-3102 Summary Calendar. United States Court of Appeals, Fifth Circuit. March 19, 1973. Rehearing Denied April 16, 1973. Alex Popeko, pro se. William S. Sessions, U. S. Atty., San Antonio, Tex., for plaintiff-appellee. Before JOHN R. BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges. Rule 18, 5 Cir.; See Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir. 1970, 431 F.2d 409, Part I. PER CURIAM: On September 29, 1960, petitioner-appellant was convicted of three offenses: two counts charging transportation in interstate commerce of falsely made securities, Title 18 U.S.C. Section 2314, and one count under Title 18 U.S.C. Section 371 of conspiracy to violate Section 2314. He was sentenced to two consecutive ten-year terms of imprisonment for the substantive charges, and a concurrent five-year term under the conspiracy count. Immediately after sentence was imposed November 9, 1960, petitioner-appellant signed an election not to commence service of the sentence pending appeal pursuant to the provisions of F. R.Crim.P. 38(a)(2) then in effect. That election stated: “I understand that as a result of making this election I will not receive credit on my sentence for time spent in jail . . . awaiting the outcome of my appeal.” Because he failed to meet the requirements for bail, petitioner-appellant remained in the county jail until his conviction was affirmed by this Court on August 16, 1961, and his motion for rehearing was denied on September 14, 1961. Popeko v. United States, 5 Cir. 1961, 294 F.2d 168. Shortly thereafter he was moved to a federal prison and commenced serving his sentence. Petitioner-appellant moved in the district court for his sentence to be corrected so that he will receive credit for the period of time spent in the county jail pending the final adjudication of his appeal, asserted to be 354 days. Notwithstanding the signed election his motion asserted that he did not sign the Rule 38(a)(2) waiver voluntarily or with a full understanding of its consequences. Therefore he contends, it should be of no binding effect. The district court denied relief, without a hearing, relying on Shelton v. United States, 5 Cir. 1956, 234 F.2d 132, where we held: “After his motion for new trial was denied, he gave notice of appeal and then elected not to serve his sentence. Having thus voluntarily elected not to serve, service of his sentence automatically ceased, . . . (citations omitted) . . . and he may not now complain of the results of his voluntary action.” 234 F.2d at 133-134. Before deciding whether petitioner-appellant is entitled to credit for the time he served in jail pending his appeal, it is necessary to answer a more basic inquiry. The key question is the truth or falsity of the assertion that his execution of the Rule 38(a)(2) election was neither voluntary nor entered into with a full understanding of its consequences. Davis v. United States, 7 Cir. 1971, 446 F.2d 847, 849; Johnson v. United States, 9 Cir. 1969, 414 F.2d 807; Bujese v. United States, 3 Cir. 1968, 404 F.2d 615; and Cephus v. United States, 1967, 128 U.S.App.D.C. 366, 389 F.2d 317. Indeed, the Shelton court assumed this premise in answering the question of credit for time served in jail pending appeal. We repeat for emphasis a portion of our quotation from Shelton, supra: “Having thus voluntarily elected not to serve, service of his sentence automatically ceased . . . (citations omitted) . . . and he may not now complain of the results of his voluntary action.” (Emphasis added) Because findings of fact as to Popeko’s allegation that his election was neither voluntarily nor knowingly executed are absent, we reverse and remand for an evidentiary hearing below so that such findings may be made. Reversed and remanded. . F.R.Crim.P. 38(a)(2) in 1960 permitted the defendant to stay the commencement of his sentence, and thus remain within the district of his conviction, provided an appeal was taken and the defendant elected not to commence service of the sentence: “A sentence of imprisonment shall be stayed if an appeal is taken and the defendant elects not to commence service of the sentence or is admitted to bail.” F.R.Crim.P. 38(a) (2) was amended in 1966 to eliminate the procedure for election not to commence service of sentence: “A sentence of imprisonment shall be stayed if an appeal is taken and the defendant is admitted to bail.” . Not to be confused with a separate and later Shelton, case brought by the same petitioner, J. Paul Shelton on a separate ground of claimed involuntariness of his guilty plea. See Shelton v. United States, 5 Cir. 1957, 242 F.2d 101, set aside en banc, 1957, 246 F.2d 571, reversed per curiam, 1958, 356 U.S. 26, 78 S.Ct. 563, 2 L.Ed.2d 579.

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UNITED STATES of America, Appellee, v. Edwin Joseph HUCKENSTEINE, Appellant. No. 72-1350. United States Court of Appeals, Eighth Circuit. Submitted March 15, 1973. Decided March 22, 1973. John A. Rava, Huseh, Eppenberger, Donohue, Elson & Cornfeld, St. Louis, Mo., on briefs for appellant. Daniel Bartlett, U. S. Atty., and Jerry L. Murphy, Asst. U. S. Atty., St. Louis, Mo., on brief for appellee. Before MATTHES, Chief Circuit Judge, and ROSS and STEPHENSON, Circuit Judges. PER CURIAM. Edwin Joseph Huckensteine appeals from his conviction by the district court of five charges of violation of 18 U.S.C. § 472. Appellant was convicted of four charges of passing a counterfeited obligation of the United States and one charge of possessing and concealing counterfeited obligations of the United States. The district court sentenced appellant to six years imprisonment for each of the five counts, the sentences to be served concurrently. On the evening of February 3, 1972, appellant was arrested by Deputy Sheriff Kimbrow of the Poplar Bluff City Police. The arrest occurred after a series of events beginning when appellant passed a counterfeit twenty dollar bill in Mike’s Lounge in Poplar Bluff, Missouri. The Poplar Bluff Police were notified of this occurrence, and Deputy Sheriff Kimbrow went to Mike’s Lounge to pick up the counterfeit note. Deputy Pickett was given a description of appellant and the car, located the car, and began following it. Appellant went to three other bars in the Poplar Bluff area and passed counterfeit notes; Deputy Pickett at no time lost sight of the car during this time and was in constant radio contact with Deputy Sheriff Kim-brow. Deputy Sheriff Kimbrow went to each bar after appellant had left and picked up the counterfeit notes which appellant passed. Deputy Pickett then lost sight of the car. The Poplar Bluff City Police spotted the car about an hour later and sent a radio dispatch. Deputy Sheriff Kimbrow immediately proceeded to the vicinity, blocked appellant’s car and ordered the occupants out of the car. Trooper Ronald Jones of the Missouri State Highway Department, who had been in constant radio contact with the Poplar Bluff Police the entire evening, arrived at the scene approximately one minute after Deputy Sheriff Kimbrow. As Trooper Jones approached the group standing around the car, he overheard that appellant was under arrest. He then noticed that the right rear door was open about four inches and opened it all the way. When he opened the door he observed a pack of counterfeit money wedged between two paper bags and seized it. Appellant alleges as error (1) That the counterfeit notes found in the back of the car were illegally seized by Trooper Jones and that therefore the district court erred in denying his motion to suppress. (2) That he was prejudiced by the district court’s denial of his motion for production and inspection of the grand jury minutes. We reject appellant’s contention that the counterfeit notes were illegally seized. The police had ample cause to stop the appellant’s car. Appellant had been described by several persons as the person who was passing the counterfeit notes and had been observed by Deputy Pickett entering the different bars where the notes had been passed. In addition, the notes had been verified as counterfeit. Consequently, the police had probable cause to stop the car, and to arrest appellant. Under Chambers v. Maroney, 399 U.S. 42, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970) and Orricer v. Erickson, 471 F.2d 1204 (8th Cir. 1973) they therefore were entitled to search the ear for instruments of the crime. We also note that the evidence which appellant sought to suppress was essential only to the proof of the fifth count on which he was convicted — possession and concealment of counterfeit notes. Under the concurrent sentence doctrine, if the conviction under one count is proper, that conviction will support the judgment. Kilcrease v. United States, 457 F.2d 1328 (8th Cir. 1972). We hold that appellant was convicted properly of the other four counts. With regard to appellant’s second alleged error, the record shows that the Grand Jury minutes were not recorded. We have previously held that a defendant is not denied due process because the Grand Jury which indicted him made no written record of its proceedings. United States v. Gray, 464 F.2d 632, 635 (8th Cir. 1972); United States v. Harflinger, 436 F.2d 928 (8th Cir. 1970), cert. denied, 402 U.S. 973, 91 S.Ct. 1660, 29 L.Ed.2d 137 (1971). Therefore, appellant was not prejudiced by the district court’s denial of his motion for production and inspection of the Grand Jury minutes. Affirmed.

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ASSOCIATED STUDENTS OF WESTERN KENTUCKY UNIVERSITY et al., Plaintiffs-Appellants, v. Dero G. DOWNING, President of the Western Kentucky University et al., Defendants-Appellees. No. 72-1894. United States Court of Appeals, Sixth Circuit. Argued Jan. 30, 1973. Decided March 28, 1973. Thomas L. Hogan, Louisville, Ky., Robert Allen Sedler, Lexington, Ky., on brief, for plaintiffs-appellants. J. David Francis, Bowling Green, Ky., William E. Bivin, Bowling Green, Ky., on brief, for defendants-appellees. Before PHILLIPS, Chief Judge, PECK, Circuit Judge, and KENNEDY, District Judge. Honorable Cornelia G. Kennedy, United States District Judge for the Eastern District of Michigan, sitting by, designation. PHILLIPS, Chief Judge. The governing officials of Western Kentucky University at Bowling Green made a decision that the sponsoring by the University of a certain motion picture film and its showing on the campus under University auspices would be inappropriate. Accordingly, the University cancelled the booking contract which it previously had executed for the showing of the film. District Judge Rhodes Bratcher, after a comprehensive evidentiary hearing, found that the decision of the University was within the rights and powers of its governing officials. We affirm. The appellants are Associated Students of Western Kentucky University, the student government organization, two of the officers of that organization and two other University students. The appellee Board of Regents is the duly constituted governing body of the University. K.R.S. § 164.350. The President and Dean of Student Affairs also were named parties defendant. Since about 1966 the University and the Associated Students have planned and operated jointly a series of cultural, social and educational programs for the benefit and enjoyment of students. The District Court held that the University is an indispensable party, both as to selection and content of the programs under consideration in the series. The programs are financed through an item in the University’s budget, which in 1971 was set at a maximum of $52,000. All agreements in connection with the series required the approving signature of the University as a necessary contracting party. A showing of “The Films of John Lennon and Yoko Ono” was scheduled on the campus on February 2, 1971. The University signed a booking contract for this program. After a preliminary showing of the film, the University can-celled the contract. One segment of the film in question was titled “The Fly.’’ Judge Bratcher described it as follows: “The Court has seen the questioned film in chambers and it has been described in the testimony. Briefly, it consists of a camera focused upon what appears to be an ordinary house fly as it crawls and meanders over, around, in, on and about the body of a nude female model lying in bed on her back with her legs spread apart. The camera, on occasion, zooms in for close-up showings of the open vaginal orifice with the ever-present fly crawling in and around the exposed area. “The travels of the fly take it to the legs, arms, nipples of breast, ears, hair of the head, hair under the arms and substantially the entire body of the model, all accompanied by background music.” The Dean of Student Affairs concluded that: “It would be inappropriate for the University to continue as a contracting party.” The President of the University concurred in this conclusion. There is no dispute that the making of this decision was within the scope of authority delegated by the Board of Regents. The appellants sought declaratory judgment and injunctive relief to protect certain rights alleged to have been violated in derogation of constitutional guaranties. After a full hearing Judge Bratcher ruled that the University, as a party to the booking contract and pursuant to its terms, had the right to cancel the contract in the absence of a clear case of constitutional infringement. We believe this case to be distinguished from situations where University officials have censored programs sponsored by students or student organizations or otherwise interfered with the exercise of First Amendment rights. See, e. g., Brooks v. Auburn University, 412 F.2d 1171 (5th Cir. 1969); Korn v. Elkins, 317 F.Supp. 138 (D.Md.1970); Antonelli v. Hammond, 308 F.Supp. 1329 (D.Mass.1970). In the present case the University did nothing more than to make a determination that, with respect to a particular experimental film, it would be “inappropriate for the University to continue as a contracting party.” The evidence supports the conclusion of the District Court that appellants demonstrated no violation of any constitutional right. The findings of fact of the District Court are not clearly erroneous, but to the contrary are supported by substantial evidence. Rule 52(a), Fed.R.Civ.P. The University had the prerogative to determine, as it did, that it was inappropriate for it as an institution of higher learning to sponsor the showing of the questioned film as a part of its educational program. Affirmed.

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Claude BERNARD, Appellant, v. U. S. LINES, INCORPORATED, Appellee, v. RYAN STEVEDORING CO., INC. and the United States of America, Appellees. No. 72-2115. United States Court of Appeals, Fourth Circuit. Argued Feb. 7, 1973. Decided March 13, 1973. Stuart V. Carter, Norfolk, Va. (Breit, Rutter, Montagna & Carter, Norfolk, Va., on brief), for appellant. Daniel.Lee Brawley, Wilmington, N. C. (Lonnie B. Williams and Marshall, Williams, Gorham & Brawley, Wilmington, N.'C., on brief), for Ryan Stevedoring Co., Inc. Ronald R. Glanez, Atty., U. S. Dept, of Justice (Harlington Wood, Jr., Asst. Atty. Gen., Thomas P. McNamara, U. S. Atty., E. D. N. C., and Morton Hollander, Atty., Dept, of Justice, on brief), for the United States. Before HAYNSWORTH, Chief Judge, BUTZNER, Circuit Judge, and BRYAN, District Judge. PER CURIAM. We affirm the judgment for the reasons stated by the district court. Claude Bernard, a longshoreman, brought this suit for pierside injuries caused by a land-based forklift owned by the United States while he was loading a ship. The injuries were not caused by the ship or its gear. Subsequently, the Supreme Court decided Victory Carriers v. Law, 404 U.S. 202, 92 S.Ct. 418, 30 L.Ed.2d 383 (1971), which Bernard concedes forecloses any claim against the ship or its owner for negligence or unseaworthiness. However, he seeks to sustain admiralty jurisdiction against the United States, time charterer of the vessel and terminal owner, which had been named a third party defendant by the owner of the vessel. Bernard bases his allegation of jurisdiction on the theory that he is the third party beneficiary of a maritime contract. The district court held that he was not, and we agree. Bernard urges two theories, one under the stevedoring contract between Ryan Stevedoring Co. and the United States and the other under the charter party between United States Lines, owner of the vessel, and the United States. However, the warranty of workmenlike performance in the stevedoring contract was made by Ryan, not the United States. It ran to the vessel and its charterer, not the longshoreman. Similarly, the charter party created no contractual duty to the longshoreman on the part of the United States as time charterer. Habrat v. United States, 310 F.Supp. 618, 620 (W.D.Pa.1970); Klishewich v. Mediterranean Agencies, Inc., 302 F.Supp. 712 (E.D.N.Y.1969); Buthusien v. Central Gulf S. S. Corp., 217 F.Supp. 903 (E.D.Pa.1963). Federal Rule of Civil Procedure 14(c), which allowed the United States Lines, as third party plaintiff, to demand judgment against the United States, third party defendant, in favor of Bernard, the plaintiff, does not create admiralty jurisdiction. Rule 82 expressly negates the extension of jurisdiction by the rules. Bernard also seeks to assert a claim against the United States under the Federal Tort Claims Act. While Bernard filed his suit within two years of the accident, his failure to file an administrative claim within the statutory period bars his action. 28 U.S.C. §§ 2401 (b), 2675(a). Affirmed.

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UNITED STATES of America, Appellee, v. James Francis NEELEY, Appellant. No. 72-2321. United States Court of Appeals, Fourth Circuit. April 9, 1973. Michael S. Ferguson, Roanoke, Va. [Court-appointed counsel] on brief for appellant. Leigh B. Hanes, Jr., U. S. Atty., on brief for appellee. Before WINTER, CRAVEN and BUTZNER, Circuit Judges. PER CURIAM: James Francis Neeley appeals from his conviction by a jury of two counts of armed bank robbery in violation of 18 U.S.C. § 2113(a) (1972). Neeley complains that the district court erred in admitting the testimony of (1) Betsy Trent, whom he claimed was his wife at the time of his trial and (2) Helen Weiss, whom he claimed was his wife at the time he made statements to her which constituted the basis of her testimony. We find no merit in these assignments of error and therefore affirm. The Agreed Statement of Facts In Lieu of Transcript reveals that Neeley had been married and divorced twice when he married Opal Virginia Palmer on June 15, 1947. No record of a divorce from this marriage was introduced by the prosecution or Neeley. Neeley then married Sara Freeman and on July 8, 1970 he married Helen Weiss. The record is silent as to how the marriage to Sara Freeman was terminated, if at all, but the record does show that Helen Weiss had not yet obtained a final divorce from Mr. Weiss at the time of her purported marriage to Neeley. Neeley was probably aware of this fact. Apparently, he simply disregarded his marriage to Helen Weiss, for on January 28, 1971, he married Betsy Trent. Neeley argues that Betsy Trent should not have been allowed to testify because of the Virginia rule that one spouse cannot testify against the other without consent. Va.Code Ann. § 8-288 (1972). He then argues that Helen Weiss should not have been allowed to testify as to statements he made privately to her while they were married because of Virginia’s privileged communications rule. Va.Code Ann. § 8-289 (1957). These rules operate only where there is a valid marriage. Leigh v. Commonwealth, 192 Va. 583, 66 S.E.2d 586 (1951). Neeley challenges the admission of the government’s evidence showing that he married, but failed to divorce, Opal Palmer, and argues that he was entitled to rely on his belief in the validity of his marriage to Helen Weiss. The district court was correct in admitting an exemplified copy of the marriage certificate between Neeley and Opal Palmer, attested to by the clerk of the state court. 28 U.S.C. § 1739 (1966). The district court admitted hearsay testimony concerning Neeley’s failure to obtain a divorce from Opal Palmer. Neeley had sufficient notice of the government’s intent to call witnesses whose testimony would be inadmissible if he could establish that he had divorced Opal Palmer. He not only failed to introduce evidence of having divorced Opal Palmer, but also on cross-examination admitted he could not remember obtaining a divorce from her. Considering this, and considering the other substantial evidence of Neeley’s guilt, we cannot conclude that admission of the hearsay evidence constituted reversible error. In light of the unchallenged evidence that Opal Palmer still resides at the place of her marital domicile with Neeley, we find his attempt to rely on a presumption of her death after a seven-year absence to be completely frivolous. It was Neeley who was absent, not Opal Palmer. Since Neeley never divorced Opal Palmer, he could not have entered into a valid marriage with either Helen Weiss or Betsy Trent after the date of his marriage to Opal Palmer. Thus, he cannot now rely on any exclusionary rules based on the existence of subsequent valid marriages. Leigh v. Commonwealth, supra. Accordingly, we dispense with oral argument and affirm the judgment of the district court. Affirmed.

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William L. RUSSELL, Petitioner-Appellant, v. J. D. HENDERSON, Respondent-Appellee. No. 72-3658. United States Court of Appeals, Fifth Circuit. March 26, 1973. William L. Russell, pro se. John W. Stokes, U. S. Atty., Atlanta, Ga., for respondent-appellee. Before JOHN R. BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges. PER CURIAM: Russell, while an inmate of the United States Penitentiary at Atlanta, Georgia, filed a petition for a writ of habeas corpus in the district court, seeking relief from conditions at the prison which he alleged constituted cruel and unusual punishment. Russell contended that his indeterminate confinement in poorly ventilated administrative segregation violated his Eighth Amendment right to be free from cruel and unusual punishment. The district court denied relief, and this appeal was taken. The Administrative Assistant of the United States Penitentiary at Atlanta, Georgia, has filed an affidavit in this Court certifying that the appellant is no longer incarcerated there. The case is moot. Williams v. U. S. Department of Justice, 5 Cir. 1972, 462 F.2d 1291; McCarroll v. Morrow & Holman, 5 Cir. 1971, 435 F.2d 560; Bryant v. Blackwell, 5 Cir. 1970, 431 F.2d 1203. Appeal dismissed. . It is appropriate to dispose of this pro se case summarily, pursuant to this Court’s local Rule 9(c) (2), appellant having failed to file a brief within the time fixed by Rule 31, Federal Rules of Appellate Procedure. Kimbrough v. Beto, Director, 5 Cir. 1969, 412 F.2d 981.

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Mrs. Barbara Janusa SMITH, Individually and as Natural Tutrix of her minor children, Lee Roy Smith, III and Raymond Smith, Plaintiff-Appellant, v. ASSOCIATED PIPE LINE CONTRACTORS, INC. and Travelers Insurance Company, Defendants-Appellees, Liberty Mutual Insurance Company, Intervenor. No. 73-1087 Summary Calendar. United States Court of Appeals, Fifth Circuit. April 20, 1973. Rehearing Denied May 16, 1973. Robert E. Morgan, Lake Charles, La., for plaintiff-appellant. Edmund E. Woodley, Lake Charles, La., for Associated Pipe Line Contractors, Inc. Bruce J. Borrello, New Orleans, La., Richard A. Chozen, Lake Charles, La., for Liberty Mutual Ins. Co. Before THORNBERRY, GOLDBERG and RONEY, Circuit Judges. Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5th Cir. 1970, 431 F.2d 409. PER CURIAM: Plaintiff’s husband was killed in a two-car collision which resulted from the negligence of defendant’s employee, Nugent. We have previously sustained a summary judgment denying liability of the employer under the Jones Act for the death of a fellow-employee guest passenger riding with Nugent on the ground that the driver Nugent was not in the course of his employment at the time of the accident. Moore v. Associated Pipeline Contractors, 468 F.2d 815 (5th Cir. 1972). Plaintiff contends that Nugent was acting in the course and scope of his employment, under Louisiana law, at the time of the collision with her husband’s automobile. We affirm the summary judgment for the defendant on the basis of the opinion of the District Court. Smith v. Associated Pipe Line Contractors, Inc., 357 F.Supp. 493 (W.D.La.1972). Affirmed. . Louisiana Civil Code of 1870, Article 2370. Masters and employers are answerable for the damage occasioned by their servants and overseers, in the exercise of the functions in which they are employed. Teachers and artisans are answerable for the damage caused by their scholars or apprentices, while under their superintendence. In the above cases, responsibility only attaches, when the masters or employers, teachers and artisans, might have prevented the act which caused the damage, and have not done it. See O’Brien v. Traders & General Insurance Co., 136 So.2d 852 (La.App.1961).

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NATIONAL LABOR RELATIONS BOARD, Petitioner, v. BUCKEYE FLORAL COMPANY, Respondent. No. 72-1826. United States Court of Appeals, Sixth Circuit. Argued April 10, 1973. Decided April 17, 1973. Marjorie S. Gofreed, Atty., N. L. R. B., Washington, D. C., for petitioner; Peter G. Nash, Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Marcel MalletPrevost, Asst. Gen. Counsel, Robert Sewell, Atty., N. L. R. B., Washington, D. C., on brief. Edward C. Kaminski, Akron, Ohio, for respondent; Buckingham, Doolitte & Burroughs and Herndon & Bartlo, Akron, Ohio, of counsel. Before PHILLIPS, Chief Judge, and KENT and LIVELY, Circuit Judges. ORDER The National Labor Relations Board seeks enforcement of its order issued May 25, 1972 against Buckeye Floral Company as reported at 197 NLRB No. 21. Upon consideration of the record on appeal, briefs and oral arguments, it appears to the Court that the findings and order of the Board are supported by substantial evidence on the record as a whole. It is therefore ordered that the order of the Board be, and it is hereby, enforced.

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Harold E. JAHN and Mary Jahn, Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. No. 72-1976. United States Court of Appeals, Sixth Circuit. Argued April 9, 1973. Decided April 12, 1973. Leonard J. Simasko, Mt. Clemens, Mich., for appellants. Wesley J. Filer, Atty., Tax Div., Dept, of Justice, Washington, D. C., for appellee; Scott P. Crampton, Asst. Atty. Gen., Thomas L. Stapleton, Grant W. Wiprud, Attys., Tax Div., Dept, of Justice, Washington, D. C., on brief. Before WEICK and PECK, Circuit Judges, and CECIL, Senior Circuit Judge. ORDER Upon consideration, it is ordered that the decision of the Tax Court be and it is hereby affirmed on the opinion of Judge Withey, 58 T.C. 452.

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Jim FAIR and Jim Hinnant, both Individually and as representative of the class of similarly situated residents of of the State of Florida, Flaintiffs-Appellees, v. Jim SEBESTA, as Supervisor of Elections, Hillsborough County, Florida, etc., et al., Defendants-Appellants. Joel Francis WOODMAN, Individually, and Joel Francis Woodman, as representative of the class, etc., et al., Plaintiffs-Appellees, v. James SEBESTA, Supervisor of Elections, Hillsborough County, Florida, et al., Defendants-Appellants. Nos. 72-3301, 72-3300 Summary Calendar. United States Court of Appeals, Fifth Circuit. April 11, 1973. Robert L. Shevin, Atty. Gen., Jerry E. Oxner, Asst. Atty. Gen., Tallahassee, Fla., David W. Thorpe, Asst. County Atty., Tampa, Fla., for James Sebesta. Jim Fair, pro se. Leslie Harold Levinson, Gainesville, Fla., Richard P. Condon, Tampa, Fla., for Hinnant. Before THORNBERRY, GOLDBERG and RONEY, Circuit Judges. Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York, 5 Cir. 1970, 431 F.2d 409, Part I. PER CURIAM: We find that these consolidated cases require a three-judge district court, 28 U.S.C. § 2281. We therefore vacate the decision of the lower court, 346 F.Supp. 913, for want of jurisdiction and remand the cases with instructions to convene a three-judge district court pursuant to 28 U.S.C. § 2284. Vacated and remanded.

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Larry JONES, Petitioner-Appellant, v. STATE OF GEORGIA et al., Respondents-Appellees. No. 72-3659 Summary Calendar. United States Court of Appeals, Fifth Circuit. April 27, 1973. James C. Bonner, Decatur, Ga., (Court-appointed), for petitioner-appellant. Arthur K. Bolton, Atty. Gen., Harold N. Hill, Jr., Courtney Wilder Stanton, David L. G. King, Jr., Asst. Attys. Gen., Atlanta, Ga., for respondents-appellees. Before BELL, GODBOLD and IN-GRAHAM, Circuit Judges. Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir., 1970, 431 F.2d 409. PER CURIAM: Court-appointed counsel for appellant, a Georgia state prisoner habeas applicant, has asserted one principal error on this appeal. In addition, deeming it to be his duty in a habeas case, he has conscientiously catalogued other possible errors for the consideration of the court. The principal assignment of error, that the state trial court erred in the charge to the jury on voluntary manslaughter (called a due process violation), is, in the context of the total charge, without merit. The additional assignments of error are also without merit. Affirmed. . The additional assignments of error are the following: 1. Appellant’s conviction for voluntary manslaughter on an indictment charging murder was a violation of due process. 2. Appellant was denied effective assistance of counsel at trial. 3. Appellant was arrested in violation of the Fourth Amendment. 4. Appellant’s conviction was obtained by the use of an involuntary confession. 5. Appellant was denied assistance of counsel at the commitment hearing. 6. Appellant was denied the right to present witnesses in his behalf because his trial counsel did not call certain witnesses who attended trial under subpoena. 7. Appellant’s conviction was obtained by the use of improperly suggestive identification procedures.

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ESTATE of Eugene F. McCABE, Deceased (Westport Bank and Trust Company, Administrator, C.T.A.) v. The UNITED STATES. No. 115-70. United States Court of Claims. March 16, 1973. Lawrence C. Moore, Washington, D. C., attorney of record, for plaintiff. Walter M. Andrew, Jr., Westport, Conn., of counsel. Kenneth R. Boiarsky, Washington, D. C., with whom was Asst. Atty. Gen. Scott P. Crampton, for defendant. Gilbert E. Andrews and Joseph Kovner, Washington, D. C., of counsel. Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG, Judges. and BENNETT, OPINION PER CURIAM: This ease was referred to Trial Commissioner David Schwartz with directions to make findings of fact and recommendation for conclusions of law under the order of reference and Rule 134(h). The commissioner has done so in an opinion and report filed on August 2, 1972. Exceptions to the commissioner’s opinion, findings and recommended conclusion of law were filed by plaintiff, defendant filed exceptions to certain findings and the case has been submitted to the court on oral argument of counsel and the briefs of the parties. Since the court is in agreement with the opinion and recommendation of the commissioner, with a modification by the court, it hereby adopts the same, as modified, as the basis for its judgment in this case as hereinafter set forth. Therefore, plaintiff is not entitled to recover and the petition is dismissed. Commissioner Schwartz’ opinion, with a modification by the court, is as follows : This is a suit for the recovery of estate taxes and assessed interest, to a total of $30,346.45, paid by the estate of Eugene F. McCabe, who died in 1964. Three questions are pi’esented: (1) what is the proper valuation of decedent’s residence; it is held that the residence had the value fixed by the Commissioner of Internal Revenue; (2) whether a certain inter vivos trust was a transfer with such a retained life estate as made it properly includible in the gross estate under subdivision (1) of § 2036(a) of the 1954 Code; it is held that it was; and (3) whether a testamentary trust of which decedent’s widow was a beneficiary failed to qualify, by virtue § 2056(a)(5) of the 1954 Code, for the marital deduction under § 2056(a); it is held that the trust does not qualify, for the reason that the widow’s power of appointment was not exercisable by her alone and in all events. A fourth issue sought to be raised is the propriety of the Commissioner’s dis-allowance, as a deduction from the gross estate, of a widow’s allowance paid pursuant to probate court order. This ground for refund was first mentioned in plaintiff’s post-trial brief in this court; it was not raised in the administrative claim for refund and in the petition in this court. The failure to raise it before the Commissioner of Internal Revenue in the claim for refund bars its consideration in this judicial proceeding. Union Pacific R. R. Co. v. United States, 182 Ct.Cl. 103, 389 F.2d 437 (1968); 26 U.S.C. § 7422(a) (1964). True, plaintiff demanded, in both its claim for refund and in its petition in this court, the entire amount of the deficiency which had been assessed and paid, an amount which would be refundable only if the widow’s allowance were a proper deduction. Numbers alone, however, cannot satisfy the rule that a claim for refund must set out the grounds upon which it rests. Plaintiff cannot make out a case, either before the Commissioner or in court, merely by demanding more money than is warranted by the allegations. H. H. Hornfeck & Sons, Inc. v. Anderson, 60 F.2d 38, 41 (2d Cir., 1932). 1. Valuation of Decedent’s Residence Decedent’s residence, jointly owned with his wife, was valued at $57,500 in the tax return filed by his estate and at $64,500 by the Commissioner of Internal Revenue. The two appraisers appointed by the probate court testified in support of their valuation of $57,500. The Government’s expert testified to a valuation of $67,000. The qualifications of the respective appraisers, the bases for their valuation and the facts as to what they considered, and how thoroughly, are set out in the accompanying findings. Plaintiff’s appraisers did a perfunctory job of their appraisal. Notably, they failed to take into account the increase in value which would be gotten by a quite feasible subdivision into three parcels of the 6.8 acre lot on which decedent’s house stands. The Government’s witness, on the other hand, has impressive qualifications, made an industrious appraisal and provided evidence in support of his opinion that the house and lot were worth $67,348 on a cost-reproduction basis and $67,000 on a direct-market-comparison or comparable-sales basis. On the basis of that witness' testimony, it is found that the property — land and improvements — was worth at least $64,500, the figure accepted by the Commissioner of Internal Revenue. It is unnecessary to determine whether the property was any more valuable than that. Accordingly, plaintiff is not entitled to recover on the issue of valuation. 2. The Inter Vivos Trust On May 16, 1940, decedent by an indenture created a trust of insurance policies on his life with a total face value of $75,000. His wife thereafter transferred to this trust shares of stock worth $6,300. The trust instrument provided that the income from the trust was to be paid to decedent's wife for life, with a remainder to decedent’s children. The trustees were Russell J. Hopkins, president of the Titusville Trust Co. of Titus-ville, Pennsylvania, and the Trust Company. The value of the assets in the trust as of the date of decedent’s death in 1964, exclusive of any corpus contributed by his widow, Dorothy McCabe, was $18,298.66. The question for decision is the includibility of this sum in decedent’s gross estate under § 2036(a) of the 1954 Code. More precisely, the question is whether in making the transfer the decedent had in the words of the section, retained for his life “the possession or enjoyment of, or the right to the income from, the property,” within the meaning of subdivision (1) of § 2036(a). The section reads as follows (26 U.S.C. § 2036(a) (Supp. V, 1959-1963)): § 2036. Transfers with retained life estate (a) General rule.— The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death— (1) the possession or enjoyment of, or the right to the income from, the property, or (2) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom. The decision herein is that decedent retained such a life interest as is described in subdivision (1) of § 2036(a). A contention of taxability under subdivision (2) of § 2036(a), based upon the retention in Article Twelfth (note, supra) of the power to substitute the donor as trustee, therefore need not be considered. At the time the trust was created in 1940, decedent was employed by the Tidewater Associated Oil Company. He retired as a vice president in 1959. Upon his retirement, he ceased to receive his annual salary of $30,000, and became a consultant at a compensation which does not appear. Following decedent's retirement in 1959, the cash surrender value of the insurance policies in the trust was taken by the trustees, by mutual agreement of decedent, decedent’s wife and the trustees. Substantially all of the dealings with regard to the trust took place between decedent and the individual trustee, Russell J. Hopkins, who was his longtime friend and business associate. Between 1959 and 1964, the year of decedent’s death, funds from the corpus of the trust were devoted by the trustees as follows: At the trial, decedent’s widow could not recall ever having seen the 1940 trust agreement, nor could she recall her husband's having explained its terms to her. She was certain that no one at the Trust Company had ever done so. None of decedent’s children was aware of the 1940 trust agreement except through informal family conversations. With some small exceptions, they did not know the nature or amount of the trust assets, the nature of their respective interests, the identity of the trustees, the taking of the cash surrender value of the life insurance policies or the amounts withdrawn from the trust. They were not consulted with regard to any of the transactions regarding the trust, nor was any evidence presented which would show that any of the four children received money from their parents or from the trust for support, medical assistance or educational purposes during the period 1959-1964. Prior to decedent’s retirement in 1959 and subsequent to his death on August 23, 1964, no distributions of trust corpus were requested or made. From 1959 until decedent’s death, all requests for cash distributions of trust corpus (set out in the foregoing table) were prepared by and at the direction of decedent, for his wife’s signature. The distributions were deposited in decedent’s cheeking account, by the trustees acting upon Dorothy McCabe’s request, and were applied to the joint and personal use and benefit of decedent and his wife, including the costs of children’s weddings and personal vacations. There is no question but that decedent did not, by the terms of the instrument of transfer, expressly retain the life interest that would make § 2036(a)(1) applicable. A retained life interest need not, however, necessarily be created by the express terms of the instrument, nor need it be legally enforceable, for § 2036(a) (1) to apply McNichol’s Estate v. Commissioner, 265 F.2d 667 (3d Cir.), cert. denied, 361 U.S. 829, 80 S.Ct. 78, 4 L.Ed.2d 71 (1959). A retention of the “possession or enjoyment of, or the right to the income from, the property” may be inferred from the circumstances attendant upon the transfer and the manner in which the transferred property is used. Skinner’s Estate v. United States, 316 F.2d 517 (3d Cir. 1963); see also Barlow v. Commissioner, 55 T.C. 666 (1971). Both McNichol and Skinner were factually different flom the instant case. McNichol involved a purported outright gift of income-producing property by a father to his children, coupled with a contemporaneous oral agreement between the donor and the donees that the donor would continúe to receive the income from the property until his death. In Skinner, the trust instrument gave the trustee discretion to pay the income from the trust to the settlor during her lifetime, a discretion which he exercised in her favor until her death. The facts of the instant case however show as clearly as in those cases a retained life interest. Decedent was not a detached settlor, and the trustee (to all intents the individual trustee was the sole trustee) did not act exclusively for the benefit of the ostensible beneficiary, Mrs. McCabe. The dealings among the three of them — decedent, trustee and wife — in my opinion raise an inference of a prearrangement that decedent should retain control for his benefit so long as he lived. In these dealings, Mrs. McCabe and the trustee recognized and surrendered to the decedent’s interests, throughout. After decedent retired in 1959 (and his income thereby diminished) substantial cash distributions were at four separate times made from the trust corpus to the decedent, presumably a settlor who had parted with his interest and had no rights. After the first of these distributions, trustee Hopkins requested that decedent have his wife execute “a letter * * * authorizing the $3,000 transfer to your [decedent’s] checking account.” The succeeding cash withdrawals were made pursuant to the written request of decedent’s wife, who additionally directed that these sums be deposited in her husband’s checking account. The only provision of the trust under which the corpus could be invaded for the benefit of decedent’s wife, Article Fifth (note 1, swpra) was conditioned on her illness or an emergency, and an exercise of judgment by the trustee as to the amount, additional to income, necessary to provide proper care for Mrs. McCabe. This was ignored. The trustee made no inquiry into her situation to determine whether she was beset by illness or emergency when she requested distributions of corpus; and plaintiff provides no basis for any conclusion that the uses to which the distributions were put fall within the provisions of Article Fifth for Mrs. McCabe’s benefit. Rather, it appears that the three parties at all times treated the decedent as having the right to receive the trust corpus, exercisable on the mere formality of his wife’s demand. Consistent with this conclusion is the language in Mrs. McCabe’s second letter requesting a distribution of corpus to her husband: In view of the rights and privileges granted to me under the above mentioned trust agreement, I now request that you permit me to withdraw from the trust the cash on hand, namely $3,163.08, depositing it in Titusville Trust Company to the credit of my husband Eugene F. McCabe. In consideration of so doing I hereby agree to protect and save the trustees harmless and free from, any liability or any claim that may be made upon them by reason of releasing the above sum to me.’ Similar language was contained in three of the four such letters she wrote, authorizing the four noted cash distributions. None of the letters contained any statement as to the purposes for which the money was required. A pretended transfer to a wife, with the retention of a life estate by the husband so apparent from the facts as here, is the archetypal situation reached by subdivision (1) of § 2036(a). The property is includible in the gross estate. 3. The Testamentary Trust The issue in this last part of the case is whether one of the trusts created by the will, “Trust Fund A,” is such a life estate with power of appointment in a surviving spouse as permits its value to be deducted from the gross estate. The precise questions are whether the power is exercisable by the surviving spouse “alone and in all events” and whether there is a power in any other person to appoint “to any person other than the surviving spouse.” 26 U.S.C. § 2056(b)(5) (1958). Only if the first question is answered in the affirmative, and the second in the negative, is the value of the interest deductible from the gross estate under § 2056(a). Article Second of the will (set out in the note ) divided the estate equally between two trusts, Trust Fund A and Trust Fund B, and provided that the income of Trust Fund A should go to the widow for her life, she to have power to “use” any part of the principal in her discretion, any balance remaining at her death to be added to Trust Fund B (in which, at that time, the income beneficiaries and remaindermen (at stated ages) would be decedent’s surviving children and issue). Section 2056(b)(5) of the 1954 Code (note 3, supra) requires, if a life interest with a power to appoint to a spouse is not to be included in the gross estate under § 2056(a), that the power to appoint be exercisable by the spouse “alone and in all events.” Under the regulations the power is not exercisable “alone and in all events” unless it falls within one of three categories, one of which is that the power be “fully exercisable in her own favor at any time following the decedent’s death (as, for example, an unlimited power to invade).” Moreover, the power is not exercisable “in all events” if there be any restrictions on the power to consume the property, as for instance “if a power of invasion is exercisable only for the spouse’s support, or only for her limited use,” or if the trustee has power “to appoint a part of the interest to any person other than the surviving spouse.” Treas.Reg. § 20.-2056(b)-5 (1964). These conditions are not met, the Government first contends, because the widow’s right, under Article second of the will (note 4, supra), to “use” amounts out of principal is restricted by an implied duty of good faith in favor of the remaindermen, and is thus not “fully exercisable in her own favor.” The nature of the interests created by the will is of course to be determined under Connecticut law. Treas.Reg. § 20.2056(b)-5(e) (1964). A relatively recent case in the Supreme Court of Errors of Connecticut, the highest court of that state, dealt with the consequences of a clause closely similar to Article Second of the instant will, giving a life tenant apparent power to demand payment of the principal. Connecticut Bank and Trust Co. v. Lyman, 148 Conn. 273, 170 A.2d 130 (1961). The trust in that case provided for a life interest in the settlor, then to his wife for her life, the trust to terminate on the death of the survivor and “the property constituting the same” to be distributed to the settlor’s issue, per stirpes, and in default of issue to designated institutions. The clause in question permitted payments of principal by the trustee for the benefit of the widow as life tenant, on the widow’s need or “at the written request” of the widow, as follows (148 Conn, at 276-77, 170 A. 2d at 132): * * * after the death of the * * * [settlor], payments of principal shall be made to or for the benefit of said Katharine R. Lyman either on the judgment of the Trustee as to their being needed because of her illness or absence or other emergency, or at the written request of said Katharine R. Lyman or for both of said reasons. Soon after the death of the settlor, the widow presented a written request that the entire principal be paid to her forthwith. The trustee petitioned for instructions. On behalf of the remaindermen, it was claimed that while the widow could by a series of requests based on reasonable justification exhaust the principal, she could not do so without a showing of need or other justification. The court held the will to express a dual intention with respect to invasion of the principal — the first, to allow the trustee on its own initiative to pay over principal on the basis of need, particularly useful in case the beneficiary were so disabled as to impair her judgment, and the second to order the trustee to pay over principal “at the untrammeled, written request of the beneficiary” (148 Conn, at 280, 170 A.2d at 133). The widow as life income-beneficiary, the holder of an equitable and not a legal estate, was held neither an actual nor quasi trustee for the remaindermen. The presence of a remainder clause, the court said, was no indication of an intention to circumscribe an otherwise apparently unbridled power of invasion, and was at most an indication of the expectations of the settlor as to the use the widow would make of the unrestricted power of invasion. While standards for a limitation on the exercise of the power of an income beneficiary to invade were, the court said, doubtless enforceable, the power to invade had been given unconditionally and would not be restrained (148 Conn, at 280-81,170 A.2d at 133-134): * * * Here, the power of withdrawal or invasion is general and unlimited, and is neither expressly, nor by implication, given for the beneficiary’s support, comfortable maintenance or need, or for any similar purpose which would call for the exercise of a reasonable discretion in conformanee with expressed, or necessarily-implied, standards, purposes or limitations. See, for instance, Little v. Geer, 69 Conn. 411, 415, 37 A. 1056. Courts will, of course, protect against an abuse of discretion in any equitable matter. Conway v. Emeny, 139 Conn. 612, 619, 96 A.2d 221. Here, however, no discretion is involved. The power to request payments of principal is neither based on, nor does it call for, the exercise of discretion in conformance with any standards, purposes or limitations, express or implied. The right to invade is left to the defendant’s desires. This Connecticut decision is conclusive on the nature of the right of the widow under Article Second of the instant will, which gives the widow “the right, in her absolute discretion, to use such amounts out of the principal of said ‘Trust Fund A’ as she may request at any time and from time to time, without restriction.” She is not to be limited, in the exercise of her rights, by any duty to the remaindermen. No conditions having been imposed on “her absolute discretion,” she is entitled under the Lyman case to request payment to her of any or all of the corpus at any time. As the court said, “The right to invade is left to [the widow’s] desires.” The power is thus “an unlimited power to invade” and is “fully exercisable in her own favor” under § 2056(b)—5 (g) (i) of the regulations, note 5, swpra. Left for decision is another contention of the Government — that the trustee has the power in certain circumstances to pay out corpus for the benefit of decedent’s children. This argument is based upon Article Fourth of the will, set out in the note which gave the trustee discretionary power to use the portions of the principal deemed necessary to meet any emergency, illness or other similar situation “necessitating any unexpected need of cash for any beneficiary or any respective share herein created.” The trustees’ power is under Article Fourth exercisable “[d]uring the continuance of the Trusts” in case of need of “any beneficiary or any respective share herein created.” These words of course include the remaindermen, the decedent’s children. Article Second provided that on the death of the widow, the balance in Trust Fund A was to be paid into Trust Fund B, where, the life income-beneficiary (the widow) of Trust Fund B then being dead, the decedent’s children would take the income of Trust Fund B and be entitled to receive distributions of y3 of their respective shares of corpus at the ages of 25, 30 and 40. The clause is quite clear, and the clarity makes it unnecessary to consider the contention, made with citation of Virginia National Bank v. United States, 443 F.2d 1030 (4th Cir. 1971), that patent ambiguity permits a resort to parol evidence, outside the will, to show the intent of the testator. Until the widow dies or draws down the entire Trust Fund A by her demands (as permitted by Article Second as heretofore construed), the children remain permissible objects of the trustees’ discretionary powers to invade under Article Fourth and devote to the use of the children any part of the principal of Trust Fund A deemed necessary for the children’s “unexpected need of cash” by reason of an emergency, illness or similar situation. The possibility that the widow can deplete Trust Fund A, end the trust and thereby destroy the remainders does not affect the continued existence of those remainders in the interim. While the Connecticut court in Lyman did not have before it a clause authorizing invasion for the benefit of remaindermen, it did have occasion to comment on the remainders in the will before it, in terms which are relevant presently. In discussing the effect of the life estate on the remainders, the court stated (citing 2 Scott on Trusts (2d ed.) p. 952) that while the remainder might amount to little or nothing through exercise of the wholly unlimited power of the widow to invade, the gift over was not invalidated. The trust, defendant conceded, “would persist so long as any of the principal remained and would operate to give any principal remaining at her death to the remaindermen.” 148 Conn, at 280, 170 A.2d at 133. Lyman confirms that the remainders to the children, here, continue though the widow may at any time demand payment of all the principal. The validity of the remainders, and the power of the trustee to pay part of the principal to the children, means that the trustee could in some circumstances “appoint a part of the interest to any person other than the surviving spouse” (Regulations, note 5, supra), and thus that in the words of § 2056(b)(5) (note 3, supra), there is a “power in any other person to appoint any part of the interest * * * to any person other than the surviving spouse.” Therefore, the widow’s rights are not exclusive under § 2056(b)-5, and the interest to her therefore does not qualify under § 2056(a) for the marital deduction. The several issues having been decided against the plaintiff, the petition should be dismissed. . Among the provisions of the instrument were: “The Trustees shall take receive and hold the policies of insurance set forth in Schedule “A”, attached hereto and made a part hereof, together with instruments of assignment or change of beneficiaries upon said policies duly executed in duplicate, together with any other securities therein set forth and any policies or other securities which may from time to time be deposited with them under the terms of this Indenture, together with the proceeds of said insurance policies, IN TRUST NEVERTHELESS, for the following purposes and uses, and subject to the terms, conditions, powers and agreements as hereinafter set forth, namely:— “Second: To invest and re-invest funds coming into their possession in such securities as they may deem proper and suitable for the investment of trust funds, “Fifth: In the event of illness or emergency, should the income not be sufficient to provide proper care and comfort for the Donor’s wife, Dorothy M. McCabe, the Trustees are hereby directed to use so much of the principal of the trust fund as in their judgment may be necessary to properly care for the aforesaid Dorothy M. McCabe. Also, should any of the Donor’s children desire a college or higher education, and the income from the trust be not sufficient to provide such education, the Trustees are authorized, upon the written consent of the Donor’s wife, Dorothy M. McCabe, to use so much of the principal as in their opinion may be needed for such educational purposes. And should Dorothy M. McCabe be not living, then the Trustees may use so much of the principal of the trust fund as in their opinion is necessary and expedient for the education of the Donor’s children. “Ninth: The Donor further reserves the right to add at any time other policies of insurance to the trust fund created, and without the consent or approval of the Trustees to add to this trust securities or monies at any time. “The Donor understands and agrees that the trust shall be operative only with respect to the proceeds of such policies of insurance as may be due and payable in the event of his death, after the deduction of all charges against said policies by way of advances, loans, or otherwise, either in favor of the Trustees or the insured. “Twelfth: The Donor has the right to substitute for Titusville Trust Company and Russell J. Hopkins, as Trustees, anyone whom he desires, except, however, that such substitution of appointment cannot be made during any time in which lie has indebtedness to the within named Titusville Trust Company.” . The origin of section 2036(a) is a provision of the Revenue Act of 1918 including in decedent’s gross estate property of which a decedent made a transfer “intended to take effect in possession or enjoyment at or after bis death * * § 402(c), Revenue Act of 1918, 40 Stat. 1097 (1919). The Supreme Court in 1930 held a transfer with a life estate reserved to the donor after the expiration of a life estate to donor’s spouse (remainder to donor’s children) not within the foregoing statute (May v. Heiner, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826 (1930)), and reaffirmed this decision by announcing per curiam, decisions construing successor statutes, in Burnet v. Northern Trust Co., 283 U.S. 782, 51 S.Ct. 342, 75 L.Ed. 1412 (1931); Morsman v. Burnet, 283 U.S. 783, 51 S.Ct. 343, 75 L.Ed. 1412 (1931); and McCormick v. Burnet, 283 U.S. 784, 51 S.Ct. 343, 75 L.Ed. 1413 (1931). Congress thereupon promptly enacted a provision reversing the holding (46 Stat. 1516 (1931)), which has since evolved into § 2036(a) of the 1954 Code. . Section 2056(b)(5) reads as follows: “(5) Life estate with power of appointment in surviving spouse.— “In the case of an interest in property passing from the decedent, if his surviving spouse is entitled for life to all the income from the entire interest, or all the income from a specific portion thereof, payable annually or at more frequent intervals, with power in the surviving spouse to appoint the entire interest, or such specific portion (exercisable in favor of such surviving spouse, or of the estate of such surviving spouse, or in favor of either, whether or not in each case the power is exercisable in favor of others), and with no power in any other person to appoint any part of the interest, or such specific portion, to any person other than the surviving spouse— (A) the interest or such portion thereof so passing shall, for purposes of subsection (a), be considered as passing to the surviving spouse, and (B) no part of the interest so passing shall, for purposes of paragraph (1) (A), be considered as passing to any person other than the surviving spouse. “This paragraph shall apply only if such power in the surviving spouse to appoint the entire interest, or such specific portion thereof, whether exercisable by will or during life, is exercisable by such spouse alone and in all events.” . Article Second provides: “Second: I give, devise and bequeath all of my property, real, personal and mixed, of every description and wherever the same may be situate and of which I may die seised or possessed, to the Titus-ville Trust Company, of Titusville, Pa., IN TRUST, NEVERTHELESS, for the following purposes: “My said Trustee shall divide my said estate into two equal portions, designating one portion as ‘Trust Fund A’ and the remaining portion as ‘Trust Fund B.’ “From the said ‘Trust Fund A’ my said Trustee shall pay the net income in at least quarterly installments, to my wife, Dorothy M. McCabe, for and during her natural life, giving and granting, however, to my said wife, the right, in her absolute discretion, to use such amounts out of the principal of said ‘Trust Fund A’ as she may request at any time and from time to time, without restriction. Any balance remaining in the said ‘Trust Fund A’ at the time of her death shall be added to and become a part of ‘Trust Fund B’. “From ‘Trust Fund B’ my said Trustee shall pay the income from the said Trust Fund, in at least quarterly installments, to my wife, Dorothy M. McCabe, for and during her natural life, and upon her death, or in the event she shall have predeceased me, to my children, in equal parts, share and share alike. Should any child or children of mine predecease me, the issue of such deceased child or children shall receive the portion of income and principal its or their parent would have received if living. Should any child or children of mine leave no issue then surviving, then in that event, the proportionate share of such child or children shall revert to and become a part of the principal of said ‘Trust Fund B’, to be divided equally among my surviving children and/or the issue of my deceased child or children, if any. “As each of my children arrives at the age of twenty-five (25) years, such child shall receive one-third (%) of its proportionate share of the said ‘Trust Fund B’. “As each of my children arrives at the age of thirty (30) years, such child shall receive one-third (%) of its proportionate share of the said ‘Trust Fund B\ “As each child arrives at the age of forty (40) years, such child shall receive his or her remaining proportionate share of the said ‘Trust Fund B.’ “In the event I should die without child or grandchild me surviving, 1 give, devise and bequeath all of my said ‘Trust Fund B’ to my wife, Dorothy M. Mc-Cabe, absolutely, and in the event my said wife should also predecease me, it is my will that my property go to and be divided in accordance with the Intestate Daws of the State of Connecticut.” . Section 20.2056(b)-5 of the Regulations reads in pertinent part as follows: “(g) Power of appointment in surviving spouse. (1) The conditions set forth in paragraph (a) (3) and (4) of this section, that is, that the surviving spouse must have a power of appointment exercisable in favor of herself or her estate and exercisable alone and in all events, are not met unless the power of the surviving spouse to appoint the entire interest or a specific portion of it falls within one of the following categories : “(i) A power so to appoint fully exercisable in her own favor at any time following the decedent’s death (as for example, an unlimited power to invade) ; “ (3) * * * Likewise, if there are any restrictions, either by the terms of the instrument or under applicable local law, on the exercise of a power to consume property (whether or not held in trust) for the benefit of the spouse, the power is not exercisable in all events. Thus, if a power of invasion is exercisable only for the spouse’s support, or only for her limited use, the power is not exercisable in all events. In order for a power of invasion to be exercisable in all events, the surviving spouse must have the unrestricted power exercisable at any time during her life to use all or any part of the property subject to the power, and to dispose of it in any manner, including the power to dispose of it by gift (whether or not she has power to dispose of it by will). “(j) Existence of a power in another. Paragraph (a) (5) of this section provides that a transfer described in paragraph (a) is nondeductible to the extent that the decedent created a power in the trustee or in any other person to appoint a part of the interest to any person other than the surviving spouse. * * * ” . Article Fourth provided : “Fourth : During the continuance of the Trusts hereby created, and at the end thereof, for the purpose of making final distribution, the Trustee shall have and possess the following powers : “1. To meet any emergency, accident, sickness, surgical operation, prolonged illness, or any other similar situation which may arise, necessitating any unexpected need of cash for any beneficiary or any respective share herein created, the said Trustee is authorized to use such portions of the principal of these Trust Estates as said Trustee, in its sole discretion, may deem necessary for such purposes, as the particular occasion demands.”

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

MATHER CONSTRUCTION COMPANY et al. v. The UNITED STATES. No. 481-69. United States Court of Claims. March 16, 1973. Carl J. Felth, Washington, D. C., attorney of record, for plaintiffs. Daniel J. Andersen, Washington, D. C., of counsel. Edward J. Friedlander, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant. Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges. OPINION PER CURIAM: This ease was referred to Trial Commissioner William E. Day (since retired) with directions to make findings of fact and recommendation for conclusions of law under the order of reference and Rule 134(h). The commissioner has done so in an opinion and report filed on September 12, 1972. Exceptions to the commissioner’s opinion, findings of fact and recommended conclusion of law were filed by plaintiffs and the case has been submitted to the court on oral argument of counsel and the briefs of the parties. The court has also considered the documents submitted by plaintiffs in their motion for leave to file documents after close of proof but holds that those materials do not have significant bearing on the disposition of the case now in this court and therefore do not require any change in the recommendation of the trial commissioner. The court likewise notes that as of the time of oral argument the plaintiff corporations were still incapacitated to maintain this suit. Since the court agrees with the trial commissioner’s opinion, findings of fact and recommended conclusion of law, as hereinafter set forth, it hereby adopts the same, together with the paragraph set forth above, as the basis for its judgment in this case. Therefore, the plaintiffs are not entitled to recover and the petition is dismissed. OPINION OF COMMISSIONER DAY, Commissioner: This case grows out of a Capehart Act contract between the plaintiffs and the Department of the Air Force for the construction of 220 military housing units at Mather Air Force Base, California. The plaintiffs are seeking to recover $24,405.77 improperly paid from an escrow of the plaintiffs’ funds set aside at the closing of the construction project. This payment was made upon the request and authorization of the Department of the Air Force and the Federal Housing Administration. The case was before the court on the defendant’s motion for summary judgment. That motion was denied on October 22, 1971, and the case was returned here for trial. The court further ordered the clerk of the court to issue notice to the Continental Casualty Company and the Fidelity and Casualty Company of New York under Rule 41, those parties apparently having an interest in the disputed claim. Neither company chose to appear at the trial. At the trial on the merits, the defendant made a motion to dismiss the case based upon lack of jurisdiction. The facts upon which this motion was based were discovered shortly prior to the trial, consequently the issue was not before the court at the time the defendant moved for summary judgment. A ruling on the motion was reserved, and the parties introduced evidence consisting primarily of documentary exhibits. By pretrial agreement, the entire file of Continental Casualty Co., et al. v. American Security Corporation, et al., Civil Action No. 2226-65, in the United States District Court for the District of Columbia and the papers relating to that case as the case was the subject of an appeal to the United States Court of Appeals for the District of Columbia Circuit were admitted into evidence as a court exhibit. [143 U.S.App.D.C. 234, 443 F.2d 649 (1970), cert. denied, 402 U.S. 907, 91 S.Ct. 1378, 28 L.Ed.2d 647 (1971).] Prior to reaching a resolution of the merits, I will first address this opinion to the defendant’s motion to dismiss. Motion to Dismiss The rights and privileges of all three plaintiff corporations have been suspended in California, the State of their incorporation, for failure to pay corporate franchise taxes pursuant to the California Revenue and Tax Code, § 23301 (West 1970). That section of the code provides that: Except for the purpose of amending the articles of incorporation to set forth a new name, the corporate powers, rights and privileges of a domestic taxpayer shall be suspended, and the exercise of the corporate powers, rights and privileges of a foreign taxpayer in this state shall be forfeited if any of the following conditions occur: (b) If any tax, penalty or interest, or any portion thereof, other than jeopardy of fraud assessments, due and payable upon notice and demand from the Franchise Tax Board, is not paid on or before 6 o’clock p.m. on the last day of the 11th month following the due date of said tax. Plaintiff Mather Construction Company (hereinafter referred to as Mather) was suspended on February 1, 1962; plaintiff J. D. Bradley, Inc. (hereinafter referred to as Bradley) was suspended on August 1, 1966; and plaintiff D & L Construction Company (hereinafter referred to as D & L) was suspended on December 1, 1969. Section 23305 of the code provides for reinstatement of corporations suspended under section 23301 by the payment of all taxes, interests, and penalties due, and upon the issuance of a certificate of revivor by the Franchise Tax Board. None of the plaintiffs have produced a certificate of revivor, and have, in fact, indicated that at the present time they are not in a position to comply with section 23305. The defendant contends that by virtue of such suspensions and the subsequent failure to secure reinstatement, the three plaintiff corporations lack the capacity to sue in this court. The capacity of a corporation to sue is governed by Rule 61(b) which provides, in pertinent part, that : The capacity of a corporation to sue or be sued shall be determined by the law under which it was organized. The court has never had occasion to pass directly on the interpretation to be accorded this part of Rule 61(b), however, the rule was adopted from Rule 17 (b) of the Federal Rules of Civil Procedure, and decisions relating to that rule provide adequate guidance. In Chicago Title & Trust Co. v. Forty-one Thirty-Six Wilcox Bldg. Corp., 302 U.S. 120, 124-125, 58 S.Ct. 125, 127, 82 L.Ed. 147 (1937), the Supreme Court stated that: The decisions of this court are all to the effect that a private corporation in this country can exist only under the express law of the state or sovereignty by which it was created * * *. There must be some statutory authority for the prolongation of its life, even for litigation purposes. The court’s decision was rendered in the same year as the promulgation of Rule 17(b), and although not addressed to the rule itself, has been uniformly interpreted as requiring that federal courts apply the law of the state of incorporation when determining corporate capacity under Rule 17(b). McGinnis Theatres & Pay T.V., Inc. v. Video Independent Theatres, Inc., 386 F.2d 592 (10th Cir. 1967), cert. denied, 390 U.S. 1014, 88 S.Ct. 1265, 20 L.Ed.2d 163 (1968); Southern Land, Timber & Pulp Corp. v. United States, 322 F.Supp. 788 (N.D.Ga.1970); Joseph Muller Corp. v. Societe Anonyme De Gerance, 314 F.Supp. 439 (S.D.N.Y.1970); American Optical Co. v. Philadelphia Electric Co., 228 F.Supp. 293 (E.D.Pa.1964). The capacity of the plaintiffs to sue in this court under Rule 61(b) must therefore be determined by the law of the State of California. Under the law of California, a corporation which has been suspended for failure to pay franchise taxes is prohibited from suing, from defending a suit, or from appealing from an adverse decision. Boyle v. Lakeview Creamery Co., 9 Cal.2d 16, 68 P.2d 968-970 (1937); Baker v. Ferrel, 78 Cal.App.2d 528, 177 P.2d 973-974 (Dist.Ct.App. 1947); Graceland v. Peebler, 50 Cal.App.2d 545, 123 P.2d 527-528 (Dist.Ct.App.1942); Ocean Park Bath House & Amusement Co. v. Pacific Auto Park Co., 37 Cal.App.2d 158, 98 P.2d 1068 (Dist.Ct.App.1940). Furthermore, suspension is a defense that may be asserted so long as the corporation is under the disability. Diverco Constructors, Inc. v. Wilstein, 4 Cal.App.3d 6, 85 Cal.Rptr. 851 (Ct.App.1970); Laurel Crest., Inc. v. Vaughn, 272 Cal.App.2d 363, 77 Cal.Rptr. 538 (Ct.App.1969). The purpose of the statute is to exert pressure on delinquent corporations in order to force the payment of overdue taxes. California courts have been liberal in permitting corporations to avoid the effect of suspension by allowing them to secure reinstatement at the time the issue of capacity is raised. A motion for a continuance is normally granted when corporate incapacity is brought to the attention of the court so as to permit the party to cure his disability. See, e. g., Schwartz v. Magyar House, Inc., 168 Cal.App.2d 182, 335 P.2d 487-492 (Dist.Ct.App.1959). The plaintiffs in this case were given 30 days to secure reinstatement at the close of the trial, but have been unable to do so for lack of financial resources. Finally, it is observed that plaintiff D & L was suspended for nonpayment of taxes on December 1, 1969, approximately 20 days after its petition was filed. D & L, therefore, had capacity at the time the action was commenced. Capacity, however, is not only the power to bring an action, but is also the power to maintain it. Corporate suspension, rather than precipitating the “death” of the corporation, renders the corporation powerless or “incompetent” to perform certain acts. Just as an individual who is rendered incompetent in the course of a trial may not proceed without substitution (see Rule 66(b)), incapacity of a corporation will render it powerless to proceed and therefore may be raised as a defense at any time prior to final judgment. For the foregoing reasons, I find that the three plaintiff corporations lack the capacity to sue in this court, and therefore their action must be dismissed for lack of jurisdiction. In view of my findings as to the plaintiffs’ capacity, it is not necessary to reach a conclusion on the merits of their case. However, since a trial was ordered by the court in its order of October 22, 1971, I have prepared findings of fact and a recommended conclusion of law pursuant thereto. Plaintiffs’ Claim The plaintiffs in this case, seeking to recover $24,405.77, claim that the defendant was unjustly enriched in that amount when it ordered an improper payment from funds escrowed by the plaintiffs at the closing of a military housing construction contract. The defendant admits that the payment was improperly authorized, but argues that the plaintiffs are not entitled to recover it by virtue of a prior decision in the United States District Court for the District of Columbia. The facts are set forth in the findings and will be summarized here. On September 4, 1958, plaintiffs D & L and Bradley, a joint venture, were awarded Air Force Contract No. AF 04(612)-1032 as the “eligible builder” for the construction of 220 military housing units at Mather Air Force Base, California. D & L and Bradley subcontracted the entire contract, for the full contract price, to Mather Construction Company. The contract was to be financed in accordance with the Capehart Act, 42 U.S.C. §§ 1594-1594f; 12 U.S.C. §§ 1748-1748g (1970) and the builder was required to secure performance and payment bonds in the full amount of the contract price. For the purposes of financing and administration, the contract was divided into three “mortgage areas” or projects which shall be referred to as projects “Air 3”, “Air 7”, and “Air 8”. Together, the three plaintiffs secured separate performance and payment bonds for each project from the Continental Casualty Company and the Fidelity and Casualty Company of New York (hereinafter referred to as sureties). Construction was financed through a mortgage loan from the American Security Corporation of Washington, D. C. (hereinafter referred to as American or escrow agent), and payments were to be made to the plaintiffs from disbursements of the mortgage proceeds as authorized by the Federal Housing Administration (hereinafter referred to as FHA) and the Department of the Air Force. As performance neared completion, the three projects were closed, and moneys were placed in escrow with American by agreement of the parties. At the closing of project Air 7, $23,950.00 was escrowed. This sum was subsequently reduced to a balance of $21,958.00. Two separate escrows were established at the closing of project Air 8, one of $31,532.-40 for estimated uncompleted items of work (subsequently reduced by authorized payments to $28,498.00) and one of $144,007.95. This last escrow represented the final payment of mortgage proceeds for project Air 8 and is the source from which the disputed disbursement was made. The funds escrowed in this account were admittedly those of the plaintiffs, however, as evidenced by the agreement establishing the account, the funds were: * * * subject to payment of any judgments obtained against Mather Construction Co., or any of its subcontractors, or the eligible builder, for or on behalf of parties furnishing labor or materials in connection with the prosecution of the work of this project, or subject to the order of Mather Construction Co. for the payment of such parties upon presentation of a proper release of claims signed or executed by the said parties. . It is understood by the parties hereto that the American Security Corporation may request the Federal Housing Administration to approve of such form of release of claims, in writing, prior to disbursement of any proceeds of this escrow. On May 4, 1960, $42,177.53 was paid to Mather, and on August 16, 1960, $5,107.65 was paid to D & L and Bradley. At that time these sums were represented to be amounts then due certain creditors on the project. A final payment of $24,405.77 was made on November 22, 1963, to N. P. Van Valkenburgh & Co. reducing the final balance of the third escrow to $72,317.00. Van Valkenburgh was a subcontractor of Mather, and the payment was made pursuant to an award by the Armed Services Board of Contract Appeals for “extra” work done over and above the terms of the original contract. The defendant admits that this payment should not have been made from the escrow of the plaintiffs’ funds, but rather should have been reflected by an increase in the total contract price. The defendant does not dispute the foregoing facts, including the erroneous payment. Its defense is based upon the outcome of litigation instituted by the sureties in the United States District Court for the District of Columbia and subsequently appealed to the United States Court of Appeals, for the District of Columbia Circuit. The suit in question was commenced by the sureties on September 14, 1965, against the three plaintiffs in this case, the American Security Corporation, the FHA, and the Air Force. The sureties sought to recover the moneys in the three escrow funds (a total remaining balance of $122,413.00) and the three payments, as mentioned above, that were made out of the last escrow account. The sureties claimed that they had been required to pay out over $400,000 of creditors’ claims on the three bonds agreements executed with the plaintiff construction companies, and by virtue of these payments against the bonds, were subrogated to, and also, under the terms of their indemnity and assignment agreements, entitled to whatever interest the contracting companies had in the escrowed funds. Plaintiffs D & L and Bradley counterclaimed for the funds remaining in escrow. The sureties’ claim against the three plaintiffs was made the subject of a motion for summary judgment which was granted by the district court on March 15, 1969. The district court’s order reads in part as follows: 1. That such defendants indemnify and reimburse plaintiffs, Continental Casualty Company and The Fidelity and Casualty Company of New York, out of the mortgage proceeds or funds escrowed by them at the final closing of mortgage areas Mather AFB Housing No. Two, Inc. (Capehart FHA Project No. 136-81007, Air 7), and Mather AFB Housing No. Three, Inc. (Capehart FHA Project No. 136-81008, Air 8), pertaining to Housing Contract No. AF-04(612)-1032 dated September 4, 1958, among defendants D & L Construction Company and J. D. Bradley, Inc. (a joint venture), eligible builder; Mather AFB Housing, Inc., Mather AFB Housing No. Two, Inc. and Mather AFB Housing No. Three, Inc., mortgagor builders, and the United States (through the Department of the Air Force) for construction of 220 units of military housing at Mather Air Force Base, California; 2. That, as against defendants Mather Construction Company, D & L Construction Company and J. D. Bradley, Inc., plaintiffs are entitled to the sums so escrowed with defendant American Security Corporation — • namely, the amounts of $97,728.44, $28,498.00 and $21,598.00, or a total of $147,824.44, together with any lawful interest which may be payable thereon. The three plaintiffs sought an appeal to the United States Court of Appeals for the District of Columbia Circuit, and while that appeal was pending, the sureties and the remaining defendants settled their case, paying over to the sureties the escrowed funds less $2,500 in attorney fees to American. In satisfaction, the sureties released the other defendants of all claims arising out of the suit. This settlement was embodied in a consent order issued by the district court on December 4, 1969. The plaintiffs were unsuccessful in their appeal, and the court of appeals affirmed the summary judgment order in Continental Casualty Company, et al. v. American Security Corporation, et al., 143 U.S.App.D.C. 234, 443 F.2d 649 (1970), cert. denied, 402 U.S. 907, 91 S.Ct. 1378, 28 L.Ed.2d 647 (1971). The defendant argues that by virtue of these decisions the entitlement to all funds escrowed was established in the sureties. This includes not only the sums remaining in escrow, but also those paid out prior to judgment. By the consent order of December 4, 1969, the sureties released their claims against the defendant for the improper payment, and the defendant asserts that it cannot now be held to account to the plaintiffs. The plaintiffs, on the other hand, contend that the rights to the $24,405.77 were not adjudicated in the district court action. They claim that the sureties were seeking the funds then remaining in the escrows, and that the awards of the district court and court of appeals were limited specifically to those funds. The sureties have failed to appear to assert any interest in the improper payment, and therefore it is rightfully the property of the plaintiffs. A review of the records in the district court and court of appeals reveals that entitlement to the improper escrow payment was made an issue in that case. Although there is some substance to the plaintiffs’ claim that the decisions rendered do not specifically vest the right to recover the payment in the sureties, there is also language in those decisions which supports the position of the defendant. Regardless of which party’s narrow interpretation of these decisions is correct, however, there can be little doubt, even construing the decisions in the light most favorable to the plaintiffs, that had those courts been presented with the precise question here, they certainly would have ruled in favor of the sureties. In support of their assertions, the plaintiffs point to the fact that the sureties’ original complaint sought “the balance of $72,317.00 remaining in the hands of the escrow agent.” It is also true that the complaint was titled “Complaint to Obtain Escrow Funds and Other Declaratory Relief.” Nowhere did the complaint request relief concerning the erroneous payment, and no reference to the sum in controversy may be found in the district court order. Further, the court of appeals stated that: “ * * * the appellees [sureties] were entitled to the escrow funds held by American Security Corporation * * 443 F.2d at 653. Again, no specific reference was .made to the Van Valkenburgh payment. The defendant, in response, directs our attention to the portion of the district court order which holds that the sureties were entitled to “ * * * the sums so escrowed with defendant American Security Corporation — -namely the amounts of $97,728.44, $28,498.00 and $21,598.00 * * The $97,728.44 figure does not represent the balance of the third escrow account (all agree that that was $72,317), but rather represents the outstanding indebtedness to which the plaintiffs admitted being obligated at the time the final escrow account was established. Since the award was over $25,000 more than the final balance of the account, the defendant argues that the order indemnified the sureties to at least that amount more than was remaining in the third account. The sureties were therefore entitled to assert any claims of the plaintiffs up to $25,000. Briefly reviewing the course of the litigation in the district court, it is not difficult to understand why a precise decision on this issue was not rendered. While the sureties did not specifically claim the erroneous payment in their complaint, their failure to do so may be attributed to the fact that they apparently were not aware of it until approximately one year after the action had commenced. The first reference by any party to the payment was made on October 21, 1966, when the sureties filed a request under Rule 36 for admissions of fact. Once discovered, however, they laid claim to entitlement throughout the proceedings. In answer to the plaintiff construction companies’ Interrogatory Number 4 filed February 23, 1967, the sureties stated: Plaintiffs state that on or about November 22, 1963, defendant American Security Corporation paid from the special escrow deposit to A. M. Van Valkenburgh & Company the sum of $24,405.77 * * * which plaintiffs consider and state was improperly paid and must be restored by defendants American Security Corporation, Mather AFB No. 3 and the Federal Housing Commissioner. The record reveals that in the pretrial proceedings, Statement of the Nature of the Case, the plaintiffs (D & L and Bradley) were seeking to have the payment redeposited in the account, and the sureties were claiming entitlement against the escrow agent and the Government. The theory of the sureties’ case was simple; they based their rights to the escrow funds on the indemnity and assignment agreements and claimed that when the plaintiffs defaulted on the bonds there was an assignment of claims that related back and took effect as of the date of the bonds, namely, August 1968. This being the case, a court determination that the sureties were entitled to be subrogated or assigned to the rights of the plaintiffs in the funds would vest the claim in the sureties. The sureties sought to recover, of course, not from the plaintiffs, but rather from the Government and the escrow agent. When the motion for summary judgment was granted, this was exactly the interpretation placed upon it by the remaining parties. The sureties and the other co-defendants then entered into the settlement and consent order. It is clear from the record that the sureties released their claim for the improper payment in order to effect an immediate recovery of the escrowed funds. When the consent order was subjected to review in the district court on a motion to vacate, the following statement was made by counsel for the sureties: The United States Government here stands a chance, if we are required to try it [the remaining claims] against our will, of losing $47,000 plus twenty-four [the Van Valkenburgh payment] or $71,000, which we say they improperly paid out. The attorney representing the Government stated at that hearing: The second motion is to vacate a consent judgment. To that consent judgment the Government was a party, there was a claim against the Government, the Government in its own best interests settled the claim, and the case has been dismissed * * *. With this background in mind it becomes clear why entitlement to the erroneous payment was not specifically passed upon. The sureties were pressing this claim against the escrow agent and the Government, not against the plaintiffs, and once their rights were established against the plaintiffs, they then sought settlement of the improper payment. In view of their main claim— subrogation and assignment — the precise determination of entitlement was of minor consequence. Whether the plaintiffs’ or defendant’s interpretation of the narrow wording of the decisions is to be accepted makes little difference. The court of appeals accepted the sureties basic argument, stating: Under the established law of subrogation, appellees would be entitled to claim through appellants whatever rights the appellants had to these es-crowed funds [citing Pearlman v. Reliance Insurance Co., 371 U.S. 132, 83 S.Ct. 232, 9 L.Ed.2d 190 (1962)]. Appellants could not assert a right to these funds superior to that of the surety appellees, on the uncontradicted facts here. Furthermore under the indemnity agreement and the assignments executed in regard to each project, the rights of the appellants in each and all of these escrows funds, whether derived from the same or a different project, were assigned to the appellee surety companies to the full amount of any and all sums paid by the sureties in settlement of any claims arising under the bonds, if such claims were paid “in good faith under the belief that they or any of them were liable therefor, whether liable or not.” Appellees asserted under oath, and it appears highly likely, even if not absolutely certain, from the bare outline of facts we have given in this opinion, that the appellees did pay claims totalling in excess of all amounts es-crowed on each of such areas, not only a grand total greatly in excess of the totalled escrowed amounts. 443 F.2d at 652. The Court of Appeals could not “conceive of any theory by which on a trial on the merits appellants could possibly prevail,” and I cannot conceive of any theory by which the plaintiffs in this case could possibly have asserted a claim to the erroneous payment superior to that of the sureties. The sureties provided affidavits which reflected that they had paid out over $400,000 of claims against the plaintiffs. Those affidavits were not contradicted by the plaintiffs then, nor are they now, and the total recovery from all three escrows amounted to only $122,413. The sureties were obliged to pay over $250,000 of claims against the plaintiffs for which they will never be reimbursed. The plaintiffs’ demand for $24,405.77 pales in insignificance in comparison with the amount in which they were indemnified by their sureties. That a specific reference to the erroneous payment is not found in either decision does not require, as the plaintiffs would wish, that we close our eyes to the clear implication of those decisions. The plaintiffs may not now come into this court and claim relief for which they have no right. Finally, it is not inappropriate to note that the plaintiffs have stipulated that had the funds not been paid, they would have remained in the escrow account at the time the district court action was commenced. Had that been the case, the plaintiffs undoubtedly would not be here today. Under the circumstances it is evident that the sureties would have collected whatever moneys remained in the escrow up to the sum they paid out under the agreements. I am mindful that, as the defendant points out, the court did in fact award a sum in excess of the three escrows, but for the reasons stated, this opinion need not rest on that fact alone. As to the plaintiffs’ concern that the Government will be receiving a windfall as a result of this decision, I have already noted that the same claim was pressed against the defendant by the sureties, and those parties chose to settle it. As a result of that settlement the sureties have released the defendant, and that is undoubtedly why they did' not choose to appear in this action. Such a settlement and release cannot be construed as a windfall to the Government. It is unnecessary to consider the Government’s other defenses to this claim, the plaintiffs not being entitled to recover for the reasons set forth above. . The provision of the present Rule 61(b) dealing with corporate capacity was adopted as Rule 20(b) by the court in its rules revision of May 15, 1951. It subsequently became Rule 24(b) on March 1, 1964, and Rule 61(b) on September 1, 1969. The pertinent language of the rule is identical to that of Rule 17(b) F.R.C.P., and neither rule has been altered since its original adoption. . For a discussion of the Capehart system of financing, see Anthony P. Miller, Inc. v. United States, 161 Ct.Cl. 455, 457, cert. denied, 375 U.S. 879, 84 S.Ct. 149, 11 L.Ed.2d 111 (1963). . The correct name of the company is N. P. Van Valkenburgh & Company.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

CONSUMERS ICE COMPANY, a California corporation v. The UNITED STATES. No. 815-71. United States Court of Claims. March 16, 1973. Douglas B. Martin, Jr., San Francisco, Cal., attorney of record for plaintiff. Herman L. Fussell, Washington, D. C., with whom was Asst. Atty. Gen. Kent Frizzell, for defendant. Before COWEN, Chief Judge, DUR-FEE, Senior Judge, and DAVIS, SKELTON, NICHOLS, KUNZIG, and BENNETT, Judges. ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DEFENDANT’S CROSS-MOTION FOR SUMMARY JUDGMENT BENNETT, Judge: The uncontested facts of this case present the court with the problem of interpreting, on cross-motions for summary judgment, the language in a written lease in which the plaintiff, Consumers Ice Company, is the lessor and the defendant, the United States, is the lessee. For reasons to be stated, the court grants the plaintiff’s motion for summary judgment on the issue of liability alone and remands the case, pursuant to Rule 131(c), to the Trial Division for further proceedings on the issue of damages. The defendant’s cross-motion for summary judgment is denied. Before addressing the merits of this case, it must be noted that the named plaintiff, Consumers Ice Company, a California corporation, was dissolved on April 18, 1972, after commencement of suit in this court. All assets, including this claim, were distributed to the shareholders who, in turn, have conveyed them to Texas International Company, a Delaware corporation. Our Rule 61(a) provides that every action shall be prosecuted in the name of the real party in interest and Rule 61 (b) says that the capacity to sue shall be determined by the law of plaintiff’s domicile. Counsel appear to be agreed that the shareholders should now be substituted as plaintiffs, having received their interest by operation of law and that, according to California law, the shareholders can continue the suit. Plaintiff concedes that Texas International Company cannot be substituted as plaintiff without consent of the United States because of the Assignment of Claims Act, 31 U.S.C. § 203 (1970). On the latter point, defendant has been silent. There are various exceptions to this Act by operation of law. Webster Factors, Inc. v. United States, 436 F.2d 425, 429, 193 Ct.Cl. 892, 900-901 (1971). Among these exceptions is one stating that claims are not barred by successor corporations where their rights are gained by consolidation or merger with the original claimant corporation, all of whose assets and liabilities are transferred to it. Seaboard Air Line Ry. v. United States, 256 U.S. 655, 41 S.Ct. 611, 65 L.Ed. 1149 (1921). From the papers now before the court, this appears to be the situation here. The purposes of the Act, often stated, to prevent fraud, to avoid multiple litigation, and to protect the defenses the United States may have against the assignor by way of setoff and counterclaim, would not appear to be violated by substitution of Texas International Company as plaintiff and the real party in interest. However, it is not necessary to decide this issue now, as between the shareholders and Texas International Company. They may resort to the procedures afforded by Rule 66(c) and move accordingly, the issue to be resolved at the Trial-Division level in the proceedings connected with determination of damages. In the interim, for convenience of reference and historical reasons, plaintiff will continue to be referred to as Consumers Ice Company. The lease in question was executed on October 29, 1954, between the Consumers Ice Company and the Army Corps of Engineers for a parcel of land located in San Mateo County, California. The land covered by the original lease is 8.55 acres near the center of a larger undeveloped tract of approximately 1100 acres owned by the plaintiff. The Army wished to use the property as part of the anti-aircraft facilities protecting the San Francisco Bay area with the Nike-Hercules missile. A radar installation was constructed on the land covered by the lease, which installation is still in operation. The lease required the Government to pay a nominal rent of one dollar per year, which is all the defendant paid for the use of this property up to 1969 when the plaintiff stopped accepting the checks. The apparent motivation on the part of the plaintiff for entering into this agreement was the fact that the Government had been prepared to condemn the property in 1954 and the plaintiff felt that a lease at a dollar per year was preferable to the loss of the fee interest in the property at that time. The focus of the problem in this case is the interpretation to be given clause No. 3 of the lease, which reads as follows: 3. To have and to hold the said premises for the term beginning July 1, 1954, through June 30, 1955, provided that unless and until the Government shall give notice of termination in accordance with provision 6 hereof, this leas,e shall remain in force thereafter from year to year without further notice; provided further that adequate appropriations are available from year to year for the payment of rentals and provided further that this lease shall in no event extend beyond June SO, 196U, or as long as required for Anti-aircraft purposes. [Emphasis added.] The problem comes in determining how long the parties intended this lease to run. The plaintiff served notice on the Government in a letter dated May 22, 1969, to vacate the property covered by the lease before July 1, 1969. The defendant responded by a letter dated June 9, 1969, in which it asserted its right under the lease to continue to occupy the premises. Each party interprets the emphasized passage, supra, in a different way, which requires this court to sort out the various interpretations and come up with the reading that is most reasonable under the total circumstances involved. The plaintiff contends the lease expired no later than June 30, 1964. Thereafter, the Government was a mere tenant at will who could stay only as long as the lessor did not voice objection by giving a 30-day notice to vacate. Thus, the Government occupied the premises from July 1, 1964 through June 30, 1969, as a tenant at will and has stayed in possession of the property after that time against the will of the plaintiff for which the plaintiff now seeks a reasonable rental value from June 30, 1969 until the date of judgment. The Government’s interpretation of the lease emphasizes the language “or as long as required for Anti-aircraft purposes.” It feels the lease is still in full force and effect and will continue to be so until it is determined by the appropriate military authorities that the property is no longer needed for the anti-aircraft defenses of the San Francisco Bay area. Clearly, the interpretations given the identical language by the two parties are entirely at odds. The language of clause No. 3 of the lease is certainly not a model of legal drafting, and as a result, the court finds itself in the position of determining, if possible, which of the two competing alternative phrases [“this lease shall in no event extend beyond June 30, 1964” or “or as long as required for Anti-aircraft purposes”] controls the duration of the lease. In attempting to explain this ambiguity, the two parties have each pointed to the language in several supplemental agreements which were executed following the lease itself. Each of the, supplemental agreements concerned further additions to the leased property or rights-of-way and licenses appurtenant thereto. None of the subsequent agreements specifically attempts to modify the intended duration of the lease although several paraphrase clause No. 3 in the lease while referring to it. In so doing, they neither add to, nor subtract from, the already sufficiently confusing language in the lease itself, and will not be detailed further. The Government, however, does place heavy emphasis on a letter written February 5, 1964, approximately 5 months before the date plaintiff contends the lease terminated. In pertinent parts, this letter reads: In accordance with paragraph No. 3 of the subject lease, this is to advise you that the Government has a continuing need for the premises described in said lease for anti-aircraft purposes for an indefinite period. The plaintiff did not respond to this letter, which the defendant asserts serves to indicate the plaintiff believed the lease was to run until the Government no longer had a need for the property for anti-aircraft purposes. The court does not feel it can draw such a telling conclusion concerning the plaintiff’s belief of the content of this lease from its mere silence. It is just as likely that the plaintiff still viewed the lease as terminable on June 30, 1964, but since it had no objections to the defendant’s continued occupancy for the immediate future, it simply did not respond to the letter of February 5, 1964. In short, none of the supplemental documents executed by these parties provides any assistance in determining what the legal interpretation of this lease should be. While it might be like placing the cart before the horse to discuss the matter at this point since no analysis has as yet been made of the possible interpretations this lease might be given, it should be noted that the pertinent language contained in clause No. 3 of the lease was typed into a standard form Government lease, and was apparently the product of negotiations between the parties in 1954. As a result, the contra proferentem rule has no application to these facts. Kaiser Aluminum & Chem. Corp. v. United States, 388 F.2d 317, 181 Ct.Cl. 902 (1967); Tulelake Irrigation Dist. v. United States, 342 F.2d 447, 169 Ct.Cl. 782 (1965). It seems likewise clear that since the contract language was the product of negotiation, neither party may be called to task for failing to seek clarification of what seems to be language that is ambiguous on its face. The duty described in Blount Bros. Constr. Co. v. United States, 346 F.2d 962, 171 Ct.Cl. 478 (1965), and Beacon Constr. Co. v. United States, 314 F.2d 501, 161 Ct.Cl. 1 (1963), to seek clarification of obviously ambiguous contract language is nothing more than the other side of the coin from the contra proferentem rule. The court then is left with the alternative possibilities of either enforcing the contract between the parties by finding, if possible, a reasonable means of assigning a definite interpretation to the language in clause No. 3 without undertaking to write provisions into the contracts when the record fails to show what the parties actually intended, 3 Corbin, Contracts § ’541 (1960), or finding that the ambiguity went to the heart of the contract while both parties held reasonable, but different views of what the contract meant, so that it can be said that no contract existed at all because there was no “meeting' of minds.” Courts will generally not follow the latter course, typified by the “Peerless” case, if there is any reasonable means of giving effect to the contract at issue. The rule of the “Peerless” case has been dealt with more recently by other federal courts in Oswald v. Allen, 417 F.2d 43 (2d Cir. 1969), and Julius Kayser & Co. v. Textron, Inc., 228 F.2d 783 (4th Cir. 1956), but in neither of these situations had the parties acted, for any appreciable period under the terms of the disputed contract. In the case at hand, the lease clearly governed the parties’ actions through 1969, a period of 15 years. Such a document should not be lightly found to be without effect at this late date. This court has said before that where there is a gap in an agreement due to the fact that there was clearly no meeting of. the minds with respect to a certain issue, thát gap will not be “permitted to swallow the whole contract except perhaps where the gulf is far closer to the bounds of the entire consensual perimeter than here.” WPC Enterprises, Inc, v. United States, 323 F.2d 874, 879, 163 Ct.Cl. 1, 11 (1963). For these reasons and because this case does not involve an “equivocal” term in the contract, but instead turns on simply deciding which of two competing phrases in a clause should be given priority, the court feels that adoption of the “Peerless” rule would be improper in this case since the contract language can be given a reasonable interpretation by using other devices for interpreting the agreement. It may reasonably be inferred from the conduct of the parties in agreeing to the language of clause No. 3 in the first place, that each party assumed that the other held its view of what the lease actually meant, but in the face of the almost painful ambiguity of the clause they each kept quite still in order not to make waves or find out for sure how the other party viewed the agreement. It could be said that both parties seemed to be keeping their cards close to their chests throughout the period from 1954 to 1969. The court’s problem is to decide which of the interpretations is most reasonable under the total circumstances. In order to do this, it seems necessary for the court to read one of two additional phrases into the pertinent portion of clause No. 3 by implication if it is to be given a valid meaning. The 'clause must read: “ * * * and provided further that this lease shall in no event extend beyond June 30, 1964, or as long as required for Anti-aircraft purposes,” adding whichever occurs first or whichever comes later. To read the clause as the Government 'would desire [whichever comes later] places the termination of the lease strictly within the discretion of the appropriate military authorities to determine when, in fact, the land is no longer “required for Anti-aircraft purposes.” Such a need has obviously existed for some 19 years now and it seems unlikely that such a need would diminish in the near future. The plaintiff argues that whether or not the defendant requires the property for the specified purpose should be a justiciable issue. The court does not agree that it has a role in determining what the military’s needs might be in this or any other situation in which informed discretion is so important to making a decision concerning tactical military requirements. In the alternative, the plaintiff would then like to classify the lease, assuming the defendant’s view is adopted, as a lease in perpetuity and unenforceable as such. The defendant, of course, does not agree that this lease grants rights to the Government in perpetuity, but it is obvious that if the defendant’s view is adopted, the .lease is certainly for an indefinite term with the ultimate decision as to the precise duration controlled solely by the defendant. While it is clear that the terms of the lease do not specifically define a period in perpetuity, it is also clear that the lease could continue for such a long period of time as to constitute, for all practical purposes, a perpetual right to occupation, should the Government feel there was a continuing need for the land for the designated purpose. The fact that a contract leaves indefinite the period for performance will not usually invalidate it or make it unenforceable, but the longer the period for performance the heavier the burden on the enforcing party to prove that the extended duration was intended. Thus, contracts for performance in perpetuity may be valid, but under certain conditions aré considered unreasonable and contrary to public policy. 3 Corbin, Contracts § 553 (1960). There is, therefore, an apparent judicial reluctance to interpret any contract to require performance in perpetuity, and some of this reluctance should carry over to situations in which there exists a visible possibility that a contract might extend in practical perpetuity. Such a possibility is a relevant factor in determining which of two competing interpretations is the most reasonable. The judicial reluctance to uphold contract interpretations calling for extended or perpetual performance finds even stronger expression in the Restatement of Property § 19 (1936): If the durátion of the estate attempted to be created by the lease is not stated and cannot be precisely computed at the time when the estate becomes possessory, the estate is not an estate for years. The court is not going to attempt an analysis of the variety of possible characterizations .to which the language of the lease in question could be subjected, since it does not change the result in this case, but it should be noted that where an estate for years fails due to indefiniteness, a lesser estate such as a tenancy at will will result. This points once again to a judicial reluctance to lock parties into a given set of rights and obligations for long or indefinite periods without some clear indication that this was actually intended by the parties. The defendant has not shown, either through the language of the lease or the subsequent actions of the parties, that there was a clear indication that both parties knew or should have known the lease was to continue indefinably. McLean v. United States, 316 F.Supp. 827 (E.D.Va.1970). The defendant’s interpretation of this lease has at least one other difficulty, and that is if the lease was to run so long as the Government “required for Anti-aircraft purposes,” why was the June 30, 1964 date placed in the lease at all? The only possible explanation is that if the defendant were to find it no longer needed the property for the designated purpose prior to June 30, 1964, it could use it for some other purposes until that date. Such an explanation seems unlikely and outside the general purpose for which the defendant sought the particular piece of property in the first place. The plaintiff’s interpretation does not seem to suffer from the difficulties inherent in the defendant’s view. Plaintiff’s view clearly leaves no room for a lease in perpetuity at the defendant’s discretion. Under this interpretation the lease would terminate on June 30, 1964, or sooner should the Government cease to have a further need for the property for anti-aircraft purposes. This view is also far more in line with what a reasonable businessman might do in exchanging valuable property rights for a nominal consideration. The Government asserts, however, that while it might be said the plaintiff made a bad bargain back in 1954, which it came to realize in 1969, when it tried to force the Government to vacate the property, the court should not look behind the consideration for the agreement when asked to enforce the terms of the contract. This, as a general proposition, is certainly true where the contract is clear or should be clear to the party against whom the agreement is being enforced; but where the contract terms are as ambiguous as these terms, the court is free to examine the reasonableness of the business transaction in order to determine which of several competing interpretations is most reasonable and likely under the total circumstances including the business realities of the case. See 3 Corbin, Contracts § 553 (1960). Further support for the court’s conclusion may be found in the opinion in United States v. 77 Acres of Land, 88 F.Supp. 349 (S.D.Ala.1950). In this case, the plaintiff owned land near Mobile, Alabama, on which the Government wanted to build housing for personnel from a nearby shipyard during World War II. . The Government had started condemnation proceedings in order to obtain rights to the property, but before they were concluded, the plaintiff entered into a voluntary lease with the Government in August 1943, for the consideration of one dollar per year, for a set term, but with the Government having the right to extend the lease for additional yearly periods “during the present state of war and during three years thereafter.” The war officially ended December 31, 1946, by Presidential proclamation although actual hostilities ceased in August 1945. The Government attempted to retain possession after 1948 and for 3 years after the continuing post-war “national emergency” would later expire. In interpreting thé contract in order to determine if the Government had a right under the lease to retain possession during a period of “national emergency,” the court said: * * * It would be most unreasonable to assume thai any citizen for so nominal a consideration intended to grant the use and occupancy of his property for an indefinite period, especially when the indefiniteriess of that period depends upon the mere fiat or order of the other party to the contract, the government or one of its agencies. * * * [88 F.Supp. at 352.] That court allowed recovery of reasonable rental value for use and occupancy by the Government from and after December 31, 1949, the date of taking without due process. The issues of notice and eviction are not involved in that case. While the language in the lease now before the court is not so clearly diawn, the reasoning employed by the Alabama District Court is equally applicable to the case at hand. What the reasonable person would do in the situation is a relevant consideration when deciding what certain contract language means in light of the total circumstances. For all of the reasons discussed, the court feels the plaintiff’s interpretation of this lease is the most reasonable under the total circumstances. In reaching this view, the court is not going to deal with the matter of whether the defendant’s occupation of the property from June 1964 through June 1969 was as a tenant at will or as a tenant from year to year. In either case, the applicable California law (§§ 789, 1946 of the California Civil Code) requires only that the tenant be given 30 days’ prior notice to vacate. While the notice requirements of the California Code may not be dispositive of this issue, as the defendant points out, the court will apply this rule since the defendant has not provided a contrary federal standard covering the length of the notice period and our search has revealed none. As a result, the court finds that the notice given by this plaintiff on May 22, 1969, was sufficient to satisfy a 30-day requirement. Defendant’s continued occupation after June 30, 1969, constitutes a temporary taking, without due process, of a leasehold interest of plaintiff’s property from that date. It should also be noted that in reaching the conclusion urged by the plaintiff, these parties will be left in roughly the same position they were in 1954. The defendant, if it still has a need for the property in question, can try to negotiate a new and, hopefully, clearer lease with the plaintiff at a reasonable rental for the future, or it can proceed to condemn the property and pay the plaintiff a reasonable amount for the rights received. In neither event can it be said that the nation’s defense has been threatened or the Government’s interests prejudiced since the Army did make use of the property for some 15 years while paying only $15 for the privilege. In summary, for all of the reasons given, the plaintiff’s motion for summary judgment is granted, while the defendant’s cross-motion is denied. The matter is referred, pursuant to Rule 131(c), to the Trial Division for further proceedings on the issue of damages which will be for reasonable rental value of the property occupied after June 30, 1969, the date fixed in the notice to vacate, to date of judgment; R. J. Widen Co. v. United States, 174 Ct.Cl. 1020, 357 F.2d 988 (1966). Plaintiff’s claims for damages for trespass upon its adjacent lands appear to sound in tort and therefore would be outside our jurisdiction as pleaded. Consideration of such claims if tenable will await final disposition upon the recommended decision of the Trial Division in connection with the further proceedings discussed above. . West Aspen Company, a Colorado corporation, a wholly owned subsidiary of Texas International Company, is now owner of the real estate portion of the assets transferred from Consumers to its shareholders and then to Texas. . Lease No. DA 04-203 ENG 3783. . See Chris Berg, Inc. v. United States, 197 Ct.Cl. 503, 455 F.2d 1037 (1972); Mountain Home Contractors v. United States, 425 F.2d 1260, 192 Ct.Cl. 16 (1970); WPC Enterprises, Inc. v. United States, 323 F.2d 874, 163 Ct.Cl. 1 (1963); Peter Kiewit & Sons’ Co. v. United States, 109 Ct.Cl. 390 (1947). . Raffles v. Wichelhaus, 2 Hurl. & C. 906, 159 Eng.Rep. 375 (Ex. 1864). . See generally 64 Colum.L.Rev. 619 (1964).

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

SPERRY RAND CORPORATION v. The UNITED STATES. No. 10-67. United States Court of Claims. March 16, 1973. G. A. Chadwick, Jr., Washington, D. C., attorney of record, for plaintiff. Charles M. Chadwick, Chadwick & Titus, Washington, D. C., of counsel. Michael B. Rosenberg, Washington, D. C., with whom was Asst. Atty. Gen., Harlington Wood, Jr., for defendant. Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges. OPINION PER CURIAM: This case was referred to Trial Commissioner Harry E. Wood with directions to make findings of fact and recommendation for conclusions of law under the order of reference and Rule 134(h). The commissioner has done so in an opinion and report filed on November 3, 1972, with reference to Count I of the amended petition (consideration of Counts II and III having been postponed until after the disposition of Count I). The case is now before the court on the parties’ joint motion, filed January 26, 1973, that the court adopt the commissioner’s report as the basis for its judgment in the case and dismiss the amended petition as to Count I. The case is also before the court on plaintiff’s motion, filed January 26, 1973 (and duly endorsed by the defendant as having “no objection”), to dismiss Counts II and III of the amended petition without prejudice. Upon consideration thereof, without oral argument, since the court agrees with the commissioner’s opinion and recommended conclusion of law, as hereinafter set forth as well as the commissioner’s findings of fact which are not reported here, the court hereby grants the motion of the parties and adopted the same as the basis for its judgment in this case as to Count I of the amended petition. Therefore, plaintiff is not entitled to recover as to said Count I and, as to it, the petition is dismissed. The court further grants plaintiff’s motion to dismiss as to Counts II and III of the amended petition and they are dismissed without prejudice. OPINION OF COMMISSIONER WOOD, Commissioner: This action, in three counts, arises from a 1956 fixed-price incentive type contract between plaintiff and defendant, acting through the Department of the Air Force, for the development, manufacture, production and delivery to defendant, at a total target price of some $15,300,000, of “certain AN/ASN-7 aircraft Navigation Systems.” Count I, grounded exclusively on the holding of this court in National Presto Indus., Inc. v. United States, 338 F.2d 99, 167 Ct.Cl. 749 (1964), cert. denied, 380 U.S. 962, 85 S.Ct. 1105, 14 L.Ed.2d 153 (1965), alleges a mutual mistake of fact as to the magnitude of research and development efforts required in contract performance, seeks reformation on that ground, and asks “that the additional costs incurred by [plaintiff] be allocated equitably between the parties hereto in the proportion that said additional costs represent actual research and development effort and benefited the follow-on contracts * * In Count I, seeking relief “exclusive of the Wunderlich Act”, plaintiff prays for judgment of “not less than $2,938,116.62.” Counts II and III involve, respectively, the propriety of allocation (within ceiling price limits) of “engineering, research, design and development expenses incurred under” plaintiff’s 1956 contract to certain follow-on contracts, and an allegation that plaintiff incurred extra costs in the performance of the 1956 contract because of changes. After lengthy trial, the Armed Services Board of Contract Appeals denied on the merits plaintiff’s claim for “recoupment of R&D costs allocated to * * *” subsequent contracts (Count II), and plaintiff’s claim of right to an equitable adjustment for six of nine asserted contract “extras” (Count III). The parties agree that Counts II and III are subject to Wunderlich Act review in this court. At the outset, the parties engaged in vigorous and prolonged dispute respeeting plaintiff’s entitlement to trial de novo on Count I. A commissioner’s order filed December 5, 1969, held that absent agreement by the parties that determination of the issue presented by Count I be confined to the administrative record, that issue might be tried out, but urged that the court’s observations in Air-A-Plane Corp. v. United States, 408 F.2d 1030, 187 Ct.Cl. 269 (1969), as to further proceedings be heeded. At the direction of the commissioner, counsel for the parties subsequently devoted considerable time and effort to reaching agreements in accordance with the court’s observations in Air-A-Plane. Those efforts culminated in a commissioner’s memorandum and order, filed February 24, 1971, incorporating two significant stipulations. Pursuant to the first, the entire administrative record in ASBCA Nos. 8689 and 9951 was received in evidence on Count I, to be considered (subject to the decisions of the Supreme Court in United States v. Carlo Bianchi & Co., 373 U.S. 709, 83 S.Ct. 1409, 10 L.Ed.2d 652 (1963) and related cases) as though offered and received at trial in this court. The parties further stipulated and agreed, for purposes of Count I, that certain specified findings of fact made by the ASBCA were entitled to finality under the Wunderlich Act. In August 1971, trial on Count I, duly limited to the issues of law and fact relating to plaintiff’s right to recover, was held in Washington, D.C. Briefing of the case to the commissioner was completed July 13, 1972. For reasons subsequently to be set forth, it is concluded that plaintiff is not entitled to recover on Count I. The facts, most of which have been stipulated, are lengthy. Prior to 1955, plaintiff had developed a navigational computer known as the ASN-6, by the use of which a pilot could continuously read off his present position in terms of latitude and longitude. Late in 1955, a model of a combined, more sophisticated, system known as the OA-541(XA)/ASN-7 Service Test System was successfully flight tesed. Findings 2-4. The Department of the Air Force was interested in purchasing (and plaintiff was interested in selling) a production version of ASN-7. Finding 4. The Air Force, then mainly interested in the new system for use in high-speed fighter aircraft, desired the new system to be able to compute speeds up to 2,000 knots (rather than simply the 800-knot capability of the Service Test System), and to have an additional capability, the automatic computation of magnetic variation. Finding 5. The restricted space in a fighter plane, particularly in the cockpit, called not only for miniaturization of components in the new system, but also for remote location of mechanisms which had theretofore been directly geared to cockpit instruments. Ibid. In March 1956, after free exchanges of communications between engineers for both parties, defendant prepared, and submitted to plaintiff for comments, a draft specification based on data and general layouts supplied to it by plain-tiff. Finding 7. As a result of plaintiff’s extensive written comments of Oetober 16, 1956, on the draft, a revised specification (Mil-C-25528A, November 9, 1956) was issued by defendant. This revision was, in essence, the specification upon which Contract AF 33(600)-34124 (hereinafter Contract 34124), the contract in suit under Count I, was negotiated. Finding 9. Although the dimensions of the seven “black boxes” ’ making up the ASN-7 were specified, and some of the contents were delineated, the contract specifications were largely performance, not design, specifications. Finding 10. Contract 34124, executed effective November 16, 1956, was of the fixed-price incentive type. As the parties have heretofore treated' it, it called for the delivery of some 500 ASN-7 sets. The total target price for the 57 categories of items covered by the contract, separately stated on the face of the contract and separately treated in the price revision clause, was some $15,300,000. Finding 13. The contract was a production contract in name and in form, and as executed it accurately expressed the intent and agreement of the parties at that time. Findings 12, 14. In 1956 both parties visualized the contract as embodying “the relatively simple repackaging of an already developed and proved design into units capable of efficient production, and which could meet the somewhat more critical requirements for installation in operational aircraft.” Finding 12. Indeed, plaintiff had theretofore explicitly advised defendant that open manufacturing capacity existed, and that acceptance of its first proposal (submitted in response to defendant’s request) would result in a “production supply contract”. Finding 8. Neither party was aware, in 1956, that a research and development (R&D) effort of the magnitude and cost actually undertaken by plaintiff in connection with Contract 34124 would be involved. Findings 12, 26, 39. Contract 34124 contained, in addition to the standard form of General Provisions for a supply contract, a “Fixed Price Incentive Clause” providing for revision, by negotiation after contract performance, of the target price on, the basis of cost data submitted by plaintiff. A target profit to 10 percent of target cost was allowed, and .this could be adjusted up or down depehding on whether actual costs were less or greater than target cost. Final profit could not, however, exceed 15 percent of target cost, nor could final price exceed 110 percent of target price. Finding 15. Contract 34124 called for delivery of three sets of first articles and test reports within 9Yz months, with production deliveries to commence 1 month after first article approval and to be completed within approximately 10 months thereafter. Finding 14. Reliability requirements were not clearly spelled out in Contract 34124, nor did it contain a prescribed useful life for the ASN-7 sets. Finding 15. Contract 34124 did not contain a specific disclaimer of governmental liability to plaintiff, nor a specific warranty by plaintiff. Finding 42. In January 1958, on the basis4 of tests on the initial first article sample, tentative approval of first articles was given, and plaintiff was provisionally authorized to deliver up to 63 production sets. Finding 18. Shipment of production units began February 28, 1958, and by the end of June 1958, approximately 60 sets, most of which defendant sent to Boeing Airplane Company for installation in KC-135 tankers then coming off the assembly line, had been delivered. In the meantime, on the basis of tests on the other two first article samples, unconditional first article approval had been given June 23, 1958. Finding 19. As early as Jhe middle of 1957 plaintiff had come to realize it had a cost problem on Contract 34124, and between then and the end of June 1958 it became increasingly aware of both financial and technical problems in connection with Contract 34124. Findings 20-22. At the end of May 1958 plaintiff made a complete reestimate of its cost situation with respect to Contract 34124 and the first follow-on contract (let as of November 1, 1957, with unit costs approximately 13 percent higher than those for Contract 34124), realized it faced a substantial loss, prepared a cost reduction program, and prepared to make a presentation to the Air Force “for the purpose of recovering funds to offset the then anticipated loss.” Finding 23. Because of the soon-to-be-described “Interregnum”, however, the cost reduction program was shelved and the presentation to recover funds was deferred for about a year. Ibid. While ASN-7 sets which passed plaintiff’s own inspection met contract tests and were accepted by the Air Force, from the start of production early in 1958 plaintiff experienced an increasing in-house rejection rate. Finding 24. In March 1958, plaintiff assigned a task force to a study of the reasons for rejection. After Boeing began to complain to plaintiff, in June 1958, that sets furnished to Boeing by defendant were failing after brief use, it became apparent that major problems of design might be involved. Plaintiff made arrangements with Boeing to return to it the sets that had failed, and, on analysis, became convinced that if it were not to furnish defendant a marginal product that met specifications but proved unsuccessful in the field, a major reassessment of its manufacturing program, including the basic design of the sets, was called for. Finding 25. About July 1, 1958, plaintiff’s president, faced with three possible courses of action, called a meeting of plaintiff’s personnel concerned with the ASN-7 program to decide upon a course of action. Plaintiff’s decision was to “do the research, development and engineering necessary to make it into the product that would perform as we knew it should and find some way to recover the cost of doing this, if we could find it, or take our lumps if we could not.” Finding 27(a). Accordingly, plaintiff decided to stop production until it had corrected the causes of failures, and arranged for a meeting with Air Force representatives July 7, 1958, to discuss its plan. Finding 27(b). Around this same time defendant’s project engineer learned for the first time of failures in the field, and he concurred in a decision to stop accepting deliveries. Finding 27(d). Thus, on July 7, 1958, the parties agreed to stop production until plaintiff had found the cures for its technical difficulties. Finding 27(d). This commenced what the parties refer to as the “Interregnum”. Finding 27(e). Plaintiff’s activities during the Interregnum, which continued to the end of December 1958, are set forth in the findings. Findings 28-30, 38-40. It suffices presently to say the parties are agreed (for purposes of Count I) that (a) during the Interregnum plaintiff not only performed R&D work under Contract 34124, but did so to a far greater extent than either party had anticipated in 1956, and (b) approximately 65 percent of some $4,500,000 (represented by plaintiff as a conservative compilation of all its R&D costs) reflected the cost of all R&D work performed in connection with Contract 34124 which was both actual R&D effort and of benefit to follow-on contracts. Findings 39, 40. After the Interregnum a new delivery schedule was set up, and plaintiff exceeded delivery requirements while producing highly satisfactory sets :with greater ease than before the Interregnum. Delivery of the sets called for by Contract 34124 was substantially completed about the end of 1959, although delivery of some items under that contract continued into 1961. Finding 31. Thus, while both parties had envisioned Contract 34124, a production contract in name and in form, as involving the relatively simple repackaging of items performing a developed and proven function, serious troubles developed in the ASN-7 systems after installation in aircraft and otherwise. In order to perform its contract to the satisfaction of all concerned, plaintiff felt compelled to (and did) engage in a very substantial amount of R&D type work in order to solve the problems encountered in the use of the ASN-7 systems and to deliver systems more adequately meeting the requirements of its contracts. Findings 26, 39. Sound business reasons underlay plaintiff’s decision to do so. Finding 27(c). In the spring of 1959, at the Air Material Command, plaintiff made a presentation of its excess costs problem, with a view to obtaining from defendant some portion thereof, but no action followed. Finding 33. Around September 1959 plaintiff had printed a lengthy brochure, entitled the “AN/ASN-7 Story”, detailing its problems to that date and seeking financial consideration by the Air Force, and in November 1959 plaintiff’s president made a presentation to the Commanding General, AMC, using the “AN/ASN-7 Story” as a basis. Again, no relief was forthcoming. Finding 34. Finally, toward the middle of 1961, plaintiff’s treasurer, defendant’s successor contracting officer, and the latter’s legal advisor explored together means whereby plaintiff might recoup some of its excess costs, but none was found. Finding 35. There followed plaintiff’s unsuccessful administrative efforts to (inter alia) allocate R&D expenses (within ceiling price limits) under Contract 34124 to certain follow-on contracts (findings 37, 40(c)), and this action, Count I of which prays for relief not sought (or available) at the administrative level. On these facts, plaintiff asserts that this court's holding in National Presto Indus., Inc. v. United States, supra (hereinafter “Presto”), entitles it to reformation. More precisely, plaintiff contends that there was a mutual mistake of fact; that Contract 34124 did not “allocate the risk of a mutual mistake to either the Government or the plaintiff”; that plaintiff’s unanticipated R&D effort resulted in a benefit to defendant; that such extra work “was of the nature the Government wished to obtain from the contract”; and that, had defendant been aware of “the true facts from the beginning, [it] would have been willing to bear a substantial portion of the additional costs.” Defendant says, among other things, that in the circumstances of this case, the risk of mistake was in any event plaintiff’s, and that Presto is wholly inapposite. Defendant is right. Presto involved a contract for the production of artillery shells by a new process. Plaintiff was to propose the equipment (and facilities) it believed would be needed for production, and defendant was to pay for the items on which agreement was reached. There was mutual agreement to dispense with certain equipment (initially proposed by plaintiff but rejected by defendant) subsequently found — but only after expenditures by plaintiff of considerable time, effort, and money — to be indispensable to satisfactory production. Under its agreement to produce 180,000 shells by the new process, at a contract price of some $980,000, the plaintiff in Presto had apparently lost some $750,000. In, and after, Presto, this court has consistently recognized that, among other things, reformation is “a remedy the purpose of which is to make a mistaken writing conform to antecedent expressions on which the parties agreed.” Bromion, Inc. v. United States, 411 F.2d 1020, 1022, 188 Ct.Cl. 31, 35 (1969); see also Jamsar, Inc. v. United States, 442 F.2d 930, 935-936, 194 Ct.Cl. 819, 828-829 (1971); Macke Co. v. United States, 1328, 199 Ct.Cl. 552, 561 (1972); Evans Reamer & Machine Co. v. United States, 386 F.2d 873, 880-881, 181 Ct.Cl. 539, 551-552 (1967), cert. denied, 390 U.S. 982, 88 S.Ct. 1102, 19 L.Ed.2d 1279 (1968). The facts in Presto were, however, sufficiently exceptional to impel consideration of that remedy notwithstanding the absence of any mistake in the written formulation of the understanding of the parties. A definite, mutual, innocent mistake as to a very material fact, coupled with substantial loss, led in the circumstances of that case, to reformation. One crucial factor contributing to that result was the conclusion that “neither the written contract nor the course of dealings requires that plaintiff alone bear the full consequences of the parties’ mutual error as to the need for turning equipment.” Presto, supra, 338 F.2d at 109, 167 Ct.Cl. at 764. That conclusion, in turn, rested especially (albeit not solely) on the novel and experimental character of the project, and the seriousness of the unexpected costs in relation to contract price. The court stressed that Presto involved a new and joint enterprise in which neither party had any real expertise or background; that defendant was as interested in the perfection of the new process as in the end product Presto was to deliver; that the contract there was not a performance one; and that Presto was not “an expert, promising to perform and taking the whole risk and anxiety of the project off the Government’s shoulders”, but simply “the more active of a pair of gropers attempting to develop a new and largely untried process which was still far from mature.” Presto, supra, 338 F.2d at 109, 167 Ct.Cl. at 764-765. Cf. Natus Corp. v. United States, 371 F.2d 450, 459, 178 Ct.Cl. 1, 15 (1967) (concurring opinion). This case does not fit within that mold. Plaintiff was, and is, experienced both as a manufacturer of navigational computer systems and as a goverment contractor. The contract specifications were, in essence, performance specifications. Not only was defendant’s initial draft of those specifications based on data and general layouts supplied to it by plaintiff, but the revised, final, version of the specifications resulted from plaintiff’s extensive comments on the initial draft. That version came some months after plaintiff had represented that open manufacturing capacity existed and that its proposal, if accepted, would result in a production supply contract, and the contract which did result was, in name and in form, just that. No novel and experimental project, nor joint enterprise, was contemplated; defendant did not really care how plaintiff went about fulfilling its promises to perform. The parties were not “gropers”, knowingly engaged in a combined journey through unexplored areas, but a seller of a developed and proven (if to be repackaged) design, and a purchaser who wanted the end product plaintiff said it could promptly supply. As Presto suggests (and plaintiff recognizes), a fixed-price contract does not normally impose on defendant any responsibility for whether or not the contract work can be done within the contract bid price. Aerojet-General Corp. v. United States, 467 F.2d 1293, 1301, 199 Ct.Cl. 422, 434 (1972); Cf. United States v. Wegematic Corp., 360 F.2d 674, 676-677 (2d Cir. 1966). Absent unusual circumstances a “fixed-price contractor * * * shoulders the responsibility for unexpected losses, as well as for his failure to appreciate the problems of the undertaking * * Macke Co. v. United States, supra. While plaintiff’s contract was of the fixed-price incentive, rather than of the pure fixed-price, type, it is clear that this circumstance is, for present purposes, of no real significance, nor is it of any aid to plaintiff in its argument that Contract 34124 “did not allocate the risk of mistake to either party.” If, in a fixed-price incentive type contract, “the final cost exceeds the ceiling, the contractor suffers a loss.” Lockheed Aircraft Corp. v. United States, 426 F.2d 322, 323, n. 1, 192 Ct.Cl. 36, 39, n. 1 (1970). See also Nash, Risk Allocation in Government Contracts, 34 Geo.Wash.L.Rev. 693, 695 (1966). Looking at the dealings of the parties as a whole, their contractual agreement, and the nature of the enterprise embodied therein, it is concluded that plaintiff “assumed all the uncovered risks inherent in its promised performance •x- x- *_» Natus Corp. v. United States, supra, 371 F.2d at 458, 178 Ct.Cl. at 14; see also Olin Mathieson Chemical Corp. v. United States, 179 Ct.Cl. 368, 407-409 (1967). In light of the entire record, plaintiff’s contractual agreement here too “forecloses any possibility of expense allocation along the lines of mutual mistake.” Natus Corp. v. United States, supra; see also Tombigbee Constructors v. United States, 420 F.2d 1037, 1043, 190 Ct.Cl. 615, 626 (1970). Rather, any equitable relief therefor, by way of additional compensation to plaintiff, “should be left to legislation or administrative discretion.” Presto, supra, 338 F.2d at 110-111, 167 Ct.Cl. at 767. Although plaintiff relies “exclusively” on Presto, there is a suggestion in plaintiff’s Conclusion of an “oral novation” leading to recovery “on the order of quantum meruit.” This suggestion is wholly unsupported by any citation of authority, and is, as defendant contends, unsound. Each of the parties has advanced a considerable number of other arguments. Each such argument has carefully been considered, but in light of the foregoing, only one issue requires any further elaboration. In Presto, the court denominated as a prerequisite to reformation a showing that defendant “would have been willing, it it had known the true facts from the beginning, to bear a substantial part of the additional expenses” Presto incurred. Plaintiff urges that the record enables it to surmount that difficult hurdle sufficiently, if not well, while defendant sharply controverts that view. Perhaps necessarily because of the retrospective and elusive investigation thus required, the record on this issue is vague, imprecise, and unsatisfying. The 1959 statement attributed by plaintiff’s president to the Commanding General, AMC (finding 34) is, even as attributed, equivocal. Nor does defendant’s payment, in 1960 and 1961, of a higher price for most components purchased (finding 36) justify the inference plaintiff draws thereform: that, had defendant known the “true facts” in 1956, it would nonetheless have proceeded to purchase the ASN-7 at considerably increased cost. By 1960, defendant had an investment of more than $29,000,000 in that system. Time had passed as well. Differences in quantities, factors of inflation, and other relevant factors aside, defendant’s alternatives in 1960 and 1961 manifestly differed from those which would have been available to it in 1956, had it then been aware of the “true facts”. While defendant’s evidence of what it would have done in 1956 with that knowledge (finding 41) also lacks force, answering the inquiry posed in Presto would, on this record, require sheer speculation. For the foregoing reasons, it is concluded that plaintiff is not entitled to recover on Count I, and that its amended petition should be dismissed as to that count. CONCLUSION OF LAW Upon the findings of fact and the foregoing opinion, which have been adopted by the court and made a part of the judgment herein, the court concludes as a matter of law that plaintiff is not entitled to recover on Count I of the amended petition, and as to that count the amended petition is dismissed. . ASBCA Nos. 8689 and 9951, 66-1 BCA ¶ 5403. The administrative record is voluminous. Finding 1(b). . 68 Stat. 81, 41 U.S.C. §§ 321-22 (1970). . The said order also reflected that a decision for plaintiff on Count I would remove any necessity to consider and decide Counts II and III, and that plaintiff had requested that further consideration of these counts be postponed until after the disposition of Count I. That request, being deemed just and proper, was thereby granted. . Each party reserved the right to object to any portion of the administrative record on grounds of competency, relevancy, or materiality, and to offer additional testimony or exhibits. . The order set forth in 55 separately numbered paragraphs the findings of fact made by the ASBCA and entitled to finality, reserving to each party “the right (a) in its requested findings of fact and briefs to alter or revise either the order or the language of the said findings as they- appear herein, and (b) to contend that any such finding, though made, is not relevant or material to the disposition of Count I.” . Plaintiff is experienced both as a manufacturer of navigational computer systems and as a government contractor. Finding 1(a). . See Finding 11. A comparison of the boxes of the Service Test and ASN-7 systems is there set forth. . “Design engineering” (in defendant’s terms) or “research and development” (in plaintiff’s) of about $800,000 was within the contemplation of the parties at contract execution. Finding 8, n. 3. . In mid-1958 plaintiff was aware it faced a loss of approximately $3,000,000 on Contract 34124 and the initial follow-on contract. Finding 23, n. 9. . Finding 27(a) sets forth in his own words the alternatives available and the decision made. Briefly, the alternatives were to reduce costs and to continue to deliver items which “would not adequately meet the need in the aircraft”, to seek a termination, or to “face the music and decide that we had produced a design or a product for the Air Force which really did not have it.” . Plaintiff’s decision was influenced by its reputation; by an awareness of competitive equipment under development; and by the possibilites of (a) future business, by way of follow-on contracts, and (b) becoming sole source, if it could produce a truly reliable product. Finding 27(c). . There is, however, no indication in the record that defendant then knew of, or agreed to, an extensive R&D program. . Plaintiff’s Brief, p. 34. . Id., p. 41. . Id., p. 41. . E. g., defendant; denies any “mutual mistake.” . Recovery ultimately amounted to $250,000. National Presto Indus., Inc. v. United States, 175 Ct.Cl. 881 (1966). . Cf. R. E. D. M. Corp. v. United States, 428 F.2d 1304, 1309-1310, 192 Ct.Cl. 891, 901-902 (1970); J. L. Simmons Co. v. United States, 412 F.2d 1360, 1362, 188 Ct.Cl. 684, 689 (1969). . Cf. Bethlehem Corp. v. United States, 462 F.2d 1400, 199 Ct.Cl. 247 (1972); Austin Co. v. United States, 314 F.2d 518, 161 Ct.Cl. 76 (1963), cert. denied, 375 U.S. 830, 84 S.Ct. 75, 11 L.Ed.2d 62 (1963); Olin Mathieson Chemical Corp. v. United States, 179 Ct.Cl. 368, 407-409 (1967). . Plaintiff did not urge during the administrative proceedings, nor does it now assert, the right to an equitable adjustment for increased costs of performance due to defective specifications, nor does it claim damages for breach of the implied warranty that, if government “specifications are followed, a satisfactory product will result.” Hol-Gar Mfg. Corp. v. United States, 360 F.2d 634, 638, 175 Ct.Cl. 518, 525 (1966); see also Bethlehem Corp. v. United States, 462 F.2d 1400, 199 Ct.Cl. 247 (1972). . Plaintiff’s Brief, p. 43. . This statement, entirely limited to the problems raised in Count I, expresses no view upon issues yet to be considered in Counts II and III. . Plaintiff’s Brief, pp. 39, 55.

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DALE INGRAM, INC., (formerly Florida Builders, Inc.) v. The UNITED STATES. No. 412-65. United States Court of Claims. Decided March 16, 1973. Peter Latham, Washington, D. C., for plaintiff; I. H. Wachtel, Washington, D. C., of record; Glade F. Flake, Washington, D. C., of counsel. Paul A. Zoss, U. S. Dept, of Justice, Court of Claims Section, Civil Division, with whom was Asst. Atty. Gen., Harlington Wood, Jr., for defendant; Michael B. Rosenberg, Washington, D. C., of counsel. Before .COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges. ON PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DEFENDANT’S CROSS-MOTION FOR SUMMARY JUDGMENT SKELTON, Judge, delivered the opinion of the court: In this case the plaintiff, Dale Ingram, Inc. (formerly Florida Builders, Inc.), contends that two decisions of the Armed Services Board of Contract Appeals (the Board), one on liability and one on quantum, are erroneous as a matter of law and are not supported by substantial evidence. The plaintiff also seeks reformation of the contract on the ground of mistake. The contract in question was one for Capehart housing construction upon land in Florida that had been under water and had to be filled in before the housing could be constructed. The land fill was to be accomplished by a different contractor under a different contract (land fill contract) which originally required compacting the land to a maximum density of 95 percent. However, this compaction requirement was reduced to 90 percent before the land fill contract was awarded on April 18, 1960, to Gahagan Dredging Corporation (Gahagan). The compaction requirement was changed again on the date the land fill contract was awarded to eliminate the numerical requirement of 90 percent of maximum density to: “All embankments and fill shall be dense and uniform.” In the meantime, plaintiff prepared and submitted a bid on the contract in-issue before us (the construction contract) which required the construction of 500 houses on the area to be filled in. The Invitation For Bids (IFB) stated that the houses were to be constructed on land to be filled in by another contractor and all bidders were admonished to visit the site and become familiar with the type and quantity of earthwork required in the construction contract. They were further informed that the specifications and drawings of the land fill contract were available for inspection at two different offices, the names and addresses of which were stated. The plaintiff visited the site and worked with a contractor who intended to bid on the land fill contract. By reason of these facts, the plaintiff had knowledge of the basic specifications of the land fill contract, including the original requirement that the fill would be compacted to 95 percent density and the addendum changing this requirement to 90 percent density. The plaintiff submitted its bid on the construction contract, but all bids were rejected because they exceeded the money available. Thereafter, during July and August 1960, a second IFB was issued. The plaintiff’s representatives visited the site again and observed the land fill operations of Gahagan. The plaintiff desired to bid on the construction contract again, which contract provided in its specifications that: ->; -x- -x- [T]he top six inches of material on which footings and floor slabs are placed shall have a density of not less than 90 per cent of laboratory density. Being mindful of the foregoing requirement of 90 percent density for the top six inches of the soil for the footings and floor slabs, the plaintiff sought and obtained a quotation of $277,000 from Redland Construction Company, Inc. (Redland), a subcontractor, to do the grading and footing compaction work at the site under the construction contract. Redland inspected the condition of the soil at the site and then raised its quotation to $410,000. The plaintiff then got a higher quotation from another subcontractor, after which it negotiated a contract with Redland to do the work for $403,000. The plaintiff and Redland then bid on the contract without knowing that the specifications of the land fill contract had been changed so that the requirement for compaction to 90 percent maximum density had been removed and the words “dense and uniform” had been substituted therefor. At the time they bid, the plaintiff and Redland thought that the 90 percent density requirement was still in the' land fill contract. It should be noted that the plaintiff did not ask for up-to-date land fill specifications during the July-August bidding period and did not make any investigation with reference to same. There is no evidence that the government knowingly or willfully withheld any of such information from the plaintiff. The plaintiff had plenty of time to investigate the compaction requirements of the land fill contract as it was awarded on April 18, 1960, and the construction contract was awarded to the plaintiff eight months later on December 19, 1960, as stated below. After the bids were opened on the construction contract, but before the contract was awarded, plaintiff learned that the 90 percent compaction requirement of the land fill contract had been changed to “dense and uniform.” The plaintiff protested to the government but did not ask to be allowed to withdraw its bid. The government refused to agree that the fill was other than what should have been anticipated. The plaintiff, being the low bidder, was awarded the contract and signed the agreement, reserving the right to present a claim for changed conditions. The contract was effective December 19, 1960, and was for $8,171,300. The contract contained the standard changes and changed conditions and disputes clauses. The plaintiff began work in January 1961, but did not start the compaction of the footings involved in this case until about March 15, 1961. Redland, the subcontractor, attempted to achieve the 90 percent density for the footings and floor slabs, as required by the contract, but encountered difficulty due to the type and condition of the soil. Various tamping machines were tried, but 90 percent density was found not'to be possible. Finally, on April 24, 1961, the size of the footings was changed and the required compaction was reduced from 90 percent density to 80 percent laboratory density. After these changes were made in the contract, Redland was able to achieve 80 percent compaction. However, 30 days were wasted in trying to achieve the 90 percent density. However, the plaintiff encountered difficulty in achieving even the 80 percent density compaction. This was due to a variety of factors, including the nature of the material, the difficulty in crushing the pieces of oolite encountered by the machines which had to be small enough to go into the trenches, and the caving-in of the walls of the trenches. Excessive concrete was required to fill in the caved-in walls of the trenches, as well as for the building of continuous pads similar to a runway instead of a separate pad for each house. The continuous pads were built so as to allow the use of heavier equipment for compaction and to obtain better compaction at the bottom of the footing elevations. The plaintiff filed a claim under the changes and changed conditions clauses for an equitable adjustment, contending that physical conditions at the site of the construction contract differed materially from those anticipated. From an adverse ruling, it appealed the claim to the Armed Services Board of Contract Appeals (the Board). The case was docketed Florida Builders, Inc., ASBCA No. 8944. After an extensive hearing, the Board handed down its decision on December 17, 1969. In its opinion the Board stated: The primary question presented in this appeal is whether the fill at Sigsbee Park was in the condition stated in the contract. This includes the plans and specifications for the Gahagan [land fill] contract, as they were modified by Amendment No. 1 [the “dense and uniform” change] thereto. The plaintiff contended before the Board that the fill was neither “dense” nor “uniform.” Considerable expert testimony was introduced by both parties as to the meaning of the term “dense” as required by the specifications, and as used in the trade and industry. The plaintiff’s expert contended it meant 90 percent maximum density. The Board found, however, that defendant’s expert testimony was more persuasive to the effect that the terms “dense” and “uniform” are not terms of art in either soil mechanics or the construction industry to the extent that they may be assigned specific numerical factors for gradation and density. This testimony further showed that in order to determine what the plaintiff should have encountered at the site, many factors would have to be considered, such as the nature of the oolitic limestone and its manner of placement by hydraulic pipeline dredge, the reworking of the material after its ejection from the pipeline, and the crushing of the material with bulldozers. Based on this evidence, some of which was admittedly conflicting, the Board held that the fill was as uniform as could be expected, and that the plaintiff could reasonably have expected the fill to be above 80 percent, but less than 90 percent, of laboratory density. The Board stated further that the plaintiff should have expected some compaction effort on his part to bring the material to 90 percent density under its contract even if the land fill contract had required 90 percent -density compaction as plaintiff believed when it submitted its bid. The Board found that the material was generally below 80 percent, while plaintiff should have anticipated between 80 and 90 percent density. Consequently, when the requirement in plaintiff’s contract was reduced from 90 to 80 percent density on April 24, 1961, plaintiff was required to increase the density only a small percent to reach the 80 percent density, and this was no more than it should have anticipated in preparing its bid. The plaintiff’s contract required it to do some compaction, otherwise the compaction provision would have been meaningless. After April 24, 1961, when the compaction requirement was reduced to 80 percent density, the plaintiff was able to achieve it without much difficulty. However, the Board found that the plaintiff had been delayed 30 days trying to obtain 90 percent density and concluded that it should be paid for the costs directly attributable to this delay, including interest on its loan for such period of 30 days and its direct costs in attempting to perform the impossible requirements. The Board, by agreement of the parties, considered entitlement only. It sustained the appeal and remanded the ease to the parties for negotiation of an equitable adjustment of the contract price. The parties could not agree on an equitable adjustment and the plaintiff appealed to the Board again on the issue of quantum. This appeal was docketed as Florida Builders, Inc., ASBCA No. 8944. A comprehensive hearing was had before the Board on every item of cost claimed by the plaintiff under the Board’s previous decision on entitlement, including extra compaction effort, the 30 day delay and the increase in expenses in placing footings for the houses, and additional costs in placing the pads for the slab-on-grade houses. At this hearing, the parties stipulated that the plaintiff was to receive $14,792 for the 30 days delay. They also stipulated that the plaintiff was to receive $3,170 for the extra compaction effort. They further stipulated to prices of $15.50 per cubic yard of concrete and $3.00 per cubic yard for labor. The Board found that the plaintiff was due the following costs for extra concrete: The Board also allowed plaintiff extra compensation for extra fill placed at the pad locations, and an additional amount for removing the excess pad material from between the buildings, as well as extra pay for work in attempting to gain additional subgrade compaction at the footing level. The amounts allowed for these extra expenses were as follows : The total overall extra costs allowed plaintiff by the Board as a result of changed conditions, in the total sum of $84,009.46, which includes the above costs, were as follows: DECISION — CHANGED CONDITIONS We have found the following amounts: In the meantime there was another appeal to the Board by plaintiff growing out of this contract that involved a dispute growing out of the rejection by the contracting officer of certain Hotpoint ranges furnished by the plaintiff for the houses. That appeal was docketed under ASBCA No. 9013, and was settled by a stipulation of the parties to the effect that the plaintiff was to receive an additional $8,588. That appeal is mentioned here because the Board described it in its opinion in Docket No. 8944, and added the $8,588 to the $84,009.46 equitable adjustment described above, making the total equitable adjustment due the plaintiff on this contract the sum of $92,597.-46. The above amount of $92,597.46 awarded to the plaintiff by the Board has not been paid by the government because it claims an off-set as follows. In another proceeding, not related to the case before us, involving a different contract (contract No. DA08-123-ENG2830) between the plaintiff and the government, the contracting officer issued an order on December 1, 1966, that the plaintiff was indebted to the government in the sum of $429,291.84. The plaintiff appealed that decision to the ASBCA and it has been docketed as ASBCA No. 12152. A stipulation was entered into in that case that the sum at issue is $495,429.04, plus interest. A hearing was held from September 25 through 27, 1972. No decision has been reached by the Board. The government contends in the case before us that the contracting officer’s decision in No. 12152 is final until and unless it is overturned by the Board and that it is entitled to wait the outcome of that case before paying the plaintiff the $92,597.46 awarded in the present case, because it claims the right of off-set. The plaintiff, on the other hand, argues and claims that the failure of the government to pay the $92,597.46 is a breach of contract for which it is entitled to judgment plus interest. This is one of the plaintiff’s claims in the present case, as will be shown below. The plaintiff was not satisfied with the Board’s decision on quantum in the present case in which plaintiff was awarded the $92,597.46 mentioned above. It filed this suit seeking to increase the award and asking for other remedies as well, as will be described, infra. The case is before us on plaintiff’s motion for partial summary judgment and defendant’s cross motion for summary judgment. It is difficult to come to grips with plaintiff’s claims in the case before us, because its contentions embrace almost the whole field of public contract law, including equitable adjustment, changes and changed conditions, substantial evidence, defective specifications, ambiguous contract provisions, mistaken bid, reformation, errors of law, and breach of contract, to name a few. This more or less “shotgun approach” has presented us with the arduous task of trying to separate the main issues from the forest of claims so that they may be analyzed and considered. The plaintiff first claims that the award of the $84,009.46 by the Board is not supported by substantial evidence and that the case should be returned to the Board to determine the equitable adjustment due plaintiff for “additional sums” paid to Redland, its overhead, plus costs of compaction after April 24, 1961, together with a reasonable profit on both sums, the total amount of which amounts to $247,870.72, which does not include the $84,009.46 already awarded by the Board. In the alternative, plaintiff contends that the contract should be reformed on the ground of mistake. When reformed, the plaintiff says, the contract should contain (1) an express promise by defendant that the construction site when made available to the plaintiff would contain fill compacted to 90 percent of maximum density, and (2). an increase in the contract price of $134,895.60, the same being the minimum amount by which the plaintiff was mistaken. It asks this court to enter judgment for $97,000.60 plus the $37,895 already awarded by the Board for Redland’s compaction effort (a total of $134,895.-60). When this is done, the plaintiff asks the court to suspend proceedings so that it can return to the Board to prove it is entitled to an equitable adjustment in the amount of $196,984.58, which sum represents the costs of achieving compaction after the requirement was reduced to 80 percent density on April 24, 1961. Finally, the plaintiff seeks recovery of the $92,597.46 previously awarded by the Board which it says the defendant has wrongfully withheld in breach of its contract, plus interest at six percent from July 23, 1971. The plaintiff also asks the court to stay proceedings before the Board in No. 12152 “so that the merits of defendant’s claim may receive de novo trial in this court.” I The Change and Changed Condition Claim The main thrust of the plaintiff’s claim that its equitable adjustment for a changed condition should be increased above the $84,009.46 awarded by the Board is based on (1) its contention that it would have paid Redland $126,000 less for the grading and compacting work if plaintiff and Redland had known that compaction had been changed from 90 percent density to “dense and uniform” in the land fill contract, and to this amount must be added 10 percent for overhead and six percent for profit, making the total amount $134,895.60; and (2) alleged extra effort to achieve 80 percent density after April 24,1961. The Board found that there was no proof that plaintiff could have obtained Redland’s contract for $126,000 less if they had known of the change in the land fill contract. In fact, the Board found the evidence to be against the plaintiff on this claim. The facts found by the Board showed that Redland quoted a price of $277,000 to the plaintiff and after inspecting the material at the site, it raised its quotation to $410,000. The plaintiff then got a quotation from another subcontractor, but it was higher than Redland’s. Then plaintiff and Red-land negotiated a price of $403,000 and they then bid on that basis. The plaintiff has arrived at the $126,000 figure by subtracting the original Redland quotation of $277,000 from its final negotiated quotation of $403,000. The proof nowhere shows that Redland would have done the work for its original quotation of $277,000 if it had known of the change in the land fill contract. The Board found that the reason for the change in the quotation by Redland was that its original quotation was too low. This is buttressed by the fact that the Board found that the government’s Design Director, Southern Division, Naval Facilities Engineering Command, prepared an estimate of the value of Red-land’s work, using 1960 and 1961 prices current with performance, which far exceeded Redland’s original quotation and approached the actual subcontract price of $403,000. In any event, the Board considered every item of extra cost incurred by Redland in trying to achieve compaction of 90 percent density prior to April 24, 1961, and made its award accordingly. Furthermore, the Board stated that the parties had stipulated that plaintiff was to receive $14,792 for the 30 days delay in trying to achieve the 90 percent density, and they also stipulated that: * * * [T]he appellant [plaintiff] is to receive $3,170 for the extra compaction effort. * * * [Emphasis supplied.] [71-2 BCA ¶ 8992.] The parties also stipulated before the Board to prices of $15.50 per cubic yard for concrete and $3.00 per cubic yard for labor in arriving at the amount due the plaintiff for extra concrete. The plaintiff is bound by these stipulations. The amounts specified in the stipulations were included in the costs awarded by the Board as itemized, supra. It appears that the evidence shows that plaintiff has been compensated for the extra compaction effort and other extra work in accordance with the stipulations and facts proved before the Board. We hold that the decision of the Board relative to these extra costs was neither arbitrary nor capricious and was supported by substantial evidence. Accordingly, the decision of the Board must be accorded finality inasmuch as this case is before us for review under the standards of the Wunderlich Act, 41 U.S.C. §§ 321, 322 (1970), Morrison-Knudsen Co. v. United States, 345 F.2d 833, 836-837, 170 Ct.Cl. 757, 761-763 (1965); Koppers Co. v. United States, 405 F.2d 554, 557, 186 Ct.Cl. 142, 147-151 (1968). With respect to plaintiff’s claim that it is entitled to more compensation for its “alleged extra effort” in trying to achieve 80 percent compaction density after April 24, 1961, the Board found that the plaintiff should have expected to receive the construction site compacted to as low as 80 percent density under the terms “dense and uniform” in the land fill contract. In this regard, it appears that the Board was more than generous in treating the situation as if the plaintiff had knowledge of the dense and uniform provisions of the land fill contract at the time it made its bid. The plain truth of the matter is that the plaintiff did not know about it and was clearly negligent in failing to have this knowledge. The evidence shows that the change in the land fill contract was made before the invitation for bids was issued for the construction contract and at least eight months before plaintiff was awarded the construction contract. Its failure to check the contents of the land fill contract during this long lapse of time before it submitted its bid was plain negligence. It may be, as defendant suggests, that this negligence bars the plaintiff from basing a claim on this change in the land fill contract. See Martin Lane Co. v. United States, 432 F.2d 1013, 193 Ct.Cl. 203 (1970), Schoeffel v. United States, 193 Ct.Cl. 923, 935 (1971), and Albano Cleaners, Inc. v. United States, 455 F.2d 556, 197 Ct.Cl. 450 (1972). These cases hold that a contractor who submits his bid without reading all of specifications does so at his peril. It is our view that in such a case the contractor assumes the risk of complying with the specifications and cannot complain later on if he is required to perform the contract in accordance with such specifications, provided there is no misrepresentation or overreaching by the government. However, the Board held in effect that even if the plaintiff had known of the change when it submitted its bid, it could not recover for any effort made to achieve the 80 percent density after April 24, 1961. This decision was arrived at on the evidence submitted by both parties at the Board hearing as to the meaning of the terms “dense and uniform” in the trade and industry. There was very little problem as to whether the land fill was uniform as it had been distributed from a hydraulic pipeline dredge which resulted in its being put in place uniformly. The plaintiff’s main contention was with reference to the meaning of the term “dense.” The plaintiff’s expert witness testified that the term required the material to be between 86 and 90 percent density. The defendant’s expert witnesses testified that it could mean that the material could be as low as 80 percent density, but that it was difficult to assign a numerical classification to it because many factors had to be considered, such as the condition and type of material involved. The Board weighed this evidence and concluded that under the terms “dense and uniform” the plaintiff should have expected to receive the construction site compacted as low as 80 and as high as 90 percent density. While the interpretation of the meaning of the provisions of a contract is a question of law for the court, nevertheless the decision of the Board on a question of law is entitled to great weight if it is based on the Board’s expertise and is not unreasonable. H. N. Bailey & Associates v. United States, 449 F.2d 376, 196 Ct.Cl. 166 (1971); Red Circle Corp. v. United States, 398 F.2d 836, 185 Ct.Cl. 1 (1968). Furthermore, it is well established that factual determinations that form the basis of the Board’s contract interpretation are entitled to finality if supported by substantial evidence. D & L Construction Co. v. United States, 402 F.2d 990, 993, 185 Ct.Cl. 736, 743 (1968); Jamsar, Inc. v. United States, 442 F.2d 930, 932, 194 Ct.Cl. 819, 823 (1971). In this instance, we think the Board’s decision was within the zone of reasonableness and was supported by substantial evidence and is entitled to finality. Plaintiff’s contract required it to do some compacting work, otherwise the provisions therein that required it would have been meaningless. Under the factual findings of the Board, the plaintiff should have expected to receive the land fill to be compacted to 80 percent density after April 24, 1961, and if such compaction was slightly below 80 percent, its contract required it to bring the compaction up to 80 percent. It has been held that expenses which a contractor would have been required to expend anyway had no changed condition occurred are not recoverable as a part of an equitable adjustment. Roscoe - Ajax Constr. Co. v. United States, 458 F.2d 55, 198 Ct.Cl. 133 (1972); Paul Hardeman, Inc. v. United States, 406 F.2d 1357, 1362-1363, 186 Ct.Cl. 743, 751 (1969), and Kaiser Industries Corp. v. United States, 340 F.2d 322, 337, 169 Ct.Cl. 310, 335-336 (1965). In this case the plaintiff was not required to expend any more effort in reaching 80 percent density than it should have expected when it submitted its bid. The finding of the Board and its decision to this effect is supported by substantial evidence and is entitled to finality. The facts before the Board showed, and the Board found, that after the compaction density requirement was lowered to 80 percent on April 24, 1961, the plaintiff was able to achieve such 80 percent density without much difficulty. The Board was correct in holding that the plaintiff was not entitled to any extra compensation in achieving 80 percent density after April 24, 1961, because that was an obligation the contract required it to perform. The plaintiff also argues that the term “dense” in the land fill contract was ambiguous and that the ambiguity should be resolved against the government who drafted the contract if the contractor’s interpretation is reasonable. It urges that its interpretation of “dense” as meaning 90 percent density was reasonable. The fault that is self-evident in this argument is' the fact that the plaintiff did not even know that the term “dense” was in the land fill contract when it submitted its bid and for that reason it could not and did not interpret the meaning of the term at that time. The plaintiff cannot now contend that it relied on any interpretation of this specification when it had no knowledge of its existence. It is well-established that where a contractor is relying on an interpretation of an alleged ambiguous contract, he must show that he relied on such interpretation. Brezina Constr. Co. v. United States, 449 F.2d 372, 196 Ct.Cl. 29 (1971); WPC Enterprises, Inc. v. United States, 323 F.2d 874, 876, 163 Ct.Cl. 1, 6 (1963); Martin Lane Co. v. United States, supra; LTV Aerospace Corp. v. United States, 425 F.2d 1237, 1240-1241, 192 Ct.Cl. 191, 197-198 (1970), and Randolph Eng’r Co. v. United States, 367 F.2d 425, 429-431, 176 Ct.Cl. 872, 880-882 (1966). There was no such reliance by plaintiff here, and the rule that ambiguities are resolved against the drafter does not apply. II Reformation of the Contract The plaintiff contends that the contract should be reformed because its bid was the result of a mistake in that it thought that the site would be compacted to 90 percent density by the land fill contractor, whereas, such contractor was only required to compact it so that it would be “dense and uniform.” It says that because of this mistaken belief it submitted a bid on the construction contract which required it to compact the footings for the houses and slabs to 90 percent density. In the first place, these contentions have already been placed before the Board by the plaintiff under the disputes clause of the contract as changed conditions which entitled it to an equitable adjustment. The Board considered the claim, held hearings, and settled the issues by awarding the plaintiff an equitable adjustment, as set forth above. The plaintiff cannot now relitigate the same claim and the same issues in this court under a reformation theory. United States v. Utah Constr. & Mining Co., 384 U.S. 394, 419-420, 86 S.Ct. 1545, 16 L.Ed.2d 642 (1966); Northbridge Electronics, Inc. v. United States, 444 F.2d 1124, 1127, 195 Ct.Cl. 453, 458 (1971), and Marley v. United States, 423 F.2d 324, 328-329, 191 Ct.Cl. 205, 213-214 (1970). Actually, there was no mistake in the plaintiff’s bid that would support a reformation of the contract, because plaintiff submitted exactly the bid that it intended to submit. The government did not know of any error in the bid, and in fact, there was none. There was no overreaching or deception on the part of the government. There was no misreading of the specifications by the plaintiff. In fact, the specifications it now complains of were not read at all, notwithstanding the provisions in the invitation for bids that admonished the plaintiff to familiarize itself with such specifications. The plaintiff cites Chris Berg, Inc. v. United States, 426 F.2d 314, 192 Ct.Cl. 176 (1970); Chernick v. United States, 372 F.2d 492, 178 Ct.Cl. 498 (1967), and Ruggiero v. United States, 420 F.2d 709, 190 Ct.Cl. 327 (1970) in support of its reformation claim. The court granted reformation in each of those cases, but they are clearly distinguishable on the facts from the instant case. In Chris Berg and Chernick, mistakes were made in the bids because of misplaced decimal points in the figures in the bid. In Ruggiero, the contractor failed to indicate that its bid was on a group of parcels instead of individual parcels. In each of those cases there was a pure clerical error by the contractor that the government either knew about or should have known about. In each of those cases the bids were not the bids that the contractor intended to make. None of those facts exist here. In our case, the plaintiff bid exactly what it intended to bid, and the government had no knowledge, and had no reason to suspect, that plaintiff did not know the requirements of the specifications. The case of Jamsar, Inc. v. United States, 442 F.2d 930, 194 Ct.Cl. 819 (1971), is in point. There the court said: * * * [T]he type of mistake upon which reformation may be granted must be a clear cut clerical or arithmetical error or a misreading of the specifications of such a serious and obvious nature that the defendant’s contracting agents would (or should) know of the mistake. Ruggiero v. United States, 420 F.2d 709, 190 Ct.Cl. 327 (1970). * * * “[A]n agreement cannot be revised to reflect a plaintiff’s subjective understanding the defendant does not and should not know of.” Benjamin v. United States, 348 F.2d 502, 172 Ct.Cl. 118 (1965). [ld. 442 F.2d at 935-936, 194 Ct.Cl. at 828-829.] The plaintiff also cites the case of Rhode Island Tool Co. v. United States, 128 F.Supp. 417, 130 Ct.Cl. 698 (1955) in support of its reformation claim. We do not think that case helps the plaintiff. There the bidder made a clerical mistake in figuring the cost of items required by the contract. He figured the cost of stud bolts instead of the machine bolts required by the specifications. The error there was much like the errors in Chernick, Chris Berg, and Ruggiero. See also, Bromion, Inc. v. United States, 411 F.2d 1020, 188 Ct.Cl. 31 (1969), and in addition, the contractor had sought to withdraw its bid before a binding award was made. If there was any mistake in the bidding in the instant case, it was a unilateral mistake on the part of the plaintiff. This court has held that reformation will not be awarded on the unilateral mistake of one of the parties to a contract. Natus Corp. v. United States, 371 F.2d 450, 458, 178 Ct.Cl. 1, 14 (1967); Olin Mathieson Chemical Corp. v. United States, 179 Ct.Cl. 368, 408 (1967); Allied Contractors, Inc. v. United States, 310 F.2d 945, 159 Ct.Cl. 548 (1962); California-Pacific Utilities Co. v. United States, 194 Ct.Cl. 703, 717-719 (1971), and Albano Cleaners, Inc. v. United States, supra. Finally, plaintiff argues that the contract should be reformed because of the provisions of ASPR 2.406-3 which authorizes the contracting officer to correct mistakes in bids where such mistakes are discovered after the bid is opened but before the award of the contract. The plaintiff says that such is the situation in this case and the regulation requires that the contract be reformed. The trouble with this argument is that ASPR 2.406-3 did not become effective until December 31, 1960, when it was first published in 25 FR 14118. The effective date of the contract in the instant case was December 19, 1960. Consequently, ASPR 2.406-3 does not apply to this case. It appears that prior to the publication of ASPR 2.406-3, the rule governing the problem before us was set forth in Massman Constr. Co. v. United States, 60 F.Supp. 635, 643, 102 Ct.Cl. 699, 717, cert. denied, 325 U.S. 866, 65 S.Ct. 1403, 89 L.Ed. 1985 (1945) as follows: At the time the contract was awarded to the plaintiff, pursuant to its bid, and at the time it signed the contract, the plaintiff was not mistaken. It had become aware of the mistake in its bid, and faced the problem of whether it was willing to sign a contract for the figure which it had, by mistake since discovered, bid. The Government was also aware of the plaintiff’s claim that it had made a mistake in its bid. There was not, then, at the time of signing the contract, any lack of knowledge, either mutual or unilateral, which ,caused either of them to make the contract which they did make, when in fact they intended to make a different contract. That being so, if we should reform the contract as the plaintiff requests, we would be making for the parties the very contract which one of them, the Government, expressly refused to make at that time, though requested to do so by the plaintiff. See also Board of Trustees, etc. v. O. D. Wilson Co., 77 U.S.App.D.C. 127, 133 F.2d 399 (1943); Early & Daniel Co. v. United States, 271 U.S. 140, 46 S.Ct. 457, 70 L.Ed. 874 (1926); aff’g, 59 Ct.Cl. 932 (1924); Willard, Sutherland & Co. v. United States, 262 U.S. 489, 43 S.Ct. 592, 67 L.Ed. 1086 (1923), aff’g 56 Ct.Cl. 413 (1921). The plaintiff is clearly not entitled to reformation of the contract under the rule announced in the Massman Construction Co. case, as well as for other reasons set forth above for denying such reformation. Mention should be made of the fact that after plaintiff submitted its bid but before the award of the contract, the plaintiff learned of the change in the specifications of the land fill contract and complained to the contracting officer. However, the plaintiff neither requested nor demanded the right to withdraw its bid. On the other hand, it proceeded to sign the contract with full knowledge of the facts, although it did reserve the right to file a claim for an equitable adjustment under the changed condition and disputes clauses. It could be argued that this conduct constituted a waiver of the claim that is being made here. See Adler Constr. Co. v. United States, 423 F.2d 1362, 1366, 191 Ct.Cl. 607, 611 (1970). However, we do not need to decide that question. Suffice it to say the plaintiff would have been in a much stronger position if it had asked permission to withdraw its bid and such request had been refused by the contracting officer, but we do not mean to indicate that even if this had occurred the plaintiff would be entitled to reformation of the contract. Ill The Breach of Contract Claim The plaintiff contends that by withholding the $92,597.46 that has been awarded to it in this case by the Board, the government has breached its contract and plaintiff demands the payment to it of this amount plus interest from July 23, 1971, at six percent. This claim would appear to be inconsistent with the claims previously discussed wherein the plaintiff contends that the $92,597.46 is not enough and it seeks more under the changed conditions clause, as well as under its reformation claim. In any event, the breach of contract claim must be rejected because the government has a right of off-set with respect to the decision of the contracting officer in Appeal No. 12152 now pending before the Board in which he held that the plaintiff is indebted to the government in the sum of $429,291.84. The decision of the contracting officer in this regard is final and binding until and unless it is reversed or changed by the Board or by this court should the case be appealed here from the Board. Consequently, the government has the right to withhold the $92,597.46 awarded to the plaintiff in this case until Appeal No. 12152 has been finally decided. The plaintiff has asked this court to stay the proceedings in Appeal No. 12152 now pending before the Board. That case is not before us and we have no authority to grant such a stay. IV Conclusion We hold that the decision of the Board on all the issues was neither arbitrary nor capricious, and is supported by substantial evidence and is correct as a matter of law, and the same is accorded finality and is affirmed; that the claims of the plaintiff for an additional recovery under the changed conditions clause of the contract and for reformation of the contract, as well as its claims for breach of contract, and for stay of proceedings of Appeal No. 12152 now pending before the Board, and for remand to the Board, are denied. Accordingly, the plaintiff’s motion for partial summary judgment is denied, except that judgment is awarded to the plaintiff for the sum of $92,597.46, subject to the right of the government to set-off its claim, if any, against the plaintiff in Appeal No. 12152 now pending before the Board, at the time the appeal in that case is finally disposed of by the Board or by this court if the case reaches us on appeal. The defendant’s motion for summary judgment is granted as to all other claims and issues involved in this case, and the plaintiff’s petition is dismissed with respect to them. . The contract was No. NBy(CH)-29105.

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60 CCPA IMBERT IMPORTS, INC., et al., Appellants, v. The UNITED STATES, Appellee. Customs Appeal No. 5483. United States Court of Customs and Patent Appeals. April 5, 1973. Barnes, Richardson & Colburn, New York City, attys,, of record, for appellants. David O. Elliott, New York City, of counsel. Harlington Wood, Jr., Asst. Atty. Gen., Andrew P. Vance, Chief, Customs Section, Frederick L. Ikenson, New York City, for United States. Before MARKEY, Chief Judge, RICH, BALDWIN and LANE, Judges, and CLARK, Justice (Ret.), sitting by designation. BALDWIN, Judge. This appeal is from a judgment of the United States Customs Court, Second Division, Appellate Term, 67 Cust.Ct. 569, 331 F.Supp. 1400, A.R.D. 294 (1971), affirming the judgment of a single Judge sitting in reappraisement, 65 Cust.Ct. 697, 314 F.Supp. 784, R.D. 11718 (1970). Both courts upheld the imposition, under the Antidumping Act of 1921, as amended, of dumping duties on fourteen entries of portland gray cement exported from the Dominican Republic between October 1962 and the end of March 1963, and entered in the port of San Juan, Puerto Rico. Only the dumping duties are in issue. The statute principally involved here, section 201 of the Antidumping Act of 1921, as amended (19 U.S.C. § 160) reads in pertinent part as follows: (a) Whenever the Secretary of the Treasury (hereinafter called the “Secretary”) determines that a class or kind of foreign merchandise is being, or is likely to be, sold in the United States or elsewhere at less than its fair value, he shall so advise the United States Tariff Commission, and the said Commission shall determine within three months thereafter whether an industry in the United States is being or is likely to be injured, or is prevented from being established, by reason of the importation of such merchandise into the United States. The said Commission, after such investigation as it deems necessary, shall notify the Secretary of its determination, and, if that determination is in the affirmative, the Secretary shall make public a notice (hereinafter in this Act called a “finding”) of his determination and the determination of the said Commission. * * * (c) The Secretary, upon determining whether foreign merchandise is being, or is likely to be, sold in the United States at less than its fair value, and the United States Tariff Commission, upon making its determination under subsection (a) of this section, shall each publish such determination in the Federal Register, with a statement of the reasons therefor, whether such determination is in the affirmative or in the negative. The “record” before us is entirely documentary, consisting of certified copies of papers filed with the United States Tariff Commission during an investigation it conducted, and the Commission’s “Determination of Likelihood of Injury,” TC Publication 87, 28 Fed.Reg. 4047 (1963). This record reveals that the Assistant Secretary of the Treasury advised the Tariff Commission on January 21, 1963, that Portland cement, other than white nonstaining cement, from the Dominican Republic was being or was likely to be sold in the United States at less than fair value (LTFV). The Commission then issued a notice that it had instituted an investigation “to determine whether an industry in the United States is being or is likely to be injured, or is prevented from being established” by the importation of such merchandise into the United States. 28 Fed.Reg. 882 (1963). The Commission’s Determination, supra, with Chairman Dorfman dissenting, followed on April 19, 1963. The majority of the Commission found that imports of Dominican LTFV cement were entered largely at the port of New York and were marketed almost exclusively in the metropolitan area of New York City. This area was held to be a “competitive market area” and the domestic plants that historically supplied Portland cement in the area were held to be “an industry” for purposes of the Antidumping Act. Its determination was that an industry in the United States was likely to be injured by reason of importation of LTFV Dominican cement. The majority found that the Dominican producer had capacity to sell increased quantities of Portland cement in the United States; that the Dominican market had provided an outlet sufficient to take only half the potential production of the country’s cement plant and the plant has operated with considerable excess capacity even with substantial exports ; that, through sales at prices that were below those charges in the home market but sufficiently high to cover out-of-pocket costs and contribute to net return, the producer could achieve more complete utilization of capacity and a lowering of unit costs; and that the very substantial market in the New York metropolitan area constituted a continuing and attractive lure for the producer’s management seeking to expand production and reduce costs. It was also the view of the majority that domestic producers supplying the New York metropolitan area market had operated at about 70 percent of capacity; that not only did sales of imported cement at LTFV tend to repress prices in the marketing area but it was also difficult for domestic producers to compete therewith inasmuch as the price was based not on lower cost but on discrimination; that domestic producers were precluded from making complete use of their productive facilities as they would be able to do in the absence of such competition; and that, because of both legal and economic restraints, domestic producers would be unable to increase volume by resort to the same kind of price discrimination. Appellants claim that the Tariff Commission’s injury determination is invalid. They base that claim on the following contentions: (1) The Tariff Commission violated its statutory authority in basing its injury determination in part on the mere presence of sales at less than fair value. (2) The Tariff Commission functioned as an agency within the meaning of the Administrative Procedure Act and its injury determination should be set aside as arbitrary, and (3) The Tariff Commission’s determination, insofar as it encompasses Puerto Rican imports, is in clear and unnecessary excess of the competitive injury found to exist. The Appellate Term rejected all three contentions in upholding the Commission’s determination. Opinion As to appellants’ first objection, it is apparent that the Commission did not find that sales of the imported cement at less than fair value were ipso facto injurious to a domestic industry but instead made a separate determination of injury. It is true that the Commission recognized the LTFV aspect of the sales as one factor involved in its determination. But that amounted to no more than giving weight to a consideration which was reasonably, if not necessarily, related to the conditions which it was required to analyze in determining whether there was a likelihood of injury under the statute. We therefore find that the Appellate Term was correct in holding that the Commission did not err in considering the LTFV aspect of the sales as a factor in its determination. With regard to the scope of review of the Commission’s determination, involved in appellants’ charge that the determination here was arbitrary, this court stated in City Lumber Co. v. United States, 457 F.2d 991, 59 C.C.P.A. 89, C.A.D. 1045 (1972): * * * It is not the judicial function to review or to weigh the evidence before the Commission or to question the correctness of findings drawn therefrom. Kleberg & Co. (Inc.) v. United States, 71 F.2d 332, 21 CCPA 110, T.D. 46446 (1933), compare United States v. George S. Bush & Co., 310 U.S. 371, 60 S.Ct. 944, 84 L.Ed. 1259 (1940). As stated in 'Kleberg, our review of determinations of injury or likelihood of injury in anti-dumping cases does not extend beyond determining whether the Commission has acted within its delegated authority, has correctly interpreted statutory language, and has correctly applied the law. As indicated in the Bush opinion, “No question of law is raised when the exercise of * * * discretion is challenged.” The statute itself, 19 U.S.C. § 160(a), authorizes the Commission to base its determination upon “such investigation as it deems necessary.” Appellants contend that the grounds relied on by the majority of the Commission are shown to be arbitrary, for various reasons, by the facts recited in the dissenting opinion of Chairman Dorfman. For example, appellants challenge the Commission’s conclusion that the Dominican producer had continued incentive to sell at less than fair value in the New York area because the price level in that area declined after (1) the supply of Dominican cement ceased and (2) the largest plant in North America came into operation in this same competitive area. Appellants state: Examined in the light of the fact that prices in the New York area had fallen sharply since Dominican cement ceased coming in and that the competitive market area was much less attractive than it had been * * it is difficult to understand how incentive to ship would not be less than in 1961 where injury was inconsequential or in 1962 when there was no finding of present injury. * * * To base a finding of likelihood of injury, as it comes down to in this case, primarily on the capacity of the facilities of the foreign producer is pure conjecture and inherently arbitrary. [Footnote omitted.] Suffice it to say that for us to determine that the prices had declined to the point where sales would no longer allow more efficient use of the Dominican facilities or recovery of out-of-pocket costs would require us to weigh and balance the evidence in the same manner as the Tariff Commission, which even appellants admit is not our function. The opening of another New York cement plant merely adds to the store of evidence to be weighed. In short, we find that the findings of the Commission are supported by substantial evidence, and that the factors pointed out in the Chairman’s dissent are not of sufficient moment to establish that the decision of the majority was arbitrary. Accordingly, we are satisfied that the Commission here acted within its delegated authority and correctly interpreted and applied the law. In fact, we think, as did the Appellate Term, that the determination would pass the test as not being arbitrary, an abuse of discretion, or contrary to law, even if the more extensive scope of review under the Administrative Procedure Act (the provision now 5 U.S.C. § 706) were appropriate, as appellant contends. As it is, we make no express holding with regard to the applicability of that Act. Finally, appellants urge that, since likelihood of injury was found in terms of factors subsisting in the New York metropolitan area, the imposition of dumping duty on the present importations to Puerto Rico was improper for lack of a reasonable relation to the injury found to exist. The Appellate Term found that the Commission has only the responsibility for making the determination of injury under the statute and does not prescribe the remedial action. Also, it agreed with the trial judge that 19 U.S.C. § 172, which defines “United States” for purposes of 19 U.S.C. § 160 in a manner which includes Puerto Rico, requires that the same duties be collected on importations to Puerto Rico as to the various states. We agree with both views and thus find the Appellate Term did not err on this point. Accordingly, the judgment of the Customs Court is affirmed. Affirmed. . The Commission also noted that “the instant case represents the second occasion in which the Treasury Department has advised the Commission that Portland cement from the Dominican Republic was being sold in the United States at less than fair value.” On the first occasion, in 1962, the Commission accepted certain assurances by the parties involved that continued effort was being made to avoid future sales at LTFY and declined to find that a domestic industry was “likely to be injured.” T.C.Pub. 54, 27 Fed.Reg. 3872 (1962).

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Thomas W. TECHLER and Richard G. Thompson, Appellants, v. Iven R. NORSTRUB and John H. Threlkeld, Appellees. Patent Appeal No. 8877. United States Court of Customs and Patent Appeals. April 5, 1973. John D. Gould, Minneapolis, Minn. (Merchant & Gould, Minneapolis, Minn.), attorneys of record, for appellants. Kenneth D. Siegfried, Joseph E. Ryan, Minneapolis, Minn. (Schroeder, Siegfried, Ryan & Vidas, Minneapolis, Minn.), attorneys of record, for appellees. Before MARKEY, Chief Judge, and RICH, ALMOND, BALDWIN, and LANE, Judges. MARKEY, Chief Judge. This is an appeal from the decision of the Patent Office Board of Interferences awarding priority to appellees, the senior party. Appellees were patentees of United States Patent No. 3,140,049 entitled “Cleaning Apparatus with Relief Control Valve,” issued July 7, 1964, on an application filed November 28, 1962. Appellants are patentees of United States Patent No. 3,246,845, entitled “Controls for High Velocity Washing Equipment,” issued April 19, 1966, on an application filed June 11, 1964. On July 1, 1966, appellees filed application serial No. 572,164 for reissue of their patent with claims 11-18 copied from appellants’ patent. The interference was declared after the Board of Appeals reversed the examiner’s rejection of the claims for lack of support in appellees’ application. Appellants moved that the resulting interference be dissolved on two grounds: (1) that none of the counts is supported by the disclosure of appellees and (2) that appellees have no right to make the claims of the counts because of improprieties in the reissue oath. Consideration of the motion was deferred to final hearing. The board regarded the question of sufficiency of the reissue oath as not ancillary to priority and held it had no authority to decide it. Considering only the question of appellees’ right to make the count, it awarded priority to appellees. We affirm. OPINION Appellants’ charge that appellees cannot make the counts is based on appellants’ disclosure of two separate, spaced pressure responsive devices and the allegation that appellees’ disclosure includes but one such device. The elements of appellants’ claims in question are underlined in representative count 1: In a pressure washer, a power-driven pump having an inlet and an outlet connected by a flexible conduit to a spray head including -a handle for directing the spray from said head, a first valve controlling flow through said head; conduit means for supplying liquid to the inlet of said pump and having a first branch connected to a source of water and a second branch connected to a source of cleaning fluid, a second valve controlling flow of water from said source through said first branch to said pump inlet, and a third valve controlling flow of cleaning fluid through said second branch to said pump inlet, the improvements which comprise; a bypass conduit connecting the outlet of said pump to the inlet thereof, an un loader valve interposed in said by-pass conduit and responsible to the pressure in said flexible conduit to open said unloader valve when the pressure in said flexible conduit exceeds a predetermined value; a first electric switch; electrically energizable means for actuating said second valve; a first electric circuit including said switch and electrically energizable means, and pressure responsive means communicating with the outlet of said pump and operatively connected to said switch whereby changes in pressure in said flexible conduit resulting from alternate opening and closing of said first valve is effective alternately to supply water and cleaning fluid to said pump when in operation. Appellees dispose in their bypass conduit a structure shown schematically in its two functional positions as: Appellees rely on In re Kelly, 49 CCPA 1359, 305 F.2d 909, 134 USPQ 397 (1962). In that case, cited also in the board’s decision, we held the structure shown schematically below in its two functional positions as supportive of two claim elements, i. e. a power driven actuator productive of an actuating force (a piston) and means for reducing said actuating force (an expanding cavity). In Kelley we considered the fact of sequential operation wherein the expanding cavity functioned to reduce the actuating force and thereafter the piston, upon reaching the clutch, functioned as the power driven actuator. We neither find nor have been shown any reason to hold differently here where appellees’ valve piston unseats first to function as an unloader valve and then, through the rod, to operate the switch in further response to pressure in the bypass conduit. Appellants’ arguments regarding “double inclusion” and ambiguity, as well as their reliance on Holdsworth v. Goldsmith, 29 CCPA 1047, 129 F.2d 571, 54 USPQ 90 (1942) and Kreidel v. Parker, 25 CCPA 1242, 97 F.2d 171, 37 USPQ 815 (1938) are all fully discussed in Kelley, supra. No useful purpose would be served in repeating that discussion. It is incorporated here as equally applicable to the facts before us. We would add that “double inclusion” is governed by 35 U.S.C. § 112 and is regarded as improper when it renders a count indefinite or where the separate structures are not clearly identifiable. Here we find the counts definite and the structures indentifiable. Appellants do not contend that either the board or we have jurisdiction to decide the reissue oath question. Rather they urge that this question should have been disposed of in the Patent Office before any award of priority. That contention may well be correct. However, we see no reason why that matter should delay our determination of the ancillary matter of appellees’ right to make the counts as already raised and argued here. The Patent Office is obviously the proper place for appellants to initiate any efforts to overcome the alleged error in the treatment of the reissue oath question. Our decision on the appeal as it is now before us is not intended to preclude the Patent Office from taking any otherwise appropriate action in response to any such efforts and, if it is ultimately determined that the interference should be dissolved for inadequacy of appellees’ reissue oath, this court will be receptive to a motion to vacate the present decision. For the foregoing reasons, we affirm the decision of the board. Affirmed. BALDWIN, Judge, (concurring). I fully agree with the majority’s disposition of this ease, and merely wish to add some further observations. Insofar as appellants’ motion was based on alleged defects in appellees’ reissue oath, said motion amounted to a motion to dissolve on the basis that the counts are unpatentable to the applicants (appellees). Such a motion is apparently permitted under Patent Office Rule 231(a), and Rule 231(d) provides in pertinent part: (d) All proper motions as specified in paragraph (a) of this rule * * * will be transmitted to and considered by the primary examiner * * * While Rule 231(d) does not specify when such motions are to be transmitted, it is obvious that if the rule is to mean anything, transmittal must take place prior to termination of the interference. The appropriate procedure in this case would have been to transmit the reissue oath phase of the motion to the primary examiner directly rather than deferring it to final hearing. After final hearing, the board was not precluded from ruling on the ancillary question of appellees’ right to make merely because of the presence of this reissue oath phase of the motion in the case. However, I am of the opinion that the board should have transmitted the motion to the primary examiner prior to termination of the interference proceedings in the Patent Office. While the motion might also have been handled by a recommendation under Rule 259, the board found that the circumstances of this case did not warrant such a recommendation. I agree with the majority that appellees’ application supports the counts and that initiation of any efforts to remedy the mistreatment of the reissue oath question should be done in the Patent Office. Thus I concur in the affirmance of the decision of the board. LANE, Judge (dissenting). I conclude that the decision of the Board of Patent Interferences awarding priority to appellees should be reversed and that the case should be remanded to the Patent Office for a determination of the entitlement of appellees to a reissue patent under the provisions of 35 U.S.C. § 251. I agree with the conclusions of the majority concerning appellees’ support for the counts, and I agree that the interests of justice are served by presently reviewing and supporting the board’s holding on that question. However, I do not believe that the decision of the board in the form of an award of priority can be affirmed where priority has been awarded before a complete determination of all issues timely and properly raised. See Vandenberg v. Reynolds, 44 CCPA 873, 879, 242 F.2d 761, 765, 113 USPQ 275, 278 (1957). Leaving the further course of action to the Patent Office in the manner indicated in the majority opinion seems to me to be unsatisfactory since appellants, faced with a judgment of priority against them, will have no means of compelling examination of the reissue question. That is an inappropriate procedural posture in which to put the appellants, and one which could be readily avoided by reversing and remanding. Since appellants have not contested the board's holding to the effect that the reissue oath question is not ancillary to priority and therefore not within its jurisdiction, I would agree that this is not an appropriate case for us to review that jurisdictional question. I do feel, however, that reflective current thinking in this area is needed. I am not convinced that there is sound underlying basis for precluding review by the board and this court of a decision respecting the sufficiency of a reissue oath, although there is admittedly a long precedential history of that proposition, the most recent expression of which appears in Pritchard v. Loughlin, 53 CCPA 1339, 360 F.2d 250, 149 USPQ 676 (1966). The court in that case saw no reason to depart from the established rule. The rationale of the cases holding reissue challenges not to be ancillary to priority is that they are not in actuality matters of patentability suitable for ex parte consideration and unrelated to the interference proceeding. Patentability in general has long been held not to be ancillary to priority. See Glass v. DeRoo, 44 CCPA 723, 239 F.2d 402, 112 USPQ 62 (1956). Accepting this principle, it is nevertheless noted that in Norton v. Curtiss, 57 CCPA 1384, 1389, 433 F.2d 779, 783, 167 USPQ 532, 535-36 (1970), decided subsequent to Pritchard, this court held fraud to be a matter ancillary to priority. The theory expressed in Norton is that if fraud were proved, the party that committed it would lose its right to have the interfering claims present in its application and would therefore lose its standing as a party to the interference. We reaffirmed the Norton holding in Langer v. Kaufman, 59 CCPA -, -, 465 F.2d 915, 920-21, 175 USPQ 172, 175-76 (1972), observing a distinction between fraud and other grounds of unpatentability. It is clear, however, that fraud on the part of a party to an interference falls within the broad scope of patentability. From a jurisdictional standpoint, inability to present interfering claims because of an insufficient reissue oath appears indistinguishable from inability to present claims because of fraud. In each situation, the charges, if true, render one of the parties incapable of presenting interfering claims from which it follows that the party is not a proper party to the proceeding. Whereas analysis of a specific contention under the jurisdictional standard of ancillarity in the past has focused on the relationship of the contention to a contention of unpatentability, I suggest that in the future the focus might as logically be the relationship of the contention to a contention of fraud. Most importantly, there does appear to be a need to reexamine the jurisdictional questions present in an interference in light of the potential changes flowing from Norton and Langer. As for the present case, I would reverse the board’s decision and remand the case to the Patent Office for consideration of the reissue question by the appropriate official or tribunal.

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INDUSTRIAL NUCLEONICS CORPORATION, Appelant, v. Edward J. HINDE, d.b.a. Hinde Engineering Co., Appellee. Patent Appeal No. 8858. United States Court of Customs and Patent Appeals. April 5, 1973. Edward M. Prince, William T. Bullinger (Cushman; Darby & Cushman, Washington, D. C.), attorneys of record, for appellant. William T. Fryer, III, Baltimore, Md., of counsel. Jack M. Wiseman (Rosenberg & Wise-man, San Jose, Cal.), attorney of record, for appellee. Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE, Judges, and WATSON, Judge, United States Customs Court, sitting by designation. RICH, Judge. This appeal is from the decision of the Patent Office Trademark Trial and Appeal Board, abstracted at 166 U.S.P. Q. 160 (1970), dismissing appellant’s opposition to the registration by appellee of ACCURA-FLO, application serial No. 242,820, filed April 6, 1966, claiming first use March 9,1966. We affirm. The goods for which appellee seeks to register the mark are “a metering flume used for the measurement of sewage and industrial waste and allied solutions.” The record shows that the flumes sold by appellee under the mark are of two kinds, the Palmer Bowlus flume and the Parshall flume. They are simple mechanical structures of sheet metal or reinforced plastic through which fluid is conducted, in an open channel and not under pressure, the rate of flow being measured by taking a visual depth measurement and then referring to a table or chart to determine the rate of flow. Invoices show a unit price ranging from $90 to $835, depending on type and size. Appellant opposes registration as the owner of the mark ACCURAY for which it has the following five Principal Register registrations for the goods listed: No. 585,217, Feb. 2, 1954, “AccuRay” in stylized script, for Industrial beta gauges used in measuring the weight thickness, and area of sheet materials No. 646,469, June 4, 1957, “ACCURAY” plain block letters, for Radiation gauges used in measuring the physical properties of materials, and control equipment which includes such gauges for regulating industrial processes No. 714,707, May 2, 1961, “ACCURAY” plain block letters, for Statistical computation and data reduction systems and component apparatus therefor including computers, counters, classifiers, evaluators, timers, alarms, and information indicators No. 723,084, Oct. 24, 1961, “ACCURAY” plain block letters, for Material handling systems and component apparatus therefor including conveyors, electrical and mechanical controls, identifiers, routers, counters, classifiers, and sorters No. 799,849, Dec. 7, 1965, “AccuRay” similar to 585,217, for Moisture and temperature measuring apparatus and systems. Appellant is a large manufacturer of industrial measurement and control equipment and systems for measuring such things as thickness, density, fluid level, moisture contents, mass flow rate, and other process variables. Much of the equipment depends on the use of emissions from radio-active materials in conjunction with detectors and amplification, recording and control equipment. In conjunction therewith, the mark AccuRay, usually displayed in script form with a capital “R” in advertising literature, is evidently intended to suggest accurate measurement by some radiation means. It is apparent that AccuRay is also used as the company’s house mark. For the most part, the goods are very expensive with common unit prices of the order of $2,500 or far higher. Priority of use and registration in appellant is not in question. The board found, and we accept the finding as in accord with the evidence, that, The goods of both parties are sold to the same class of purchasers and are used in connection with sewage and industrial wastes. Opposer has also shown that its gauges can be used in conjunction with metering flumes to detect and measure the level of sewage or industrial waste passing through the flume. The sole remaining issue here is whether the concurrent use of the parties’ marks on their respective goods is, within the meaning of 15 U.S.C. § 1052(d), likely to cause confusion, or to cause mistake, or to deceive, to the presumed damage of appellant. In determining this question it is necessary to consider the marks, the goods, and all the circumstances surrounding their sale and offering for sale, insofar as these are made known to us by the evidence. The board correctly held that, among other things, the marks must be considered in their entireties. After discussing their obvious similarities and differences and the suggestiveness of their component parts, ACCURA, FLO, and RAY, as applied to the wares, the board concluded: In our opinion the differences in appearance and sound between “ACCURA-FLO” and “ACCURAY” are substantial when considered in. their entireties. And while each of the marks suggests, in the context of each mark, accuracy, this similarity is not believed sufficient to lead the type of purchasers for the goods of the parties to assume a single source of [sic, or?] origin. The soundness of this judgment is, of course, the only question we have to decide. We agree that visual inspection and vocalization of the marks bring out substantial differences in sound, appearance, connotation, and “commercial impression.” These differences might not be sufficient if we were dealing with off-the-shelf items purchased by all manner of people. But we think the fact which fully justifies the board’s conclusion in this ease is that both parties sell their goods to discriminating purchasers under conditions calculated to insure care in discerning the source or origin of the goods. The following passages from appellee’s brief, which clearly conform to the evidence of record, show the situation: Applicant’s “Aecura-Flo” measuring flumes are sold to public agencies and manufacturing institutions on the recommendation of consulting engineers, who specify the item to be purchased by drawings and specifications. * * * Opposer sells density analyzers and level detectors to public agencies and industrial plants for use in metering stations in sewage treatment plants, in industrial waste plants and in municipal water works. * * * Opposer deals with construction and consulting engineers, sewage and industrial waste engineers and public agencies. Under these conditions we see no error in the board’s conclusion that there is no likelihood of confusion etc. We think purchasers would inevitably be aware of the actual source of the goods. Our decision of some years ago in a case involving appellant and its ACCURAY mark, in which it lost an opposition to the registration of ACCUDATA, Industrial Nucleonics Corp. v. Minneapolis-Honeywell Co., 328 F.2d 942, 51 C.C.P.A. 1078 (1964), has been discussed by both parties. Several other cases have been cited as precedents to be followed. As we have said innumerable times, prior decisions on other marks for other goods are of very little help one way or the other in cases of this type. Each case must be decided on its own facts and the differences are often subtle ones. Appellant feels that the marks in the prior Nucleonics case were not as close as are the marks in the present case. Our impression — if it be of any present significance — is that the reverse is true, considering the marks in their entireties. Appellant asks us to resolve doubt against the newcomer, in accordance with the well-established rule, but in spite of its efforts to raise one we find we have no doubt to be resolved. The decision of the board is affirmed. Affirmed. BALDWIN, Judge (dissenting). I must respectfully disagree that “purchasers would inevitably be aware of the actual source of the goods” here. The class of purchasers involved in this case is very similar to the “engineering firms” involved in Torr X-Ray Corp. v. Sierra Engineering Co., Cust. & Pat. App., 471 F.2d 1247 (1973) in which we held that the use of stylized RADI-FLUOR 360 on fluoroscopic testing units would be likely to cause confusion, mistake, or deception in view of the registered mark RADIFLO for leak testing apparatus. Engineers are not immune from confusion as to source of goods. In the present case, the record establishes that appellant’s mark is well established in industry for a wide variety of measuring and testing devices and systems. The industries served by apparatus bearing appellant’s mark include the sewage industry, the very industry in which most of appellee’s flumes are used. Appellant’s ACCURAY devices are used in conjunction with just such flumes as appellee’s. One of appellant’s systems consists of a source of radiation mounted on one side of a flume, with a radiation detector mounted on the other side of the flume. The source and detector are used to sense the level of liquid in the flume, thus automatically indicating flow rate, instead of visually determining the liquid level and thus the flow rate. A radiation source and a detector have also been used to measure the density of the material going through the flume. In my opinion, those “consulting engineers, sewage and industrial waste engineers and [purchasing agents for] public agencies” familiar with either of appellant’s systems in which ACCURAY instruments are mounted on either side of flow-measuring flumes, when confronted with flow-measuring flumes bearing the mark ACCURA-FLO, would be likely to ascribe those flumes to the manufacturer of the ACCURAY systems. Such being the case, I would reverse the decision of the board.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Application of David D. McCUE and Thomas A. Brendle. Patent Appeal No. 8891. United States Court of Customs and Patent Appeals. April 5, 1973. Edwin L. Reynolds, Washington, D. C., attorney of record, for appellants. S. Wm. Cochran, Washington, D. C., for the Commissioner of Patents; R. V. Lupo, Washington, D. C., of counsel. Before MARKEY, Chief Judge, and RICH, ALMOND, BALDWIN, and LANE, Judges. BALDWIN, Judge. This appeal is from the decision of the Patent Office Board of Appeals, adhered to on reconsideration, sustaining the examiner’s rejection of claims 1 and 9 of appellants’ application. Claims 2-5, 7, and 8 have been allowed. The Invention Appellants’ invention relates to a device designed to provide a continuous record of the speed of a locomotive as it progresses along the track. The record is produced on a paper tape by a stylus movable transversely thereon. A first motor rotates a drive drum to move the tape while a second motor controls the transverse position of the stylus on the tape. The device includes an alternating current generator driven from a wheel of the locomotive to produce a signal of a frequency and amplitude proportional to vehicle speed. That signal is converted to a direct current signal which is applied to a recording unit “in such fashion as to drive the paper record therein at a rate proportional to vehicular speed and also to actuate a stylus in proportion to the vehicular speed so as to provide a visual record on the paper.” Additional styluses actuated by individual solenoids may be provided to record various other events such as application and release of brakes. The auxiliary styluses are mounted in alignment on the same transverse line as the speed recording stylus. The appealed claims read: 1. In a recording system for locomotives, in combination, a record paper system including drive means for moving a record paper linearly in proportion to the distance travelled by the locomotive, recording means for producing a visual record upon the record paper indicating the speed of the locomotive, and transducer means for actuating both said drive means and said recording means whereby the distance travelled and locomotive speed records cooperatively produced thereby stem from a common signal source, said transducer means having a single output signal proportional to locomotive speed connected to both said drive means and said recording means. 9. In the recording system as defined in claim 1 including a plurality of auxiliary styluses mounted in alignment with said recording device tranverse to the direction of record paper travel, and individual solenoids for actuating respective auxiliary styluses in accord with events other than vehicle speed. The References Parrish discloses a speed recording apparatus for locomotives, a portion of the control circuit of which is shown in the following excerpt from Fig. 1 thereof: The drawing shows an assembly including gears 18 and 20 which is driven from a roller 17 engaging a locomotive driver wheel 16 and which drives two interrupters 19 and 21 to actuate switches 61 and 22 respectively. Switch 22 acts through an electrical circuit to drive a paper tape in a recorder in proportion to the distance the locomotive travels. Switch 61 acts through an electrical circuit to control the transverse position of a stylus on the tape to indicate locomotive speed. Wait discloses a recording system for locomotives which includes, in addition to a stylus for recording speed on a paper tape, a plurality of auxiliary “pencils” or styluses actuated in accordance with other events. Wait states the “points of these [auxiliary] pencils are all arranged substantially on the same transverse line” as that of the pencil or stylus for recording speed. The Rejection The examiner rejected claim 1 as fully met by Parrish under 35 U.S.C. § 102 and claim 9 as obvious over Parrish in view of Wait under 35 U.S.C. § 103. After expressing its agreement with the examiner as to both claims the board stated: In construing these claims, we have followed the conventional practice giving the terms used therein the broadest meaning which within reason they will stand. When the term transducer is given its dictionary meaning, i.e., a device actuated by power from one system and supplying power to a second system, we find that this term is definitive of the elements of Parrish which the Examiner asserts forms a transducer. This transducer means 17 and 18 has a single output signal proportional to locomotive speed, and is connected to both the drive and recording means, as recited in claim 1. Claim 9, which recites additional stylii [sic] and their operating solenoids for recording additional operating conditions, is deemed to involve only an obvious modification of the prior art. Wait, cited by the Examiner, shows that it is conventional in the art to use separate stylii [sic] and operating solenoids for recording other operating conditions as well as speed on the performance chart of a locomotive. Opinion The determination of this appeal depends on the meaning attributed to the word “transducer” in claim 1 and the breadth of the remaining claim terminology. Appellants contend that the board erred in its broad interpretation of “transducer” and in not finding the limitation of means for actuating both the drive and recording means “from a common signal source” to avoid anticipation by Parrish. Appellants argue specifically that “the definition most generally accepted, particularly by authorities of a scientific nature, limits ‘transducer’ to a device which receives one kind of energy and delivers another.” They cite authorities which set out such a limited definition and urge that the existence of conflicting definitions renders “transducer” ambiguous, with the result that it must be construed in light of the specification. We find no merit in that position. The law is that an unpatented claim is given its broadest reasonable interpretation. See In re Carlson, 56 CCPA 1309, 1315, 412 F.2d 255, 260-261, 162 USPQ 233, 237 (1969) and In re Prater, 56 CCPA 1381, 1395-1396, 415 F.2d 1393, 1404-1405, 162 USPQ 541, 550-551 (1969). In their brief, appellants state: The Board did not cite the dictionary in which that definition was found, but it may well have been Webster’s New 20th Century Dictionary which contains a definition corresponding to that used by the Board. We find the board’s definition also supported by the definition given in Webster’s Third New International Dictionary (1961 ed.) at 2426: transducer * * *: a device actuated by power from one system and supplying power in the same or any other form to a second system * * *. [Emphasis supplied.] The meaning of the term “transducer" found by the board is plainly a reasonable one and we do not find it to give rise to any ambiguity in the claim language. Further, in conformity with the board’s position, we agree that “transducer” so defined finds full response in Parrish’s wheel 17 and gears 18 along with the shafts associated therewith which provide a “single output signal” as required in claim 1. The reference to a “common signal source” does not limit the claim to an electrical “signal” as appellants appear to urge and thus also fails to distinguish over Parrish. Appellants further state: The essential difference between appellants’ device and that of Parrish is that in the former the motion of the locomotive wheel is used to generate a single electrical signal which is simultaneously transmitted to and controls the paper drive and recording means whereas in the latter, the wheel motion generates two distinct sets of electrical impulses or signals which are separately transmitted to and control the said means. This is not an arbitrary difference since, if a single signal is used, any error in the signal will correspondingly affect both the drive and recording means, whereas if two signals are used, either signal may be in error without any error being present in the other. In essence, their position is that Parrish’s device is not equivalent to theirs because the Parrish device does not perform the same function in the same way as their device. In their view Parrish’s “means” are required by the last paragraph of 35 U.S.C. § 112 to be equivalent to the “means” recited in appellants’ claims before an anticipation of the claims under section 102 can be made out. We find no difference between the mode of operation of Parrish’s device and the mode of operation of the device defined by the claim under consideration. In terms of claim 1, the “drive means” and. “recording means” are not restricted to devices whose sole functions are to drive or record without any further manipulation of the single output signal supplied to them. Such a construction of those terms would exclude the very embodiment disclosed in appellants’ specification. For example, taking as “driving means” that to which the signal is delivered from appellants’ transducer means, and which results in driving the chart, the term must include a stepping motor which is intermittedly driven in accordance with the signal. The stepping motor includes a drive shaft which projects through a plate and carries a first pinion. The first pinion is in mesh with a gear carried by a second shaft which is also mounted on the plate and which carries a second pinion. A further gear reduction results from the mesh between the second pinion and a second gear on a third shaft which is also carried by the plate. The third shaft carries a third pinion which meshes with a third gear which is mounted on a fourth shaft which carries the driving roll of the paper tape recorder. As appellants state, if error occurs in their single signal, both their driving means and their recording means will be affected in the same manner. But the same is true of Parrish — if something affects the accuracy of the speed of measuring wheel 17, such as slippage, or if one of the gears 18 lost a tooth, both the drive means and the recorder means will be equally affected. Of course, should a tooth be lost from breaker cam 19 in Parrish, which we think the term “recording means” is broad enough to include, one system will be in error while the other one will not, but the same would be true should appellants’ drive motor fail or should any of the gears between it and the drive roll lose a tooth. Finally, two shafts are required in Parrish’s device to carry the rotational speed signal to the “recording means” and to the “drive means.” While the disclosure in appellants’ application is scanty in this regard, appellants’ stylus-controlling device is clearly separate from their roll drive, and there are indications in both the specification and the drawings that separate wires convey the appellants’ single signal to those two devices. Thus difficulties in the shaft going to Parrish’s “drive means” would again correspond to difficulties in the wire going to appellants’ chart drive. As to claim 9, we agree with the board that the use of aligned auxiliary styluses as by Wait is an “obvious modification” of Parrish. Appellants’ take the position that Wait’s styluses are “arranged in a group but not in alignment,” and that the arrangement in alignment “permits the use of a larger number of styluses than is possible with Wait's arrangement.” We see no reason why this would be so, since the bodies of Wait's styluses, which are on opposite sides of the line defined by their points on the recording paper, would seem to interfere with each other less than the bodies of appellants’ styluses which are aligned in parallel on the same side of that line. At any rate, the disclosure of Wait indicates that the level of skill in the art was such that it would have been obvious to so arrange Wait’s styluses to accommodate a greater number thereof. For the foregoing reasons, the decision of the board is affirmed. Affirmed. . Serial No. 687,589, filed December 4, 1967. . U.S. Patent No. 2,342,687 issued February 29, 1944. . U. S. Patent No. 2,325,451 issued July 27, 1943.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America, Plaintiff-Appellee, v. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL NO. 11, Defendant-Appellant. No. 9-2. Temporary Emergency Court of Appeals. Jan. 26, 1973. Julius Reich, Brundage, Neyhart, Miller, Reich & Pappy, Los Angeles, Cal., for appellant. Kyle D. Brown, Carl M. Gould, Hill, Farrer & Burrill, Los Angeles, Cal., for appellee' NECA. Harlington Wood, Jr., Washington, D. C., William D. Keller, U. S. Atty., Los Angeles, Cal., Matthew Schumacher, Los Angeles, Cal., William E. Nelson, Washington, D. C., and Paul T. Michael, Alexandria, Va., for appellee United States of America. Before CARTER, CHRISTENSEN and ESTES, Judges. JAMES M. CARTER, Judge. This is an appeal from a judgment granting an injunction against appellant for violating Pay Board Ruling No. 34 by entering into agreements which provided for the deposit in escrow accounts of wages and benefits unapproved (in fact, disapproved) by the Construction Industry Stabilization Committee (hereafter CISC). The sole question presented by the appeal is whether the District Court correctly held that payment into escrow of the unapproved portion of the wage increase, as demanded by appellant, was a violation of Pay Board Ruling No. 34 and 6 C.F.R. 201.17 (6 C.F.R. 200.41) of the Pay Board regulations. We affirm. Appellant is the collective bargaining representative for approximately 6,000 electrical workers in and about Los Angeles, California. The National Electrical Contractors Association, Los Angeles County Chapter (hereafter NECA) is the bargaining representative for approximately 200 members of the Association. Approximately 400 other companies, not associated with NECA, have agreed to be bound by the agreement reached between NECA and appellant. NECA, a defendant below, did not appeal but has filed a brief in support of the position of the United States. The appellant and NECA entered into an “Inside Wiremen’s Agreement” on September 1, 1970 for the period 1970 to 1973. It provided inter alia for an increase in wages and benefits totaling $1.71 per hour, to be effective on June 1, 1972. The Economic Stabilization Act of 1970 (P.L. 91-379, 84 Stat. 799, Aug. 15, 1970) authorized the President to issue such orders and regulations as he deemed appropriate to stabilize wages and salaries at levels not less than those prevailing on May 25, 1970. The President implemented the statute by Executive Order 11588 (36 F.R. 63.39, April 3, 1971) . In part it provided for the creation of CISC. The CISC was created to assure conformance of all wage and salary increases within the construction industry to the provisions of the order. Section 4(c) of Executive Order 11588 also provided that “[ujnless and until an increase in wage or salary has been approved in accordance with the provisions of sections 3(a) and 4 of this order, it shall be a violation of this order to put such wage or salary increase into effect.” Thereafter, on October 15, 1971, the President issued Executive Order 11627 and, under the authority of the amendments to-the Act (Public Law 92-210, 85 Stat. 743, December 22, 1971), issued Executive Order 11640 on January 27, 1972. By virtue of Executive Order 11627, the Pay Board was created, and continued by Executive Order 11640 to establish criteria and issue regulations for the purpose of stabilizing wages and salaries on a national basis. These later Executive Orders also modified Executive Order 11588 to bring it within the framework of the stabilization program by transferring certain powers formerly vested in the Secretary of Labor to the Chairman of the Pay Board. Section 1(a) of Executive Order 11640 provides that: “ * * * no person shall, directly or indirectly, pay or agree to pay, in any transaction, wages or salaries in any form, or to use any means to obtain payment of wages and salaries in any form, higher than those permitted hereunder, whether by retroactive increase or otherwise.” The Pay Board issued Regulations on March 7, 1972, 6 C.F.R. 201.17 (37 F.R. 4899), providing in part that it was a violation to “(a) Pay any portion of a wage and salary increase not authorized by such regulations or Pay Board decision ; (b) Receive or accept any portion of a wage and salary increase not authorized by such regulations or Pay Board decision; . . . ” The Regulations in this respect which were revised November 23, 1972, 6 C.F. R. 201.41 (37 F.R. 24960) spell out more precisely the violations. In performing the duties spelled out in the Executive Orders, the Pay Board issued Pay Board Order No. 2 effective November 14, 1971. (36 F.R. 21857, Nov. 16, 1971) This order authorized the CISC to administer its policies with “respect to wages and salaries and other economic adjustments” within the construction industry. This order further provided that the approval of the CISC was required before any economic adjustments contained in collective bargaining agreements within the construction industry could be implemented. Pay Board Order No. 2 was amended on April 25, 1972. (37 F.R. 8140, April 25,. 1972) The amended order continued the functions of CISC in overseeing and approving all economic adjustments scheduled to be implemented within the construction industry. Furthermore, section 2 of the amended order provided that: “All wage and salary increases and other economic adjustments contained in collective bargaining agreements in the construction industry scheduled to take effect on or after August 16, 1971 require approval of CISC regardless of the number of employees involved.” On May 9, 1972, the Pay Board issued Ruling No. 34. (37 F.R. 9350, May 9, 1972) On December 15, 1972, Pay Board Ruling No. 34 was amended and reissued as Pay Board Ruling No. 125. (37 F.R. 26708, December 15, 1972) Pay Board Ruling No. 125 was made after the judgment below, entered October 10, 1972, but brings into focus more clearly the prohibition against escrowing proposed wage increases which have not been approved by CISC. The proposed increase, to become effective June 1, 1972, of wages and benefits contained in the “Inside Wiremen’s Agreement” of September 1970, was submitted to CISC. On April 26, 1972, CISC decided that $1.00 of the total of $1.71 was approved and could be implemented on June 1, 1972. On May 5, 1972 appellant sent a letter to all parties covered by the Agreement, contending that, notwithstanding the decision of CISC, the employers were still legally obligated to pay the portion of the wage increase that had not been approved ($.71), and demanding the portion be placed into an escrow account of the employers. On June 1, 1972, appellant asked reconsideration by CISC of its decision of April 26,1972. On July 6, 1972, appellant renewed the demand of May 5, 1972, by a second letter to all parties covered by the Agreement. Enclosed were copies of a “Memorandum of Understanding,” copies of an escrow agreement, and monthly reporting forms to be completed and returned to appellant upon each deposit into the escrow accounts. As a result of the demand certain employers entered into escrow agreements and began paying the amounts of the unapproved increase into the escrow accounts. On July 27, 1972, CISC held a hearing on appellant’s request for reconsideration, and on August 2, 1972, CISC reaffirmed its decision of April 26, 1972 and appellant was notified that the continued existence of escrow accounts was a violation of applicable regulations and rulings. The issue in Pay Board Ruling No. 34 was clearly stated — “Would it constitute a violation [of the Regulations] for an employer to place negotiated wage increases in an escrow account pending approval by the [CISC] ?” [Emphasis added]. In substance, the ruling held that placing the proposed wage increases in an escrow account would not violate Pay Board Regulations if payment of the funds put in escrow would not occur until the approval of CISC had been obtained; but that if CISC has finally acted, then the escrow agreement is unlawful. Discussion To state the case is to decide it. The major purpose of the stabilization program was to halt inflation which had infected and was damaging the national economy. Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO, v. John B. Connally, et al. (D.D.C.1971) 337 F.Supp. 737, 750. If each party whose request for a wage increase was denied could circumvent the decisions by requiring monies to be paid in escrow, the integrity of the stabilization program would be seriously undermined. An escrow account would insure the creation of a sum of excess funds which, upon payment, could adversely affect the inflationary trends as soon as the controls were lifted. It is beyond dispute that in light of Pay Board Rulings No. 34 and No. 125, the appellant and other parties to the escrow agreements paid and received a portion of the wage increase that had not been approved by CISC. This resulted in the violation of 6 C.F.R. 201.17 (6 C.F.R. 201.41). Moreover, CISC has interpreted the Ruling to preclude the creation or continuance of escrow accounts after a decision has been rendered. This interpretation was communicated to the parties by a letter dated August 2, 1972. Great deference is to be accorded to the interpretation of regulations and rulings issued by the administrative body. University of Southern California v. Cost of Living Council et al. (Em.App., 1972), 472 F.2d 1065, cert. denied, 410 U.S. 928, 93 S.Ct. 1364, 35 L.Ed.2d 590 (1973); United States v. Lieb (Em.App., 1972), 462 F.2d 1161. Appellant’s argument that the language in the “Memorandum of Understanding” to the effect that the money will be released from escrow “at such times as they may legally do so” is no justification for its conduct. Appellant’s demand on the contractor employers and the placement of wages in the escrow accounts did not occur until after CISC had already failed to approve the $.71 increase and, in fact, had disapproved it. The matter was no longer pending before CISC for approval when the escrows began. Appellant’s contention that the CISC had not finally acted upon the wage increase in question when the escrows began is without merit. Nor is there merit to appellant’s speculative contention that the Pay Board or the Congress may in the future authorize payment of the unapproved portion of the wage increase. The judgment is affirmed. . On November 23, 1972, the Pay Board regulations found in Title 6 of the Code of Federal Regulations were recodified with the result that some citations used in the District Court have changed since that time. Citations to the regulations used in the District Court will - appear first, with the citations to the new codification, if any, appearing afterwards in parentheses. . 6 C.F.R. 201.41 (37 F.R. 24960, November 23, 1972) of the Pay Board regulations provides in pertinent part: (a) In general. Except as provided in paragraph (b) of this section, it shall be a violation of the provisions of this chapter, subject to the sanctions, fines, penalties, and other relief provided in the Act, for any person to— (1) Payment. Pay, directly or indirectly, immediately or on a deferred basis, any portion of a wage and salary increase not authorized by the provisions of this chapter or by decision or order of the Pay Board or its delegate; (2) Receipt. Receive or accept, directly or indirectly, any portion of a wage and salary increase not authorized by the provisions of this chapter or by decision or order of the Pay Board or its- delegate; (3) Accessorial acts or attempts. Induce, solicit, encourage, force, or require, or attempt to induce, solicit, encourage, force or require, any other person to pay or to receive, directly or indirectly, any portion of a wage and salary increase not authorized by the provisions of this chapter or by decision or order of the Pay Board or its delegate; . Pay Board Order No. 2 (36 F.R. 21857, November 16, 1971) provided in pertinent part: 1. The Pay Board authorizes the Construction Industry Stabilization Committee, effective November 14, 1971, to administer the policies of the Pay Board with respect to wages and salaries and other economic adjustments in the building and construction industry. In other respects, Executive Order No. 11588 of March 29, 1971 remains in effect. 2. All wages and salaries and other economic adjustments contained in collective bargaining agreements, whether scheduled to take effect in the period from August 16 through November 13, 1971, or scheduled to take effect after November 13, 1971 (whether or not previously approved by the Committee), now require the approval of the Construction Industry Stabilization Committee regardless of the number of employees affected. . Pay Board Order No. 2, as amended (37 F.R. 8140, April 25, 1972), provides in pertinent part: 1. The Pay Board authorizes the Construction Industry Stabilization Committee (CISC) to administer Pay Board regulations to the extent applicable with respect to collective bargaining agreements in the construction industry. CISC shall also administer CISC “Substantive Policies” as approved by the authorized construction subcommittee of the Pay Board, which are attached as a supplement to this order. 2. All wage and salary increases and other economic adjustments contained in collective bargaining agreements in the construction industry scheduled to take effect on or after August 16, 1971 require approval of CISC regardless of the number of employees involved. . Pay Board Ruling No. 34 (37 F.R. 9350, May 9, 1972) provided: Facts: To protect his bid price, a contractor desires to place negotiated wage increases (which represent the last increment in the current wage agreement) in an escrow account pending approval by the Construction Industry Stabilization Committee. Issue: Would it constitute a violation of Economic Stabilization Regulations, 6 CFR 201.17, 37 F.R. 4899 (March 7, 1972), for an employer to place negotiated wage increases in an escrow account pending approval by the Construction Industry Stabilization Committee? Ruling: No. If the wording of the escrow agreement places delivery of the wage increases on the condition of approval by the Construction Industry Stabilization Committee, then until the performance of that condition, the legal title to the wages held in escrow remains in the employer grantor and no title or interest in the wages vests in the employee grantees. Section 201.17, among other things, prohibits the payment or receipt of any portion of a wage and salary increase not permitted by Pay Board regulation or decision. Accordingly, while the wage increases remain in the escrow account pending the condition of approval for delivery, no payment of wages is made by the employer nor is any portion of the wage increase received by the employees. Note, however, if the wording of the escrow agreement is such that title to the wages will flow to the employees at some future date even though the approval by CISC has not been obtained (e. g. “when controls are lifted * * *”), such wages and salaries would be considered paid in the year put in escrow. . Pay Board Ruling No. 125 (37 F.R. 26708, December 15, 1972) provides: Facts. Contractor X must obtain the approval of the Construction Industry Stabilization- Committee, a delegate of the Pay Board, for a wage increase provided in a union contract. The contractor must also obtain Pay Board approval for a wage increase for his nonunion employees. To protect his bid price, the contractor desires to place the two separate wage increases in question into an escrow account pending approvals by C.I.S.C. and the Pay Board, respectively. The portions of the wage increases in the union contract which are disapproved by C.I.S.C., if any, and the portions of the nonunion wage increases which are disapproved by the Pay Board, if any, will revert to the employer upon such disapproval. Issue. Would it constitute a violation of Economic Stabilization Regulations, § 201.41, 37 F.R. 24971 (1972), for an employer to place negotiated wage increases in an escrow account pending approval by C.I.S.C. and the Pay Board, respectively? Ruling. No. Section 201.41 prohibits the payment or receipt of any portion of a wage and salary increase not permitted by the Economic Stabilization Regulations or by decision or order of the Pay Board or its delegate. In the situation where wage increases are delivered to and remain in an escrow account pending approval by either C.I. S.C. or the Pay Board, depending on which body has jurisdiction, with reversion to the employer upon disapproval, such increases are neither paid by the employer nor received by the employees. Note, however, if the escrow agreement does [not] provide for reversion to the employer in the event of, and immediately upon denial of the exception by C.I. S.C. or the Pay Board, such wages and salaries would be considered paid and received in the year that such wages and salaries are placed in escrow and such payment would constitute a violation of the regulations. See examples (4) and (5) of Economic Stabilization Regulations, § 201.41, 37 F.R. 24971 (1972). (Because of a printer’s error, the bracketed word “not” above was excluded from the ruling. The error was corrected in 37 E.R. 27615, December 19, 1972.)

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McGUIRE SHAFT AND TUNNEL CORPORATION, a corporation, Plaintiff-Appellee, v. LOCAL UNION NO. 1791, UNITED MINE WORKERS OF AMERICA et al., Defendants-Appellants. OLD BEN COAL CORPORATION, a corporation, Plaintiff-Appellee, v. LOCAL UNION NO. 1124 OF UNITED MINE WORKERS OF AMERICA et al., Defendants-Appellants. SOUTHWESTERN ILLINOIS COAL CORPORATION, a corporation, Plaintiff-Appellee, v. LOCAL UNION NO. 1392 OF UNITED MINE WORKERS OF AMERICA et al., Defendants-Appellants. ROBERTS AND SCHAEFER COMPANY, INC., a corporation, Plaintiff-Appellee, v. LOCAL NO. 9111, UNITED MINE WORKERS et al., Defendants-Appellants. Nos. 7-2 to 7-5. Temporary Emergency Court of Appeals. Feb. 1, 1973. Certiorari Denied June 18, 1973. See 93 S.Ct. 3008. Duncan B. Cooper, III, Peoria, Ill. (Willard P. Owens, Washington, D. C., and Heyl, Royster Voelker & Allen, Peoria, Ill., were with him on the brief), for appellants. Paul S. Kuelthau, St. Louis, Mo. (Moller, Talent & Kuelthau, St. Louis, Mo., were with him on the brief in No. 7-2 and Warren W. Browning, Browning & Browning, Chicago, Ill., and Moll-er, Talent & Kuelthau, St. Louis, Mo,., were with him on the brief in No. 7-5), for appellees in Nos. 7-2 and 7-5. Roger Edgar, St. Louis, Mo. (Veryl L. Riddle and Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., were with him on the brief in No. 7-3 and Dennis C. Donnelly, S. Richard Heymann and Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., were with him on the brief in No. 7-4) for appellees in Nos. 7-3 and 7-4. John N. Hanson, Washington, D. C. (Harlington Wood, Jr., William E. Nelson, Stanley D. Rose, and Edward A. Lenz, Washington, D. C., were with him on the brief), for the United States, amicus curiae. Before VAN OOSTERHOUT, ESTES, and HASTINGS, Judges. ESTES, Judge. These are appeals from four judgments granting preliminary injunctions against the appellant local labor unions and officers of certain of these locals for violating Pay Board Reg. § 201.17 and for violating the arbitration provisions of collective bargaining agreements between the appellants and appellees by striking to force the appellant construction companies to pay a wage increase disapproved by the Pay Board. On January 14, 1972, a representative of appellees, McGuire Shaft and Tunnel Corporation (McGuire) and Roberts and Schaefer Company, Inc. (Roberts),'entered into a collective bargaining agreement with the International Union, United Mine Workers of America on behalf of the construction workers employed by the coal mine construction companies and coal slope and shaft sinking companies signatory thereto. The agreement provided for wage increases in excess of 18 (about 18.7) per cent. The agreement was submitted to the Pay Board for approval oh January 24, 1972. On May 2, 1972, the Pay Board authorized only a 9.54 per cent wage increase. A petition for reconsideration was filed, but on August 1, 1972, the Pay Board reaffirmed its prior decision allowing only '9.54 per cent wage increase. On August 14, 1972, the construction workers employed by Roberts stopped working at the Orient Number 3 Mine (Local 9111) of Freeman Coal Company and the Randolph preparation plant of Peabody Coal Company (Local 1824) to protest the Pay Board’s decision and to force Roberts to pay the unapproved increase. The construction workers employed by McGuire (Local 1781) stopped working on August 18 for the same reasons. The construction worker members of Local 9111 also picketed several coal mines throughout Illinois in an attempt to enlist the aid of other locals in forcing the construction firms to pay the disapproved wage increases. Among these mines were three operated by appellee Old Ben Coal Corp. (Old Ben) and two operated by appellee Southwestern Illinois Coal Corporation (Southwestern). At the two Southwestern mines, Local 9111 pickets were joined by members of Locals 9721 and 1825. The miners employed by both Old Ben (Locals 1124, 1345 and 1487) and Southwestern (Locals 1392 and 7333) refused to cross the picket lines. The appellees each sought relief in the district court by means of a temporary restraining order and preliminary and permanent injunctions against the involved local unions and the officers of certain of these locals. Each appellee company sought this injunctive relief upon the authority of § 210(a) of the Economic Stabilization Act of 1970, as amended, 85 Stat. 743, Dec. 22, 1971. McGuire, Roberts, and Southwestern also claimed a second basis for the requested injunctive relief. They contend that under the authority of Boys Markets, Inc. v. Retail Clerk’s Union, Local 770, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970), the district court could enjoin the work stoppages as violations of the grievance arbitration obligations of the collective bargaining agreements, despite the anti-injunction provisions of the Norris-LaGuardia Act, 29 U.S.C. § 101 et seq. The district court issued the requested temporary restraining orders and preliminary injunctions in all four cases, finding authority to do so in both the Economic Stabilization Act and (except in the case brought by Old Ben) the collective bargaining agreements. The defendants appeal. Finding as we do that these injunctions were authorized by the Economic Stabilization Act of 1970, as amended, we find it unnecessary to reach the Boys Markets issue. The Economic Stabilization Act of 1970 (P.L. 91-379, 84 Stat. 799, Aug. 15, 1970), as amended (P.L. 92-210, 85 Stat. 743, Dec. 22, 1971), authorized the president to issue such orders and regulations as he deemed appropriate to stabilize wages and salaries at levels not less than those prevailing on May 25, 1970. Section 1(a) of Executive Order 11640, issued January 27, 1972, provides that “. . . no person shall, directly or indirectly, pay or agree to pay, in any transaction, wages or salaries in any form, or to use any means to obtain payment of wages and salaries in any form, higher than those permitted hereunder, whether by retroactive increases or otherwise.” Pay Board Reg. § 201.10 established 5.5 per cent as the standard maximum permissible annual wage increase. Higher increases must either meet specific exceptions provided in other Pay Board Regulations or be approved by a decision of the Pay Board. Since the Pay Board approved only a 9.54 per cent wage increase, an increase higher than that would be unlawful. Pay Board Reg. § 201.17 declared it “a violation of the Pay Board regulations, subject to the sanctions, fines, penalties and other relief provided in the Act, for any person to: (c) Induce, solicit, encourage, force, or require, or attempt to induce, solicit, encourage, force or require, any other person to pay or to receive any portion of a wage and salary increase not authorized by such regulations or Pay Board decision; or (d) Fail or refuse to comply with an order or decision of the Pay Board or to induce, solicit, encourage, force or require any other person to fail or refuse to comply with an order or decision of the Pay Board. “Notwithstanding paragraph (c) of this section, it shall not be a violation to bargain for, request, contract for or agree to (as contrasted with paying or receiving) a wage and salary increase in excess of the maximum permissible annual aggregate wage and salary increase. The preceding sentence shall not apply to those situations where the Board has denied an appeal from a determination by the Internal Revenue Service, or rendered a decision on a pay challenge or request for an exception.” The union work stoppages and picket lines were an effort to force, through both direct and indirect pressures, the construction companies to pay an unlawful wage increase. Such actions are violations of Executive Order 11640 and the Pay Board regulations. The appellants contend that the Economic Stabilization Act of 1970, as amended, does not provide the right for private parties to obtain injunctions against violations of the act and the orders and regulations promulgated thereunder. Section 210(a) of the act provides: “Any person suffering legal wrong because of any act or practice arising out of this title, or any order or regulation issued pursuant thereto, may bring an action in a district court of the United States, without regard to the amount in controversy, for appropriate relief, including an action for a declaratory judgment, writ of injunction (subject to the'limitations of section 211), and/or damages.’.’ This section clearly gives parties the right to obtain injunctive relief for harm suffered from violations of the act and implementing orders and regulations, subject only to the restrictions upon the district court’s injunctive power provided in § 211 of the Act. The restrictions in § 211 are directed at limiting the power of the judiciary to impede the enforcement, operation, or execution of the Economic Stabilization Program. Since the cases sub judice are not concerned with enjoining the implementation of the stabilization program, but rather with enjoining violations thereof, the provisions of § 211 are inapplicable. Since the statute is clearly written, and the “injunction” issued in these cases was “appropriate relief” specifically provided in § 210(a), it is unnecessary to look to the legislative history to ascertain the intent of Congress; however, the rather sketchy legislative history on this subject supports our interpretation. The bulk of the legislative history which concerns injunctions relates to § 211 and the Congress’s and the Administration’s concern with the “avoidance of any breaks or stays in the operation of the Stabilization Program.” The Administration’s proposed amendments to the Economic Stabilization Act of 1970, considered concurrently by both the House and the Senate, contained a section on judicial review which was subsequently revised by Congress and enacted as the present § 211. While there was no provision in the Administration’s proposed amendments to the act corresponding to the present § 210, the hearings before the Senate Committee on Banking, Housing and Urban Affairs reflect that concern was expressed by a senator that the Administration’s proposal did not provide “an individual, aggrieved by a violation, sp right to go to court and seek injunctive relief or damages.” The administration representative replied that there was an avenue for collecting damages. Subsequent to these hearings, this Senate Committee wrote § 210(a) in the identical language which was finally enacted as § 210(a) of the act, as amended. Furthermore, the House version of the amendment contained a similar § 210(a) provision; however, that provision provided that the appropriate relief an individual could obtain included “an action for a declaratory judgment, and/or damages.” Even though neither the Administration proposal nor the House Bill provided the individual with the right to obtain injunctive relief, they each provided severe limitations on the power of the courts to enjoin the enforcement, operation and execution of the stabilization program. Clearly, the limitations on the federal courts’ authority to enjoin agencies of the government in the execution of the act, orders, and regulations thereunder were not considered synonymous with the right of an individual injured by violations of the program to enjoin those violations. Having determined that a private party is entitled to obtain an injunction against violation of the Economic Stabilization Program, we face the issue of whether the anti-injunction provisions of the Norris-LaGuardia Act prohibit the granting of such an injunction against a labor union. There is nothing in either the Economic Stabilization Act or its legislative history to indicate any distinction between suits initiated by a private party under § 210(a) or by the Attorney General under the provisions of § 209 in so far as the applicability of the Norris-LaGuardia Act is concerned. On the contrary, it was clearly indicated that for the Economic Stabilization Program to work, it would be necessary for government enforcement to be supplemented by voluntary private efforts. Section 209 provides that the district court may “issue mandatory injunctions commanding any person to comply with any . . . order or regulation” under the act. As stated by Representative Ryan of New York in presenting to the House the amendments as agreed upon by the Conference Committee for final passage of the bill, “Injunctive relief is . available to any person authorized by the President to exercise authority under this act to prevent any person or organization from violating this act.” The significance of this legislation is expressed in § 202 of the act: “It is hereby determined that in order to stabilize the economy, reduce inflation, minimize unemployment, improve the Nation’s competitive position in world trade, and protect the purchasing power of the dollar, it is necessary to stabilize prices . wages [and] salaries. . . . The adjustments necessary to carry out this program require prompt judgments and actions by the executive branch of the Government.” It is inconceivable that Congress would announce the national importance of stabilizing wages and then exempt labor unions from the principal means of enforcement, an injunction. In light of the importance of the Economic Stabilization Program to economic welfare of the United States, the Norris-LaGuardia Act must be interpreted to accommodate the overriding Congressional intent expressed in the Economic Stabilization Act. Such accommodations have been made in the past when the provisions of the Norris-LaGuardia Act conflicted with other specific intentions of Congress. Furthermore, the Norris-LaGuardia Act was designed primarily to protect working men in the exercise of organized economic power, which is vital to collective bargaining. Enforcement of the Economic Stabilization Act by injunctions will not detract from collective bargaining. In cases No. 7-3 and 7-5, the appellants argue that the strikes and picketing were spontaneous actions on the part of individual members of the local unions and that the locals and their officers cannot be held responsible. The evidence is that the construction workers as a group struck and formed picket lines which the miners refused to cross. At subsequent meetings of the members of the various locals involved, the members voted to remain out. Although some officers of the locals made verbal attempts to get the members back to work, they participated in the strike themselves. The evidence supports the trial court’s finding that these activities were the activities of the local unions in an effort to force the construction companies to pay wages in violation of the Economic Stabilization Act and implementing orders and regulations. The issuance of a preliminary injunction is a matter committed to the sound discretion of the trial court and can be overturned by an appellate court only where it has been a clear abuse of discretion. The proper standard for review has been thus stated by the D.C. Circuit in Quaker Action Group v. Hickel, 137 U.S.App.D.C. 176, 421 F.2d 1111, 1116, as follows: “The standards which should guide the decision to grant a preliminary injunction have been often stated. The movant must show a substantial likelihood of success on the merits, and that irreparable harm would flow from the denial of an injunction. In addition, the trial judge must consider the inconvenience that an injunction would cause the opposing party, and must weigh the public interest as well.” See Pauls v. Secretary of Air Force, 457 F.2d 294, 298 (1 Cir. 1972); Unicon Management Corp. v. Koppers Co., 366 F.2d 199 (2 Cir. 1966). We agree with such standard. When such standard is applied to the facts of these cases, it is clearly established that the trial court did not abuse its discretion in granting the preliminary injunction in each of these cases. Appellants in cases No. 7-2 and 7-5 further contend that the preliminary injunctions issued by the district court were overbroad. We agree. As indicated in Boys Markets and Old Ben Coal Corp. v. Local Union No. 1487 of United Mine Workers of America, 457 F.2d 162 (7 Cir. 1972), a cautious approach is required when enjoining labor unions. These injunctions should be limited to restraining the defendants and all persons acting in concert with them from engaging in a strike, picketing, inducing any individual or members of any other organization to strike and picket, or in any other manner inducing, soliciting, encouraging, forcing or requiring or attempting to induce, solicit, encourage, force or require the plaintiffs to pay any portion of a wage increase not authorized by the Economic Stabilization Act of 1970, as amended, and orders and regulations implementing it. As so modified, the judgments are affirmed. . Issued on Nov. 13, 1971, amended Dec. 27, 1971 (36 F.R. 25427); reissued on Nov. 23, 1972, as § 201.10 without material change (37 F.R. 24960). . 37 F.R. 4899, March 7, 1972; the substance of § 201.17 was reissued on November 23, 1972, as § 201.41 (37 F.R. 24960). . § 211. Judicial review (a) The district courts of the United States shall have exclusive original jurisdiction of cases or controversies arising under this title, or under regulations or orders issued thereunder, notwithstanding the amount in controversy .... (d) (1) Subject to paragraph (2), no regulation of any agency exercising authority under this title shall be enjoined or set aside, in whole or in part, unless a final judgment determines that the issuance of such regulation was in '-excess of the agency’s authority, was arbitrary or capricious, or was otherwise unlawful under the criteria set forth in section 706 (2) of title 5, United States Code, and no order of such agency shall be enjoined or set aside, in whole or in part unless a final judgment determines that such order is in excess of the agency’s authority, or is based upon findings which are not supported by substantial evidence. (2) A district court of the United States or the Temporary Emergency Court of Appeals may enjoin temporarily or permanently the application of a particular regulation or order issued under this title to a person who is a party to litigation before it. Appeals from interlocutory decisions by a district court of the United States under this paragraph may be taken in accordance with the provisions of section 1292(b) of title 28, United States Code; except that reference in such section to the courts of appeals shall be deemed to refer to the Temporary Emergency Court of Appeals. (e) (1) Except as provided in subsection (d) of this section, no interlocutory or permanent injunction restraining the enforcement, operation, or execution of. this title, or any regulation or order issued thereunder, shall be granted by any district court of the United States or judge thereof .... . Senate Comm, on Banking, Housing and Urban Affairs, S.Rep.No.92-507, 92d Cong.lst Sess. (1971), U.S.Code Congressional and Administrative News 2283 at 2292. . Hearings on H.R. 11309 before the House Comm, on Banking and Currency, 92d Cong., 1st Sess. at 305 (1971). . Hearings on S. 2712 before the Senate Comm, on Banking, Housing and Urban Affairs, 92d Cong.. 1st Sess. at 2 (1971). . Senator Stevenson, Hearings on S. 2712, supra, at 43 (emphasis added). . 117 Cong.Rec.H. 12259 (daily ed. Dec. 10, 1971). . § 209. Injunctions and other relief Whenever it appears to any person authorized by the President to exercise authority under this title that any individual or organization has engaged, is engaged, or is about to engage in any acts or practices constituting a violation of any order or regulation under this title, such person may request the Attorney General to bring an action in the appropriate district court of the United States to enjoin such acts or practices, and upon a proper showing a temporary restraining order or a preliminary or permanent injunction shall be granted without bond. Any such court may also issue mandatory injunctions commanding any person to comply with any such order or regulation. In addition to such injunctive relief, the court may also order restitution of moneys received in violation of any such order or regulation. . 117 Cong.Rec.H. 12532 (daily issue, Dec. 14, 1971) (emphasis added) . Allen Bradley Co. v. Local Union No. 3, International Brotherhood of Electrical Workers, 325 U.S. 797, 65 S.Ct. 1533, 89 L.Ed. 1939 (1945); Virginia Railway Co. v. System Federation No. 40, Railway Employees Department of the A.F.L., 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789 (1937); Graham v. Brotherhood of Locomotive Firemen & Enginemen, 338 U.S. 232, 70 S.Ct. 14, 94 L.Ed. 22 (1949); Brotherhood of Railroad Trainmen v. Chicago River & Indiana Railroad Co., 353 U.S. 30, 77 S.Ct. 635, 1 L.Ed.2d 622 (1957); Textile Workers Union of America v. Lincoln Mills of Ala., 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957); Boys Markets, Inc. v. Retail Clerk’s Union, Local 770, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970). Although this point had not been raised in previous cases before this court, the court has already upheld injunctions against labor unions violating the act and the regulations and orders promulgated thereunder. Local 117 of Amalgamated Meat Cutters and Butcher Workmen of North America v. United States, 468 F.2d 946 (Em.App.1972); United States v. International Brotherhood of Electrical Workers, Local No. 11, 475 F.2d 1204 (Em.App.1973). . In its brief as amicus curiae, the United States advances the proposition, which we do not find it necessary to decide, that the Norris-LaGuardia Act is not applicable here because the basic dispute does not come within the Act’s definition of a “labor dispute.” See 29 U.S.C. § 113(e). The Government contends that this is so because (1) the subject matter of the dispute being unlawful means that no valid “labor dispute” as to it can exist, and (2) the actual controversy being between a union and a regulatory agency, there is no labor dispute between the parties involved here. For the first point, the Government cites NLRB v. Indiana Desk Co., 149 F.2d 987 (7 Cir. 1945), and dictum in Order of R.R. Telegraphers v. Chicago & North Western Ry., 362 U.S. 330, 340, 80 S.Ct. 761, 4 L.Ed.2d 774 (1960). We do not consider it necessary to decide this point. Khedivial Line, S.A.E. v. Seafarers’ International Union, 278 F.2d 49 (2 Cir. 1960), is cited for its holding that the Norris-LaGuardia Act prohibition against grant of injunctions in labor disputes does not extend to picketing directed against the policies of the [foreign] government of which the employer is a subject, as distinguished from picketing directed against activities of the employer. The union activity here does not seem to be exclusively in protest of the Pay Board action. The predominant intent, as found by the court below, is to force the employ - ers to take certain action unlawful under the Economic Stablization Act.

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In the Matter of Thomas W. Thompson, Debtor. Thomas W. THOMPSON, Appellant, v. FORD MOTOR CREDIT COMPANY, Appellee. No. 72-3553 Summary Calendar. United States Court of Appeals, Fifth Circuit. April 4, 1973. L. Zack Dozier, Macon, Ga., for appellant. E. J. Harrell, Macon, Ga., for appellee. Before WISDOM, AINSWORTH and CLARK, Circuit Judges. Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir. 1970, 431 F.2d 409, Part I. WISDOM, Circuit Judge: On December 8, 1971, Thomas W. Thompson filed a petition in federal district court under Chapter XIII of the Bankruptcy Act to pay his debts through a wage earner plan. After the court issued notice to creditors, Ford Motor Credit Company [Ford], a secured creditor to whom Thompson was indebted for payments owing on a 1970 Ford Mustang, filed a secured proof of claim rejecting the proposed plan. At the first meeting of creditors the plan was confirmed over Ford’s objection. The plan provided for payments to Ford of $22.90 per week, equivalent to the rate specified in the original sales contract, and enjoined Ford from foreclosing on the car. On July 6, 1972, Ford filed a petition to reclaim the car, alleging that Thompson had failed to make payments in the amount specified by the plan. After a hearing before the referee in bankruptcy, the referee denied Ford’s petition and also denied Ford’s oral motion to dismiss the plan. On Ford’s petition for review the district court reversed the referee’s decision and remanded to the referee with directions to grant the reclamation petition.' Thompson appeals from the district court’s decision. We reverse and remand the case with instructions to the referee to amend the plan. After confirmation of a Chapter XIII plan, a bankruptcy court may in appropriate circumstances permit a secured creditor who has rejected the plan to reclaim its property from a defaulting debtor. Cheetham v. Universal C.I.T. Credit Corp., 1 Cir. 1968, 390 F.2d 234; In re Clevenger, 7 Cir. 1960, 282 F.2d 756, 757; In re Copes, 1962, D. Kan., 206 F.Supp. 329; In re Duncan, 1940, E.D.Va., 33 F.Supp. 997; Comment, Relief for the Wage-Earning Debtor: Chapter XIII, or Private Debt Adjustment?, 55 Nw.U.L.Rev. 372, 376 (1960). The exercise of the power to restrain or permit foreclosure is within the sound discretion of the referee. Hallenbeck v. Penn Mutual Life Ins. Co., 4 Cir. 1963, 323 F.2d 566, 573-574. The referee may properly deny reclamation in the following circumstances. (1) General equitable considerations, including the debtor’s good faith and ability to pay, should favor restraining foreclosure. (2) The injunction agáinst foreclosure must be necessary to preserve the debtor’s estate or carry out the Chapter XIII plan. (3) The injunction must not impair the security of the lien. (4) The owner of the secured indebtedness must not be required to accept less than the full periodic payments specified in the contract. Hallenbeck v. Penn Mutual Life Ins. Co., supra, 323 F.2d at 572; Cheetham v. Universal C.I.T. Credit Corp., supra, 390 F.2d at 238. Equitable considerations strongly suggest that foreclosure would be improper in this case. Thompson fell behind in payments not because of any lack of good faith on his part, but because of circumstances beyond his control. His default appears to have been due to an injury which prevented him from working and to his being temporarily put on a part-time schedule by his employer. During the period of his incapacity Thompson regularly submitted his disability cheek to the trustee. At present Thompson is still employed, and earns enough to cover payments under the plan. Foreclosure would seriously threaten Thompson’s ability to make payments under the Chapter XIII plan. Loss of the car would endanger his employment. His job requires him to be at work at 6:00 A. M., and the car is his only means for getting to work at that hour. See In re Rutledge, 1967, E.D.Ark., 277 F.Supp. 933, 936. Thompson’s other creditors have a substantial stake in the success of the Chapter XIII plan. Though Ford is Thompson’s largest single creditor, his total debts to his other secured and unsecured creditors exceed his debt to Ford. While foreclosure would make Ford whole, it would effectively destroy any hope that Thompson might be able to repay these other creditors. Cf. In re Garrett, 1962, N.D.Ala., 203 F.Supp. 459, 461. Thompson’s default has not been so substantial as to impair Ford’s security. Ford alleged in its reclamation petition that it had been paid only $82.44 under the plan, instead of the $517 which it should have received. Shortly after the petition was filed, however, Ford was paid an additional $91.60. At the time of the hearing, then, Ford had received $174.04. This sum roughly covered the depreciation on the car, approximately $200 since confirmation of the plan. We do not regard it as of controlling importance that part of this payment was made after Ford filed its petition. When the referee considered this case Ford’s economic position was fundamentally no worse than when the plan was confirmed. Ford is not required by the plan to surrender any essential rights under its contract. The plan contemplates payment at the contract rate. At worst Thompson’s default will work some delay in the time required for full payment. In light of all the circumstances in this case, including Thompson’s good faith, the interests of the other creditors, and the fact that Ford’s security has not been seriously impaired, we do not view this potential delay as substantial enough to require immediate foreclosure. See In re Clevenger, 7 Cir. 1960, 282 F.2d 756, 757; In re Pizzolato, 1967, W.D.Ark., 268 F.Supp. 353, 356. We do not suggest that Thompson is free to make reduced payments for the indefinite future. Ford should be entitled to reclaim if Thompson continues to fall behind in payments without substantial justification, and if the economic injury to Ford from the delay in payment or impairment of its security grows greater in comparison to the interest of the other creditors in continuation of the plan. To ensure that Ford will receive payment within a reasonable time, we remand the case with instructions to the referee to amend the plan by specifying a date for bringing delinquent payments current. But on the record before us we hold that the referee was within his sound discretion in refusing reclamation. The judgment of the district court is reversed, and the case is remanded with instructions to the referee to amend the plan in accordance with this opinion. . It is less clear whether a secured creditor who accepts a Chapter XIII plan may seek reclamation in event of default by the debtor after confirmation. See Copenhaver, Chapter XIII, Wage Earner’s Plan, in Proceedings of Fourth Seminar for Referees in Bankruptcy 279, 299 (1967); 10 Collier on Bankruptcy ¶ 29.03, at 332 (14th ed. 1970); 1A Collier Bankruptcy Manual ¶ XIII-9.03 (1970). That question is not at issue in this case, since Ford rejected the plan. . See also In re Pizzolato, 1967, W.D.Ark., 268 F.Supp. 353; In re Wilder, 1963, M.D.Ga., 225 F.Supp. 67, 69. . Under § 661 of the Bankruptcy Act a debtor may be discharged after three years even if payments under the plan are not complete, if the failure to complete payment is due to circumstances for which the debtor cannot be justly held accountable. 11 U.S.C: § 1061. The requisite circumstances include loss of employment because of illness or other reasons beyond the debtor’s control. 10 Collier on Bankruptcy ¶ 29.11, at 355 (14th ed. 1970) ; Comment, Belief for the Wage-Earning Debtor: Chapter XIII, or Private Debt Adjustment?, 55 Nw.U.L.Rev. 372, 375 n. 26 (1960). . Ford asserts in its brief that Thompson has fallen further behind in his payments since the filing of Ford’s petition. There is nothing in the record on this appeal to substantiate this assertion, however. And it appfears from the record that Thompson has been hospitalized during part of this time.

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OAK CONSTRUCTION COMPANY, Plaintiff-Appellant, v. HURON CEMENT COMPANY, Defendant-Appellee. No. 72-1853. United States Court of Appeals, Sixth Circuit. Argued Feb. 7, 1973. Decided March 22, 1973. Richard H. Scholl, Detroit, Mich., Schaden & Peplowski, Detroit, Mich., on brief, for plaintiff-appellant. George B. Martin, Detroit, Mich., Dickinson, Wright, McKean & Cudlip, Detroit, Mich., on brief, for defendantappellee. Before EDWARDS, CELEBREZZE, and McCREE, Circuit Judges. PER CURIAM. This is an appeal from the grant of summary judgment in favor of the defendant cement company in a Robinson-Patman action, 15 U.S.C. § 13(a), (d), and (e), to recover treble damages for injuries resulting from unlawful price discrimination. The record reveals that a counterclaim for non-payment of a contract debt was filed by defendant but has not yet been adjudicated. Since all the claims before the court were not decided in the grant of summary judgment, that order is interlocutory. Illinois Tool Works, Inc. v. Brunsing, 378 F.2d 234 (9th Cir. 1967); 6 J. Moore, Federal Practice ¶ 54.35[1], at 582 (2d ed. 1948). Federal courts of appeal do not have jurisdiction of interlocutory orders under 28 U.S.C. § 1291, David v. District of Columbia, 88 U.S.App.D.C. 92, 187 F.2d 204 (D.C.Cir.1950), although in an action involving multiple claims or parties the district court may enter a final, appealable judgment with respect to less than all the claims or parties if it certifies that there is no just reason for delay and expressly directs the entry of judgment. Fed.R.Civ.P. 54(b). No such certification or direction was entered in this case. Accordingly, we lack jurisdiction to entertain this appeal. This lack of jurisdiction cannot be cured now by a belated Rule 54(b) certification by the District Court. Williams v. Bernhardt Bros. Tugboat Service, Inc., 357 F.2d 883 (7th Cir. 1966). Our jurisdiction attaches, if at all, when notice of appeal is filed in the district court. See Fed.R.App.P. 3(a). If all the jurisdictional prerequisites have not been satisfied at that point, we have no choice but to dismiss the action and “indicate to the parties that if the trial court enters a new judgment and accompanies it with a Rule 54(b) certificate, the second appeal will be heard on the record and briefs prepared for the first appeal, as supplemented by the new judgment and certificate.” 3 Barron & Holtzoff, Federal Practice & Procedure § 1193, at 26 (Wright ed. 1958). The appeal is dismissed. No costs.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Ethel L. RIDGELY, Administratrix of the Estate of Susanna Hape, Appellee, v. SECRETARY OF the DEPARTMENT OF HEALTH, EDUCATION & WELFARE OF the UNITED STATES of America, Appellant. No. 72-2181. United States Court of Appeals, Fourth Circuit. Argued Feb. 8, 1973. Decided April 3, 1973. Robert E. Kopp, Atty. U. S. Department of Justice (Harlington Wood, Jr., Asst. Atty. Gen., George Beall, U. S. Atty., Walter H. Fleischer and Stanton R. Koppel, Attys., U. S. Department of Justice, on brief), for appellant. Robert Barker Harrison, III, Baltimore, Md. (George W. White, Jr., and Buckmaster, White, Mindel & Clarke, Baltimore, Md., on brief), for appellee. Before CRAVEN, FIELD and WIDENER, Circuit Judges. FIELD, Circuit Judge: The Secretary of Health, Education and Welfare appeals from an order of the district court which ruled that Mrs. Ethel L. Ridgely, Administratrix of her mother’s estate, was entitled to judicial review of a decision of the Social Security Administration Appeals Council and, additionally, held that the hearing examiner’s findings were not supported by substantial evidence. The decedent, Mrs. Hape, was hospitalized for treatment of a broken hip at Baltimore County General Hospital from March 15, 1970, until April 1, 1970. On April 1 she was transferred to Foxleigh Nursing Center, an extended care facility, where she remained until September 17, 1970, when she was returned to the hospital and died a few days later. The Social Security Administration granted coverage through June 10, 1970, but denied payment for the remaining twenty-nine days to July 9,1970.® Mrs. Ridgely sought $497.20 in hospital insurance benefits under the Medicare program which was disallowed by the hearing examiner upon a determination that the treatment afforded Mrs. Hape was not skilled nursing care but only custodial in nature, which is excluded from coverage. The Appeals Council affirmed the hearing examiner’s opinion which became the final decision of the Secretary. Mrs. Ridgely filed a complaint in the district court seeking judicial review of the adverse administrative decision under 42 U.S.C. § 1395ff(b). The Secretary moved the court to dismiss the ease upon the ground that judicial review under the Act is limited to cases in which the amount in controversy exceeds $1,000. Despite the deficiency in the jurisdictional amount, the district court concluded that judicial review was appropriate under the alternative jurisdictional provision of “entitlement” to benefits. As of the date of this controversy Section 1395ff(b) provided: “Any individual dissatisfied with any determination under subsection (a) of this section as to entitlement under part A or part B, or as to amount of benefits under part A where the matter in controversy is $100 or more, shall be entitled to a hearing thereon by the Secretary to the same extent as is provided in section 405(b) of this title, and, in the ease of a determination as to entitlement or as to amount of benefits where the amount in controversy is $1,000 or more, to judicial review of the Secretary’s final decision after such hearing as is provided in section 405(g) of this title.” (Emphasis supplied.) The district court conceived the issue to be whether Mrs. Ridgely was entitled to the benefits rather than a dispute as to amount, and noted that the hearing examiner had also framed the issue in terms of entitlement and not a question of the amount which might be due. The district court relied on Cardno v. Finch, 311 F.Supp. 251 (E.D.La.1970), which in a case quite similar to this concluded that judicial review was available based on the “entitlement” provision of Section 1395ff(b). We agree with the district court and the opinion in Cardno that the reasonable construction of the statutory language limits the amount in controversy requirement only to judicial review of determinations as to the amount of benefits, and that determinations as to entitlement to benefits are properly subject to judicial review regardless of the amount. Counsel for the Secretary has pointed out to us that the language of Section 1395ff(b) was changed by the Social Security Amendments of 1972, under which the term “entitlement” was eliminated and judicial review limited to the question of eligibility to receive benefits or cases where the amount in controversy was $1,000 or more. The purpose of the amendment as stated in the Senate floor- debate was to clarify the original intent of the law that “entitlement” was intended to mean eligibility for any benefits of medicare but not to decisions on a claim for payment for a given service. 118 Cong.Rec. 17048, 17049 (Oct. 5, 1972). Counsel suggests that this amendment and its legislative history confirms the Secretary’s position in the present controversy. It may well be that the amendment was designed to eliminate ambiguity in the statute as originally enacted, but in our opinion under the statutory language prior to the 1972 amendment judicial review of Mrs. Ridgely’s claim was appropriate. With respect to the merits, the district court properly recognized that it could not try the case de novo and that its function was to apply the substantial evidence test to the Secretary’s findings. A careful review of the record by the district court disclosed that the Secretary’s determination that Mrs. Hape needed only care of a custodial nature was based solely on the records of the extended care facility, and the district judge found that the hearing examiner had been unduly selective in his reliance upon only those portions of the facility’s records dealing with treatment of Mrs. Hape and disregarded other portions which indicated that her condition was such that more than custodial care was required. In reaching this conclusion the district court held that the examiner should have considered every aspect of Mrs. Hape’s physical condition in making the determination rather than relying upon the treatments immediately required as the determinative factor. The court found support for this rationale in Sowell v. Richardson, 319 F.Supp. 689 (D.S.C.1970), where it was held that even if no treatment was required the condition of the patient might be so unstable or unsatisfactory as to require the extended services covered by the Medicare program. This determinative approach of Sowell has been followed in Reading v. Richardson, 339 F.Supp. 295 (E.D.Mo. 1972) and Brewerton v. Finch, 320 F.Supp. 68 (N.D.Miss.1970). The district court further found that the hearing examiner attached little or no significance to the opinion of Dr. Greenstein, the doctor who sent Mrs. Hape to the extended care facility following her treatment in the hospital. In the course of this controversy, Dr. Greenstein wrote a letter of clarification to the Secretary stating that Mrs. Hape “did require the supervision of professional nurses and that she did specifically require professional nursing care.” The district court found nothing in the record to refute Dr. Greenstein’s opinion and observed that it should have been accorded substantial weight in determining whether Mrs. Hape required skilled nursing care in accordance with Brewer-ton v. Finch, supra. In Brewerton, the court held that where there was no evidence to the contrary the opinion of the attending physician of the patient should be given great weight, and that where the hearing examiner had disregarded the physician’s evaluation, the resultant decision by the Secretary was not supported by substantial evidence. The substantial weight to be accorded the opinion of the attending physician under such circumstances was also recognized in Reading v. Richardson, supra, where the court reviewed the legislative history of this phase of the Medicare program, particularly the report of the Senate Committee on Finance, 1965 U.S.Code Cong, and Adm.News, p. 1986, and stated “[t]he Committee thus made clear its intention that responsibility for determining whether a patient required skilled nursing care would rest primarily with the physician.” 339 F.Supp. at 301. Finally, the district court found nothing in the record to indicate any justifiable basis for the decision to change Mrs. Hape’s status from one which required skilled nursing care during the initial seventy-one days to mere custodial care during the last twenty-nine days of her period of coverage. Upon consideration of the record, briefs and oral argument, we agree with the conclusion of the district judge that the Secretary’s decision was not supported by substantial evidence. Affirmed. . Ridgely v. Secretary of Dept. of Health, Ed. & Welf, 345 F.Supp. 983 (D.Md.1972). . 42 U.S.C. § 1395d(a) (2) provides for payments for extended care services up to 100 days during any “spell of illness.” . Custodial care is excluded from coverage under 42 U.S.C. § 1395y(a)(9), but the term is not defined in the Act. Sowell v. Richardson, 319 F.Supp. 689 (D.S.C. 1970) interpreted custodial care as any treatment which need not be provided in an institutional setting by trained and skilled professional personnel. . Act of Oct. 30, 1972, Pub.L.No.92-603, Title II § 2990(a), 86 Stat. 1464. . Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389 at 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971).