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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

The BANKING AND TRUST COMPANY, Plaintiff-Appellant, v. John B. CONNALLY, Secretary of the Treasury of the United States, and United States of America, et al., Defendants-Appellees. No. 72-1820. United States Court of Appeals, Sixth Circuit. Argued April 3, 1973. Decided May 1, 1973. John S. McLellan, Kingsport, Tenn., for plaintiff-appellant. Jean A. Staudt, Dept. of Justice, Washington, D. C., for defendants-appellees; Harlington Wood, Jr., Asst. Atty. Gen., John L. Bowers, Jr., U. S. Atty., Walter H. Fleischer, Thomas J. Press, Dept. of Justice, Washington, D. C., on brief. Before EDWARDS, CELEBREZZE and LIVELY, Circuit Judges. PER CURIAM. Plaintiff bank in this action sought recoupment of money in the sum of $5,054 which was set off from the funds of plaintiff bank on the instruction of defendants while the funds were in the hands of the Federal Reserve Bank of Atlanta, Georgia. By this means the United States Government made itself whole for the loss to it resulting from plaintiff bank’s having cashed six stolen Series E United States Savings Bonds for a Mr. Monroe, a professional forger who presented himself as a Mr. Kreiss, the owner of the bonds, having in his possession a forged driver’s license, Social Security card, and credit cards in the name of said Kreiss. The facts before the District Judge indicated that Mr. Monroe was a complete stranger to the bank personnel, that the bonds had a New Jersey mailing address, and that he presented a driver’s license with a Pennsylvania address. The bank officers did not seek to corroborate Mr. Monroe’s statements as to his intention to purchase a coin collection in Elizabethton, Tennessee, nor did the bank officers seek corroboration of his identification documents. The District Judge found that the bank personnel “simply did not' exert due care in cashing these forged bonds.” 31 U.S.C. § 757c(i) (1970) authorizes the Treasurer of the United States to issue regulations pertaining to the fault or negligence of paying agents such as the plaintiff bank in the cashing of Savings Bonds. In a Treasury Department statement dated December 19, 1947, concerning identification of persons seeking to cash such bonds, and pertaining directly to the employment of motor vehicle operator’s licenses for such purposes, the instruction statement said in part, “In any case of doubt, other acceptable documents should be required for corroborative purposes.” Under the total circumstances of this case, as set out above, and as set out more fully in the District Judge’s opinion filed June 15, 1972, we conclude that the District Judge’s finding of lack of due care is not clearly erroneous. Fed.R.Civ.P. 52(a). The judgment of the District Court is affirmed.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

EXECUTIVE BOARD LOCAL 1302, UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, Plaintiff-Appellee, v. UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, Defendant-Appellant. No. 385, Docket 72-1865. United States Court of Appeals, Second Circuit. Submitted Jan. 22,1973. Decided April 16, 1973. Norman Zolot, Hamden, Conn., for defendant-appellant. Matthew Shafner, O’Brien, Shafner & Garvey, Groton, Conn., for plaintiff-appellee. Before MOORE, HAYS and OAKES, Circuit Judges. HAYS, Circuit Judge: This is an appeal from a judgment of the United States District Court for the District of Connecticut, 339 F.Supp. 613, granting an injunction prohibiting the defendant International Union, its general executive board, its officers and representatives from interfering with or otherwise restricting the plaintiff Local in the legitimate conduct of its affairs and, particularly, from interfering with the plaintiff Local’s filing a petition for disaffiliation and a petition for a separate certification with the National Labor Relations Board. The appellant contends that the imposition of trusteeship for the purpose of preventing the Local from petitioning the Board for disaffiliation and separate certification is among the “legitimate objects” of a labor organization within the meaning of Section 302 of the Labor Management Reporting and Disclosure Act, 29 U.S.C. § 462 (1964). We agree with this contention of the appellant and reverse the judgment of the District Court. Local 1302 is composed of about 400 carpenters all of whom are employed by the Electric Boat Division of General Dynamics in Groton, Connecticut. Local 1302 is one of eleven separate unions represented by the Metal Trades Council of New London County in collective bargaining with the Electric Boat Division. The Metal Trades Council has been certified by the National Labor Relations Board since 1945 as the bargaining representative for the eleven unions and has for over twenty-five years negotiated collective agreements Covering the Electric Boat Division’s approximately 8000 employees. In August 1967 Local 1302 voted to disaffiliate from the Metal Trades Council and seek separate certification in order to deal directly with the employer in behalf of the 400 carpenters rather than to continue to bargain through the Council representing all 8000 employees. The International ordered Local 1302 to refrain from filing for separate certification. Refusing to obey this order, the Local filed the petition for separate certification. The International thereupon, after holding a hearing on the matter, imposed a trusteeship and appointed a trustee. The trustee withdrew the Local’s petition for separate certification. The trusteeship was withdrawn by the International after a new contract was agreed upon by the Metal Trades Council and the employer. This contract expired in June 1972. The International has indicated that it will again impose a trusteeship should Local 1302 file a new petition for disaffiliation with the Board. The sole question presented on this appeal is whether the imposition of the trusteeship is permissible under Section 302 of the Labor Management Reporting and Disclosure Act, 29 U.S.C. § 462 (1964). Section 302 of the Act provides : “Trusteeships shall be established and administered by a labor organization over a subordinate body only in accordance with the constitution and bylaws of the organization which has assumed trusteeship over the subordinate body and for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures or otherwise carrying out the legitimate objects of such labor organization.” It is clear from Section 302 that there are two conditions for the valid imposition of a trusteeship: the International must comply with its own constitution in establishing and administering the trusteeship and the trusteeship must be imposed for one of the purposes enumerated in the Section. See United Bro. of Carpenters & Joiners v. Brown, 343 F.2d 872, 882 (10th Cir. 1965). There is no contention in the instant case that the International did not comply with its constitution in imposing the trusteeship. Therefore the only question at issue is whether the purpose for which the trusteeship was imposed was one of those enumerated in Section 302. It is our view that the trusteeship was imposed for the purpose of “carrying out the legitimate objects of such labor organization.” The Senate Report on Section 302 said: “[trusteeships] are among the most effective devices which responsible international officers have to ensure order within their organization. In general, they have been widely used to prevent corruption, mismanagement of union funds, violation of collective bargaining agreements, . . . .; in short, to preserve the integrity and stability of the organization itself.” 1959 U.S.Code Cong. & Admin.News p. 2333. Here the trusteeship was imposed in order “to preserve the integrity and stability of the organization.” The Metal Trades Council from which the Local seeks to disaffiliate is chartered by the Metal Trades Department of the American Federation of Labor and the Congress of Industrial Organizations. The governing body of the Council is the executive board which is comprised of delegates representing each of the affiliated local unions. The object of the Council, and of the Metal Trades Department generally, is to facilitate the adjustment of trade disputes along- practical lines and thus to encourage harmonious relations between employees and employers. The constitution of the Metal Trades Department provides : “Where there exist three (3) or more local unions of affiliated trades in any locality, they shall, when called upon by their respective national and international organizations, form a local metal trades council of this Department, which bodies shall be governed in accordance with the laws of this Department.” In connection with imposing the trusteeship on the Local, the committee of the International which heard the charges found that collective bargaining by the Metal Trades Council on behalf of Local 1302 and the ten other affiliated local unions had resulted over many years in stable bargaining relationships under which the members of the affiliated locals had received substantial benefits. The committee also found that the filing by the Local of the petition for disaffiliation had resulted in delaying the then current collective negotiations. The committee concluded that the Local’s disaffiliation would have a detrimental effect on the process of collective bargaining and would constitute a failure to carry out its duties to its members in a responsible manner. It appears to us that the Committee’s conclusions were clearly justified. Not only would separate bargaining negotiations delay the execution of a collective agreement, but disaffiliation by the Local might well lead to attempts at disaffiliation by other locals of the eleven unions representing the 8000 employees of the Electric Boat Division, and the undermining of the Council’s position as bargaining representative. Such a development would almost inevitably result in instability of the whole bargaining relationship with the eleven locals vying to outdo one another and resorting to strikes to accomplish their aim. It was to avoid just such results that the Metal Trades Department was organized. Thus the trusteeship was imposed to prevent the destruction of the existing bargaining unit and to preserve the status of the certified bargaining representative. The International action was designed, in our opinion, to carry out “the legitimate objects” of the organization within the meaning of Section 302. The case of National Association of Letter Carriers v. Sombrotto, 449 F.2d 915 (2d Cir. 1971), lends support to the proposition that Section 302 allows the imposition of a trusteeship in a situation in which the Local seeks to petition for a new bargaining unit. In Sombrotto, Branch 36, a National Association of Letter Carriers local, attempted to petition for a new local area bargaining unit. To prevent this action, as well as a threatened strike, the national union imposed a trusteeship. This court upheld the imposition of the trusteeship, saying: “The union is entitled to protect itself, and actions taken toward this end appear to us directed toward a ‘legitimate object’ within the meaning of 29 U.S.C. § 462.” It is significant that Congress in enacting Section 302 emphasized the limited role of the judiciary in reviewing the imposition of trusteeships under the Section. To protect against judicial intervention, Congress established a presumption of validity by which courts are not to overturn a trusteeship for the first 18 months of its existence “upon a question of fact or degree or of judgment as to the necessity for imposing it” but only “if dishonesty or bad faith is proved.” Given this background, judicial intervention should be undertaken with only the greatest care and caution. It should be noted that our decision does not mean that the members of the local are being locked in to the union. If the members of Local 1302 wish to repudiate the United Brotherhood of Carpenters and Joiners and start a new union through which to bargain, they are free to do so. However, this is not what they have attempted to do. Instead they have attempted to stay within the International while at the same time withdrawing from the Metal Trades Section and from the established bargaining system. As Judge Friendly noted in a slightly different context, “Although § 1203(c) [similar to section 9 of the LMRA] protects, the right of employees or labor organizations to seek a new bargaining representative when they have become dissatisfied with the existing one it does not necessarily mean that in exercising that right while still maintaining membership in the national union, they are immune from discipline by the parent body as provided in the union constitution.” Sombrotto, supra, at 923. The judgment of the District Court is reversed and the permanent injunction prohibiting the trusteeship dissolved. OAKES, Circuit Judge (dissenting): I dissent. There is no doubt that the International may under its constitution impose a trusteeship to assure the performance of a collective bargaining agreement, but here the agreement has expired. The question is, then, whether it may impose such a trusteeship — or as it has been called a “labor receivership” — solely to prevent the local from petitioning the Board for disaffiliation or separate certification, on the basis that keeping the local as a part of the International is one of “the legitimate objects” of the International, within § 302 of LMRDA, 29 U.S.C. § 462. In National Association of Letter Carriers v. Sombrotto, 449 F.2d 915 (2d Cir. 1971), a majority of the panel indicated that a “legitimate object” of the International, enforceable by a trusteeship, was to prevent a local from seeking to disaffiliate “while still maintaining membership in the national union . . . . ” 449 F.2d at 923. But Sombrotto involved a trusteeship imposed to prevent a local’s strike that would have been in violation of a collective bargaining agreement. Its dictum that a trusteeship could be imposed to prevent a local’s disaffiliation was, as the majority of the Sombrotto panel itself seemed to recognize, 449 F.2d at 923, unnecessary to the disposition of that appeal and should be limited to the particular circumstances — the preservation of a collective bargaining agreement —involved therein. Here, however, the majority holds in effect that a local may be “locked in” and forever unable to disaffiliate even absent a collective bargaining agreement. Not every objective of an International in setting up a trusteeship is necessarily legitimate. In interpreting the broad language of § 302 due weight must be given to other sections of the LMRDA, United Brotherhood of Carpenters and Joiners v. Brown, 343 F.2d 872, 882 (10th Cir. 1965) (trusteeship imposed because a local would not affiliate with a District Council or raise its dues is not imposed for a proper purpose within § 302), as well as other aspects of national labor policy., As to the latter, extension of Sombrotto to this case would infringe on the local’s specifically guaranteed right as a craft unit to bargain separately. Labor Relations Act § 9(a) & (b)(2), 29 U.S. C. §§ 159(a) & (b)(2). See Mallinckrodt Chemical Works, 162 NLRB 387 (1966). The majority takes the position that the members of the local could go out and start a new local, one which, would not be affiliated with the International. This is, of course, true, but under § 9(b)(2), a craft unit may seek representation separate from the larger unit previously designated by the Board as the appropriate unit for collective bargaining. If doing so amounts to a violation of the International constitution or by-laws, this may be grounds for expulsion of the local from the International. But to permit a trusteeship to be imposed is effectively to prevent the craft unit from enforcing its statutory right to sever. Furthermore, permitting the trusteeship to be imposed here defeats one of the principal purposes of other provisions of the LMRDA, protecting the democratic process within union organizations. 29 U.S.C. § 401; United Brotherhood of Carpenters and Joiners v. Brown, supra, 343 F.2d at 882-883. A reading of the relevant legislative history, II Legislative History of the Labor-Management Reporting and Disclosure Act 1202 et seq. (1959), establishes that, despite Senator Ervin’s reference to it as “specific,” id. at 1204, the “legitimate objects” clause of § 302 of the Act is plainly ambiguous. I would limit it to a reference that a trusteeship can be imposed only for objects consistent with other legally established rights of a local and thus not extend it to allow the International to keep the local here “locked in.” . Paragraph D, Section 6 of the International’s constitution provides: “The United Brotherhood of Carpenters and Joiners of America shall have the right to establish supervision over and to conduct the affairs of any subordinate body (including the removal of any or all officers of such subordinate body) to correct financial irregularities or to assure the performance of collective bargaining agreements and the responsibility of the subordinate body as a bargaining agent or to protect the interests and rights of the members or whenever the affairs of the subordinate body are conducted in such a manner as to be detrimental to the welfare of the members and to the best interests of the United Brotherhood, subject, however, to the provisions of Paragraph J of Section 10.” Paragraph J of Section 10 provides: “Whenever it appears to the satisfaction of the General President that any Local Union or member thereof, or any District, State or Provincial Council is acting contrary to the welfare of the United Brotherhood of Carpenters and Joiners of America, or that supervision should be established over the conduct of the affairs of any subordinate body as set forth in Section 6-D, he may appoint a committee to hold a hearing, after due notice to such subordinate body or member. Upon completion of the hearing, the committee shall report its findings and recommendations to the General Executive Board and to the member or subordinate body involved. The General Executive Board is empowered to take such action as is necessary and proper for the welfare of the United Brotherhood of Carpenters and Joiners of Ameria, subject, however to the right of appeal to the next General Convention.” . The Sombrotto decision involved Section 1203(c) of the Postal Reorganization Act, 39 U.S.C. 1203(c), instead of Section 9 of the Labor Management Relations Act; however, the sections are similar in purpose and the analysis presented is applicable to the instant case.

f2d_477/html/0616-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Daniel ROSS et al., Appellants, v. Dr. Stanley BLACKLEDGE et al., Appellees. No. 73-1314. United States Court of Appeals, Fourth Circuit. Submitted Jan. 30, 1973. Decided March 27, 1973. Daniel Ross, pro se. Jacob L. Safron, Asst. Atty. Gen., for appellees. Before SOBELOFF, Senior Circuit Judge, and WINTER and CRAVEN, Circuit Judges. SOBELOFF, Senior Circuit Judge: Six North Carolina prisoners, who are members of the Islamic, a Black Muslim faith, seek injunctive relief pursuant to 42 U:S.C. §§ 1983 and 1985 to compel prison authorities to provide them with the pork-free diet required by the tenets of their religious faith. They allege that they cannot obtain a balanced diet by eating only non-pork items because of the frequency with which pork appears as the only meat on the prison menu and because most vegetables are cooked in or seasoned with pork. And, adducing the failure of prison officials to provide them with a “special diet on the same basis as the correctional prisoners who are on ulcer diet,” the prisoners proffer an equal protection argument as an additional basis for the relief sought. Initially, the District Court denied a motion to dismiss, directing instead that the State demonstrate that an adequate diet could be maintained by eating only non-pork items and that the State respond to the equal protection allegation. After the State’s submission of a supplemental memorandum and supporting affidavits, the District Court granted a motion to dismiss without ever holding an evidentiary hearing. In its Memorandum Opinion and Order, the District Court said that “[t]he affidavits and menus clearly show that the plaintiffs can receive more than adequate nourishment from other foods and that the defendants are providing ample pork free meals and foods” (emphasis added). The court also found that the “record clearly shows” that a rational basis existed for providing a separate diet for prisoners with ulcers but not for Black Muslims. We conclude that the District Court erred in granting summary dismissal and therefore vacate its judgment and remand the case for an evidentiary hearing. In Abernathy v. Cunningham, 393 F.2d 775, 778 (4 Cir. 1968), this court held that where the District Court found after “an extensive evidentiary hearing” (p. 777) that Muslim prisoners could obtain a balanced ration while avoiding pork and food prepared with pork, the state was not required to provide a separate pork-free diet. Subsequently, in a case involving the attempt of Muslims to secure First Amendment rights, we held that the state may only restrict a prisoner’s desire to practice religion “upon a convincing showing that paramount state interests so require. * * * The burden is not met merely by the filing of an answer which controverts the allegations of the complaint or which relies solely on our previous decision in Abernathy v. Cunningham, supra.Brown v. Peyton, 437 F.2d 1228, 1231 (4 Cir. 1971). The value of a full evidentiary hearing is exemplified by Barnett v. Rodgers, 133 U.S.App.D.C. 296, 410 F.2d 995 (1969), which dealt with Black Muslim demands for at least one full-course, pork-free diet per day. The District Court initially dismissed the petitions without a hearing. The dismissal was vacated upon appeal, counsel appointed and an extensive evidentiary hearing held that enabled the District Court to develop a full and complete record. Only examination and cross-examination of witnesses brought out the prevalence of pork in the prison diet. See Abernathy v. Cunningham, supra, 393 F.2d at 780 (Craven, J., concurring and dissenting). Witnesses for the Muslims testified that pork was used to prepare such non-pork main dishes as hamburgers, meat loaf, chili con carne, and gravies served on non-pork meats. While prison authorities contested this testimony, they admitted that pork was present in macaroni and cheese, hot dogs, cold cuts and luncheon meats. The chief steward also admitted that pork was used to season about half of the green vegetables served and many side dishes. Barnett v. Rodgers, supra, 410 F.2d at 998. Nonetheless, the District Court once again dismissed the suit, apparently on the theory that a balanced diet was provided to prisoners generally and if a particular inmate wished to practice his religion, he could refrain from eating those things he found objectionable. The issue of whether an inadequate diet would result from this exercise of “freedom” was not faced. The Court of Appeals for the District of Columbia Circuit ruled that the District Court had erred in its dismissal of petitioners’ complaints, reasoning that the request for one full-course, pork-free diet daily was “essentially a plea for a modest degree of official deference to their religious obligation.” The onus was to be placed upon the state to demonstrate that the impediments placed in the way of appellants’ observance of their dietary creed had compelling justification, such as budgetary constraints or administrative difficulties. The District Court was also to inquire into whether governmental purposes responsible for the impediments could be feasibly “pursued by means that [less] broadly stifle fundamental personal liberties.” Barnett v. Rodgers, supra at 1003. While the decisions of prison officials are entitled to considerable weight, they are subject to judicial reviews “to insure that the constitutional rights of prisoners are protected.” Brown v. Peyton, supra, 437 F.2d at 1232. The state’s only justification for refusing to provide some form of alternative diet is that adequate nourishment could be obtained from non-pork items. This is a conclusory assertion made in an affidavit by W. H. Swart, the official of the North Carolina Department of Correction responsible for preparing and distributing menus. The plaintiffs have not been given an opportunity to submit their own evidence or controvert the Swart affidavit. Nor is it clear to what extent non-pork meat, vegetables and other side dishes are prepared with pork seasonings and derivatives. As a matter of fact, an analysis of the master menus for the months of March, April, May and June, 1972, which were submitted by the defendants, reveals the following with respect to the number of meals at which some form of pork was served as the exclusive meat: Month (1972) Total Number of Meals Where Meat Served Number of Pork Meats Non-Pork Meats Percent of Meals with Pork Meats March 89 43 46 48.3% April 77 38 39 49.3% May 90 43 47 46.6% June 92 44 48 47.8% Whether a prisoner could obtain adequate nourishment from the prison ration while refraining from eating all pork-tainted food is a question of medical and scientific fact. Adequacy of diet is not simply measured by determining whether the stomach is so full that pangs of hunger do not persist. There are special nutritional elements found in meats; and when the amount of meat in a diet is reduced, substitutes providing parallel nourishment can be found, but only in certain foods. Adequacy of diet must be viewed qualitatively as well as quantitatively. Since almost half of the meals served at the prison contain pork as the exclusive meat, and many others may contain meat, vegetables or eggs seasoned with pork products, the Department of Correction has not clearly shown that an adequate ration is available to Muslim prisoners wishing to observe their religious creed, in either a quantitative or qualitative sense. The appellants also challenge their treatment vis-á-vis ulcer patients, who are provided a menu which specifically provides that “No pork meats are served” and are also permitted to eat items on the regular menu. The State responds that a failure to provide an ulcer diet to an inmate for whom the diet has been prescribed could conceivably give rise to a claim of denial of adequate medical treatment. This is undoubtedly true and certainly justifies treating ulcer patients differently from the general population with respect to diet. It does not, however, explain the refusal to accord the same privileges to the plaintiffs, who also make a constitutional argument in support of their demands. The prison authorities apparently have arbitrarily chosen to acknowledge the medical claim and to resist the religious claim, but have failed to make any showing that their refusal to provide some minimal form of pork-free diet is based on any “paramount state interest.” The State admits that at one time it provided a pork-free diet for Black Muslims. This policy was discontinued, not because of any “paramount state interest,” but because allegedly the prisoners did not eat the food provided. Appellants are entitled to an evidentiary hearing on the prevalence of pork in the prison diet, on whether there is adequate nourishment in the pork-free foods currently available to the prisoners and on whether the state can establish an adequate interest for not providing some satisfactory form of alternative diet. Since the District Court erred in its summary dismissal of this case, leave to appeal in forma pauperis is granted, the judgment of the District Court is vacated, and the case is remanded for further proceedings consistent with this opinion. CRAVEN, J., concurs in the result only. . The figures for pork-meat meals do not reflect those meals where pork was served accompanied by a non-pork meat. These are classified as non-pork meals. Composition meats which generally include pork are treated as pork meat in the chart. Breakfast meals are included. It is not known whether eggs are cooked in pork derivatives or with pork meats.

f2d_477/html/0620-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Donna AUSTIN, Petitioner-Appellant, v. Don R. ERICKSON, Warden of the South Dakota Penitentiary, Respondent-Appellee. No. 72-1385. United States Court of Appeals, Eighth Circuit. Submitted Nov. 17, 1972. Decided April 20, 1973. Marvin K. Bailin, Sioux Falls, S. D., for appellant. William J. Srstka, Jr., Asst. Atty. Gen., Pierre, S. D., for appellee. Before VAN OOSTERHOUT, Senior Circuit Judge, LAY, Circuit Judge and DURFEE, Senior Judge of the United States Court of Claims. Senior Judge James R. Durfee of the United States Court of Claims is sitting by designation. DURFEE, Senior Judge. Donna Jean Austin, appellant, petitioned the United States District Court for the District of South Dakota for a writ of habeas corpus, pursuant to 28 U.S.C. §§ 2241 and 2254, against the Warden of the South Dakota State Penitentiary, Don R. Erickson, appellee. Austin had exhausted her remedies upon affirmance of denial of her application for a state writ of habeas corpus by the Supreme Court of South Dakota, Judge Wollman dissenting. Austin v. Erickson, S.D., 195 N.W.2d 395 (1972). Petitioner-appellant claimed her confinement was imposed upon a conviction and life sentence which were the result of a trial in which she was deprived of the effective assistance of counsel as guaranteed by the Sixth and Fourteenth Amendments to the Constitution. The Federal District Court denied the petition in a memorandum opinion reported at 343 F.Supp. 22 (D.S.D.1972), and ordered the Writ of Habeas Corpus quashed on June 12, 1972. Donna Austin was remanded to the custody of appellee. This appeal from denial of the petition for writ of habeas corpus and order quashing the writ followed. We reverse. The central issue is whether there was a conflict of interest arising from representation of Austin and a co-defendant by one attorney, which deprived her of effective assistance of counsel. Donna Austin and her companion, Ronnie Goode, were separately charged by the State of South Dakota with first degree manslaughter in killing William L. Doty, appellant’s two and one-half' year old son by a former marriage. One lawyer was appointed to represent both Austin and Goode as indigents. Their preliminary hearings were combined but they were separately tried. Austin was tried first and convicted by a jury of first degree manslaughter for aiding and abetting Goode in killing her infant son. Appellant’s conviction was affirmed on appeal. State v. Austin, 84 S.D. 405, 172 N.W.2d 284 (1969). Goode was separately tried and also convicted by a jury of first degree manslaughter. On appeal his conviction was reversed by the South Dakota Supreme Court on the grounds that the appointment of the same counsel to represent both defendants created a conflict of interest which denied Goode his right to effective assistance of counsel. State v. Goode, 84 S.D. 369, 171 N.W.2d 733 (1969). The attorney for both defendants had called Goode as a witness at the Austin trial. Thereafter, * * * Although advised by the court of his constitutional right to refuse to testify to any matter which might tend to incriminate him, Goode testified fully and in detail about his relationship with Mrs. Austin and his care and handling of the deceased child. He related how he took care of the child while Mrs. Austin worked. He admitted using physical force as disciplinary measures. On the day of the child’s death he admitted shaking the child shortly after which the boy was rushed to the hospital and died. His testimony could serve but one purpose — to deflect the glare of guilt away from Mrs. Austin. 171 N.W.2d at 735. Goode’s testimony was later read into the record in Goode’s trial and fulfilled the State’s burden of proof against Goode as to certain elements of the crime. Appellant’s principal contention is that there was a divergence of interests between Austin and Goode arising from the nature of the theory of the State against each defendant. The State’s theory was that Goode had directly committed the fatal act resulting in death of the child while the State’s theory against Austin was that she aided and abetted Goode in failing to prevent Goode from administering the fatal beating. Petitioner-appellant argues that the separate theories gave rise- to separate potential defenses. Whereas Goode could only defend on grounds of excusable homicide, Austin could rely upon a reciprocal defense of excusable homicide as well as a conflicting defense antagonistic to Goode, of lack of responsibility. To assert and prevail upon the second defense, petitioner-appellant would have had to introduce evidence in support of her defense which could tend to east the blame on Goode alone. Appellant argues in part that counsel did make a marginal effort to pursue the defense of lack of responsibility on her behalf but that, beleagured by his divided loyalty and the actual conflict of interests, the attorney could not develop the defense properly through vigorous and full examination of Goode and in argument. The leading case in this area is Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942). In that case the Supreme Court enshrined the principle: * * * [T]he ‘assistance of counsel’ guaranteed by the Sixth Amendment contemplates that such assistance be untrammeled and unimpaired by a court order requiring that one lawyer shall simultaneously represent conflicting interests. If the right to the assistance of counsel means less than this, a valued constitutional safeguard is substantially impaired. 315 U.S. at 70, 62 S.Ct. at 465. No one seriously disputed the Sixth Amendment applies equally to the individual states through the due process clause of the Fourteenth Amendment. The principal announced in Glasser also binds the states. In Glasser the co-defendants Glasser and Kretske shared the same attorney. The possibility of the inconsistent interests of Glasser and Kretske was brought home to the trial court, but the court created joint counsel anyway. Glasser, supra, at 71, 62 S.Ct. 457. The Supreme Court noted: Upon the trial judge rests the duty of seeing that the trial is conducted with solicitude for the essential rights of the accused. Speaking of the obligation of the trial court to preserve the right to jury trial for an accused, Mr. Justice Sutherland said that such duty ‘is not to be discharged as a matter of rote, but with sound and advised discretion, with an eye to avoid unreasonable or undue departure from that mode of trial or from any of the essential elements thereof, and with caution increasing in degree as the offense dealt with increase in gravity.’ Patton v. United States, 281 U.S. 276, 312-313, 50 S.Ct. 253, 263, 74 L.Ed. 854, 70 A.L.R. 263. The trial court should protect the right of an accused to have the assistance of counsel. [Emphasis added]. 315 U.S. at 71, 62 S.Ct. at 465. The Supreme Court later added: Of equal importance with the duty of the court to see that an accused has the assistance of counsel is its duty to refrain from embarrassing counsel in the defense of an accused by insisting, or indeed even suggesting, that counsel undertake to concurrently represent interests which might diverge from those of his first client, when the possibility of the divergence is brought home to the court. 315 U.S. 60, 76, 62 S.Ct. 457, 467, 86 L.Ed. 680. In Glasser, supra, 72-75, 62 S.Ct. 457, the possibility of divergent interests manifested itself in actual conflict of interest during the course of the trial in that it inhibited counsel’s conduct of Glasser’s defense. The Court in Glasser concluded: Our examination of the record leads to the conclusion that Stewart’s (counsel’s) representation of Glasser was not as effective as it might have been if the appointment had not been made. 315 U.S. at 76, 62 S.Ct. at 468. Where the conflict of interest appears from the outset, it is clear error for the Court to force the same counsel on both accused. See Larry Buffalo Chief v. State of South Dakota, 425 F.2d 271 (8th Cir. 1970). And it is the rule in this circuit that no reversible error is committed by a District Court in assigning a single attorney to represent two or more co-defendants in a pending criminal action, absent evidence of an actual conflict of interest or evidence pointing to a substantial possibility of a conflict of interest between the co-defendants. United States v. Williams, 429 F.2d 158, 161 (8th Cir. 1970), cert. denied, 400 U.S. 947, 91 S.Ct. 255, 27 L.Ed.2d 253. In the instant case appellant Austin has not argued that at the time of appointment of joint counsel the trial judge failed to conduct a “careful inquiry and satisfy himself that no conflict of interest is likely to result and that the parties have no valid objection.” Williams, supra, at 161. Rather appellant argues that the trial judges “should have been aware” of the conflict when he made the appointment of counsel, essentially because appellant had available to her a potential, though unarticulated, defense intrinsically antagonistic to Goode’s interests. We do not think that appellant made a sufficient showing to establish an actual conflict arising from the outset or a “substantial possibility” of a conflict of interest at the outset which was brought home to the court. Whether the trial court should have foreseen the conflict and appointed separate counsel is not then the pivotal issue in this case. In this respect this case is similar to Sawyer v. Brough, 358 F.2d 70, 74 (4th Cir. 1966). What is determinative is that the possible divergence of interests of Austin and Goode developed into a clear and actual conflict of interest in counsel’s representation of Goode and Austin during the course of Austin’s trial limiting and inhibiting the attorney’s conduct of Austin’s defense. The conflict of interest was most evident when Goode took the stand at Austin’s trial on her behalf. Before Goode testified, the court advised him of his privilege against self-incrimination and specifically stated that it would permit counsel to prompt Goode to claim that privilege. Upon this direct examination, Goode admitted hitting the Doty child, and counsel moved to strike the statement, “as it might tend to incriminate this defendant in a later charge against him.” The court denied the motion and counsel stated: “That’s all right. I’m making the motion. Of course, I am trying to defend this defendant, as well. All right. Now, you understand, Ron, you don’t need to say anything, but you can, if you wish, say everything. But you understand that you are supposed to say what Donna did. This charge is against Donna. * * * Go ahead and tell us the whole thing; or tell us what you want to.” 171 N.W.2d at 735. The South Dakota Supreme Court found this same dialogue crucial in establishing a violation of Goode’s Sixth Amendment right to effective counsel. The foregoing exchange also reveals a “struggle to serve two masters,” Glasser, supra, 315 U.S. at 75, 62 S.Ct. 457, which hampered his defense of Austin. Taken altogether, counsel’s gingerly direct examination of Goode was indicative of his “duplicitous position where his full talents — as a vigorous advocate having the single aim of acquittal by all means fair and honorable — (were) hobbled or fettered or restrained by commitments to others.” White v. United States, 396 F.2d 822, 824 (5th Cir. 1969), citing Porter v. United States, 298 F.2d 461, 463 (5th Cir. 1962). Appointed counsel’s cautious examination indicated that he could not use his best efforts to force Goode to exonerate Austin for fear of Goode’s implicating himself. The Supreme Court of South Dakota found that Goode’s testimony “could serve but one purpose — to deflect the glare of guilt away from Mrs. Austin.” 171 N.W.2d at 735. At this point it was without a doubt in appellant’s interest to show that she could not prevent Goode from beating the child and that Goode was determined to discipline the child even to the point of injuring him severely. But rather than exploit this clear opportunity to develop fully the defense of lack of responsibility on behalf of Mrs. Austin, counsel failed to do so. Counsel’s failure to undertake such a direct examination “luminates the cross-purposes under which he was laboring.” Glasser, supra, 315 U.S. at 73, 62 S.Ct. at 466. In an analogous case, United States v. Pinc, 452 F.2d 507 (5th Cir. 1971), the unwillingness of a commonly shared attorney to examine fully and directly a .co-defendant whose statements were reasonably assumed to be exculpatory to the benefit of a defendant was held to deny defendant effective assistance of counsel. We do not speculate whether or not the defense of lack of responsibility could have been successfully developed and asserted on .behalf of Mrs. Austin. Whether successful or unsuccessful, the defense was not developed because of counsel’s divided loyalties, and the possible damage to Goode. See Craig v. United States, 217 F.2d 355, 358 (6th Cir. 1954). The right to the “untrammeled and unimpaired” assistance of counsel is breached where a defendant’s counsel simultaneously represents another defendant with conflicting interests. Government of Virgin Islands v. John, 447 F.2d 69, 74 (3rd Cir. 1971). Each defendant does not have to delineate the precise manner in which he or she may have been harmed by the conflict of interest. Sawyer, supra, 358 F.2d at 73. “The right to have the assistance of counsel is too fundamental and absolute to allow courts to indulge in nice calculations as to the amount of prejudice arising from its denial.” Glasser, supra, 315 U.S. at 76, 62 S.Ct. at 467. No prejudice need be shown. Accord: United States v. Gougis, 374 F.2d 758, 761 (7th Cir. 1967); Kaplan v. United States, 375 F.2d 895, 898 (9th Cir. 1967), cert. denied, 389 U.S. 839, 88 S.Ct. 67,19 L.Ed.2d 103. The capstone we think is that, despite the fact that evidence was on the record that Goode alone was responsible for the child’s death, the attorney elected in closing argument to rely solely upon excusable homicide in defense of Austin. Goode directly caused the death; his only defense was excusable homicide. Upon this record, to make Austin’s defense dependent upon, and parasitic to, Goode’s defense is further evidence of the actual conflict of interest. The language the South Dakota Supreme Court chose in State v. Goode, 84 S.D. 369, 171 N.W.2d 733, 736, where it discussed the conflict of interest affecting Goode, is equally applicable to Austin: No attorney should be placed in a position of divided loyalty ‘where he may be required to choose between conflicting duties or to be led to an attempt to reconcile conflicting interests rather than to enforce, to their full extent, the rights of the party whom he should alone represent.’ Commonwealth ex rel. Whitling v. Russell, 406 Pa. 45, 176 A.2d 641. In considering Austin’s application for a writ of habeas corpus, the South Dakota Supreme Court ruled that Austin had not shown a conflict of interest or prejudice to her by the dual representation of herself and Goode by the same attorney. It said: It appears that this Court has decided by its opinion in State v. Austin, supra, and State v. Goode, supra, that in having the defendant Goode testify in her case at a time when both were represented by the same counsel, she was benefited or at least the attempt was made to assist her, by having Goode take the blame. Under these circumstances we cannot find that she has been prejudiced and as to her at least, there was no conflict of interest. 195 N.W.2d at 398. In turn when considering Austin’s petition, the Federal District Court relied on that part of the reasoning in Glasser which held that if one defendant is to rely on the denial of his co-defendant’s constitutional rights for reversal, he must show that denial prejudiced him in some manner. Applying this rule, the District Court said: “Some prejudice must be shown even though the amount of that prejudice need not be shown. No prejudice has been shown by the petitioner.” 343 F.Supp. 22, 24. The District Court additionally founded its denial of the application for the writ upon a finding of no conflict of interests. The reliance of the District Court on the aforementioned part of the holding in Glasser was misplaced. Austin does not rely upon the denial of Goode’s constitutional right to effective counsel for reversal but rather upon denial of her own right to effective assistance of counsel. Once the actual conflict had been established which affected.her own right to counsel’s effective assistance, Austin had met her burden. The Federal District Court further stated: Her chief complaint now is that she and her trial counsel chose the wrong defense. Yet she offered no evidence at the hearing before this court, as was done in Buffalo Chief v. South Dakota, 425 F.2d 271 (8th Cir. 1970), as to why her attorney chose excusable homicide as her defense instead of attempting to lay the blame solely on Goode. As the evidence now stands we can only speculate that that defense was chosen because petitioner thought that was the truth. 343 F.Supp. at 24. The issue in this case is not why a particular defense was chosen and we do not agree that petition-appellant’s chief complaint is that the wrong defense was chosen. This is not simply a case where appellant now criticizes “the defense ‘adopted’ from hindsight.” Duran v. United States, 413 F.2d 596, 599 (9th Cir. 1969). We think there was clear and convincing evidence of an actual conflict, distinguishing this case from Larry Buffalo Chief. The Federal District Court’s finding to the contrary was clearly erroneous. That the attorney relied solely upon excusable homicide in his closing argument on behalf of Austin, giving the appearance of Austin’s conscious selection and reliance upon this defense, is by itself misleading. It must be remembered that in cases involving conflicts of interest, the conflict does not always appear full-blown upon the record since counsel may throughout endeavor to reconcile the conflict. The burden is upon the State to show that Austin made a knowing and intelligent waiver of her right to effective assistance of counsel by selecting, agreeing to, or acquiescing in a singular defense of excusable homicide —or by knowingly, intelligently, and intentionally choosing to be represented by the same attorney. Glasser, supra, 315 U.S. at 71, 62 S.Ct. 457; Larry Buffalo Chief, supra, 425 F.2d at 280; Government of the Virgin Islands, 447 F.2d at 74; Campbell v. United States, 122 U.S.App.D.C. 143, 352 F.2d 359, 360 (1965). The State did not shoulder that burden in this case. Every reasonable presumption against the waiver of fundamental rights is made in order to protect Sixth Amendment rights. Glasser, supra, 315 U.S. at 70, 63 S.Ct. 457. The evidence left the District Court in the position of speculating as to defendant’s waiver of her fundamental right to effective assistance of counsel. It is clear that the court should have assumed, and concluded, that the right was not waived. The right to counsel does not mean the right to successful counsel. Mere errors of judgment on the part of counsel are not sufficient to establish ineffective assistance; nor is it the function of a reviewing court to evaluate the relative efficacy of trial tactics by counsel. We do not deviate from these concepts by our holding. Our examination of the record, however, leads us to the conclusion that counsel’s representation of Austin was not as effective as it might have been if the appointment had not been made. We reverse and remand to the District Court with instructions to grant the writ of habeas corpus subject to the right of the State of South Dakota to retry Austin within a reasonable time. Reversed and remanded. . The integrity of counsel is not in question and nothing we say hereafter relates thereto. Trial counsel is not the same as the counsel who has prosecuted Austin’s petition for writ of habeas corpus. . The cause of death of the infant Doty was determined to be a subdural hematoma sustained by back and forth motion of the head during an act of shaking. 172 N.W.2d at 285. There was no evidence that Austin had shaken the child. “The State apparently does not claim that the conduct of the mother directly caused the death of her son. Its position seems to be that as to the child’s death she was an aider and abettor.” State v. Austin, 172 N.W.2d at 288. The jury at Austin’s trial was instructed as follows: “In the case of a parent, the parent has a duty to protect her child. Because of this, if a parent knows that another person is abusing her child or is inclined to do so and such parent stands passively by and does nothing to protect her child or to prevent another from abusing her child, it being reasonably within her power to do so, such parent is considered as having aided and abetted such other person and thereby becomes a party to such abuse of her child and equally guilty. If, under such circumstances, the child dies as a result of such abuse by another person, the parent is held to be equally responsible for the death of the child.” 172 N.W.2d at 287-288. . Appellant further noted in her brief that in the state court habeas corpus evidentiary hearing at which only she testified, she testified that she was “not informed by the trial court that she was entitled to separate counsel.” This alone does not establish reversible error. It should further be noted that neither appellant nor the State called appellant’s trial attorney as witness at the State or Federal habeas corpus evidentiary' hearings. . We think Judge Wollman in his dissent saw the issue: In one respect it can be said that appellant benefited from Goode’s testimony and thus suffered no prejudice from the conflict, viz., because she was represented by the same attorney who represented Goode she had the benefit of Goode’s testimony, whereas had Goode been represented by separate counsel undoubtedly he would have been explicitly advised by his separate eounsel not to answer any questions concerning his participation in the disciplining of the child. This argument proves too much, however, because it demonstrated that it was in appellant’s interest to point the finger of guilt at Goode, an avenue of attack that should have been unreservedly and vigorously pursued by an attorney who had absolutely no duty to protect Goode’s interest. 195 N.W.2d at 399.

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2024-08-24T03:29:51.129683

UNITED STATES of America, Plaintiff-Appellee, v. Thomas L. THAGGARD, Sr., and Vanzie Beasley, Defendants-Appellants. No. 72-2512. United States Court of Appeals, Fifth Circuit. April 16, 1973. Rehearing and Rehearing En Banc Denied June 8, 1973. J. Paul Lowery, Montgomery, Ala., for Thaggard. Calvin M. Whitesell, Montgomery, Ala., for Beasley. Ira DeMent, U. S. Atty., D. Broward Segrest, David B. Byrne, Jr., Asst. U. S. Attys., Montgomery,o Ala., for plaintiffappellee. Before COLEMAN, MORGAN and RONEY, Circuit Judges. COLEMAN, Circuit Judge: A jury convicted Thomas L. Thaggard, Sr. and Vanzie Beasley of conspiracy wilfully and knowingly to directly and indirectly conduct, finance, manage, supervise, direct, and own all or part of a gambling business in violation of the laws of the State of Alabama, involving five or more persons for more than thirty days, 18 U.S.C. § 1955. Defendants were also convicted, in the same trial, of a conspiracy to obstruct the enforcement of the criminal laws of the State of Alabama pertaining to gambling, 18 U.S.C, § 1511. Upon these verdicts both men were sentenced to three years imprisonment for each offense to run concurrently. Thaggard and Beasley assign fourteen reasons for the reversal of their convictions. The judgment of the District Court is affirmed. In June or July of 1971, Thomas L. Thaggard, Sr. asked one James R. Sadie to become a partner with him and Beasley in a gambling establishment. Thaggard stated, however, that he had heard of a recently enacted federal law against gambling and wanted to check on that law before proceeding further with the enterprise. Prior to his appointment in that capacity the United States Attorney for that District had represented Thaggard in another prosecution, Thaggard v. United States, 5 Cir., 1965, 354 F.2d 735, cert. denied 383 U.S. 958, 86 S.Ct. 1222, 16 L.Ed.2d 1201, so Thaggard went to see his former counsel about the new “federal law”. The United States Attorney told Thaggard that he could not and would not advise him as to the statute but did give him a copy of it and told him to consult some other attorney about the matter. Thaggard did so stating that there would be only three partners or owners involved in the gambling operation. This attorney told Thaggard that he obviously would be in violation of the laws of Alabama but since “less than five persons would be involved, in his opinion there would be no federal violation”. After this conference, Thaggard, Beasley, and Sadie, as the original owners, opened the gambling house in a concrete building in a remote rural area of Crenshaw County, Alabama. From July until December, 1971, the establishment operated four nights a week. Games of dice and blackjack were played; the customers were served drinks and steaks free. The actual operation of the gambling house, however, required more than three individuals. Several other persons were hired to operate the gaming tables, to prepare food, and to guard the automobiles of the patrons while they were inside the building. A busy night would see as many as fifty or sixty persons participating in the gambling. Several local public officials were aware of the gambling but did not interfere with it. Completely read and fairly construed, the record reveals that the defense to the indictments was that the accused knew they were violating the gambling laws of Alabama but, on the advice of counsel, had no intent to violate the federal statutes. In this context the case was tried, the defendants were convicted, and they now appeal. Against this background we evaluate those assignments of error which, in our opinion, merit discussion. 1. Because of pre-trial publicity, the trial court erred in not granting Thaggard’s motions for continuance and a change of venue. Thaggard insists that the publicity he received during the protracted litigation of the bank larceny offense, Thaggard v. United States, supra, which came to an end seven years previously, had rendered him “notorious in the community”. This notoriety, coupled with the publicity given the gambling case, he says, immutably prejudiced his trial. Specifically, he refers to items which ran in the Montgomery Advertiser for the six months immediately preceding his trial. The first article, on December 2, 1971 named the individuals involved in the gambling house and described in detail the operations of the establishment. The next article on May 5, 1972 featured front page pictures of Ray Horn, Drue Lackey, and Thomas Thaggard, Sr. It listed the individuals named in the indictment and quoted from portions of it. On May 10, 1972 a cartoon depicting a sign advertising the gambling establishment as “Cotton’s Place” appeared. The May 12, 1972 issue again named the persons charged in the indictment and stated each count under which the defendants were charged. On June 1, 1972 the paper reported that James Sadie had pleaded guilty to the charges and again named the persons in the indictment. On June 4, 1972 the paper reported the uncovering of a large sports bookmaking operation in the Montgomery area. (There apparently was no connection between this operation and the gambling house.) Several known gamblers, including Thomas L. Thaggard, Sr., were listed as participating in this betting operation. However, no mention was made of the upcoming trial of the defendants involved in the gambling at “Cotton’s Place”. Upon qualifying the jury for cause, the trial judge directed all members of the venire who had read or heard anything of the case to stand for special questions. Each was individually asked if he could render a verdict upon the law and the evidence regardless of what had been heard or read. Only one responded in the negative, and was excused. A second juror was disqualified for relationship to an alleged co-conspirator. The remaining eleven of those who had heard or read of the case responded that their - verdict would not be affected by what they had heard or read. The other nineteen members of the venire had not heard or read anything about the case. Thus, the defense began its peremptory challenges with nineteen individuals who had never heard of the ease and eleven who had heard of it, although with no fixed opinion as a result of what they had heard or read. The appellants were allowed ten peremptory challenges to the trial panel and one challenge as to the alternate juror. The defense exercised only six of their ten peremptory challenges. This hardly creates a picture of one who is empaled upon pre-trial hostility or drowned in a sea of fixed opinions. Whether a change of venue is mandated depends on whether “there exists in the district where the prosecution is pending so great a prejudice against the defendant that he cannot obtain a fair and impartial trial at any place fixed by law for holding court in that district”, Fed.R.Crim.P., Rule 21. A motion for a change of venue is addressed to the discretion of the trial court and in the absence of an abuse of that discretion, the trial- decision will not be overturned on appeal. United States v. Nix, 5 Cir., 1972, 465 F.2d 90. 2. 18 U.S.C. § 1955 is an unconstitutional regulation of intrastate activities and is in violation of the Tenth Amendment to the Constitution. The contention of the appellants in this regard is rejected on the authority of United States v. Harris, 5 Cir., 1972, 460 F.2d 1041. We hold the statute to be constitutional on its face and there was no unconstitutionality in its application. Out-of-state cars were seen in the gambling house parking lot, poker chips from Las Vegas were used, and interstate telephone calls were made from the gambling house. 3. 18 U.S.C. §§ 1955 and 1511 are unconstitutional in that they exempt activities conducted by a charitable or religious organization. “The Constitution does not require things which are different in fact or opinion to be treated in law as though they were the same”, Tigner v. Texas, 310 U.S. 141, 147, 60 S.C. 882, 84 L.Ed. 1124 (1940). The l(tive history of 18 U.S.C. § 1955 ijtes that Congress was concerned wirganized crime, hence Congress hasoscrihed the gambling activities on \ ^ believes organized crime of aierstate character thrives and has ex&j those situations in which organi crime rarely appears. Accordingly,^ was a rational basis for excluding stable and religious organizations a the purview of these statutes. 4. The Government failed propei0 introduce and prove a violation of Alabama law. We reject this argument tuse our examination of the record ials that the specific statutes of the St of Alabama prohibiting the operatic 0f gambling houses were entered as adhibit in the ease. Moreover, the ry was instructed that a violation of *_ bama law must first be found befoia. conviction could be had. There s really no effort to deny or controvert violation of the Alabama gambling lac The argument was that there had be no intent to violate the federal statut From our reading of the record it woul have been impossible for the jury t have been in any way misled on this point. 5. The trial court erroneously instructed the jury on the law as to advice of counsel and specific intent. Appellants contend that the Government was required to prove specific intent to violate federal law, not just specific intent to commit the overt acts. They therefore object to the trial court’s definition of specific intent as stated in the instructions. Their defense is that they sought advice of counsel before entering into the gambling operation. The trial court gave the following instruction on specific intent: “Well, you have heard a lot about intent, and you heard me talk to you a few minutes ago that it was a case of specific intent. The offenses charged in this indictment are offenses which require proof of specific intent on the part of each defendant before a defendant can be convicted, can be found guilty. What does specific intent mean? Specific intent means more than a general intent to commit an act or acts. To establish specific intent, the Government must prove beyond a reasonable doubt, as to a defendant before that defendant can be convicted, that that defendant knowingly did an act which the law forbids purposely intending to violate the law. Such intent may be determined from all of the facts and circumstances surrounding the case as reflected by the evidence. It is not necessary that the Government prove, in order to convict a defendant, that a defendant knew each of the elements involved in the substantive statute or each of the elements involved in the statute that the indictment says the conspiracy was formed to violate in count one. It is sufficient that the conspiracy agreement, if any exists, contemplated the commission of a crime and that the crime contemplated is in fact in law a federal crime. The defendants must have specifically intended to commit each act or each of the acts that make up the offenses charged. As a general rule, it is no defense to a criminal prosecution that a defendant acted in good faith relying on the advice of counsel; however, advice of counsel may be shown where it tends to prove or disprove an intent to violate the law. Advice of counsel is not a defense — is not a defense — where it’s offered to tend to disprove that the defendant or defendants intended to violate the federal law; however, advice of counsel may be shown and considered by you jurors where it tends to disprove the intent to commit one or more of the acts involved. There must be a specific intent to commit each of the acts required in order to convict. The Government is not required to show that there must be a specific intent to violate a federal law but the Government must prove that there was a specific intent to commit each of the acts necessary to prove a violation of the federal law.” The statutes here in question do not condition guilt upon knowledge that a federal law has been violated. It is sufficient that appellants intended to do all of the acts prohibited by the statute and proceeded to do them, Cruz v. United States, 10 Cir., 1939, 106 F.2d 828. Advice of counsel, when given on full disclosure of all the facts and followed in good faith, may be a matter to be considered by the jury in determining the appellants’ guilt, Shushan v. United States, 5 Cir., 1941, 117 F.2d 110, cert. denied 313 U.S. 574, 61 S.Ct. 1085, 85 L.Ed. 1531. But where defendants know that their conduct is violative of state law, their wrongful purpose ab initio, established beyond a reasonable doubt, leaves them in no position to claim that they had no intention of violating a federal statute which, in fact, denounced the unlawful conduct as also constituting a federal crime. Defendants may have misunderstood the full reach of the federal statute but they deliberately took that risk when they set out upon a calculated violation of the laws of Alabama. The instructions gave them all, and possibly more than, they were entitled to receive under the facts of this case. 6. The trial court erred in allowing <¡ue¡tions and answers pertaining to a remark made by Thaggard to witness Ben Allen Grooms. Ben Allen Grooms was employed by the Alabama Bureau of Investigation, a private agency, as a security guard at the gambling establishment. Grooms testified as a witness for the prosecution. During Grooms’ testimony, the prosecutor, referring to an overt act charged in Count II of the indictment, asked if Thaggard had ever stated what it costPerate the Plaee- Grooms an«««voAt when he had expressed a concef)OUt the place being raided, Thag; replied that he need not worry since vas “paying three hundred dollars to open the doors”. Thaggarc}tends that the remark was prejudiced should not have been allowed® disagree. This was one of the ‘t acts charged in the indictment, United States v. McGann, 5 Cir., 1970, 431 F.2d 1104. The statement was admire against all the co-conspirators siiñhe statement of one conspirator main furtherance of a going conspiracy admissible in evidence against a coispirator, United States v. Nall, 5 Cir. 1971, 437 F.2d 1177. 7. 7 trial court erred in not granting Thaggard’s motion for mistrial after the prejudicial comment by the United States Attorney. The United States called as its only ¡buttal witness the United States At>rney who had formerly represented .'haggard but who had not participated n the trial of the instant case because he had been subpoenaed (but not called) as a witness for the defense. This official came to the courtroom from time to time but did not see any substantial portion of the trial. On direct examination Mr. DeMent was asked why he, as United States Attorney, chose not to prosecute certain other participants or conspirators in the illegal operation. On cross-examination one of thfe defense attorneys further inquired into the subject. On redirect the Government asked if there were other reasons or factors involved in choosing not to prosecute those particular defendants. At that point the following testimony occurred: “A All right; as to Sheriff Horn, Sheriff Horn has been the Sheriff of Crenshaw County for over twenty years. He’s been in law enforcement for thirty-four years. He is sixty-three years old and in ill health. He has resigned in disgrace. It would serve, in my judgment, and I might add in your and Mr. Byrne’s judgment, no useful purpose to prosecute and convict a man who has served his state for over twenty years and in law enforcement for over thirty-four years and is sixty-three years old and in ill health. When he comes to you through his lawyers and says, T will resign immediately’, and he has two and a half years remaining on his term and he further says, ‘I will give you a statement to the effect that I will never seek public office again’, and his lawyers represent that he will tell you everything he knows about the conspiracy in Crenshaw County to operate — • MR. STRAITON: We object to that, your honor. THE COURT: Overrule it. “A. To operate a gambling casino and when he says, ‘If you need me, I’ll testify’; we weighed whether we would be better off prosecuting and attempting to convict him or whether we would be better off getting an honest Sheriff in Crenshaw County appointed by the Governor, and I have spoken to Governor Jere Beasley- — ■ MR. LOWERY: We object to that. THE COURT: I sustain it; that is not responsive. MR. LOWERY: We move for a mistrial. THE COURT: That is denied.” Quite obviously, this line of testimony had no business in the trial. Neither side should have been allowed to drag it in. What the United States Attorney did about the prosecution of other defendants or conspirators in this case, and his motives for it, was solely within his discretion, certainly insofar as these or other defendants were concerned, United States v. Cox, 5 Cir., 1965, 342 F.2d 167, cert. denied 381 U.S. 935, 85 S.Ct. 1767, 14 L.Ed.2d 700. Nevertheless, the testimony of the United States Attorney merely stated his reasons for not prosecuting the county sheriff. It contained no remarks directed toward the guilt or innocence of the defendants at the bar. Indeed, Mr. DeMent could have personally known nothing about that, except that he knew of Thaggard’s visit to his office which admittedly took place before the alleged criminal activities began. There is nothing in this skirmish which would justify a reversal. 8. The trial court erred in not granting Thaggard’s motion for mistrial after the prejudicial comment by the Alabama District Attorney. Alabama District Attorney Jesse Oliver Bryan was called as the closing witness for the Government. Bryan’s Judicial District included Crenshaw County. During direct testimony, he related the following telephone conversation with Billy King, County Solicitor of Crenshaw County: “A. On 30 November, I called Billy King in the afternoon and said, ‘Billy, do you know anything about any illegal gambling operations going on up in northern Crenshaw County?’ And Billy precisely said to me— MR. STRAITON: Your honor, we object to this. THE COURT: Overrule it. “A. —‘Job, I know about it’ — Job is my nickname down there — ‘but I swear that I have never taken a penny from them; Ray Horn has.’ And that sent me right up through the ceiling; I didn’t believe Ray Horn would do anything like that. MR. LOWERY: Object to comments by the witness. THE COURT: Sustain it. MR. LOWERY: Move the Court for a mistrial. THE COURT: As to the reaction of the District Attorney as to what County Solicitor King said, it wasn’t responsive to the question, it is excluded. WITNESS: I am sorry; I am sorry. THE COURT: It is excluded.” This evidentiary occurrence provides no peg upon which to hang a reversal. The objection was “to comments by the witness”, the objection was sustained, and the comment was excluded. That ends the matter. 9. The trial court prejudiced the jury when it admonished Thaggard’s attorney. During recross-examination of the United States Attorney the following colloquy occurred between Thaggard’s counsel and the trial court: “MR. LOWERY: Yes sir; your honor, we would move to exclude the testimony of Mr. DeMent as to the reasons stated for his selection of the various parties in this charge; on the grounds that it was highly prejudicial, it invaded the province of the jury as to whether — the guilt or innocence of the parties. “THE COURT: Well, a trial is not a game, Mr. Lowery. The trial is to get the truth of the matter, and you have permeated this trial with questions and statements and testimony that a deal has been made and that some had been chosen and some hadn’t been chosen. Fairness requires that he be allowed to explain it; so your motion is denied. “MR. LOWERY: All right, sir; we move for a mistrial. “THE COURT: That motion is denied.” Relying on the authority of United States v. Coke, 2 Cir., 1964, 339 F.2d 183; Gudger v. United States, 1963, 114 U.S.App.D.C. 263, 314 F.2d 268, United States v. Ah Kee Eng, 2 Cir., 1957, 241 F.2d 157; and United States v. Minuse, 2 Cir., 1940, 114 F.2d 36, Thaggard contends that the trial court’s comment was so prejudicial as to require a reversal. But in each of these eases with the exception of Gudger, the appellate court reversed on the basis of numerous and continuing comments and remarks by the trial judge. And the short per curiam decision in Gudger emphasized that the trial judge’s admonishment of defense counsel’s impugnment of a government witness may have negated counsel’s entire attack on credibility, thus invading the province of the jury. Any prejudice attributable to the court’s solitary comment was cured by his charge to the jury that they were to draw no inferences from any comments he may have made during the trial, Lacaze v. United States, 5 Cir., 1968, 391 F 2d 516. 10. The trial court erred in allowing the Government to question the amount of fee Thaggard’s attorney received. To at least one member of this panel, this is the most questionable aspect of the trial. As already stated, the defense, however poor it may have been, was that Thaggard and Beasley were relying on advice of counsel that their participation in the gambling establishment did not amount to a violation of federal law. In support of this defense, Mr. Straiton, a trial attorney for Thaggard, took the witness stand to verify the advice he had given Thaggard prior to the commencement of activities. After his direct testimony, the following occurred on cross-examination: BY MR. SEGREST (Assistant United States Attorney): “Q. What is — what was your fee for this advice? “A. I think my fee was fifty dollars, Mr. Segrest. “Q. What is you fee. in this case? MR. WHITESELL: We object to that. THE COURT: I sustain it. MR. SEGREST: Your honor, don’t you think that would be admissible on bias, to show his bias in this case and as a witness. MR. LOWERY: We will stipulate we got a fee, your honor; but we object to any discussion of the amount. MR. SEGREST: We think the amount of it, the extent of it, would certainly affect his judgment and integrity as a witness and we would ask for permission to ask him that question. THE COURT: All right; go ahead. “Q. What is your fee in this ease, Mr. Straiton? MR. LOWERY: We object. THE COURT: Overrule it; I will permit it on that theory; I think I would have to. “A. The fee that I received from Mr. Cotton Thaggard for representing — representing him was twenty five hundred dollars. “Q. Now, what is the total fee of your firm; you — you are part of a firm, aren’t you ? “A. Yes, sir. “Q. What— “A. Six thousand dollars. “Q. And is that the total fee that you are to be paid in this case? “A. Sir? “Q. Is that the total extent of the fee you are to be paid in this case? “A. Well, that is the total fee; yes. “Q. How about expenses, now; are you to be paid expenses in addition? “A. Yes, sir.” Cross-examination as to the amount of the fee paid to counsel for services in the case then on trial before the jury should not have been admitted. Attorney Straiton took the stand to verify Thaggard’s request for legal advice. Without objection he. stated that he received a fee for the advice and it was stipulated that the trial attorneys were receiving a fee for their services. The objection was to stating the amount of the fee. The prosecutor stated that he wished to prove the amount as reflecting the possible bias and prejudice (credibility) of the attorney-witness. If the jury wished to consider Straiton’s status as attorney as bearing upon his credibility, that fact had been obvious from the beginning of the trial. That he had been paid a fee had been stipulated. Defendants have a constitutional right to counsel and attorneys are not expected to work free, even for indigents. The Criminal Justice Act provides some remuneration even for court appointed attorneys, although paid by the taxpayers. As we divine it, the real purpose for eliciting this information was to suggest that it took a big-time gambler to pay such a fee, plus the thought that Thaggard really feared a conviction and was willing to pay a “big fee” in the hope of avoiding conviction. We have no doubt that under ordinary circumstances this maneuver was both improper and prejudicial and would warrant a reversal. Nevertheless, upon mature reflection and cool analysis we are left with an abiding conviction that the guilt of the defendants in this case was so irrefutably evident that even in an errorless trial an acquittal would have been an incredible event. Under the jurisprudence applicable to errors which are harmless beyond a reasonable doubt, we decline to reverse the convictions. We are not unaware of the proposition that allowing prosecutors to escape reversal by the application of the harmless error rule may tempt some to wield any available stick, if the trial court permits it, hoping to get the conviction first and then to take refuge at the altar of harmless error. Prosecutors should try their cases within the rules of evidence and our decision in this case is never to be construed as an invitation to do otherwise. We decide this case on the precept that the ends, of justice do not require a reversal for this lapse; otherwise, one unhesitatingly would be ordered. The remaining points of the fourteen originally raised do not merit discussion. The judgment of the District Court as to both appellants is Affirmed.

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Theodore GOETZ, by his next friend Jane Sanford, Appellant, v. George S. ANSELL, Individually and as President of Board of Education of North Colonie Central School District, et al., Appellees. No. 774, Docket 73-1352. United States Court of Appeals, Second Circuit. Argued March 21, 1973. Decided April 19, 1973. Alan H. Levine, New York City (Eve Cary, New York City, Margrethe Powers, Albany, N. Y., on the brief) for appellant. David W. Morris, Albany, N. Y., for appellees. Before SMITH, FEINBERG and MANSFIELD, Circuit Judges. FEINBERG, Circuit Judge: Plaintiff Theodore Goetz, a senior at Shaker High School in Latham, New York, an honor student and the president of his class, refuses to participate in the Pledge of Allegiance because he believes “that there [isn’t] liberty and justice for all in the United States.” Defendants George S. Ansell, President of the Board of Education of North Colonie Central School District, Charles Szuberla, Superintendent of Schools in that district, the Board of Education of the district, and Arthur E. Walker, principal of Shaker High School, have offered plaintiff the option of either leaving the room or standing silently during the pledge ceremony. But plaintiff •maintains that he has a first amendment right to remain quietly seated, even though if he adheres to that position, he faces suspension from school. This is the basis of his action brought by his next friend Jane Sanford in the United States District Court for the Northern District of New York under 42 U.S.C. § 1983. After a hearing before Chief Judge James T. Foley on plaintiff’s application for a preliminary injunction, the judge dismissed the complaint for failure to exhaust administrative remedies and, alternatively, ruled against plaintiff on the merits. We conclude that both rulings were erroneous. I Judge Foley clearly had in mind that “[a]ny person conceiving himself aggrieved” by the act of a school official may, under N.Y.Educ.Law § 310, McKinney’s Consol.Laws, c. 16, appeal to the New York State Commissioner of Education. The judge also referred in his opinion to a possible appeal to defendant Board of Education. Putting to one side the question whether the doctrine of exhaustion of administrative remedies still applies in a section 1983 suit, invoking it on these facts was clearly unwarranted. The Board of Education had ruled on the precise point only a year earlier in a case involving plaintiff’s older brother; indeed, plaintiff had testified before the Board as a witness in that case. Thus, this remedy was “certainly or probably futile.” Eisen v. Eastman, supra note 1, 421 F.2d at 569. Similarly, the State Commissioner of Education had ruled on the issue in 1970, holding that requiring a student “either to stand silently or to leave the classroom” did not infringe his rights. The Commissioner cited that decision with implicit approval the following year, and thereafter issued guidelines that indicated no subsequent change of heart. Under these circumstances, there was no real remedy to exhaust. II This brings us to the merits of plaintiff’s case. In West Virginia State Board of Education v. Barnette, 319 U. S. 624, 63 S.Ct. 1178, 87 L.Ed. 1628 (1943), the Court made clear, in Mr. Justice Jackson’s memorable words, that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein. Id. at 642, 63 S.Ct. at 1187. It is true that the Court dealt in that case with the compulsion of saluting the flag and reciting the pledge, whereas here plaintiff is given the option of standing silently. But the Court in Barnette was aware that the state might demand other “gestures of acceptance or respect: . a bowed or bared head, a bended knee,” id. at 632, 63 S.Ct. at 1182, and reiterated that the state may not compel students to affirm their loyalty “by word or act.” Id. at 642, 63 S.Ct. 1178. In this case, the act of standing is itself part of the pledge. New York State Regulations so provide; and standing “is no less a gesture of acceptance and respect than is the salute or the utterance of the words of allegiance.” Banks v. Board of Public Instruction, 314 F.Supp. 285, 296 (S.D.Fla.1970) (three-judge court), aff’d mem., 450 F.2d 1103 (5th Cir. 1971). Therefore, the alternative offered plaintiff of standing in silence is an act that cannot be compelled over his deeply held convictions. It can no more be required than the pledge itself. Defendants point out, however, that plaintiff has the option of leaving the classroom; he is not, as in Barnette, excluded from the school. While we agree that the effect upon plaintiff of adhering to his convictions is far less drastic than in Barnette, we do not believe that this disposes of the case. If the state cannot compel participation in the pledge, it cannot punish non-participation. And being required to leave the classroom during the pledge may reasonably be viewed by some as having that effect, however benign defendants’ motives may be. See Abington School District v. Schempp, 374 U.S. 203, 292, 83 S.Ct. 1560, 1608, 10 L.Ed.2d 844 (1963) (Brennan, J., concurring) (“[T]he excluded pupil loses caste with his fellows, and is liable to be regarded with aversion, and subjected to reproach and insult.”). Recognizing the force of Barnette and of Tinker v. Des Moines Independent Community School District, 393 U.S. 503, 89 S.Ct. 733, 21 L.Ed.2d 731 (1969) (upholding right of students to wear black arm band), defendants concede that plaintiff has a protected first amendment right not to participate in the pledge. They argue, however, that the other students also have rights and that Tinker does not protect conduct that materially disrupts classwork or involves substantial disorder or invasion of the rights of others .... Id. at 513, 89 S.Ct. at 740. The argument is sound, but the facts of this case do not justify applying it. There is no evidence here of disruption of classwork or disorder or invasion of the rights of others. The record is just to the contrary: Plaintiff took a poll of his approximately 30 classmates; 25 said that it did not disturb them that plaintiff had remained seated during the pledge earlier in the year and the other five he “could not contact or else they did not see” him. Defendants ask where, if plaintiff prevails, the line is to be drawn. May plaintiff “kneel, lie down, stand on his hands? May he make derisive motions ?” Those situations are not before us, and we doubt that they will occur in the North Colonie Central School District, any more than they have occurred in the New York City school system after Judge Judd’s decision in Frain v. Baron, supra note 4, which wholly accepted plaintiff’s position. Of course, if such disruptive acts should occur, we would have no hesitancy in holding them unprotected. But we do not believe that a silent, non-disruptive expression of belief by sitting down may similarly be prohibited. While we do not share plaintiff’s resistance to pledging allegiance to this nation, his reservations of belief must be protected. In time, perhaps, he will recognize that such protection is sound ground for a firmer trust in his country. Judgment reversed. J. JOSEPH SMITH, Circuit Judge (concurring): I fully concur in the reasoning of my brother Feinberg. However, I do not share in any possible implied doubt that any requirement of exhaustion of administrative remedies in § 1983 cases has survived Wilwording v. Swenson, 404 U.S. 249, 92 S.Ct. 407, 30 L.Ed.2d 418 (1971) (per curiam). . See H. Friendly, Federal Jurisdiction: A General View 100 & n. 111 (1973) (discussing Eisen v. Eastman, 421 F.2d 560, 569 (2d Cir. 1969), cert. denied, 400 U.S. 841, 91 S.Ct., 82, 27 L.Ed.2d 75 (1970)); Russo v. Central School District No. 1, 469 F.2d 623, 628 n. 5 (2d Cir. 1972), cert. denied, 411 U.S. 932, 93 S.Ct. 1899, 36 L.Ed.2d 391 (1973); James v. Board of Education, 461 F.2d 566, 570-571 (2d Cir. 1972), cert. denied, 409 U.S. 1042, 93 S.Ct. 529, 34 L.Ed.2d 491 (1972). But see Carter v. Stanton, 405 U.S. 669, 670-671, 92 S.Ct. 1232, 31 L. Ed.2d 569 (1972) (per curiam); Wilwording v. Swenson, 404 U.S. 249, 251-252, 92 S.Ct. 407, 30 L.Ed.2d 418 (1971) (per curiam). . In re Bielenberg, 9 Ed.Dept.Rep. 196 (1970). . In re Bustin, 10 Ed.Dept.Rep. 168, 169 (1971). . New York State Education Dep’t, Guidelines for Students Rights and Responsibilities 16 (undated pamphlet), which, while citing a recent district court decision upholding the Commissioner’s position, Richards v. Board of Education, 70-C-625 (E.D.N.Y. July 10, 1970), unaccountably makes no reference to a decision of the same court enjoining enforcement of this very rule in New York City schools. Frain v. Baron, 307 F.Supp. 27 (E.D.N.Y.1969). . This probably explains why defendants do not press the exhaustion argument on appeal. . “In giving the pledge to the flag, the procedure is to render the pledge by standing with the right hand over the heart.” 8 CRRNY § 108.5(b). (Emphasis added.) . The decision of the three-judge court in Banks was appealed to the Supreme Court, which vacated and remanded “so that a fresh decree may be entered from which a timely appeal may be taken to the United States Court of Appeals . . . . ” 401 U.S. 988, 91 S.Ct. 1223, 28 L.Ed.2d 526 (1971). The single judge then entered an order adopting the findings of fact and conclusions of law of the three-judge court concerning the first amendment issue. This order was then affirmed by the circuit court, as indicated in the text. . Appellees’ Brief, at 8. . Contrary to defendants’ suggestion, this court’s decision in Russo v. Central School District No. 1, supra note 1, does not represent a rejection of the holding in Frain v. Baron, supra note 4, and is in no sense contrary to the result that we reach here.

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Captain Robert S. COLSON, Jr., Appellant, v. Major General BRADLEY and Melvin Laird, Appellees. No. 72-1537. United States Court of Appeals, Eighth Circuit. Submitted Feb. 15, 1973. Decided April 25, 1973. Francis L. Ruppert, Clayton, Mo., for appellant. Wendell K. Smith, Asst. U. S. Atty., Kansas City, Mo., for appellees. Before LAY and BRIGHT, Circuit Judges, and NICHOL, District Judge. Sitting by designation. LAY, Circuit Judge. On March 20, 1972, while serving as a captain in the United States Army, the petitioner, Robert S. Colson, Jr., filed in the District Court for the Western District of Missouri a petition to enjoin his pending discharge from the service on April 6, 1972, and for mandamus relief. The relief sought by petitioner was a review of his Article 138 complaint, 10 U. S.C. § 938, for correction of a low efficiency report and also an award of readjustment pay upon his discharge, 10 U. S.C. § 687(a). He further sought for medical reasons to enjoin respondents from discharging him. The district court found that Colson was being discharged by the Department of the Army Active Duty Board (hereinafter DAAD Board) for reasons other than any medical infirmity or the low efficiency rating given by his superior officer, Lieutenant Colonel Zenz. Thus, extraordinary relief by mandamus was refused. On this appeal; petitioner attacks the denial of the writ of mandamus based on the Army’s failure to process his Article 138 complaint and its refusal to award readjustment pay. We reverse and order the issuance of the writ of mandamus. Petitioner entered active duty in the Army on June 13, 1967. After five years of service Captain Colson would have been eligible for readjustment pay upon his discharge, in this case allegedly $10,670.00. At the time of his original discharge date, April 6, 1972, he had served almost four years and ten months in the service, some sixty-eight days less than five years. We need not reach this issue relating to petitioner’s readjustment pay since the issuance of a writ of mandamus requiring the processing of petitioner’s Article 138 complaint will necessitate Captain Colson’s reinstatement in the armed forces until such time that full consideration of .his entire Army record can be again surveyed for purposes of proper discharge. After distinguished service in Vietnam, Captain Colson was rotated to Fort Leonard Wood, Missouri, in February of 1971 where he served as a Training Officer at the Army Engineers Training Corps. Unknown to the Army, Colson began to suffer from narcolepsy in the late months of his military service. He alleges because of his illness his abilities to perform his military duties began to deteriorate. His superior officer, Lieutenant Colonel Zenz, not knowing of petitioner’s illness, assessed his performance as complacent and ineffective and gave him an extremely low efficiency rating. Narcolepsy is admittedly a disease of difficult diagnosis. It is a neurological illness characterized by sleep paralysis, loss of muscle tone and hallucinations. It can, however, be medically controlled. Army regulations recognize the disease of narcolepsy and require that no personnel can be discharged prior to the time that the disease is medicinally controlled. Army Reg. 40-501. It is admitted that it was not until approximately May 11, 1972, that Colson’s illness was under medical control. Captain Colson was given his low efficiency rating on September 9, 1971. He sought redress in November of 1971 under Article 138 and Army Regulation 27-14 which require the officer exercising general court-martial jurisdiction over petitioner’s commanding officer to investigate and review the facts underlying the complaint. Colson claimed that his efficiency record was inaccurate and also that it should be reviewed in light of the subsequent diagnosis of narcolepsy. Colson’s superior officer, Major General Bradley, refused to investigate and review the report because he concurred in its recommendation of dismissal and felt he did not have jurisdiction over the matter. This was clearly erroneous. General Bradley, as the officer who exercised general court-martial jurisdiction over Colonel Zenz, the officer against whom the complaint was made, at the time of the incidents giving rise to the complaint and at the time of the filing of the complaint, clearly had jurisdiction. Under the regulations General Bradley had the duty to investigate into the complaint in light of Captain Colson’s claim regarding the inaccuracy of the report and the effect of his unknown illness. Mandamus, of course, is the appropriate remedy against members of the armed forces who fail to follow the service’s own regulations. See Harmon v. Brucker, 355 U.S. 579, 78 S.Ct. 433, 2 L.Ed.2d 503 (1958); Konn v. Laird, 460 F.2d 1318, 1319-1320 (7 Cir. 1972). We turn then to the district court’s refusal to issue the writ on the ground that Captain Colson had already been recommended for discharge on grounds independent of the low efficiency record. The district court based its conclusion on two affidavits received into evidence over strenuous objection. The affidavits were from a personnel officer and a recorder of the DAAD Board who related that Colson’s discharge was recommended as early as September, 1971, and that it was processed without knowledge of the low efficiency report made by his immediate superior. Assuming these affidavits constituted competent evidence at trial, which they clearly did not, it is difficult to reconcile that Colson was being processed for discharge at a time when it is admitted his narcolepsy was not under medical control. This clearly was invalid under the Army’s regulations. See Army Reg. 40-501. Furthermore, the affidavits leave some doubt whether his efficiency rating was not in fact considered in some formal or informal way by the Board, if not by the Board’s investigators. It may be true that a vast organization such as the United States Army may not on occasion know what in fact both its right and left hands are doing; however, the law deems it legally bound to have sufficient knowledge of all of its own records so as not to prejudice the individual rights of its service personnel. Thus, any consideration of Colson’s discharge while he was still suffering from narcolepsy which was not medically controlled must be vacated from his records. Moreover, we cannot assume that the ultimate discharge was done in disregard of Captain Colson’s entire service record including his low efficiency rating. We find that mandamus relief to afford proper redress to Captain Colson under Article 138 should have been given. The issue was not shown to be moot. Unfortunately, the preliminary injunction was dissolved and the Army was allowed to discharge Colson. Although only a member of the armed forces is entitled to redress under Article 138, petitioner’s rights cannot be denied on lack of standing since it was the Army’s error which led to his present nonmilitary status. Colson’s discharge should be vacated as of the date of its issuance, and he should be restored to the status he enjoyed at the time he filed his complaint; the commanding officer having jurisdiction of his complaint is ordered to review and investigate his claims, and the DAAD Board is required to stay his discharge until such time that petitioner’s entire service record is before it. Judgment reversed and remanded with directions for the district court to issue the writ of mandamus against respondents in accordance with this opinion. . Article 138, 10 U.S.C. § 938, provides: “Any member of the armed forces who believes himself wronged by his commanding officer, and who, upon due application to that commanding officer, is refused redress, may complain to any superior commissioned officer, who shall forward the complaint to the officer exercising general court-martial jurisdiction over the officer against whom it is made. The officer exercising general court-martial jurisdiction shall examine into the complaint and talce proper measures for redressing the wrong complained of-, and he shall, as soon as possible, send to the Secretary concerned a true statement of that complaint, with the proceedings had thereon.” (Our emphasis.) . For medical reasons, Colson was probably not eligible for discharge until approximately May 11, 1972. He was in fact discharged on June 30, 1972, following the dissolution of the trial court’s preliminary injunction. . Petitioner served as a combat helicopter pilot from January to December of 1970. From this service he was awarded the Army Commendation Medal, the Air Medal nine times and the Bronze Star. . For the text of Article 138, 10 U.S.C. § 938, see note 1 supra. Army Regulation 27-14 reads in part: “9. Action by general court-martial convening mithority. Upon receipt of the complaint, the officer exercising general court-martial jurisdiction over the respondent may: “a. If such action has not been taken by an intermediate commander, grant the redress requested, including restoration of rights, or if he lacks jurisdiction to grant such redress, forward the complaint to the jurisdiction which has authority to grant such redress, or “b. Delay consideration of the complaint in accordance with paragraph 3b, or “c. Conduct an information inquiry into the complaint or direct an officer of his command senior to the respondent to do so on his behalf, or “d. Order an investigation in accordance with AR 15-0 with respect to the alleged wrong. Upon completion of his inquiry into the complaint and action thereon (approval or denial of the requested redress), the officer exercising general court-martial jurisdiction will forward the file in accordance with the procedures outlined in paragraph 10. . ." . Jurisdiction is defined in Army Regulation 27-14: “6. Jurisdiction. Jurisdiction to examine into complaints lies with the commander or his successor commander who exercised general court-martial jurisdiction over the respondent at the time of the incident giving rise to the complaint. In the event of the respondent’s transfer to another general court-martial jurisdiction, the action on the complaint may also be transferred if investigation or redress will be facilitated thereby. Intermediate commanders receiving complaints will transmit the complaint and accompanying papers without delay to the appropriate general court-martial convening authority. They may add pertinent material to the file or grant the redress requested and so note in the transmittal to the appropriate general court-martial convening authority.” . The affidavits were not admissible as competent evidence. Botli were hearsay. Neither affiant was available for xiurposes of cross-examination. . In fact, a letter from the Department of Army Active Duty Board received by petitioner on December 23, 1971, declared: “[A]ll factors were considered, including your efficiency ratings, comments on your efficiency rei>orts, schooling, commendations, and types and varieties of assignments.”

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Donald E. POWERS, Plaintiff, Appellant, v. BETHLEHEM STEEL CORPORATION, Defendant, Appellee, v. McKIE LIGHTER CO., INC., Defendant, Appellee. Donald E. POWERS, Plaintiff, Appellant, v. McKIE LIGHTER CO., INC., Defendant, Appellee. Nos. 72-1197, 72-1198. United States Court of Appeals, First Circuit. Heard March 7, 1973. Decided April 9, 1973. Rehearings Denied May 10, Aug. 23, 1973. Michael B. Latti, Boston, Mass., with whom Robert S. Wolfe, and Kaplan, Lat-ti & Flannery, Boston, Mass., were on brief, for plaintiff-appellant. Leo F. Glynn, Boston, Mass., for defendant-appellee, McKie Lighter Co., Inc. Charles E. Colson, Boston, Mass., with whom Cargill, Masterman & Cahill, Boston, Mass., was on brief, for defendantappellee, Bethlehem Steel Corp. Before COFFIN, Chief Judge, ALDRICH and CAMPBELL, Circuit Judges. LEVIN H. CAMPBELL, Circuit Judge. Appellant Powers, a pile driver employed by McKie Lighter Co., suffered a serious eye injury as he stood on a MeKie-owned raft next to Pier 3 of the Bethlehem shipyard in Boston. McKie was under contract with Bethlehem Steel Corporation, the owner of the pier, to repair the pilings underneath. Powers, who received compensation for the injury under the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U. S.C. § 901 et seq., commenced separate actions in the district court against McKie, claiming damages under the Jones Act, 46 U.S.C. § 688, and damages and maintenance and cure under general maritime law; and against Bethlehem, under diversity jurisdiction, claiming damages for negligence. The jury returned substantial verdicts against both defendants, jointly and severally. Powers appeals from the district court’s entry of judgments notwithstanding the verdicts in favor of both defendants, D. C., 343 F.Supp. 17. Standing under the pier on a raft or “float” owned by McKie, Powers and other workmen would first clean the piles by chipping and sandblasting, and then place a form around them into which concrete would be poured. The raft was about twenty-five feet long and five feet wide. Without deck or railing, it was made of 12 by 12 timbers, bonded together. There were rings for lines at its four corners. The men would descend by ladder to the raft, which when not in use lay tied to the pier, lower to the raft sandblasting equipment, water pumps, and forms to be placed around the pilings, and move the raft under the pier to the piles by poling or pulling on lines attached to the pier. They would tie the raft to a larger raft on opposite sides of a row of piles, and span the rafts with planks, so that they could move between and work around the piles. Lines containing water, air, steam and electricity for cleaning, sandblasting and lighting were led from the pier by the men on the raft to where they were working. The pier was thirty to forty feet wide. The raft’s only movement was from the pier front to the piles underneath or from one row of piles to another. Even when so moving it was normally attached by at least one line to the pier. It had earlier been towed by a workboat to Pier 3 from Pier 2 and had also been towed through Boston harbor to other jobs. The lighting for the work area, supplied by Bethlehem, consisted of drop lines with a male plug at one end, plugged into a fuse box, and a socket at the other with a bulb in it. The line would be slung over the side of the pier, and taken under the pier by a workman. Some but not all of the bulbs had reflectors. None had protective covering around them. The bulbs had popped frequently while the men worked, sometimes when Bethlehem supervising employees were present. As late - as the week of the accident, a bulb had popped in their presence. Powers had twice complained to the Bethlehem job supervisor, recommending that the bulbs be surrounded with a steel or wire cage, with a piece of plexiglass enclosure. There is no evidence of what response Powers received, if any. The accident happened before daylight, as Powers, standing on the raft, then attached to the pier, was preparing to move it about twenty feet to piles under the pier. The light cable, supplied by a Bethlehem employee to a McKie employee, lay hanging over the side of the pier, the bulb about ten to thirteen feet above Powers' eye level. The bulb was unprotected. When Powers looked up toward the light, the bulb popped, sending pieces of glass into his eye. This case is one more taking us literally to the water’s edge, having to do with the circumstances under which a harbor-worker may become entitled to a seaman’s remedies. See Victory Carriers, Inc. v. Law, 404 U.S. 202, 92 S.Ct. 418, 30 L.Ed.2d 383 (1971). Recovery under the Jones Act or under the general maritime law for unseaworthiness requires affiliation with a “vessel” — either as a crew member or as one injured aboard doing seaman’s work. Swanson v. Marra Brothers, Inc., 328 U.S. 1, 4, 7, 66 S.Ct. 869, 90 L.Ed. 1045 (1946); Seas Shipping Co., Inc. v. Sieracki, 328 U.S. 85, 99, 66 S.Ct. 872, 90 L. Ed. 1099 (1946). We believe the raft upon which Powers was injured was not a vessel. What is a vessel, like who is a crew member, is “except in rare cases”, a jury question. Offshore Company v. Robison, 266 F.2d 769, 780 (5th Cir. 1959). Nevertheless, the broad parameters of definition must be established if the terms are to have content. If what emerges from facts and inferences taken most favorably to the plaintiff cannot be a vessel, the jury may not make it one. See Thibodeaux v. J. Ray McDermott & Co., 276 F.2d 42, 46 (5th Cir. 1960); Hill v. Diamond, 311 F.2d 789, 792-793 (4th Cir. 1962); Texas Company v. Savoie, 240 F.2d 674, 675 (5th Cir. 1957); rehearing denied, 242 F.2d 667 (5th Cir. 1957); cert. denied, 355 U.S. 840, 78 S.Ct. 49, 2 L.Ed.2d 51 (1957). We agree with the 5th Circuit in Cook v. Belden Concrete Products, Inc., 472 F.2d 999 (5th Cir. 1973), that a floating construction platform secured to land is not a vessel for purposes either of the Jones Act or general maritime law. The non-vessel in Cook was a flat-deck barge, 180 by 54 feet, upon which employees fabricated concrete barges. Equipped with pipes and pumps for flooding or evacuating interior compartments, but without its own propulsion, it was occasionally moved to different positions alongside the dock to pick up materials, would be towed into deeper water to launch completed barges, and had been towed considerable distances. While barges were being fabricated, it was fastened by ropes to the dock. The court said, at 1001: in the instant case the floating construction platform was capable of limited movement and was, in the normal course of its service, towed from point-to-point in the navigable waters. . . . The permanence of fixation, however, is not the criterion which governs the maritime status of floating dry docks and similar structures. As the Supreme Court pointed out in The Robert W. Parsons [191 U.S. 17, 30, 24 S.Ct. 8, 48 L.Ed. 73 (1903)] the “determinative factors upon the question of jurisdiction [are] the purpose for which the craft was constructed and the business in which it is engaged”. . . . Cook, supra, relied on cases emanating from Cope v. Vallette Dry-Dock Company, 119 U.S. 625, 627, 7 S.Ct. 336, 30 L.Ed. 501 (1887), that a floating dry-dock is not a vessel. See Atkins v. Greenville Shipbuilding Corp., 411 F.2d 279, 283 (5th Cir. 1969), cert. denied, 396 U.S. 846, 90 S.Ct. 105, 24 L.Ed.2d 96 (1969). In our own case of DeMartino v. Bethlehem Steel Co., 164 F.2d 177, 179 (1st Cir. 1947), holding that a floating dock was not a vessel, we cited Berton v. Tietjen & Lang Dry Dock Co., 219 F. 763 (D.N.J.1915), in which, at 771, the court said, . A stage designed to be used in connection with painting or repairing the side of a vessel would not become [a vessel] merely because it was capable of floating on the water, though it were used by workmen in thus painting and repairing, while the same was on the water, rising and falling with the tide, or because it could be moved alongside or around such vessel, and while being moved was capable of holding persons and property. . . The purpose and business of the present craft was not the transportation of passengers, cargo, or equipment from place to place across navigable waters. It was tied to the pier or its pilings virtually all of the time. Nearly as long as the pier was wide, it was used to provide a stable platform for men repairing defective piles. While so used, it was lashed with the other raft to piles, planks being placed from raft to raft, and was indistinguishable from a permanent floating dock. See DeMartino v. Bethlehem, supra. Its brief movement consisted of being hauled, poled or pad-died from the pier to the piles underneath, or from pile to pile; even when moving it was usually attached to the pier by one or more lines. Its occasional “voyages” — -when towed by workboat from one pier to another — were no different from the dragging of a section of floating dock from one location to another. See Evansville & Bowling Green Packet Co. v. Chero Cola Bottling Co., supra, 271 U.S. at 20-21, 46 S.Ct. 379; Cook,.supra, 472 F.2d 1001, n. 5. Rafts, of course, may be designed or used “to encounter perils of navigation” (See Evansville v. Chero Cola Co., supra, 271 U.S. at 22, 46 S.Ct. 379); if so they may be vessels. See The Mary, 123 F. 609 (S.D.Ala.1903); United States v. Marthinson, 58 F. 765 (E.D.S.C.1893); Seabrook v. Raft of Railroad Cross-Ties, 40 F. 596 (D.S.C. 1889). But we cannot reasonably describe the present raft as other than a floating stage. Even with men and equipment on it, its movement, amounting mostly to a positioning under the pier incidental to its intended use, was not navigation. The raft, moreover, was unlike special purpose floating structures whose function requires exposure to the hazards of the sea usually at some distance from the shore, such as barges, dredges, drilling platforms and floating derricks. See Offshore Company v. Robison, supra, 266 F.2d at 772 (mobile drilling platform with retractable legs, having a raked bow, navigation lights, bitts, anchors, bilge pumps, cranes and life rafts, located at the time of the accident three miles offshore); Summerlin v. Massman Const. Co. et al., 199 F.2d 715, 716 (4th Cir. 1952) (derrick anchored in a river); Gahagan Const. Corporation v. Armao, 165 F.2d 301, 305 (1st Cir. 1948) (dredge on which crew slept and ate). Also compare Stafford v. Perini Corporation, 475 F.2d 507 (1st Cir. 1973) (construction barge anchored two miles offshore, assumed to be vessel). These navigable craft, like conventional vessels, retain their status even when berthed for long periods or even when resting upon or attached to the bottom. See Gianfala v. Texas Company, 350 U.S. 879, 76 S.Ct. 141, 100 L.Ed. 775 (1955), reversing, Texas Company v. Gianfala, 222 F.2d 382 (5th Cir. 1955). It may well be that when a craft not designed or generally used as a vessel is in actual navigation — such as when, unattached to land, it is under tow for an appreciable distance over navigable water — it will temporarily acquire a vessel’s status. See United States v. Moran Towing & Transportation Co., 374 F.2d 656 (4th Cir. 1967), Cook, supra. However, even were the jury on conflicting evidence to have concluded that Powers’ injury occurred while the raft was in process of being hauled under the pier, we do not consider such movement to be navigation. Attached by a line to the pier, the raft remained a work platform while being so maneuvered into position, a distance of about twenty feet. We sustain judgment for McKie. We next consider whether appellant may be allowed to recover against Bethlehem. We do not agree with him that Bethlehem’s negligence is to be determined under general maritime law. See Kermarec v. Compagnie General, 358 U.S. 625, 628, 79 S.Ct. 406, 3 L.Ed.2d 550 (1959); Carlisle Packing Co. v. Sandanger, 259 U.S. 255, 259, 42 S.Ct. 475, 66 L.Ed. 927 (1922). Maritime law applies only where the wrong occurring on or over navigable waters “bear[s] a significant relationship to traditional maritime activity.” Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 268, 93 S.Ct. 493, 504, 34 L.Ed.2d 454 (1972). It would be incongruous to hold that the required relationship existed here, in the face of our conclusion that the raft was not a vessel, but, being a floating work platform, was, in effect, an extension of the pier, itself an extension of the land. See Victory Carriers, Inc. v. Law, supra, 404 U.S. at 206-207, 92 S.Ct. 418. Powers, a landbased piledriver, employed to repair piles from the platform, was injured by a bulb hanging over the pier. We see nothing either in his occupation or in the circumstance of the accident to invoke the law of admiralty, “designed and molded to handle problems of vessels relegated to ply the waterways of the world.” Executive Jet Aviation, Inc. v. City of Cleveland, supra, 409 U.S. at 269, 93 S.Ct. at 505. We thus turn to whether under Massachusetts law the jury could have found that Bethlehem violated a duty owed Powers. A Massachusetts landowner owes to the employees of an independent contractor only the same duty he owes his own employees, “and that duty [is] to disclose hidden defects of which the defendant was aware or of which in the exercise of reasonable care it should have known. Except in cases of hidden defects, the employer owes no duty to alter the conditions where the work is to be done or to make them safe for the employee.” Burr v. Massachusetts Electric Company, 356 Mass. 144, 147, 248 N.E.2d 492, 495 (1969). This rule, now mitigated in virtually all cases (as in Powers’) by comprehensive workmen’s compensation laws, was established in an earlier era when the cost of industrial accidents was but rarely imposed on an employer. Whatever its shortcomings, we are bound by it. The defect in the light bulb was not hidden; Powers had noticed bulbs popping and had in fact complained about the danger to Bethlehem employees. That appellant had not seen the light bulb which exploded is unimportant, given his familiarity with the bulbs’ propensity to pop and their lack of shielding. Appellant’s argument that Bethlehem violated a duty to supply safe equipment must fail also, since recovery would depend, on Powers’ not knowing that the equipment was defective. Cf. Mulchey v. Methodist Religious Society, 125 Mass. 487, 489 (1878); White v. Newborg, 208 Mass. 279, 281, 94 N.E. 269, 270 (1911). See Restatement of Torts 2d § 496A, comment c(3), § 496C. We thus affirm the judgment for Bethlehem against Powers. We find merit in none of the appellant’s remaining contentions, dealing mostly with the exclusion of evidence at trial. The verdict in his favor cured any possible prejudice before the jury. We ourselves have considered and, for purposes of this decision have accepted in its aspect most favorable to appellant, the excluded proof relative to the status of the raft. Other exclusions, such as of certain evidence relative to his alleged crew status, were harmless in view of our conclusion that the raft was not a vessel. Given our disposition of the case, the district court’s unwillingness to allow appellant to amend the complaint could not have been prejudicial. Affirmed. . Sometimes, men on the pier would hold a line to guide the raft under the jner. There was a suggestion in the testimony that at a point when the raft was moving under the pier the man on the pier would drop the line to a man on the raft, but it is clear from the testimony that the raft was unattached to the pier, if at all, for only a matter of minutes. . There is some suggestion in testimony that the raft may actually have commenced its movement under the pier. . We have considered the evidence in the light most favorable to appellant, in-eluding evidence made as an offer of proof after exclusion by the court, and give him the benefit of every favorable inference. Rainey v. Gay’s Express, Inc., 275 F.2d 450, 451 (1st Cir. 1960). . Somewhat related is the Supreme Court’s classification of a so-called wharf boat as a non-vessel. Evansville & Bowling Green Packet Co. v. Chero Cola Co., 271 U.S. 19, 46 S.Ct. 379, 70 L.Ed. 805 (1926). Secured to the shore, with quarters for men abroad and shore based power and plumbing connections, the huge craft was towed each winter to a more sheltered harbor, and had sometimes been towed considerable distances. The statutory “vessel” definition under consideration in that case — “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water”— was virtually the same as that in 46 U.S. § 801, arguably applicable to Jones Act cases. See 7A Moore’s Federal Practice ¶ .215 [4], The quoted language has never been construed as meaning simply every floating object capable of bearing weight without sinking. See, e. g., Hill v. Diamond, supra, 311 F.2d at 792-793. . Besides the short distance from pier to pilings, and the fact the raft remained attached to the pier, we note that piers and docks have traditionally been “deemed extensions of land”. Victory Carriers v. Law, supra, 404 U.S. at 206-207, 92 S.Ct. 418. To term movement thereunder of this sort “navigation” would seem as strained as to call the raft a “vessel” or Powers its “crew”. . The district court erred in ruling alternatively that § 905 of the Longshoremen’s and Harbor Workers’ Act, 33 U.S.C. § 901 et sea., barred Powers’ action against McKie because Powers had collected compensation and had testified in support of his compensation claim. It was settled, at least before amendment in October, 1972, that § 905 did not bar a longshoreman or harbor worker’s action against his employer, who owned the vessel where the injury occurred, despite the worker’s having collected compensation. Reed v. The Yaka, 373 U.S. 410, 83 S.Ct. 1349, 10 L.Ed.2d 448 (1963); Jackson v. Lykes Steamship Co., 386 U.S. 731, 87 S.Ct. 1419, 18 L.Ed.2d 488 (1967); Biggs v. Norfolk Dredging Co., 360 F.2d 360 (4th Cir. 1966). But see Pub.Law 92-576, 86 Stat. 1251, § 18(a) (1972), amending § 905. . See also Barrett v. Foster Grant Co., 450 F.2d 1146 (1st Cir. 1971); DeMartin v. New York, New Haven & H. R.R. Co., 336 Mass. 261, 143 N.E.2d 542 (1957); Hannon v. Hayes-Bickford Lunch System, Inc., 336 Mass. 268, 145 N.E.2d 191 (1957); Gallo v. Leahy, 297 Mass. 265, 8 N.E.2d 782 (1937); Faverau v. Gabele, 262 Mass. 118, 159 N.E. 738 (1928). . Powers’ earlier unheeded requests for shielding indicated that he knew of the likelihood of danger ns well as of the possibility of the bulbs’ popping. Restatement of Agency 2d, § 521, comment b; § 522.

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2024-08-24T03:29:51.129683

UNITED STATES of America, Appellee, v. Leland Laird HOLBY, Appellant. No. 643, Docket 72-2120. United States Court of Appeals, Second Circuit. Argued March 2, 1973. Decided April 18, 1973. Marvin M. Karpatkin, New York City (Barry Satlow, New York Civil Liberties Union, New York City, of counsel), for appellant. George E. Wilson, Asst. U. S. Atty. (Whitney North Seymour, Jr., U. S. Atty. S. D. N. Y., Peter L. Truebner, Asst. U. S. Atty., of counsel), for appellee. Robert H. Turtle and Edmund D. Campbell, Washington, D. C., McNeill Smith, Greensboro, N. C., and James M. Nabrit, III, New York City, for American Bar Association, amicus curiae. Before KAUFMAN and MANSFIELD, Circuit Judges, and BRYAN, District Judge. Of the United States District Court for the Southern District of New York sitting by designation. FREDERICK van PELT BRYAN, District Judge: Leland Laird Holby appeals from a judgment of conviction for knowing, wilful and unlawful refusal to submit to induction in the armed forces of the United States, in violation of 50 U.S.C. App. § 462(a). The judgment was entered in the Southern District of New York, after trial to the Court without a jury. The District Court found that Holby had knowingly failed to exhaust his administrative remedies under the Military Selective Service Act. It held that he was, therefore, barred from asserting his defenses on the merits that the order of induction was invalid because there was no basis in fact for denial of 1-0 classification as a conscientious objector and because no reasons have been given for such denial. The District Court thus did not consider or pass on these defenses. It further held that defendant had no right to legal counsel before his local board and that his induction order was not issued in violation of the order of call regulations. Holby was found guilty as charged. 345 F.Supp. 639 (S.D.N.Y.1972). The facts are not in dispute. Holby registered with the Selective Service on October 11, 1963. He attended Middlebury College and was classified 2-S (full time undergraduate student deferment). In June, 1967, upon his graduation from college, he filed Selective Service Form 150, the special form for conscientious objectors, with extensive supporting material. He presented a strong case for 1-0 classification as a conscientious objector. On July 19, 1967, the local board rejected his conscientious objector application and classified him 1-A. The board gave no reasons for its decision. Thereafter, at Holby’s request, he was granted a personal appearance and he and his parish clergyman appeared, separately, before the local board. Following these interviews, the local board, on September 13, 1967, again refused to classify him as a conscientious objector and continued his 1-A classification. Again, no reasons were given. In the meantime, Holby had appeared for physical examination and was found physically fit for induction. Holby appealed from the decision of his local board and on November 9,1967, by a vote of 2 to 1, the New York State Appeal Board upheld the 1-A classification. It gave no reasons. Thereafter, on appeal to the Presidential Appeal Board, that Board also upheld his 1-A classification without stating any reasons. On April 15, 1968, pursuant to an order to report for induction, Holby appeared at the induction center but refused to submit to induction on the ground of his religious objection to participation in war in any form. The case was then sent to the United States Attorney for the Southern District of New York for prosecution. The United States Attorney declined to prosecute Holby, advising Selective Service System afficials (1) that on the record, there appeared to be no basis in fact for the denial of his 1-0 claim and (2) that no reasons had been given for the denial of 1-0 classification. A request from the Selective Service System urging reconsideration was denied by the United States Attorney for the same reasons given for the initial refusal to prosecute. The New York State Selective Service headquarters then advised Holby’s local board that prosecution had been declined and directed the board to call Holby for a “discretionary” or “courtesy” interview. When Holby received that call, he requested permission .to attend with his counsel and a stenographer or tape recorder so that he could obtain an accurate transcript of the proceedings. The local board refused his request under Selective Service Regulation 32 C.F.R. § 1624.1(b) providing that “no registrant may be represented before the local board by anyone acting as attorney or legal counsel.” Holby then wrote to the board declining to appear because there was nothing he could add to the record and because of its refusal to permit him to appear with counsel and to record the proeeedings when he was under threat of criminal prosecution for his prior refusal to submit to induction. On November 13, 1968 the board refused to reopen his 1-A classification, without stating any reasons. On November 27, 1968 the State Director directed the local board to reopen and reconsider. In March, 1969 the local board again requested Holby to appear for a “discretionary” interview. Holby again declined, on the same grounds. On May 6, 1969 he was advised that he was still classified 1-A. No reasons were given. He was sent the standard form, SSS Form 217, advising him of his right to a personal appearance and to an appeal. Holby did not exercise those rights. He was directed to report for induction on July 9, 1969. He appeared at the induction center but again refused induction on the religious grounds previously asserted. His prosecution and conviction for refusal to submit to induction followed. Holby attacks the judgment of conviction on several grounds. First, he contends that the court below was in error in holding that the exhaustion of administrative remedies doctrine barred him from asserting his defenses on the merits. Second, he urges that the induction order was invalid because (1) there was no basis in fact for the denial of his application for 1-0 classification as. a conscientious objector, and (2) because neither the local board nor the appeals boards gave any reason or explanation for their classification decisions. I The question of when the doctrine of exhaustion of administrative remedies should be applied in criminal cases under the Selective Service Act to bar defenses on the merits is not without difficulty. However, the basic principles have been well established in McKart v. United States, 395 U.S. 185, 89 S.Ct. 1657, 23 L.Ed.2d 194 (1969), where the exhaustion doctrine was held not applicable under the circumstances of that case. As the Court stated in MeKart, [I]t is well to remember that use of the exhaustion doctrine in criminal cases can be exceedingly harsh. The defendant is often stripped of his only defense; he must go to jail without having any judicial review of an assertedly invalid order. This deprivation of judicial review occurs not when the affected person is affirmatively asking for assistance from the courts but when the Government is attempting to impose criminal sanctions on him. Such a result should not be tolerated unless the interests underlying the exhaustion rule clearly outweigh the severe burden imposed upon the registrant if he is denied judicial review. . . .We must ask, then, whether there is in this case a governmental interest compelling enough to outweigh the severe burden placed on petitioner. Even if there is no such compelling interest when petitioner’s case is viewed in isolation, we must also ask whether allowing all similarly situated registrants to bypass administrative appeal procedures would seriously impair the Selective Service System’s ability to perform its functions. 395 U.S. at 197, 89 S.Ct. at 1664 (footnote omitted). “[Djiscrete analysis of the particular default” ascribed to Holby in the case at bar convinces us that the application of exhaustion doctrine here would be exceedingly harsh and that there is no governmental interest compelling enough to justify its application. Moreover, under the circumstances of this case, there is no danger that allowing similarly situated registrants to bypass administrative procedures would seriously impair the ability of the Selective Service System to perform its functions. During the extensive proceedings culminating in Holby’s first refusal to submit to induction on religious grounds, he meticulously complied with the Selective Service rules and regulations and diligently pursued every administrative remedy available to him. He submitted a full and convincing application for 1-0 classification as a conscientious objector, with extensive supporting material including seven letters attesting to his sincerity. He took the required physical examination. When the local board denied his application he applied for and made a personal appearance with his parish clergyman, who testified before the board as to his sincerity. When his application was again denied, Holby successively appealed to the State Appeal Board and, finally, to the Presidential Appeal Board, both of which upheld the local board’s determination. At no point did any of the administrative bodies give any reasons for denial of his application for 1-0 classification and no such reasons appeared from the record. Thus, at this point, he had fully exhausted all his administrative remedies and had been denied any relief. When the Selective Service forwarded Holby’s case for prosecution, the United States Attorney, with ample justification, twice declined to prosecute. Thereafter, the local board invited Holby to appear for so-called “courtesy” or “discretionary” interviews. Holby did not ignore those invitations. He requested the board’s permission to appear with counsel and a stenographer or tape recorder, in view of the already demonstrated threat of criminal prosecution. When the board refused his request, Holby declined to appear on the ground that the record before the board was complete and there was nothing he could add to that record, and on the further ground of the board’s refusal to permit him to appear with counsel and to record the proceedings. When the local board again adhered to the 1-A classification, Holby did not appeal from that determination. As he explained at the trial, he felt he had presented everything he could in support of his 1-0 application and that after the sixth successive denial, any further appeal would be futile. The Government takes the position that Holby’s failure to appear for a “courtesy” or “discretionary” interview or to appeal from the board’s sixth denial of his claim for 1-0 classification— that is to say, to re-exhaust the remedies he had already fully pursued — bars him, under the exhaustion doctrine, from asserting his defenses on the merits. We disagree. When Holby was invited to appear for the courtesy interviews, he had already gone through the entire gamut of administrative remedies with inexplicable lack of success. He had provided the board with thorough documentation of his 1-0 claim and had personally appeared before the board. It is difficult to see what could have been added to that record. All that remained for Holby to do when the board adhered to the 1-A classification was to file a simple statement saying “I appeal”. That would have added nothing on the merits to the already complete administrative record. Under the circumstances here, Holby’s failure to appear at the discretionary interviews and to appeal does not constitute a waiver of his right to contest his classification or furnish a basis for denying him the right to do so. We cannot perceive “a governmental interest compelling enough to outweigh the severe burden” which would be placed on the defendant by the application of the exhaustion doctrine here. Moreover, the result we reach, if applied to similarly situated registrants, could not seriously impair the functioning of the Selective Service System. The number of registrants similarly situated will be miniscule. Holby was fully entitled to a 1-0 classification on the record he had already made before the board. Given the failure of the system to have performed its function properly the first four times it had the chance to do so, the claim that denying it a fifth opportunity constitutes a serious impairment falls of its own weight. “Surely an insubstantial procedural default by a registrant should not shield an invalid order from judicial correction, simply because the interest in time-saving self-correction by the agency is involved.” McGee v. United States, 402 U.S. 479, 484-485, 91 S.Ct. 1565, 1569, 29 L.Ed.2d 47 (1971). Whether the exhaustion doctrine should be applied in a particular case depends on the facts. The facts here fall generally within the ambit of such cases as United States v. Rabe, 466 F.2d 783 (7th Cir. 1972); United States v. Hayden, 445 F.2d 1365, on petition for rehearing, id. at 1378 (9th Cir. 1971); and United States v. Glover, 286 F.2d 84 (8th Cir. 1961), in each of which the court refused to apply the exhaustion doctrine as a bar. The facts in this ease are quite different from those in McGee v. United States, 402 U.S. 479, 91 S.Ct. 1565, 29 L.Ed.2d 47 (1971), on which the Government principally relies. McGee neither sought a personal appearance nor took an administrative appeal after his local board denied his application, for classification as a conscientious objector. He had burned his draft card, announced unequivocally that he would adhere to a policy of non-cooperation with the Selective Service System and consistently did so. There was a deliberate flouting of the administrative process. The Supreme Court, applying the principles announced in McKart, held that McGee’s rejection of all administrative remedies prevented the Selective Service System from having a “full opportunity”, 402 U.S. at 489, 91 S.Ct. 1565, to compile a factual record and to have administrative review of the classification. Accordingly, the court applied the exhaustion doctrine to bar McGee from asserting the defense that there was no basis in fact for denial of his request for 1-0 classification. Holby, in contrast, had provided Selective Service with a full and detailed record, and had availed himself of administrative review at the highest level. This case is also unlike United States v. Alford, 471 F.2d 718 (9th Cir. 1972) and United States v. Maciel, 469 F.2d 718 (9th Cir. 1972), cited by the Government, since, among other factual distinctions, those cases did not involve registrants who had previously fully exhausted their administrative remedies. United States v. Nelson, 6 SSLR 3034, No. 72-2383 (9th Cir. Dec. 21, 1972), also relied upon by the Government, is apparently the only case holding a registrant barred by the exhaustion doctrine for failure to conduct a second appeal on an identical claim. In that case there had been a change in the applicable law between the registrant’s initial exhaustion and subsequent failure to re-exhaust, and there was no intervening refusal to submit to induction. To the extent that Nelson is inconsistent with the views we express here (but see United States v. Goss, No. CR 71-1473, 6 SSLR 3152 (N.D.Cal. March 2, 1973), we decline to follow it. Applying the principles announced in McKart and McGee to the circumstances of this case, we hold there is nothing which would justify the forfeiture of judicial review of Holby’s defenses on the merits because he failed to reexhaust administrative remedies which he had already fully pursued without success. We turn, then, to Holby’s defenses. II The first defense is that the order of induction was invalid because there was no basis in fact for the local board’s rejection of Holby’s claim for 1-O classification. Congress did not choose to subject administrative action under the Selective Service Act to the customary scope of review authorized by other administrative agency statutes. Judicial review of classifications made by a local board is narrowly circumscribed and confined to a determination of whether there is any basis in fact for the classification which the local board gave the registrant. If there is no basis in fact for the classification, the classification and resulting induction order are invalid. 50 U.S.C. App. § 460(b)(3); United States v. Seeger, 380 U.S. 163, 185, 85 S.Ct. 850, 13 L.Ed.2d 733 (1965); Estep v. United States, 327 U.S. 114, 122-123, 66 S.Ct. 423, 90 L.Ed. 567 (1946). Whether or not there is such a basis in fact is a question to be decided by the reviewing court on the administrative record before the board. Cox v. United States, 332 U.S. 442, 68 S.Ct. 115, 92 L.Ed. 59 (1947); United States ex rel. Zelman v. Carpenter, 457 F.2d 621, 622 (2d Cir. 1972); Helwick v. Laird, 438 F.2d 959, 965-966 (5th Cir. 1971). In conscientious objector cases the basis in fact test involves not only the consideration of the objective facts concerning the registrant’s claimed beliefs but also the subjective question of his sincerity in such beliefs. See Witmer v. United States, 348 U.S. 375, 381-382, 75 S.Ct. 392, 99 L.Ed. 428 (1955). Holby’s application (SSS Form 150) spelled out fully and at length his position as a religious pacifist in accordance with well recognized Christian principles and established all the criteria necessary for 1-O classification. The application recited that Holby had had extensive religious training, was a devout and practicing member of the Episcopal Church, and that his rejection of war in any form was based on the Nicene Creed and the doctrine of brotherly love as taught by Christ. He made a full and convincing statement of the rationale of his beliefs. With his application he submitted pamphlets elaborating on his principles and beliefs. He also submitted seven letters from clergymen, relatives and friends conversant with his religious convictions, which attested to his sincerity. Holby’s claim had none of the typical flaws, such as opposition to only some wars, see Gillette v. United States, 401 U.S. 437, 91 S.Ct. 828, 28 L.Ed.2d 168 (1971), untimeliness of his application, see Ehlert v. United States, 402 U.S. 99, 91 S.Ct. 1319, 28 L.Ed.2d 625 (1971), or lack of sincerity, see Witmer v. United States, 348 U.S. 375, 75 S.Ct. 392, 99 L.Ed. 428 (1955). His claim is simple, direct and free from doubt. Nothing in the record of his personal appearance before the local board after its initial rejection of his claim casts the slightest doubt on any of the facts stated in his application or the sincerity of his beliefs. In fact, his parish clergyman, who appeared before the board at the same time, attested to Holby’s sincerity. Holby’s own summary of the appearance before the local board, which the Government does not question, confirms this. The board gave no reasons for any of its successive rejections of his claim and none appear from the record. The only perhaps unusual feature of Holby’s application is his forthright admission, included in his Form 150, that he had been a member of the Reserve Officers Training Corps during his freshman and sophomore years at Middlebury College two years before he made his application for conscientious objector classification. Holby pointed out, however, that at that time he had not yet “chosen to declare myself officially a pacifist”; that the R.O.T.C. program was compulsory for the first two years of college only and was required for graduation; that he had sought to be released from the program but that releases were not permitted by the college administration; that he did not continue with R.O.T.C. after the end of his sophomore year; and that he was among the leaders of a group of students who were successful in persuading the trustees of the college to make R.O. T.C. voluntary instead of compulsory. If the board considered this information as an indication of lack of sincerity on Holby’s part (and there is some indication that it may have), we see no basis in fact for such a conclusion. We hold that, on the record before the board, there was no basis in fact for the local board’s denial of Holby’s 1-0 application, that therefore the order of induction was invalid and that his conviction must fall for that reason. III There is another reason why the conviction cannot be allowed to stand. At the least, Holby’s made out a prima facie case before the board for 1-0 classification, as the Government concedes. On none of the four occasions on which the local board refused Holby’s request for 1-0 classification did the board give any reasons whatsoever for so doing. Prior to the confession of error by the Solicitor General, in Joseph v. United Status, 405 U.S. 1006, 92 S.Ct. 1274, 31 L.Ed.2d 473 (1972), on the basis of which the judgment of conviction was vacated and the cause remanded, there was some doubt in this circuit as to whether, before the 1971 amendment to the Selective Service Act, it was necessary for the local board to give a statement of reasons for denial of an application for reclassification. See United States ex rel. Checkman v. Laird, 469 F.2d 773 (2d Cir. 1972); United States ex rel. Zelman v. Carpenter, 457 F.2d 621, 622 n. 1 (2d Cir. March 27, 1972, decided on the same day as Joseph, supra); United States v. Lenhard, 437 F.2d 936 (2d Cir. 1970); Paszel v. Laird, 426 F.2d 1169 (2d Cir. 1970). But cf., e. g., United States v. Haughton, 413 F.2d 736 (9th Cir. 1969); United States v. Broyles, 423 F.2d 1299 (4th Cir. 1970); Scott v. Commanding Officer, 431 F.2d 1132 (3d Cir. 1970); United States v. Stetter, 445 F.2d 472 (5th Cir. 1971). That doubt has now been resolved. In confessing error in Joseph, the Solicitor General, after citing with approval a series of eases which held that a statement of reasons was required, stated The underlying rationale of these decisions, although variously formulated, is that some statements of reasons for a board’s classification is necessary to “meaningful” review (cf. Gonzales v. United States, 348 U.S. 407, 415, 75 S.Ct. 409, 99 L.Ed. 467) of the administrative determination — both by the State Appeals Boards and by the courts. . . . He conceded that failure to give a statement of reasons invalidated the classification. A statement to the same effect was also made by the Solicitor General in Lenhard v. United States, 405 U.S. 1013, 92 S.Ct. 1296, 31 L.Ed.2d 477 (1972), vacating and remanding 455 F.2d 1406 (2d Cir. 1971) on the basis of the confession of error. In Lenhard, the conviction was reversed by the Court of Appeals for this circuit on remand. 461 F.2d 1268 (2d Cir. 1972). Since Joseph and Lenhard, it is plain that, in selective service cases, the failure of the local board to state reasons for denial of conscientious objector classification where a prima facie case has been made out deprives a registrant of any meaningful review of the administrative determination. See United States v. Rabe, 466 F.2d 783 (7th Cir. 1972); United States v. Orr, 474 F.2d 1365, 1369 & n. 3 (2d Cir. 1973). Such arbitrary action by the local board in this case invalidates the 1-A classification on which the order of induction was based and the conviction must fall for that reason also. The judgment of conviction is reversed and the cause is remanded with directions to dismiss the indictment. . Pursuant to 18 U.S.C. § 3651, Judge Cannella sentenced Holby to imprisonment for two years but suspended all but four months of the sentence. He also imposed an eighteen month term of probation upon Holby to follow his confinement. . Holby also contends that the Selective Service Regulation, 32 C.F.R. § 1624.1 (b), denying him counsel before the local board violates his constitutional rights under the Fifth and Sixth Amendments and was not authorized by Congress. In view of our disposition of the other issues, we do not pass on those questions here. . McGee v. United States, 402 U.S. 479, 485, 91 S.Ct. 1565, 1569, 29 L.Ed.2d 47 (1971). . We see no basis in the record for the finding by the Court below that this was a “studied and obstructionist effort on his [Holby’s] part to prevent the Selective Service System from performing its fact-finding function.” 345 F.Supp. at 642. . See part II, infra. After our opinion was filed, we learned that on petition for rehearing this United States v. Nelson opinion was withdrawn and a new opinion substituted reversing instead of confirming Nelson’s conviction. United States v. Nelson, 476 F.2d 254 (9th Cir. 1973). . Public Law 92-129, 85 Stat. 353, September 28, 1971, provides that in the event of a decision adverse to the claim of a registrant, the local or appeal board making such decision “shall, upon request, furnish to such registrant a brief written statement of the reasons for its decision.” 50 U.S.C.App. § 471a (b)(4). . See also Fein v. Selective Service System, 405 U.S. 365, 377-381, 92 S.Ct. 1062, 31 L.Ed.2d 298 (1972).

f2d_477/html/0657-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America, Plaintiff-Appellee, v. John England MORRIS, Jr., a/k/a Larry Jackson, Defendant-Appellant. No. 72-2224. United States Court of Appeals, Fifth Circuit. April 17, 1973. Rehearing and Rehearing En Banc Denied May 21, 1973, Robert Glass, New Orleans, La., Court-appointed for defendant-appellant. Gerald J. Gallinghouse, U. S. Atty., Robert S. Leake, Asst. U. S. Atty., New Orleans, La., Mervyn Hamburg, U. S. Dept. of Justice, Washington, D. C., for plaintiff-appellee. Before GEWIN, GOLDBERG and DYER, Circuit Judges. GEWIN, Circuit Judge: John England Morris was convicted of possessing a fully automatic rifle that had not been registered to him in the National Firearms Registration and Transfer Record, a violation of 26 U.S. C. §§ 5861(d) and 5871. Morris challenges his conviction on two grounds. He first argues that the evidence against him should have been suppressed because its seizure was incident to an unlawful arrest. His second argument is that as applied to him the registration provisions of the National Firearms Act violate his constitutional privilege against compulsory self-incrimination. We find both of Morris’ claims to be without merit and affirm the judgment of the district court. Early in the morning of November 26, 1970, a bizarre sequence of events unfolded at the Desire Housing Project, a public housing unit owned and operated by the New Orleans Housing Authority. At that time an abscure organization calling itself the National Committee to Combat Fascism (NCCF) was located in the Desire Project at 3315 Desire Parkway, Apartment A. This apartment served not only as the headquarters of NCCF but also as the residence of some, if not all, of its members. The record does not reveal how NCCF’s members came to be in possession of the apartment, but it does disclose that the apartment’s owner, the New Orleans Housing Authority, considered their presence on the premises unlawful. In any event on November 26 at 1:20 a. m. a group of New Orleans police officers wearing disguises arrived in the vicinity of Apartment A. Their purpose was to execute warrants for the arrest of Betty Powell and Godthea Cooper, known to be living in Apartment A, and to remove anyone else found on the premises. While three of the officers positioned themselves so that they could not be observed by the apartment’s inhabitants, three others attired in clerical dress approached the apartment and knocked on the door. Before receiving any response, they heard the sounds of weapons being loaded and a heavy object being moved in front of the door. Someone then peered out at them through a small peephole, and a voice asked, “Who is it?” One of the officers identified himself as “Father Coy” and asked to speak with Godthea Cooper. The door was opened, and the officers were confronted by Cooper and another person later identified as Leon Lewis. Betty Powell was observed standing in the background. A conversation ensued during which the officers pretended to be clergymen eager to assist the apartment’s occupants in arranging bond for friends of theirs who had been arrested on the preceding day. They attempted to induce Cooper and her friends to leave the apartment and accompany them to the police station. After some twelve minutes of fruitless persuasion, another officer disguised as a postman appeared and said that he had a letter for one of the apartment’s occupants. Leon Lewis came forward to examine the letter. At this time two more officers dressed in civilian clothes emerged from their hiding places and advanced toward the apartment. When Lewis noticed these new arrivals, he apparently recognized them as police officers, for he shouted, “Pigs! Watch out” and began trying to slam the door shut. A commotion erupted as one of the officers announced “Police”, another grabbed Cooper, and the rest forced their way into the apartment.. As they entered, they were met by outbursts of gunfire which they returned in kind. The gunfight lasted for about a minute until Betty Powell cried out that she had been hit. The occupants of the apartment were ordered to come out with their hands up and upon doing so were placed under arrest. Appellant Morris was found kneeling on the living room floor with an automatic rifle in his hands. Shots had emanated from the position where Morris was found. He was arrested, and the rifle was seized. An evaluation of the legality of Morris’ arrest and the seizure of his weapon cannot be made without first examining the circumstances which led the police to devise and execute such an elaborate ruse for the arrest of the apartment’s inhabitants. On November 18, 1970 Officer Williams of the Police Department had obtained warrants for the arrest of Betty Powell and Godthea Cooper. In a sworn affidavit Williams stated that: “. . . Betty Powell did . commit the crime of criminal trespass by the unauthorized and intentional taking possession of the structure known as 3315 Desire Parkway, Apartment A, without the consent of the Housing Authority of New Orleans, the owners of said property, by making application for and paying the deposit of $35.00 for the installation of a phone at 3315 Desire Parkway, Apartment A. The phone was installed by South Central Bell on October 29, 1970. These facts were verified by affiant by checking the records of South Central Bell and the affidavit of the illegal unauthorized entry and taking possession of made by the Chairman of the Board of the Housing Authority of New Orleans.’’ (emphasis added) In a second affidavit Williams similarly alleged that Godthea Cooper had committed the crime of criminal trespass by occupying Apartment A without the consent of the New Orleans Housing Authority. He knew this because: “On November 16, 1970 a registered letter was mailed via the U.S. Post Office to the occupant of 3315 Desire Parkway, Apartment A. On November 17, 1970 the letter was received and a receipt was signed by Godthea Cooper, alias Keefie. On November 18, 1970 said receipt was sent to the New Orleans Police Department by the U.S. Post Office. The fact of the illegal possession was verified by an affidavit executed by the Chairman of the Board of the Housing Authority of New Orleans.” On the basis of these two affidavits warrants for the arrest of Powell and Cooper were issued. At the hearing on appellant’s motion to suppress, Williams testified that he never did provide the issuing magistrate with a copy of the Housing Authority’s complaint and that despite his statement in the Powell affidavit to the contrary', he had never actually seen the affidavit or verified its existence. He stated that at the time the warrants were obtained he had known of the affidavit’s existence because he had probably read about it in interoffice correspondence. Williams, however, did not participate in the execution of these two warrants on the morning of November 26. The officers who did execute the warrants did so upon the instructions of Superintendent Giarusso of the Police Department. He instructed them to go to Apartment A in order to arrest Powell and Cooper and remove anyone else found on the premises. Although the arresting officers were not given the arrest warrants, they were told that warrants had been secured. They were never shown the complaint in which the Housing Authority charged the apartment’s occupants with criminal trespass, but they were informed of its existence by the Superintendent of Police and were told that the Police Department had verified the occupancy of the apartment by Powell and Cooper in the manner described in Williams’ affidavits. In addition the officers were shown photographs of the two women they were to arrest. But the information supplied them by Superintendent Giarusso at this preliminary briefing was not the only information concerning Apartment A and its occupants possessed by the officers who forcibly entered it on November 26. On several occasions prior to November 26 some of these same officers had participated in abortive efforts to execute the warrants and clear the apartment of trespassers. They were accompanied by officials from the Housing Authority, the owner of the apartment, who complained that the people living in the apartment were trespassers and who urged the police to remove them. On these visits the police were not disguised, and they attempted to persuade the apartment’s inhabitants to leave peaceably. These prior visits resulted in nothing more than hostile confrontations with the apartment’s occupants who were armed and who obdurately refused to leave. It was because of the hostile reception they were accorded that the police concocted the very unusual scheme, the successful execution of which on November 26, culminated in the arrest of Morris and the seizure of his automatic rifle. The critical question in this appeal is whether the police officers’ entry into Apartment A was lawful, for, if so, the subsequent seizure of the automatic rifle held in plain view by Morris was undisputedly proper. As the Supreme Court noted in Harris v. United States: “It has long been settled that objects falling in the plain view of an officer who has a right to be in the position to have that view are subject to seizure and may be introduced in evidence.” In determining the lawfulness of the officers’ entrance into Apartment A, the validity of the arrest warrants obtained by Williams must first be considered; if valid, they justify the officers’ entrance into the apartment in order to execute them. Questions as to a warrant’s validity ordinarily turn upon whether the affidavit underlying it sets forth facts sufficient to establish probable cause. The statements made in the affidavit are presumed to be true. But at the suppression hearing in this case Officer Williams candidly admitted that a statement made by him in the Powell affidavit was erroneous. Tn that affidavit he swore that he had personally checked the Housing Authority complaint which charged Powell and Cooper with criminal trespass. In fact he had never seen any such affidavit; although unsure, he thought that he had learned of its existence through interoffice memoranda. Thus in his testimony at the suppression hearing Officer Williams inadvertently raised the question of what effect erroneous statements in an affidavit have on the validity of a warrant issued on the basis of that affidavit. We recently considered this question in United States v. Upshaw. In that case a search warrant was issued upon an affidavit which, it was revealed, contained erroneous statements. When purged of its erroneous statements, the affidavit was wholly lacking in facts sufficient to show probable cause. After careful consideration this Court concluded : “Once it came to the attention of the court, from the testimony at the motion to suppress hearing, that evidence had been seized on the basis of statements of facts erroneously made by the affiant which struck at the heart of the affidavit’s showing of probable cause, the court was required to grant the motion.” A contrary rule would leave the warrant requirement embodied in the fourth amendment open to circumvention by overzealous officials willing to make erroneous affidavits in the hope that the resultant search or arrest will yield conclusive proof of criminal conduct. The warrant procedure operates on the assumption that statements in the affidavit presented to the issuing magistrate are at least an accurate representation of what the affiant knows though possibly inadequate to show probable cause. It would quickly deteriorate into a meaningless formality were we to approve searches or arrests based upon misrepresentation or incorrect factual statements. Thus when an affidavit contains inaccurate statements which materially affect its showing of probable cause, any warrant based upon it is rendered invalid. In this case as in Upshaw, the affidavit underlying the warrant for Powell’s arrest contains an erroneous statement. Williams averred that he had personally checked the Housing Authority complaint charging Powell with trespass when in fact he had not. In the absence of this statement, the issuing magistrate had no assurance that such a complaint actually existed. If this critical fact is removed from the Powell affidavit, it contains nothing more than a recitation of entirely innocent acts coupled with the bare assertion that a crime was being committed. Purged of its erroneous statement, it is insufficient to support the issuance of an arrest warrant. Furthermore, Williams’ misstatement in the Powell affidavit casts doubt on the accuracy of his affirmation in the Cooper affidavit that a Housing Authority complaint had been filed against Cooper. In the absence of this affirmation the second affidavit is also deficient. In short the unfounded assertion contained in the Powell affidavit materially affected not only its showing of probable cause but that of the Cooper affidavit as well. The arrest warrants issued on the basis provided by these affidavits are therefore invalid and cannot be used to justify the officers’ entry into Apartment A. However, it does not necessarily follow from the fact that the arrest warrants were defective that the officers’ entrance into the apartment was unlawful. To our knowledge all of the courts that have considered the question have decided that a warrant is not a prerequisite to a lawful arrest. A warrantless arrest is nevertheless valid if the arresting officer has probable cause to believe that the person arrested has committed or is in the act of committing a crime. Therefore in this case the officers’ entrance was lawful in spite of the invalid warrants if at the time they entered they had probable cause to believe that Powell, Cooper, or any of its other occupants had committed or were committing a crime. Although probable cause has been defined in a variety of ways, in essence it means nothing more than a reasonable basis for belief of guilt. Enough evidence to support a conviction is not required. Probable cause to arrest exists if, at the moment an arrest is made, the facts and circumstances within the arresting officers’ knowledge and of which they have reasonably trustworthy information are sufficient to warrant a prudent man in believing that the suspect has committed or is committing an offense. In applying this standard for determining the existence vel non of probable cause, it is wise to heed the sound admonition found in Brinegar v. United States: “These long-prevailing standards seek to safeguard citizens from rash and unreasonable interferences with privacy and from unfounded charges of crime. They also seek to give fair leeway for enforcing the law in the community’s protection. Because many situations which confront officers in the course of executing their duties are more or less ambiguous, room must be allowed for some mistakes on their part. But the mistakes must be those of reasonable men, acting on facts leading sensibly to their conclusions of probability. The rule of probable cause is a practical, nontechnical conception affording the best compromise that has been found for accommodating these often opposing interests. Requiring more would unduly hamper law enforcement. To allow less would be to leave law-abiding citizens at the mercy of the officers’ whim or caprice.” Brinegar instructs us to interpret the probable cause standard in a common sense and realistic fashion, and its teaching has been affirmed time and time again, most recently in Adams v. Williams and United States v. Harris . Reviewing the record compiled in this case with these principles in mind, we are convinced that at the time the arresting officers entered Apartment A they did have probable cause to arrest Powell, Cooper, and its other occupants for criminal trespass. On previous visits to the apartment some of the officers had personally observed Housing Authority officials complain that its occupants were trespassers and request that they be removed. At the briefing they attended on the day preceding the arrests the officers were informed by the Police Superintendent that the Housing Authority had filed an official complaint and that the Police Department had ascertained that Powell and Cooper were definitely living on the premises. When the owner of a dwelling charges its occupants with trespass, it is not unreasonable for prudent police officers at least to suspect that there is some truth in the charges. The actions of the apartment’s occupants strongly tended to confirm the suspicions legitimately aroused by the owner’s complaint. From earlier visits the officers had learned that the apartment’s inhabitants were unwilling to vacate and were likely to resist forcibly any efforts to persuade them to leave. Upon arriving at the apartment and knocking on the door on the morning of the 26th, they heard the sound of weapons being loaded and a heavy object being moved in front of the door. When the door was opened, the occupants, two of whom were Powell and Cooper, appeared to be very suspicious and during the ensuing conversation demonstrated a marked reluctance to leave for whatever reason. When the disguised officers were finally recognized to be policemen, the occupants immediately shouted “Pigs” and attempted to bar the door. Conduct such as this was not what could reasonably be expected from persons legitimately on the premises. To the contrary the armed hostility of the apartment’s occupants, their unwillingness to offer any explanation for their presence, and their resistance to the inquiries of the police all indicated that there was substance to the Housing Authority’s charges. At this point the arresting officers, as prudent men, had probable cause to believe that the persons living in Apartment A were trespassing. Failure to take decisive action would have only postponed the inevitable confrontation. Though somewhat unusual, their entrance into the apartment for the purpose of arresting its occupants was lawful. Upon entering the officers were presented with more than ample cause to arrest Morris and seize the illegal weapon which was in his actual possession. We hold that the district court properly denied his motion to suppress this evidence. Morris’ other contention is that the registration provisions of the National Firearms Act, as applied to him, violate his fifth amendment privilege against compulsory self-incrimination. A citation to the Supreme Court’s decision in United States v. Freed, in which it was determined that the Act did not conflict with the fifth amendment, would ordinarily be sufficient to dispose of this issue. Since Freed, contentions similar to that made by Morris have been considered by this Court on numerous occasions and without exception have been rejected. Morris seeks to avoid the force of these decisions by casting his claim in a somewhat novel form. He does not make the usual argument that had he registered his firearm in compliance with the Act, he would have been required to reveal information that might in the future be acquired and used by state officials to prosecute him for possession of an illegal weapon, in this instance a machine gun. Instead appellant points to the regulations adopted under the Act which require a prospective transferee of a firearm to secure from local law enforcement officials a certificate verifying that the photograph and fingerprints furnished in the registration application are indeed his and that the weapon is intended- for lawful purposes. In order to comply with this requirement the prospective registrant of a machine gun obviously must admit to local officials that he is attempting to possess one. Since Louisiana prohibits the private possession of a machine gun and reads the law of attempt broadly, Morris argues that in Louisiana the prospective, albeit ineffective, registrant of a machine gun is nevertheless forced to reveal information which might be used by the state to prosecute him for attempted possession. Although we entertain serious doubts as to whether Louisiana officials would actually prosecute an unsuccessful registrant of a machine gun for attempted possession of one, we need not consider this question because there is a simpler answer to appellant’s argument. § 5848 of the Firearms Act provides in pertinent part: “No information or evidence obtained from an application . . . shall . be used, directly or indirectly, as evidence against that person in a criminal proceeding with respect to a violation of law occurring prior to or concurrently with the filing of the application . . . ” This provision was written into the Act in order to eliminate any conflict with the fifth amendment and is to be construed accordingly. It means that federal and state officials are barred from using in a prosecution for prior or concurrent offenses any information provided them in an effort to comply with the Act’s registration provisions, regardless of whether the information is obtained from the application form itself or instead is revealed by the applicant in the process of filing an application. Because of this statutory barrier to use, compliance would have left Morris in the same position as if he had never admitted his intention to possess a machine gun. It makes his fear of a state prosecution for attempted possession more imaginary than real. We conclude that Morris’ indictment and conviction under the National Firearms Act did not violate his constitutional privilege against self-incrimination. For the foregoing reasons the judgment of the district court is affirmed. Affirmed. . Morris’ automatic rifle was not the only weapon 'found in the apartment by the officers. After arresting the apartment’s occupants, the officers also seized another rifle, several shotguns and some ammunition. . 390 U.S. 234, 236, 88 S.Ct. 992, 993, 19 L.Ed.2d 1067 (1968). . At this point it is important to emphasize that this ease does not raise the issue of whether a defendant is entitled to a hearing to test the underlying factual validity of the affidavit on the basis of which a warrant has been issued. This issue has yet to be resolved by the Supreme Court though it has occasioned considerable commentary. See, e. g., Kipperman, Inaccurate Search Warrant Affidavits as a Ground for Suppressing Evidence, 84 Harv.L.Rev. 825 (1971). In this case a probable cause hearing was conducted during the course of which testimony inadvertently revealed that the Powell affidavit contained an erroneous statement. . 448 F.2d 1218 (5th Cir. 1971). Accord United States v. Jones, 475 F.2d 723 (5th Cir., 1973). . United States v. Upshaw, 448 F.2d 1218, 1222 (5th Cir. 1971). . We feel compelled to emphasize that there is nothing in the record which indicates that the erroneous statement in Williams’ affidavit was intentionally or wilfully made. Nothing in this opinion is intended to suggest the contrary. . United States v. Wysocki, 457 F.2d 1155 (5th Cir.), cert. denied 409 U.S. 859, 93 S.Ct. 145, 34 L.Ed.2d 105 (1972); United States v. Wilson, 451 F.2d 209 (5th Cir. 1971); Ray v. United States, 412 F.2d 1052 (9th Cir. 1969); United States v. Botsch, 364 F.2d 542 (2d Cir. 1966), and United States v. Hall, 348 F.2d 837 (2d Cir.), cert. denied 382 U.S. 947, 86 S.Ct. 408, 15 L.Ed.2d 355 (1965). Cf. United States v. Rabinowitz, 339 U.S. 56, 60, 70 S.Ct. 430, 94 L.Ed. 653 (1950) and Ker v. California, 374 U.S. 23, 41-42, 83 S.Ct. 1623, 10 L.Ed.2d 726 (1963). . Adams v. Williams, 407 U.S. 143, 92 S.Ct. 1921, 32 L.Ed.2d 612, 618 (1972). . 338 U.S. 160, 176, 69 S.Ct. 1302, 1311, 93 L.Ed. 1879 (1949). . 407 U.S. 143, 92 S.Ct. 1921, 32 L.Ed.2d 612, 618 (1972). . 403 U.S. 573, 582-583, 91 S.Ct. 2075, 29 L.Ed.2d 723 (1971). See United States v. Banks, 465 F.2d 1235 (5th Cir., 1972); United States v. Wysocki, 457 F.2d 1155 (5th Cir. 1972), and United States v. Squella-Avendano, 447 F.2d 575 (5th Cir. 1971). . 401 U.S. 601, 91 S.Ct. 1112, 28 L.Ed.2d 356 (1971). . See, e. g., United States v. Coleman, 441 F.2d 1132 (5th Cir. 1971). Accord United States v. Bowdach, 458 F.2d 951 (5th Cir. 1972), United States v. Mix, 446 F.2d 615 (5th Cir. 1971), United States v. Williams, 446 F.2d 486 (5th Cir. 1971), United States v. Beck, 443 F.2d 1360 (5th Cir. 1971), United States v. Piper, 443 F.2d 371 (5th Cir. 1971), United States v. Miller, 441 F.2d 1147 (5th Cir. 1971), and United States v. Johnson, 441 F.2d 1134 (5th Cir. 1971). . 26 C.F.R. §§ 179.98-179.99. . LSA-R.S. 40:1752. Morris contends that under Louisiana law “machine gun” is defined so as to include the automatic rifle found in his possession. . LSA-R.S. 14:27. . In its brief at pg. 7 the government makes the uneontested assertion that there have been no prosecutions for attempted possession of a machine gun. . 26 U.S.C. § 5848 (Supp.1972). . See S.Rep. No. 1501, 90th Cong., 2d Sess., 26, 42, 48, 52; HR Cong.Rep. No. 1956, 90th Cong., 2d Sess., 35. . See, e. g., United States v. Freed, 401 U.S. 601, 604, 91 S.Ct. 1112, 28 L.Ed.2d 356 (1971) and United States v. Coleman, 441 F.2d 1132, 1133 (5th Cir. 1971).

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Frank KOHNER, Appellant and Cross-Appellee, v. Abraham WECHSLER, Appellee and Cross-Appellant, and Manufacturers Hanover Trust Company, Defendant. Nos. 236, 366, Dockets 72-1721, 72-2062. United States Court of Appeals, Second Circuit. Argued Dec. 18, 1972. Decided April 6, 1973. Sidney B. Silverman, New York City (Silverman & Harnes, New York City, and Lawson F. Bernstein, New York City, of counsel), for appellant and cross-appellee. Nathan Lewin, Washington, D. C. (Miller, Cassidy, Larroea & Lewin, Washington, D. C., of counsel), for appellee and cross-appellant. Before MOORE, MULLIGAN and TIMBERS, Circuit Judges. MOORE, Circuit Judge: Plaintiff, Frank Kohner, brought an action under sections 12(2) and 17(a) of the Securities Act of 1933 and section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 against Abraham Wechsler and Manufacturers Hanover Trust Company, wherein he sought to rescind a purchase agreement pursuant to which he agreed to purchase all of the outstanding shares of the Wecolite Company owned by • Wechsler.- Defendant, Manufacturers Hanover Trust Company, the escrow agent named in an escrow agreement which was a part of the transaction, is not a party to this appeal. Shortly after the action was commenced, plaintiff sought a preliminary injunction to prevent Wechsler from leaving the country and for consolidation of the trial on the merits with the hearing on the injunction. The motion for consolidation was initially denied by Judge Frankel. After a four-day evidentiary hearing on the preliminary injunction, before Judge Cannella, the court, sua sponte, consolidated the hearing and the trial on the merits. From an order denying the preliminary injunction, dismissing the summons and complaint, and terminating the escrow agreement, plaintiff appeals. The gravamen of plaintiff’s complaint centers around the assertion of fraudulent representations allegedly made by the Seller, Wechsler, to Kohner to the effect that Wecolite, the Company purchased, operated in conformity with the law, whereas, in fact, it had violated provisions of the Robinson-Patman Act, had underpaid customs duties, and was engaged in-sharp and unethical business practices (withholding commissions and royalties due). The only issue before the trial court was whether the proof justified rescission. The court found that plaintiff’s charges as to violations of the Robinson-Patman Act had not been sustained, that if there were unpaid customs duties, they would very probably amount to the de minimis sum of $4,000, and that there was no substance to the charge that Wecolite engaged in unethical business practices. On appeal, as in the trial court, Kohner conjures up the specter of Wecolite being forced to defend a Federal Trade Commission action for violations of the Robinson-Patman Act as well as a multiplicity of private suits by Wecolite’s customers based on these same violations. The trial court found no such violations. Even now there are still no threats of Robinson-Patman actions or suits by the government for unpaid customs duties. If plaintiff, as the new owner of Weeolite, believes that certain of the business practices of his acquired Company are in violation of the law, he is free to remedy these practices, albeit the trial court found no such violations of law. If he does not approve of the Company’s business policies, he is equally free to change them. If unpaid customs duties require payment, the indemnity agreement which is part of the purchase agreement is protective. Noting that “[T]he plaintiff, an experienced businessman and a sophisticated investor had many financial advisors to assist him in carefully analyzing defendant Wechsler’s business before the sale was finalized,” the trial court concluded that plaintiff’s motion for a preliminary injunction should be denied and the summons and complaint dismissed. Wechsler cross-appeals the dismissal of his counter-claim for damages for interference with his employment and consulting contracts which were executed in connection with the sale of Wecolite. No proof was adduced at trial as to this claim and Judge Cannella properly dismissed it. We affirm. Apparently, on its own motion, the trial court added: “The escrow agreement with defendant Manufacturers Hanover Trust Company is hereby terminated and the Court directs that the notes being held in escrow be turned over to defendant Wechsler, and that the legitimate fees incurred by the Bank in the amount of $1,350 be paid by the plaintiff.” The order appealed from must be modified because the escrow agreement and the indemnity agreement were vital parts of the purchase transaction. The purchase price was $650,000. Remaining unpaid is $274,000, consisting of a negotiable note for $124,000 due January 2, 1973, and two non-negotiable notes for $76,500 due January 2, 1973, and $73,500 due October 15,1974. Since the trial court did not grant rescission, the purchase agreement remains in full force and effect including the indemnity and escrow provisions. Hence the escrow agreement should not have been terminated. The notes held pursuant thereto should continue to be held in accordance with its terms. Any fees thereunder should be paid in accordance with the terms thereof. Order as modified affirmed. MULLIGAN, Circuit Judge (concurring) : I concur in the opinion of Judge Moore. Appellant Kohner has assumed here and below that once having established that Wecolite was selling the same commodity at different prices to two or more competing buyers, the burden of proof shifted to the appellee Wechsler under the Robinson-Patman Act (15 U. S.C. § 13 (1970)). Thus, under the much maligned decision in Moss, appellant has urged that the appellee must bear the burden of proving no possible competitive injury. Moreover, under § 2(b), he has assumed that the appellee has the burden of establishing that Wecolite was meeting and not beating the price of a competitor. I do not think the appellee here had to sustain either burden of proof. The appellant is not the Federal Trade Commission or an injured secondary line competitor bringing a § 2(a) action. The appellant is neither a purchaser of Wecolite products or even a competitor. He is the disappointed buyer not of a commodity but of the business itself. Although the Act is admittedly murky, there is no language in it which gives him a cause of action. The burden of proof provision in § 2(b) is explicitly limited to hearings on complaints brought under the statute. Since this is not such an action the appellant is not entitled to the benefit of the statutory presumption. The appellant buyer of the business has urged that the appellee seller has violated the Act — he therefore has the burden, in my view, of establishing that Wecolite not only discriminated to the possible detriment of its buyers but that it had no § 2(b) defense. Even if this is not sound and the appellant is to be treated as the plaintiff under the statute, I agree with Judge Timbers that there is no showing of any Robinson-Patman violation. The expert opinion relied upon is bereft of any meaningful survey indicating competitive realities in relevant areas. Absent this we simply have a recitation of cases which can be found in any anti-trust primer culminating in the rather startling prediction that both Wecolite and Kohner face the strong likelihood of both civil and criminal liability in an action brought by the Anti-Trust Division. As Judge Moore has pointed out, no proceeding of any kind ever took place in the past and, as for the future, the appellant is now free to make whatever price structure changes his experts suggest and thus avoid the damages, fines or imprisonment which have been foretold. TIMBERS, Circuit Judge (concurring) : I concur in the judgment of the Court and in the brief opinion of Judge Moore to the extent that it affirms denial of a preliminary injunction and dismissal of the complaint and counterclaim, but modifies that provision of the order below which terminated the escrow agreement. In my view, however, certain aspects of the issues on this appeal warrant somewhat fuller discussion, so that the parties, counsel and possibly another Court may have a bit more illumination as to the basis for our judgment affirming the order of the district court as modified. In short, in my opinion, it is not enough for us simply to say, for example, that the district court’s findings of fact support its conclusion that rescission of the purchase agreement was not warranted. Rather, we must determine essentially whether the evidence supports the district court’s finding that plaintiff Kohner failed to sustain his burden of proving various statutory violations on the part of defendant Wechsler. Since I believe there was adequate evidence to support the district court’s finding and its conclusion that the purchase agreement should not be rescinded was not clearly erroneous, I concur in the judgment of the Court affirming the order of the district court as modified. I. In order more sharply to focus upon the issues, a somewhat more detailed statement of the events which culminated in the controversy may be helpful. Wechsler was the owner of Wecolite Company, a small manufacturer of low-priced plastic kitchen gadgets. In 1971, he decided to resettle in Israel. He prepared to sell his Wecolite shares at a public offering. Among the steps taken was the filing of a preliminary prospectus with the SEC. In the meantime, Kohner, the former owner of a successful toy manufacturing company, had expressed a tentative interest in a private purchase of Wecolite. Negotiations between the two ultimately resulted in an agreed purchase price of $650,000, subject to verification of the Wecolite prospectus and the assorted representations that Wechsler had made concerning the operation of Wecolite. Following Kohner’s acceptance of the representations, the parties entered into a 50-page purchase agreement. Included therein were numerous warranties, including warranties of lawfulness, and a provision whereby Wechsler was to be retained by Wecolite for one year as an employee and for three years thereafter as a consultant. Thus, even after the assumption of control by Kohner, the day-to-day management of Wecolite was intended to, and did, remain in Wechsler’s hands in the early period following the sale. Several months after Kohner took over the control of Wecolite, he claims to have become aware that certain of Wecolite’s pricing practices were in violation of the Robinson-Patman Act, 15 U.S.C. § 13 (1970). As a result, he hired two persons — a Washington, D.C. attorney and a professor of economics at Columbia University — to determine the existence and extent of Wecolite’s statutory violations. Their investigation culminated in an opinion letter in which the view was expressed that Wecolite’s marketing policies would subject both Wecolite and Kohner personally to possible civil and/or criminal litigation brought by the FTC, the Department of Justice, or private parties. This conclusion apparently was based upon a study of the variety of prices that Wecolite charged its customers, without regard to the prices quoted by Wecolite’s competitors or to any other potential defense to a Robinson-Patman violation provided for in 15 U.S.C. § 13(a) or (b). Kohner also claims to have discovered that Wecolite was in violation of the United States customs laws, due to its use of a “double-invoicing” scheme. On a number of occasions, as Wechsler admitted, the billing for Wecolite’s purchases from Modern Plastics Company, Wecolite’s Canadian supplier of plastic jelly molds, was done by means of split invoices. Wechsler also admitted that Wecolite may in fact have paid customs duties on the initially-invoiced portion only. Wechsler’s explanation was that the molds were packaged in nests of four and that prior to 1969 they had been billed in terms of nests. In that year, however, Modern Plastics closed its Vermont plant (which had been the outlet dealing with Wecolite). In changing the source of supply, the billing simultaneously was changed to an individual mold, rather than a nest of four, basis. This, according to Wechsler, “caused substantial confusion in [Modern Plastics’] billing, to which the alleged ‘double-invoicing’ was attributable.” Kohner testified that, if he had known of these alleged statutory violations and liabilities prior to his purchase of Wecolite, he would not have consummated the purchase. Consequently, on May 8, 1972, Kohner commenced the instant action in the district court for rescission of the agreement to purchase Wecolite. Wechsler counterclaimed for $163,000 on the employment and consulting provision, allegedly lost due to Kohner’s interference with that provision of the agreement. Following a hearing on Kohner’s motion for a preliminary injunction, the district court consolidated the hearing on that motion with the trial on the merits, in accordance with Kohner’s motion pursuant to Fed.R.Civ.P. 65(a)(2). On June 16, 1972, the court denied the motion for a preliminary injunction and dismissed the complaint. At the same time, it ordered that the escrow agreement be terminated and that the notes subject thereto be transferred to Wechsler. On July 20, a separate order was entered dismissing Wechsler’s counterclaim for failure of proof. The essential issue on this appeal is whether the district court was clearly erroneous in its conclusion that Kohner was not entitled to rescission of the purchase agreement because of the alleged undisclosed statutory violations by Wechsler and Wecolite. The rescission relief was sought pursuant to Sections 12(2) and 17(a) of the Securities Act of 1933, 15 U.S.C. §§ 77l(2) and 77q(a) (1970), and Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) (1970), and Rule 10b-5 promulgated thereunder. In order to understand our ruling on that issue, reference must be made to the substance of the alleged violations of both the RobinsonPatman Act and the customs laws. II. The primary prohibition of Section 2 of the Robinson-Patman Act, 15 U.S.C. § 13 (1970), makes it “unlawful for any person engaged in commerce to discriminate in price between different purchasers of commodities , of like grade and quality . . . where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce . . . .”15 U.S.C. § 13(a). That prohibition is then made subject to various defenses set forth in the statute. Here, while there is no doubt that Wecolite discriminated in price between its various customers, there are serious questions as to (1) whether the effect of such discrimination “may be substantially to lessen competition”, and (2) whether Wechsler has demonstrated the applicability of any of the statutory defenses. The rule in this Circuit, unique as it may be, is that, once a plaintiff has shown discrimination in pricing, the burden of proving a lack of the requisite anticompetitive effect shifts to the defendant. Samuel H. Moss, Inc. v. FTC, 148 F.2d 378, 379 (2 Cir.), cert. denied, 326 U.S. 734 (1945). In the present case, there is no question that the alleged practice of granting jobber discounts, ranging in magnitude from 55% to 65%, was proved. Nevertheless, the district court held that “the plaintiff has failed to sustain his burden of proving a violation of Section 2(a) of the Robinson-Patman Act”, a conclusion which, under the standards that have evolved in this complex area of the law, we hold is adequately supported by the evidence. In FTC v. Morton Salt Co., 334 U.S. 37 (1948), the Supreme Court stated the classic “injury to competition” test: that the discriminations need not “in fact have harmed competition, but only that there [be] a reasonable possibility that they ‘may’ have such an effect.” 334 U.S. at 46, quoting from Corn Products Refining Co. v. FTC, 324 U.S. 726, 742 (1945). In so doing, the Court also rejected as a standard the minimal threshold of injury: “the use of the word ‘may’ was not to prohibit discriminations having ‘the mere possibility’ of those consequences, but to reach those which would probably have the defined effect on competition.” 334 U.S. at 46 n. 14. In the instant case, Kohner has demonstrated no more than that “mere possibility”. Wecolite is a small company, itself having a relatively insignificant effect on competition. In that sense at least, Morton Salt and the other principal cases are distinguishable as presenting situations involving an industry leader whose every action might be presumed to have a “reasonable possibility” of affecting competition, whether harmful or otherwise. In addition, there has been no showing of any harm, actual or reasonably possible, to any customer. For aught that appears from the evidence, Wecolite’s pricing policies may indeed have fostered competition by adapting the discount rate to the particular situation of each customer. There is nothing in the record, for example, to suggest such suspect practices as the volume discounts in Morton Salt which enabled Morton’s largest customers to gain ever-greater advantages. On the contrary, the evidence in the present case shows no consistent pattern of discount variations, no specially-favored customers, and not even remote proof of injury to any person. The Moss burden of proof notwithstanding, therefore, no injury to competition has been shown. Consequently no violation of Section 2(a) of the Robinson-Patman Act has been established. Even if Kohner had sustained his burden of proving a prima facie violation of the Act, however, Wechsler, as the district court correctly held, successfully brought himself within the protection of an express defense provided in Section 2(b), 15 U.S.C. § 13(b) (1970): “That nothing herein contained shall prevent a seller rebutting the primafacie case thus made by showing that his lower price . . . was made in good faith to meet an equally low price of a competitor. . . .” The burden of proving the meeting-competition defense of course was on Wechsler. Cf. Utah Pie Co. v. Continental Baking Co., 386 U.S. 685, 694 (1967). In sustaining that burden, Wechsler appears to have established a complete absence of a pattern of discriminatory discounts; on the contrary, he has shown that the price differentials were granted on a nonsystematic ad hoc basis, reasonably attributed to the fluctuations in prices quoted by Wecolite’s competitors, as well as to other legitimate factors. To establish that defense, Wechsler produced such evidence as the testimony of a Wecolite sales representative, who served under both Wechsler and Kohner, to the. effect that additional discounts off the jobber price lists were granted by Wecolite only after Wechsler was satisfied, by invoices or other means, that the lower prices were necessary to meet the prices offered by Weeolite’s competitors. This witness also testified that he could not remember any instance in which Wechsler attempted to under-price the competition rather than simply to equal it; and that, Wechsler being in the witness’ terms a “frugal” man, it clearly was not Wechsler’s practice at any time to charge anything less than competition required. The only remaining consideration with respect to this defense is whether Wechsler adequately substantiated the particulars of the competitors’ prices that Wecolite allegedly was formed to meet. In Corn Products Refining Co. v. FTC, supra, 324 U.S. at 741, for example, the Court found insufficient support for the meeting-competition defense, the evidence being described as limited to “each witness’ assumption or conclusion that price discriminations were justified by competition”. In the instant case, however, testimony to that effect was given by witnesses having personal and intimate knowledge of the particular transactions. Moreover, the accepted rule, and certainly the sensible one, is that a seller is not necessarily required to establish the defense by showing that his price discriminations in fact met the prices offered by his competitors. The burden on the seller is rather to demonstrate “that the price was made in good faith to meet a competitor’s .... [T]he statute at least requires the seller, who has knowingly discriminated in price, to show the existence of facts which would lead a reasonable and prudent person to believe that the granting of a lower price would in fact meet the equally low price of a competitor.” FTC v. A. E. Staley Mfg. Co., 324 U.S. 746, 759-60 (1945) (emphasis added). See also, e. g., Forster Mfg. Co. v. FTC, 335 F.2d 47, 55-56 (1 Cir. 1964), cert. denied, 380 U.S. 906 (1965) (remanding “for application to the evidence of the standard of the ‘reasonable and prudent person’ ” a case involving an FTC order which held the meeting-competition defense not to have been established due to a failure to prove the precise amounts of competitive offers and the names of the competitors who made them). Applying that standard, there is no doubt that the evidence here supports the district court’s conclusion that Wechsler sustained his burden of proving the defense. The meeting-competition proviso offers an “absolute defense to a charge of violating § 2(a), notwithstanding the existence of the statutorily prohibited anticompetitive effect.” FTC v. Sun Oil Co., 371 U.S. 505, 514 (1963). Wechsler consequently cannot be said to have misrepresented the legality of Wecolite’s operation. We hold that the district court’s denial of rescission on this ground clearly was warranted. III. The alleged customs laws violation presents an issue of a different species. While it is true that Wechsler offered an explanation for the apparent double-invoicing of purchases from Modern Plastics, it also is true that this explanation does not fit nicely within a statutory defense, as was the case with the Robinson-Patman claim. Indeed, a reading of the district court’s opinion discloses an implicit finding that Kohner’s contention that Wecolite might be subject to various customs liabilities and penalties was not satisfactorily rebutted by Wechsler. What the court concluded, however, was that the likelihood of mitigation of the total potential liability made the probable liability de minimis, in terms of its effect on Kohner’s entering into the purchase contract. The federal securities laws under which this action was brought have developed a matrix of tests and standards as prerequisities to a suit for rescission or damages. One such prerequisite is that “the facts [allegedly] withheld be material in the sense that a reasonable investor might have considered them important in the making of this decision.” Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 153-54 (1972). Cf. List v. Fashion Park, Inc., 340 F.2d 457, 462 (2 Cir.), cert. denied, 382 U.S. 811 (1965). In the instant case, the testimony of Kohner’s expert witness, an attorney experienced in customs matters, indicated that after successful mitigation of the total potential liability, Wecolite probably would have been subject to an assessment of less than $4,000. In a sale involving a purchase price of $650,000 plus extensive additional consideration, the conclusion that $4,000 would not constitute a factor that a reasonable investor would have deemed important in the purchase decision would seem to be reasonable. Contrary to Kohner’s contention on this appeal, the existence of potential criminal liabilities does not necessarily make a company an “illegal” operation, thereby furnishing an unsuspecting purchaser a basis for rescission relief. Rather, Kohner has demonstrated no more than the fact of underpayment of a minimal portion of Wecolite’s customs obligation, resulting in a possible assessment in duties and penalties of an insubstantial amount. It is not even clear that Wecolite would in fact be subject to any assessment, depending on the success of its explanation as a defense under § 1592. In any event, assuming that Weehsler knowingly misrepresented Wecolite’s liabilities in the warranties of lawfulness and freedom from criminal liabilities, in my view the established standards of materiality preclude rescission of the purchase agreement. IV. Two other issues raised on this appeal deserve brief mention. First, while the termination of the escrow agreement was erroneous and the district court’s order should be modified accordingly, the court correctly refused to upset the employment and consultation provision of the agreement. Although it may be presumed that as a consequence of this lawsuit the parties are on less than ideal terms, the fact remains that both parties satisfied the one-year employment agreement and currently are in the three-year consultation period. It appears that the parties contemplated in this regard that, following the first year after the sale, Wechsler would be residing in Israel and the consultation provision would be no more than a formality tied to additional consideration for the sale. Since we hold that Weehsler has not breached the agreement, there would appear to be no reason for depriving him of any portion of the agreed consideration. Second, there is no reason or need for a reversal of the district court’s dismissal of Weehsler’s counterclaim. In its original order, the court failed to dispose of the counterclaim. Three weeks later, on July 7, 1972, Weehsler moved for summary judgment on the counterclaim, or in the alternative for the issuance to Kohner of a certificate under Fed.R.Civ.P. 54(b) to permit an immediate appeal of the June 16 order pending decision on the counterclaim. On July 20, the court dismissed the counterclaim for failure of proof. Weehsler concedes that, at least with respect to the employment agreement, the counterclaim is moot and presents no issüe for trial. What he asks is that the dismissal of the counterclaim be vacated with instructions to enter a judgment of dismissal with prejudice. In view of our decision to require enforcement of the consultation agreement, the counterclaim itself appears to be unfounded. Moreover, should it later appear that Kohner is in violation of the consultation agreement, it seems to me that a new cause of action would arise and that the order of July 20 would not preclude Wechsler from seeking appropriate relief. For the reasons stated above, I concur in the judgment of the Court and in the opinion of Judge Moore to the extent that they affirm the order of the district court as modified. . Kohner v. Wechsler, 72 Civ. 1898. (S.D.N.Y., filed June 16, 1972). . Id. . Samuel H. Moss, Inc. v. FTC, 148 F.2d 378 (2d Cir.), cert. denied, 320 U.S. 734, 66 S.Ct. 44, 90 L.Ed. 438 (1945). . Such a burden on the plaintiff in this case is less than that imposed upon the Federal Trade Commission in a legitimate Robinson-Patman Act § 2(f) case directed against a buyer. See Automatic Canteen Co. v. FTC, 346 U.S. 61, 73 S.Ct. 1017, 97 L.Ed. 1454 (1953). . Included in the purchase price were two non-negotiable promissory notes totalling $150,000 which were to be held in escrow by the Manufacturers Hanover Trust Company as part of a fund for the payment of any successful claims by Kohner against Wechsler arising out of the sale. The district court ordered termination of the escrow agreement and the transfer of the notes to Wechsler. I agree with Judge Moore that that part of the district court’s order was erroneous, and I concur in the modification of the order accordingly • . Kohner emphasizes that on several occasions during the negotiations express requests were made for guarantees as to the lawfulness of Wecolite’s business procedures. Regarding the Robinson-Patman Act claim, the evidence indicates that at the first meeting between Wechsler and Kohner the latter inquired as to Wecolite’s pricing policies. Wechsler testified that he answered, “We sell at 50 and 10, the same as stated on the price list. However, in many cases we have to grant additional discounts, bakers’ dozens, in some eases 10 per cent, in some cases even a little better than that.” Wechsler further testified that that exchange constituted the extent of the parties’ discussion of Wecolite’s pricing policies. . A major source of disagreement is the extent to which Kohner investigated and verified Wechsler’s prospectus and representations. Kohner asserts that his accountants ascertained that Wechsler’s reports were in accord with proper accounting procedures, and that he refused to enter into the purchase agreement until Wechsler agreed to include such warranties as the one stating that Wecolite “is not prohibited by agreement or law from carrying on its business substantially on the basis now conducted”, Purchase and Sale Agreement f 3.2(c), and that it “is not indebted in any amount to any . . . governmental agency for customs duties or taxes on imports under any applicable law. ...” Purchase and Sale Agreement ¶ 3.4 (n). Wechsler, however, points to Kohner’s frequent consultations with a housewares expert, the complete access of Kohner’s accountants to Wecolite’s books (including its invoices), and Kohner’s testimony that he read the prospectus thirty times and that he was very conscious of the language and effect of the RobinsonPatman Act. . Kohner testified that this knowledge came to him through a letter from a salesman. . Moss has been both consistently questioned, e. g., Rowe, Price Discrimination Under the Robinson-Patman Act 108 (1962), and effectively limited. Enterprise Industries, Inc. v. Texas Co., 240 F.2d 457, 460 (2 Cir.), cert. denied, 353 U.S. 985 (1957); Sano Petroleum Corp. v. American Oil Co., 187 F.Supp. 345, 353 (E.D.N.Y.1960) (“ . . . there is no presumption that the proscribed discrimination in price has caused damage to the plaintiff. The burden of proving such damage is always on the plaintiff.”) In light of the conclusions that, even under the Moss presumption the evidence fails to • disclose a reasonable possibility that the price discrimination may substantially lessen competition, Standard Motor Products, Inc. v. FTC, 265 F.2d 674, 676 (2 Cir.), cert. denied, 361 U.S. 826 (1959), and that, even if such a finding were made, Wechsler has established the defense set forth in § 13(b), further consideration of the Moss rule is not required. . The evidence indicated that Wecolite had granted six different jobber discounts: 50% + 10% (55%) ; 50% + 10% + 5% (57.75%) ; 50% + 10% + 7.7% (“baker’s dozen”) (59.24%) ; 50% -|- 10% + 10% (60.5%) ; 50% + 10% + 15.4% (“double baker’s dozen”) (63.-47%) ; and straight 65%. . See, e. g., Corn Products Refining Co. v. FTC, supra; Kroger Co. v. FTC, 438 F.2d 1372 (6 Cir.), cert. denied, 404 U.S. 871 (1971). Cf. Anheuser-Busch, Inc. v. FTC, 289 F.2d 835 (7 Cir. 1961) (primary-line case). . The president of one of Wecolite’s larger customers testified, for example, that the lower price offered to it could be demanded from all its suppliers because of its ability to provide such services as “preticketing” and inventorying which would not be performed by most other customers. . See, e. g., supra note 8. . The witness at the time of his testimony was employed by Wecolite, among other manufacturers, and appeared at the trial under subpoena. . In reaching this result, there is no need to decide what additional effect should be credited to the peculiarities of Kohner’s position in the transaction. The record indicates that Kohner fairly may be characterized as a “sophisticated investor”, Clement A. Evans & Co. v. McAlpine, 434 F.2d 100, 104 (5 Cir. 1970), cert. denied, 402 U.S. 988 (1971), who by his own admission was familiar with the RobinsonPatman Act and was concerned with its applicability to Wecolite. In addition, while the evidence is conflicting as to Kohner’s actual knowledge of Wecolite’s pricing policies prior to the sale, the fact that his agents investigated the company’s books and records may permit an inference of knowledge on the part of Kohner. Cf. Johns Hopkins University v. Hutton, 422 F.2d 1124, 1130-31 (4 Cir. 1970). As a result, Kohner’s claim for rescission under the federal securities laws due to the alleged non-disclosure of Robinson-Patman liability might well be said to fall because of the absence of the essential elements of reliance and materiality. In my opinion, however, it is sufficient to hold that the claim fails because Kohner did not prove any misrepresentation in the first instance. . Under 19 U.S.C. § 1592 (1970), any person who is guilty of, inter alia, “any willful act or omission by means whereof the United States is or may be deprived of the lawful duties or any portion thereof accruii g upon the merchandise [described on the import invoice, etc.] . . . shall be subject to forfeiture . . . [of] the whole of the merchandise or the value thereof . . . . ” Section 1592 has been held to require proof of an intent to use fraudulent means in order to subject a person to the prescribed penalties. Jen Dao Chen v. United States, 385 F.2d 939, 942 (9 Cir. 1967). That holding, however, has been questioned. The intent requirement may properly coincide with the language in § 1592 that a false statement, to provide a basis for forfeiture, must be made “without reasonable cause to believe the truth of such statement.” United States v. Wagner, 434 F.2d 627, 628-29 (9 Cir. 1970). . The witness testified that in his experience mitigation was successful in over half the cases brought by the government alleging unpaid customs duties. . In addition, as the district court observed, “ . . . the plaintiff will not be hurt by his retaining ownership of Wecolite. There is no provision in the agreement which compels the plaintiff to continue defendant Wechsler’s price structure”. Nor is plaintiff required to continue the method of billing regarding Modern Plastics. It should be further noted that the contract expressly provides for indemnification by Weehsler of any corporate liabilities incurred during his ownership not reflected in Wecolite’s financial statement and books, including the costs of litigation. Purchase and Sale ’ Agreement ¶ 9.1(a), (c). The escrow agreement described at supra note 1 was available to Kohner to satisfy the indemnity. . See supra note 1.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. SHEET METAL WORKERS’ INTERNATIONAL ASSOCIATION, LOCAL UNION NO. 361, Respondent. No. 72-2029. United States Court of Appeals, Fifth Circuit. April 26, 1973. Marcel Mallet-Prevost, Asst. Gen. Counsel, N.L.R.B., Washington, D. C., Charles M. Paschal, Jr., Director, Region 15, N.L.R.B., New Orleans, La., John H. Ferguson, N.L.R.B., Washington, D. C., for petitioner. Charles M. Peters, Shreveport, La., for respondent. Before GEWIN, GOLDBERG and DYER, Circuit Judges. GEWIN, Circuit-Judge: Pursuant to § 10(e) of the National Labor Relations Act, ás amended 29 U.S.C. § 151 et seq., the Board seeks enforcement of its order against Sheet Metal Workers’ International Association, Local Union No. 361 (Local 361). This case arose from Local 361’s assessment of a $2,500 fine and permanent expulsion of one of its members, Elmer C. Langston, a sheet metal superintendent for Langston & Co., Inc. (the Company). On February 24, 1971, Langston, as an individual, filed an unfair labor practice charge against Local 361, alleging that the action taken against him violated § 8(b)(1)(A) and (B) and § 8(b)(2) of the Act, 29 U.S.C. §§ 158(b)(1)(A), (B), and (b)(2). A hearing was conducted before a Trial Examiner who recommended that the complaint be dismissed as to all charges. The Board reversed. Local 361 was found guilty of the unfair labor practices, as charged, the Board having concluded that Langston was fined and expelled in violation of § 8(b)(1)(B) for exercising permissible and normal supervisory functions in making certain employee discharges and in violation of §§ 8(b)(2) and 8(b)(1)(A) for hiring members of a rival union at a particular job site instead of members of Local 361. A cease and desist order was issued accordingly together with an order for other appropriate affirmative relief. We fully enforce the Board’s order. I — Section 8(b)(1)(B) Violation Section 8(b)(1)(B) makes it an unfair labor practice for a labor organization “to restrain or coerce ... an employer in the selection of his representatives for the purposes of collective bargaining or the adjustment of grievances.” The acts which formed the basis of these charges allegedly occurred during a dispute between the Company and Local 361, when Elmer in his role as supervisor, had on several occasions taken worksite action against fellow members of Local 361. In the disciplinary proceedings, Local 361 charged that Elmer had slandered the Union by dismissing union members for drunkenness, had broken down working conditions by firing union members without just cause, had encouraged the company to hire members of a rival union and had “made the Local Union look sick in the eyes of the public.” Local 361 does not contest the fact that a prima facie showing of an 8(b)(1)(B) violation appears from the record. It argues, however, that the disciplinary action taken against Elmer was justified by its good faith belief that he was committing unfair labor practices against his own union. We do not agree. The Trial Examiner missed the point when he gratuitously suggested that under the facts of this case to hold the union guilty of an 8(b)(1)(B) violation “would in effect amount to rewarding Elmer for committing or attempting to commit an unfair labor practice against his union.” Local 361’s good faith is immaterial to the issue now before this court. This conclusion is reinforced by the existence of legal remedies for any unfair labor practices committed by the employer through its supervisory personnel. As the Board pointed out, “[a] union faced with such concerns is not without remedies. Contractual violations can be remedied through appropriate grievance procedures. Violations of this Act may be pursued by filing charges with this Agency. Self-help, through the exercise of statutorily protected strike and picketing activity, may also be available.” The implied corollary of this reasoning is that Local 361’s disciplinary measures cannot be justified as a supposedly necessary self-help tactic. The only circumstances in which union discipline of a supervisor member is permissible is when the discipline concerns a purely internal union matter, and such is not the ease here. As Local 361’s charges indicate, the firing and expulsion of Elmer were based upon acts which he carried out in his capacity as superintendent of the sheet metal crew. The Board properly found that this was done to retaliate against him for the performance of duties indigenous to his position as a management representative of the Company, and hence amounted to coercion of the employer in contravention of the provisions of section 8(b)(1)(B). See Meat Cutters Union Local 81 v. NLRB, 147 U.S.App.D.C. 375, 458 F.2d 794 (1972); NLRB v. New Mexico District Council of Carpenters, 454 F.2d 1116 (10th Cir. 1972); Dallas Mailers Union, Local 143 v. NLRB, 144 U.S.App.D.C. 254, 445 F.2d 730 (1971). II — Section 8(b)(1)(A) and 8(b)(2) Violations Elmer’s unfair labor practice charges under Section 8(b)(1)(A) and (b)(2) arose from disciplinary action taken against him by Local 361 for hiring members of a rival union as a part of an alleged conspiracy to oust Local 361 as bargaining representative of the Company’s sheet metal workers. Section 8(b)(2) provides in relevant part that it is an unfair labor practice for a labor organization “to cause or attempt to cause an employer to discriminate against an employee in violation of [section 8(a)(3)]”. The latter provision prohibits “discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization.” Section 8(b)(1)(A) makes it unlawful for a union to restrain or coerce employees in the exercise of their section 7 right to join or to refrain from joining a labor organization. The Trial Examiner found that Local 361 did not violate these provisions as alleged by Elmer. From his review of the testimony, he made the sweeping determination that the entire Langston Family employed by the Company, with the possible exception of Elmer himself, became involved in a surreptitious scheme “whose purpose quite obviously was to supplant Local 361 as the recognized bargaining agent of the employees of L. & Co. at Jena if not at all L. & Co. jobs, to eliminate the existing contractual relationship between L. & Co. and Local 361 at Jena, at least, and to replace Local 361 as such bargaining agent with District 101 (the rival union) if necessary.” These facts, in the Trial Examiner’s view, removed the case from 8(b)(1)(A) entirely and made it abundantly clear that “if anyone was attempting ‘to restrain or coerce employees in the exercise of the rights guaranteed in Section 7,’ it was L. & Co. and not Local 361.” The Trial Examiner then stated that it was unimportant to his decision whether Elmer was actually privy to the clandestine scheme to oust Local 361. His reason was very simply that Local 361 probably didn’t know about the scheme when it filed the charges against Elmer on July 17, 1970. Nonetheless, on the basis of what was known by the union on that date, apart from any consideration of an allegedly illegal conspiracy by the company, Local 361 was found to have had good cause to believe that: “ . . . [A]s sheet metal department Superintendent, Elmer had hired and deliberately retained District 101 members, Lloyd and Gauthier, far beyond the time limits set in the existing collective-bargaining agreement between L & Co. and Local 361 and that Elmer was doing this in an effort to displace Local 361 at Jena with the more favored L & Co. union, District 101. In other words Local 361 could reasonably believe that Elmer was attempting to get rid of Local 361 despite its contract with L & Co. and replace it surreptitiously with District 101. In short the evidence here proves that the proverbial reasonable man, based on the facts then known to Local 361, had good cause to believe that Elmer, with or without L & Co.’s participation, was busily engaged in activities favoring Distinct 101 which amounted to unfair labor practices in violation of Section 8(a)(2) and (1) of the Act as well as in violation of the terms of the existing collective-bargaining agreement. If Elmer’s actions were not violative of Section 8(a)(2) of the Act, at least it appeared that he was deliberately engaged, or had engaged, in making a “sweetheart deal” with District 101, the hated rival of Local 361.” As an additional ground for dismissing the complaint, the Trial Examiner also found that the dual unionism charges filed against Elmer had nothing to do with the enforcement or interpretation of the collective-bargaining agreement then in effect between the Company and Local 361. On the contrary, Local 361’s grievances against Elmer were considered to be “exclusively a matter of internal union concern relating, without exception, to the relationship between the Union and one of its members.” In reversing the Trial Examiner, the Board reasoned: “ . . [I]t is our view that the Trial Examiner’s explanation does not square with the Union allegations against Elmer Langston. Those allegations make no complaint of a failure to enforce a union-security clause after the employees were hired. Instead, they complain that ‘The above Employee's [sic] were hired and placed to work at Jena, Louisiana.’ The Union’s complaint, then, was that Elmer had sanctioned the hiring of these men. And why was this hiring offensive to the Union? Because, to paraphrase the rest of the allegations, they were not members of Respondent (Local 361) but, instead, were members of another union. Thus, Elmer’s sin, as the Union saw it, was that he failed to require membership in Respondent as a condition preceding employment. We therefore find that Respondent’s discipline of Langston was, in part, an attempt to cause him as the Employer’s representative, unlawfully to discriminate against applicants for employment in violation of Section 8(a)(3) of the Act. We find that, by engaging in such conduct, Respondent violated Section 8(b)(1)(A) and (2) of the Act.” The Board’s decision, in our opinion, is fundamentally sound. Union rules requiring that their supervisor members hire only fellow union members have long been associated with illegal efforts to reinstate the closed shop outlawed by the Taft-Hartley Amendments of 1947. See, e.g., NLRB v. Millrights’ Local 2232, 277 F.2d 217 (5th Cir. 1960), cert. denied, 366 U.S. 908, 81 S.Ct. 1083, 6 L.Ed.2d 234 (1961). Likewise, union fines or expulsion of a supervisor member for failing to require membership as a condition of employment is an attempt to discriminate against non-member applicants in violation of Section 8(a)(3) and hence a violation of Sections 8(b)(2) and 8(b)(1)(A). N.L.R.B. v. New Mexico District Council of Carpenters, 454 F.2d 1116, 1119 (10th Cir. 1972). At this juncture, it is necessary only to add that the Board did not improperly disregard the Trial Examiner’s findings of fact and credibility determinations, as the union now contends. The Trial Examiner in his opinion greatly emphasized Local 361’s reasonable belief that Elmer was part of a clandestine scheme designed to replace it as the bargaining representative of the employees of the Company. Feeling that Elmer should not profit from such wrongdoing, he concluded that this reasonable belief would constitute a complete defense to the unfair labor practice charges at issue. The Board rejected this conclusion as a matter of law, regardless of whether the conspiratorial scheme existed as a matter of fact. For reasons which are adequately stated in the first section of this opinion, we believe that the Board’s rejection of the union’s good faith or reasonable belief defense rests on solid legal footing. CONCLUSION The order of the National Labor Relations Board requiring Local 361 to cease and desist from certain described unfair labor practices against the Company and to rescind all disciplinary actions taken against Elmer Langston is hereby Enforced. . In this capacity, Elmer did all the hiring and firing and adjusted grievances in behalf of Langston & Co. He is clearly a “supervisor” within the meaning of § 2 (11) , 29 U.S.C. § 152(11), which includes : “any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment.” . 29 U.S.C. § 158(b)(1)(B). . See, e. g., Meat Cutters Union, Local 81 v. N. L. R. B., 147 U.S.App.D.C. 375, 458 F.2d 794, 800-801 (1972); N. L. R. B. v. Sheet Metal Workers’ International Association, 430 F.2d 1348, 1350 (10th Cir. 1970). . The charge states in pertinent part: “Bro. Elmer Langston was a party to and knowingly agreed to work with and encourage the Company to hire Employee’s [sic] of Allied Federation of Unions Local 101. Bro. Elmer Langston membership No. 339041 was and still is Foreman, with the right to hire and fire Employee’s. The above Employee’s were hired and placed to work at Jena, Louisiana. Bro. Elmer Langston stated that they were members in good standing of the Union, but after checking they were members of Local No. 101, Allied Federation of Union Local No. 101, Article 17, Sec. 1(f).” . The Board also found on the basis of the uncontradicted testimony of Earl Langston, president of Langston & Co., that a manpower shortage occasioned by Local 361 necessitated the concentration of all available workers at the England work-site after February 18, 1970 and eventually led to the hiring of the two workers at Jena who were not Local 361 members. The Trial Examiner had previously rejected this testimony on the ground that it lacked corroboration. Although, outside of Earl’s testimony, the record provides something less than overwhelming support for the Board’s finding in this connection, we are not prepared to say either that Earl’s testimony was uncorroborated or that such other evidence was insubstantial.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Vivadean P. WALLACE, Plaintiff-Appellee, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY, Defendant-Appellant. No. 72-2025. United States Court of Appeals, Fifth Circuit. April 30, 1973. James W. Gewin, Birmingham, Ala., for defendant-appellant. William L. Irons, Birmingham, Ala., for plaintiff-appellee. Before JOHN R. BROWN, Chief Judge, and MOORE and RONEY, Circuit Judges. Hon. Leonard P. Moore, Senior Circuit Judge of the Second Circuit, sitting by designation. MOORE, Circuit Judge. Plaintiff, Vivadean P. Wallace, is the widow of her husband, Billy Gene Wallace (Wallace). She is the undisputed beneficiary of a $50,000 accidental death insurance policy issued to her husband when he was for a brief period of time an employee of the Gulf Oil Corporation (Gulf). A certificate evidencing this insurance had been issued to Wallace under a “Voluntary Group Accident Policy” under which the Connecticut General Life Insurance Company (Connecticut General), the defendant-appellant, insured employees of Gulf. This action was commenced in the United States District Court for the Northern District of Alabama to recover the proceeds of the policy. Jurisdiction was grounded upon diversity of citizenship of the parties. The case was tried before the Court without a jury. Judgment was entered for the plaintiff. Connecticut General, the insurer, appeals. A brief resume of the facts suffices to frame the issues raised on this appeal. Plaintiff and her husband had lived together in Alabama for approximately eight years, during which time he had held various jobs. They had six children. In October, 1969, Wallace, leaving his wife and children in Alabama, went to Texas where he rented an apartment and lived with a Joyce Wallace (not his wife). Although Wallace returned to Alabama on three brief occasions prior to June, 1970, his employment was in Texas, first with Gulf, then Foley’s, and again with Gulf, an employment which lasted from January to May, 1970. During this time Wallace became insured under the Gulf group policy, which was paid up through June 30, 1970. Plaintiff was the named beneficiary under the policy which covered death from an “accidental bodily injury”. Wallace continued to live with Joyce near Tuscaloosa, Alabama, until his death on June 26, 1970. Wallace’s occupation upon his return to Alabama, from which he derived some income, seems to have involved the unlawful cutting, removal, and sale of copper telephone wire from telephone poles in the Tuscaloosa area. Unfortunately, while engaged in this enterprise, wire, which Wallace had in his possession, must have come into contact with high tension (44,000 volts) power wires. Wallace’s body, badly burned, was found near the base of a telephone pole. There was burned wire in contact with the body. The facts more than justify the trial court’s conclusion that Wallace died “as a result of electrocution” and that “beyond any reasonable doubt * * * the insured [Wallace] was engaged in an illegal act * * *." The trial court addressed itself to the two main issues: (1) Was this an accidental death? and (2) Did the fact that Wallace was engaged in an illegal act constitute a defense under the policy? Were there a substantial difference in the applicable law of Alabama and Texas to the facts here presented, a dissertation on conflict of laws might be required, but such is not the ease. The trial court’s conclusion that “the act of cutting the wire does not have such inherent hazards in and of itself” as to make serious injury or death a “natural and probable consequence” is clearly supported by the facts. Connecticut General argues that, where a person voluntarily engages in an act, the natural and probable consequences of which may be injury or death, death or injury therefrom is not an accident. The types of cases cited from Alabama and Texas deal with radically different situations. Thus, if an insured knowingly places himself in a position where injury or death is likely to result, injury or death is not accidental. Examples: injury caused by being shot while committing a crime; altercation and assault upon a man known to be armed, resulting in insured’s death; resisting arrest, insured killed by the officer in self-defense. The element of reasonable foreseeability of injury or death is stressed in the applicable decisions as a prerequisite to denial of recovery. Where injury or death is not a reasonable probability, recovery is allowed. Accidental death has been defined as the happening of “something unforeseen, unexpected, and unusual.” Conversely, if death or injury was not a reasonably foreseeable consequence of the insured’s acts, death might well be, dependent upon the facts, accidental. Here, upon the facts, the trial court found that death was not “foreseeable and that the act of cutting the wire does not have such inherent hazards in and of itself as to make him [Wallace] or make one there engaged in that act a voluntary participant in the unexpected contact with some other wire which produce[d] his [Wallace’s] death.” Even though the proof be convincing that Wallace’s death was accidental, Connecticut General argues that the public policy of Alabama bars a recovery to an insured whose death occurred while he was committing a felony. It is true that the trial court in its opinion in dealing with what constituted accidental death noted a difference between Texas and Alabama law and said that under Alabama law “as a matter of public policy coverage may be denied or at least recovery may be denied as a matter of public policy, if the insured met his death while engaged in an unlawful act.” However, the court came to the conclusion that “the public policy in Alabama which is against the proceeds of the insurance policy being paid to some beneficiary of someone engaged in an illegal act is not so strong a public policy as to require its enforcement by a court of this forum, * * *." Although the court suggested that an “appellate question” might be presented, it concluded that under the law of Alabama the policy “should be treated as a Texas contract and interpreted under the laws of the State of Texas” and that under Texas law the beneficiary was entitled to recover. Thus, the court —despite its finding that “were the state laws of the State of Alabama to be applied to this, that the beneficiary would not be entitled to recover” — did not actually have to base its decision on this hypothetical assumption as to Alabama law. Accordingly, we AFFIRM the decision of the district court. . Opinion read into trial record at close of trial. Appendix 314, 315. . Opinion, App. 316, 317. . Wright v. Western & Southern Life Ins. Co., 443 S.W.2d 790 (Tex.Civ.App. 1969). . Texas Prudential Ins. Co. v. Turner, 127 S.W.2d 563 (Tex.Civ.App.1939). . Massachusetts Bonding & Ins. Co. v. Richardson, 27 S.W.2d 921 (Tex.Civ.App.1930). . Texas Prudential Ins. Co. v. Turner, supra, 127 S.W.2d at 565; Hutcherson v. Sovereign Camp, W. O. W., 112 Tex. 551, 556, 251 S.W. 491, 493 (Tex.Civ.App.1923); American Nat’l Ins. Co. v. Garrison, 97 S.W.2d 534, 536 (Tex.Civ.App.1936); Perry v. Aetna Life Ins. Co. of Conn., 380 S.W.2d 868, 877 (Tex.Civ.App.1964). . See cases cited in note 6, supra. . O’Bar v. Southern Life & Health Ins. Co., 232 Ala. 459, 461, 168 So. 580, 582 (1936). . 'Opinion, App. 317. In Great Am. Reserve Ins. Co. v. Sumner, 464 S.W.2d 212 (Tex.Civ.App.1971), Sumner was killed when caught in the act of adultery with the assailant’s wife. Texas had apparently decided to relieve the courts of this type of homicide by setting up certain standards by providing (Texas Penal Code, Vernon’s Ann.P.C. Article 1220) that: Homicide is justifiable when committed by the husband upon one taken in the act of adultery with the wife, provided the killing take place before the parties to the act have separated * * *. Despite this provision of the law, the Civil Court of Appeals of Texas held that a man killed by an enraged liusband under circumstances clearly within the purview of Article 1220 died “accidentally” for the purposes of an accidental death insurance policy. In so concluding the- court said: There is nothing in the crime of adultery * * * calculated to produce the death of the adulterer. 464 S.W.2d at 216 If death from wife stealing is accidental, a fortiori, so should be death from wire stealing. . Opinion, App. 315-16. . Id. at 318. . Id. at 312. . Id. at 318.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

ARNOLD J. RODIN, INC., Plaintiff-Appellant, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Defendant-Appellee. No. 72-2605. United States Court of Appeals, Fifth Circuit. April 30, 1973. John C. North, Jr., Corpus Christi, Tex., for plaintiff-appellant. Joe B. Cunningham, Fort Worth, Tex., for defendant-appellee. Before RIVES, GOLDBERG and MORGAN, Circuit Judges. LEWIS R. MORGAN, Circuit Judge: Appellant Rodin, plaintiff below, sued the Atchison, Topeka & Santa Fe Railway Company to recover damages to 82 carloads of potatoes shipped out of Maine during May of 1968. The railroad filed a cross-action and counterclaim for freight charges. The jury found in favor of the defendant railroad on Rodin’s damage claim. The trial judge rendered a verdict for the railroad on its cross-action and counterclaim. We affirm. Appellant Rodin was a speculator in potatoes on the New York Mercantile Exchange dealing with up to 5,000 carloads of potatoes a year. His usual practice was to purchase contracts for future delivery and sell these contracts prior to their delivery date. In fact, over the 10-year period prior to this action, Rodin had only accepted for delivery a total of 100 cars from the New York Mercantile Exchange. Rodin’s previous experience in actually selling potatoes had been limited to the Detroit, Michigan, area where he lived, but he did appear to have a certain amount of knowledge as to the effect of time and temperature on these commodities. In early 1968, appellant Rodin purchased contracts for 1,200 carloads of Maine potatoes to be delivered on May 10, 1968. The delivery date arrived before resale of these contracts and Rodin became the owner of 1,200 carloads of potatoes located across the State of Maine. The heretofore neglected potatoes now began to receive Rodin’s careful attention. In hopes of finding a buyer for these potatoes, Rodin began shipping them all over the Eastern Seaboard. They were shipped to the primary market areas first: Boston, New York, Cleveland, and Detroit. When there was no market there, Rodin began shipping his potatoes to other locations, including Atlanta, Georgia; Miami, Florida; Pennsylvania; New Jersey; Ohio; Illinois; Minnesota; and Texas. Success in the potato market continually eluded Rodin and as a result 731 carloads, or 62 percent of his potatoes, could not be sold at all. For the carloads he did manage to sell he received less than $500.00 for 131 of them, between $500.00 and $1,000.00 for 132 carloads; between $1,000.00 and $1,500.00 for 180; and for three of his cars he received between $1,500.00 and $1,900.00. During the trial below Rodin asserted that the value of each of the 82 cars in question was $3,000.00. Rodin has filed damage claims in other courts against the various railroads transporting 600 to 800 of his other cars. The action below involves 82 of 165 to 175 cars that eventually found their way to Chicago. Upon arrival in Chicago the potatoes were inspected by an employee of Rodin, Mooney Gendelman. Gendelman was hired to inspect all cars that came into Chicago belonging to Rodin. He testified at the trial that he inspected all of the 82 cars concerned when they arrived in Chicago and found them to be in poor condition. Rodin was unperturbed and his agent sought out buyers in Chicago — none were found. Finally, Northwest Railroad requested Rodin to divert his cars to another location because of their condition. When these cars finally left Chicago for Texas, 56 of the 82 had been sitting in the railroad yard for over 25 days. This was during the months of May and June. Rodin testified below that his purpose in reconsigning the potatoes to Texas was to reconstitute them and thereby mitigate damages. Upon arrival at Amarillo, Texas, the potatoes had no market value and were abandoned to the carrier. Rodin then brought suit for the value of these potatoes, alleging at trial that upon delivery to the originating carrier in Maine the potatoes were in good condition but upon arrival in Chicago they were in poor condition and could not be sold for an amount equal to the freight charges due at that time. Rodin further contended that had the potatoes arrived in Chicago in good condition they could have been sold with no difficulty. He. also maintains that the potatoes were reconsigned to Amarillo, Texas, in order that they be reconstituted and thereby mitigate damages. When they arrived in Texas, however, they were worthless. During the trial below it appears that the jury found that the condition of the potatoes was due to no fault on the part of the railroad, but rather was due to fault on the part of Rodin because of the various delays in shipping attributable to him, improper shipping instructions and lack of knowledge of how to deal with these commodities This court has considered all allegations of error by appellant Rodin and finds it necessary to address only those set out below. I. Appellant contends that the court below erred in trying this ease and submitting it to the jury as though it were a tort action rather than a suit in contract. Appellant apparently bases this contention upon part of the trial judge’s charge to the jury which mentioned negligence as follows: If the potatoes were in fact delivered in good condition and arrived at their destination in a worsened condition, the carriers must prove that they were not negligent in their handling of the potatoes and that the worsened condition was due solely to a combination of faults or inadequacies in the bills of lading and the transportation service requested by Rodin and to some inherent defect in the potatoes themselves. (Emphasis added). This court following the Supreme Court in Missouri P. R. Co. v. Elmore & Stahl, 377 U.S. 134, 84 S.Ct. 1142, 12 L. Ed.2d 194 (1964), finds the trial judge’s instruction to have been proper. The Court in Elmore & Stahl stated: [I]n an action to recover from a carrier for damage to a shipment, the shipper establishes his prima facie case when he shows delivery in good condition, arrival in damaged condition, and the amount of damages. Thereupon, the burden of proof is upon the carrier to show both that it was free from negligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability. (Emphasis added). Missouri P. R. Co, v. Elmore & Stahl, supra. We find that it was in this manner that the trial judge properly instructed the jury and that no change from trying the case in contract to trying it in tort took place. See Atlantic Coast Line R. Co. v. Georgia Packing Co., 5 Cir. 1947, 164 F.2d 1, and Austin v. Seaboard Air Line R. Co., 5 Cir. 1951, 188 F.2d 239. II. Appellant further maintains that the district court’s charge to the jury on Special Issue No. 1 placed the burden of proof of the entire ease on the plaintiff-appellant and was, therefore, error. The judge below instructed the jury on Special Issue No. 1 as follows: Do you find from a preponderance of the evidence that the potatoes in any of the 82 cars were in such condition on the date of the bills of lading that, based upon the instructions given by Rodin to the carriers for their transportation, and the reasonable performance of those instructions by the carriers, the potatoes would have been reasonably expected to arrive at the final destination in good merchantable condition? This court does not find the burden of proof to have shifted. The trial judge had in previous instructions explained to the jury that when a prima facie case was shown by the plaintiff-shipper, then the burden is shifted to the carrier to show that it was free from negligence and that the damage to the cargo was due to one of the excepted causes, relieving the carrier of liability. We do not feel that these instructions as to Special Issue No. 1 had the effect of shifting the burden of proof. It appears that the judge below was complying with the Supreme Court’s decision in Elmore & Stahl. The Court there stated that the general rule in the case of perishables places the affirmative burden on the carrier of bringing the cause of damage within one of the specified exceptions. Missouri Pacific R. Co. v. Elmore & Stahl, supra, 377 U.S. at 138, 84 S.Ct. 1142. The trial judge’s instructions were intended to do just that. See Atlantic Coast Line R. Co. v. Georgia Packing Co., supra. III. Appellant asserts that the court below erred in admitting testimony concerning the 1,200 cars originally purchased and shipped by the plaintiff because they are not involved in this action. Rodin, however, at trial, during direct examination originally introduced evidence as to these 1,200 carloads of potatoes. Only after Rodin had mentioned this during his direct testimony did the defendant ask questions concerning these cars on cross-examination. This appears to be well within the rule concerning scope of cross-examination in use in state and federal courts today. The appellant’s brief complains that testimony as to the value of the goods at point of origin was immaterial to this case. Appellant alleges it should not have been admitted at trial because of possible differences in freight charges and running time which could affect the actual value to the shipper at destination. First, it does not appear to this court that at trial such information was elicited from Rodin for the purpose of determining cost comparisons as alleged by appellant. Rather, it appears that appellee attempted to demonstrate that these 82 cars were not the only cars Rodin had trouble with as he had implied in earlier testimony. Secondly, the limit of cross-examination, especially as to matters already brought forth during direct examination is well within the discretion of the trial judge. District of Columbia v. Clawans, 300 U.S. 617, 57 S.Ct. 660, 81 L.Ed. 843 (1937). Here we find no abuse of that discretion whatsoever. IV. Appellant further insists that the court erred in instructing the jury that the final destination of the cars was Amarillo, Texas. Appellant argues that the court thus completely deprived appellant of presenting the entire basis of its case, that is, that Chicago, Illinois, was the original destination of the 82 cars and upon arrival there in poor condition they were diverted by appellant to Amarillo in order to mitigate damages. This contention on the part of appellant presents this court with a rather puzzling issue. If the plaintiff’s contention is accepted and the trial court is found to be in error as to its instructions that Amarillo was the final destination, then the appellant, in fact, has no case under the Carmack Amendment, 49 U.S.C. § 20(11), against this defendant railroad. The appellant asserts that Chicago should have been considered the final destination point of the potatoes. After the potatoes arrived in Chicago the appellant’s agent inspected the potatoes and found them to be in unsatisfactory condition. At that point the appellant unquestionably had full knowledge of the defect in its goods. With that knowledge, the appellant chose to reconsign the potatoes to Amarillo. The Atchison, Topeka & Santa Fe Railway Company did not enter the picture then until after the appellant had full knowledge that his potatoes were in damaged condition. If Chicago is then considered to be the destination under the Carmack Amendment, then the record demonstrates that the railroad received damaged goods and the appellant has no case. Under the Carmack Amendment the holder of the bill of lading is given a cause of action only against the receiving or delivering carrier. The purpose of the Carmack Amendment was to make the initial and delivering carriers responsible so that the lawful holder of a bill of lading does not have to search out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods. The initial or delivering carrier could then recover damages from the connecting carrier on whose line the loss or damage to the property was sustained. Therefore, if the court below had taken the position that Chicago was the point of destination, then there would be no reason for the Atchison, Topeka & Santa Fe Railway Company to be party to this suit at all. The defendant railroad would then neither be the receiving, the connecting nor the delivery carrier under the Carmack Amendment. Any contra interpretation of Carmack would allow a shipper who has discovered that his goods were damaged to shop around for a solvent carrier on which it could ship its damaged goods and later sue to recover those damages. This court, after considering all of the allegations of the appellant as to error by the trial court below, finds that the trial court was correct and is therefore Affirmed. . Rodin testified at trial that he knew that he only had 30 to 45 days to sell these potatoes before they would begin normal sprouting leading to severe damage. . The court feels it necessary to elaborate on what was wrong with these potatoes when they arrived in Amarillo. Maine potatoes are harvested in September and October, and once they start sprouting they must be kept at a temperature of 40 to 48 degrees or else they will sprout rapidly. The potatoes Rodin purchased were orginally classified as U.S. No. 1 by USDA inspection at their point of origin. Sprouting potatoes remain U.S. No. 1 unless more than ten percent have spouts over three-quarters of an inch long. When these potatoes arrived in Amarillo they were not U.S. No. 1 for two reasons : sprouting and soft rot (soft rot and sprouting are caused usually by the same factors, age and exposure to excessive temperature). . It is interesting to note that Rodin started protesting the condition of the potatoes and abandoned these potatoes before all of the carloads of potatoes had arrived in Amarillo. . What must be proved by a shipper to recover damages from a carrier is that the goods were delivered in good condition, that they arrived in damaged condition, and the amount of damages. The trial judge’s instruction quoted in Part I of this opinion appears sufficient to have covered the prima facie case facts in that situation. .. The questions and answers by Rodin and his counsel were as follows: Q: . . .1 will ask you if you did, in May of 1968, purchase on the New York Mercantile Exchange any cars of potatoes? A: Yes, sir. Q: Approximately how many? A: There were a total of a thousand— 1,200 ears. . The so-ealled American Rule followed in most states and in the federal courts limits the cross-examination to matters included within the scope of the direct examination. Houghton v. Jones, 1 Wall (U.S.) 702, 17 L.Ed. 503; Philadelphia & T. R. Co. v. Stimpson, 14 Pet. (U.S.) 448, 10 L.Ed. 535. The English rule presently used in the state courts of Texas permits a witness called by one party to be cross-examined on any issue involved in the case in chief whether it was brought up on direct examination or not. Continental Casualty Company v. Thomas, 463 S.W.2d 501 (Tex. Civ.App.1971). . The pertinent part of § 20(11) reads as follows: § 20, par. (11). Liability of initial and delivering carrier for loss; limitation of liability; notice and filing of claim. Any common carrier, railroad, or transportation company subject to the provisions of this chapter receiving property for transportation from a point in one State or Territory or the District of Columbia to a point in another State, Territory, District of Columbia, or from any point in the United States to a point in an adjacent foreign country shall issue a receipt or bill of lading therefor, and shall be liable to the lawful holder thereof for any loss, damage, or injury to such property caused by it or by any common carrier, railroad, or transportation company to which such property may be delivered or over whose line or lines such property may pass within the United States or within an adjacent foreign country when transported on a through bill of lading, and no contract, receipt, rule, regulation, or other limitation of any character whatsoever shall exempt such common carrier, railroad, or transportation company from the liability imposed; and any sueli common carrier, railroad, or transportation company so receiving property for transportation from a point in one State, Territory, or the District of Columbia, to a point in another State or Territory, or from a point in a State or Territory to a point in the District of Columbia, or from any point in the United States to a point in the District of Columbia, or from any point in the United States to a point in an adjacent foreign country, or for transportation wholly within a Territory, or any common carrier, railroad or, transportation company delivering said property so received and transported shall be liable to the lawful holder of said receipt or bill of lading or to any party entitled to recover thereon, whether such receipt or bill of lading has been issued or not, for the full actual loss, damage, or injury to such property caused by it or by such common carrier, railroad, or transportation company to which such property may be delivered, or over whose line or lines such property may pass within the United States or within an adjacent foreign country when transported on a through bill of lading, notwithstanding any limitation of liability or limitation of the amount of recovery or representation or agreement as to value in any sueli receipt or bill of lading, or in any contract, rule, regulation, or in any tariff filed with the Interstate Commerce Commission; and any such limitation, without respect to the manner or form in which it is sought to be made is declared to be unlawful and void. .

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IDAHO POWER COMPANY, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. No. 26368. United States Court of Appeals, Ninth Circuit. April 10, 1973. As Amended April 30, 1973. Frank Norton Kern (argued), Lawrence C. Wilson, Reid & Priest, New York City, for petitioner-appellant. William A. Friedlander (argued), Johnnie Walters, Asst. Atty. Gen., Tax Division, Dept. of Justice, K. Martin Worthy, Chief Counsel, IRS; Meyer Rothwacks, Elmer J. Kelsey, Gordon S. Gilman, Tax Division, Dept. of Justice, Washington, D. C., for respondent-appellee. Before TRASK and CHOY, Circuit Judges, and McGOVERN, District Judge. Honorable Walter T. McGovern, United States District Judge, for the Western District of Washington, sitting by designation. TRASK, Circuit Judge: The taxpayer, Idaho Power Company, appeals from a Tax Court decision denying taxpayer’s depreciation deduction on equipment used in the construction of capital improvements. Under the Tax Court decision the taxpayer was ordered to pay deficiencies, in income taxes for the taxable years 1962 and 1963 in the amounts of $73,023.47 and $50,342.21, respectively. The Tax Court ruled against the taxpayer on the single issue — -whether the taxpayer is entitled to deduct depreciation on depreciable equipment to the extent such equipment is used in the construction of its own capital assets. The Tax Court treated the depreciation as a cost of the construction of the new facilities and ruled such costs must be capitalized as part of the basis of the property constructed under section 263 of the Internal Revenue Code of 1954. We agree with the taxpayer’s position that the current depreciation should be treated as a current deduction under section 167 of the Code. The decision of the Tax Court is therefore reversed. The taxpayer is a public utility engaged in the production, transmission and sale of electricity. Since at least 1929, the taxpayer has regularly constructed additional transmission and distribution facilities using its own employees and equipment for a major part of the work. In 1962 it constructed $7,139,940.72 worth of facilities and in 1963, $5,642,342.79 worth. In some years it has used as many as 300 employees in construction and at the time of trial 140 were engaged in such work in question. During the years, the taxpayer has owned cars, trucks, trailers and radio equipment which have been used in part to operate and maintain existing facilities and in part to construct new capital assets. On its books the taxpayer capitalized the depreciation to the extent the equipment was used in the construction of capital assets in accordance with accounting procedures prescribed by the Federal Power Commission and adopted by the Idaho Public Utilities Commission. On its income tax returns for 1962 and 1963, however, the taxpayer deducted all depreciation on its transportation equipment, including depreciation on the equipment to the extent it was used in construction. Such equipment was depreciated over a composite life of ten years. All other costs allocable to the constructed facilities, except pension contributions, social security taxes and motor vehicle taxes, which were also deducted currently, were capitalized by the taxpayer. This included costs of operating and maintaining such equipment. The Commissioner of Internal Revenue disallowed and capitalized the deduction for depreciation on taxpayer’s equipment to the extent that such equipment was used in the construction of capital assets and allowed instead a deduction for depreciation of the amounts so capitalized over the useful life of the property so constructed. The construction, consisting principally of transmission and distribution facilities, had useful lives of 30 years or longer. The result of this adjustment was the net disallowance by the Commissioner of depreciation claimed by the taxpayer during the years 1962 and 1963 in the respective amounts of $140,429.75 and $96,811.95. I. THE DEPRECIATION DEDUCTION A re-examination of the purpose of the depreciation deduction, its place in the statutory scheme and its history will assist us in solving the problem. It is the basic theory of depreciation that capital assets which are used in the business should not be exhausted without a provision for their replacement. To that end depreciation over the life of the asset provides the means by which the taxpayer can recover its cost. One way of expressing this very practical approach was that of the Supreme Court in Knoxville v. Knoxville Water Co., 212 U.S. 1, 13-14, 29 S.Ct. 148, 152, 53 L.Ed. 371 (1909): “A water plant, with all its additions, begins to depreciate in value from the moment of its use. Before coming to the question of profit at all the company is entitled to earn a sufficient sum annually to provide not only for current repairs but for making good the depreciation and replacing the parts of the property when they come to the end of their life. The company is not bound to see its property gradually waste, without making provision out of earnings for its replacement. It is entitled to see that from earnings the value of the property invested is kept unimpaired, so that at the end of any given term of years, the original investment remains as it was at the beginning. It is not only the right of the company to make such a provision, but it is its duty to its bond and stockholders, and, in the case of a public service corporation at least, its plain duty to the public. If a different course were pursued the only method of providing for replacement of property which has ceased to be useful would be the investment of new capital and the issue of new bonds or stocks. This course would lead to a constantly increasing variance between present value and bond and stock capitalization — a tendency which would inevitably lead to disaster either to the stockholders or to the public, or both.” Although that case did not involve an income tax problem, it states the underlying theory of the deduction. The purpose of the depreciation allowance under the Code is “to permit the taxpayer to recover his capital investment in wasting assets free of income tax.” 4 Mertens, Law of Income Taxation § 23.04. The Supreme Court has said that the purpose of the depreciation deduction is to create a fund to restore the property, to the extent of the investment of the taxpayer, at the end of its useful life: “The end and purpose of - it all is to approximate and reflect the financial consequences to the taxpayer of the subtle effects of time and use on the value of his capital assets. For this purpose it is sound accounting practice annually to accrue as to each classification of depreciable property an amount which at the time it is retired will with its salvage value replace the original investment therein.” Detroit Edison Co. v. Commissioner, 319 U.S. 98, 101, 63 S.Ct. 902, 904, 87 L.Ed. 1286 (1943). In Massey Motors, Inc. v. United States, 364 U.S. 92, 96, 80 S.Ct. 1411, 1414, 4 L.Ed.2d 1592 (1960), the Supreme Court allowed a depreciation deduction on automobiles used by dealers or their employees, explaining: “Such assets, employed from day to day in business, generally decrease in utility and value as they are used. It was the design of the Congress to permit the taxpayer to recover, tax free, the total cost to him of such capital assets; hence it recognized that this decrease in value — depreciation—was a legitimate tax deduction as business expense. It was the purpose of § 23(l) and the regulations to make a meaningful allocation of this cost to the tax periods benefited by the use of the asset.” The issue here does not affect the amount of the depreciation to which the taxpayer is entitled. Whether it is spread over a ten-year life or a thirty-year life, the amount remains the same. It does affect the timing of the recovery of the depreciation and thus might have a vital effect on the ability of a taxpayer to maintain and replenish its equipment inventory without depleting its working capital or burdening its borrowing capacity. The legislative history of the depreciation deduction clearly supports our decision in favor of the taxpayer. “Prior to the enactment of the Internal Revenue Code of 1954, the statutory provisions for depreciation were singularly brief.” 4 Mertens, supra at § 23.01. Section 23(l) of the 1939 Act contained only a bare statement similar to the general rule in section 167(a) of the 1954 Act, and a two sentence paragraph stating the method of computation as between a life tenant and a remainderman. When Congress adopted the Internal Revenue Code of 1954, however, it gave particular attention to liberalized depreciation allowances. It provided for the use of new methods and rates, in addition to the standard straight line method. These included a declining balance method, a sum of the years-digits method and a fourth method which was any one consistently applied so long as the total at the end of each year did not exceed the allowances which would have resulted from the use of the declining balance method. Further, the report of the Ways and Means Committee on H.R. 8300, which became the Internal Revenue Code of 1954, stated at the beginning of its discussion of this subject: “Your committee’s bill provides for a liberalization of depreciation with respect to both the estimate of useful life of property and the method of allocating the depreciable cost over the years of service.” H.R. No. 1337, 83rd Cong., 2nd Sess., 1954 U.S.Code Cong. & Admin.News at 4047. The report emphasized the importance of the liberalized policies of the bill. It pointed out its reliance upon the use of an improved declining balance method of computing depreciation which “concentrates deductions in the early years of service and results in a timing of allowances more in accord with the actual pattern of loss of economic usefulness.” Id. at 4048. The report continued: “More liberal depreciation allowances are anticipated to have far-reaching economic effects. The incentives resulting from the changes are well timed to help maintain the present high level of investment in plant and equipment. The acceleration in the speed of the tax-free recovery of costs is of critical importance in the decision of management to incur risk. The faster tax writeoff would increase available working capital and materially aid growing businesses in the financing of their expansion. For all segments of the American economy, liberalized depreciation policies should assist modernization and expansion of industrial capacity, with resulting economic growth, increased production, and a higher standard of living.” Id. Obviously the decision of the court below does not permit the purpose of either the statute, the regulations, the legislative history or the eases interpreting them from being achieved. The assets, for which a depreciation deduction is sought here, have a useful life of ten years. No dispute appears to exist as to this point. If the plain language of the statute is to be followed, the taxpayer should by depreciation allowances recover the cost of those assets within that ten-year period. Yet such costs will not be fully recovered for 30 years if the Commissioner’s determination requiring transfer of the depreciation to the new asset is applied. II. TAXPAYER’S ARGUMENT The taxpayer argues that deductions specifically allowed and set out under the Internal Revenue Code of 1954 should not be capitalized even though incurred by the taxpayer in constructing facilities for its own use. Such deductions include interest (section 163), taxes (section 164) and depreciation (section 167). These particular deductions, expressly enumerated in the Code, differ from the general deduction for ordinary and necessary business expenses, which is not available whenever the amount expended is determined to be a capital expenditure rather than a current business expense. This interpretation of the Code’s overall scheme is in harmony with the Tax Court’s decision in All-Steel Equipment Inc., 54 T.C. 1749 (1970), rev’d on other grounds, 467 F.2d 1184 (7th Cir. 1972). The issue there was whether certain expenditures for taxes, losses and research and experiment where to be included in the cost of inventory (comparable to the capitalization of expenditures for capital assets). Because these three items are expressly listed in the Code as proper deductions under sections 164, 165 and 174, they are not to be deferred even though they relate to inventory or capital items. The Tax Court explained: “Secondly, the petitioner contends that the respondent also erred in his determination by requiring the inclusion of certain costs in inventory even though the current deductibility of such costs is expressly authorized by the Code and regulations. The expenditures referred to by the petitioner involve costs incurred for repairs, taxes, losses, and research and experiment. We agree with the petitioner that such expenditures are currently deductible and are excludable from inventory costs. “Deductions for taxes, losses and research and experiment are expressly authorized in the year the taxes are paid or accrued, the losses are sustained, or the research and experimental expenditures are paid or incurred. Secs. 164, 165, 174. Neither the statutory provisions nor the regulations indicate in any way that such deductions are limited to current expenses as distinguished from capital expenditures for the acquisition of capital assets or inventory. To the contrary, it has been held that deductions expressly granted by statute are not to be deferred even though they relate to inventory or capital items. Montreal Mining Co., 2 T.C. 688 (1943); Spring Valley Water Co., 5 B.T.A. 660 (1926); Pacific Coast Redwood Co., 5 B.T.A. 423 (1926). See also Joe W. Stout, 31 T.C. 1199 (1959), affirmed and modified on other issues sub nom. Rogers v. Commissioner, 281 F.2d 233 (C.A. 4, 1960). Cf. sec. 266; Rev. Rul. 141, 1953-2 C.B. 101. Moreover, section 174 expressly states that research and experimental expenditures may be treated ‘as expenses which are not chargeable to capital account.’ ” 54 T.C. at 1759. Depreciation, under section 167, is likewise expressly listed as a proper deduction and no exception is made should it relate to a capital item. The precise issue of this case was raised in an early railroad case. Great Northern Ry. Co., 30 B.T.A. 691 (1934). The railroad there, like the taxpayer here, used its equipment for the construction of additions to the taxpayer’s property. The court reversed the Commissioner’s determination and held that the full amount of depreciation of the equipment, including the period that it was used for construction, should be allowed. The court decided the equipment was used by its owner in a trade or business as the taxpayer maintained and that “it is a part of the regular business of a railroad to construct additional capital facilities for the transaction of its business as a common carrier.” 30 B.T. A. at 708. The allowance of the depreciation deduction rather than capitalization of such costs was deemed appropriate because the statutory conditions for the deduction were satisfied. In further support of its position, taxpayer points out that section 263 providing for capital expenditures states: “(a) . . . No deduction shall be allowed for— (1) Any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate.” (Emphasis supplied). The use of the term “paid out,” argues the taxpayer, was not without significance. There is nothing in the Internal Revenue Code which says that for purposes of section 263 depreciation is an amount “paid out” or an “expenditure.” On the contrary in construing other sections, the decisions have held that depreciation is not an amount “paid out.” In section 170(a)(1), for example, a deduction is allowed for “. any charitable contribution payment of which is made within the taxable year.” It has been held that an allowance for depreciation is not a payment within the meaning of this section. Thus in Orr v. United States, 343 F.2d 553 (5th Cir. 1965), a taxpayer used his automobile and airplane in work for the Methodist Church. The court held that a charitable deduction was not permissible to the extent of the depreciation arising from such activity because such an allowance was not a payment. “It is entirely possible, as the taxpayer suggests, that Congress and its Committees were not thinking of depreciation when they used the word ‘payment’. The absence of any evidence as to whether Congress focused on this problem provides no basis for extending the meaning of payment to include ‘depreciation’. A depreciation expense is an indispensable element in accounting. But it is not a ‘payment’, not a transfer of money or property. We are bound by plain, prosaic language of the statute.” 343 F.2d at 556. In Clinton H. Mitchell, 42 T.C. 953 (1964), the Tax Court said: “Depreciation is a ‘decrease in value.’ Massey Motors, Inc. v. United States, 364 U.S. 92 [80 S.Ct. 1411, 4 L.Ed.2d 1592]. It is not a payment,, or expenditure, or an out-of-pocket expense. Hence, it cannot be considered as a contribution, payment of which is made within the taxable year.” 42 T.C. at 973. As another example, we note that section 213 of the Internal Revenue Code provides for deduction of medical and dental expenses equal to: “(1) the amount by which the amount of the expenses paid during the taxable year . . . exceeds 3 percent of the adjusted gross income, . . ." In Maurice S. Gordon, 37 T.C. 986 (1962), it was held that depreciation on an automobile used to transport a taxpayer’s son to a doctor could not qualify as a medical expense upon the ground that it was not “an amount paid.” “The statute permits the deduction for ‘expenses paid’ and ‘amounts paid’ and respondent correctly interprets the statute as permitting deduction for ‘medical expenses actually paid.’ Sec. 1.213-1 (a), Income Tax Regs. Depreciation is a ‘decrease in value’. Massey Motors Inc. v. United States, 364 U.S. 92, 96 [80 S.Ct. 1411, 4 L. Ed.2d 1592], Any allowance for depreciation is not an ‘expense paid’ or ‘amount paid.’ ” 37 T.C. at 987. It appears to us there is both merit and judicial support for the taxpayer’s argument here. III. THE TAX COURT DECISION The Tax Court disposed of the taxpayer's arguments by emphasizing that depreciation incurred in the acquisition of capital assets should be treated as part of the cost thereof. In Revenue Ruling 59-380, 1959-2 Cum.Bull. 87, the Internal Revenue Service specifically dealt with the issue in this case: “Depreciation sustained on construction equipment owned by a taxpayer and used in the erection of capital improvements for its own use is not an allowable deduction, but shall be added to and made a part of the cost of the capital improvements. So much thereof as is applicable to the cost of depreciable capital improvements is recoverable through deductions for depreciation over the useful life of such capital improvements. “In the instant case the capital improvements constructed constitute property to be used in the trade or business or property held for the production of income. However, the building equipment used in the construction cannot be considered as property used in the regular trade or business of the taxpayer.” In a recent case factually similar to this case, the Court of Claims followed Revenue Ruling 59-380. Southern Natural Gas Co. v. United States, 412 F.2d 1222, 1264-1269, 188 Ct.Cl. 302 (1969). The taxpayer contends the court’s decision was erroneously based on incorrect assumptions. We agree. First, the Court of Claims could see no reason “for carving out a special exception for depreciation” on the automotive equipment of the company to the extent it was used to construct additional pipelines for its own capital improvements. Neither the Southern Natural Gas Company nor the Idaho Power Company, however, was seeking a special exception. Both based their claims on the express language of the Internal Revenue Code authorizing a depreciation deduction. Second, the Court of Claims was concerned that a double recovery of cost would result if a depreciation deduction were currently allowed on the equipment —first, when the depreciation was deducted and second when the constructed asset was depreciated or sold. This assumption is patently incorrect. There is no possibility of double recovery because the cost basis of the capital asset would not include the depreciation theretofore deducted. Third, the court harbored an unfounded fear that the interpretation urged by the appellant if pushed to its logical conclusion would leave the taxpayer without a basis for self-constructed assets. A taxpayer’s actual expenditures for labor and materials, however, must be capitalized as part of the basis of the capital improvements under the requirements of section 263 which provides for capitalization of amounts “paid out” for capital assets. Such expenses have to be capitalized even though they are expended for self-constructed assets. Also, as we have noted above, the costs of operating and maintaining the equipment must be capitalized. For these reasons we are not persuaded by South- em Natural Gas and we conclude that Revenue Ruling 59-380 is an improper and incorrect interpretation of the law. Furthermore, the strong factual record in this case supports the taxpayer’s contention that equipment used to construct its own capital improvements is used in the trade or business of the taxpayer as section 167 requires. The continuity and regularity of taxpayer’s construction activities, the number of employees engaged in construction and the amounts expended on construction all point to the conclusion that construction of facilities is a major aspect of the taxpayer’s trade or business. These activities are auxiliary operations incident to the taxpayer’s principal trade or business of producing, transmitting, distributing and selling electrical energy within the meaning of section 167. We, therefore, are constrained to distinguish this case from Southern Natural Gas where the court determined the taxpayer’s equipment was not used in the taxpayer’s trade or business to the extent it was used to construct capital assets. Other cases cited by the Tax Court concerning oil and gas leases are factually distinguishable from the self-constructed capital asset eases. In L. W. Brooks, Jr., 50 T.C. 927 (1968), and Producers Chemical Co., 50 T.C. 940 (1968), the issues involved the allocation of operating costs between two taxpayers — the operator’s working interest in a leasehold and his production payment toward acquisition of the leasehold. These cases are analogous to allocation of costs between a life tenant and a remainderman. They are inapposite here where there is only one taxpayer involved. Likewise, Ben Perlmutter, 44 T.C. 382 (1964), aff’d, 373 F.2d 45 (10th Cir. 1967), cited by the Tax Court, was decided on a question of fact. No legal issue was raised as to the validity of a depreciation deduction for vehicles used in construction. The extent of their úse, if any, was questionable and the issue thus was inconsequential. We do not deem it to be in point on the issue before us. The judgment is reversed. . “§ 263. Capital expenditures (a) General Rule. — No deduction shall be allowed for— (1) Any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate. This paragraph shall not apply to— (A) expenditures for the development of mines or deposits deductible under section 616, (B) research and experimental expenditures deductible under section 174, (O) soil and water conservation expenditures deductible under section 175, or (D) expenditures by farmers for fertilizer, etc., deductible under section 180.” . “§ 167. Depreciation (a) General Rule. — There shall be allowed as a depreciation deduction a reasonable allowance for the exhaustion, wear and tear (including a reasonable allowance for obsolescence) — (1) of property used in the trade or business, or (2) of property held for the production of income. (b) Use of certain methods and rates. —For taxable years ending after December 31, 1953, the term ‘reasonable allowance’ as used in subsection (a) shall include (but shall not be limited to) an allowance computed in accordance with regulations prescribed by the Secretary or his delegate, under any of the following methods: (1) the straight line method, (2) the declining balance method, using a rate not exceeding twice the rate which would have been used had the annual allowance been computed under the method described in paragraph (1), (3) the sum of tlie years-digits method, and (4) any other consistent method productive of an annual allowance which, when added to all allowances for the period commencing with the taxpayer’s use of the property and including the taxable year, does not, during the first two-thirds of the useful life of the property, exceed the total of such allowances which would have been used had such allowances been computed under the method described in paragraph (2).” . It should be noted that the taxpayer in Spring Valley Water Co., 5 B.T.A. 660 (1926), charged interest payments on funds borrowed for construction of a dam to its capital account as required by law for public utilities. The taxpayer was allowed a current deduction for such payments, notwithstanding the method of accounting used for its books. The fact that the taxpayer in the case at bar was required to capitalize the depreciation on its books for purposes of the Federal Power Commission and the Idaho Public Utilities Commission is likewise irrelevant as to the proper tax treatment of depreciation deductions. See Old Colony Ry. Co. v. Commissioner, 284 U.S. 552, 562, 52 S.Ct. 211, 76 L.Ed. 484 (1931); Mine Hill & Schuylkill Haven R. R. Co. v. Smith, 184 F.2d 422 (3rd Cir. 1950), cert. denied, 340 U.S. 932, 71 S.Ct. 496, 95 L.Ed. 673 (1951). . The Treasury Regulations under the 1954 Internal Revenue Code are to the same effect: “§ 1.167 (a)-1. Depreciation in General. (a) Reasonable alloxoanee. Section 167(a) provides that a reasonable allowance for the exhaustion, wear and tear, and obsolescence of property used in the trade or business or of , property held by the taxpayer for the production of income shall be allowed as a depreciation deduction. The allowance is that amount which should be set aside for the taxable year in accordance with a reasonably consistent plan (not necessarily at a uniform rate), so that the aggregate of the amounts set aside, plus the salvage value, will, at the end of the estimated useful life of the depreciable property, equal the cost or other basis of the property as provided in section 167(g) and section 1.167(g)-l.” . Supra note 2. . The Ways and Means Committee noted: “The depreciation allowances under this method, therefore, [declining-balance] are considerably larger in the early years of the life of a property than those resulting from the straight-line method. The declining-balance method at twice the appropriate straight-line rate will write off approximately 40 percent of the cost of an asset in the first quarter of its service life and two-thirds of the cost in the first half of its life.” H.R. No. 1337, 83rd Cong., 2nd Sess., 1954 U.S.Code Cong. & Admin.News at 4047. . Depreciation was apparently, not before the court in All-Steel Equipment, Inc. . The revenue laws have uniformly required that a depreciation deduction be allowed for “property used in the trade or business.” 4 Mertens, Law of Federal Income Taxation § 23.03. . The Court of Claims approved the decision of the Trial Commissioner. Neither the taxpayer nor the United States took exception to the Commissioner’s finding on the issue involved here. . A revenue ruling, as distinguished from a regulation or a Treasury decision, does not have the force and effect of law. It is merely the opinion of a lawyer in an agency. A revenue ruling in conflict with revenue statutes is, therefore, without any force. See, e. g., Bartels v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947 (1947); Stubbs, Overbeck & Assoc. Inc. v. United States, 445 F.2d 1142 (5th Cir. 1971); Lincoln Savings & Loan Ass’n v. Commissioner, 422 F.2d 90 (9th Cir. 1970), rev’d on other grounds, 403 U.S. 345, 91 S.Ct. 1893, 29 L.Ed.2d 519 (1971); 1 Mertens, supra at § 3.20. . The undisputed testimony of the Superintendent of Engineering and Construction for the company was that construction was undertaken by the company because it thus obtains a better facility at less cost and because contractors are not always available to perform the work. R.T. at 22. . The Tax Court here stated, “ [o]bviously the acquiring of capital improvements whether by purchase or construction is appropriate if not vital to petitioner’s continued operation of its business of producing and selling electric energy . . . ” C.T. at 41-42.

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RAY BAILLIE TRASH HAULING, INC., et al., Plaintiffs-Appellees, v. Thomas S. KLEPPE, Administrator, Small Business Administration, et al., Defendants-Appellants. No. 72-1163. United States Court of Appeals, Fifth Circuit. April 18, 1973. Rehearing and Rehearing En Bane Denied June 18, 1973. Robert W. Rust, U. S. Atty., Chief, Civil Div., Clemens Hagglund, Asst. U. S. Atty., Miami, Fla., John N. Mitchell, U. S. Atty. Gen., Dept. of Justice, Thomas S. Kleppe, Administrator, S. B. A., Walter H. Fleischer, Joseph B. Scott, Dept. of Justice, Washington, D. C., for defendants-appellants. Alexander Boskoff, Washington, D. C., Bernard Jaffe, Miami, Fla., for plaintiffs-appellees. Before WISDOM, THORNBERRY and GODBOLD, Circuit Judges. WISDOM, Circuit Judge: On reconsideration sua sponte, we withdraw our opinion dated January 5, 1973 and issue the following opinion. * * * In this case the plaintiffs attack the Small Business Administration’s program for awarding government procurement contracts to small business concerns owned by “socially or economically disadvantaged persons.” 13 C.F.R. § 124.8-1 (c). The district court held that the section 8(a) program is not authorized by statute and denies due process and equal protection in violation of the Fifth and Fourteenth Amendments. We reverse. I. The plaintiffs-appellees, Ray Baillie Trash Hauling, Inc., Leonard Santo, d/b/a L & J Waste Service, and C. Lewis Jones, d/b/a Southern Florida Sanitation Company of Dade County, Inc., are engaged in the business of collecting and hauling refuse to disposal sites. They qualify as small business concerns under both the Small Business Act, 15 U.S.C. § 631 et seq., and the applicable regulations of the Small Business Administration. All American Waste, Inc., named as a defendant, is a black-owned firm that competes with the plaintiffs in the business of collecting and hauling refuse and also qualifies as a small business concern. The dispute in the present case relates to a contract for the collection and removal of refuse from Homestead Air Force' Base in Homestead, Florida. In 1968 and 1969, the Small Business Administration and the Department of the Air Force, pursuant to a joint program, set aside the contracts for placement with small business concerns. The Air Force awarded the contracts after formal advertising and competitive bidding restricted to small business concerns. Jones and Santo successfully bid for the contract in 1968 and 1969 respectively. In 1970, the Small Business Administration promulgated new regulations establishing a “section 8(a) program” providing for assistance to small business concerns owned by disadvantaged persons. 13 C.F.R. § 124.8-1. As part of the program, the SBA secured a prime contract from the Air Force for the collection and removal of refuse from the Homestead base for a two year period commencing July 1, 1970. The SBA then negotiated a similar subcontract with All American for the performance of the services in the prime contract between the SBA and the Air Force for a one year period commencing July 1, 1970 at $65,000 Upon being advised that the SBA intended to enter into a second subcontract with All American for the performance of the prime contract services at Homestead for the fiscal year 1971, the plaintiffs demanded an opportunity to compete for the contract. They did not apply for participation in the program and they did not contend that they were eligible. The SBA rejected the demand and later executed the second subcontract with All American. On June 29, 1971, the plaintiffs commenced the present action for injunctive and declaratory relief in the District Court for the Southern District of Florida. The defendants were the Administrator of the Small Business Administration, the Secretary of the Department of the Air Force, the Contracting Officer assigned to Homestead Air Force Base, and All American Waste, Inc. In the complaint, the plaintiffs sought a permanent injunction enjoining the SBA from letting the Homestead contract under the section 8(a) program without competitive bidding. At the same time, they filed a motion for a temporary restraining order and a preliminary injunction. With the consent of the parties, the district court issued an order directing that the second subcontract be held in abeyance for thirty days and that the prior contract with All American be extended until further order. Later orders of the court extended this period until judgment on the merits. On October 29, 1971, the district court entered its judgment. 334 F.Supp. 194. The court found that the SBA’s section 8(a) program, providing for assistance to small business concerns owned by disadvantaged persons, was not authorized by the Small Business Act and violated the federal statutes requiring competitive bidding in government procurement. The court also found that the primary criterion for the program was race, col- or, and ethnic origin, that whites were ineligible for program benefits except on a token basis, and that the plaintiffs, as “non-minority” owned firms, were denied due process and equal protection of the laws. The court concluded that the subcontract awarded to All American was illegal and ordered that the Homestead contract be awarded as soon as possible on the basis of the maximum competitive bidding practicable among the plaintiffs and other similarly situated small business concerns. The defendants appealed. II. At the outset, we must confront two questions relating to our ability to hear and decide the merits of the parties’ contentions: first, whether the present case is moot; and second, whether the plaintiffs have standing to litigate the issues raised in their complaint. The question of mootness arises from the fact that All American did not satisfactorily perform its responsibilities under the contract. The Air Force terminated the contract with All American on October 1, 1971, and has since negotiated a refuse contract, under 10 U.S.C. § 2304(a)(2), with one of the plaintiffs for the duration of the fiscal year 1972. A ease is not moot, however, if there is a reasonable expectation that the act complained of will be repeated. United States v. W. T. Grant Co., 1953, 345 U.S. 629, 73 S.Ct. 894, 97 L.Ed. 1303. The Court has been advised that the SBA intends to continue its section 8(a) program, including future awards of the Homestead contract. We conclude, therefore, that a real controversy exists and that the appeal may proceed. See also, American Bible Society v. Blount, 3 Cir. 1971, 446 F.2d 588; Atlantic Richfield Co. v. Oil, Chemical and Atomic Workers International Union, AFL-CIO, 7 Cir. 1971, 447 F.2d 945. The question of the plaintiffs’ standing is considerably more difficult. In general, to have standing to litigate, a party must show that he has incurred, or is in immediate danger of incurring, some direct and personal injury resulting from the violation of a constitutional or statutory right designed to protect that party. Moose Lodge No. 107 v. Irvis, 1972, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627; Sierra Club v. Morton, 1972, 405 U.S. 727, 92 S.Ct. 1361, 31 L. Ed.2d 636; Laird v. Tatum, 1972, 408 U.S. 1, 92 S.Ct. 2318, 33 L.Ed.2d 154; Association of Data Processing Organizations, Inc. v. Camp, 1970, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184; Barlow v. Collins, 1970, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192. To be sure, even a slight injury may suffice in some circumstances. See Flast v. Cohen, 1968, 392 U.S. 83, 88 S.Ct. 1942, 20 L.Ed.2d 947. Yet the fundamental principle remains inviolate: one who has no personal stake in the outcome of the controversy always lacks standing. In the case at bar, the plaintiffs challenge the SBA’s section 8(a) program on two separate grounds. First, the plaintiffs contend that the SBA lacked the statutory and constitutional authority to establish its section 8(a) program. Second, assuming there is authority for establishing the section 8(a) program, the plaintiffs contend that the SBA has administered the program in an unconstitutional manner by discriminating on the basis of race, color, or ethnic origin. Turning to the first of these issues, we conclude the plaintiffs have standing to litigate the question of the statutory and constitutional authority for establishing the section 8(a) program. The plaintiffs allege not only that they have been injured by the SBA’s action removing government procurement contracts from competitive bidding, but also that the section 8(a) program enabled All American to receive a premium price above that which would have prevailed under competitive bidding and that All American has since used this premium to submit low bids for private commercial contracts, thus causing the plaintiffs to lose some of their customers to All American. In these circumstances, the injury to the plaintiffs is manifest. Moreover, as small business concerns, the plaintiffs are arguably within the zone of interests intended to be protected by the Small Business Act. See Association of Data Processing Organizations, Inc. v. Camp, supra. We therefore find that the plaintiffs have standing to litigate the first issue. For the present, we pretermit the question of the plaintiffs’ standing to litigate the issue of the SBA’s alleged discrimination in administering the section 8(a) program. III. As stated in the regulations promulgated by the SBA, the purpose of the section 8(a) program is “to assist small business concerns owned by disadvantaged persons to become self-sufficient, viable businesses capable of competing effectively in the market place.” 13 C. F.R. § 124.8-1 (b). Authority for the program is derived from section 8(a) of the Small Business Act, 15 U.S.C. § 637(a), empowering the SBA to enter into all types of contracts (including contracts for supplies, services, construction, research, and development) with other departments and agencies of the federal government and to arrange for the performance of such contracts by negotiating or otherwise letting subcontracts to small business concerns. In awarding subcontracts under the section 8(a) program, the SBA limits eligibility to small businesses “owned or destined to be owned by socially or economically disadvantaged persons.” 13 C.F.R. § 124.8-1 (c). As the regulations recognize, this “often includes, but is not restricted to, Black Americans, American Indians, Spanish Americans, Oriental Americans, Eskimos and Aleuts.” Id. The district court held that the SBA’s section 8(a) program was statutorily unauthorized, that the SBA’s powers under section 8(a) of the Small Business Act are limited to periods of emergency, and that the SBA was bound by other statutes requiring government procurement contracts to be awarded competitively. We disagree. A. The declared policy of the Small Business Act is to “aid, counsel, assist, and protect . . . the interests of small-business concerns in order to preserve free competitive enterprise [and] to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government ... be placed with small-businesses enterprises.” The Act is premised on the idea that “the essence of the American economic system of private enterprise is free competition,” “[that] the preservation and expansion of such competition is basic not only to the economic well-being but to the security of this Nation,” and that “[s]ueh security and well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed.” 15 U.S.C. § 631. To accomplish this goal, Congress vested the Small Business Administration with broad powers and responsibility over the economic life of small business concerns. The SBA is authorized to make loans to small business concerns, to provide technical and managerial aids, and to assist small business concerns in obtaining government contracts. 15 U.S.C. §§ 636, 638, 644. Most importantly, in section 8(a) of the Act the SBA is authorized to enter into procurement contracts with other federal agencies and to arrange for the performance of those contracts by subcontracting with small business concerns. 15 U.S.C. § 637(a). This section unequivocally states that the SBA is empowered to let subcontracts to “small business concerns or others.” 15 U.S.C. § 637(a)(2). In accordance with this statutory mandate, the SBA adopted its section 8(a) program through which government procurement contracts are awarded to small business concerns owned by disadvantaged persons. The plaintiff contends, however, that the section 8(a) program is unauthorized because it is not specifically mentioned in the statute. This argument is without merit. The complex and volatile nature of problems, including allocation of government procurement contracts, often causes Congress to cast its statutory provisions in general terms, leaving to the agency the task of spelling out the specific regulations and programs. In this manner, agency expertise may be fully employed in dealing with such problems. The agency may evaluate the competing alternatives and formulate the policy best suited to the attainment of the statutory goal. Furthermore, the agency is left free to respond to the demands of changing circumstances or conditions unanticipated by Congress. Indeed, an agency could easily be prevented from serving its intended purpose if burdened with specific statutory regulations and programs. So it is with the case at bar. Congress has declared that the actual and potential capacity of small business concerns must be developed and that a fair proportion of total purchases and contracts of the federal government must be placed with such firms. 15 U. S.C. § 631. It has given the SBA the statutory authority and necessary discretion in awarding subcontracts to accomplish that goal. The discretion as to which firms shall receive subcontracts and the decision as to what regulations shall govern procurement is left to the SBA. 15 U.S.C. § 637. It must select the programs that will insure the economic development of small business concerns and provide for their participation in government procurement contracts. The SBA has responded by adopting a program which reflects its judgment of priorities in light of current facts. It is not the duty of the courts to evaluate the arguments regarding allocation of government procurement contracts or to consider the wisdom of the present programs. American Trucking Ass’ns v. Atchison, T. & S. F. Ry., 1967, 387 U.S. 397, 87 S.Ct. 1608, 18 L.Ed.2d 847. Rather, our task is limited to determining whether the SBA has abused its discretion or exceeded its statutory authority in adopting the section 8(a) program. There is ample indication that small business concerns owned by disadvantaged persons have traditionally received a disproportionally small number of government procurement contracts. It is certainly reasonable, therefore, for the SBA to make a special effort to alleviate this imbalance. Section 8(a) of the Act provides the authority to do so. Furthermore, the plaintiffs cannot complain because a specific type of small business concern is the primary beneficiary of the present program. It is well settled that an agency need not “strike at all evils at the same time,” Semler v. Dental Examiners, 1935, 294 U.S. 608, 610, 55 S.Ct. 570, 571, 79 L.Ed. 1086, but may “reform may take one step at a time, addressing itself to the phase of the problem which seems most acute.” Williamson v. Lee Optical Co., 1955, 348 U.S. 483, 489, 75 S.Ct. 461, 465, 99 L.Ed. 563. See Katzenbach v. Morgan, 1966, 384 U.S. 641, 86 S.Ct. 1717, 16 L.Ed.2d 828; Roschen v. Ward, 1929, 279 U.S. 337, 49 S.Ct. 336, 73 L.Ed. 722. Since the present program is a reasonable means of promoting the statutory goal, we find that the SBA has not abused its discretion or exceeded its statutory authority. The SBA’s program is also supported by congressional and presidential mandates issued after the passage of the Act. The first of these mandates is contained in the 1967 Amendment to the Economic Opportunity Act, 42 U.S.C. § 2701 et seq. This amendment directs the SBA to “assist in the establishment, preservation, and strengthening of small business concerns . with special attention to small business concerns (1) located in urban or rural areas with high proportions of unemployed or low-income individuals, or (2) owned by low-income individuals.” 42 U.S.C. § 2901. In addition, the Administrator of the SBA is specifically instructed to “take such steps as may be necessary and appropriate, in coordination and cooperation with the heads of other Federal departments and agencies, so that contracts, subcontracts, and deposits made by the Federal Government or in connection with programs aided with Federal funds are placed in such a way as to further the purposes of this subchapter.” 42 U.S.C. § 2906c(a). (emphasis added.) In response, the plaintiffs contend that the Economic Opportunity Act prohibits the awarding of the subcontract in the present case since section 2949(2) provides that financial assistance may not include the procurement of plant or equipment, or goods or services. 42 U.S.C. § 2949(2). This section, however, clearly applies to grants in kind and does not preclude awards of subcontracts for the performance of services. On the contrary, financial assistance through contract awards is expressly approved by the Act. 42 U.S.C. § 2906c(a). The presidential mandates for the SBA’s section 8(a) program are found in Executive Orders 11458, 11518, 11625. In the first order, issued March 5, 1969, the President instructed the appropriate federal departments and agencies to establish programs to strengthen minority business enterprise. Exec.Order No. 11458, 34 Fed.Reg. 4937 (1969). In the second order, issued March 21, 1970, the President called for increased representation of the interests of small business concerns, particularly minority-owned business concerns, within federal departments and agencies. Exec.Order No. 11518, 35 Fed.Reg. 4939 (1970). In the third order, issued October 13, 1971, the President directed all federal departments and agencies to “continue all current efforts to foster and promote minority business enterprises.” Exec.Order No. 11625, 36 Fed. Reg. 19967 (1971). In terms substantially identical to the SBA’s section 8(a) program, the order defines “minority business enterprise” as “a business enterprise that is owned or controlled by one or more socially or economically disadvantaged persons.” Id. The SBA’s section 8(a) program clearly promotes the goals articulated in both the 1967 Amendment to the Economic Opportunity Act and the executive orders. We conclude that there is ample support for the section 8(a) program. B. In reaching the conclusion that the SBA’s powers under section 8(a) of the Small Business Act may be used only in periods of emergency, the district court relied on the fact that the statutory prototype of section 8(a), sections 714(b)(1)(B), (C), and 714(b)(2) of the Defense Production Act Amendments of 1951, was first enacted to increase the participation of small business concerns in the production of war material during the Korean War. Defense Production Act Amendments of 1951, 65 Stat. 140, 141, §§ 7.14(b)(1) (B), (C), and 714(b)(2). In addition, the court noted that the regulations first promulgated by the SBA after the passage of section 8(a) stated that the authority to subcontract would be used only in periods of emergency. 13 C.F.R. § 124.8-1 (1958). We are not persuaded by this restrictive interpretation of section 8(a). There can be no more reliable an indication of legislative intent than the specific statutory words selected by Congress in delineating the powers conferred.. Section 8(a) unambiguously provides that the SBA is empowered to act “whenever it determines that such action is necessary.” 15 U.S.C. § 637(a). This broad mandate answers the argument that Congress intended to restrict section 8(a) to periods of emergency. We therefore conclude that the SBA’s authority to use its powers under section 8(a) is not limited to periods of emergency. C. As an additional ground for its decision, the district court held that section 8(a) prohibits the SBA’s action awarding the Homestead contract to All American without formal advertising or competitive bidding. Again, we disagree. Section 8(a) empowers the SBA to arrange for the performance of prime contracts by “negotiating or otherwise letting subcontracts.” 15 U.S.C. § 637(a)(2). The statute does not require the SBA to engage in competitive bidding. The plaintiffs contend, however, that to construe the phrase “or otherwise letting” as permitting the SBA to dispense with competition would be inconsistent with the congressional intent expressed in other statutes requiring competition in government procurement. These statutes recognize, however, that competition may be dispensed with when other statutes so provide, 41 U.S.C. § 252(c)(15), or when the purposes of the relevant program make it impractical to secure competition. 41 U.S.C. § 252(c)(10). Both exceptions are applicable here. First, section 8(a) of the Small Business Act clearly constitutes specific statutory authority to dispense with competition. 15 U.S.C. § 637(a). It provides that the SBA may let subcontracts by negotiation or any other method. Second, competition is impractical in the present case. The purpose of the Act is to assist small business concerns. The Act is based on the premise that such firms are unable to compete effectively in the marketplace and therefore cannot secure government procurement contracts awarded through competitive bidding. By increasing their participation in government procurement, however, these firms can eventually become self-sufficient, viable businesses capable of competing effectively in the marketplace. Private negotiation of subcontracts is the best means of accomplishing this goal. To require competitive bidding would be contrary to the basic rationale of the Act. Even if competition were limited to small business concerns, there would still be many small business concerns that would never receive government procurement contracts. This result would clearly frustrate the congressional intent to assist small businesses. Kleen-Rite Janitorial Services, Inc. v. Laird, D.Mass.1971, [September 21, 1971, No. 71-1968], supports the SBA’s authority to institute the section 8(a) program. In Kleen-Rite, the plaintiff sought to enjoin the SBA and the Department of Defense from awarding a subcontract for janitorial services to a small business concern owned by socially and economically disadvantaged persons. In denying the injunction, the court held that the SBA had specific statutory authority to administer its section 8(a) program and that there was no statutory or constitutional duty to offer the subcontract for competitive bidding. Space Services of Georgia, Inc. v. Laird, D.C.D.Conn.1972, [No. 15,170; August 17, 1972] and Fortec Constructors v. Kleppe, D.D.C.1972, 350 F.Supp. 171, also uphold the legality of the section 8(a) program. The present case is on all fours with those cases. We conclude, therefore, that subcontracts under the section 8(a) program may be awarded on a noncompetitive basis. D. The plaintiffs also contend that in awarding the Homestead contract the SBA violated section 124.8-1(d)(3) of the applicable regulations, which provides that “procurements [under section 8(a)] will not be considered where ... (3) ... small business concerns are dependent in whole or in significant part on recurring Government contracts.” 13 C.F.R. § 1248-1 (d) (3). It is clear from the evidence presented to the district court, however, that the plaintiff who had previously been awarded the Homestead contract failed to perform the required services and abandoned the contract after nine and a half months. Thus, the SBA was not depriving the plaintiffs of a renewal of an existing contract by placing the Homestead contract under the section 8(a) program. E. Finally, the plaintiffs contend that the SBA’s section 8(a) program, by using the government’s lending and contracting power to enhance All American’s competitive position, violates due process. In effect, the plaintiffs argue that the section 8(a) program enabled All American to receive a premium price above that which would have prevailed under competitive bidding and that All American has since used this premium to submit low bids for private commercial contracts, causing the plaintiffs to lose some of their customers to All American. It has long been recognized that the government, like private individuals and businesses, has the power “to determine those with whom it will deal, and to fix the terms and conditions upon which it will make needed purchases.” Perkins v. Lukens Steel Co., 1939, 310 U.S. 113, 127, 60 S.Ct. 869, 876, 84 L.Ed. 1108. In exercising this power, of course, the government remains subject to the constitutional requirement of due process. But in the case at bar we cannot accept the plaintiffs’ argument that the section 8(a) program is unconstitutional because the plaintiffs may be disadvantaged competitively. There is no constitutional duty to offer government procurement contracts for competitive bidding. The SBA has the statutory authority to assist small business concerns through private placement of contracts. We have already held that the SBA has not abused its discretion in adopting the section 8(a) program. The program may produce some inequalities among small business concerns as a class. But in the area of socio-economic legislation, the government’s action must be upheld if it is rationally related to a proper government purpose. Dandridge v. Williams, 1970, 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491; Walters v. St. Louis, 1954, 347 U.S. 231, 74 S.Ct. 505, 98 L. Ed. 660. We hold that it is. IV. We now consider the district court’s decision that the SBA’s section 8(a) program is unconstitutional because “the primary criterion for eligibility is race, color, or ethnic origin” and that the' “[p]laintiffs have been excluded from consideration because of their race.” As we have stated, to have standing to litigate, a party must show that,he has incurred or is in immediate danger of incurring some direct and personal injury resulting from a statutory or constitutional right designed to protect that party. Moose Lodge No. 107 v. Irvis, supra; Sierra Club v. Morton, supra; Laird v. Tatum, supra; Association of Data Processing Organization, Inc. v. Camp, supra. In this case the plaintiffs have failed to meet that requirement with respect to the issue of the SBA’s alleged discrimination in administering the section 8(a) program. The plaintiffs never applied for participation in the section 8(a) program. Furthermore, they do not even contend that they are socially or economically disadvantaged and therefore eligible for participation in the program. Thus, whatever the outcome of the litigation, the plaintiffs will not be directly affected. Most directly in point is Moose Lodge No. 107 v. Irvis, supra. There, the Supreme Court held that the plaintiff did not have standing to litigate the question involving the membership qualifications of the Moose Lodge because he did not attempt to become a member; he did have standing to litigate the issues concerning the Lodge’s guest policies because he was refused service while a guest. In discussing the standing requirement, the Court stated, 407 U.S. at 92 S.Ct. at 1968, 32 L.Ed.2d at 634: Any injury to appellee from the conduct of Moose Lodge stemmed not from the Lodge’s membership requirements, but from its policies with respect to the serving of guests of members. Appellee has standing to seek redress for injuries done to him, but may not seek redress for injuries done to others. [Citations omitted]. While this Court has held that in exceptional situations a concededly injured party may rely on the constitutional rights of a third party in obtaining relief, Barrows v. Jackson, 346 U.S. 249, 73 S.Ct. 1031, 97 L.Ed. 1586 (1953), in this case appellee was not injured by Moose Lodge’s membership policy since he never sought to become a member. It follows from Moose Lodge that the plaintiffs in the present case have no standing to litigate the issue of racial discrimination in the administration of the section 8(a) program because they did not even apply for participation in the program. In Space Services of Georgia v. Laird, supra, the district court dismissed a similar challenge to the SBA’s section 8(a) program on the ground that the plaintiff could “complain that there is discrimination in the administration of the program only if he had tried to become a member of the class eligible for the program.” Again, in Fortec Constructors v. Kleppe, supra, the district court held that the plaintiff had no standing to raise the issue of racial discrimination because he had not applied for participation in the program. The court concluded that “[since] the plaintiffs have never sought to be eligible for the section 8(a) program, and never having had an 8(a) contract to gain, they cannot now allege that a contract was lost .... Solely on the basis of some generalized interest in the fair administration of a program, plaintiffs cannot attack the award as racially discriminatory.” In effect, the plaintiffs are asking this Court to resolve a question that is not now before us. We must decline the invitation. See United States v. Raines, 1960, 362 U.S. 17, 80 S.Ct. 519, 4 L.Ed. 2d 524. Otherwise, the grasp of our decree would exceed its proper reach. We therefore conclude that it was error for the district court to consider the issue of racial discrimination in the administration of the program. The decision of the district court must be Reversed. . Section 2 of the Small Business Act defines “small business concerns” as follows : For the purposes of this chapter, a small-business concern shall be deemed to be one which is independently owned and operated and which is not dominant in its field of operation. In addition to the foregoing criteria the Administrator, in making a detailed definition, may use these criteria, among others: Number of employees and dollar volume of business. Where the number of employees is used as one of the criteria in making such definition for any of the purposes of this chapter, the maximum number of employees which a small-business concern may have under the definition shall vary from industry to industry to the extent necessary to reflect different characteristics of such industries and to take proper account of other relevant factors. Pub.L. 85-536, § 2 [3], July 18, 1958, 72 Stat. 384. 15 U.S.C. § 632. . Section 8(b) (11) of the Small Business Act authorizes the SBA to set aside contracts for placement with small business concerns. The SBA has the power: (11) to make studies and recommendations to the appropriate Federal agencies to insure that a fair proportion of the total purchases and contracts for property and services for the Government be placed with small-business enterprises, to insure that a fair proportion of Government contracts for research and development be placed with small-business concerns, to insure that a fair proportion of the total sales of Government property be made to small-business concerns, and to insure a fair and equitable share of materials, supplies, and equipment to small-business concerns ; 15 U.S.C. § 637(b)(11). . In 1968, Jones was the successful bidder and received a contract price of $42,245. In 1969, Santo was the successful bidder and received a contract price of $49,166. . The SBA contends that the contract price was arrived at by computing estimated cost plus allowance for a reasonable profit. The district court found that the contract price includes a premium designed to enhance All American’s competitive position against the plaintiffs and other similarly situated small business concerns. . The regulations governing the section 8 (a) program provides, in pertinent part: § 124.8-1 (a) General. Section 8(a) of the Small Business Act authorizes SBA to enter into all types of contracts (including supply, services, construction, research and development) with other Government departments and agencies and subcontract the preformance of such contracts. (b) Purpose. It is the policy of SBA to use such authority to assist small concerns owned by disadvantaged persons to become self-sufficient, viable businesses capable of competing effectively in the marketplace. (c) Eligibility. To be eligible for an 8(a) subcontract, a concern must be owned or destined to be owned by socially or economically disadvantaged persons. This category often includes, but is not restricted to, Black Americans, American Indians, Spanish Americans, Oriental Americans, Eskimos and Aleuts. If a concern is not presently controlled by such persons, the firm having such control must execute a divestiture agreement providing for divestiture of control by the divesting company over the concern within a reasonable period of time. The existence of control is a question of fact for administrative determination under the circumstances of each case. Divestiture of at least 51 percent of the stock will create a rebuttable presumption of divestiture of control. (d) Procurement selection criteria. Procurements will be selected which are determined suitable for performance by an SBA subcontractor. However, procurements will not be considered where: (1) Public solicitation has been issued ; (2) There is a reasonable possibility of an award being made to disadvantaged contractors under normal competitive procedures, or (3) Where small business concerns are dependent in whole or in significant part on recurring Government contracts. . Section 8(a) of the Small Business Act, 15 U.S.C. § 637(a), provides : (a) It shall be the duty of the Administration and it is empowered, whenever it determines such action is necessary— (1) to enter into contracts with the United States Government and any department, agency, or officer thereof having procurement powers obligating the Administration to furnish articles, equipment, supplies, or materials to the Government. In any case in which the Administration certifies to any officer of the Government having procurement powers that the Administration is competent to perform any specific Government procurement contract to be let by any such officer, such officer shall be authorized in his discretion to let such procurement contract to the Administration upon such terms and conditions as may be agreed upon between the Administration and the procurement officer ; and (2) to arrange for the preformance of such contracts by negotiating or otherwise letting subcontracts to small-business concerns or others for the manufacture, supply, or assembly of such articles, equipment, supplies, or materials, or parts thereof, or servicing or processing in connection therewith, or such management services as may be necessary to enable the Administration to perform such contracts. . See e. g., FTC v. Sperry Hutchinson Co., 1972, 405 U.S. 233, 92 S.Ct. 898, 31 L.Ed.2d 170; Permian Basin Area Rate Cases, 1968, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312; United States v. Southwestern Cable Co., 1968, 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001; American Trucking Ass’ns v. Atchison, T. & S. F. Ry., 1967, 387 U.S. 397, 87 S.Ct. 1608, 18 L.Ed.2d 847; American Power & Light Co., 1946, 329 U.S. 90, 67 S.Ct. 133, 91 L.Ed. 103; Tagg Bros. & Moorhead v. United States, 1930, 280 U.S. 420, 50 S.Ct. 220, 74 L.Ed. 524; FRC v. Nelson Bros. Bond & Mortgage Co., 1933, 289 U.S. 206, 53 S.Ct. 627, 77 L.Ed. 1166; FTC v. Grate, 1930, 253 U.S. 421, 40 S.Ct. 572, 64 L.Ed. 993; United States v. Shreveport Grain & Elevator Co., 1932, 287 U.S. 77, 53 S.Ct. 42, 77 L.Ed. 175; See K. Davis, Administrative Law Treatise, § 2.01-2.16. . As the court noted in Kendler v. Wirtz, 3 Cir. 1968, 388 F.2d 381, 383, A mere difference of judgment between a person disadvantageous^ affected by agency action and the responsible head of the agency over the merits of particular administration action as a means of achieving a legislative objective, when Congress has assigned authority to make and act upon such determinations to the agency, is not judicially reviewable. . . . [T] he statutory standard is expressed in such general concepts that it requires and must contemplate the exercise of discretion in choice among various rational alternatives none of which can fully satisfy all demands of competing interests. The area of government contract awards has long been recognized as one in which special deference should be shown to the discretion of the administrative agency. Perkins v. Lukens Steel Co., 1940, 310 U.S. 113, 60 S.Ct. 869, 84 L.Ed. 1108. The agency, of course, may not act arbitrarily. Scanwell Laboratories v. Shaffer, 1970, 137 U.S.App.D.C. 371, 424 F.2d 859; Gonzalez v. Freeman, 1964, 118 U.S.App.D.C. 180, 334 F.2d 570. . The limited extent to which minority business enterprises participate in federal government procurement indicates that these firms have received a disproportionately small number of contract awards. According to the Report of the President’s Advisory Council on Minority Business Enterprise, at 5 (1971) “current figures place minority-owned businesses variously between 55,000 and 165,000, from a total of more than 5.5 million, or between one and three percent of the total business community.” In Fiscal Year 1971 federal government procurement contracts let to minority-owned businesses (blacks, Indians, Puerto Ricans, Mexican Americans, and others) totalled $143.8 million. The SBA’s section 8(a) program accounted for $66 million of this amount. Dept. of Commerce, Progress of the Minority Business Enterprise Program, at 9 (1972). The federal government’s procurement contracting during this same period exceeded $45 billion. Secretary of the Defense, Military Prime Contract Awards and Subcontract Payments or Commitments — July 1970 - June 1971, at 7-8 (1971) ; General Services Administration, Procurement By Civilian Executive Agencies, Period July 1, 1970 - June 30, 1971, (1971). Thus, minority-owned businesses participated in about one-third of one percent of the total dollar volume of federal government procurement during the Fiscal Year 1971. Although no figures were presented comparing contract awards to non-minority-owned small business firms with awards to minority-owned small business firms, it is apparent that in general minority-owned small business firms have received a disproportionately small share of federal government procurement contracts. . We hold that the Small Business Act alone provides sufficient authority for the SBA’s section 8(a) program. We discuss these additional authorities, however, because we find they show convincingly that the SBA has not abused its discretion or exceeded its statutory authority. . The plaintiffs argue that the 1967 Amendment defines eligibility in terms of low-income, not social and economic disadvantage. 42 U.S.C. § 2901. The plaintiffs would conclude that the Amendment cannot provide support for the SBA’s program. This restrictive interpretation fails for three reasons. First, the broad goal of the Economic Opportunity Act and the 1967 Amendment clearly contemplates that the beneficiaries of the Act need not be defined exclusively in terms of income. The Act states that its purpose is to eliminate “the paradox of poverty in the midst of plenty’’ and that the nation can achieve its economic and social potential only if “every individual has the opportunity to contribute to the full extent of his capabilities and to participate in the workings of our society.” The Senate Committee on Labor and Public Welfare, in its Report on the 1967 Amendments to the Economic Opportunity Act, recognized that achievement of the statutory goal required that disadvantaged minorities be included in the programs established by the Act: “The Committee feels that an important priority of the anti-poverty effort must be to expand the opportunities for a stake in the community economic life for low-income persons and minority group members, especially in the urban ghetto.” S.Rep.No.563, 90th Cong., 1st Sess. 65 (1967). (emphasis added.) Second, the House and Conference Reports of the 1967 Amendment state that the Administrator of the SBA has the responsibility for defining “low income”, and that “such definition need not correspond with the definition of ‘low income’ as used elsewhere in the act.” 1967 U.S. Cong, and Admin.News, pp. 2485, 2596; H.R. Final Report No. 866, 90th Cong., 1st Sess. (1967); Conference Report No. 1012, 90th Cong., 1st Sess. (1967), U.S. Code Cong. & Admin.News, p. 2428. When an administrative agency is charged with the responsibility for defining a broad statutory term, the agency’s construction must be accepted if it has a reasonable basis in law. NLRB v. Hearst Publications, 1944, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170; Gray v. Powell, 1941, 314 U.S. 402, 62 S.Ct. 326, 86 L.Ed. 301. The legislative history clearly indicates that factors other than income may be considered. Indeed, it is unlikely that many persons who own small businesses are impoverished in the strict sense. Even for the Act to have meaning, therefore, it is necessary to read the term “low-income individuals” in a broad manner. We conclude that the SBA’s construction of the term has a reasonable basis in law. Finally, the standards for determining eligibility under the SBA’s section 8(a) program contemplate that income will be an important factor. 13 C.F.R. § 124.8-1. In these circumstances, we find plaintiffs’ contention that the 1967 Amendment is inapplicable to be without, merit. . The SBA’s section 8(a) program was instituted in 1968. The plaintiffs argue that executive orders issued after that date cannot be- considered in determining the authority for the program. We find this contention unsupported. The relevant period for the present case is the date when the second Homestead contract was awarded, 1971. Since the executive orders were issued before that date, they may be considered as authority. Furthermore, we note that executive orders have the force and effect of law. See Farkas v. Texas Investment Corp., 5 Cir. 1967, 375 F.2d 629. cert. denied 389 U.S. 977, 88 S.Ct. 480, 19 L.Ed.2d 471. . The Defense Production Act Amendments of 1951 were designed to insure the participation of small business concerns in the production of material for the Korean War. The Amendments authorized the Small Defense Plants Administration (SDPA) to enter into contracts with other government agencies and to subcontract with small business concerns “without regard to any other provision of law except the regulations prescribed under Section 201 of the First War Powers Act, 1944, as amended.” Act of July 31, 1951, ch. 275, § 110, 65 Stat. 140-141. Section 201 of the War Powers Act authorized contracting “without regard to the provisions of law relating to the making, performance, amendment or modification of contracts,” whenever such action would facilitate the prosecution of the war. On February 2, 1951, President Truman issued Executive Order No. 10210, 16 Fed.Reg. 1049, authorizing certain federal agencies, including the Department of Defense, to exercise the subcontracting power granted by section 201. The order stated that “advertising competitive bidding, and bid, payment, performance or other bonds or other forms of security need not be required.” In 1953, Congress established the Smali Business Administration as the peacetime successor to the SDPA. The Small Business Act of 1953 conferred the subcontracting power upon the SBA but did not state, as did the earlier Amendments, that it could be exercised “without regard to .any other provision of law.” Act of July 30, 1953, ch. 282, 67 Stat. 235. In 1958, Congress enacted the second Small Business Act. The Act provided that the SBA could use the subcontracting power “whenever it determines that such action is necessary” and that it could arrange for the performance of subcontracts “by negotiating or otherwise letting” 15 U.S.C. § 637(a)(2). . The 1958 regulations provided, in pertinent part: 13 C.F.R. § 124-8.1 (a) During periods of emergency determined by the Administrator to warrant exercise by SBA of its prime contract authority, SBA will review procurement plans and programs of other Government departments and agencies to determine the contracts for property, equipment, supplies, or materials which SBA should undertake to furnish to the Government through the exercise of its prime contracting authority. Upon making such determination, SBA will make the certification provided for in section 8(a)(1) of the Small Business Act and will enter into a formal contract with the procuring agency. Thereafter, SBA will widely publicize its requirements and fully utilize its facilities listing in soliciting bids or proposals. Awards will then be made to the best qualified supplier, price and other factors considered. The regulations promulgated by the SBA in 1970, of course, contain no such limitation. Congress has often criticized the SBA’s initially restrictive interpretation of its powers. See note 15 infra. The SBA is certainly entitled to re-evaluate its position in these circumstances. As the Supreme Court noted in American Trucking Ass’n v. Atchison, T. & S. F. Ry., 1967, 387 U.S. 397, 416-417, 87 S.Ct. 1608, 1618, 18 L.Ed.2d 847, [W]e agree that the Commission, faced with new developments or in light of reconsideration of the relevant facts and its mandate, may alter its past interpretation and overturn past administrative rulings and practice, [citing cases]. In fact, . . . this kind of flexibility and adaptability . . . is an essential part of the office of a regulatory agency. . Congress has stated on several occasions that section 8(a) can be used peacetime. In 1960, for example, the Final Report of the Select Committee on Small Business, referring to the SBA’s initial position that section 8(a) could be used only in periods of emergency, stated: It is the conclusion of the committee that the [SBA’s] interjiretation of this S.ection is too narrow and limited; that it was the intention of Congress that it would he used whenever necessary to assure that small business receives its fair share of Government procurement and not just in ‘national emergency.’ The committee believes that small business is not getting its fair share, and that there could very well be instances wherein the assuming of prime contracts by SBA for the purpose of letting subcontracts to small businesses would be feasible. H.R.Final Rep.No. 2235, 86th Cong., 2d Sess. 81 (1960) (emphasis added.) See Hearings before Subcomm. of the Comm, on Banking and Currency, 87th Cong., 1st Sess., at 262-264 (1961); Hearings on H.R. 4525 Before the Comm, on Banking and Currency, 84th Cong., 1st Sess., at 97 (1955). The plaintiffs point out that the SBA, in a report presented to the House Committee considering the legislation which became the Small Business Act of 1958, stated that it believed its authority to subcontract was limited to periods Of emergency. In American Trucking Ass’n v. Atchison, T., & S. F. Ry., supra, the Supreme Court commented on the reliability of such reports in determining legislative intent: We do not regard [an agency’s report to Congress] as legislative history demonstrating a congressional construction of the meaning of the statute. . The advocacy of legislation by an administrative agency — and even the assertion of the need for it to accomplish a desired result — is an unsure and unreliable, and not a highly desirable, guide to statutory construction. 387 U. S. at 417, 87 S.Ct. at 1619. . The Federal Property and Administrative Services Act of 1949, 41 U.S.C. § 252 (c) (15), provides that competition may be dispensed with where negotiation is “otherwise authorized by law.” The regulations promulgated pursuant to the Act cite several examples, including “negotiation permitted by the Small Business Act.” 41 C.F.R. § 18-3.217-3. . The 1967 Amendments to the Economic Opportunity recognized this fact by specifying that subcontracts were to be “placed in such a way as to further the purposes of this subchapter.” 42 U.S.C. § 2906c(a). Again, Congress avoided imposing any requirement of competitive bidding on the SBA in awarding subcontracts under the program.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Louis GARBER, Plaintiff-Appellee, v. Cortes W. RANDELL et al., Defendants-Appellees. Mildred LIPSIG et al., Plaintiffs-Appellees, v. NATIONAL STUDENT MARKETING CORPORATION et al., Defendants-Appellees. Domenick L. NATALE, Plaintiff-Appellee, v. NATIONAL STUDENT MARKETING CORPORATION et al., Defendants-Appellees, and White & Case, Defendant-Appellant. Nos. 743, 766, Dockets 72-1820, 73-1339. United States Court of Appeals, Second Circuit. Argued Jan. 11, 1973. Decided April 9, 1973. Edwin J. Wesely, New York City (Peter H. Kaminer, Winthrop, Stimson, Putnam & Roberts, New York City, of counsel), for defendant-appellant, White & Case. Julius Levy, New York City (Abraham L. Pomerantz, New York City, of counsel), for plaintiffs-appellees. John Logan O’Donnell, New York City (Charles M. McCaghey, Jonathan C. Lane, Olwine, Connelly, Chase, O’Donnell & Weyher, New York City, of counsel), for defendant-appellee National Student Marketing Corp. William E. Hegarty, New York City (David R. Hyde, Mathias E. Mone, Ca-hill, Gordon, Sonnett, Reindel & Ohl, New York City, of counsel), for plaintiff-appellee, Peat, Marwick, Mitchell & Co. Ronald P. Wertheim, Washington, D. C. (David Ginsburg, Lee R. Marks, Ginsburg, Feldman & Bress, Washington, D. C., of counsel), for plaintiff-appellee, Cameron Brown. Before LUMBARD, KAUFMAN and MANSFIELD, Circuit Judges. MANSFIELD, Circuit Judge: In these three consolidated class and derivative suits by stockholders of National Student Marketing Corp. et al. (“NSM” herein), which allege violations of the federal securities laws on the part of some 58 defendants, the law firm of White & Case (“W & C” herein), originally named as a defendant in one suit only (the Natale action), appeals from two orders of the District Court for the Southern District of New York entered by Chief Judge Edelstein. The first order, filed on April 20, 1972, directed, among other things, that the three actions (including the Natale suit) be consolidated for pretrial purposes and that plaintiffs file a consolidated amended complaint, which has since been served on June 5, 1972. The second order, dated February 14, 1973, denied W & C’s motion for a severance, 58 F.R.D. 492. We reverse the first order insofar as it directs the filing of a consolidated complaint and in all other respects affirm both orders. Two of the actions (the Garber and Lipsig suits) are purported class suits by NSM stockholders which charge that during the period from April 1968, to March 1, 1970, the defendants, who include various directors and officers of NSM; Peat, Marwick, Mitchell & Co. (“PMM” herein), its independent auditors; and various stockbrokers, investment banking firms, and public relations firms, used materially false and misleading financial reports, statements, releases, predictions and estimates to inflate the market price of NSM shares, with resulting benefits to some of the defendants and loss to those who purchased shares during the relevant period, all in violation of § 10 of the Securities Exchange Act of 1934, 15 U.S.C. § 78j and SEC Rules issued thereunder, notably Rule 10b-5, 17 C.F.R. § 240.10b-5. The Natale complaint, which joined W & C as a defendant along with those named in the two earlier suits, contains basically the same allegations on behalf of purchasers of NSM shares during the same period (April 1968 to March 1, 1970) without specifying any conduct on the part of W & C alleged to have violated the federal securities laws. Na-tale’s designation of W & C as a defendant was apparently inspired by the SEC’s inclusion of W & C as a defendant in a suit for injunctive relief instituted by the SEC against most or all of the same defendants in the United States District Court for the District of Columbia shortly before the commencement of the Natale suit here. The allegations of the Consolidated Amended and Supplemental Complaint are more detailed than those asserted in the three individual complaints and claim violations of both the Securities Act of 1933, 15 U.S.C. § 77a et seq., and the 1934 Act, 15 U.S.C. § 78a et seq. The consolidated complaint is for the most part devoted to charges of artificial inflation of NSM shares during the period from April 1, 1968, to February 17, 1972. Upon the basis of the complaint recently filed by the SEC, Paragraphs 16 to 29 allege, upon information and belief, on behalf of plaintiff Natale only, wholly distinct claims against W & C. The principal claim against W & C relates to its activities as counsel for NSM in the closing on October 31, 1969, of the merger of Interstate National Corporation (“Interstate” herein) into NSM. It is alleged that in connection with that merger W & C failed to disclose to stockholders of the two companies that a “comfort letter” which was required to be furnished pursuant to the merger agreement by defendant PMM, accountants for NSM, did not conform to the terms of that agreement. According to the consolidated complaint, the comfort letter was to state that certain unaudited financial statements of NSM had been prepared in accordance with generally accepted accounting principles and that NSM had not suffered any material adverse interim change in its financial position or in the results of its current operations; instead, the letter revealed that there had been a material over-statement of NSM’s current earnings in earlier unaudited interim financial statements used to solicit stockholder approval of the merger and that instead of the profit shown on the interim unaudited statement, NSM had suffered a loss for the period ended May 31, 1969, and would show a “break-even” for the year ended August 31,1969. The claim against W & C is that, notwithstanding its knowledge of the foregoing information and of PMM’s recommendation that the merging companies should consider submission to their stockholders of the corrected financial data prior to proceeding with the closing of the merger, W & C and attorneys for Interstate (Lord, Bissell & Brook) nevertheless proceeded with the closing, respectively issuing opinions that all steps necessary to consummate the merger had been validly taken, without requiring a revision of the financial statements to reflect the material downward adjustment of NSM’s earnings or insisting upon a disclosure of the earnings decline to the stockholders of both companies or to the SEC. It is further alleged that upon learning of the adjustment of earnings the directors of both companies failed to publish the information or notify stockholders and that W & C, acting on behalf of NSM, transmitted to the SEC a Form 8K containing false representations as to NSM’s financial statements, and concealed the existence and contents of the comfort letter. On or about October 31, 1969, certain officers and directors of Interstate allegedly sold 77,000 NSM shares without disclosing the contents of the comfort letter. Two other discrete claims are asserted against W & C: (1) that on November 20, 1969, it rendered an opinion with respect to NSM’s acquisition of Compujob, Inc. concurring in an opinion by the latter’s legal counsel which falsely. stated that title to its shares had passed to NSM as of August 29, 1969, and (2) that on October 31, 1969, and November 20, 1969, W & C rendered opinions in connection with NSM’s disposition of Collegiate Advertising Ltd., which falsely asserted that title had passed as of the end of August, 1969. The purpose of the alleged backdating of the transactions was to enable profits realized from them to be included in NSM’s August 31, 1969, year-end financial statement. It is not claimed that W & C profited from any of the foregoing conduct. The threshold question is whether the district court’s .two orders, being interlocutory, are appealable. We have recognized that consolidation of stockholders’ suits during pretrial stages pursuant to Rule 42 F.R.Civ.P. may benefit both the court and the parties by expediting pretrial proceedings, avoiding duplication and harassment of parties and witnesses, and minimizing expenditure of time and money by all persons concerned. See MacAlister v. Guterma, 263 F.2d 65 (2d Cir. 1958). However, where the claims against, or defenses of, some parties are substantially different from those of others, some may be prejudiced by consolidation, particularly if one general or lead counsel exercises his supervisory power in a way that tends to deprive them of full discovery and preparation of their individual cases. For these reasons the determination in each case as to whether the benefits from consolidation will outweigh the prejudice to individual parties rests in the district court’s sound discretion. MacAlister v. Guterma, supra, at 69-70; United States v. Knauer, 149 F.2d 519 (7th Cir. 1945), aff’d., 328 U.S. 654, 66 S.Ct. 1304, 90 L.Ed. 1500, rehearing denied, 329 U.S. 818, 67 S.Ct. 25, 91 L.Ed. 697 (1946), petition denied, 332 U.S. 834, 68 S.Ct. 210, 92 L.Ed. 407 (1947). For essentially the same reasons the court’s power to sever claims and order separate trials is likewise discretionary, requiring it to balance the factors of benefit and prejudice that will result from the alternative courses. The denial of a motion for severance will not, therefore, usually be set aside in the absence of a clear showing of abuse of discretion. Walsh v. Miehle-Goss-Dexter, Inc., 378 F.2d 409, 412 (3d Cir. 1967). Since consolidation and severance are both discretionary and interlocutory, such orders are not ordinarily appealable. Levine v. American Export Industries, 473 F.2d 1008 (2d Cir. 1973) (consolidation); United States v. Garber, 413 F.2d 284, 285 (2d Cir. 1969) (severance). “An order granting or denying consolidation, or granting or denying separate trials, is an ordinary, nonappealable interlocutory ordér. Severance orders are the same. Such orders are appealable only by certification and permission under 28 U.S.C. § 1292(b) [footnotes omitted].” 9 J. Moore, Federal Practice ¶110.13 [8] at 183 (2d ed. 1972). The general rule against appealability of interlocutory orders granting or denying consolidation or severance, however, is subject to a well-recognized exception, sometimes labelled the “collateral order” doctrine. Immediate review may be had with respect to that “small class [of interlocutory orders] which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.” Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528 (1949); MacAlister v. Guterma, supra 263 F.2d at 67. Furthermore, since finality must be given a “practical rather than a technical construction,” Cohen v. Beneficial Industrial Loan Corp., 337 U.S. at 546, 69 S.Ct. at 1226 (1949); Brown Shoe Co. v. United States, 370 U.S. 294, 306, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962), we have, in the interest of minimizing delay and expense, permitted appeal of an otherwise non-appealable order where it is directly related to a final and appealable order under review in a class action by stockholders. Green v. Wolf Corp., 406 F.2d 291, 302 (2d Cir. 1968), cert. denied, 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969). The appealability of the orders before us turns, therefore, on whether either order finally determines collateral rights that are too important to be denied review or to be deferred until the entire case is adjudicated. In resolving this issue we are fortunate in having the benefit of some carefully considered opinions of this court in the very area now before us, consolidation of stockholders’ derivative and class suits. See, e. g., MacAlister v. Guterma, supra; Farber v. Riker-Maxson, 442 F.2d 457, 459 n. 1 (2d Cir. 1971). In MacAlister we held that an immediate appeal may be taken from an order denying the consolidation of stockholders’ derivative suits where the refusal to order consolidation “may prove oppressive.” MacAlister v. Guterma, supra 263 F.2d at 67. In affirming the denial of the consolidation, we noted the doubtful authority of the district court to order a consolidated complaint which would have the effect of merging the rights of some parties with those of others in violation of principles established in Johnson v. Manhattan Railway Co., 61 F.2d 934 (2d Cir. 1932), affd., 289 U.S. 479, 53 S.Ct. 721, 77 L.Ed. 1331 (1933): “ [Consolidation is permitted as a matter of convenience and economy in administration, but does not merge the suits into a single cause, or change the rights of the parties, or make those who are parties in one suit parties in another.” Johnson v. Manhattan Ry. Co., 289 U.S. at 496-497, 53 S.Ct. at 727-728 (1933). Accord, Greenberg v. Giannini, 140 F.2d 550 (2d Cir. 1944) (per L. Hand, C. J.); Zdanok v. Glidden Co., 327 F.2d 944, 950 n. 6 (2d Cir.), cert. denied, 377 U.S. 934, 84 S.Ct. 1338, 12 L.Ed.2d 298 (1964); Journapak Corporation v. Bair, 27 F.R.D. 509, 510-511 (S.D.N.Y.1961); 5 J. Moore, Federal Practice ¶42.02, at 42-21; 9 Wright & Miller, Federal Practice & Procedure: Civil § 2382 at 255 (1971). Accepting our admonition that “Cohen must be kept within narrow bounds, lest this exception swallow the salutory ‘final judgment’ rule,” Weight Watchers of Phila. v. Weight Watchers Int., 455 F.2d 770, 773 (2d Cir. 1972), no sound reason is advanced for not following the teaching of Guterma with respect to appealability of interlocutory consolidation orders in these stockholders’ suits. That decision drew the line between an order which merely requires the parties, in the interest of avoiding needless duplicative expenditure of time and money, to join in common pretrial discovery and preparation and an order which goes beyond these permissible objectives to deny a party his due process right to prosecute his own separate and distinct claims or defenses without having them so merged into the claims or defenses of others that irreparable injury will result. This latter kind of order may be reviewed under the “collateral order” doctrine. Applying the teachings of MacAlister here, we find that the district court’s consolidation order, although purporting to be for “pretrial purposes,” went beyond mere consolidation of the three suits for such purposes. In addition it directed the filing of the Consolidated Amended Supplemental Complaint, which superseded the complaints filed in the three separate actions. It further appears that the effect of this consolidation may be to cause serious prejudice to W & C. The claims asserted against W & C in the consolidated complaint are stated on behalf of only one of the 15 plaintiffs, Domenick L. Natale. Indeed it is questionable whether he could properly represent a class since he acquired his shares prior to October 31, 1969, the date when W & C first allegedly engaged in wrongful conduct, and since he did not purchase them on the open market. Furthermore, at least some of the plaintiffs have disassociated themselves from Natale’s claims against W & C. In a letter to this court dated November 22, 1972, Harry H. Lipsig, writing on behalf of himself and the other five Lipsig plaintiffs, states “neither I nor any of the other Lipsig plaintiffs intended to assert any claims against White & Case or Lord, Bissell & Brook” and “the Lipsig plaintiffs do not desire to have their claims brought against the other defendants consolidated or otherwise merged or combined with claims that other stockholders might wish to assert against those lawyer defendants.” Aside from the disassociation of some plaintiffs from Natale’s claims against W & C, the three transactions in which W & C allegedly participated are relatively narrow and limited as to scope, subject matter and time, in contrast to the broad claims asserted by all plaintiffs against most of the other 57 defendants. W & C is not claimed to have participated with these numerous other defendants in the extensive manipulative scheme allegedly carried out by them to defraud NSM stockholders, which formed the original basis and principal claim of all three actions. According to the consolidated complaint, this scheme was carried out during the period from April 1, 1968, to February 17, 1972, or for almost four years, and involved the use of scores of false financial reports, statements, releases, predictions and estimates, some 24 of which are specified as examples in Paragraph 11 of the consolidated complaint. Relief is sought on behalf of all purchasers of NSM shares during the four-year period, including the named plaintiffs. The charges against W & C, on the other hand, are limited to those claims asserted by Natale only in Paragraphs 16 to 29 of Count I. W & C is not even named in Count II. The claims against W & C, furthermore, are limited to three transactions alleged to have occurred during the 2%-month period from October 31, 1969, to January 19, 1970, with most of the alleged wrongdoing having occurred on one day — October 31, 1969. There is no claim that W & C realized any improper gains from these transactions. Assuming the validity of Natale’s claims against W & C, as wé must for the present purposes, it appears likely that only those members of the class who purchased NSM shares after the alleged concealment on October 31, 1969, of the adjustments to the NSM current operating results would be in a position to claim damages. Thus at some point it will become necessary to separate their claims against W & C from the claims of all plaintiffs against most of the other defendants, which cover a much longer period of time. To permit such limited claims against W & C to be joined with numerous unrelated claims by other purchasers against some 50-odd other defendants in one “mixed bag” type of consolidated complaint would be fundamentally unfair and would violate the principles underlying our decision in MacAlister v. Guterma, supra, and the unbroken line of authority going back to Johnson v. Manhattan Railway Co., supra. Nor is the prejudice to W & C alleviated by designation of the claims against it separately in Paragraphs 16 to 29 as claims asserted solely by Natale. This mere change in form does not serve to avoid the harm threatened by the merger of all claims into a single cause. Accordingly, we reverse the district court’s consolidation order insofar as it directs that a consolidated complaint be filed against W & C Upon remand the separate Natale complaint will be reinstated. Turning to the district court’s denial of W & C’s motion for a severance, W & C urges reversal on several grounds: First it contends that in view of the very limited nature of the claims against it and its unique issues and defenses, it will be severely prejudiced by a joint pretrial and trial of the consolidated claims, whereas none of the other parties would be prejudiced by a severance. It appears that despite W & C’s non-participation in most of the alleged misconduct it will be subject to the heavy burden, absent a severance, of participating in voluminous pretrial discovery in a mammoth proceeding that may last for years. If the limited claims against it were severed, on the other hand, pretrial discovery could be completed without delay and the issues with respect to W & C promptly tried within a fraction of the time needed to dispose of the numerous other issues with respect to other defendants. Furthermore, it is asserted, the novel claims against W & C have led to a great deal of speculation and uncertainty on the part of the public and the bar as to the personal vulnerability of lawyers to heavy damages for action taken by them solely in their capacity as such. Were the foregoing the entire picture, we might be persuaded, because of the unique circumstances of this case, to hold that denial of a severance here amounts to an abuse of discretion. However, it does not appear that a severance would enable W & C to escape the prejudice complained of or gain the benefits it seeks. In the pending action by the SEC against W & C and the other defendants, Judge Barrington D. Parker of the United States District Court for the District of Columbia entered, on March 7, 1973, an order, followed by a memorandum decision dated March 22, 1973, which denied W & C’s motion for a severance of the claims asserted against it in that proceeding and for a transfer of those claims to the Southern District of New York. Thus W & C, even assuming a severance of the Natale suit against it here, may face in the District of Columbia the very pretrial and trial problems sought to be avoided by it, including involvement, expense and delay in pretrial discovery and trial in' the parallel proceeding instituted there by the SEC against it and the other defendants, and it is doubtful whether an immediate trial of the Natale claims against W & C would bar trial of the same claims against it by the SEC. The picture is further complicated by the fact that some other “lawyer defendants” (e. g., Lord, Bissell & Brook, Meyer, Schauer, Katz and Eppley) are in substantially the same position as W & C. Furthermore, PMM contends that the claims against it, being based on essentially the same facts, are inextricably involved with those against W & C and that a severance of the latter would prejudice PMM’s cross-claim against W & C. Lastly, notwithstanding Judge Edelstein’s assumption that the MultiDistrict Panel had in effect granted a “de facto” severance of the claims here against W & C, that Panel recently ordered transfer of those claims to the District of Columbia for pretrial consolidation with the SEC’s claims there and vacated its order only because of the pendency of this appeal. In view of these complications we cannot conclude that the district court’s denial of a severance in this case constituted an abuse of discretion, particularly since it was without prejudice to a motion by W & C pursuant to Rule 42(b) for a separate expedited trial of the claims against it. Thus, assuming the Multi-District Panel transfers the claims here on appeal to the District of Columbia, the way is open for W & C to apply to Judge Parker for an order expediting and giving priority to discovery with respect to the claims against it so that these claims may, upon completion of that discovery, be retransferred to the Southern District of New York for an expedited trial here on the merits. The district court’s consolidation order is reversed to the extent that it directs the filing of a consolidated complaint. In all other respects both orders are affirmed. . The actions consolidated by the district court’s April 20, 1972, order were Garber v. Randell, 70 Civ. 835, begun on March 2, 1970; Lipsig v. National Student Marketing Corp., 70 Civ. 2006, begun on May 15, 1970; and Natale v. National Student Marketing Corp., 72 Civ. 721, begun on February 18, 1972. . Although consolidation or severance or-tiers may he challenged by way of a petition for a writ of mandamus, see United States v. Garber, 413 F.2d 284, 285 (2d Cir. 1969); Nelson v. Grooms, 307 F.2d 76 (5th Cir. 1962); American Pacific Dairy Products v. District Court of Guam, 217 F.2d 589 (9th Cir. 1955), such relief will be granted only upon a showing of extraordinary circumstances or such gross abuse of discretion as to amount to action beyond the court’s power, Regec v. Thornton, 275 F.2d 801 (6th Cir. 1960). . Natale was an attorney representing a company acquired by NSM in 1968, who received from NSM restricted shares in payment for legal services rendered by him to the acquired company. . Our decision should not be construed as implying that under no circumstances would an order directing the filing of a consolidated complaint be proper. There may be Circumstances, e. g'., the existence of substantially complete identity between the claims and defenses in all actions, where a consolidated complaint would be appropriate. As we said in MacAlister: “We do not attempt here to prescribe a rule of universal application to orders granting or denying consolidation.” (263 F.2d at 67).

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Walter BOSTROM, Plaintiff-Appellant, v. ASTRO CRECIDO CIA, NAV. S.A. et al., Defendants-Appellees. No. 72-1296. United States Court of Appeals, First Circuit. Heard March 6, 1973. Decided April 6, 1973. Michael B. Latti, Boston, Mass., with whom Carroll E. Ayers and Kaplan, Latti & Flannery, Boston, Mass., were on brief, for appellant. Ansel B. Chaplin, Boston, Mass., with whom Joseph P. Rooney and Gaston, Snow, Motley & Holt, Boston, Mass., were on brief, for appellees. Before COFFIN, Chief Judge, ALDRICH and McENTEE, Circuit Judges. ALDRICH, Senior Judge. Plaintiff, a longshoreman, was part of a gang discharging the S.S. Oriental Explorer, a Greek vessel, at the port of Boston. After the hatch to which he was assigned had been opened, the three beams that had supported the boards were lifted and deposited by the winch-man on the deck, close to the side of the vessel. The beams could not go directly against the hull because of angular stiffeners rising thereto from the deck. Each beam was 22 feet long, and 8 inches wide at the top and bottom. The bottom, lengthwise, was gibbous, in a sweep or curve, to give more strength in the middle, and at the deepest point the beam was three feet from top to bottom. The gibbous shape is in old-fashioned, foreign design, rarely seen in the port of Boston. According to plaintiff’s witnesses it is the Boston practice to stow beams on their side, one on top of the other, during unloading, but if the beams are high they are sometimes placed upright on their bottoms, side by side, to conserve deck space. In spite of the fact that the Oriental Explorer’s beams had a sweep bottom, the latter alternative was adopted on the day in question. Concededly the upright position, even with flat-bottomed beams, is less safe. Plaintiff testified that when he was gang boss he never stowed beams upright for this reason. One of plaintiff’s witnesses testified that the instant beams were particularly unsteady when so placed, which would, in fact, seem obvious. When beams are stowed upright, it is the custom to lash them with a line to the outer rail, or bulwark. Plaintiff was doing this, standing in the process, on top of the beam nearest the hull, when he felt the beam “give,” and he slipped and fell into the space between the beam and the hull, injuring himself. Before he fell a witness, and afterwards plaintiff, assertedly saw paper and “gooey stuff,” on top of a beam in the area in which he had stood. Plaintiff testified that he fell because of this substance and the beam’s moving. No officer or member of the crew of the vessel was present at any time. Plaintiff sued the owner of the vessel in two counts; one for negligence, the second for unseaworthiness. The jury found for him on the first count, but for the defendant on unseaworthiness. Various motions were filed by the parties, the upshot of which was the ordering of judgment n. o. v. for the defendant on count one. Plaintiff appeals therefrom. If the jury had found for the plaintiff on unseaworthiness, which is almost any unsafe condition no matter how transitory, Mitchell v. Trawler Racer, 1960, 362 U.S. 539, 80 S.Ct. 926, 4 L.Ed.2d 941 (fish gurry on the rail), he would, if we may mix metaphors, be on solid ground. The fact that the unseaworthy condition had been the fault of his employer, and not the defendant, would have been immaterial. Alaska S.S. Co. v. Petterson, 1954, 347 U.S. 396, 74 S.Ct. 601, 98 L.Ed. 798. We may wonder to what extent the verdict for the defendant on this issue constitutes a denial of the existence of the paper, etc., that had materialized subsequent to plaintiff’s description in his answers to interrogatories of the factual cireumstances that allegedly caused the accident. But even apart from this, if we take all the evidence most favorable to plaintiff, we cannot see negligence on the part of the defendant. If there was a substance on the beam before the longshoremen took over, it was not evident to the defendant, but concealed under the hatch-boards. Nor was there any evidence bringing home to the defendant a reason to suppose that the beams would be stowed on their bottoms, so that someone might have to stand on them to make them fast, particularly where their unstable nature due to their design was open and obvious. Clearly the defendant was not obliged to design beams so that they could be stood up, when it was perfectly feasible to lay them down. Even if the Boston practice which, in the light of experience related to rectangular beams, had been uniformly to stow them upright, the maximum obligation of the defendant would have been to warn the stevedore to treat its beams differently, if such a warning was needed. It was the gang boss himself, however, who noted that as soon as the beams landed on deck their design made them unsteady. No further warning was necessary. There was no reason shown to charge the defendant with anticipating that the stevedore would engage in knowingly negligent conduct. Cf. Guarracino v. Luckenbach S.S. Co., 2 Cir., 1964, 333 F.2d 646, cert. denied 379 U.S. 946, 85 S.Ct. 439, 13 L.Ed.2d 543. For such expectation there should be a heavy burden on the plaintiff. In these circumstances plaintiff is driven to argue that the defendant was negligent because it did not furnish him a safe place to work, regardless of who caused the unsafety. This is just an attempt to equate negligence with unseaworthiness, and is going full circle in the wrong direction. Unseaworthiness is a doctrine of liability which grew out of the belief that in certain circumstances, and to certain parties, there should be liability without fault. The jury found, from which there was no appeal, that plaintiff had not proved such a case. He cannot get back aboard by saying that the defendant is an insurer under the negligence count. Plaintiff’s case of Beard v. Ellerman Lines, Ltd., 3 Cir., 1961, 289 F.2d 201, rev’d on other gr’ds, Atlanta & Gulf Stevedores v. Ellerman Lines, 369 U.S. 355, 82 S.Ct. 780, 7 L.Ed.2d 798, involved a shipowner’s own negligence in stowage and in permitting a dangerous method of discharging cargo. To the extent that language in the opinion could be read to equate, under all circumstances, unsafeness of a place to work, with negligence, we do not agree with it. Arena v. Luckenbach S.S. Co., 1 Cir., 1960, 279 F.2d 186, cert. denied 364 U.S. 895, 81 S.Ct. 222, 5 L.Ed.2d 189; cf. Usner v. Luckenbach Overseas Corp., 1971, 400 U.S. 494, 91 S.Ct. 514, 27 L.Ed.2d 562. The maximum duty was “reasonable care.” West v. United States, 1959, 361 U.S. 118, 123, 80 S.Ct. 189, 4 L.Ed.2d 161. Affirmed. Throughout this opinion by “defendant” we mean the shipowner. In point of fact the appeal is being resisted by the stevedoring company, third party defendant, on whom ultimate liability would fall on account of its warranty of performance.

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Rafael SANTANA, Appellant, v. UNITED STATES of America, Appellee. No. 436, Docket 72-2075. United States Court of Appeals, Second Circuit. Argued Feb. 14, 1973. Decided April 20, 1973. Joseph I. Stone, New York City, for appellant. Nicholas Figueroa, Asst. U. S. Atty. (Whitney North Seymour, Jr., U. S. Atty., S. D. N. Y., John W. Nields, Jr., Asst. U. S. Atty., of counsel), for appellee. Before FRIENDLY, Chief Judge, OAKES, Circuit Judge, and DAYIS, Judge. Of the United States Court of Claims, sitting by designation. OAKES, Circuit Judge: This appeal raises the question whether a judgment on a plea of guilty may be set aside where the use at trial of the evidentiary presumptions in the statute is subsequently invalidated. The plea here was to an indictment charging receipt of illegally imported cocaine, 21 U.S.C. § 174. The statutory presumptions in effect at the time of appellant’s plea in 1957 were that importation of the cocaine and knowledge of that importation could be inferred from possession. These presumptions were invalidated in Turner v. United States, 396 U.S. 398, 90 S.Ct. 642, 24 L.Ed.2d 610 (1970), which held that possession at least of less than one gram of cocaine (14.68 grams of a cocaine-sugar mixture of which 5 per cent was cocaine) did not warrant the statutory presumptions, since considerable cocaine (as opposed to heroin) is manufactured in the United States, 396 U.S. at 418-419, 90 S.Ct. 642, and n. 39. While appellant has long since served his five-year mandatory sentence on this charge, he seeks to set aside his conviction by writ of habeas corpus, 28 U.S.C. § 2255, denied below, because he has subsequently been charged with other drug offenses — indeed, was sentenced to a term of 15 years on February 17, 1966, in a second offender status. Because appellant’s original charge related to possession of only one-half ounce of cocaine or 14.75 grams, he contends that he fell within the Turner case’s protection from the presumptions. Our own United States v. Gonzalez, 442 F.2d 698, 709 (2d Cir.) (en banc), cert. denied subnom., Ovalle v. United States, 404 U.S. 845, 92 S.Ct. 146, 30 L.Ed.2d 81 (1971), refers to small amounts as “of the order of 10 grams.” For purposes hereof we will assume that appellant’s case is identical to Turner’s in amount and time. We also recognize that we held in United States v. Liguori, 438 F.2d 663 (2d Cir. 1971) (Liguori II), that Turner is retroactive, and that failure to object to the use of the presumptions during trial would not have affected a waiver of the Turner issue. But here, unlike Liguori II, appellant did not go to trial, he pleaded guilty, and the Liguori II court specifically declined to express any opinion on the validity convictions without trial. 438 F.2d at 670. Appellant argues, however, that since his plea was based upon his (or presumably his attorney’s) knowledge that the now invalidated presumptions could be used against him at trial, he should now be allowed to withdraw that plea. McMann v. Richardson, 397 U.S. 759, 90 S.Ct. 1441, 25 L.Ed.2d 763 (1970), and Brady v. United States, 397 U.S. 742, 90 S.Ct. 1463, 25 L.Ed.2d 747 (1970), require us to reject appellant’s claim. In McMann the defendant’s claim that his guilty plea was induced by a coerced confession — inadmissible under later decisions — was rejected, the Court saying that he was “convicted on his counseled admission in open court that he committed the crime charged against him” and that the fact that his lawyer might have advised him otherwise had “no bearing on the accuracy of the defendant’s admission that he committed the crime.” 397 U.S. at 773, 90 S.Ct. at 1450. So, too, in Brady the Court rejected the defendant’s claim that his guilty plea to a kidnaping charge was induced by a statutory provision — later invalidated — permitting imposition of the death penalty only upon a recommendation of a jury, the Court saying, in even broader language, that “a voluntary plea of guilty intelligently made in the light of the then applicable law does not become vulnerable because later judicial decisions indicate that the plea rested on a faulty premise.” 397 U.S. at 757, 90 S.Ct. at 1473. The Court in McMann and Brady, while recognizing that subsequent judicial actions might have changed the thinking that resulted in the guilty pleas there involved, nonetheless refused to find the pleas invalid for a combination of reasons. First, the plea was made in open court on advice of competent counsel and the defendant fully recognized that he would sustain severe punishment because of his plea. Nothing in the record of those cases indicated that the pleas were either inaccurate or unreliable indicia of guilt. Brady, 397 U.S. at 758, 90 S.Ct. 1463. Second, the Court felt that ordering a new trial years after the original sentencing would make it very difficult for both the accused and the State to marshal the relevant evidence. Third, the State would be faced with reopening a very large number of cases in which guilty pleas had been entered. United States v. Liguori, 430 F.2d 842, 848-849 (2d Cir. 1970), cert. denied, 402 U.S. 948, 91 S.Ct. 1614, 29 L.Ed.2d 118 (1971) (Liguori I). The case now before us presents these same three difficulties. (1) Here the defendant voluntarily pleaded guilty on advice of counsel. Although he may have been influenced by the greater likelihood of conviction stemming from the statutory presumptions of importation and knowledge in the later invalidated 21 U.S.C. § 174, that increased likelihood of conviction is exactly parallel to the increased likelihood of conviction stemming from the admission of the coerced confession in McMann. (2) It would be for all practical purposes impossible to have a retrial that was other than a sham when the alleged offense took place 15 years ago. (3) It would place an extraordinary burden on the Government to have to retry the substantial number of pre-Turner 21 U.S.C. § 174 convictions based on guilty pleas which would likely result from a reversal in this case. Nor does the decision in Liguori I, supra, avail appellant. There the defendant had pleaded guilty to a violation of the marijuana transfer tax act, to the prosecution of which, as was later held by Leary v. United States, 395 U.S. 6, 89 S.Ct. 1532, 23 L.Ed.2d 57 (1969), a timely assertion of the privilege against self-incrimination was a complete defense. Liguori I held that a plea of guilty was not a waiver of the privilege and accordingly reversed the conviction, distinguishing McMann, Brady and Parker v. North Carolina, 397 U.S. 790, 90 S.Ct. 1458, 25 L.Ed.2d 785 (1970), on the three bases discussed above. A still more important distinction is that in Liguori I, as the court there pointed out, it was not a question whether the unconstitutional statute had tended to influence the defendant to plead guilty, but rather whether the statute took away the privilege against self-incrimination by imposing a statutory scheme the purpose of which was to punish for failing to incriminate oneself. 430 F.2d at 849. Thus, in Liguori I, unlike this case and the McMann, Brady and Parker trilogy, the punishment would have been unjustified even if the procedures leading to the conviction were correct. 430 F.2d at 849. This case fits squarely within McMann, Brady and Parker. Judgment affirmed.

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UNITED STATES of America, Appellee, v. Robert Theodore BASS, Appellant. No. 72-2715. United States Court of Appeals, Ninth Circuit. March 27, 1973. Michael J. Lightfoot, Deputy Federal Public Defender (argued), Los Angeles, Cal., for appellant. Barry Russell, Asst. U. S. Atty. (argued), William D. Keller, U. S. Atty., Eric Nobles, Asst. U. S. Atty., Los Angeles, Cal., for appellee. Before ELY and GOODWIN, Circuit Judges, and SCHWARTZ, District Judge. The Honorable Edward J. Schwartz, Chief Judge, United States District Court for the Southern District of California, sitting by designation. ALFRED T. GOODWIN, Circuit Judge: Robert Theodore Bass was found guilty of unarmed bank robbery (18 U.S.C. § 2113(a)), and acquitted on a charge of armed bank robbery (18 U.S.C. § 2113 (d)). He contends on appeal that he was prejudiced in presenting his defense of insanity because the district court refused to authorize payment for a thorough psychiatric examination. Approximately three weeks before the date set for trial, Bass moved for the appointment of a psychiatrist of his choice under the provision of the Criminal Justice Act of 1964 which makes “investigative, expert, or other services necessary to an adequate defense” available to indigent defendants. 18 U.S.C. § 3006A(e). It is conceded that Bass was indigent. His motion was accompanied by an affidavit swearing that Bass’s father had died in a mental institution, that Bass had twice attempted suicide, and that he had received treatment for mental problems in prison. Because this unverified information called into question Bass’s competency to stand trial, the court postponed the trial, deferred action upon the § 3006A motion, and, on its own motion, appointed a psychiatrist, Dr. Marcus Crahan, to examine the defendant pursuant to 18 U.S.C. § 4244. This statute, whether or not an accused is indigent, authorizes the court to appoint a psychiatrist to evaluate the present mental competence of the accused to stand trial. The district judge at the same time ordered Dr. Crahan to investigate and report upon Bass’s sanity at the time of the alleged offense. Dr. Crahan examined Bass for one hour. He reported to the court that Bass had told him that Bass’s father had died in a mental hospital, probably of syphilis, that Bass’s mother was mentally defective, and that Bass had a history of three suicide attempts, two mental commitments, and heroin addiction. Dr. Crahan concluded that, nevertheless, Bass was able to understand court proceedings and assist in his defense. Pursuant to the judge’s request, but outside the scope of the § 4244 examination, Dr. Crahan also reported that in his "opinion Bass was sane, for the purposes of the criminal law, at the time of the offense charged. The court found Bass competent to stand trial, and Bass renewed his motion under § 3006A(e) for the appointment of a psychiatrist to assist in his defense. Bass again nominated Dr. Michael Co-burn. He advised the court that Dr. Coburn had been apprised of Dr. Crahan’s evaluation and had stated that before Dr. Coburn could reach a firm conclusion as to Bass’s sanity at the time of the offense he would require various neurological and psychological tests for brain damage. The court granted the motion for Dr. Coburn’s appointment as a defense expert. But before Dr. Coburn could examine Bass, the government moved for a second § 4244 competency examination to be performed by a third psychiatrist, Dr. Harold Deering. The court thereupon ordered Dr. Deering to report his opinion on the present and past sanity of Bass. Dr. Deering interviewed Bass, concluded Bass was sane at all relevant times, and reported this to the court. Bass notified the court that Dr. Co-burn, after considering Dr. Deering’s report, remained of the opinion that specific neurological and psychological tests were necessary before he could make an accurate determination of sanity at the time of the robbery. Bass objected to any rescission of the order appointing Dr. Coburn. In view of the reports of the two court-appointed psychiatrists the district judge ruled that there was now no need for Dr. Coburn to proceed or to perform any tests. Bass was then tried to the court on a stipulated statement of facts, and was found guilty of unarmed bank robbery. We reverse because Bass was not given the opportunity to develop his theory of his defense as provided by § 3006A(e). Where expert services are necessary to an adequate defense the court must authorize them. E. g., Christian v. United States, 398 F.2d 517, 519, 6 A.L.R.Fed. 1001 (10th Cir. 1968). A clear standard for deciding what constitutes “necessity” under § 3006A(e) has not yet been stated in this circuit. We agree with the views of Judge Wisdom, concurring in United States v. Theriault, 440 F.2d 713, 716-717 (5th Cir. 1971). The statute requires the district judge to authorize defense services when the defense attorney makes a timely request in circumstances in which a reasonable attorney would engage such services for a client having the independent financial means to pay for them. The initial affidavit in support of Bass’s motion set forth enough facts to require the appointment of a psychiatric expert under § 3006A(e). Bass’s family and personal history indicated that an insanity defense might be appriate. His own expert was necessary to assist counsel in the exploration, preparation, and presentation of such a defense. See United States v. Taylor, 437 F.2d 371, 377 n. 9 (4th Cir. 1971). If his client had adequate financial resources, counsel could reasonably be expected to seek the services of an expert in these circumstances. Cf. United States v. Schultz, 431 F.2d 907, 911 (8th Cir. 1970). An indigent defendant is entitled to the same type of service. The appointment of two experts to investigate Bass’s competency and sanity did not obviate the defendant’s right to his own expert under § 3006A (e). Under § 4244 the court appoints a psychiatrist who examines the accused and reports to the court. The § 4244 expert is expected to be neutral and detached. The § 3006A(e) expert fills a different role. He supplies expert services “necessary to an adequate defense.” He can be a partisan witness. His conclusions need not be reported in advance of trial to the court or to the prosecution. And his services embrace pretrial and trial assistance to the defense as well as potential trial testimony. United States v. Theriault, 440 F.2d at 715. Bass requested the appointment of a psychiatrist who was on the district court’s panel of psychiatrists qualified and available for the assistance of indigents. It is ordinarily desirable to appoint under § 3006A(e) a psychiatrist preferred by the defendant. If this is not practicable, then the psychiatrist should be one acceptable to the defendant. In any event, the prosecutor should have no influence in the selection. See United States v. Matthews, 472 F.2d 1173 (4th Cir., 1973); Report of the Judicial Conference of the United States, 36 F.R.D. 277, 374 (1965). The government can obtain no help from our recent decision in United States v. Valtierra, 467 F.2d 125 (9th Cir. 1972), for two reasons. First, Valtierra’s belated motion for a second psychiatric report was not made until the day of the trial, and granting it would have occasioned substantial delay. Second, Valtierra’s motions did not appear to invoke the provisions of § 3006A(e). The second psychiatrist was not requested in order to do anything his predecessor failed to do. No consideration was given to the relationship between § 4244 and § 3006A(e). We held that the court, under those circumstances, had no duty to appoint successive psychiatrists. Because the procedure followed by the district court deprived Bass of an important right under the Criminal Justice Act, we must vacate the judgment. While we cannot predict the outcome of an examination conducted by a § 3006A (e) defense expert, Bass should have the opportunity to utilize the services of such an expert. The district court should enter an order authorizing the employment of the requested expert. Reversed and remanded.

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In the Matter of KDI CORPORATION, Debtor. Frederick BEACH and Vincent Di Rubbio, Appellants, v. KDI CORPORATION and KDI Creditors’ Committee, Appellees. No. 72-1485. United States Court of Appeals, Sixth Circuit. Argued Nov. 28, 1972. Decided April 10, 1973. See also 6 Cir., 477 F.2d 742. J. Vincent Aug, Nieman, Aug, Elder & Jacobs, Cincinnati, Ohio, on brief for appellants, Frederick Beach and Vincent Di Rubbio; Converse Murdoch, Peter J. Walsh, Wilmington, Del., of counsel. Mark S. Lieberman, Chicago, Ill., and John A. Benjamin, Cincinnati, Ohio, for appellee, KDI Corp.; Gottlieb & Schwartz, Chicago, Ill., and Robert O. Edington, Cors, Hair & Hartsock, Cincinnati, Ohio, on brief. John A. Benjamin, Benjamin, Faulkner & Tepe, Cincinnati, Ohio, on brief for KDI Creditors Committee. Before MILLER, KENT and LIVELY, Circuit Judges. LIVELY, Circuit Judge. This appeal is from an order of the District Court denying a motion pursuant to § 328 of the Bankruptcy Act to dismiss . proceedings brought under Chapter XI of the Bankruptcy Act and in effect to transfer them to Chapter X. Chapter XI of the Bankruptcy Act deals with Arrangements whereas Chapter X deals with Corporate Reorganizations. Section 306 of the Act, 11 U.S.C. § 706(1) contains the following definition: “ ‘arrangement’ shall mean any plan of a debtor for the settlement, satisfaction, or extension of the time of payment of his unsecured debts, upon any terms.” The debtor is KDI Corporation, a publicly owned holding company created under the laws of Delaware with its headquarters in Cincinnati, Ohio. In the three years immediately prior to its public disclosure of financial problems, KDI had acquired 69 wholly-owned subsidiaries involving more than 50 operating businesses in the United States, Canada and England. It is a widely diversified conglomerate, although the parent company is not engaged in any business itself and its only assets are stock in its subsidiaries and cash. KDI furnishes management services to its subsidiaries and is paid fees which, along with the profits of the wholly-owned subsidiaries, supply its operating funds. For the year ended December 31, 1969, KDI reported net sales of nearly $140,000,000.-00 and earnings of approximately 5.3 million dollars. Nevertheless, by August of 1970 the corporation was without funds to meet its current obligations. At this point a management consulting firm was retained by the corporation and an immediate analysis of its financial position was undertaken. The consultant found that KDI owed about $31,000,000.00 to banks, $9,000,000.00 to its debenture holders and $25,000,000.00 to other creditors. It was estimated that the cash needs for the following six months would be $5,000,000.00 in excess of receipts. The-consultant, after analysis, classified the subsidiaries and affiliates into four different groups. Those which were classified as “established companies” were operating profitably and required little financial support from KDI. The next category of “developing companies” were projected for losses in the near future and would continue to require sizable contributions of working capital from the holding company. The third classification was “foreign subsidiaries” which were estimated to have reasonable prospects of producing modest profits in the near future. The fourth category included those affiliated companies in which KDI owned a minority interest and had options to buy control. All oT these were unprofitable and appeared to require steady infusions of working capital. In September, 1970, the directors of KDI adopted a group of specific proposals made by the consultant which included immediate termination of all acquisitions and other commitments which would require cash outlays, immediate end to the flow of cash to developing companies and affiliated companies and a reduction in corporate staff and overhead. In the next few months 26 subsidiaries were either sold or closed and there was a complete reorganization of the top management of KDI. The two chief officers during the period of rapid expansion were removed from office and subsequently they resigned as directors. Louis W. Matthey, who had prepared the report and recommendations for the consulting firm, was elected president and chief executive officer of KDI. A new board of directors consisted of Matthey and the presidents of seven of the retained subsidiaries. After approximately one year only fourteen of the top forty-two staff and operating personnel remained on the payroll of KDI and its subsidiaries. In addition to stopping the outflow of cash, one of the most pressing problems which faced the new management was the fact that over $31,000,000.00 was owed to a consortium of eleven banks on a demand basis and that an interest payment to one of the banks had been missed on August 1, 1970. That bank would not agree to any refinancing unless all of the bank lenders were involved. In order to meet its immediate needs KDI borrowed an additional $1,125,000.00 from the banks and on September 1, 1970, agreed to pledge all stock owned by it in its subsidiaries and affiliates and all notes from subsidiaries and affiliates, not only as security for the new money but to secure the total bank debt which now was $32,425,000.00 plus accrued interest. The maturity date of the entire bank debt was then extended to March 15, 1971. The second largest item of debt was $9,200,000.00 of convertible debentures held by one or more insurance companies, which agreed to a change in restrictions so that the creation of the secured positions of the banks could not result in a default in the debentures. Financial statements and earnings estimates which had been issued by the company in mid 1970 were found to be seriously in error. The directors announced publicly that the previously issued statements were not correct and new estimates of operations for the year 1970 were made. The new management of KDI caused a thorough audit to be made by independent certified public accountants and as a consequence substantial operating losses were reported for 1970. The final figures for that year showed operating losses in excess of $9,000,000.00 from continuing operations and in excess of $8,000,000.00 from discontinued operations. In addition to these operating losses there were extraordinary losses of over $19,000,000.-00, including the write-off of good will in consolidated subsidiaries and certain reserves which were deemed to be worthless. The publication of these figures caused a precipitous drop in the price of KDI stock and triggered nine law suits by stockholders and former stockholders who had sold various subsidiaries to KDI during 1969 and 1970. These suits sought rescission of the agreements by which these subsidiaries were acquired and in some cases substantial damages were demanded in addition. Frederick Beach and Vincent Di Rubbio, the appellants in this action, were among those who filed rescission suits. On December 30, 1970, KDI filed its petition under Chapter XI of the Bankruptcy Act and the proposed plan of arrangement which is annexed to this opinion as an Appendix was submitted on April 6, 1971. On February 10, 1971, a creditors’ committee had been elected at the first meeting of creditors and it had employed an attorney and a certified public accountant. On April 14, 1971, the creditors’ committee issued a report to the general creditors of KDI Corporation in which it reviewed the events of the recent past which had brought KDI Corporation to the bankruptcy court and analyzed the plan of arrangement which had been proposed. The report strongly endorsed the plan of arrangement and urged all unsecured creditors to file consents to the plan immediately. In addition to discussing the plan itself, the report disclosed the transactions between KDI and the bank consortium which had resulted in the banks’ acquiring security for their preexisting debts. While this transaction was described as being “vulnerable,” under section 70(e) of the Bankruptcy Act (11 U.S.C. § 110(e)), nevertheless, the creditors’ committee felt that it was not in the best interests of the unsecured creditors to attack it. The committee also reported that it had negotiated with the banks and had been successful in converting $7,000,000.00 of the bank debt to a category equal to that of general creditors and obtaining $3,000,000.-00 from the banks for operating funds for the corporation on certificates of indebtedness, one-half of which was to be available immediately after the plan was approved. On July 29, 1971, Beach and Di Rubbio filed a motion to dismiss the proceedings under Chapter XI unless the petition should be amended for proceedings under Chapter X. The reason given was that the circumstances and capital structure of the debtor were such that the relief afforded by Chapter XI is inadequate to satisfy the needs to be served and, therefore, the petition should originally have been brought under Chapter X. The hearing on the application to confirm the arrangement was held before the referee in bankruptcy on October 29, 1971. Proof was submitted at that time that a majority in number and in amount in each class of creditors under the division of creditors set forth in the arrangement had approved the plan and filed written consents. Mr. Matthey was then called as a witness in support of confirmation of the plan of arrangement and stated that operations in the first nine months of 1971 had generally been in line with predictions at the time the petition for arrangement was filed on December 30,-1970. He stated that the corporation would show a profit for the year 1971, though it would be less than projected, and that all nonrecurring losses had now been absorbed and that virtually all unprofitable units had been disposed of. He then described the capital structure of KDI as of the time of the hearing and compared it with the capital structure which would exist if the plan were confirmed. Matthey stated that prior to confirmation there were seven million shares of common stock outstanding and that this would remain unchanged after confirmation. There were $35,000,000.00 of obligations to a group of banks and this was due on demand. The obligations to the debenture holders totaled $9,200,000.00 and there was approximately $5,000,-000.00 owed to general creditors. The witness stated that as of that time the corporation had a negative tangible worth. Assuming that the plan of arrangement would be confirmed he stated that there would be significant changes in the capital structure. The first of these would be that the 9.2 million dollars of convertible debentures would be converted into the same value of preferred stock. Also approximately $5,000,000.00 of trade obligations would be converted into the same amount of new convertible debentures. Further, approximately $7,000,000.00 worth of the bank debt would be converted into a like amount of convertible debentures. Approximately $15,000,000.00 of bank debt would be converted from a demand loan into a ten year term loan and approximately $15,000,000.00 of the same would be converted into a three year revolving credit. He stated that this would give KDI a positive' tangible worth. In addition to these changes in the capital structure the plan of arrangement provided that the new debentures issued to the banks and trade creditors would not bear any interest for the first two years and would have an interest rate of four per cent for the following eight years. Of the remaining bank obligations one and one-half million dollars would bear interest at six per cent for the first two years and the balance would carry interest of three per cent for that period. The witness stated that in his opinion the creditors of the company under a liquidation would probably receive something in the order of one-quarter to one-half of what he projected they would get through the plan of arrangement. He also discussed the rescission suits which were then pending against KDI. He stated that even if KDI should lose all of these suits and be required to divest itself of the eight subsidiaries involved, while it would have an effect on the business, it would not be substantial enough to affect the success of the plan of arrangement. Matthey also testified that representatives from the Securities and Exchange Commission had visited KDI headquarters and interrogated the management, investigated the contents of various minute books and records of the corporation and had visited with the independent certified public accountants employed by the corporation. He further stated that after the motion to dismiss the Chapter XI proceedings was filed, another representative of the SEC came to Cincinnati and examined their various corporate records and interviewed counsel concerning the proceedings. Mr. Matthey concluded his testimony by saying that in his opinion the plan of arrangement is feasible and in the best interest of the creditors. Much of the cross-examination of this witness was concerned with the treatment of Class 6 creditors. All of the debts included in Class 6 arose out of the various acquisitions by KDI of operating companies during its period of expansion. Some of the contracts involving these acquisitions contained individual guarantees by KDI of the value of its stock on some future date where stock was used as payment for the subsidiary. While all of the contracts involved in Class 6 were set up as tax free exchanges, there were different provisions in the several agreements. The proposed Chapter XI arrangement put a ceiling on the number of shares of common stock of KDI which would be required to satisfy these guarantees by providing that all debts arising from such guarantees would be satisfied in full by paying a number of shares of the common stock equal to the number of shares of the same stock held by each such creditor on December 31, 1970. It was further provided that the persons who received common stock pursuant to this portion of the plan of arrangement could participate in registration of the stock only if approved by KDI. In some cases the plan would result in substituting “piggyback” rights of registration for what had been mandatory rights to registration in the original contracts. With respect to the security given to the bank consortium, the witness testified on cross-examination that even if the security were set aside as being a preference the banks would still hold seven-eighths of the claims against the corporation. In his opinion the alteration in the terms of the bank loans was of sufficient benefit to justify the giving of security. In regard to the changes effected in the rights of the Class 6 creditors, the witness testified that for purposes of the plan of arrangement these people were treated as a single group of creditors and it was only incidental that they were also shareholders. They were not listed in Class 6 because they were shareholders, but because they had a particular type of unsecured claim against the corporation which arose out of an acquisition contract. He described the guarantee provisions of the acquisition contracts as guaranteeing a certain amount of money on the date that the guarantee was effective, to be satisfied by the payment of additional stock if the market price of the stock at that time was below the assumed value when the contract of acquisition was made. In answer to a hypothetical question concerning a situation where the seller of one of the subsidiaries had received a relatively small down payment in stock and there was a drastic reduction in market price at the time the final payment was due, the witness agreed that the rights of the holder of this guarantee would be drastically affected, but stated that it would affect his position because he is a creditor of KDI and not because he is a shareholder. The number of shares of stock he would receive on the settlement date would be substantially less under the plan of arrangement than under his original contract, but the witness insisted that it was his creditor position that was affected and not his position as a shareholder. The debt- or-creditor relationship between these persons and KDI arose out of a contract which was entered into before they became shareholders, he stated. Louis Matthey was the only witness called by the debtor and he filed a number of exhibits with his testimony. The creditors’ committee called its certified public accountant who expressed general support for the plan of arrangement. The objectors did not produce any witnesses in opposition to the plan but relied entirely on cross-examination to establish their position. The referee took the matter under submission after a day of testimony and argument. The hearing on the motion to dismiss was held before District Judge David S. Porter on December 13, 1971. As they had done in the hearing before the referee, the movants Beach and Di Rubbio introduced no witnesses. Instead their counsel produced various documents which had been filed as exhibits in the hearing before the referee, and additional documents which were introduced for the first time at the District Court hearing, and called to the attention of the trial judge particular portions of these documents which counsel felt established its right to dismissal. Following this there were extensive arguments. In their objections to the plan of arrangement and on their motion to dismiss the Chapter XI proceedings the appellants maintained that the proposed plan of arrangement was illegal, that it was not feasible and that it was not in the best interests of the unsecured creditors. In the hearing before the referee they were joined by several other Class 6 creditors who claimed only that the plan was illegal and did not question that it was feasible and in the best interests of the creditors generally. These particular creditors did not join in the motion to dismiss, nor did the Securities and Exchange Commission. On March 9, 1972, the District Judge filed an opinion and order in which he denied the motion to dismiss the proceedings under Chapter XI. In the opinion Judge Porter noted that the movants were among the former owners of businesses acquired by KDI who had rescission suits pending against the corporation. In addition he noted that these same two parties had recently been removed from management positions in the subsidiary which they had formerly controlled. The opinion of the court was based on the record made before the referee in the hearing concerning approval of the plan as well as that made before the District Judge on the motion to dismiss. However, the judge noted that some of the determinations required to be made in one proceeding were different from those required in the other. In reaching his decision, he considered and answered the following five questions : (1) Does the plan illegally affect shareholders ? (2) Is there a need for a trustee to investigate charges of mismanagement and fraud ? (3) What are the plaintiffs’ particular needs and the needs of others in category 6 — the need to challenge the security of the banks? What is the need of KDI for a source of new money? (4) Is there a need for a trustee to protect the public in view of S.E. C.’s inaction? (5) Is there a need for a trustee because the present plan is not feasible ? In answering the first question in the negative the trial court found that the plan preserves the relative position of each member of Class 6 and that the rights affected by the plan for Class 6 creditors do not have their origin in stock but in contracts of acquisition. The court found that the classification and treatment of Class 6 creditors was fair and equitable and was one which dealt with contractual debts which were capable of being estimated and liquidated and, therefore, were subject to being materially and adversely affected by a plan of arrangement. In answering the second question the court noted that KDI already had new management and that there was no public debt. Further the court found that charges of fraud, self-dealing and mismanagement were not supported by any evidence at the two hearings other than exhibits produced by KDI itself. The court was impressed with what had already been accomplished by the new management and stated that many of the steps which a trustee would be expected to take had already been taken by Mr. Matthey and his associates. The court specifically found that there was no improper self-dealing or other breach of fiduciary duty by any of the directors and that no need was demonstrated to investigate the charges that mismanagement had resulted in large losses to the corporation. It was held that these losses had been sufficiently explained by Mr. Matthey and that they had resulted from general economic conditions and mistakes in judgment rather than any wrongdoing. The opinion also noted the active role of the creditors’ committee in negotiating with the bank consortium and working closely with the new management in effecting needed changes in the affairs of the corporation. In answering the third question the District Court analyzed the transaction between the group of banks and KDI and noted particularly that the creditors’ committee had concluded that the overall effect of this transaction was beneficial. The court pointed out that the banks as secured creditors were not included in the plan of arrangement and that the information concerning the bank transaction was put there so that everyone would be advised of what had occurred. It was noted that if the proceedings were transferred to Chapter X, KDI would lose the advantageous refinancing of the bank debt and that no other source of operating capital appeared to be available. The court concluded that neither the needs to be served of the appellants nor the needs of others required the appointment of a trustee, but in fact that the needs of the unsecured creditors generally would be disserved by the appointment of a trustee. In answering question number four the court took note of the fact that representatives of the SEC were very familiar with all the proceedings concerning KDI and had not seen fit to join in the motion to dismiss or transfer to Chapter X. Without drawing any conclusions from this fact alone the court determined that the interests of the public would be properly protected in Chapter XI proceedings and that there was no necessity to appoint a trustee for this purpose. With respect to question number five the court found that the plan proposed by KDI is “absolutely feasible” and adopted as a test of feasibility the probability of actual performance of the plan as proposed. At this point the opinion reviewed the terms of the plan in some detail and found that it was workable. The court noted the argument made by appellants that the plan is too complex and actually accomplishes a reorganization of KDI rather than a simple arrangement of debt. The court concluded that most of the steps which would normally be taken in a Chapter X proceeding had already been taken by KDI before it came into bankruptcy court. The court determined that the plan only affected unsecured creditors and, considering the needs to be served, no reason for dismissing had been shown. The standards set by Congress in determining whether a motion under § 328 of the Act should be granted are expressed in the broadest possible terms. A judge “may” grant the motion “if he finds that the proceedings should have been brought under Chapter 10 of this title.” The Supreme Court has dealt with the problem in three cases and all parties to this action agree that the controlling decisions are Securities and Exchange Commission v. United States Realty and Improvement Co., 310 U.S. 434, 60 S.Ct. 1044, 84 L.Ed. 1293 (1940); General Stores Corp. v. Shlensky, 350 U.S. 462, 76 S.Ct. 516, 100 L. Ed. 550 (1956) and Securities and Exchange Commission v. American Trailer Rentals Co., 379 U.S. 594, 85 S.Ct. 513, 13 L.Ed.2d 510 (1965). This court had the question before it for decision in Securities and Exchange Commission v. Wilcox-Gay Corporation, 231 F.2d 859 (6th Cir. 1956). Only general principles may be drawn from any opinion dealing with this issue, because the fact situation is different and largely determinative of the outcome of each case. One of the most important differences in procedures under the two chapters is that Chapter X requires the appointment of a disinterested trustee to take possession of the assets of the debtor, while Chapter XI permits the debtor in possession to continue to hold the assets and to continue its operations subject to the control of the court. At the outset we must determine, then, whether the record in this particular case reveals a set of facts where the appointment of a trustee would best serve the various interests- involved. We believe the District Judge correctly decided this question and his findings on the subject are supported by the evidence. The new management of KDI, headed by Louis Matthey, has moved promptly and skillfully to restore the corporation to a profit-making enterprise with financial stability. The long-term success of these efforts could be seriously hindered, or even completely doomed, by a transfer to Chapter X and the consequent appointment of a trustee. Matthey testified that he would not stay with KDI if this were done and the banks, who are by far the largest creditor as a group, notified the referee that the adjustment of terms of their loans was contingent upon qontinued operation under Chapter XI. In addition to supplying new management, a trustee is frequently needed to investigate past mismanagement, fraud or breach of trust by officers or directors. While KDI has suffered from bad management in the sense of poor business judgment and insufficient financial controls and accounting practices, the appellants failed to produce convincing proof of any fraud or bad faith. Several transactions with former directors had the result of relieving KDI of obligations which were connected with the properties sold to these individuals. The record supports the findings of the trial judge that these transactions were openly carried out with full disclosure to other directors who approved them, and that the net effect of each was to strengthen KDI. Many, if not all the steps which a trustee would be expected to take in the circumstances of this case had already occurred before the petition was filed in the bankruptcy court. The corporation had been substantially reorganized without court assistance, but it needed “breathing room” in order to continue operations. The most pressing debts were the bank loans which were payable on demand. Once these had been transformed into term loans and new working capital had been provided in the revolving credit of $3,000,000.00, KDI maintains it was necessary to resort to the protection of the bankruptcy court to be assured of this “breathing room.” Nevertheless, the appellants contend that the proposed arrangement is actually a reorganization and that the capital structure of KDI is too complex for proceedings under Chapter XI. They assert that the proceedings are illegal because the rights of shareholders are materially and adversely affected, that the proposed plan is not feasible and that Chapter XI is not appropriate to the needs to be served in this case. The two statutory methods of accomplishing the rescue of financially distressed corporations “are not alternate routes, the choice of which is in the hands of the debtor. Rather, they are legally, mutually exclusive paths to attempted financial rehabilitation.” SEC v. American Trailer Rentals, supra 379 U.S. at p. 607, 85 S.Ct. at p. 520. Though the debtor makes the first choice between the remedies of the two chapters, proceedings under Chapter X will not be permitted unless “adequate relief” is not obtainable under Chapter XI; and if the proceedings “should have been brought” under Chapter X, the court must dismiss a petition filed under Chapter XI. In determining which method of rehabilitation should be followed in a given case, the trial court does not have untrammeled discretion, but must make the decision in the light of enunciated principles. The question on appeal is not whether there has been a clear abuse of discretion, but whether the “exercise of discretion transcended the allowable bounds.” General Stores Corp. v. Shlensky, supra 350 U.S. at p. 468, 76 S.Ct. at p. 520. The Supreme Court has held that the determination of whether a debtor should proceed under Chapter X or XI cannot be based exclusively on the size of the corporation, whether it has few or many security holders or whether its securities are held by the public; although, as a general rule, Chapter X is better adapted to large corporations with complicated balance sheets and numerous shareholders. SEC v. United States Realty and Improvement Co., supra. Furthermore, in General Stores it was held that neither the character of the debtor nor the nature of its capital structure should be the controlling consideration in making a choice between the two chapters. The decision must be based on the “needs to be served.” 350 U.S. at p. 466, 76 S.Ct. 516. The teachings of United States Realty and General Stores were followed by the District Court and this Court in SEC v. Wilcox-Gay Corp., 133 F.Supp. 548 (W.D.Mich. 1955), 231 F.2d 859 (6th Cir. 1956). While there are important factual differences between Wilcox-Gay and the present case, we continue to adhere to its guiding principles without relying directly upon it for our decision. In Trailer Rentals the Court reaffirmed the previous holdings that there is no absolute rule that Chapter X must be used when the debtor is publicly owned. Furthermore, if a plan alters the rights of public investors it does not necessarily require proceedings under Chapter X. While holding that Congress had not seen fit to make absolute distinctions based on these considerations, it, nevertheless, laid down the general rule that Chapter X is the “appropriate proceeding for adjustment of publicly held debt.” 379 U.S. at p. 613, 85 S.Ct. at p. 524. The opinion goes on to hold that Congress was primarily concerned with the protection of public investors in enacting Chapter X, whereas Chapter XI provides primarily for the adjustment of the rights of trade creditors by way of a “simple composition.” p. 614, 85 S.Ct. 513. There is support for the positions of both the appellants and the appellees in the three Supreme Court decisions. Considered alone United States Realty might appear to rule out any possibility of KDI’s proceeding under Chapter XI because there is a rearrangement of its capital structure under the proposed plan. However, when United States Realty was decided, an arrangement under Chapter XI was required to be “fair and equitable” and the decision seems to rest largely on the court’s holding that the proposed plan did not, on its face, meet this test. Since Congress has subsequently removed the “fair and equitable” requirement from Chapter XI proceedings and since the important facts in that case, particularly the existence of publicly owned debentures are so different from those in the present one, it is impossible to decide this case in reliance on SEC v. United States Realty and Improvement Co., supra. In General Stores none of the unsecured trade and commercial debts which were being rearranged was publicly held. In that respect it is similar to the present case because here the debentures (Class 5 under the plan) are too closely held to be classified as publicly held debt securities. The same is also true of the debts arising out of the contractual rights of the Class 6 creditors. Likewise, all of the debts in the first four classes under the plan are trade or commercial debts. However, there are important differences between the eases. There was a long story of financial difficulties, including previous bankruptcy proceedings, in the history of the General Stores Corporation. The financial conditions of the company were so precarious that the proceedings appeared to offer only a short moratorium that “may be merely a prelude to new disasters.” 350 U.S. at p. 467, 76 S.Ct. at p. 519. The ease was ultimately decided on the finding that no “feasible” plan would be possible under Chapter XI. It was held that the two lower courts did not transcend the allowable bounds of discretion in finding that rehabilitation of the debtor would require a more drastic restructuring of its capital than could be accomplished under Chapter XI. Turning to the most recent Supreme Court case, we find an obvious and important difference in the debt structure of American Trailer Rental Co. and KDI. There were numerous widely scattered small investors who had purchased trailers and leased them back to the corporation. In fact the business had largely been financed by this sale and lease-back scheme until the Securities and Exchange Commission ruled that the agreements were investment contracts requiring registration as securities. Two previous attempts at public financing had been blocked by the SEC on the ground that materials issued by the debtor contained false and misleading statements. The financial statement filed with the Chapter XI petition of Trailer Rentals showed an entirely different situation from that disclosed by KDI. There were very few assets beyond an extremely doubtful item listed as its trailer rental system which consisted of agreements with some 500 individual service stations. On the other hand its liabilities consisted of over $900,000.00 owed to investors under the lease-back plan, in excess of $285,000.00 owed to officers and directors and only $71,805.00 owed to trade and general creditors. A further comparison with Trailer Rentals discloses that the plan of arrangement which was- proposed by the debtor in that ease would have left the old management in control of a successor corporation, the stock of which was being issued in various ratios to the different groups of creditors. In that case the plan also provided for payment in full of an unsecured bank loan which the officers and directors of American Trailer Rental Co. had individually guaranteed. The entire plan appeared to be highly favorable to those persons whose acts had been largely responsible for the plight of the debtor. In reversing the denial of the motion to dismiss or transfer the proceedings to Chapter X the Court in Trailer Rentals found that the proposed arrangement under Chapter XI would materially affect the rights of widespread public investor creditors. This fact alone would have required a Chapter X proceeding. However, the opinion continued :— “On the other hand, General Stores also makes it clear that even though there may be no public debt materially and directly affected, Chapter X is still the appropriate proceeding where the debtor has widespread public stockholders and the protections of the public and private interests involved afforded by Chapter X are required because, for example, there is evidence of management misdeeds for which an accounting might be made, there is a need for new management, or the financial condition of the debtor requires more than a simple composition of its unsecured debts.” 379 U.S. pp. 614-615, 85 S.Ct. p. 524. The Court also considered the argument that the time and expense involved in a Chapter X proceeding should be weighed against the speed and economy possible under Chapter XI. In ruling that this could not be a determinative consideration, the opinion pointed out that “it must be recognized that Chapters X and XI were not designed to prolong — without good reason and at the expense of the investing public — the corporate life of every debtor suffering from terminal financial ills.” 379 U.S. at p. 618, 85 S.Ct. at p. 526. Taking into account the principles enunciated and conclusions reached in the three controlling Supreme Court opinions and the decisions of a number of other courts cited in brief and argument, we have concluded that the judgment of the District Court should be affirmed. None of the debt subject to the plan of arrangement is evidenced by publicly held securities, and it is all unsecured. The proposal to issue convertible subordinated income debentures and convertible preferred stock is a permissible method of providing for the rearrangement of unsecured debts within § 356 of the Bankruptcy Act (11 U.S.C. § 756) which provides for modifying or altering the rights of unsecured creditors “upon any terms or for any consideration.” In § 306(2) of the Act [11 U.S. C. § 706(2)] “consideration” is defined as including “evidences of indebtedness, either secured or unsecured, stock and certificates of beneficial interest therein, and certificates of beneficial interest in property.” The appellants are Class 6 creditors under the proposed plan. They complain that the plan will result in their receiving fewer shares of stock of KDI in the future than they contracted for when they sold their company to KDI. This will be true if the market value of KDI stock remains at its depressed level. However, all of the Class 6 creditors are treated the same, and of the 77 proofs of claim representing 760,956 shares of stock received from Class 6 creditors, 67 representing 716,336 shares filed acceptances of the plan. The District Court correctly held that the acquisition contracts dealt with in Class 6 created unsecured debts of KDI, and the fact that these debts were payable in common shares of the corporation does not make them ineligible for modification or alteration under Chapter XI. A number of cases have been cited by appellants in support of their contention that the proposed proceedings under Chapter XI are illegal. We have examined the decisions and do not find them to be controlling. In two cases decided since Trailer Rentals the Eighth and Tenth Circuits have reversed orders of district courts which denied motions, pursuant to § 328, to dismiss proceedings under Chapter XI. The case of In re Peoples Loan and Investment Company of Fort Smith, 410 F.2d 851 (8th Cir. 1969), involved a finance company which had raised most of its capital by selling certificates of deposit to numerous small investors. These public investors constituted a large majority of the unsecured creditors. They were widely scattered and had little knowledge of the operations of the debtor. Furthermore, there was much evidence of mismanagement and self-dealing and an investigation was needed into past relationships between the old management and a corporation which would wind up with control of the debtor under the plan of arrangement. The Court of Appeals held that a disinterested trustee was needed to make these investigations and for the protection of the unsophisticated investor creditors. In the case of Norman Finance and Thrift Corp. v. SEC, 415 F.2d 1199 (10th Cir. 1969), the same result was reached where many of the facts were similar. There were more than six hundred creditors who had invested in “Thrift Savings Accounts.” There was strong evidence again of prior mismanagement, and control of the debtor had passed to an insurance company whose connections with the prior management required investigation. These two cases are distinguishable from the present one both because of the existence of many public investors among the unsecured creditors and the clear need for an investigation by a disinterested trustee. When KDI came into court it had already taken many drastic and effective steps to correct past mistakes. It was being run by a new management team which had gotten rid of much of the dead wood that had produced its losses of the recent past, and a consolidation and tightening up was in process. Furthermore, a renegotiation of very large and pressing demand bank loans had provided some “breathing room.” Although security was given for previously existing loans as part of this transaction, the banks already held seven-eighths of the total indebtedness of the corporation, and the new loans which accompanied the transaction provided the working capital which was needed to keep the company in operation. Immediately after the Chapter XI proceedings began the creditors’ committee was organized and professionally staffed and began working on the details of the plan of arrangement. At the hearing on .the plan the debtor was able to report that it was operating at a profit, that virtually all the nonrecurring losses had been absorbed and that prospects for continued successful operation were good. The creditors’ committee agreed with this appraisal of the results and projections and an overwhelming number of the creditors approved the plan of arrangement. Faced with this evidence and no testimony to the contrary, the trial judge correctly found that the plan is feasible. Under these circumstances the District Court exercised its discretion within the allowable bounds in holding that the “needs to be served” test was satisfied in this case by proceeding under Chapter XI. The judgment is affirmed. Appellants will pay the costs. APPENDIX I PLAN OF ARRANGEMENT (Filed in Bankruptcy April 6, 1971) KDI Corporation, the above-named Debtor, proposes the following arrangement with its unsecured creditors: ARTICLE I. DEFINITIONS As used in this Plan of Arrangement, unless the context clearly requires otherwise, “Plan” shall mean this Plan of Arrangement, and “Order of Confirmation” shall mean an order by the Referee in Bankruptcy confirming this Plan, with respect to which: either, no petition for review or extension of time for the filing of a petition for review has been filed pursuant to the provisions of Section 39(c) of the Bankruptcy Act (11 U.S.C. Section 67(c)); or such a petition having been filed, same shall have been finally sustained by the appropriate Court. ARTICLE II. DIVISION OF CREDITORS INTO CLASSES The unsecured debts of the Debtor are divided into the following classes: 1. Class 1. All debts which have priority under Section 64a(2), (4), and (5) of the Bankruptcy Act. 2. Class 2. All debts up to and including One Thousand Dollars ($1,000.-00). 3. Class 3. All debts in excess of One Thousand Dollars ($1,000.00) and up to and including Ten Thousand Dollars ($10,000.00). 4. Class Jp. All debts in excess of Ten Thousand Dollars ($10,000.00) except for those debts described in Classes 1, 5 and 6. 5. Class 5. All debts owing holders of convertible subordinated notes, debentures or bonds (being those dated December 1, 1968, December 23, 1968 and July 1, 1969). 6. Class 6. All debts arising out of individual guarantees by the Debtor of the value of specific consideration exchanged in various specific corporate acquisition contracts. ARTICLE III. PROVISIONS MODIFYING OR ALTERING THE RIGHTS OF UNSECURED CREDITORS 1. All debts included in Class 1 are to be paid in full in cash within thirty (30) days after the allowance thereof by the Referee in Bankruptcy and the Order of Confirmation, or are to be paid in accordance with such agreement, more beneficial to the Debtor, as may be made between any holder of such a debt and the Debtor. 2. All debts included in Class 2 shall be paid in full in cash (debts greater than One Thousand Dollars ($1,000.00) may be voluntarily reduced to that amount, and the excess waived, by a creditor under this section). 3. All debts included in Class 3 shall be satisfied, at the creditor’s option, either: (A) by payment in cash of fifty per cent (50%) of the debt up to a maximum payment of Five Thousand Dollars ($5,000.00) (debts greater than Ten Thousand Dollars ($10,000.00) may be voluntarily reduced to that amount, and the excess waived, by a creditor under this section); or (B) by payment in full of the debt in the form of One Hundred Dollars ($100.00), face value convertible four per cent (4%) subordinated income debentures of the Debtor, all of which will be issued in fully registered form as to principal and interest. Such debentures shall be callable, upon ninety (90) days notice, for One Hundred and Five Dollars ($105.00) per debenture, and be due ten (10) years after issuance with no interest earned or due in either of the first two (2) years after issuance unless the profits of the Debtor after all taxes except Federal income tax exceed Ten Million Dollars ($10,000,000.00) for the respective year. Such debentures will be convertible into the Debtor’s common stock at the rate of one (1) common share per each Ten Dollars ($10.00) of face value of debenture. Holders of debt in other than amounts divisible by One Hundred Dollars ($100.00) shall receive, at the Debtor’s option, either: the next higher whole debenture; or, the proportionate value of such difference in cash. 4. All debts included in Class 4 shall be satisfied by payment in full of the debt in the form of the convertible income debentures of the Debtor described in 3.(B) above. 5. All debts included in Class 5 shall be satisfied by payment to the holders thereof of one hundred per cent (100%) of the debt in convertible preferred stock of the Debtor. Such preferred stock will be a One Hundred Dollar ($100.00) stated value non-eumulative, Four Dollar ($4.00) dividend preferred stock, redeemable by the Debtor upon ninety (90) days notice at One Hundred and Five Dollars ($105.00) per share and will be convertible into ten (10) shares of common stock of the Debtor. No annual dividend may be paid in either of the first two (2) years after issuance unless the profits of the Debtor after all taxes except Federal income tax exceed Ten Million Dollars ($10,000,000.-00) for the respective year. Majority approval of the preferred stockholders will be required for the sale of any capital assets of the Debtor in excess of Five Million Dollars ($5,000,000.00) over a three (3) successive year period. Upon non-payment of dividends for two (2) years, voting rights of the preferred shall be equivalent to the voting rights of the number of common shares into which the preferred is convertible. In such case the preferred will vote with the common shares and not as a separate class, except with regard to the majority approval relating to the sale of capital assets. A right to require the Debtor, at Debtor’s expense, to register, under the Securities Act of 1983, both the preferred stock and the underlying common stock into which the preferred is convertible shall be afforded the recipients under Class 5 of the preferred stock. Such right shall be exercisable only once upon the request of a majority (in dollar amount) of any of the predecessor debenture-bond holder groups. Such request may only be exercised where the annual certified audit of the Debtor is the last statement necessary for filing. The right to participate in an S-l or S-7 registration statement filed by the Debtor shall be afforded the same parties, at no cost to them. Such rights shall be subject to the approval of the Debtor’s underwriter, if any, in such registration, and shall apply only if such registration is necessary for the sale of same. At the earlier of: the retirement of the debentures provided for in Class 3; or, the tenth year following issuance of the preferred stock, ten per cent (10%) of the preferred stock will be redeemed annually. 6. All debts included in Class 6 shall be satisfied in full by payment to the holders thereof of a number of shares of the common stock of the Debtor equal to the number of shares of the common stock of the Debtor held by said holder on December 31, 1970, which are subject to a specific unsatisfied guarantee of the Debtor. The number of shares to be delivered shall be further subject to and defined by the terms of the respective holder’s corporate acquisition contract. The right to participate in an S-l or S-7 registration statement filed at any time by the Debtor shall be afforded to the parties receiving common stock hereunder, at no cost to them, subject to the approval of the Debtor’s underwriter, if any, in such registration and provided that Debtor’s counsel is of the opinion that registration of such particular shares is necessary for the sale of same. The above shall all be subject to compliance with the Securities Act of 1933 and the Trust Indenture Act of 1939, if necessary. All of the above debt satisfactions shall occur within thirty (30) days after the allowance thereof by the Referee in Bankruptcy and the Order of Confirmation. ARTICLE IV. PROVISIONS FOR THE REJECTION OF EXECUTORY CONTRACTS Within thirty (30) days from the filing of this Plan, this Article IV shall be amended to set forth the rejection by the Debtor of specific executory contracts. Creditors obtaining rights by virtue of rejection of executory contracts shall fall within Class 2, 3 or 4 as applicable. ARTICLE V. INFORMATION REGARDING BORROWING AGREEMENTS As of December 31, 1970, the Debtor owed a consortium of banks the principal amount of Thirty-Two Million, Three Hundred Twenty-Nine Thousand, Six Hundred Eighty-Seven Dollars and Fifteen Cents ($32,329,687.15), plus accrued interest from various dates beginning August 15, 1970 and at various rates. There has been an oral agreement reached between the Debtor and said consortium of its banks regarding the debt owing to such banks and the advancement of additional monies. The written expression and consummation of such agreement shall be subject to the entry of the Order of Confirmation and satisfactory resolution of several lawsuits seeking rescission of corporate acquisition contracts. Such agreement shall, through appropriate written documents, effect a change in the status of the current indebtedness of the Debtor to said banks, approximately Thirty-Four Million Dollars ($34,000,000.00) (including accrued interest), and future indebtedness, certificates of indebtedness (anticipated to be approximately, but not to exceed, Three Million Dollars ($3,000,000.00)) so that, said banks will exchange: (1) Seven Million Dollars ($7,000,000.-00) of said indebtedness for an equal face amount of the face amount of the four per cent (4%) convertible income debentures described in Article III, 3.(B) above, receivable by Class 3 and Class 4 debt holders. (2) Approximately Fifteen Million Dollars ($15,000,000.00) of said indebtedness for a ten (10) year secui-ed term loan at three per cent (3%) interest for the first two (2) years, then six per cent (6%) interest thereafter, with interest paid quarterly, and with principal to be repaid at Three Hundred Seventy-Five Thousand Dollai’s ($375,000.00) per quarter starting with the third year. The proceeds from any sale of assets shall be applied to reduce first the payment due for the fourth quarter of the tenth year (Three Million, Three Hundred Seventy-Five Thousand Dollars ($3,375,-000.00) and then to reduce the balance of the loan in inverse order (i. remaining tenth year payments, etc.). If the term loan is reduced by the amount of Five Million Dollars or more within three (3) years from inception, the revolving credit described in (3) below will automatically be extended for an additional three (3) years at six per cent (6%) interest. (3) Approximately Fifteen Million Dollars ($15,000,000.00), which amount includes the anticipated future indebtedness of approximately Three Million Dollars ($3,000,000.00) of said indebtedness for a secured revolving credit due in three (3) years with interest on Twelve Million Dollars ($12,000,000.00) of the principal at three per cent (3%), and on the anticipated future indebtedness of approximately Three Million Dollars ($3,000,000.00) of the principal at six per cent (6%), with all interest payable quarterly starting immediately. Such secured revolving credit shall contain a provision requiring reduction of the principal at an accelerated rate related directly to the annual after tax profits of the Debtor. The above changes will all be subject to agreements between the parties upon mutually satisfactory terms. Interest on the bank obligations described above for the period of December 31, 1970 until the Order of Confirmation, shall be at the rate of six per cent (6%) for the amounts under (2) and (3) above and no interest on the amount of (1) above. ARTICLE VI. PROVISIONS FOR PAYMENT OF DEBTS INCURRED DURING PEND-ENCY OF ARRANGEMENT All debts incurred after the filing of the petition and prior to the Order of Confirmation shall be paid in full in cash before (with leave of the Court), or within thirty (30) days following, said order, except that the time of payment of all or any part of such debts may be extended by agreement with the creditors to whom such debts are due, and such extended debts shall have priority in payment over the debts affected by this Plan. ARTICLE VII. PROOFS OF CLAIM All creditors of the Debtor shall have thirty (30) days after the Order of Confirmation within which to file proofs of claim. ARTICLE VIII. PROVISIONS FOR RETENTION OF JURISDICTION The Referee in Bankruptcy shall retain jurisdiction to allow or disallow any and all claims filed herein to which objections are filed by the Debtor. ARTICLE IX. PROVISIONS FOR PAYMENT OF COSTS AND EXPENSES OF PROCEEDINGS The costs and expenses of the proceedings shall have priority in payment over the debts affected by this Plan and shall be paid in cash in full from time to time before (with leave of the Court), or within thirty (30) days of entry of, the Order of Confirmation, out of the deposit to be made by the Debtor at the time of the Order of Confirmation in accordance with the following order of priority: (1) Certificates of Indebtedness— payable according to their terms. (2) All administrative expenses as approved by the Court, including all Court costs, special mailing charges and duplicating charges; costs of disbursing agent; all other administrative expenses including allowable out-of-pocket expenses and fees of counsel for the Debtor; special counsel for the Debtor in related proceedings and allowable expenses of the creditors’ committee including fees and expenses of its counsel and its accountant. . Section 328 of the Bankruptcy Act (11 U.S.C. § 728) reads as follows: “The judge may, upon application of the Securities and Exchange Commission or any party in interest, and upon such notice to the debtor, to the Securities and Exchange Commission, and to such other persons as the judge may direct, if he finds that the proceedings should have been brought under chapter 10 of this title, enter an order dismissing the proceedings under this chapter, unless, within such time as the judge shall fix, the petition be amended to comply with the requirement of chapter 10 of this title for the filing of a debtor’s petition or a creditors’ petition under such chapter, be filed. Upon the filing of such amended petition, or of such creditors’ petition, and the payment of such additional fees as may be required to comply with section 532 of this title, such amended petition or creditors’ petition shall thereafter, for all purposes of chapter 10 of this title, be deemed to have been originally filed under such chapter.” . A requirement of Section 362 of the Act (11 U.S.C. § 762). . 11 U.S.C. § 556. . 11 U.S.C. § 742-743. . 11 U.S.C. § 546(2) . 11 U.S.C. § 728

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

In the Matter of KDI CORPORATION, Debtor. Frederick BEACH and Vincent DiRubbio, Appellants, v. KDI CORPORATION, Appellee. Frederick BEACH and Vincent DiRubbio, Petitioners-Appellees, v. KDI CREDITORS’ COMMITTEE, Respondent-Appellant. Nos. 72-1986, 72-2045. United States Court of Appeals, Sixth Circuit. Argued Feb. 7, 1973. Decided April 10, 1973. J. Vincent Aug, Nieman, Aug, Elder & Jacogs, Cincinnati, Ohio, for Frederick Beach and Vincent DiRubbio, appellants and cross-appellees; Converse Murdoch, Peter J. Walsh, Wilmington, Del., of counsel. Mark S. Lieberman, Chicago, Ill., and John A. Benjamin, Cincinnati, Ohio, for appellees; Gootlieb & Chwartz, Chicago, Ill., Robert O. Edington, Cors, Hair & Hartstock, Cincinnati, Ohio, on brief for KDI Corp., appellee and cross-appellant; Benjamin, Faulkner & Tepe, Cincinnati, Ohio, on brief for KDI Creditors Committee, appellee and cross-appellant. Before MILLER, KENT and LIVELY, Circuit Judges. LIVELY, Circuit Judge. The history of this bankruptcy proceeding is set forth in Beach and DiRubbio v. KDI Corporation et al. (No. 72-1485), 477 F.2d 726 (6th Cir. 1973) decided today. In that action we affirmed the District Court’s denial of a motion to dismiss proceedings under Chapter XI of the Bankruptcy Act and require the debtor to proceed under Chapter X. While that appeal was pending, on September 16, 1971 the debtor, KDI Corporation, made an application to the referee for confirmation of the proposed plan of arrangement. Objections to confirmation were filed by two groups of creditors and a hearing on the application was held on October 29, 1971. In its application for confirmation the debtor stated, inter alia, that it had not been guilty of any acts or failures which would be a bar to discharge of a bankrupt. This, along with other statements in its application, followed the language of Section 366 of the Bankruptcy Act (11 U.S.C. § 766), which reads as follows: § 766. Requisites for confirmation The court shall confirm an arrangement if satisfied that— (1) the provisions of this chapter have been complied with; (2) it is for the best interests of the creditors and is feasible; (3) the debtor has not been guilty of any of the acts or failed to perform any of the duties which would be a bar to the discharge of a bankrupt; and (4) the proposal and its acceptance are in good faith and have not been made or procured by any means, promises, or acts forbidden by this title. Confirmation of an arrangement shall not be refused solely because the interest of a debtor, or if the debtor is a corporation, the interests of its stockholders or members will be preserved under the arrangement. Although five separate reasons were set out in the two objections to confirmation, neither objection alleged that the plan of arrangement should be rejected for failure to qualify under subsection (3), supra. At the confirmation hearing the debt- or and the official creditors’ committee produced evidence in support of confirmation, but the objectors introduced no witnesses and relied upon cross-examination and the filing of portions of approximately fifteen contracts as exhibits. The entire thrust of the objectors’ efforts was concerned with the alleged illegality of the plan. The objectors stated that the whole point of their objection was that the debtor was trying to do something in Chapter XI that it could only do in Chapter X. It was claimed that the proposed plan was illegal because it affected shareholders’ rights, particularly those shareholders in Class 6 of the proposed plan. No evidence was produced of any act or failure by the debtor which would have been a bar to discharge of a bankrupt under § 366(3) of the Act. On March 27, 1972 the referee filed an opinion and order in which all of the grounds for denying confirmation asserted by the objectors were overruled. However, the opinion stated that it was incumbent upon the referee, in addition to disposing of objections, to make an independent judgment concerning the fulfillment by the debtor of the conditions set out in Section 366 before confirming a plan of arrangement under Chapter XI. The referee then found that the debtor had satisfied the conditions of sub-sections (1), (2) and (4); that is, that the provisions of Chapter XI had been complied with, that the plan was for the best interest of creditors and was feasible, and that the proposal and acceptance by creditors were in good faith. In dealing with the requirements of sub-section (3), the referee referred to Section 14(c) of the Bankruptcy Act [11 U.S.C. § 32(c)], which provides as follows: § 32. Discharges, when granted * * * * * * (e) The court shall grant the discharge unless satisfied that the bankrupt has (1) committed an offense punishable by imprisonment as provided under section 152 of Title 18; or (2) destroyed, mutilated, falsified, concealed, or failed to keep or preserve books of account or records, from which his financial condition and business transactions might be ascertained, unless the court deems such acts or failure to have been justified under all the circumstances of the case; or (3) obtained money or property on credit, or obtained an extension or renewal of credit, by making or publishing or causing to be made or published in any manner whatsoever, a materially false statement in writing respecting his financial condition; or (4) at any time subsequent to the first day of the twelve months immediately preceding the filing of the petition in bankruptcy, transferred, removed, destroyed, or concealed, or permitted to be removed, destroyed, or concealed, any of his property, with intent to hinder, delay, or defraud his creditors; or (5) in a proceeding under this title commenced within six years prior to the date of the filing of the petition in bankruptcy had been granted a discharge, or had a composition or an arrangement by way of composition or a wage earner’s plan by way of composition confirmed under this title; or (6) in the course of a proceeding under this title refused to obey any lawful order of, or to answer any material question approved by, the court; or (7) has failed to explain satisfactorily any losses of assets or deficiency of assets to meet his liabilities: Provided, That if, upon the hearing of an objection to a discharge, the objector shall show to the satisfaction of the court that there are reasonable grounds for believing that the bankrupt has committed any of the acts which, under this subdivision, would prevent his discharge in bankruptcy, then the burden of proving that he has not committed any of such acts shall be upon the bankrupt. The opinion recited that it was the debt- or’s responsibility to satisfy the court that the conditions of Section 366 have been met and, “We cannot conclude that we are satisfied that the debtor has not been guilty of any of the acts or failed to perform any of the duties which would be a bar to the discharge of a bankrupt.” In reaching this conclusion, the referee indicated that there was evidence that § 14(c)(4) of the Act may have been violated by the debtor’s granting of security to a group of banks on September 1, 1970. In that transaction approximately $1,125,000.00 of new money was obtained by the debtor, and the banks were given security for some $30,000,000.00 of pre-existing debt, which had been unsecured, in addition to the new loans. This transaction was fully disclosed in the minutes of KDI Corporation and discussed at length in a letter from the creditor’s committee to the general creditors of KDI Corporation. In that letter the bank arrangement was described as “vulnerable” under Section 70(e) of the Bankruptcy Act which deals with fraudulent and voidable transfers by a bankrupt debtor. While recognizing this vulnerability, the creditors’ committee pointed out that it had been instrumental in arranging for $3,000,000.00 of new working capital from the same banks and reworking the terms of the bank loan in a manner which was very advantageous to the debtor and, therefore, to the creditors. The report strongly recommended approval of the proposed plan of arrangement, which depended to a large extent on the continued cooperation of the banks for its viability. The referee seized upon the characterization of the bank arrangement as “vulnerable” and held that it was the obligation of the debtor to satisfy the court that the “questionable transaction” was not an act which would be a bar to the discharge of a bankrupt. On March 29, 1972 the debtor filed a petition for review addressed to District Judge Porter, who entered an order in which he declined to review the referee’s order denying confirmation. The matter was remanded to the referee with instructions to entertain a motion to reopen the proceedings to confirm the plan. In an accompanying opinion the court held that the objectors have the burden of making out a prima facie case before the debtor is required to show affirmatively that no act has been committed which would bar discharge. It further held that the referee should not raise this issue on his own, and that he should require more of a showing than the mere designation of a portion of the creditors’ committee letter which characterizes the transaction as “vulnerable.” Holding further that the referee must have evidence before him involving the intent of the debtor in making the transfer, the opinion noted that the objectors offered nothing on this question. The court then reviewed portions of the record and concluded that “in the circumstances of this case as they now are reflected in this record, the Referee could be satisfied' that the transaction was not an act which would bar a discharge.” The opinion of the District Court then examined Section 14(c) of the Act, and in particular the proviso dealing with burden of proof which is contained at the end of sub-section (c). The court held “. . . (A)ssuming that the designation by the objectors of certain evidence of the debtor constitutes a prima facie case, we believe the debtor has met the burden of proving to the Referee that the transfer was not with intent to defraud creditors.” Near the conclusion of its opinion the court wrote, “And it seems equally clear that KDI has met any burden it might have had cast on it by the statute, especially as to its good faith in proposing the plan which was put into question by the objectors.” Despite all these findings, the order of the District Court remanded the case to the referee with instruction to consider a motion to reopen the proceedings. The objectors, Beach and DiRubbio, have appealed from the order and opinion and the creditors’ committee has filed a cross-appeal. The objectors do not question the action of the District Court in declining to review the referee’s order, but do seek to reverse its holding that the burden of proving disqualification is on the objectors. The creditors’ committee maintains that the District Court erred in refusing to confirm the plan of arrangement and requests this Court to direct that an order of confirmation be entered. Section 366 speaks in mandatory terms with its requirement that the plan “shall” be confirmed if the court is satisfied that all requirements of the statute have been met. Even though the required majority of creditors signifies its approval, the referee must exercise an independent judgment as to whether the four conditions of the statute have been fulfilled. Technical Color & Chemical Works, Inc. v. Two Guys From Massapequa, Inc., 327 F.2d 737 (2d Cir. 1964); In re Graco, Inc., 364 F.2d 257 (2d Cir. 1966). And if no objections are made, a referee must study the plan carefully and make an independent determination that it is feasible and in the best interest of creditors. United Properties v. Emporium Department Stores, Inc., 379 F.2d 55 (8th Cir. 1967). In dealing with the requirements of subsection (3), however, the referee is governed by the provisions of Section 14(c) which describes the acts that would be a bar to the discharge of a bankrupt. The present appeal does not concern feasibility of the plan or whether it is in the best interest of the creditors. These issues have been decided previously by the District Court and affirmed by this Court in No. 72-1485. The appellants here, who were the objectors before the referee, maintain that the District Judge erred in applying the provisions of § 14(c) and determining that the objectors had the burden of proof under § 366(3). .We hold that since the ultimate issue under § 366(3) can only be decided by reference to § 14(c), the procedure set forth in the latter statute must necessarily be-applied. The language of § 14(c) is mandatory, providing that the court “shall” grant discharge unless satisfied that the bankrupt has committed certain acts. The referee was not satisfied that the “vulnerable” transaction between the debtor and the bank consortium did not violate sub-section (4) of § 14(c): “. . . the bankrupt has . . . (4) at any time subsequent to the first day of the twelve months immediately preceding the filing of the petition in bankruptcy, transferred, removed, destroyed, or concealed, . any of his property, with intent to hinder, delay, or defraud his creditors; . . In reaching his conclusion to deny confirmation, the referee failed to apply correctly the proviso at the end of § 14(c) concerning burden of proof as to violations. The language clearly requires the objector to make a prima facie case of violation before the bankrupt ■ has the burden of proving that he has not disqualified himself for discharge. Feldenstein v. Radio Distributing Company, 323 F.2d 892 (6th Cir. 1963). The District Court correctly held in its opinion that the referee erred in this ease in holding that the burden was on the debtor in the first instance to prove that it had not done any of the forbidden acts. In the absence of a prima facie ease by the objectors that it had committed such an act, the debtor was not required to prove anything in order to qualify as one who would have been entitled under § 14(c) to discharge in bankruptcy. Nevertheless, the referee was not satisfied and raised the question sua sponte. In its opinion the District Court held that the referee should not have raised the question on its own, citing Collier on Bankruptcy, Yol. 9, p. 328. We agree that the duty to exercise independent judgment does not permit the referee to require a debtor under Chapter XI to prove that it has not been guilty of an act or omission which would be a bar to discharge of a bankrupt, where objecting creditors fail to produce any evidence of such acts or omissions. The reference to the “vulnerability” of the bank transaction falls far short of making a prima facie case of disqualification under § 14(c)(4), the portion of the statute referred to by the referee. The language there is “. . . transferred, removed, destroyed, or concealed, or permitted to be removed, destroyed, or concealed, any of his property, with intent -to hinder, delay, or defraud his creditors; . . .” (emphasis added). A fair reading of the entire letter from the creditors’ committee convinces us that no intent to hinder, delay or defraud creditors was discovered or intimated. On the contrary, the transaction was described as being for the benefit of the corporation in its fight for survival, and ultimately for the benefit of the creditors. The very “vulnerability” of the transaction gave the new management and the creditors’ committee leverage which they used to obtain a reduction of interest obligations and a generally favorable renegotiation of the bank debt. There was no attempt to conceal the questioned transaction and nothing was destroyed or removed. There was a transfer only in the sense that assets were pledged for an antecedent debt. If actually vulnerable at all, the transaction would have at most constituted a preference. As the Supreme Court pointed out in Coder v. Arts, 213 U.S. 223, 241, 29 S.Ct. 436, 443, 53 L.Ed. 772 (1909): “An attempt to prefer is not to be confounded with an attempt to defraud, nor a preferential transfer with a fraudulent one.” In order to have present a prima facie case of disqualification, the objectors would have been required to prove not only that the forbidden act or acts were done, but also that they were done with an actual intent to hinder, delay or defraud creditors. The record is barren of any evidence that such intent existed. In addition to referring to the letter of the creditors’ committee, counsel for the objectors cross-examined Lewis Matthey, chief of the new management team of KDI and a witness in support of confirmation. He testified that he had sought advice of counsel and had determined that the bank pledge was given in good faith and was a bona fide pledge —“an honorable piece of business.” He further testified that the plan was sound for the general creditors and described the concessions which the banks had made with respect to interest charges and term of loans. This cross-examination produced none of the “badges of fraud” found in such cases as Technical Color & Chemical Works, Inc. v. Two Guys From Massapequa, Inc., supra; Dixwell v. Scott & Co., Ltd., 115 F.2d 873 (1st Cir. 1940) and In re Stanley Karman, Inc., 279 F.Supp. 828 (S.D.N.Y.1967). Indeed, the case more nearly resembles In re Graco, Inc., 364 F.2d 257 (2d Cir. 1966) where the court made the following observation: “On the other hand, counsel for appellants at no time attempted to introduce contrary evidence, and it is quite clear that the objection was part of a general plan to throw as many obstacles as possible in the path of an arrangement.” 364 F.2d at 260. The appellants say that the burden of proof should be on the debtor because it has all the records and information necessary to show the acts required for disqualification. Here the debtor disclosed the bank transaction and filed copies of its minutes as exhibits in the hearing before the referee. All the facts concerning the transaction were in the open and the appellants had ample opportunity to uncover any wrongdoing, if it existed, by means of discovery. Instead they chose to rely on a single word in the letter of the creditors’ committee and cross-examination of the debtor’s witness. If evidence of wrongdoing existed, surely the appellants would have pursued it more vigorously. We are confronted with the anomalous situation that the District Court has held that the referee erred in assigning the burden of proof to the debtor rather than to the objectors and in raising the issue of disqualification sua sponte, but nevertheless has not reversed the referee’s order. Furthermore, while declining to review that order, the District Court has filed an opinion in which it reviewed all the proceedings before the referee and concluded that even if the objectors had made a prima facie case, “We believe the debtor has met the burden of proving to the Referee that the transfer was not with intent to defraud creditors.” The petition for an arrangement under Chapter XI was filed December 30, 1970 and the proposed plan of arrangement was filed April 6, 1971. The District Court and this Court have held that proceedings were properly brought under Chapter XI and that the proposed plan is legal and is in the best interest of creditors, and is feasible. The referee has found that three of the four statutory requirements for confirmation have been met. Based upon an erroneous premise as to which party had the obligation to satisfy him as to the remaining requirement, the referee withheld confirmation. However, the District Court has found that there was no evidence of any act or omission by the debtor that would disqualify it under the remaining condition. Applying the mandatory language of § 366 to the facts, we hold that the debtor was entitled, as a matter of law, to an order confirming the proposed plan of arrangement. The objectors have had ample opportunity, in hearings before the referee and the District Court, to produce evidence of disqualifying acts. There is no reason to believe that a remand for further hearings before the referee, with review by the District Court, would compel a different conclusion. Cf. Slocum v. Edwards, 168 F.2d 627, 632 (2d Cir. 1948). The record, which we have now twice reviewed, fully supports the factual determinations set forth in the opinion of the District Court. The Court erred, however, in failing to enter an order of confirmation upon being satisfied that all of the requirements of § 366 had been met by the debtor. Pursuant to § 24(a) of the Act we remand to the District Court and direct that an order be entered confirming the proposed plan of arrangement as amended. So ordered. Appellants, Beach and DiRubbio, will pay the costs. . Section 24(a) of the Bankruptcy Act [11 U.S.C. § 47(a)]: § 47. Jurisdiction of appellate courts (a) The United States courts of appeals, in vacation, in chambers, and during their respective terms, as now or as they may be hereafter held, are invested with appellate jurisdiction from the several courts of bankruptcy in their respective jurisdictions in proceedings in bankruptcy, either interlocutory or final, and in controversies arising in proceedings in bankruptcy, to review, affirm, revise, or reverse, both in matters of law and in matters of fact: Provided however, That the jurisdiction upon appeal from a judgment on a verdict rendered by a jury shall extend to matters of law only: And ;provided further, That when any order, decree, or judgment involves less than $500, an appeal therefrom may be taken only upon allowance of the appellate court.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. STATE ELECTRIC SERVICE, INC., Respondent. No. 72-3477 Summary Calendar. United States Court of Appeals, Fifth Circuit. April 19, 1973. Rehearing Denied June 14, 1973. Marcel Mallet-Prevost, Asst. Gen. Counsel, N. L. R. B., Washington, D. C., Charles M. Paschal, Director, Region 15, N. L. R. B., New Orleans, La., for petitioner. Lynn C. Higby, Panama City, Fla., for respondent. Before GEWIN, COLEMAN and MORGAN, 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, Part I. LEWIS R. MORGAN, Circuit Judge: The National Labor Relations Board in this ease seeks enforcement of its order against respondent State Electric Service, Inc. The Board’s decision and order of July 31, 1972, is reported at 198 N.L.R.B. No. 77. The Board found that the company violated sections 8(a)(5) and (1) of the National Labor Relations Act by refusing to abide by a contract negotiated and executed in its behalf by a multi-employer association. We find substantial evidence to support the Board’s holding and grant enforcement of its order. For several years State Electric had been a member of a multi-employer bargaining group which negotiated contracts with Local 1001 of the International Brotherhood of Electrical Workers. The 1969-70 contract was set to expire on September 13, 1970. By August 21, 1970, agreement had been reached on a contract for the next year, to be effective on September 14th. This agreement was executed by the association (Panama City Electrical Contractors) and the union. During August 1970, a dispute arose between the union and State Electric. This dispute centered on which contractual wage rate — the industrial rate or the lower commercial rate — was to be paid on a certain small electrical job at Tyndall Air Force Base. The company maintained that the lower commercial rate was applicable while the union felt otherwise. Evidence shows that the union business manager attempted several times to discuss the matter with State Electric’s president, Peterson, but received no response. On August 20th, in light of the failure of response from Peterson, the business manager instructed the employees not to work the next day on the Tyndall job. The union members did not work on the job again thereafter. On August 26th, Peterson fired all of his employees and hired replacements. The issue in this case is whether or not the work stoppage by the employees was sufficient to justify State Electric’s termination of the contract for 1969-70, and its refusal to abide by the contract effective September 14, 1970, for 1970-71. The Board held that State Electric was bound by both contracts. The contracts for both of the two above periods contained “no strike” clauses, but these clauses differ significantly. The 1969-70 agreement contained a no strike clause which provided : There shall be not (sic) stoppage of work either by strike or walkout because of any proposed changes in the agreement. The contract effective on September 14th, for the next year, expanded the no strike clause to read: There shall be no stoppage of work either by strike or walkout because of any proposed changes in the agreement or dispute over matters relating to this agreement. At the same time, both contracts contained a broad arbitration clause: During the term of this agreement all questions or disputes shall be taken up for adjustment between the duly selected representatives of both parties to this agreement. If the representatives of the parties could not agree, the contracts provided for binding arbitration. The work stoppage in question occurred while the 1969-70 contract with the circumscribed no strike clause was in effect. It is uncontroverted that the work stoppage was not over proposed changes to the agreement. The union has contended that its work stoppage was simply an attempt to force State Electric to discuss or arbitrate the wage dispute. The facts establish that president Peterson failed to respond to numerous telephone requests from the union for a meeting. On August 14th, the union sent a letter to Peterson requesting a labor-management representative meeting as required by the arbitration section of the agreement. When no response was forthcoming in six days, the work stoppage occurred. The union did, finally, unilaterally invoke the grievance procedure in September, 1970. Peterson was notified by registered mail of the meeting of the joint conference committee but failed to reply or appear. The committee, consisting of both contractor and union representatives, found that State Electric, not the union, had violated the contract by failing to follow the grievance procedure. Although Peterson met with union officers at various times after this stoppage and arbitration, his union employees did no more work on the job. It apparently is State Electric's position that the work stoppage was a total breach of contract by the union, relieving it of any contractual obligations to the union. Although it never properly withdrew from the multi-employer group, it refused to abide by the contract agreed to by the group and the union. The NLRB held that the union’s work stoppage was not a violation of the contract because of the limited “no strike” clause therein. Therefore, it held the failure to continue to deal with the union was a violation of the Act. In challenging the NLRB’s holding, petitioner State Electric relies on Teamsters Union v. Lucas Flour Company, 369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593 (1962), for the proposition that a no strike clause is to be implied coextensive with an existing arbitration clause and that a strike over an arbitrable grievance was a violation of the contract. The Supreme Court has seemingly 'retreated from the full implications of the broad language in Lucas Flour. The Court stated in Drake Bakeries v. Local 50, 370 U.S. 254, 261, 82 S.Ct. 1346, 1351, 8 L.Ed.2d 474 (1962): However, this Court has prescribed no such inflexible rule rigedly linking no-strike and arbitration clauses of every collective bargaining contract.7 The Court then added that it did not think previous cases had established “a flat and general rule that these two clauses are properly to be regarded as exact counterweights in every industrial setting.” Id., f.7. Here, of course, unlike Lucas Flour, there was a bargained-for no-strike clause which was obviously more limited than the arbitration clause. Even if Lucas Flour does require a coextensive no strike clause here, we see other reasons why the employer cannot prevail. First, as noted, the union made every effort, excluding the unsatisfactory one of forcing unilateral arbitration, to have this matter settled as provided in the contract. Secondly, in Lucas Flour the strike was designed to compel the employer to agree to the union’s position as a substitute for the contractually agreed to arbitration. In the present case, however, the work stoppage was unquestionably designed simply to force the company to acknowledge the existing dispute and to make the company comply with the contract by arbitrating the matter. It is unchallenged that the union was not attempting to use the stoppage mechanism to force the employer’s acquiescence to an issue which the arbitrator could decide, rather it was solely in response to the employer’s refusal to abide by the very clause which he now claims the union has breached. Thus, this is not “a strike to settle a dispute which a collective agreement provides shall be settled exclusively and finally by compulsory arbitration” as was the case in Lucas Flour, 369 U.S. at 105, 82 S.Ct. at 577. Furthermore, we think it well settled that a union’s breach of a no strike clause (assuming there was such a breach in this case) is not automatically sufficient to breach the entire contract. The Supreme Court has held that a union’s breach of a no strike clause does not justify an employer’s subsequent refusal to arbitrate, as required by the contract, the underlying dispute which gave rise to the stoppage in the first place. See Packing House Workers v. Needham Packing Company, 376 U.S. 247, 84 S.Ct. 773, 11 L.Ed.2d 680 (1964); Drake Bakeries, Inc. v. Bakery & Confectionery Workers, 370 U.S. 254, 82 S.Ct. 1346, 8 L.Ed.2d 474 (1962). If a breach of a no strike clause is not enough to relieve the employer of his duty to arbitrate the issue giving rise to the illegal work stoppage, it can certainly not automatically be held that a breach of a no strike clause terminates the entire contract with the union. Here, assuming that the union did indeed breach its obligation by calling the stoppage, under the circumstances of this case that does not seem sufficient to justify the employer’s position that the entire contract was rendered void. As noted here, there is a serious question as to whether the work stoppage was an illegal work stoppage within an implied no strike clause based on the Lucas Flour decision. At most, it would seem the employer only had an action against the union for any damages growing out of the stoppage or a suit for a possible injunction under Boys Markets, In fact, even here there is a strong argument that the employer’s only course of action would require his filing a grievance and resorting to arbitration over whether or not this was an illegal work stoppage. The employer chose not to attempt any of these “peaceful” remedies. Rather, it appears he simply decided to take this opportunity to rid himself of the union once and for all. After consideration of all the evidence, we find ample support for the Board’s conclusion that State Electric never effectively repudiated or withdrew from the multi-employer bargaining unit so as to not be bound by the contract to become effective on September 14th. Therefore, the order of the NLRB in this case is Enforced. . The opinion of the joint committee includes the following paragraph: After consideration discussion and question the committee finds that the local union put forth extra effort and consideration in trying to arbitrate this matter in good faith and under the terms of this agreement, and at the same time showing the union’s regards to Mr. Peterson as an individual and as an employer. . Boys Markets, Inc. v. Local 770, Retail Clerks Union, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed. 2d 199 (1970).

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

FARMERS-PEOPLES BANK, Plaintiff-Appellant, Cross-Appellee, v. UNITED STATES of America, Defendant-Appellee, Cross-Appellant. Nos. 72-1856, 72-1857. United States Court of Appeals, Sixth Circuit. Argued Feb. 5, 1973. Decided April 30, 1973. John F. Kizer, Milan, Tenn., for appellant, cross-appellee. Charles R. Burnett, Tax Div., Dept. of Justice, Washington, D. C., for appellee, cross-appellant; Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Crombie J. D. Garrett, Attys., Tax Div., Dept. of Justice, Washington, D. C., on brief; Thomas F. Turley, Jr., U. S. Atty., Memphis, Tenn., of counsel. Before PHILLIPS, Chief Judge, and EDWARDS and MILLER, Circuit Judges. WILLIAM E. MILLER, Circuit Judge. This appeal involves the claim of the plaintiff, Farmers-Peoples Bank of Milan, Tennessee (the bank) against the defendant, United States (the government) pursuant to 26 U.S.C. § 7426(a)(1) for an alleged wrongful levy by the government on the assets of the Clemmer Building Supply Company (C. B.S.), now bankrupt. The government counterclaimed under 26 U.S.C. § 3505(b), which imposes personal liability on lenders under certain conditions. The district court for the Western District of Tennessee partially granted the relief sought by each party. The plaintiff has appealed and the government has cross-appealed. C.B.S. ran a lumber shed and was a home contractor in Milan, Tennessee. On October 7, 1968, its Board of Directors authorized its president, Hubert Clemmer, Jr., to apply for a loan up to $50,000 from the bank. The district court found that on October 10, 1968, the bank loaned C.B.S. $35,000. In return Clemmer signed a promissory note and a security agreement, granting the bank a security interest in C.B.S.’s assets (notably accounts receivable and inventory). The security agreement was lost. At the time of the agreement C.B.S. carried two accounts with the bank, one a general checking account and the other a payroll account. It was the bank’s practice to allow C.B.S. to overdraw these accounts regularly. The bank’s records reflect that $32,000 of the loan made in 1968 was transferred to the payroll account to cover the existing overdrafts in that account. On October 23, 1968, the bank filed a financing statement with the Secretary of State of Tennessee, reflecting the indebtedness of C.B.S. and the bank’s security interest. By December 19, 1969, payments by C.B.S. had reduced the outstanding balance on the note to $19,832.76. At this time Clemmer signed for C.B.S. a “renewal” promissory note. The bank was represented in these transactions by John McNail, the bank’s executive vice president. McNail personally approved the payment of checks drawn by C.B.S. that actually overdrew C.B.S.’s accounts. In 1968, C.B.S.’s financial condition worsened. Yet it regularly overdrew its checking accounts, often for large amounts. In 1970, it was forced into involuntary bankruptcy. At the time of the bankruptcy, the bank was carrying over $47,000 in overdrafts. During the fourth quarter of 1968, the third and fourth quarters of 1969, and the first quarter of 1970, C.B.S. incurred federal tax liabilities for withholding and unemployment taxes. On three occasions C.B.S. attempted to pay these taxes but the cheeks were dishonored by the bank because of insufficient funds. Finally, in early 1970, Clemmer paid the Internal Revenue Service a part of C.B.S.’s tax liability with a cashier’s check in the amount of $8,051.30. On February 24, 1970, .and April 23, 1970, the government filed two tax liens for $14,111.73, and $7,554.82, respectively, totaling $21,666.65. On March 4, 1970, the government foreclosed on these liens, locking the doors of C.B.S. The government proceeded to collect some of C.B.S.’s accounts receivable and attempted to sell its assets at public sale. The sale drew no bidders and the government released the assets to Clemmer. The bank then asserted its security interest. An accord was reached between the bank and the government, providing that the assets would be sold free of their respective interests, the proceeds of the sale to be placed in an escrow fund pending judicial determination of priorities. The later sale netted $21,601.18. Subsequently a rent account in the amount of $1,137.50 was seized by the bank. On August 14, 1970, C.B.S. was declared bankrupt. The bankruptcy court released the property of the bankrupt to the bank subject only to the rights of the federal government, if any, under its tax liens. The district court found that the bank had a security interest arising from the lost 1968 agreement, limited to $19,832.-76, with respect to: All inventory of every nature and kind now on hand and all' hereafter acquired inventory, along with all accounts receivable, now held or hereafter acquired accounts receivable, along with office supplies, machines, and tools and equipment usual and incidental to the operation of a lumber shed. It was then held that the bank’s interest in this amount was superior to the government’s tax liens, except as to the 26 U.S.C. § 3505(b) liability. From the amount of $19,832.76 the court subtracted $1,300.00 (rent account) and $5,650.-50 (proceeds from the sale of equipment). These monies were thought to have been collected independently of the escrow fund. Consequently, the bank’s security interest in the proceeds from the sale of C.B.S.’s assets held in the escrow fund was reduced to $12,882.26, or, with interest, to $14,341.23. The court then held that the bank was liable under 26 U.S.C. § 3505(b) as to the fourth quarter of 1969 because of loans made to C. B.S. during that period, a liability fixed at $5,763.81. This amount was also subtracted from the bank’s share of the escrow account, finally leaving the bank’s portion at $8,577.42. The government was awarded the remaining amount, or $13,023.76 ($5,763.81 under 26 U.S.C. § 3505(b), and $7,259.95 under its tax liens). To complicate matters further the court amended its findings. In its amended order the district court held that the $5,700.00 (listed above as $5,650.50) was in fact included in the escrow fund. Consequently this amount was added to the bank’s share of the fund and subtracted from the government’s portion, thus giving the bank $14,277.42 and the government $7,323.76 from the escrow fund. Also each party was allowed to retain the proceeds from the sale of assets that it had sold independently of the escrow fund. Upon consideration we are satisfied that all of the findings and conclusions of the district court are correct except its denial of the bank’s demand for a jury trial on the 26 U.S.C. § 3505(b) issues as to both the third and fourth quarters of 1969, and with the possible exception of the common law lien question noted below. The Seventh Amendment to the federal Constitution provides: In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law. This Amendment is in essence embodied in Rule 38(a) of the Federal Rules of Civil Procedure: (a) Right Preserved. The right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by a statute of the United States shall be preserved to the parties inviolate. The Seventh Amendment preserves to litigants the right to jury trial in suits at common law— not merely suits, which the common law recognized among its old and settled proceedings, but suits in which legal rights were to be ascertained and determined, in contradistinction to those where equitable rights alone were recognized, and equitable remedies were administered .... Ross v. Bernhard, 396 U.S. 531, 533, 90 S.Ct. 733, 735, 24 L.Ed.2d 729 (1970), quoting Parsons v. Bedford, 28 U.S. (3 Pet.) 433, 437, 7 L.Ed. 732 (1830). The difficulty of course is to distinguish the legal from the equitable claims. Since the merger of law and equity, the doctrine that a court in equity, once it has jurisdiction, will adjudicate both legal and equitable claims sitting without a jury, has been drastically eroded. This is due to the liberal joinder provisions under Rule 18 of the Federal Rules of Civil Procedure. Beacon Theaters, Inc. v. Westover, 359 U.S. 500, 509-510, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959). As the Supreme Court has stated: where equitable and legal claims are joined in the same action, there is a right to jury trial on the legal claims which must not be infringed either by trying the legal issues as incidental to the equitable ones or by a court trial of a common issue existing between the claims. The Seventh Amendment question depends on the nature of the issue to be tried rather than the character of the overall action. Ross v. Bernhard, 396 U.S. 531, 537-538, 90 S.Ct. 733, 738 (1970). Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962); Beacon Theaters v. Westover, 359 U.S. 500, 505, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959). In Ross the Court pointed to three factors to be considered in making the distinction between legal and equitable claims. As our cases indicate, the “legal” nature of an issue is determined by considering, first, the pre-merger custom with reference to such questions; second, the remedy sought; and, third, the practical abilities and limitations of juries. Of these factors, the first, requiring extensive and possibly abstruse historical inquiry, is obviously the most difficult to apply. Ross v. Bernhard, 396 U.S. 531, 538 n. 10, 90 S.Ct. 733, 738. See Simler v. Conner, 372 U.S. 221, 223, 83 S.Ct. 609, 9 L.Ed.2d 691 (1963). In Damsky v. Zavatt, 289 F.2d 46 (2nd Cir. 1961), the Court held in a well-reasoned opinion that an action in personam to recover taxes was one recognized at common law as an action on a debt, a legal cause of action for which a jury trial was appropriate. On the basis of this authority the first prerequisite for a jury trial is met. There are three essential elements of an action pursuant to § 3505(b) upon the facts of this case. First, the bank must have loaned money to C.B.S. with the knowledge that the money was to be specifically used to meet C.B.S.’s payroll during the third and fourth quarters of 1969; second, C. B.S. must have failed to pay its withholding and unemployment taxes during these quarters and the taxes must still be outstanding; and third, the bank must have had actual notice or knowledge that C.B.S. neither intended nor was able to pay its payroll taxes. In our opinion no characterization of this cause of action could be made other than an action on a debt to impose personal liability. The recovery of the debt against the bank under § 3505(b) could exist regardless of the existence of the escrow fund or of the tax liens. Hence, the second requirement of Ross, i. e. the remedy, is satisfied. The third factor listed by Ross, the practical abilities and limitations of juries, should present no difficulties here. The central issue for the jury would be the bank’s actual notice or knowledge of the employer’s intent not to pay or its inability to pay its payroll taxes. This question is peculiarly appropriate for jury resolution. Moreover, the § 3505(b) issues are easily severable from the other issues raised in the action. These issues as to both the third and fourth quarters of 1969 should be submitted for jury determination. The bank asserts that it is entitled to set-off the amount recovered from the rent account against C.B.S.’s outstanding liability. Apparently the bank is arguing that this right is a common law one and therefore takes precedence over a federal tax lien. See Tenn.Code Ann. § 47-9-310 (1964). The district court did not specifically pass on this issue. By inference, however, the court held that the bank had no such right, since the court subtracted the amount in the rent account from the bank’s secured interest. Wagner v. Citizens Bank & Trust Co., 122 Tenn. 164, 122 S.W. 245 (1909), easts some doubt on this result. In that case the court, albeit by dictum, apparently recognized such a common law right in Tennessee. See also Comment 1, Tenn.Code Ann. § 47-4-208 (1964). We express no opinion on this question since we feel that it should be specifically dealt with by the district court on remand. We observe, however, that the finding that the original security agreement did not contain a future advances clause is not dispositive of this issue because the bank still has outstanding over $47,000 in overdrafts. Other questions have been raised by both parties on appeal but have been found to be without merit. Modified and remanded for further proceedings not inconsistent with this opinon. . The district court in its amended order found that this escrow fund contained some $5,650.50 derived from the sale of C.B.S.’s equipment. Originally this amount was not included in the escrow fund, but was assumed to have been independently collected by the bank. According to the court’s amended order this assumption was in error, and this amount was found to have been included in the escrow fund. The government did collect two items independently of the escrow fund, $454.28 (cash from C.B.S.’s register at the time of seizure) and $3,350.00 (proceeds realized from the sale of C.B.S.’s vehicles). The bank does not claim an interest in these two items. . This account is later referred to by the district court as containing $1,300.00. The difference is apparently represented by interest. . Subsequent to the filing of the tax liens, the bank sought to convince the government that the original security agreement had actually been executed and that it contained a future advances clause, seeuring the bank for advances up to $50,000.-00. Pursuant to this purpose, Clemmer came to McNail’s office and signed a “duplicate agreement.” The form was blank when Clemmer signed it, except that it indicated an indebtedness of $35,000 and was marked “duplicate.” McNail then filled in the form, including a future advances clause for amounts up to $50,000. Also, McNail filed an affidavit with the court that the original agreement did in fact contain a future advances clause. Clemmer testified that he could not remember whether the original contained such a provision. The court found that the bank did not carry its burden of proof on this issue, and that the original security agreement did not contain a future advances provision. We hold that this finding was not clearly erroneous. . See note 2, supra. . 26 U.S.C. § 3505(b) provides: (5) Personal liability where funds are supplied. — If a lender, surety, or other person supplies funds to or for the account of an employer for the specific purpose of paying wages of the employees of such employer, with actual notice or knowledge (within the meaning of section 6323(i)(l)) that such employer does not intend to or will not be able to make timely payment or deposit of the amounts of tax required by this subtitle to be deducted and withheld by such employer from such wages, such lender, surety, or other person shall be liable in his own person and estate to the United States in a sum equal to the taxes (together with interest) which are not paid over to the United States by such employer with respect to such wages. However, the liability of sucli lender, surety, or other person shall be limited to an amount equal to 25 percent of the amount so supplied to of for the account of such employer for such purpose. . 26 U.S.C. § 6323, as rewritten by § 101 (a), Federal Tax Lien Act of 1966, defining “notice” or “knowledge” for purposes of § 3505(b), provides in part: (i) Special Rules.— (1) Actual notice or knowledge.— an organization shall be deemed for purposes of a particular transaction to have actual notice or knowledge of any fact from the time such fact is brought to the attention of the individual conducting such transaction, and in any event from the time such fact would have been brought to such individual’s attention if the organization had exercised due diligence.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America and Gerald T. Culver, Plaintiffs-Appellees, v. Robert I. WHITE, Defendant-Appellant. No. 71-2381. United States Court of Appeals, Fifth Circuit. April 17, 1973. Rehearing En Banc Granted July 10, 1973. George A. Hrdlicka, Houston, Tex., for defendant-appellant. Anthony J. P. Farris, U. S. Atty., Houston, Tex., Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwaeks, Atty., Carleton D. Powell, Dept. of Justice, Tax Div., Washington, D. C., for plaintiffs-appellees. Before GEWIN, AINSWORTH and SIMPSON, Circuit Judges. GEWIN, Circuit Judge: In this case we must decide whether the constitutional privilege against compulsory self-incrimination may be invoked in behalf of a taxpayer by his attorney to prevent the production of income tax workpapers in his attorney’s possession. Pursuant to 26 U.S.C. §§ 7402(b) and 7604(a), the government petitioned the United States District Court for the Southern District of Texas for enforcement of an internal revenue summons issued on December 7, 1970 in connection with an investigation of the tax liability of Louis D. and Carolyn R. Roberts for the years 1966 through 1969 inclusive. The summons was addressed to Appellant White, taxpayers’ attorney, and directed him to produce workpapers and other documents which had been prepared by taxpayers’ accountant and which were then in White’s possession. In the enforcement proceeding White asserted his clients’ fifth amendment privilege as a bar to the compelled production of the documents in his possession. The district court, 326 F.Supp. 459, D.C., held that taxpayers had no fifth amendment rights with respect to the papers in their attorney’s possession and ordered White to obey the summons. From this order White appeals. We affirm. From 1962 through 1968 taxpayers’ income tax returns were prepared by Stanley H. Voelkel, a certified public accountant. Voelkel was not taxpayers’ personal employee but rather was an independent contractor with his own office and numerous other clients. Using the information supplied to him by taxpayers, Voelkel would compile workpapers and other documents which summarized the data pertinent to the preparation of an income tax return; the information contained in the workpapers would then be used to complete each year’s return. After filing a return Voelkel retained his workpapers in his files. In 1967 taxpayers found it necessary to draft and submit to the Internal Revenue Service an offer in compromise of their tax liability for the years 1962 through 1965. Voelkel assisted them in its preparation, compiling more workpapers in the process. Upon receipt of taxpayers’ offer in compromise, the Internal Revenue Service assigned a revenue officer to examine it and to make a recommendation as to its acceptability. The revenue officer apparently found indications that taxpayers did not adequately disclose their assets in making the settlement offer. His discoveries were eventually reported to the Intelligence Division of the Internal Revenue Service which in 1969 assigned a special agent to join him in a thorough investigation of the offer in compromise. Undoubtedly one purpose of this investigation was to determine whether taxpayers had committed criminal violations in making the settlement offer. When they learned that a special investigation was underway, taxpayers turned to White for counsel; he was officially appointed their attorney and representative-in-fact on a government power of attorney form filed with the Internal Revenue Service. White immediately contacted Voelkel and by November of 1969 had obtained from him not only the workpapers he used in preparing the offer in compromise but also all workpapers used in preparing taxpayers’ income tax returns for the years 1962 through 1968. It was agreed that White could keep Voelkel’s papers indefinitely but that he would return them upon completion of his representation of taxpayers. In 1970 taxpayers withdrew their offer in compromise. Shortly thereafter the Internal Revenue Service expanded the scope of its investigation into taxpayers’ affairs to include a review of their tax returns for the years 1966 through 1969 in order to determine among other things their correct tax liability for those years. In connection with this expanded investigation the summons in question was issued and-served on White. Although the Internal Revenue Service initially sought all of the workpapers in White’s possession, it subsequently modified its demands to encompass only those workpapers used by Voelkel in preparing taxpayers’ income tax returns for the years 1966 through 1968. When White refused to produce these workpapers, the government petitioned the district court for enforcement of the summons. At the time enforcement was requested, there had been no recommendation to prosecute either with respect to the tax returns under investigation or with respect to the offer in compromise. Resolution of this case begins with White’s contention that the summons served upon him pursuant to 26 U.S.C. § 7602 is unenforceable because the Service’s sole objective in issuing it was to obtain evidence for use in a criminal prosecution of his clients. In Donaldson v. United States the Supreme Court refused to hold that a § 7602. internal revenue summons is invalid if issued in aid of a tax investigation which might result in a recommendation that a criminal prosecution be instituted against the taxpayer. The Court rejected a contention similar to White’s with these observations : “Congress clearly has authorized the use of the summons in investigating what may prove to be criminal conduct .... There is no statutory suggestion for any meaningful line of distinction, for civil as compared with criminal purposes, at the point of a special agent’s appearance. . To draw a line where a special agent appears would require the Service, in a situation of suspected but undetermined fraud, to forego either the use of the summons or the potentiality of an ultimate recommendation for prosecution. We refuse to draw that line and thus to stultify enforcement of federal law. . . 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.” In view of Donaldson it can hardly be disputed that § 7602 permits an internal revenue summons to be issued and enforced in aid of a tax investigation in which civil and criminal purposes are intertwined; the Court cautioned only that the summons must be issued in good faith and prior to a recommendation for criminal prosecution. The record in this case plainly reveals that the summons addressed to White was issued in connection with an investigation the purpose of which, at least in part, was to ascertain the correct income tax liability of taxpayers for the years 1966 through 1969. The trial court conducted an in camera examination of the Service’s motives which substantiated the evidence presented in open court. Although the investigation definitely carried with it the possibility of criminal consequences, no recommendation for criminal prosecution had been made either at the time the summons was issued or at the time enforcement was sought. In these circumstances the issuance of the summons was authorized by § 7602. More substantial problems are raised by appellant’s contention that his clients’ constitutional privilege against compulsory self-incrimination would be violated if he were compelled to produce the workpapers in his possession. Since taxpayers were denied permission to intervene in the enforcement proceeding, they were unable personally to assert their fifth amendment privilege. Instead White as their attorney asserted it in their behalf. A threshold question, then, is whether attorneys have standing in internal revenue proceedings to assert the privilege in behalf of their clients. This question has been considered by several lower federal courts, and, as is so often the case, conflicting decisions have resulted. On one hand there is the traditional view that the fifth amendment privilege is purely personal; it does not permit a witness to plead the fact that another party might be incriminated by his testimony even though he is that party’s agent or attorney. On the other hand some courts have taken the position that too heavy a burden in terms of time and money would be imposed on taxpayers if they were required to be present personally at internal revenue hearings and enforcement proceedings in order to exercise their constitutional rights. Under this view an attorney does have standing to invoke the privilege in his client’s behalf in response to an internal revenue summons that seeks the production of incriminating documents. Assuming, without deciding, that the latter view is correct and therefore that White has standing to assert his clients’ privilege, a second question necessarily arises — whether the fifth amendment shields his clients from the compelled production of workpapers owned and prepared by their accountant and held in their attorney’s possession. In order for White to be successful on appeal, this question must be answered in the affirmative; for even though he may have standing, it is of no use to him if his clients have no fifth amendment rights with respect to the papers in his possession. Like the question of standing, this question has also elicited contradictory responses from the lower federal courts. Fortunately the Supreme Court has provided some guidance with its recent opinion in Couch v. United States. The issue presented in Couch was whether a taxpayer could successfully invoke her privilege against self-incrimination to prevent the production of incriminating documents in her accountant’s possession. The documents sought by the government were the taxpayer’s business records which over the years had been given to her accountant for the purpose of preparing her income tax returns. The taxpayer retained title to the records in herself. As an intervenor in the enforcement proceeding brought against her accountant, she asserted her privilege against self-incrimination as a bar to production of the records. In rejecting the taxpayer’s contention that ownership rather than possession defines the boundaries of the protection afforded by the fifth amendment, the Court once again emphasized the intimate and personal nature of the privilege. The privilege does not prevent the government from discovering incriminating evidence but rather precludes it from extorting such evidence from the accused himself. Without the essential ingredient of personal compulsion against the accused, a fifth amendment claim necessarily founders. When the government seeks papers which might implicate a taxpayer, the Court concluded that the ingredient of personal compulsion, essential to a claim of privilege, is almost invariably missing unless the papers are actually in the taxpayer’s possession. The following remarks are particularly revealing: “We do indeed believe that actual possession of documents bears the most significant relationship to Fifth Amendment protections against governmental compulsions upon the individual accused of crime. Yet situations may well arise where constructive possession is so clear or the relinquishment of possession is so temporary and insignificant as to leave the personal compulsions upon the accused substantially intact. But this is not the case before us.” Since it was the taxpayer’s accountant rather than taxpayer herself who was actually in possession of the documents sought by the government, she could not legitimately claim that enforcement of the summons would compel her to incriminate herself. The lesson to be drawn from Couch, then, is that unless the taxpayer is actually in possession of documents sought by the government — or clearly has constructive possession — he will be unable to seek the shelter of the fifth amendment because he will not be the object of any impermissible governmental compulsion. White’s clients, allegedly the object of impermissible governmental compulsion, do not own the work-papers sought by the government, nor have they ever been in possession of these documents. It is White their attorney who is forced to respond to the governmental summons. The essence of White’s complaint is that potentially incriminating information will be divulged to the government, not that it is being acquired by subjecting the taxpayers to the cruel dilemma of self-accusation, perjury, or contempt. The fifth amendment, however, protects not against the production of such information but only against its extraction from the accused himself. Appellant’s best argument is that taxpayers are in constructive possession of the workpapers because White, the actual possessor, obtained them only in his capacity as taxpayers’ attorney and retained them only for the sake of convenience in representing them. In Couch, the Court acknowledged the possibility that in a case of constructive possession there might be sufficient governmental compulsion exerted upon the taxpayer to legitimatize a claim of privilege. As possible examples of such a case the Court cited Schwimmer v. United States and United States v. Guterma. In both of these cases a claim of privilege was successfully asserted to prevent the government from obtaining documents the parties had temporarily stored on the premises of corporations. The reference to these cases in Couch indicates that a claim of privilege might be valid on the constructive possession theory if the taxpayer has placed papers in the hands of another person or entity for custodial safekeeping, thereby, retaining the right to immediate possession though not having actual possession. But this conception of constructive possession cannot be extended to fit the situation in which White’s clients find themselves. For it is undisputed that they have never for an instant been in possession of the papers sought by the government. White himself obtained these documents from their accountant. Although not of controlling importance, there is no evidence in the record that he did so upon their instructions or that they even knew that he had secured them. At the time the workpapers were demanded by the government, they had been in his possession for over a year. In these circumstances the necessary ingredient of personal compulsion against White’s clients is totally lacking, and in its absence the fifth amendment does not prohibit the government from obtaining information vital to the enforcement of its laws and the collection of its revenues. The district court correctly ordered enforcement of the summons directed to White insofar as it required him to produce all of the accountant’s papers in his possession that pertain to his clients’ income tax returns for the years 1966 through 1969. Its judgment is affirmed. Affirmed. AINSWORTH, Circuit Judge (dissenting) : With deference I dissent because of a strongly held belief that taxpayers’ constitutional rights against self-incrimination are being violated by the action taken by the majority in affirming the district court in this case. On December 7, 1970, Special Agent Gerald T. Culver of the Intelligence Division served an Internal Revenue Service summons on Robert I. White, attorney at law, who represented taxpayers, Mr. and Mrs. Roberts, under a written power of attorney filed with the Service, demanding production of certain work papers pertaining to taxpayers’ federal income tax returns. These work papers were prepared by taxpayers’ accountant and delivered to Mr. White at his request on behalf of his clients. They remained in his possession for approximately a year when the summons was served. Attorney White declined to produce the papers demanded by the summons and the present enforcement proceeding was begun on February 22, 1971 by the United States and Special Agent Culver for enforcement of the summons, pursuant to 26 U.S.C. §§ 7402(b) and 7604(a). A hearing was held before the district court on March 15, 1971, at which time Special Agent Culver testified that he had not reached any conclusions relative to criminal prosecution of taxpayers for violation of federal revenue statutes because he had not completed his investigation. The district court resumed the hearing again on April 5, 1971, and Special Agent Culver further testified: “In my opinion, based on what I know at this point, I think there is a criminal violation involving the offer and compromise and the financial statement that accompanied that offer which was filed by [taxpayer] Mr. Roberts.” Mr. Culver then listed several federal criminal statutes apparently violated by taxpayers, namely, 18 U.S.C. § 1001, 26 U.S.C. §§ 7206(1) and 7206(5). While this appeal has been pending, taxpayers’ counsel has furnished the court with information to the effect that the Chief of the Intelligence Division of the office of the District Director of the Internal Revenue had written taxpayer, Mr. Roberts, that a recommendation has been made to Regional Counsel to criminally prosecute him for attempted income tax evasion, for making and subscribing false and fraudulent income tax returns, for wilfully attempting to evade payment of income tax, for concealing property with intent to evade or defeat the collection of taxes, for filing a false financial statement, and for making false statements in an offer in compromise. The Government’s response is that this information is irrelevant because at the time the summons was issued no recommendation for prosecution had been made. There is strong reason to believe that the Government was not acting in good faith when it served the instant summons. The case had initially been investigated for some time by an Internal Revenue agent and the Special Agent of the Intelligence Division was called in later. Even though a recommendation for prosecution had not been made at the time the summons issued, the Service had sufficient information available upon which to base a recommendation. The recommendation should not have been delayed to take advantage of a civil summons. I doubt, therefore, that the requisites of Donaldson v. United States, 400 U.S. 517, 536, 91 S.Ct. 534, 545, 27 L.Ed.2d 580 (1971), have been complied with- since the evidence points most strongly to an absence of good faith on the part of the Government, as required by Donaldson, in issuing the summons. Nevertheless, I do not rest my dissent on this ground, but on the more important ground that taxpayers’ constitutional rights under the Fifth Amendment against compulsory self-incrimination have been violated. The work papers involved here are documents that would be privileged under the Fifth Amendment if actually possessed by taxpayers when the summons was issued. See United States v. Cohen, 9 Cir., 1967, 388 F.2d 464. In Cohen a summons was issued to obtain work papers prepared by taxpayer’s accountant and then in taxpayer’s possession. The Ninth Circuit maintained taxpayer’s Fifth Amendment privilege against self-incrimination and declined to require taxpayer to produce the papers in response to the summons. In the present ease the work papers prepared by taxpayers’ accountant from their books and records were not in taxpayers’ possession but in that of a third person, the attorney at law charged with responsibility of representing them in their federal income tax matters. Attorney White was thus in constructive possession of these work papers on behalf of his clients. During the enforcement proceeding, he claimed the constitutional privilege on behalf of his clients. Then taxpayer, Mr. Roberts, filed a motion for leave to intervene “to claim the benefit of certain constitutional provisions which inured to his benefit,” which was denied by the district judge. It is clear, therefore, that Mr. Roberts attempted also to assert his constitutional privilege. However, though the privilege is a personal one, there is no reason why it cannot be asserted in clients’ behalf by their attorney at law. See United States v. Judson, 9 Cir., 1963, 322 F.2d 460; In re House, N.D.Cal.1956, 144 F.Supp. 95. In Judson, an Internal Revenue summons was served on an attorney in possession of clients’ papers, demanding production of the documents. The Ninth Circuit maintained the Fifth Amendment privilege asserted by taxpayers’ attorney in their behalf. There is no difference in principle between Judson and the present case. The majority attempts to make a distinction in principle based upon the fact that the work papers in the present case are not owned by taxpayers but belong to taxpayers’ accountant who prepared them from taxpayers’ books and records. However, actual ownership of the documents is not necessary to the assertion of the privilege. See Couch v. United States, 409 U.S. 322, 330 n. 12, 93 S.Ct. 611, 617 n. 12, 34 L.Ed.2d 548 (1973). The critical question is the right of a possessor rather than that of an owner. In the present case, though the papers are not in the possession of taxpayers, they are in the possession of taxpayers’ attorney, and constructively for their benefit. The majority relies most heavily on the recent Supreme Court decision in Couch v. United States, 409 U.S. 322, 93 S.Ct. 611, 34 L.Ed.2d 548 (1973), where an Internal Revenue Service summons directed to an accountant was challenged by taxpayer based on the Fifth Amendment privilege against self-incrimination. The Court held that the constitutional privilege was not available for documents in possession of the accountant. The case is clearly distinguishable because the accountant-client relationship is essentially different from the attorney-client relationship. There is no expectation of privacy in the accountant-client relationship. On the other hand, the attorney-client relationship is a personal one, guaranteed by the Sixth Amendment right to counsel, the attorney-client privilege, and ethical restraints on the attorney. The attorney-client relationship does not depend on whether the attorney or the client possesses the documents. As Professor Wigmore concluded: “It follows, then, that when the client himself would be privileged from production of the document, either as a party at common law or as a third person claiming title or as exempt from self-incrimination, the attorney having possession of the document is not bound to produce.” Moreover, the Ninth Circuit recognized: “The attorney and his client are so identical with respect to the function of the evidence and to the proceedings which call for his production that any distinction is mere sophistry.” United States v. Judson, 9 Cir., 1963, 322 F.2d 460, 467. In my view we are seriously weakening the attorney-client relationship and the Fifth Amendment privilege against self-incrimination by what the majority opinion decides in this case. I would accordingly deny the Government the right to production of documents in possession of taxpayers’ attorney. I, therefore, respectfully dissent. ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC Before JOHN R. BROWN, Chief Judge, and WISDOM, GEWIN, BELL, THORNBERRY, COLEMAN, GOLDBERG, AINSWORTH, GODBOLD, DYER, SIMPSON, MORGAN, CLARK, IN-GRAHAM and RONEY, Circuit Judges. By the Court: A member of the Court in active service having requested a poll on the application for rehearing en banc and a majority of the judges in active service having voted in favor of granting a rehearing en banc. It is ordered that the cause shall be reheard by the Court en banc with oral argument on a date hereafter to be fixed. The Clerk will specify a briefing schedule for the filing of supplemental briefs. . § 7402. Jurisdiction of district courts. (b) to enforce summons. — If any person is summoned under the internal revenue laws to appear, to testify, or to produce books, papers, or other data, the district court of the United States for the district in which such person resides or may be found shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, or other data. § 7604. Enforcement of summons. (a) Jurisdiction of district court. — If any person is summoned under the internal revenue laws to appear, to testify, or to produce books, papers, records, or other data, the United States district court for the district in which such person resides or is found shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, records, or other data. . The district court also denied the taxpayers’ request to intervene in the enforcement proceeding in order to protect their interests. Although this ruling may have been erroneous, compare Donaldson v. United States, 400 U.S. 517, 91 S.Ct. 534, 27 L.Ed.2d 580 (1970) with Reisman v. Caplin, 375 U.S. 440, 84 S.Ct. 508, 11 L.Ed.2d 459 (1964), we do not consider it because taxpayers have not appealed. . 26 U.S.C. § 7122 (1964 ed.) permits the Internal Revenue Service to accept a settlement in compromise of the tax liability of any taxpayer. Its purpose is to facilitate the settlement of tax liabilities without litigation. . The summons was issued pursuant to 26 U.S.C. § 7602 (1964 ed.), which provides: Examination of Books and Witnesses. For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal' revenue tax, or collecting any such liability, the Secretary or his delegate is authorized— (1) To examine any books, papers, records or other data which may be relevant or material to such inquiry; (2) To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform, the act, or any other person the Secretary or his delegate may deem proper, to appear before the Secretary or his delegate at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and (3) To take such testimony of the person concerned under oath, as may be relevant or material to such inquiry. . 400 U.S. 517, 91 S.Ct. 534, 27 L.Ed.2d 580 (1971). . Id. at 535-536, 91 S.Ct. at 544. . Bouschor v. United States, 316 F.2d 451, 458 (8th Cir. 1963). Accord In Re Fahey, 300 F.2d 383, 385 (6th Cir. 1961). Both of these eases rely on language in Hale v. Henkel, 201 U.S. 43, 69-70, 26 S.Ct. 370, 50 L.Ed. 652 (1906). . Application of House, 144 F.Supp. 95, 100 (N.D.Cal.1956). Accord United States v. Judson, 322 F.2d 460 (9th Cir. 1963). . As an alternative reason for not obeying the summons, White might have argued that the documents were protected by the attorney-client privilege. This argument has been uniformly rejected by the courts on the ground that pre-existing documents such as an accountant’s workpapers cannot constitute a confidential communication between the attorney and his client. See, e. g., United States v. Judson, 322 F.2d 460 (9th Cir. 1963). But see The Attorney and His Client’s Privileges. 74 Yale L.J. 539 (1965). . Compare Application of House, 144 F.Supp. 95 (N.D.Cal.1956) with Bouschor v. United States, 316 F.2d 451 (8th Cir. 1963). See also United States v. Judson, 322 F.2d 460 (9th Cir. 1963); In re Fahey, 300 F.2d 383 (6th Cir. 1961); and United States v. Boccuto, 175 F.Supp. 886 (D.N.J.) appeal dismissed, 274 F.2d 860 (3d Cir. 1959). . 409 U.S. 322, 93 S.Ct. 611, 34 L.Ed.2d 548 (1973). The instant case was argued some time ago, but our decision has been delayed awaiting the decision of the Supreme Court in Couch. . By the time the government sought enforcement of the summons issued to Couch’s accountant, the documents in question had been delivered to Couch’s attorney. Nevertheless the Court treated the case as if the documents had remained in the accountant’s possession because otherwise the command of a summons could be evaded simply by transferring possession before enforcement is sought. Thus the rights and obligations of the parties involved become fixed when the summons is served, and a transfer cannot alter them. . 409 U.S. 322, 333, 93 S.Ct. 611, 618, 34 L.Ed.2d 548, 557 (1973). . The Court also held that the Fourth Amendment did not afford the taxpayer any protection against the production of the documents sought by the government. . 232 F.2d 855 (8th Cir. 1956). . 272 F.2d 344 (2d Cir. 1959). . In many respects the taxpayer in Couch was in a better position to claim constructive possession than is the taxpayer here. In Couch the taxpayer herself raised the fifth amendment claim. Furthermore she actually owned the documents sought by the government and had them in her possession at one time. She had relinquished possession of them to her accountant so that lie could assist her in preparing her returns. Nevertheless, the possibility that she was in constructive possession by the documents in question was given scant attention by the Court. . There has been some confusion as to what papers the government is seeking, confusion that is no doubt exacerbated by the reference in the district court’s order to offer in compromise files. For the sake of clarity we refer to the government’s brief at page 12: We do not know that the workpapers were created to prepare the tax returns, and I think the summons is clear in that we want the workpapers that pertain to the correctness of the tax returns. We do not seek any information with regard to the offer in compromise. . The accountant, Stanley H. Voelkel, testified as follows: Q. Mr. Voelkel, when Mr. White acquired possession of the documents did you know on whose behalf he was acting? A. Yes, sir. Q. Was it your understanding Mr. White was acquiring those records for himself or on behalf of Mr. Roberts? A. On behalf of Mr. Roberts. Q. Were you aware of the fact that Mr. White at that time was the attorney representing Mr. Roberts? A. I did assume that he was, and it was implied that he represented Mr. Roberts. Otherwise, I wouldn’t have given him the files. Q. So you turned the files over to Mr. White as Mr. Roberts’ attorney? A. Yes. Q. Was there any specific time limitation on Mr. White’s right as Mr. Robert’s attorney to keep possession of those records? A. Well, he was to return them to me when he finished with them in connection with his representation of Mr. Roberts. Q. So that the period of his possession as far as you were concerned was indefinite, is that correct? A. Yes. . See generally Lyon, Government Power and Citizen Rights in a Tax Investigation, 25 Tax Lawyer 79 (1971). . But see United States v. Widelski, 6 Cir., 1971, 452 F.2d 1, 5 (declining to follow Cohen), cert. denied, 406 U.S. 918, 92 S.Ct. 1769, 32 L.Ed.2d 117 (1972). This case was decided before the Supreme Court cited Cohen favorably in Couch v. United States, 409 U.S. 322, 330 n. 12, 93 S.Ct. 611, 617 n. 12, 34 L.Ed.2d 548 (1973). . There are eases to the contrary. See, e. g., Bouschor v. United States, 8 Cir., 1963, 316 F.2d 451, 458; In re Fahey, 6 Cir., 1961, 300 F.2d 383. But they rely on dicta from Supreme Court cases where a mere agency relationship existed for the benefit of a public entity which had no Fifth Amendment privilege, such as in Rogers v. United States, 340 U.S. 367, 71 S.Ct. 438, 95 L.Ed. 344 (1951); United States v. White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542 (1944); McAlister v. Henkel, 201 U.S. 90, 26 S.Ct. 385, 50 L.Ed. 671 (1966); and Hale v. Henkel, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652 (1906). . See Rule 503, Rules of Evidence for United States Court and Magistrates, 41 L.W. 4021 (U.S.Sup.Ct. Nov. 21, 1972). . The new ABA Code of Professional Responsibility in its Ethical Consideration 4-4 notes: “The attorney-client privilege is more limited than the ethical obligation of a lawyer to guard the confidences and secrets of his client. This ethical precept, unlike the evidentiary privilege, exists without regard to the nature or source of information or the fact that others share the knowledge.” . This rule is stated without regard for the path traveled by the documents. No policy would be served by requiring the client first to touch the documents before turning them over to his lawyer. The important fact in this case is that Voelkel gave the documents to White after assurances that he took possession for Roberts. See also Comment, The Attorney and His Client’s Privileges, 74 Yale L.J. 539, 548 (1965) (for an alternative rationale). . Justice Marshall in his dissent to Couch suggested that the attorney’s possession is an example of protected third party custody: A transfer to a lawyer is protected, not simply because there is a recognized attorney-client privilege, but also because the ordinary expectation is that the lawyer will not further publicize what he has been given. 409 U.S. at 350, 93 S.Ct. at 627, 34 L.Ed. 2d 548.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

UNITED STATES of America ex rel. Alexander LITTLE, Petitioner-Appellant, v. John J. TWOMEY, Warden, Respondent-Appellee. No. 71-1743. United States Court of Appeals, Seventh Circuit. Argued Dec. 12, 1972. Decided April 19, 1973. James R. Streicker, Chicago, Ill., for petitioner-appellant. William J. Scott, Atty. Gen., Michael J. Murphy, Chicago, Ill., for respondent-appellee. Before FAIRCHILD, PELL and STEVENS, Circuit Judges. PELL, Circuit Judge. Appellant Alexander Little, presently in state custody under two concurrent 20 to 40 year sentences for murder and robbery, appeals from the denial of a writ of habeas corpus. The district court in a preliminary order of November 10, 1970, dismissed all but two of Little’s numerous claims, having determined that he had not exhausted his state court remedies as to such dismissed claims by his appeal to the Illinois Supreme Court. People v. Little, 44 Ill. 2d 267, 255 N.E.2d 447 (1970). The two remaining issues were the denial of a right to speedy trial and incompetence of trial counsel. On January 29, 1971, the district court denied the writ. From the state court transcript there is little doubt that Little did in fact rob a tavern on the evening of July 10-11, 1962. In leaving the scene, he shot and killed a man. The principal, if not the only, defense presented at trial was that he was legally insane. Little testified at his trial that he could not remember anything from a couple of days before the robbery until two months after the event. Little had been apprehended shortly after the robbery and shooting. While in jail he twice attempted suicide and was totally uncommunicative. The public defender moved for a psychiatric examination. Dr. Haines, Director of the Behaviour Clinic of the Criminal Court of Cook County, examined Little and recommended that he be committed as “insane,” since he was unable to understand the charges against him or cooperate with an attorney. Following a sanity hearing before a jury on August 3, 1962, Little was committed to the Illinois Security Hospital. It would appear that Dr. Haines had a question as to whether Little might have been malingering. On February 5, 1964, Little filed a petition for a writ of habeas corpus in the Circuit Court of Randolph County requesting a sanity hearing. At the hearing, Little was unrepresented by counsel, and apparently his counsel of record, the public defender, was never advised of these proceedings although the statute requires it. Ill.Rev.Stat. 1963, ch. 38, § 104-3. He testified that he knew the nature of the charge against him and that he would cooperate with his attorney in preparing his defense. A Dr. E. R. May testified that Little was very uncooperative and abusive, that he had refused work, and that May felt that “he is not ready for a discharge at this time.” The court denied Little’s petition at the end of the hearing. We are left with the impression from Little’s brief on this appeal that the attention given to his claim of competency was cursory and nonmeaningful. While the hearing of April 1964 may not have been marked with a full panoply of due process trappings, our own independent examination of the record convinces us that he was scarcely a forgotten man as far as the State of Illinois was concerned. The testimony of Dr. Haines reflects a continuing course of seeing and examining Little to determine whether he knew “the nature of the charge and was he able to cooperate with his counsel.” Dr. Haines’s examinations of Little according to his testimony occurred on August 1 and 12 and September 9 in 1962, January 12 and October 19 in 1963, March 15 and April 9 in 1964, and January 24, May 23 and August 18 in 1965. According to the doctor, “when I would examine him he never told me the nature of the charge or cooperated in the examination.” This status remained true even as late as May 1965 when Little told the doctor that he had filed the petition in Cook County. By the time that this petition came on for hearing in August of 1965, Little for the first time, at the examination of August 18, 1965, had discussed with the ■ doctor the charges in such a manner that the doctor could give the opinion that Little was competent to stand trial. During much of the intervening time, Dr. Haines apparently entertained a suspicion that Little was malingering; however, to force the defendant into a trial upon this suspicion while the manifestations of the malingering, if that was the fact, continued to exist would leave the situation open to the charge that he indeed was not competent to stand trial. Certainly if Little was malingering, the pointing finger of responsibility for delay returns to him, and if he was not, there was a reasonable basis for not taking him to trial. Little’s brief on this appeal does not indicate that the Randolph County Circuit Court relied on testimony other than that of Dr. May; however, it appears that Dr. Haines was present at the hearing and either testified or explained to the court what his opinion was. In fact, Little in the state court in a motion to dismiss filed in 1966 referred to the fact that Dr. May testified with Dr. Haines concurring. We have no reason from this record for thinking other than that the State of Illinois was desirous of getting on with the trial, but as Judge Marovitz stated, “the delay resulted from an attempt to protect petitioner until he was capable of standing trial.” Subsequently, Little filed another petition for a competency hearing in the Circuit Court of Cook County. A hearing was held on August 25, 1965, and a jury found Little competent to stand trial. Little’s trial and conviction followed several months thereafter. In the Illinois Supreme Court, Little relied primarily on the violation of the Illinois statute which requires the state to bring a defendant to trial within 120 days. (Ill.Rev.Stat.1961, ch. 38, § 748, now Ill.Rev.Stat.1971, ch. 38, § 103-5.) Federal habeas corpus, however, only reaches violations “of the Constitution or laws or treaties of the United States.” 28 U.S.C. § 2254(a). Thus, we must decide only whether or not Little’s federal constitutional right to a speedy trial was violated. The Sixth Amendment right to a speedy trial is as fundamental as other aspects of that Amendment which have been applied to the states through the Fourteenth Amendment. Klopfer v. North Carolina, 386 U.S. 213, 87 S.Ct. 988, 18 L.Ed.2d 1 (1967). In Barker v. Wingo, 407 U.S. 514, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972), the Court mandated a balancing test to determine if the right to a speedy trial had been violated. Four factors are to be considered in each case: “Length of delay, the reason for the delay, the defendant’s assertion of his right, and prejudice to the defendant.” 407 U.S. at 530, 92 S.Ct. at 2192. Here, the length of delay is such as to be presumptively prejudicial: Little was not brought to trial until 4 years after the crime took place. But the state contends that the reason for the delay — Little’s incompetency to stand trial — compels a conclusion that the right to a speedy trial was not denied. Certainly a defendant who is incompetent, in that he does not understand the crime with which he is charged and cannot help his counsel, cannot be tried. Such action would constitute a denial of due process. People v. McLain, 37 Ill.2d 173, 226 N.E.2d 21 (1967). The incarceration for a reasonable period of time because of established incompetency to stand trial would thus appear to be a sufficient answer to any speedy trial claim under the Sixth Amendment as applied to states under the Fourteenth Amendment. A different matter, and one not argued here, would be involved if Little had been held “more than the reasonable period of time necessary to determine whether” there was a substantial probability that he would attain capacity in the foreseeable future. Cf. Jackson v. Indiana, 406 U.S. 715, 738, 92 S.Ct. 1845, 32 L.Ed.2d 435 (1972). In our opinion, in either context, “a reasonable period of time” must to some extent be equated with the gravity of the offense involved. Here the charge was murder and robbery as contrasted to a petty theft. Little was in a state mental hospital, presumably receiving the mental-medical attention provided by such institutions, and during the course of his stay he was examined with a degree of regularity to ascertain whether competency to stand trial had been restored. We may fairly infer from the record that at no time was it indicated that the competency would not be achieved in the foreseeable future. The factual situation at this point presents an implicit dilemma. If Little had been found competent to stand trial in April 1964, and had been tried, it is not entirely unreasonable to believe that notwithstanding he had claimed then he was competent and would cooperate with counsel, we would now be met with a claim that he was improperly forced to trial over the opinion of the examining doctor that he was not ready for a discharge. Little, however, argues that he should have been declared competent after the initial hearing in the Randolph County Circuit Court. Not only does he contend that the factual determination of the judge was wrong, but he also argues that the denial of his procedural rights was so substantial as to require a presumption that the limitation period of the speedy trial test must be- presumed to have commenced running on that date. Both the Illinois Supreme Court, 44 Ill.2d at 271, 255 N.E.2d 447, and the district court refer to the fact that Little did not appeal the adverse decision. We find no aspect of waiver in this failure and do not read the previous decisions to this effect. Little’s counsel of record was not informed of the hearing. Little, who apparently was not advised of his right to appeal, was incarcerated in a mental institution. We do note, however, if there had been an appeal the only relief which could have been ordered was to remand for another hearing. That was secured by Little the following year, in all probability prior to the time that an ordered hearing following an appeal reversal would have been held. Even though the 1964 hearing itself lacked some of the adversarial indicia of due process, we do note that the trial judge had an opportunity to observe Little’s appearance and demeanor. Especially when the question is one of the competency of an individual to stand trial, the cold transcript may not reflect one of the most important pieces of evidence available to the trier of fact — the individual’s demeanor. Thus, we are unable to say that the court would have come to a different conclusion if there had been a searching cross-examination of the doctors. Even if the state should have brought Little to trial after the April 9, 1964 hearing, the delay until he was determined to be competent to stand trial amounted to approximately 16 months. Subsequent delay was attributable to Little’s demands for different counsel and withdrawal of counsel, as well as one mistrial declared on the defendant’s motion due to prejudicial newspaper statements. The 16 months’ delay is less than that in Barker v. Wingo, supra, which the Court ultimately found not to be a violation of the right to a speedy trial. The third Barker factor is demand for trial. Here Little’s filing of his pro se petition for a writ of habeas corpus in Randolph County would seem to serve as a demand which was repeated in two subsequent petitions. This is in contrast to Barker, where the Court found that Barker did not want a speedy trial, 407 U.S. at 534, 92 S.Ct. 2182. Little apparently wanted to be tried, at least from the date he filed his habeas corpus petition. The final factor to be considered on trial delay is whether there was prejudice to the defendant. There is always the possibility of prejudice to a defendant from any delay of a trial, although this is a two-edged factor, as the memory and ability of state witnesses to testify accurately are subject to the same time hazards as defense witnesses’. Other factors of delay-prejudice are outlined in Barker, supra, 407 U.S. at 532-533, 92 S.Ct. 2182. We are particularly concerned here, however, not so much with the inherent possibility of prejudice in the general sense as with whether there was specific prejudice to Little in his defense. United States v. DeTienne, 468 F.2d 151, 157 (7th Cir. 1972). In this respect, Little relies on two factors, the difficulty of proving his insanity defense where his psychiatrist did not examine him until three and one-half years after the offense and a missing witness. As to the first of these, it appears to us, as will be hereinafter discussed, that the crucial aspect was not so much the delay in the psychiatric examination as its inconclusiveness. The second matter, the missing witness, as far as we can see, is being presented to any reviewing body for the first time on this appeal. The statement appears in Little’s brief that a witness, “Miss Kathrine Warthon, was dating petitioner at the time of the offense and had been for some time. Her testimony would have been extremely helpful in terms of establishing petitioner’s pattern of behavior and mental state at or near the time of the offense. However, when petitioner finally came to trial, Miss Warthon had left the jurisdiction of the court. As a result, an important link in establishing the defense of insanity was lost.” No source, in the record or elsewhere, is stated in the brief. There is no indication when the previously unidentified witness may have departed or how long she may have been unavailable. As far as we can tell from the reference in the brief, she might have been unavailable if there had been a much earlier trial date. There is no showing that there were not other intimates who could have testified to his pattern of behavior such as fellow employees, other social acquaintances, members of his family, and neighbors. This was not a case of a sole alibi witness but of a witness who was to testify as to facts which, if true, should have been discernible to others with whom Little had frequent contact. Also, there is nothing to indicate that Miss Warthon’s actual whereabouts were unknown. If she had left the jurisdiction she would not have been subject to subpoena presumably, but there is no showing that she would not have come back voluntarily or that her deposition could not have been taken. Finally, our independent examination of the record causes the air of mystery to deepen. During the course of the trial, Little’s counsel indicated he had two more witnesses who were not in court. One of these was Little’s brother, of whom more hereinafter. The other witness was Thelma Lewis whose address was given. The brother was to get her. This witness had been, according to the defendant, in his company a week or two prior to July 10th, the date of the offense. She was described as a social acquaintance. The trial court with a show of consideration to Little had the state go ahead with rebuttal witnesses but held the case open so that the absent witnesses could testify the next day if they appeared. On the next morning, Thelma Lewis was not present but counsel stated “if she does arrive I’m not going to put her on the stand, I think it is in the best interest of my client.” We find no reference to Miss Warthon. Little’s brother did, however, appear and testify as to the matter of the defendant’s behavior during the period prior to the date of the offense. The court, in our opinion, evinced a desire to see that the defense was not thwarted by overly technical evidentiary rules. Thus, the transcript reflects the following: Q. Now, in the spring of 1962, did you notice anything unusual about your brother’s behavior or any change ? MR. OPLATKA: Object to that date, the date in question is July of 1962. THE COURT: Well, I’ll allow him to answer. MR. CAWLEY: Q. Do you remember the question? A. Repeat it again. MR. CAWLEY: Q. In the spring of 1962, in the months of May or June or at anytime did you notice anything unusual about your brother’s behavior? A. Yes, he made quite a change, yes. Q. When you say a change are you referring to something different than his previous actions? MR. OPLATKA: Objection, your Honor, that is leading. THE COURT: He may answer. A. Yes, his attitude was different, he drinked a lot more and he was more — used more vulgar words around my wife and children. The brother further testified that on one occasion when he had denied Little the use of the brother’s automobile because the brother’s wife wanted to use it, Little had used vile language in front of the wife. It was still cold when this happened and otherwise the date of the incident was not definite. Also, in June 1962, Little “used a lot of language” around his mother, and the brother told Little he should respect his mother. The witness did not recall any other specific instances of conduct. Nevertheless, although a lay witness, the court did permit him over objection to express an opinion: Q. Do you have an opinion based upon your observance of the change in your brother, as to his mental condition in July of 1962? MR. OPLATKA: Objection. THE COURT: I’ll allow him to answer. A.' I would say he was mentally instable because of the attitude he take. MR. CAWLEY: Would you repeat that, please? A. He was mentally disturbed because of the attitude he taked toward his people and his friends. Q. Was that condition substantially different than his condition in prior years ? A. Yes. MR. CAWLEY: That is all. We note the brother’s testimony in part because of its indication that the state trial court appeared not to have been affording less than a full opportunity to Little to prove his defense and in part as it reflects upon Little’s claim, hereinafter treated, that his counsel did not competently present that defense. At most, the testimony of Miss Warthon, and it is far from clear just what her testimony would have been, would probably have been cumulative to that which the brother adduced. We turn then to balancing the four factors discussed above on an ad hoc basis^ There was a delay of 16 months based on a claim of a denial of Little’s right to due- process in a competency hearing. Little did request a trial. Prejudice to him seems scarcely clearly demonstrated other than in a general sense. On these facts, it is our opinion that the delay was not such as to deprive Little of his right to a speedy trial. We place weight on the fact that the state’s reasons were not shown to be wrong and the prejudice both by the lack of adversarial proceedings and to his defense would seem to be de minimis. Little also claims that his appointed trial counsel was incompetent since he was unable to phrase an unobjectionable question to the defense’s psychiatric expert witness, Dr. Seglin. This court has stated that a trial must be a “sham or mockery” in order for a,petitioner to be entitled to “habeas corpus relief by reason of ineffective assistance of counsel,” Sims v. Lane, 411 F.2d 661, 665 (7th Cir. 1969), cert. denied, 396 U.S. 943, 90 S.Ct. 378, 24 L.Ed.2d 244. The United States Court of Appeals for the District of Columbia recently stated that the “sham or mockery” standard is based on the Fifth and Fourteenth Amendments’ due process clauses. That court stated in Scott v. United States, 138 U.S.App.D.C. 339, 427 F.2d 609 (1970), that the Sixth Amendment right to counsel compels a higher standard of competence of counsel, to-wit: “whether gross incompetence blotted out the essence of a substantial defense.” 427 F.2d at 610. It is this latter test that Little urges us to apply to his case. Little’s only defense was insanity. Thus, it might be argued that in his case the two tests are virtually indistinguishable since if his attorney was so incompetent as to “blot out the essence” of his only “substantial defense” the trial might be reduced to a “sham or mockery.” The district court agreed with the Illinois Supreme Court that Little was ably represented, that all favorable evidence was presented on his behalf, and that the trial court’s rulings during Dr. Seglin’s testimony were basically due to the court’s beliefs about the doctor’s qualifications to testify about a certain matter. We might not agree if these courts were in effect saying that Dr. Seglin’s examination, conducted in December 1965, was too remote to permit him to be considered a competent witness. Wright v. United States, 102 U.S.App.D.C. 36, 250 F.2d 4, 9 fn. 2 (1957). As an expert witness, the doctor should have been capable of determining whether he could form an opinion as to the mental capacity as of a time three and one-half years prior to the date of the examination. If he had expressed an opinion as of the earlier date, the remoteness of the examination would go to the weight rather than the competency of the testimony. Here, however, under the above standard, the doctor, who apparently was well qualified in his specialty, did, from a fair reading of the record, indicate that he had not formed an opinion sufficiently medically certain to permit the expression thereof. The examination conducted at the county jail lasted approximately one and a half hours. The examination consisted of reviewing hospital records and interviewing the patient. It is not clear whether the expressed time included both the record review and the interview, but even if it did not, the total exposure of the doctor to the individual was only a very short time. When Dr. Seglin was asked about his opinion he stated it in terms of being “quite possible.” This, of course, is sufficiently indefinite that we could not say the trial court, which had been somewhat lenient in letting in arguably improper testimony on the issue, abused its discretion. Further, Dr. Seglin admitted on cross-examination that he had no idea of Little’s mental condition as of the date of the offense. Since the doctor, although only having a limited period for examination of Little, did have an opportunity to examine his hospital records, it appears to us to be a fair inference that the lapse of time before the examination was not the precluding factor in his lack of opinion but rather that there was insufficient indication of factors in Little’s history to enable a psychiatrist to form an opinion with any degree of medical certainty. We are not considering the court’s rulings as we would in the case of a direct appeal but are only considering them in the context of a constitutional claim of incompetent counsel. The plain fact as it appears to us is that the counsel did what he could with the material he had, but that that material just did not include an opinion as to mental competency on the crucial date. Little also argues, however, that irrespective of the doctor having an admissible opinion based upon the actual case, the defense could have been helped by an answer to a hypothetical question and that his counsel was unsuccessful in phrasing such a question. A hypothetical question, of course, could only have encompassed predicate facts which had been introduced into evidence, and while we agree that the attorney was unsuccessful in phrasing an unobjectionable question, we cannot say on the meagre material, such as the use of vile language in front of his brother’s wife, which he had as a basis for use in a hypothetical question, that his lack of success blotted out the essence of a substantial defense, much less that it made the trial a sham or mockery. We do not say that the art of advocacy reached its highest level in the particular situation but merely that on the total picture the representation was not so deficient as to bring into play the constitutional violation of right of effective counsel. Finally, we must consider Little’s claim that the district court was incorrect in dismissing some of his claims for failure to exhaust state remedies. In his direct appeal, Little’s counsel only raised the competence of trial counsel and the speedy trial issues. The relationship between Little and his appellate counsel was marked by friction over the speed or lack of same with which counsel was pursuing the appeal. In his petition in the district court, Little alleges as one of his grounds for the issuance of a writ of habeas corpus the indifference and hostility of appellate counsel. On these facts, we think that this case resembles most closely People v. Hamby, 32 Ill.2d 291, 205 N.E.2d 456 (1965), where the Illinois Supreme Court relaxed its usual rule that the failure to raise an issue on direct appeal bars its subsequent assertion in a Post-Conviction Hearing Act proceeding. Hamby had unsuccessfully tried to have his appellate counsel changed and to have the court consider other points not raised by counsel. The court had denied all such motions and affirmed the conviction. When Hamby sought to raise these same matters, not raised by his counsel on appeal, in a Post-Conviction Hearing, on motion of the state, the petition was dismissed on the basis of the res judicata effect of the Supreme Court’s decision. Hamby appealed and the Illinois Supreme Court reversed, carving out a narrow exception to the waiver doctrine “where fundamental fairness so requires.” 32 Ill.2d at 294, 205 N.E.2d 456. It appears to us that Little’s alleged relationship with his appellate counsel is closer to Hamby’s than to the situation in People v. Ashley, 34 Ill.2d 402, 216 N.E.2d 126 (1966), or People v. Agnello, 35 Ill.2d 611, 221 N.E.2d 658 (1966), where the doctrine was not relaxed. As this court said in a similar case, “We cannot assume that petitioner’s disagreement with counsel cannot ultimately be presented to the Illinois Supreme Court for consideration in aid of petitioner’s review should he not prevail in the post-conviction remedy, which the state concedes is available to him.” United States ex rel. Millner v. Pate, 425 F.2d 249, 250 (7th Cir. 1970). As in Millner, we assume that the State of Illinois will not object on the ground of waiver to such a petition which it has in this court conceded to be procedurally proper. For the reasons hereinbefore given, the judgment of the district court is affirmed. Affirmed. FAIRCHILD, Circuit Judge (concurring). Defense counsel called as a witness the psychiatrist who had examined Little in December, 1965. The direct testimony, after qualifying the witness, went as follows: “Q. How long did that examination take? A. The examination took approximately one and a half hours. Q. And of what did this examination consist. A. The examination consisted of reviewing hospital records and interviewing the patient in direct question and answer type of interview.” * * * * * * “Q. Did you have sufficient material at that time, Doctor, to form an opinion as to the legal sanity of Mr. Little? [Prosecutor]: Objection, your Hon- or. THE COURT: At that time. [Defense counsel]: Up until today. THE COURT: Only as of December, 1965, when he examined him. [Defense counsel]: This was a preliminary question. Did you have enough material and was your examination sufficient to allow you to form an opinion? A. At the time of my examination ? Q. Yes. A. Yes. Q. And based upon your experience, Doctor, and your examination of Mr. Little and the hospital records, and from the knowledge which you know concerning this crime itself, the commission of this crime as charged, murder and robbery, do you have an opinion as of this date, as of today, as to the legal sanity — I would like to read that more carefully, to define it — whether or not a person, due to mental disease or mental defect, lacked substantial capacity either to appreciate the criminality of his conduct or to conform his conduct to the requirements of law; do you have an opinion as to whether or not Alexander Little was legally sane on July 10, 1962? A. I do have an opinion, yes. Q. Will you state that opinion for the Court? A. My opinion is that it is quite possible, from a psychiatric point of view, that he was not competent to make the judgments necessary to conduct himself in accordance with the law on that date. [Prosecutor]: Object to that answer, that is not— THE COURT: Sustained, it is stricken. You will have to give him a hypothetical question with all the things that are here. How can he say what a man was back in — can you say definitely what a man’s condition was back in 1962 when you examined him in 1965? A. No, I could not. [Defense counsel]: Q. But based upon certain materials and your own examination — • THE COURT: Sustained. [Prosecutor]: Object. THE COURT: Sustained. [Defense counsel]: Well— THE COURT: Counsel, the only way he can give an opinion, you will have to lay the proper foundation, you will have to ask a hypothetical question with all the facts and circumstances, based on that. [Defense counsel]: I’ll ask a hypothetical. Would the Court permit me, in the hypothetical question, permit me to include the background upon which he made this examination? THE COURT: The only hypothetical questions are hypothetical things— or the matters that are presented here, that are before this jury. [Defense counsel]: Well, the doctor based his opinion upon certain examinations performed. THE COURT: He didn’t perform these examinations. [Defense counsel]: He performed one examination. THE COURT: In December of 1965. You can find out what his opinion was of the man in 1965 when he examined him, what his opinion was as to his mental condition then. [Defense counsel]: Well, that is half the problem. I’ll phrase the hypothetical, Judge. Do you have an opinion, Doctor, based upon your examination of December 1, 1965, as to Mr. Little’s mental capacity and condition as of that time? [Prosecutor]: Objection, your Hon- or, that is not the statutory definition. THE COURT: Sustained. [Defense counsel]: Q. Do you have an opinion as to Alexander Little’s legal sanity as of that date? [Prosecutor]: Object. THE COURT: Sustained. [Defense counsel]: Q. Do you have an opinion as to whether or not the defendant had sufficient capacity to conduct his conduct to the requirements of law and that he had sufficient capacity to appreciate the criminality of his conduct? [Prosecutor]: Objection, no foundation laid. THE COURT: Sustained. [Defense counsel]: I have no further questions. Any cross? THE COURT: And the part that the doctor said on possibility, that is stricken and the jury is instructed to disregard it.” With all respect, I must conclude that defense counsel was wholly unprepared to make any meaningful use of this expert. This was the only defense he was trying to present. There was no surprise or other excuse for failing to ascertain in advance what relevant opinions the expert was able to form and for failing to ask appropriate questions if such opinions warranted bringing this expert before the jury. It is most unlikely that it was trial strategy just to get the doctor before the jury and to ask improper questions in order to avoid unfavorable answers. The prosecutor, in final argument, made good use of the fact that the judge struck out the answers the doctor “tried to give here to help this man.” Undoubtedly defense counsel failed to prepare himself by conferring with the doctor and learning what appropriately based and relevant opinions the doctor could state. It may well be he would have learned there was no purpose in calling him. If the doctor were able to state relevant opinions, upon an appropriate hypothesis, counsel was unprepared to adduce them. At the time the doctor testified, the jury had heard Little’s own testimony concerning his loss of memory, and that fact was available for a hypothesis. Counsel had not, however, brought before the jury other clearly available information which would seem likely to make a difference if any would, e.g., two suicide attempts and bizarre behavior during the three weeks following the murder and robbery, a jury’s finding on August 3, 1962 that Little was then insane, and hospital records during the period of his hospitalization. Defense counsel’s performance in this area appears dismal. Nevertheless the record contains much to demonstrate that the insanity defense lacked substance. Much of the material about Little’s bizarre behavior in jail and his hospitalization was later brought before the jury by Dr. Haines, a state rebuttal witness, who observed Little at the jail and thereafter. Dr. Haines thought that Little was malingering, although at the first observations he was unable to say whether Little’s conduct was malingering or a psychological reaction to his impending trial. The testimony of persons who observed and spoke with Little for a period of hours after the offense was convincing that he behaved normally, and correctly gave information concerning his identity, employment history, and family. In the entire examination of the defense psychiatrist, by both counsel and the court, there is a strong suggestion that his opinion would never have risen above the level of mere possibility, even if appropriate questions had been asked. Although aware that the harmless error doctrine can not be applied to denial of right to counsel. Chapman v. California, 386 U.S. 18, 23, footnote 8, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967), I can agree here that there was no substantial insanity defense to be “blotted out” and that the trial was not reduced to a sham or mockery. . The range of dismissed claims in the pro se petition before the district court swept broadly through alleged mistreatment at the Illinois Security Hospital, faulty indictment, hostility of the trial judge, intellectually and racially discriminatory jury, improper pretrial procedures, improper conduct of the prosecuting attorney, hostile appellate counsel, and a general denial of due process. The foregoing is a most abbreviated summary of the six pages of the single spaced, detailed statement of claimed grounds for the writ. The district court appears to have resisted what might be an expectable human impulse, arising from the indiscriminately wide claim of improprieties of the judicial procedures afforded the claimant, to have dismissed the entire petition as frivolous.

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BOARD OF DIRECTORS AND OFFICERS, FORBES FEDERAL CREDIT UNION, Charter No. 11258, Forbes Air Force Base, Topeka, Kansas, Petitioners, v. NATIONAL CREDIT UNION ADMINISTRATION, Respondent. No. 72-1351. United States Court of Appeals, Tenth Circuit. April 26, 1973. Gerald W. Hyland (Dale W. Bruce and Robert L. Davis, Davis, Bruce, Davis & Cather, Wichita, Kan., on the brief), for petitioners. Edwin E. Huddleson, III, Atty., Dept. of Justice (Harlington Wood, Jr., Asst. Atty. Gen., and Robert E. Kopp, Atty., Dept. of Justice, on the brief), for respondent. Before HILL, McWILLIAMS, and BARRETT, Circuit Judges. McWILLIAMS, Circuit Judge. This is a dispute between the officers and directors of the Forbes Federal Credit Union of Topeka, Kansas, and the National Credit Union Administration over the meaning of a 1967 amendment to the charter of the Forbes Federal Credit Union. The amendment in question relates to the eligibility requirements for membership in the Forbes credit union. The matter was first heard by a Hearing Examiner designated by the Administrator of the National Credit Union Administration to conduct a hearing. After an extended evidentiary hearing, the examiner made elaborate findings and conclusions, and filed a “Recommended Decision,” all of which was then adopted by the Administrator as his “Final Decision and Order.” The officers and directors of the Forbes Federal Credit Union thereafter filed a petition in this court seeking direct judicial review by us of the Administrator’s order, asking in connection therewith that we invalidate the order. 12 U.S.C. § 1786(i). Background facts will have to be developed if the narrow issue is to be seen in context. A federal credit union is defined by statute as a “cooperative association organized * * * for the purpose of promoting thrift among its members and creating a source of credit for provident or productive purposes.” 12 U.S. C. § 1752(1). The initial Act of Congress permitting the formation of such credit unions occurred in 1984. In 1956, Forbes Federal Credit Union, hereinafter referred to simply as Forbes, was organized under the Federal Credit Union Act and was granted a charter by the Bureau of Federal Credit Unions, the predecessor agency to the National Credit Union Administration. 12 U.S.C. §§ 1771-1790. By its terms this charter permitted Forbes to serve military personnel permanently assigned to the Forbes Air Force Base in Topeka, Kansas, and civilian personnel employed thereat. In April 1967, Forbes was advised by the Bureau that it could apply for an amendment to section 5 of its charter which would permit it to extend its credit union services to a somewhat larger field of membership. Application for such charter amendment was made by Forbes, and the application therefor was approved by the Bureau on May 5, 1967. Section 5 of Forbes’ charter, as thus amended by the so-called 1967 amendment, reads as follows: “The field of membership shall be limited to those having the following common bond: Civilian employees and military personnel of the Department of the Air Force who work at and are permanently assigned to the Forbes Air Force Base in Topeka, Kansas; members of the U. S. Armed Forces, active or retired, or their dependents or dependent survivors who are eligible by law or regulation to receive benefits or services from the above military installation; members of this credit union who are stationed at military bases overseas and retain their membership in this credit union; employees of this credit union; members of their immediate families; and organizations of such persons.” (Emphasis added.) The emphasized portion in the foregoing constitutes the so-called 1967 charter amendment and the present controversy concerns the meaning of that particular language. By way of additional background, this particular charter change came about as the result of a request from the Department of Defense to the Bureau that eligibility requirements be altered so as to permit membership in a local federal credit union by military personnel who were “geographically separated” from their parent organization and were receiving normal services such as, for example, commissary and exchange services, from the nearest military base providing such services. More particularly, in this regard the Department of Defense wrote as follows: “•» * * in or¿er to correct this situation, [we] request your consideration of an amendment to BFCU regulations which would permit a member of the armed services, either active or retired or his legal survivors, to become a member of a credit union located on the military installation which provides other services to that member or survivor. * * *” As a result of that request, the Bureau authorized amendments to the charters of several local federal credit unions of the same type granted Forbes. Inquiry was soon made to the Bureau as to whether such amendment permitted local credit unions to enroll as members any and all military personnel who were eligible to receive services at their particular military installation, regardless of whether they had actually received any benefits or services from the military base Where the particular credit union was located. In this regard, apparently all military personnel, wherever located geographically, are “eligible” to receive benefits and services from any military base, even though they may never do so. In response to these inquiries, the Bureau issued a memorandum to all of its regional representatives and examiners in June 1967, interpreting the 1967 Amendment as follows: “The Bureau interprets the [1967 Amendment] as applying only to those persons who are so situated that they can and in fact do utilize the benefits or services provided by the named installation. This is necessary to assure that the person is a part of the military community of the installation.” The foregoing “interpretation” of the so-called 1967 Amendment was generally announced to the federal credit union industry and in October 1967 the Bureau’s bulletin specifically advised all Department of Defense affiliated credit unions, including Forbes, of its interpretation in the following language: “To avoid any misunderstanding as to who would be eligible for membership by the adoption of the amendment, the following interpretation should be used as a guide: ‘Those people who are so situated that they can and in fact do, make fairly regular use of the benefits and services provided by the named installation.’ “This is necessary to assure that the person is a part of the military community of the installation.” In 1968, the Bureau amended the 1967 Amendment to the end that charter amendments approved thereafter read as follows: “[M] embers of the U. S. Armed Forces, active or retired, or their dependents or dependent survivors who are eligible by law or regulations to receive and are receiving benefits or services from the above military installation.” The italicized portion of the foregoing was added in 1968 to the wording of the 1967 Amendment, which addition was in line with the Bureau’s prior “interpretation” of the 1967 Amendment. However, prior to the 1968 change, many local federal credit unions, including Forbes, had their charters amended in language of the 1967 Amendment, which did not include the words “and are receiving.” And Forbes, at least, does not agree with the Bureau’s interpretation of the 1967 Amendment. Forbes’ position, in a nutshell, is that the 1967 Amendment should be interpreted just as it reads, and that under the 1967 Amendment, Forbes is entitled to enroll as members any and all military personnel who are “eligible” to receive benefits and services from Forbes Air Force Base, regardless of whether the military personnel have ever in fact received any benefit or service at Forbes Air Force Base. Under such interpretation, as we understand it, Forbes could enroll as a member in its credit union military personnel located anywhere around the world, since all are “eligible” to receive benefits and services at Forbes Air Force Base, regardless of whether the individual sought to be enrolled has ever in fact received any benefit or service at Forbes Air Force Base. And, conversely, we assume that other credit unions with a similar charter amendment could invade Forbes Air Force Base and enroll military personnel attached to that installation. These differing interpretations by Forbes and the Bureau of the former’s 1967 charter amendment were known and recognized by each of the parties, but apparently did not come to a head till May 1969. In April 1969, the president of Forbes advised the Bureau that in his view the 1967 Amendment authorized Forbes to enroll as members any person in the military service, notwithstanding the Bureau’s narrower interpretation. Despite a warning from the Bureau, Forbes, in May 1969, set up a so-called “branch office” at Sewart Air Force Base in Tennessee. More specifically, in May 1969 Forbes sent a representative to Sewart who conducted extensive business with military personnel on that base until March 1970, accepting, for example, some 1150 new members. There is some suggestion that Se-wart Air Force Base was at the time in the process of being deactivated. In any event, some of the newly enrolled members were eventually transferred to Forbes Air Force Base in Topeka. However, other newly enrolled members were never transferred to Forbes Air Force Base and in fact were eventually transferred to other military installations. In November 1970, the National Credit Union Administration, that agency having succeeded by Act of Congress to the powers and duties of the old Bureau, formally requested Forbes to abide by its interpretation of the 1967 Amendment. Forbes refused, and as a result of such refusal the Administrator on July 13, 1971, issued a Notice of Charges to Forbes and its Board of Directors, charging them with improperly expanding its membership. The matter was then referred to a Hearing Examiner to determine if a cease and desist order should issue to compel Forbes to follow the Administration’s interpretation of the 1967 Amendment. As indicated, after hearing the Hearing Examiner made detailed findings and conclusions and recommended the issuance of such a cease and desist order. The ruling applied only prospectively, incidentally, and did not affect new members enrolled by Forbes up to that time. The recommended action of the Hearing Examiner was approved and adopted by the Administrator, whereupon Forbes initiated this action in this court, seeking a review of that order and asking that we invalidate it. As indicated, it was Forbes’ position before the Hearing Examiner, as it is-here, that under a literal reading of the 1967 charter amendment it had the right to enroll as members in its credit union all military personnel “eligibile by law or regulations to receive benefits or services” from Forbes Air Force Base, whether they did so in fact or not. In line with this interpretation, Forbes denies that it was in anywise violating its charter in going to Sewart Air Base in Tennessee and enrolling military personnel at that installation, even though many such enrollees were not transferred to Forbes Air Force Base and never received any services or benefits from that base. In thus contending, Forbes argues that the words used in the 1967 charter amendment are clear, plain and unambiguous and should be given their normal, natural meaning. Forbes places considerable emphasis on the reasoning contained in landmark case of Dartmouth College v. Woodward, 17 U.S. 518, 4 L.Ed. 629 (1819), concerning the sanctity of a charter, and the fact that a charter, once granted, cannot thereafter be unilaterally changed. It was the position of the Administration before the Hearing Examiner, as it is here, that the interpretation sought by Forbes of the 1967 charter amendment is at odds with the Federal Credit Union Act, the rules and regulations of the Administrator of the National Credit Union Administration, and the contemporaneous interpretation given both the statute and the charter amendment by the administrative agency charged with administering and enforcing the Act. As indicated, the Hearing Examiner agreed with the position of the National Credit Union Administration, as did the Administrator. We do too. Let us first examine further the Federal Credit Union Act itself. Section 1753, 12 U.S.C., provides, in part, as follows: “Federal Credit Union Organization— “Any seven or more natural persons who desire to form a Federal credit union shall subscribe before some officer competent to administer oaths an organization certificate in duplicate which shall specifically state— * * * * * * “(2) the location of the proposed Federal credit union and the territory in which it will operate; * * * * * * “(5) the proposed field of membership, specified in detail.” The requirement of subsection 2 that the organization certificate shall “specifically state * * * the territory in which it [the federal credit union] will operate” is deemed to be of some significance. It indicates to us that Congress intended that a federal credit unit would operate within a described geographical territory and not round-the-world. Concerning membership in a federal credit union, 12 U.S.C. § 1759 provides as follows: “Federal credit union membership shall consist of the incorporators and such other persons and incorporated and unincorporated organizations, to the extent permitted by rules and regulations prescribed by the Administrator, as may be elected to membership and as such shall each, subscribe to at least one share of its stock and pay the initial installment thereon and the entrance fee; except that Federal credit unioijTñeínbershrpfsKall be limited to groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community, or rural district. * * *" From the foregoing statutory provision we learn that it was the intent of Congress that members in a particular federal credit union should have a “common bond” with each other. More about this “common bond” requirement later, but we do note here that the “common bond” requirement has been deemed something more than simply the bond of mutually serving in the military. Also, it is apparent that Congress empowered the Administrator of the National Credit Union Administration to promulgate rules and regulations regarding those eligible to become members of a local federal credit union. Concerning the powers of the Administrator, 12 U.S.C. § 1766 provides, in part, as follows: “(a) The Administrator may prescribe rules and regulations for the administration of this chapter (including, but not by way of limitation, the merger, consolidation, and dissolution of corporations organized under this chapter). “(b)(1) The Administrator may suspend or revoke the charter of any Federal credit union, or place the same in involuntary liquidation and appoint a liquidating agent therefor, upon his finding that the organization is bankrupt or insolvent, or has violated any of the provisions of its charter, its bylaws, this chapter, or any regulations issued thereunder.” Subsection (a) thus grants the Director, now the Administrator, the broad power to prescribe rules and regulations for the administration of the entire chapter and subsection (b) specifically grants him the power to suspend or revoke the charter of any federal credit union upon a finding that the local credit union has violated either the provisions of its own charter or bylaws, or has violated any provision of the chapter or any administrative regulation issued pursuant thereto. Concerning the statutory requirement of a “common bond” referred to above, the Administrator under his statutory rule-making authority has long construed the “common bond” concept to restrict membership of credit unions located at military installations to persons who in fact receive at least some benefits and services from the installation where the credit union is itself located. As evidence of this, the following excerpt from an official publication of the Administration is pertinent: “COMMON BOND “The Bureau of Federal Credit Unions defines and explains common bond, as applied to Federal credit union chartering, as follows: ‘Common bond is that pre-existing condition which causes the members of a group to associate together, to know each other, to have common interests and purposes, and to be able and willing to work together/to accomplish group objectives. A group has a common bond when it is composed of people who have the same employer, or are otherwise associated through some common interest or enterprise, and are so situated in relation to each other as a consequence of that community of employment or association that they could be expected to operate effectively as a cooperative organization for credit union purposes. ‘A group, to qualify for a Federal credit union charter, should provide opportunities for the members to associate together, and, as a result of such association, to develop common loyalties and mutual interests. Furthermore, in an associational group, the members must receive substantial benefit from membership in the association. * * *’ ” The Hearing Examiner advanced two alternative bases upon which he determined that the interpretation given the 1967 charter amendment by the Administration was the proper one, and that the interpretation argued for by Forbes was improper. One such ground was that the interpretation contended for by Forbes was at variance with Congressional intent as expressed in the Act itself, as well as being at odds with the various rules and regulations of the Administration. He reasoned, in effect, then that the charter amendment should be interpreted in a manner that would square with the applicable statutes and rules and regulations. We agree with this conclusion. As indicated earlier, 12 U.S.C. § 1786(i) provides for judicial review of an order of the Administrator of the Federal Credit Union Administration. And that statute states that our review shall be as provided in the Administrative Procedure Act. Section 706, 5 U.S. C., spells out the scope of our review of the order of the Administrator. Illustrative of the fact that in the instant case our review of the decision of the Administrator is not wide-ranging in scope, we note, for example, that administrative action has been held to be conclusive on review unless such action is not in accordance with law or is unsupported by competent, material and substantial evidence, or is arbitrary or capricious. Reconstruction Finance Corp. v. Lightsey, 185 F.2d 167 (4th Cir. 1950). With this in mind, then, let us examine the principles which in our view govern this controversy. In the first place, no administrative body may contract with a corporate body which it regulates in a manner contrary to the statute which it is charged with administering, nor in a manner which would not give full effect to the intent of Congress. Peoples Bank v. Eccles, 82 U.S.App.D.C. 126, 161 F.2d 636 (1947), rev’d on other grounds, 333 U.S. 426, 68 S.Ct. 641, 92 L.Ed. 784 (1947). In determining the intent of Congress, administrative interpretation, practice and usage are accorded great weight by a reviewing court where a particular statute is susceptible of different reading. Lindberg v. Brenner, 130 U.S.App.D.C. 257, 399 F.2d 990 (1968); Garvey v. Freeman, 397 F.2d 600 (10th Cir. 1968); and H. B. Zachry Co. v. United States, 344 F.2d 352, 170 Ct.Cl. 115 (1965). So, it has been held that a court should not overturn an administrative interpretation of a statute which it is charged with administering unless it can be said that the interpretation is plainly erroneous. Jno. McCall Coal Co. v. United States, 374 F.2d 689 (4th Cir. 1967). Similarly, it has been stated that an administrative agency’s interpretation of its own regulations is to be accorded great deference and is controlling as long as it is one of several reasonable interpretations, and even though it may not appear quite as reasonable as some other. Roy Bryant Cattle Co. v. United States, 463 F.2d 418 (5th Cir. 1972). Finally, it is a well settled principle that where a contract is susceptible of two interpretations, preference will be given to the interpretation which does not violate the law. Great Northern Railway Co. v. Delmar Co., 283 U.S. 686, 51 S.Ct. 579, 75 L.Ed. 1349 (1931). Application of the foregoing principles to the instant controversy leads us to conclude that the order of the Administrator approving and adopting the findings, conclusions and recommendation of the Hearing Examiner is proper and correct. To approve, in effect, the earlier action of Forbes in going from Kansas to Tennessee to enroll new members simply because they were technically eligible to receive benefits and services at Forbes Air Force Base, though in fact they did not, would mean that in the future Forbes in its efforts to increase its membership could create a branch office at virtually any military installation, wherever located. In our view, such would violate the statutory provision that a federal credit union shall serve a described territory and that its members shall have a “common bond,” one with the other, as that phrase has been consistently interpreted by the Administrator. In sum, then, the order complained of is not plainly erroneous; and, on the contrary, in our view the Administrator has given the 1967 charter amendment a reasonable interpretation consonant with the Congressional mandate and the regulations promulgated pursuant thereto. Order affirmed.

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2024-08-24T03:29:51.129235

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Father John J. O’MALLEY et al., Appellants, v. Joseph R. BRIERLEY, Superintendent of the State Correctional Institution at Pittsburgh, et al. No. 72-1056. United States Court of Appeals, Third Circuit. Submitted Under Third Circuit. Rule 12(6) Feb. 2, 1973. Decided April 30, 1973. Harry F. Swanger, Leonard I. Sharon, James H. Logan, Paul D. Boas, Pittsburgh, Pa., Stanley A. Bass, NAACP Legal Defense Fund and Educational Fund, New York City, for appellants. Frederick N. Frank, Asst. Atty. Gen., John J. Kennedy, Jr., Asst. Atty. Gen., J. Shane Creamer, Atty. Gen., Harrisburg, Pa., for appellees. Roslyn M. Litman, Pittsburgh, Pa., for American Civil Liberties Union, Greater Pittsburgh Chapter, for amicus curiae. Before SEITZ, Chief Judge, ALDI-SERT, Circuit Judge, and FISHER, District Judge. OPINION OF THE COURT ALDISERT, Circuit Judge. The question presented on this appeal is the propriety of summary judgment in an action brought under the Civil Rights Act, 42 U.S.C. § 1983, by certain Catholic priests and prisoners, contending that their First Amendment rights were abridged when state prison officials withdrew from the priests previously granted privileges to conduct religious services and counseling within the prison. Ruling that plaintiffs’ complaint failed to set forth a claim upon which relief could be granted, the district court entered summary judgment for the defendants. We affirm the judgment as against the priest-plaintiffs, but reverse the judgment as against the prisoner-plaintiffs. Father John O’Malley and Father Augustus Taylor, although not official prison chaplains, began to visit Western Penitentiary in 1969, and soon developed a close spiritual relationship with many inmates, both black and white. In November, 1969, Father Taylor conducted an Afro-American Mass in the prison chapel, the alleged purpose of which was to “relate the essentials of the Catholic Mass more significantly to the black experience.” Shortly after the celebration of this Mass both Father Taylor and Father O’Malley were denied further visitation privileges at the prison. By affidavit, Joseph R. Brierley, Superintendent of Western Penitentiary, described the Mass: The Afro-American Mass lacked any semblance of a religious service and was in fact a political rally. It did not attract Catholic inmates but rather self-proclaimed Black Nationalists and Black Panthers. In fact less than two per cent of the inmate population, or ten prisoners are Negroes who profess Roman Catholicism. Plaintiff Father Taylor began the Afro-American Mass by holding his clenched fist in the air. He said “I do not believe in a honky Christ.” He went on to say that he is a revolutionary. The entire theme of his address to those in attendance was black militancy. There was little reference at all to any religious matters, with the exception of the receiving of communion which was indiscriminately given to non-Catholie prisoners. Father Taylor’s speech was followed by inmates standing in the pulpit giving testimonials to Black Nationalism. Responding by affidavit, Father Taylor insisted: The Mass conducted at Western Penitentiary in November 1969 was presented in the traditional Catholic Mass structure. Extemporaneous prayers and prescribed prayers of rite were utilized, communion was offered and the essential liturgy was followed. I was assisted by Father Dennis Kinderman. Within this structure, I talked about Jesus and how he was related to them (Black Prisoners) The real message I was seeking to convey was that Jesus Christ and Christianity was identified with them and their condition Any reference to a Honky Christ was a call to examine exactly what Jesus Christ meant and to reject the White false values we are told to worship and which are embodied in the traditional White image of Christ. In saying this I was not suggesting a form of Black racism and or any interpretation that being pro-Black meant anti-White was incorrect. I suggested we were above that and that our consciousness of Blackness meant recognizing, discovering, enjoying, and living our Afro-American heritage. In this process we would discover that Black people and their collective mind are “together” just as Jesus Christ was “together” . I tried to conclude this theme by urging all those Black people in attendance to spread the peace, harmony, and togetherness which they had as a whole congregation throughout the prison among Black and White prisoners alike. Several months - later, following negotiations with and intercession by the state attorney general, both priests were readmitted to very limited visitation privileges. Then, on September 20, 1971, shortly after the Attica, New York prison riot, the priests participated in what they described as a “peaceful and lawful demonstration . . . held outside the gates of the Western Penitentiary in support of prison reform, the elimination of racism in prison, and in sympathy for those persons slain at Attica State Penitentiary in New York.” Two days later, Fathers Taylor and O’Malley received a letter, dated September 20, 1971, from Superintendent Brierley, which stated in part: In the past you have been denied permission to visit with members of our population for a number of reasons, many of which we have previously discussed. However, because of your persistence to be permitted to again visit here and your voiced good intentions to be of service, as well as a request in your behalf by my superiors, I relented and gave the approval for your visiting members of our prison population. However, after witnessing your so very active part in the demonstration outside the institutional walls at noon today, I can readily see that it is your sole purpose to incite the prison population to riot and I am therefore forced to rescind the approval permitting you to enter the confines of this institution. . Superintendent Brierley indicated that he based his actions upon the following observations and conclusions: The speeches being made at the demonstration could be heard in the South Block of the institution. The inmates in that section of the institution soon told other inmates in other parts of the institution what was being said by the demonstrators. The demonstrators charged the officials at Western Penitentiary with failing to communicate with the prisoners and with oppression of the prisoners. There was an outburst from the prisoners who could hear the demonstrators and the demonstrators answered the outburst. At this point I took notice of the probable effect of this demonstration on the inmate population. Tension was already high in the prison because of the Attica State Prison incident which had preceded the demonstration by only a few days. Because I feared the inmate population would be agitated by this demonstration, I had the inmates in the South Block moved to another part of the institution so they could not hear what the demonstrators were saying. At no time did I order the demonstrators to move. In fact, no prison official moved beyond the prison gate during the course of the demonstration. I personally observed both plaintiff Father O'Malley and plaintiff Father Taylor taking part in this demonstration. It was my carefully considered opinion that because of their participation in a demonstration of this nature, it would be a serious security risk to readmit them as spiritual ad-visors inside the institution. There was no doubt in my mind that the purpose of this demonstration was to incite the prisoners to riot. Therefore I could not jeopardize the safety of the institution by permitting any of the participants in that demonstration inside the institution in the future. Superintendent Brierley explained further that there has never been any interference with the practice of the Catholic faith by prisoners, and that there are two Catholic prison chaplains, one full-time and one part-time. These priests conduct services in the prison chapel every Sunday and on every Holy Day, and have daily access to visit and counsel all Catholic prisoners. By affidavit, Father S. Richard Terza reported that he was assigned by the Bishop of the Diocese of Pittsburgh to the position of full-time Catholic chaplain at Western Penitentiary. Father Terza stated that he “had the fullest possible cooperation from [all prison officials] in all aspects of serving the Catholic inmates,” that he has “free access to all Catholic inmates who desired religious counsel, . . . and [a]t no time has the practice of the Catholic faith by inmates of the institution been interfered with by the officials of the institution, nor have these officials discriminated among Catholic prisoners on racial grounds.” Moreover, Father Terza observed that “[t]here is no tenet or article of the Roman Catholic faith which permits a member of the laity to dictate the selection of his parish priest.” Because prison authorities withdrew their visitation privileges, the priests asserted a deprivation of First Amendment rights and sought injunctive and declaratory relief against the ban. The priests requested money damages as well, compensatory and punitive, “in an amount to be determined by a jury for the humiliation, public scorn and derision suffered by them.” As a matter of preliminary importance, it is essential to note that the priests are suing in their own right. They seek personal injunctive relief and money damages for injuries allegedly sustained by them. The prisoners, too, are suing in their own right, for themselves and for a class of inmates similarly situated. It is inappropriate, therefore, to construe the claims of the priests as derivative claims of others “not immediately before the Court [which] could not be effectively vindicated except through an appropriate representative before the Court. See Barrows v. Jackson, 346 U.S. 249, 255-259, 73 S.Ct. 1031, 1034, 1036, 97 L.Ed. 1586 [1953]; Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 183-187, 71 S.Ct. 624, 95 L.Ed. 817 [1951] (Concurring Opinion).” NAACP v. Alabama, 357 U.S. 449, 458, 78 S.Ct. 1163, 1170, 2 L.Ed.2d 1488 (1958). Guiding our inquiry,- then, will be the general rule that “a litigant may only assert his own constitutional rights or immunities,” United States v. Raines, 362 U.S. 17, 22, 80 S.Ct. 519, 523, 4 L. Ed.2d 524 (1960); McGowan v. Maryland, 366 U.S. 420, 429, 81 S.Ct. 1101, 6 L.Ed.2d 393 (1961), and the principle that “one cannot sue for the deprivation of another’s civil rights.” C. Antieau, Federal Civil Rights Acts, Civil Practice, § 31 at 50-51. In delineating the specific constitutional deprivation alleged to have been suffered by reason of the action of the state prison officials, the priests construct a two-pronged argument. They contend, first, that they have been deprived of their First Amendment religious freedom right to conduct religious services and offer religious counsel in a state institution. Secondly, as a result of their valid exercise of the First Amendment’s free speech clause, they suggest their First Amendment religious freedom right to conduct prison services and counseling has been abridged. The priests do not urge, of course, that they have a constitutional right to be an inhabitant of the prison, and while inside the walls, were denied the opportunity to exercise their religion freely. Rather, their argument is the converse; that they have a First Amendment right to enter the walls so that others — the inmates — may vindicate their free exercise right. Implicit in this contention is the proposition that a clergyman has a First Amendment right, enforced through the Fourteenth Amendment, to conduct religious services and offer religious counsel in a state institution. Superficially, this argument, endowed with the familiar ringings of freedom of religion, appears sound. This proposition, however, is premised upon the thesis that a state may properly bestow upon a clergyman a right of constitutional dimension to practice a religion in a state institution under the auspices, sponsorship, and protection of the state government and the federal constitution. Such a notion, we suggest, charts a collision course with the prohibitions of the Establishment Clause. For in their enthusiasm to vindicate alleged constitutional rights, as evidenced by their requests for injunctive and declaratory relief, and in their effort to recoup pecuniary losses allegedly sustained for “humiliation, public scorn and derision,” the priests have focused both eyes on. the Free Exercise Clause of the First Amendment without a glance in the direction of that amendment’s Establishment Clause: “Congress shall make no law respecting an establishment of religion. . . .” It is this distinction between the Establishment Clause and the Free Exercise Clause that stands at the very heart of the First Amendment. To conclude otherwise would require a complete re-evaluation of the philosophical underpinnings of the school prayer cases typified by Abington School District v. Schempp, 374 U.S. 203, 83 S.Ct. 1560, 10 L.Ed.2d 844 (1963). Were the thesis of the priests deemed valid, there would be little constitutional barrier preventing a clergyman from asserting a right to deliver religious instruction and conduct prayer services in a public school classroom, based solely upon the contention that he was invited therein by the students, faculty, and school board to vindicate the students’ free exercise right. However, because these priests are suing in their own right, we put aside a comparison of the rights of prison inmates to the free exercise of religion vis a vis the rights of public school students, and evaluate the problem solely from the standpoint of a clergyman’s independent right. Our analysis draws us inexorably to the distinction between the two competing prohibitions in the First Amendment: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” Appellant priests invite our reliance upon cases dating from the time of Murdock v. Pennsylvania, 319 U.S. 105, 63 S.Ct. 870, 87 L.Ed. 1292 (1943), and suggest that we adopt in the prison context the principle that “spreading one’s religious beliefs or preaching the Gospel through distribution of religious literature and through personal visitations is an age-old type of evangelism with as high a claim to constitutional protection as the more orthodox types.” 319 U.S. at 110, 63 S.Ct. at 873. We are aware of the perils ascribed by Justice Harlan to “[a]ny attempt to formulate a bright-line distinction” between cases raising “establishment” and “free exercise” questions. McGowan v. Maryland, supra, 366 U.S. at 463, 81 S.Ct. at 1155 (concurring opinion). Nevertheless, prior to taking the plunge suggested by appellants and the amicus curiae, we embark upon an examination of the priests’ contentions in light of the myriad teachings of the Supreme Court which have zealously protected Jefferson’s “wall of separation between church and State.” Our own journey commences with Justice Black’s admonition in Everson v. Board of Education, 330 U.S. 1, 16, 67 S.Ct. 504, 91 L.Ed. 711 (1947): “Neither a state nor the Federal Government can, openly or secretly, participate in the affairs of any religious organizations or groups and vice versa. In the words of Jefferson, the clause against establishment of religion by law was intended to erect ‘a wall of separation between church and State.’ ” (Emphasis supplied.) Thus, “[n] either a state nor the Federal Government can set up a church. Neither can pass laws which aid one religion, aid all religions, or prefer one religion over another.” 330 U.S. at 15, 67 S.Ct. at 511. (Emphasis supplied.) “The Amendment’s purpose,” Justice Rutledge wrote in dissent in Everson, “was not to strike merely at the official establishment of a single sect, creed or religion, outlawing only a formal relation such as had prevailed in England and some of the colonies. Necessarily it was to uproot all such relationships. But the object was broader than separating church and state in this narrow sense. It was to create a complete and permanent separation of the spheres of religious activity and civil authority by comprehensively forbidding every form of public aid or support for religion.” 330 U.S. at 31-32, 67 S.Ct. at 519. Justice Jackson, too, although dissenting from the specific result reached in Everson, noted his agreement with the absolutism of Justice Black: “There is no answer to the proposition that the effect of the religious freedom Amendment to our Constitution was to take every form of propagation of religion out of the realm of things which could directly or indirectly be made public business and thereby be supported in whole or in part at taxpayers’ expense. . This freedom was first in the Bill of Rights because it was first in the forefathers’ minds; it was set forth in absolute terms, and its strength is its rigidity. It was intended not only to keep the states’ hands out of religion, but to keep religion’s hands off the state. . . .” 330 U.S. at 26-27, 67 S.Ct. at 516, 517. Much of the same emanates from McCollum v. Board of Education, 333 U.S. 203, 68 S.Ct. 461, 92 L.Ed. 649 (1948), where the Court held “released time” religious instruction “a utilization of the tax-established and tax-supported public school system to aid religious groups to spread their faith,” and, hence, violative of the First Amendment which requires that both religion and government be “left free from the other within its respective sphere.” 333 U.S. at 210-212, 68 S.Ct. at 464, 465. Thus, if there is one principle to be distilled from Everson, McCollum, and their progeny, it is that the First Amendment was intended, and has been interpreted, to forbid not only governmental preference of one religion over another, but any establishment or encouragement of religion by the state. In Abington School District v. Schempp, supra, 374 U.S. at 222, 83 S.Ct. at 1571, the Court announced a workable test: “[W]hat are the purpose and the primary effect of the enactment? If either is the advancement or inhibition of religion then the enactment exceeds the scope of legislative power as circumscribed by the Constitution. That is to say that to withstand the strictures of the Establishment Clause there must be a secular legislative purpose and a primary effect that neither advances nor inhibits religion.” If these views formed the jurisprudential underpinning of the school prayer cases, it would seem that rejection of the priests’ contention is a fortiori. To conclude otherwise would be to suggest in the context of the public school prayer format that although a student or secular teacher may not read passages from the Bible or recite some non-denominational prayer, a clergyman is clothed with the constitutional right to enter that classroom and lead the prayers under the pretext that his presence is demanded by students under the Free Exercise Clause. As we reject the notion that a state or the federal government may foster or support, protect or encourage any religion or group of religions, so do we find without support the proposition that religions in general are anathema to every conceivable state or federal function. As Justice Black wrote in Engel v. Vitale, 370 U.S. 421, 434, 82 S.Ct. 1261, 8 L.Ed.2d 601 (1962): “The history of man is inseparable from the history of religion.” This being so, religion and the activities of the state interact at several points. Sessions of this and other courts commence with a supplication by the crier: “God save the United States and this Honorable Court.” Similarly, each House of the Congress has a Chaplain to pronounce an opening prayer, as do most larger military units. The Supreme Court has never dealt specifically with these interactions of the spheres of God and Caesar, but instead has been satisfied to announce that although the state may not protect or prefer religion, neither may it act antagonistically toward religion. Therefore, although the absolutism of Everson and McGowan, supra, transposed to the instant case, might be read to infer a lack of constitutional props for the concept of prison chaplaincies, more recent decisions emphasize a “principle of neutrality” between religions and the state which might countenance such an institution. For example, although Zorach v. Clauson, 343 U.S. 306, 72 S.Ct. 679, 96 L.Ed. 954 (1952), stated that “within the scope of its coverage” the prohibitions of the First Amendment are absolute (note 5, supra), the Court went on to observe that the First Amendment “does not say that in every and all respects there shall be a separation of Church and State.” 343 U.S. at 312, 72 S.Ct. at 683. A similar rationale underlay Engel v. Vitale, supra. In holding unconstitutional the voluntary recitation in public schools of a state-composed, denominationally neutral prayer, the Court stated that whereas the First Amendment was designed to prohibit governmental control of religion and prayer, it was not meant to inhibit either. 370 U.S. at 435, 82 S.Ct. 1261. On the contrary, “the value of religious training, teaching and observance and, more particularly, the right of every person to freely choose his own course with reference thereto, free of any compulsion from the state,” form the basis of the Free Exercise Clause. Abington School District v. Schempp, supra, 374 U.S. at 203, 83 S.Ct. 1560. See also Tilton v. Richardson, 403 U.S. 672, 91 S.Ct. 2091, 29 L.Ed. 2d 790 (1971); Lemon v. Kurtzman, 403 U.S. 602, 91 S.Ct. 2105, 29 L.Ed.2d 745 (1971); Board of Education v. Allen, 392 U.S. 236, 88 S.Ct. 1923, 20 L.Ed.2d 1060 (1968). Outside the confines of school prayer cases, the principle of neutrality gained endorsement in Walz v. Tax Commission, 397 U.S. 664, 669-670, 90 S.Ct. 1409, 25 L.Ed.2d 697 (1970), where the Court ruled constitutional tax exemptions for real property owned by religious organizations and used solely for religious worship. Moreover, the Court disavowed Justice Jackson’s belief that the First Amendment’s “strength is its rigidity,” Everson, supra, 330 U.S. at 26, 67 S.Ct. 504, noting instead that “rigidity could well defeat the basic purpose of these provisions.” 397 U.S. at 669, 90 S.Ct. at 1411. In light of Chief Justice Burger’s formulation that the purpose of the Establishment Clause was to insure that “no religion be sponsored or favored, none commanded, and none inhibited,” Walz, supra, 397 U.S. at 669, 90 S.Ct. at 1411, how should a court view the institution of prison chaplaincies? Is the creation by the state of an official position for a cleric, granting to him in a state building access to members of a state-controlled prison population, state “sponsorship, financial support, and active involvement ... in religious activity?” 397 U.S. at 668, 90 S.Ct. at 1411. Conversely, is the refusal by a state officer to permit officially designated ministers of religion to counsel state-controlled prisoners on state property, state “inhibition” of religion? Whatever be the rights of a cleric, designated by his superiors and accepted by prison officials as official prison chaplain, to enter within the walls to counsel or conduct religious services, we need not decide in this appeal. Neither Father Taylor nor Father O’Malley are official prison chaplains at Western Penitentiary, and they do not seek entrance to the prison on the basis of any alleged right of an official prison chaplain to do so. Moreover, as previously observed, they do not contend that they have a right to be an inhabitant of the prison. Rather, their contention lays between these two extremes, and suggests the existence of some vaguely defined legal preference accorded by the Constitution to ministers of religion to conduct religious services and counseling within a state institution. However, there is no principle in the law granting to clerics an absolute right to enter a prison, and Fathers O’Malley and Taylor have no constitutional right to enter Western Penitentiary. Thus, the priests’ complaint that they have been denied fundamental First Amendment rights under the Free Exercise Clause clearly misses the mark because no such rights exist in this context. It must unalterably follow that the state cannot be charged with denying that which does not exist. Alternatively, the priests argue that state authorities have infringed upon the exercise of their First Amendment rights “ [to] peaceably assemble [to speak freely] and to petition the Government for redress of grievances,” and it was solely because of the exercise of these rights that they have been denied admission to the prison. The priests urge our application of the principle that one’s free speech rights may be vindicated even though the expression itself was not curtailed, but a deprivation of another right resulted from the exercise of the freedom of expression. The priests and the amicus curiae direct us to a trilogy of decisions providing a basis for this principle: Baird v. State Bar of Arizona, 401 U.S. 1, 91 S.Ct. 702, 27 L.Ed.2d 639 (1971); Kiiskila v. Nichols, 433 F.2d 745 (7th Cir. 1970); Taylor v. Kentucky State Bar Association, 424 F.2d 478 (6th Cir. 1970). None of these cases compel the suggested result. In Kiiskila, the Seventh Circuit dealt with an order of the commanding officer of a military base permanently excluding from the base appellant, a civilian employee of a credit union situated on the base. The commanding officer believed that appellant’s casual conversations with military personnel concerning the activities of the Veterans for Peace in Vietnam were “prejudicial to good order and discipline” in the military. 433 F.2d at 746-747. As a result of her exclusion from the military post, appellant’s civilian employer reluctantly dispensed with her services solely because the “military authorities have made it impossible to retain her.” The court determined that exclusion of appellant from the base and the termination of her employment violated her First Amendment rights of speech and association, and added: “A citizen’s right to engage in protected expression or debate is substantially unaffected by the fact that he is also an employee of the government and, as a general rule, he cannot be deprived of his employment merely because he exercises those rights. This is so because dismissal from government employment, like criminal sanctions or damages, may inhibit the propensity of a citizen to exercise his right to freedom of speech and association. Pickering v. Board of Education, [391 U.S. 563, 574, 88 S.Ct. 1731, 20 L.Ed.2d 811 (1968)].” Central to both Kiiskila and Pickering is the fact of public employment. In the case before us, the issue of public employment is not present, and, therefore, the restrictions imposed upon a state for termination of public employment as a result of an exercise of First Amendment rights are neither applicable nor controlling. Indeed, in Kiiskila, the court emphasized that it was deciding neither an issue where access to the base was denied but employment was not jeopardized, nor one where an individual not employed on the base was excluded for the same reasons. 433 F.2d at 748 n. 4. Baird, supra, subsuming the same issue as Taylor, supra, is no more compelling. In Baird, the Supreme Court reversed the judgment of the Arizona Supreme Court which denied petitioner admission to the state bar solely because she refused to answer questions concerning her personal beliefs or her affiliations with organizations which advocate certain ideas about government, viz., whether she had ever been a member of the Communist Party or any organization that “advocates overthrow of the United States Government by force or violence.” The Court observed that the power of a state to inquire into a person’s beliefs and associations is circumscribed by the First Amendment because such inquiries “discourage citizens from exercising rights protected by the Constitution.” 401 U.S. at 6, 91 S.Ct. at 706 (Emphasis supplied.) And, the Court continued, “[t]he practice of law is not a matter of grace, but of right for one who is qualified by his learning and his moral character.” 401 U.S. at 8, 91 S.Ct. at 707. Thus, clearly the necessary predicate to relief under the Taylor-Baird theory is proof of deprivation of a statutory or constitutional right as a result of the protected expression. In the context of the priests’ claim, therefore, it would be incumbent that they prove a stripping of such a right because of the exercise of their protected right of expression. As has been demonstrated, however, the alleged deprivation was of a claimed constitutional right to practice their religious profession within the penitentiary walls, a right we have shown to be nonexistent. Nor do we detect error in the district court’s decision to grant defendants’ motion for summary judgment. The court decided no issue as to any material fact contrary to the priests. Specifically, the district court did not decide that the priests were barred from the prison because Superintendent Brierley validly determined them to be security risks. Nor, of course, did the court find that their privilege to enter within the walls was terminated in retaliation for their exercise of constitutionally protected rights of free speech. On the contrary, throughout its opinion, the district court refers consistently to the priests’ complaint, and found only that it failed to state a claim upon which relief could be granted. As this court noted in affirming an identical procedure in a closely related context: “It is no legitimate function of the court to assume the existence of a genuine issue of material fact when in truth none exists.” Gittlemacker v. Prasse, 428 F.2d 1, 5 (3d Cir. 1970). Simply stated, because the priests enjoyed no constitutional right to enter the prison, a grant of summary judgment for defendants was a proper method of terminating an action based upon such a non-existent right. To find that these priests possess no constitutional right to visit the inmates at Western Penitentiary is not, of course, to say that the inmates may not possess a right to have the priests visit them. Although participation by the priests in a religious service requires consideration of the Establishment Clause, participation by the inmates brings into focus the Free Exercise Clause. And here the inmates stand, if not on bedrock, at least on much firmer footing than the priests. We take as a beginning point Gittlemacker v. Prasse, supra, 428 F.2d at 4: “To determine, with precision, those rights which follow an inmate into prison involves a process of weighing and balancing conflicting interests. The desire that there be a maximum opportunity for the exercise of rights and privileges may often collide with the practical necessities of managing and administering a complicated penal community. The task of striking the proper balance between these conflicting interests is generally within the competence of the prison authorities. Thus, the federal courts have been understandingly reluctant to intervene in matters of state prison administration, recognizing a wide latitude for- judgment and discretion must be extended to prison officials. “At the same time, however, the federal courts have been sensitive to certain particularized complaints, foremost among which have been allegations of religious discrimination. In such cases, the courts have not hesitated to intervene where prison officials have unreasonably attempted to curtail the practice of religion by prison inmates.” In United States ex rel. Jones v. Rundle, 453 F.2d 147, 149 (3d Cir. 1971), we said that a prisoner’s right to practice his religion is not. “absolute. Such right may be reasonably restricted in order to facilitate the maintenance of proper discipline in the prison.” In Wilson v. Prasse, 463 F.2d 109, 113-114 (3d Cir. 1972), we said: “In Gittlemacker, we explicitly referred to the test as ‘The requirement that a state interpose no unreasonable barrier to the free exercise of an inmate’s religion,’ 428 F.2d at 4, and in so doing we were adhering to the test set forth in Long v. Parker, 390 F.2d 816, 820 (3d Cir. 1968): ‘Where the charge is made that the regulations imposed by prison authorities restricting religious practices fall more harshly on adherents of one faith than another, the courts will scrutinize the reasonableness of such regulations.’ ” It appears, therefore, that where a state does afford prison inmates the opportunity of practicing a religion, it may not, without reasonable justification, curtail the practice of religion by one sect. The inmates’ complaint that the curtailment of the visitation privileges of Fathers O’Malley and Taylor constituted religious discrimination with racial overtones fits the classic mold of a claim cognizable under § 1983 for which relief may be granted. Thus, it was improper to dismiss the complaint of these plaintiffs on the ground stated by the district court. It remains only to determine whether summary judgment was appropriate under the circumstances, considering all of the pleadings, and the supporting and opposing affidavits. If, on balance, there remained no “genuine issue for trial,” then summary judgment could have been appropriate. F.R.Civ.P. 56(e). Our independent examination of these materials convinces us that at the posture of the case in the trial court, it was not appropriate to enter summary judgment. This could only have been possible if, under the Long-Fittlemacker-Wilson test of this circuit, the exclusion of Fathers O’Malley and Taylor was, under the circumstances, a reasonable regulation as a matter of law. Not only did the court not make such a specific finding, but we are persuaded that there was sufficient conflict in the opposing affidavits so as to require the question of reasonableness of the regulation to be resolved by a fact finder. For example, appellants’ affidavits describe the Afro-American Mass as a deeply religious, highly significant form of worship, whereas Superintendent Brierley termed the exercise a political rally based upon the black militancy theme. Also, appellants asserted that the September 20, 1971, demonstration was entirely peaceful, lawful and orderly, and was in support of prison reform and the elimination of racism. Superintendent Brierley, on the other hand, viewed the demonstration as an attempt “to incite the prison population to riot,” and denied that it was peaceful, orderly and lawful. Because we are remanding for a trial, we emphasize that the state may not interpose an unreasonable barrier to the free exercise of an inmate’s religion. The test for the fact finder, therefore, is simply whether under all of the circumstances, the state has sustained its burden of proof that it was reasonable for the prison authorities to prevent the two priests from engaging in any activities within the prison. In arriving at its “reasonableness” determination, the fact finder shall find the regulation to be reasonable only if the alternative chosen (complete exclusion) resulted in the least possible “regulation” of the constitutional right consistent with the maintenance of prison discipline. The state authorities are held to the reasonableness test only, and are not required to prove as a condition precedent to the imposition of the regulation that the presence of the priests constituted a “clear and present danger” to the prison. As we said in Wilson v. Prasse, supra, 463 F.2d at 114, “such a [jury] instruction as to all prison rules and regulations would have been gross error.” We express no opinion whether the inmates’ suit may properly proceed as a class action. The judgment in favor of the appellees against appellants, Father John O’Malley and Father Augustus Taylor, will be affirmed. The judgment in favor of the appellees against the named appellant inmates will be reversed and the cause remanded for proceedings not inconsistent with the foregoing. . No longer were the priests permitted to meet with any prisoners who desired counseling, but rather, were restricted to meeting their own “parishioners,” and then only in the visiting room. Moreover, the priests were denied access to the prison chapel. . See United States v. Biloxi Municipal School District, 219 F.Supp. 691, 694 (S.D.Miss.1963), aff’d, 326 F.2d 237 (5th Cir. 1964), cert. denied sub nom. United States v. Madison County Board of Education, 379 U.S. 929, 85 S.Ct. 324, 13 L. Ed.2d 341 (1964): “Only persons actually deprived of their individual civil rights can redress such rights.” See also Krum v. Sheppard, 255 F.Supp. 994 (W.DMich.1966), aff’d, 407 F.2d 490 (6th Cir. 1967); Brown v. Board of Trustees of LaGrange Independent School District, 187 F.2d 20 (5th Cir. 1951); Williams v. Kansas City, 104 F.Supp. 848, 857 (W.D.Mo.1952). . Clearly this is not a distinction without a difference. For example, in McGowan v. Maryland, 366 U.S. 420, 430, 81 S.Ct. 1101, 6 L.Ed.2d 393 (1961), in a defense to a state prosecution brought under a Sunday closing law, defendants sought standing on the basis of the Free Exercise Clause. The Court denied standing on the basis of this clause because appellants alleged only economic injury to themselves, and not “any infringement of their own religious freedoms due to Sunday closing.” Nevertheless, the Court did accord defendants’ standing to challenge this law as “respecting an establishment of religion,” on the basis that they “eoncededly have suffered direct economic injury, allegedly due to the imposition on them of the tenets of the Christian religion.” . More recently, in Abington School District v. Schempp, 374 U.S. 203, 218-219, 83 S.Ct. 1560, 10 L.Ed.2d 844 (1963), the Court endorsed Justice Rutledge’s Everson formulation: Our constitutional policy does not deny the value or the necessity for religious training, teaching or observance. Rather it secures their free exercise. But to that end it does deny that the state can undertake or sustain them in any form or degree. For this reason the sphere of religious activity, as distinguished from the secular intellectual liberties, has been given the twofold protection and, as the state cannot forbid, neither can it perform or aid in performing the religious function. The dual prohibition makes that function altogether private. [330 U.S. at 52, 67 S.Ct. at 529]. . There cannot be the slightest doubt that the First Amendment reflects the philosophy that Church and State should be separated. And so far as interference with the “free exercise” of religion and an “establishment” of religion are concerned, the separation must be complete and unequivocal. The First Amendment within the scope of its coverage permits no exception; the prohibition is absolute. Zorach v. Clauson, 343 U.S. 306, 312, 72 S.Ct. 679, 683, 96 L.Ed. 954 (1952). McGowan v. Maryland, supra. . See also Mangold v. Albert Gallatin Area School District, 438 F.2d 1194 (3d Cir. 1971). . Both Madison and Jefferson expressed positive doubts about the institution of chaplaincies. In Madison’s “Detached Memoranda,” he wrote: “The establishment of chaplainship to Congress is a palpable violation of equal rights, as well as of Constitutional principles. ... If Religion consists in voluntary acts of individuals, singly, or voluntarily assodated, and if it be proper that public functionaries, as well as their Constituents should discharge their religious duties, let them like their Constituents, do so at their own expense.” William and Mary Quarterly, III, 554. “He classified chaplain-ships for the army and navy ‘in the same way,’ as forbidden ‘establishments’ or an ‘establishment of a national religion.’ ” Levy, Judgments, Essays on American Constitutional History, 206. As rector of the University of Virginia, Jefferson rejected a proposal to hold religious services on university property on Sundays, R. Freeman Butts observed that “the uni-versify did not even appoint a chaplain until 1829 and then only after Madison, following Jefferson as rector, had provided that the cost of maintaining the chaplain be paid by the students themselves on a voluntary basis. “ ‘Being altogether voluntary,’ declared Madison, ‘it would interfere neither with the characteristic peculiarity of the University, the consecrated principle of the law, nor the spirit of the country.’ ” Levy, Ibid. at 214. But see Abington School District v. Schempp, 374 U.S. at 297, 83 S.Ct. 1560 (concurring opinion, Brennan, J.). . Although it is unclear -whether the credit union employer in Kiiskila was actually an arm of the government, the court viewed appellant as a government employee: In permitting the credit union to operate at Fort Sheridan, the Army undoubtedly contemplated that access to the base would be required by civilian employees including Kiiskila. Moreover, it must also have been aware that termination of a civilian employee’s access to the base would result in the loss of his employment. Thus, in terms of the interests of both plaintiff and the Army, the exclusion order in this ease is essentially equivalent to dismissal of a person from government employment. Cafeteria & Restaurant Workers Union v. McElroy, [367 U.S. 886, 896, 81 S.Ct. 1743, 6 L.Ed.2d 1230 (1961)]. 433 F.2d at 748. . See also Orr v. Trinter, 444 F.2d 128, 133 (6th Cir. 1971): “To prove a claim under 42 U.S.C. § 1983, a plaintiff must show (1) action taken under color of State law, and (2) a deprivation of a constitutional right as a result of that action.” . This phrase, originally appearing in Long v. Parker, supra, the seminal case dealing with the test of reasonableness, was used only in the context of the distribution of religious literature. In Knuckles v. Prasse, 302 F.Supp. 1036 (E.D.Pa.1969), aff’d, 435 F.2d 1255 (3d Cir. 1970), Judge A. Leon Higginbotham suggested that the more realistic test for imposing restrictions on the reception of religious literature was proof of a “clear and proiable danger.” While we found no error in the use of the phrase “clear and present danger” in the Wilson court’s charge on religious literature, we impliedly approved the Higginbotham suggestion as the appropriate test for such literature. 463 F.2d at 112 n. 12.

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UNITED STATES of America ex rel. Manuel GONZALEZ, Relator-Appellee, v. John ZELKER, Warden, Green Haven Correctional Facility, Respondent-Appellant. No. 413, Docket 72-1945. United States Court of Appeals, Second Circuit. Argued Jan. 31, 1973. Decided April 17, 1973. Joseph A. DeMaro, Asst. Dist. Atty., Nassau County, Mineóla, N. Y. (William Cahn, Dist. Atty., Nassau County, and Robert J. Kaschak, Asst. Dist. Atty., Nassau County, Mineóla, N. Y., of counsel) for respondent-appellant. Francis J. Valentino, Legal Aid Society of Nassau County, Mineóla, N. Y. (James J. McDonough, Attorney in Charge, Legal Aid Society of Nassau County, and Matthew Muraskin and Susan Crandall, Legal Aid Society of Nassau County, Mineóla, N. Y., of counsel) for relator-appellee. Before ANDERSON, FEINBERG and MULLIGAN, Circuit Judges. MULLIGAN, Circuit Judge: This is an appeal from an order of Hon. Irving Ben Cooper, United States District Court Judge for the Southern District of New York, entered on July 7, 1972, granting the relator’s petition for a writ of habeas corpus, after a hearing, pursuant to 28 U.S.C. § 2241. Reversed. On March 18, 1966 the State Laundry in Hempstead, Nassau County, New York, was robbed by two armed men. The relator Manuel Gonzalez and one James F. Castellano were indicted and convicted in the Nassau County Court after a trial by jury, receiving concurrent sentences of 10 to 20 years for Robbery in the First Degree; 5 to 10 years for Grand Larceny in the First Degree; 2% to 5 years for Assault in the Second Degree and suspended sentences for Assault in the Third Degree. Both defendants appealed their convictions to the Appellate Division, Second Judicial Department, which affirmed without opinion (31 A.D.2d 1006, 299 N.Y.S.2d 389, 32 A.D.2d 889, 301 N.Y.S.2d 424 (1969)). The New York Court of Appeals subsequently affirmed 4-2 (27 N.Y.2d 53, 313 N.Y.S.2d 673, 261 N.E.2d 605 (1970)) with Chief Judge Fuld and Associate Judge Breitel dissenting. Certiorari was denied by the Supreme Court on January 11, 1971 (400 U.S. 996, 91 S.Ct. 470, 27 L.Ed.2d 445). A writ of habeas corpus was then sought in the Southern District Court of New York on April 6, 1971. Judge Cooper referred the proceeding to United States Magistrate, Hon. Gerard L. Goettel, for report and recommendation. The Magistrate recommended that an evidentiary hearing be held and Judge Cooper so ordered. On February 3, 1972 a hearing was held before Magistrate Goettel. The principal witness, Marguerite D’Amora, was unable to attend and was deposed upon written interrogatories by the Hon. Gilbert Swink, a Magistrate of the United States District Court for the Eastern District of Virginia, the state where she now resides. On May 17, 1972 Magistrate Goettel submitted a report and recommended that the writ of habeas corpus issue. Judge Cooper adopted the report on June 19, 1972 and entered an order directing the respondent to release the petitioner unconditionally unless he was retried within sixty days. The order, however, was stayed and the petitioner is presently enlarged on bail pending the decision of this Court. I At the trial of this case Marguerite D’Amora testified that on March 18, 1966 she was working as a switchboard operator at the State Laundry in Hemp-stead, Long Island. At about 1:10 P.M. a new blue and very shiny car attracted her eye as it pulled up across the street, made a U turn and stopped in front of the laundry. Both men in the car got out and walked into the office. They were about 12 feet from her and she could clearly see their faces. She later identified the two men in court as Castellano and the relator Gonzalez. Gonzalez walked past her toward a staircase leading to the cashier’s office and because it was her job to see that no one passed, she took particular notice, asking him if she could help. Gonzalez looked into another room, walked toward her and when about one foot away pointed a gun and said “This is a stickup. Come with me.” Gonzalez brought D’Amora to the foot of the stairs together with another employee, Kitty Clarke. Gonzalez then placed a ski mask over his face and he and Castellano took the women up the stairs to the cashier’s office. Other employees were rounded up. Gonzalez rifled the contents of the safe taking cash and employees’ checks. Both men left with a blue school bag in the same blue car. The police were called. Patrolman Guzzo testified that he was on patrol in Hempstead on March 18, 1966 shortly after 1:20 P.M. About a mile from the State Laundry he saw a blue Chevrolet. He identified on trial the State’s exhibit 19 (a picture of the car Gonzalez was driving just prior to arrest) as a picture of the car he had observed and also identified Castellano as the driver, but he could not identify the other occupant. Guzzo had been cut off by the car and was about to stop it when he was advised by radio of the robbery at the laundry. He passed the car and went to the scene of the crime where he advised the detectives of the blue Chevrolet which he considered suspicious. Detective Moran testified that while cheeking out Guzzo’s lead in Lindenhurst, shortly after 3:15 P.M., a 1960 blue Chevrolet drove past with 3 men in the front seat and with the license SK 8918. He identified Gonzalez as the driver. He and Detective Kreitzman followed the car and pulled alongside. Detective Kreitzman showed his shield and ordered the car to pull over. The driver slowed down but then accelerated with the police car in pursuit, siren blaring. The Chevrolet stopped, Gonzalez said “Stop, stop, turn it off’’ and dashed between two houses. Castellano however remained with the car and was arrested immediately. Gonzalez was observed at a phone booth one quarter of a mile away. With helicopter assistance Gonzalez was chased through a woods and finally arrested after the firing of shots and a brief wrestling match with a policeman. After their arrest both Castellano and Gonzalez confessed that they had committed the crime charged. Gonzalez led the police to a refuse can near the location where he escaped from the vehicle and turned over to the police, checks which had been taken from the laundry. Weapons and clothing used in the robbery were also recovered as a result of information given by the relator. II The sole issue before the court below and now on appeal is the reliability of the identification of Gonzalez by Mrs. D’Amora who was the sole witness on trial to identify him as one of the two robbers. The case for the State was overwhelming as of March 18, 1966. Mrs. D’Amora’s eyewitness identification was not anticipated as a major factor in the trial in view of the confession and recovery of weapons, clothing and loot. From the State’s point of view a conviction could be reasonably anticipated. Then on June 13, 1966 the Supreme Court decided Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694, holding that a confession without appropriate warnings, even though otherwise voluntary, was inadmissible in evidence. On June 20, 1966 Johnson v. New Jersey, 384 U.S. 719, 58 S.Ct. 1019, 82 L.Ed. 1461, was decided, holding that the Miranda, requirements were to be applicable to all trials subsequently conducted. The State determined not to introduce either the confession or its fruits and thus the testimony of Mrs. D’Amora for the first time assumed major significance. On May 12, 1966 Mrs. D’Amora had testified before the Grand Jury and was shown two photographs. She identified one as the relator Gonzalez and the other as Castellano, the men she stated had robbed the laundry seven weeks before. On June 12, 1967 the United States Supreme Court decided Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199, holding that in some cases an unnecessarily suggestive line-up is violative of due process. On August 10, 1967 just before the trial, she was shown the photograph of Gonzalez whom she again identified as the man who robbed the laundry on March 18, 1966. She adhered to this identification on trial under rigorous cross-examination. The confession of Gonzalez and the evidence of the recovery of the weapon and the fruits of the crime, were not before the jury and were not sought to be introduced by the State. Evidence was offered to establish Gonzalez’ presence in the blue Chevrolet after the robbery as well as his flight and capture. On March 18, 1968 the Supreme Court decided Simmons v. United States, 390 U.S. 377, 88 S.Ct. 967, 19 L.Ed.2d 1247, holding that an unnecessarily suggestive photographic identification will, in some instances, be violative of due process. After the affirmances by the Appellate Division and Court of Appeals, the denial of the writ of certiorari, the present application for a writ of habeas corpus issued as previously set forth. III A threshold question here is what weight, if any, we are to accord the findings of fact of the Magistrate which were adopted by the court below. Normally such findings are to stand unless clearly erroneous under Fed.R.Civ.P. 52(a). We do not consider this rule to be here applicable. Mr. Justice Powell writing the opinion for the Court in Neil v. Biggers, 409 U.S. 188, 193, 93 S.Ct. 375, 379 n. 3, 34 L.Ed.2d 401 (Dec. 6, 1972) noted: This rule of practice, under which the Court does not lightly overturn the concurrent findings of fact of two lower federal courts, is a salutary one to be followed where applicable. We think it inapplicable here where the dispute between the parties is not so much over the elemental facts as over the constitutional significance to be attached to them. Moreover, this is a habeas corpus case in which the facts are contained primarily in the state court record (equally available to us as to the federal courts below) and where the evidentiary hearing in the District Court purported to be “confined” to two specific issues which we deem not controlling. We think this view is particularly appropriate here. The essential facts are contained in the state court record. The evidentiary hearing, for the most part, was unproductive, only confirming that which is suggested by the trial record: Mrs. D’Amora did not see any photographs prior to the Grand Jury hearing and then she was shown only those of Gonzalez and Castellano. At the hearing memories had faded regarding the August 10th picture showing, but Miss Pisciotto’s trial testimony clearly describes the circumstance surrounding that showing of the robbers’ pictures to Mrs. D’Amora. It is further noteworthy that the key witness here, Mrs. D’Amora, never testified before Magistrate Goettel but was deposed in Virginia Beach where she now resides. Hence, there was no opportunity for him to observe her demeanor and judge her veracity which is a major factor in appellate courts’ normal reluctance to interfere with trial court findings of fact. United States ex rel. Miller v. LaVallee, 436 F.2d 875, 876 (2d Cir. 1970), cert. denied, 402 U.S. 914, 91 S.Ct. 1367, 28 L.Ed.2d 657 (1971): We have in mind that when the issue the trial judge must determine relates to the validity of a witness’s identification of a defendant we ought to accord great weight to the determination the judge makes, for he has seen and has heard that witness. Moreover, as Biggers points out the basic question to be determined here is the constitutional significance to be attached to the facts. On this score the Magistrate arrived at two separate conclusions of law. First, that the photographic identification was so impermissibly suggestive as to give rise to a substantial likelihood of misidentification, Simmons v. United States, 390 U.S. 377, 88 S.Ct. 967, 19 L.Ed.2d 1247 (1968), and secondly, that the prosecution failed to sustain its burden by clear evidence that the in-court identification was based upon observations of the defendant other than the improper confrontations, citing United States v. Wade, 388 U.S. 218, 87 S.Ct. 1926, 18 L.Ed.2d 1149 (1967). The problem is that the so-called “per se” rule of Wade has been found by this circuit not applicable to due process photographic identification cases which are to be determined by the more flexible “totality of circumstances” test of Stovall and Simmons. Thus Judge Medina writing for a panel of this Court in United States ex rel. Rutherford v. Deegan, 406 F.2d 217, 218-219, cert. denied, 395 U.S. 983, 89 S.Ct. 2145, 23 L.Ed.2d 771 (1969) held: We think it clear that the rule of Wade, applicable only prospectively and requiring a hearing and finding that “the in-court identifications had an independent source” based on “clear and convincing evidence that the in-court identifications were based upon observations of the suspect other than the lineup identification” or a finding that the error was harmless, is clearly not the rule governing Stovall or other due process of law cases. To intermingle the two separate but analogous rules of Wade and Stovall can only result in confusion .... We think it is clear that no per se rule governs the due process of law cases. This position was reaffirmed in United States ex rel. Miller v. LaVallee, supra, 436 F.2d at 876. While the Magistrate here espoused both rules, a reading of his final report where he discusses the legal issues indicates that in effect he adopted the “per se” approach of Wade espoused in United States v. Gambrill, 146 U.S.App.D.C. 72, 449 F.2d 1148, 1153 (1971). We conclude therefore that although the showing of a single photograph (here there were two photographs shown but only of the two defendants charged with the robbery) is impermissibly suggestive, our inquiry must be whether under all the circumstances it gave rise to a very substantial likelihood of irreparable misidentification. United States ex rel. Carter v. Mancusi, 342 F.Supp. 1356, 1357-1359 (S.D.N.Y.1971), aff’d on opinion below, 460 F.2d 1406 (2d Cir. 1972). IV The ultimate issue is whether under the totality of circumstances Mrs. D’Amora was identifying Gonzalez on trial as the man whose photograph she had been shown twice or whether she had such a definite image of him in her mind ^before the unnecessarily suggestive showing, that she was relying on it rather than the photograph. United States ex rel. Phipps v. Follette, 428 F.2d 912, 915 (2d Cir.), cert. denied, 400 U.S. 908, 91 S.Ct. 151, 27 L.Ed.2d 146 (1970). Precedent is of little value in cases such as this, each of which must be judged on its own facts; Simmons v. United States, supra, 390 U.S. at 384, 88 S.Ct. 967. After a careful reading of the record we believe that there is no substantial likelihood that Mrs. D’Amora misidentified Gonzalez. The robbery unquestionably made a deep impression on Mrs. D’Amora who was obviously terrified by Gonzalez when he pointed the gun at her and announced the hold-up. She was only a foot away from him. She was not a casual bystander, the light was good and her attention was focussed upon him. See United States ex rel. Frasier v. Henderson, 464 F.2d 260, 264-265 (2d Cir. 1972). Her description of him, given shortly after the robbery, was, under the circumstances reasonably accurate. See United States ex rel. Bisordi v. LaVallee, 461 F.2d 1020, 1024-1025 (2d Cir. 1972). On trial she testified at least three times that she was certain of her identification. This positive identification is a factor which is entitled to consideration. United States ex rel. Carter v. Mancusi, supra, 342 F.Supp. at 1359. She was subjected to a thorough cross-examination which covers some 100 pages of about 500 pages of trial testimony. While there was a long period between the robbery and the trial, as Mr. Justice Harlan pointed out, the range of misidentifieation is lessened by cross-examination at trial. Simmons v. United States, supra 390 U.S. at 384, 88 S.Ct. 967. The jury to which the evidence was directed found the identification reliable and so did the appellate courts of the State of New York. We are further enlightened by Mrs. D’Amora’s testimony at her deposition below. After some six years Mrs. D’Amora had no clear recollection of the photographic identification procedures but still is sure that the man who was the defendant on trial, was the man who held her up. This strongly supports in our view the indelible imprint made by the event and the principal characters, Gonzalez and Castellano. Mrs. D’Amora identified not only Gonzalez but Castellano. His petition for a writ of habeas corpus has been denied without an evidentiary hearing and denial was affirmed in open court by a panel of this Coui't on April 4, 1972. While this case is not at all binding here since two other witnesses identified the unmasked Castellano, it at least supports to some extent Mrs. D’Amora’s reliability to identify the robbers despite the same suggestive procedure which was employed in both cases. We should also note that while the procedure here was suggestive there is no indication at all that the police were guilty of any activity designed to unfairly influence the trial of the relator. They were unable to anticipate Miranda and Simmons and were not attempting to circumvent normal procedures. There is no suggestion in the record that the police persuaded or coerced Mrs. D’Amora. On the contrary, our review of the minutes of Mrs. D’Amora’s, Grand Jury testimony and Miss Pisciotto’s trial testimony concerning the August 10th photographic identification discloses that restraint was practiced. This is further evidenced by the fact that Kitty Clarke, the only other witness to see the unmasked Gonzalez, was shown the same pictures at the same time on August 10 and was unable to identify either Gonzalez or Castellano. The confession and the fruits of the crime retrieved from it were not even sought to be introduced by the State in the trial of the alleged robbers. Moreover, in determining whether or not the suggestive photographic identification procedure resulted in misidentificatibn, we may properly consider the other factors which were before the jury and were properly admissible which tend to establish that there was not substantial likelihood of misidentification. United States ex rel. Springle v. Follette, 435 F.2d 1380, 1384 (2d Cir. 1970), cert. denied, 401 U.S. 980, 91 S.Ct. 1214, 28 L.Ed.2d 331 (1971); United States ex rel. Phipps v. Follette, supra 428 F.2d at 916-917; Clemons v. United States, 133 U.S.App.D.C. 27, 408 F.2d 1230, 1250-1252 (1968) (en banc) (Leventhal, J., concurring, joined by now Chief Justice Burger), cert. denied, 394 U.S. 964, 89 S.Ct. 1318, 22 L.Ed.2d 567 (1969). In our examination of the State record we find other evidence which corroborates the identification and establishes that no violation of due process was present in the Gonzalez’ trial. There was evidence that Gonzalez had been an employee of the laundry which could account for his apparent familiarity with the location of the cashier’s office, his awareness that Friday (the day of the robbery) was payday for the route drivers (his job) and also would account for his wearing a mask while Castellano used no disguise. Moreover, the general physical description of the masked robber fitted Gonzalez. More damning of course was the presence of both men in a car fitting the description of that driven to and from the laundry. Patrolman Guzzo who was on patrol shortly after 1:20 P.M. about one mile from the scene of the robbery observed Castellano driving the car which at trial he identified as the one Gonzalez was driving just prior to his arrest. At about 2 P.M. the day of the robbery, Richard Phillips testified that both Gonzalez and Castellano came to his home and asked him to ride with them to Copiague. Castellano was then unshaven, the description given by those who viewed him on the robbery scene. Phillips further testified that while he and Gonzalez stopped at a diner Castellano went to a barber and then came back freshly shaved. The three men were then observed driving in the blue Chevrolet by Detective Moran who identified Gonzalez as the driver and Castellano as a passenger. Gonzalez fit the description of one of the robbers “male, white, early twenties, dark hair, heavy set and 5'10"”. When the police car moved up to the Chevrolet, Gonzalez was showed the police shield and first slowed down, then suddenly accelerated. Gonzalez ran out of the car but Castellano was arrested. The Suffolk County Police were then alerted and at about 3:25 P.M. Patrolman Shirvell observed Gonzalez stepping into an outdoor phone booth. Gonzalez again ran away and refused to stop when warned and kept running even when shots were fired. Assistance was called for and Patrolman Carter observed a man running who fit Gonzalez’ description. After another chase and a struggle Gonzalez was finally handcuffed. While no single circumstance here was damning, the accumulated circumstantial evidence in our view fully substantiated the fact that Mrs. D’Amora accurately identified Gonzalez. All of this evidence was before the jury. In our view Gonzalez was accorded due process and his conviction was proper and without constitutional taint. The State argues that the Gonzalez confession although not complying with Miranda was in fact voluntary and although inadmissible on trial, is admissible on this proceeding. This is a novel proposition not supported by any authority and was rejected by the court below. In view of the disposition we have made, we do not reach the point. Reversed. . Guzzo had indicated that the Chevrolet was either a ’59 or ’60 model and had copied down the license as SK 8919. By the time Moran observed the robbers’ auto, it had already been determined that an error had been made, since the car having license SK 8919 was a 1964 Corvair. . The first photograph showing here was pre-Wade but the second showing just before trial was post-Wade. AVe note however that Wade involved the right to counsel at pretrial line-ups and in that context required “clear and convincing evidence” aliunde line-up identification. This circuit lias consistently held (see, e. g., United States v. Counts, 471 F.2d 422, 425, n. 2 (1973); United States v. Johnson, 467 F.2d 630, 637 (1972), and United States v. Bennett, 409 F.2d 888, 899-900, cert. denied, 396 U.S. 852, 90 S.Ct. 113, 24 L.Ed.2d 101 (1969)) that there is no constitutional right to counsel at a photographic identification. We are therefore not within the Wade rule. We do note, however, that this issue was recently argued before the Supreme Court on January 10, 1973 in United States v. Ash, Doc. No. 71-1255, 41 U.S.L.W. 3390. . The court in United States v. Gambrill, supra, 1153, reached the conclusion “that an impermissibly suggestive photographic display should be considered to give rise to a very substantial likelihood of irreparable misidentification if the Government is unable to show, by clear and convincing evidence that a subsequent in-court identification is based on a source independent of the photographic display.” (footnote omitted). . Mrs. D’Amora initially described Gonzalez as a male, white, 5TO” tall, stocky build, 26 years of age and blond hair. Gonzalez was a white male, between 5'8" and 5'9" tall, weighed 194 lbs. and was 27 years old at the time of the robbery. His hair however is not blond but dark brown or black. This misdescription is not surprising under the circumstances. Gonzalez was standing under a fluorescent light when he faced Mrs. D’Amora and she was understandably nervous at the time of the robbery. She took four tranquilizers that day, apparently at least one after Gonzalez donned his mask but before the robbers left, and evidently suffered from nervousness a good while thereafter. . As we understand Chief Judge Fuld’s dissent, he was of the opinion that the burden was on the prosecution to show by clear and convincing evidence that the in-court identification stemmed from a source independent of the two pre-trial photographic identifications (see 27 N.Y. 2d at 60; 313 N.Y.S.2d at 678, 261 N.E. 2d at 608) thus following the Wade test. . The Court: Do you remember seeing photographs of either of the persons who committed the robbery? Mrs. D’Amora: I don’t remember. The Court: Before you testified in the Grand Jury? (pause) Did you see such pictures? Mrs. D’Amora: I don’t remember. The Court: During your testimony in the Grand Jury? Did you see pictures? Mrs. D’Amora: Yes, I think I did. The Court: Before you testified at the trial? Mrs. D’Amora: Yes, I think I did. The Court: In the District Attorney’s office? Mrs. D’Amora: I don’t remember if it was in the District Attorney’s office, or where it was that they showed me pictures. The Court: All right. The next question is, at any time? Did you see pictures ? Mrs. D’Amora: Yes, I’m sure I did. The Court: If you do remember any such incident, would you describe what you remember about it including who the person was who showed the picture? (pause) Mrs. D’Amora: I dont [sic] know who it was. The Court: How many pictures were shown? Mrs. D’Amora: There was a picture of a car shown. The Court: Do you know how many pictures were shown to you? (pause) Mrs. D’Amora: I don’t know. I don’t remember. The Court: Who was portrayed in those pictures? Mrs. D’Amora: I don’t remember that either. The Court: What was said to you by the person exhibiting the photographs? Mrs. D’Amora: I don’t remember that. The Court: And, who else was present at that viewing? Mrs. D’Amora: I was in a room, and there seemed to be a few people sitting out there. The Court: You do not know any of the names? Mrs. D’Amora: No, I don’t. The Court: Or their positions-— whether they were police officers of [sic] who they might have been? Mrs. D’Amora: I don’t remember. The Court: When you testified at the trial and identified Manuel Gonzalez as the man who approached you at the switchboard and eventually put on the ski mask, were you positive, in fact, that he was that man? Mrs. D’Amora: Yes, I was. The Court: Are you positive today that your identification of Manual Gonzalez was correct? Mrs. D’Amora: At the time I identified him, I made my identification as what happened in the office. The Court: Are you positive today that the identification that you gave in the trial is correct? Mrs. D’Amora: Yes. The Court: Did anything that occurred between the time of the crime and the time you testified at the trial influence you in making an identification of Manuel Gonzalez? Mrs. D’Amora : There wasn’t. The Court: No? Mrs. D’Amora: No. The Court: If you had not seen any photographs of Gonzalez between the time of the crime and the time you testified at trial, would you have been able to identify him? Mrs. D’Amora: To the best of my knowledge, as of the day he walked into my office, yes. The Court: All right. Did you see either of the two men who committed the robbery in the courthouse prior to your testifying at the trial? Mrs. D’Amora: I’m sorry, would you repeat that? The Court: Did you see either of the two men who committed the robbery in the courthouse prior to your testifying at the trial? (pause) In other words, did you see them before you went on the witness stand to identify them? Mrs. D’Amora: Yes, I did. They were walking and I was sitting in the corridor — and they were walking in— on the other side of the room. The Court: Could you have identified Gonzalez in court if you had not seen his photograph in the Grand Jury? (pause) I’ll repeat that question. Could you have identified Gonzalez in court if you had not seen his photograph in the Grand Jury? Mrs. D’Amora: Yes. The Court: Could you have identified Gonzalez in court if you had not seen his photograph prior to testifying at the trial? Mrs. D’Amora: Yes. The Court: Did seeing Gonzalez’ photograph in the Grand Jury influence your identification of him at the trial? Mrs. D’Amora: No. The Court: Did seeing Gonzalez’ photograph prior to your testimony influence your identification of him at the trial? Mrs. D’Amora: No. The Court: If you had not seen any photographs of Gonzalez, would you have been able to identify him at the trial? Mrs. D’Amora: At that time, yes. . United States ex rel. Castellano v. Zelker, 71-C-487 (E.D.N.Y. Dec. 8, 1971). . Although the cashier’s office was up a flight of stairs and off a main office which had an unmarked door, no witness could recall directing the robbers to the cashier’s office. Drivers of course would be aware of its location, since they had to make their reports in an office adjacent the cashier’s office. . It was just prior to the robbers’ ascent of the stairs that Gonzalez donned his mask. While it was necessary for the drivers to visit the upstairs offices in order to make their reports, there was testimony at trial that they did not frequent the front offices occupied by Clarke ■ and D’Amora; there was another entrance to the upstairs offices. . While Guzzo could not identify Gonzalez as being the second man in the car, he described him as being heavyset and having brown hair.

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Lamar RUDD, Petitioner-Appellee, v. STATE OF FLORIDA, Respondent-Appellant. No. 72-2409. United States Court of Appeals, Fifth Circuit. April 23, 1973. Robert L. Shevin, Atty. Gen. of Fla., Wallace E. Allbritton, Asst. Atty. Gen., Tallahassee, Fla., for respondent-appellant. Kathryn L. Powers, Jacksonville, Fla., court-appointed, for petitioner-appellee. Before JONES, GODBOLD and IN-GRAHAM, Circuit Judges. GODBOLD, Circuit Judge: This appeal is by the State of Florida from the issuance of a writ of habeas corpus for Lamar Rudd, a state prisoner serving a 40-year term for armed robbery of a store. The District Court’s order, entered after a full evidentiary hearing and pursuant to a memorandum opinion, 343 F.Supp. 212, directed the immediate release of Rudd from state custody and allowed the state to retry him if it so elected. The error that caused the writ to issue was the introduction at Rudd’s state trial of identification testimony that had its roots in assertedly unconstitutional pretrial lineups, show-ups, and photo displays. We affirm. The robbery for which petitioner was convicted occurred December 7, 1968. It was witnessed by three persons — Tilson, the manager of the store, and Ison and Sweat, two customers who entered just as the robber was leaving. While emptying the cash register at gunpoint, Tilson viewed the bandit from a distance of only a few feet, and Ison and Sweat obtained a glimpse of him from close proximity as they passed him at the door. Nevertheless, none of these witnesses was able to obtain a full view of the robber’s face because he wore a cowboy hat with a wide brim pulled down across his eyes. Consequently the witnesses did not note any distinguishing physical characteristics, and they were unable to afford the police with even a moderately detailed description. Although the three witnesses to the December 7 robbery supplied the heart of the case against Rudd, the state also relied on testimony by two witnesses to a January 3, 1969 robbery of another store. Evidence of this later robbery, which the state contended was also committed by petitioner, was introduced to show a common scheme. The witnesses to the January 3 robbery were Payne, manager of the store, and Loos, a customer. From close range during actual consummation of the robbery, Payne was able to observe the thief, who this time wore a short-brimmed hat pulled low across his eyes. During the robbery Loos stood to the rear of the store and saw only the robber’s back except for a fleeting moment when the thief glanced around. Loos was not even aware that a robbery was being committed until after the bandit left the store. At trial defense counsel contended that all the eye-witnesses — those present during the December 7 robbery as well as those present during the later robbery on January 3 — had attended constitutionally defective pretrial identification procedures, and accordingly counsel moved to exclude all their identification testimony. The state trial court summarily denied this motion without conducting a hearing outside the presence of the jury to determine either the correctness of counsel’s contention or the circumstances surrounding any pretrial identifications that might have occurred. From the full evidentiary hearing conducted by the habeas court, we now know that each of the witnesses to the respective robberies attended one or more of either a lineup, showup, or photo display. Payne and Loos, the two witnesses to the January 3 robbery, attended pretrial lineups at which they identified Rudd as the January 3 bandit. Tilson and Sweat made pretrial identifications of Rudd at a one-man showup in the state attorney’s office. Finally, prior to trial Tilson, Sweat, and Ison selected Rudd’s picture from spreads of four or five photos. This is an unusually complex photo display-lineup-showup case raising a plethora of issues. We are here concerned with five witnesses who viewed two separate robberies and who attended three different kinds of pretrial identification procedures. Additionally there were two legally significant categories of testimony at the state trial — testimony by some of the witneses that they had identified the defendant at pretrial identification procedures (“pretrial recognition”) and trial testimony by all witnesses that the defendant was the thief (“in-court identification”). Moreover, the pretrial recognition testimony may be further subdivided into testimony elicited by the state and testimony elicited by defense counsel to mitigate the force of an in-court identification. Much of the District Court’s opinion is devoted to factual reconstruction of pretrial identifications occurring more than four years ago, and we can rearrange that factual composite only to correct clear error. See, e. g., Hines v. Beto, 473 F.2d 1034 (CA5 1973). On this appeal the state has not established any instance of a clearly erroneous finding of fact. Our task, then, is to determine if in light of the findings of fact and the applicable legal standards the District Court reached the correct result — to determine “the constitutional significance to be attached to [the elemental facts].” Neil v. Biggers, 401 U.S. 188, 193, 93 S.Ct. 375, 379, 34 L.Ed.2d 401, 407-408 n.3 (1972). 1. LINEUPS The findings of fact made by the habeas court show that in 1969 Payne and Loos, witnesses to the January 3 robbery, attended pretrial lineups at which, despite his request, Rudd was not represented by counsel. He was exhibited along with four or five other men of similar height, weight, and age. Both the witnesses selected Rudd from these lineups as the January 3 bandit. At the merits trial neither Payne nor Loos, in response to questioning by the state, testified about his pretrial recognition of Rudd, although they did make in-court identifications of him as the January thief. The District Court made a finding of fact not clearly erroneous that their in-court identifications were based on recollections formed at the lineups, not on their recollections from the crime. Consequently, if the pretrial lineup did not meet constitutional standards, then the witnesses’ in-eourt identifications were the fruit of a forbidden procedure and should not have been used in the state’s case. United States v. Wade, 388 U.S. 218, 239-242, 87 S.Ct. 1926, 18 L.Ed.2d 1149, 1164-1166 (1967). In Gilbert v. California, 388 U.S. 263, 87 S.Ct. 1951, 18 L.Ed.2d 1178 (1967), and United States v. Wade, supra, the Supreme Court held that postindictment lineups conducted without presence of counsel, and in the absence of a valid waiver of counsel, are unconstitutional. The District Court concluded on authority of these decisions that the lineups in issue were constitutionally defective. Unquestionably Rudd was denied counsel at the lineups. As Kirby v. Illinois, 406 U.S. 682, 689, 92 S.Ct. 1877, 1882, 32 L.Ed.2d 411, 417 (1972), makes clear, however, the Wade-Gilbert right to counsel attaches only “at or after the initiation of adversary judicial criminal proceedings — whether by way of formal charge, preliminary hearing, indictment, or arraignment.” In this case the District Court did not find precisely when the lineups occurred, which is understandable since Kirby v. Illinois was not decided until one week after Rudd had been granted his writ of habeas corpus. The absence of a finding as to time of occurrence makes it impossible to determine whether the lineups in issue were conducted in violation of the Wade-Gilbert right to counsel. Since a new trial is warranted for reasons we will presently discuss a remand to the District Court for resolution of the Kirby v. Illinois issue is unnecessary; it may appropriately be resolved by a state trial court should the state retry petitioner. Compare Kimbrough v. Cox, 444 F.2d 8, 11 (CA4 1971); United States ex rel. Phipps v. Follette, 428 F.2d 912, 915-916 (CA2), cert. denied, 400 U.S. 908, 91 S.Ct. 151, 27 L.Ed.2d 146 (1970), with United States ex rel. Rivera v. McKendrick, 448 F.2d 30 (CA2 1971), cert. denied, 404 U.S. 1025, 92 S.Ct. 678, 30 L.Ed.2d 675 (1972). See also Collins v. Estelle, 474 F.2d 988 (CA5 1973). The District Court also held that the state trial court committed constitutional error by permitting Payne and Loos to make in-court identifications without first determining that their recollections were not rooted in the illegal lineups. This statement was erroneous if by it the District Court meant that failure to hold a hearing outside the jury’s presence on the independent origin issue was by itself sufficient cause for new trial. Both Wade and Gilbert were direct criminal appeals in which the lower courts permitted in-court identifications by witnesses who had attended constitutionally defective pretrial identifification procedures without first determining that the in-court identifications were of untainted origin. In each case the Supreme Court vacated the convictions and remanded to the trial court for a finding on the independent origin issue. In essence, both Wade and Gilbert establish that the state at the minimum is entitled to one opportunity to adduce evidence in support of independent origin. Normally the state should be allowed to discharge that burden at the federal evidentiary hearing, if not previously discharged at trial or other post-conviction proceedings. 2. SHOWUP Tilson and Sweat, two of the witnesses to the December 7 robbery, testified at trial in response to the prosecution’s questioning that they had identified Rudd at a pretrial showup. The habeas court in reconstructing this pretrial showup found that state investigators had called Tilson and Sweat to the state attorney’s headquarters and that the witnesses had there viewed Rudd as he sat in a small office. Rudd was alone except for two or three other police officers who were seated nearby, and he was unaware that a showup was in progress. Under Stovall v. Denno, 388 U.S. 293, 302, 87 S.Ct. 1967, 1972, 18 L.Ed.2d 1199, 1206 (1967), pretrial identification procedures “unnecessarily suggestive and conducive to irreparable mistaken identification” may violate due process without regard to the Wade-Gilbert right to counsel. The District Court did not err in ruling that the showup arranged by the police was impermissibly suggestive and in violation of the standards enunciated in Stovall v. Denno. By inviting the witnesses to view the suspect as he sat alone in the state attorney’s office beside one or two police officers, the police in effect suggested that “This is the man.” Foster v. California, 394 U.S. 440, 443, 89 S.Ct. 1127, 22 L.Ed.2d 402, 407 (1969) (italics original). Such singling out, or indicating to the witness that the man in custody is the man the police believe to have committed the crime, is a classic example of impermissible suggestiveness. See Crume v. Beto, 383 F.2d 36, 39 (CA5 1967), cert. denied, 395 U.S. 964, 89 S.Ct. 2106, 23 L.Ed.2d 749 (1969). Consequently the state committed constitutional error in eliciting testimony of identifications made at this tainted procedure, and since it has made no attempt to show that its error was harmless beyond a reasonable doubt under the teachings of Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967), petitioner is entitled to federal habeas relief. Should the state decide to retry petitioner, it must do so without testimony of identifications made at the showup. Aside from their testimony of pretrial recognition at the showup, Til-son and Sweat also made in-court identifications of Rudd. For the test by which to gauge the admissibility of in-court identifications by witnesses who have attended impermissibly suggestive pretrial identification procedures, we look to Simmons v. United States, 390 U.S. 377, 88 S.Ct. 967, 19 L.Ed.2d 1247 (1968). In Simmons the Court held that the state commits constitutional error in eliciting in-court identifications by witnesses who have attended pretrial identification proceedings “so impermissibly suggestive as to give rise to a very substantial likelihood of irreparable misidentification.” Id. at 384, 88 S.Ct. at 971, 19 L.Ed.2d at 1253. While the habeas court did, as we have noted, correctly determine that the showup was impermissibly suggestive, it did not specifically find that the showup was likely to induce irreparable misidentification, a finding indispensable to proper application of the Simmons test. See Neil v. Biggers, 409 U.S. 188, 93 S.Ct. 375, 34 L.Ed.2d 401, 410-411 (1972); United States v. Sutherland, 428 F.2d 1152, 1155 (CA5 1970). On this cold record we cannot make the required factual determinations. For example, irreparability of suggestiveness may hinge in part on the strength of the witnesses’ preshowup recollections, which can best be measured by one having an opportunity to observe the witnesses’ demeanors under questioning. As with the lineups, however, we conclude that a remand to the federal District Court is unwarranted. The issue of irreparability may appropriately be resolved by the state trial court should the state retry petitioner. Without a favorable finding on this issue the state should proceed without in-court identifications by Tilson and Sweat. 3. PHOTO DISPLAYS a. Tilson display Tilson, manager of the store robbed on Dee. 7, testified at the state trial in response to questions of the prosecution that he had identified Rudd at a pretrial photo display. Testimony at the habeas hearing reveals that Tilson was shown a group of five or six photographs of men not markedly dissimiliar in appearance from petitioner. The habeas testimony also shows that the police manipulated the photographs to make some of the men appear as if they were wearing a hat. Tilson testified under questioning by Rudd’s counsel at the evidentiary hearing : THE WITNESS: Well, when he robbed the store, he was wearing a cowboy hat and they took it like, turned the picture over and blocked the top part of his head off, you know, all of them, one at a time. THE COURT: The detectives? THE WITNESS: Yes, sir. . . . . . . Q. When you were shown the photographs, did you pick Mr. Rudd’s picture out immediately or did the police officers put on the hats before you picked Mr. Rudd’s picture out? A. I picked two out first and then they put the hats on and then I— Q. You picked out two photographs because wou weren’t sure — you weren’t sure which of the two was the man who robbed the store and then the police officers put the hats on the pictures to help you identify the robber? A. Yes, ma’am. Q. When the police called and asked if they could come to your home, did they say that they had a suspect? A. No, ma’am, they didn’t call. They just knocked on my door. Q. When they knocked on your door and entered your home, did they tell you that they had a suspect? A. No, ma’am, they just asked me to look at some pictures. In light of this testimony the District Court concluded that the police had suggestively manipulated the photographs by making them to appear to wear hats, and accordingly found that the state committed constitutional error by eliciting testimony at the state trial as to Tilson’s identification made at the defective display. Application of Stovall v. Den-no to the elemental facts compels us to disagree with the habeas court. Accenting the features of a particular photograph to focus the witness’ attention on it indeed will often be impermissibly suggestive. As this court explained in Crume v. Beto, 383 F.2d 36 (CA5 1967), cert. denied, 395 U.S. 964, 89 S.Ct. 2106, 23 L.Ed.2d 749 (1969): The fault common to all these practices is that the police single out one person and influence the witness by directing attention to some element known to be connected with the crime —the unique appearance of the suspect, the words spoken in the course of the crime, or clothing similar to the suspect’s clothing. The necessary result of this singling out is to suggest to the witness that the suspect so isolated is in fact the one the police think is guilty. Id. at 39. Impermissible singling out does not necessarily occur, however, when the police attempt to reenact the atmosphere of the crime by having all subjects wear clothing similar to that worn by the bándit, or by having only two or three of the subjects wear similar clothing if the witness has already narrowed his choice to those two or three subjects. To the contrary, reenactment of crime atmosphere is often the preferred identification procedure. Wigmore suggests: At the time of presenting for recognition, whether upon arrest or at trial in the courtroom, measures should be taken to increase the simulus of association and to decrease the risk of false suggestion, (a) The person to be identified should be clothed and placed (so far as feasible) in the same conditions as when originally observed, (b) The person to be identified should be presented in company with a dozen others of not too dissimilar personalities. 3 Wigmore, Law of Evidence § 786a, at 206 (Chadbourn rev. ed. 1970) (italics original). This circuit has expressly approved such stimuli of association, provided they are not used to direct the witness’ attention to a particular subject. Thus in Crume v. Beto, supra, we upheld the practice of placing a hat on a subject and having him say, “This is a stick-up,” because the witness had already made a tentative identification and the associational procedures were merely to test her initial impression. The facts adduced at the habeas hearing were that the police did not make the photographs appear to wear hats until Tilson had already narrowed his choice to two photographs, and at that time the police made both of the photos appear to wear hats. Consequently, the police did not, within the meaning of Stovall v. Denno, impermissibly focus attention on a particular photograph. b. Ison-Sweat display Ison and Sweat, customers in the store on December 7, also attended a pretrial photo display at which they selected Rudd from a spread of four or five photographs, and they testified at state trial in response to the prosecution’s questions as to these pretrial recognitions. The habeas court held that the photo display was impermissibly suggestive within the meaning of Stovall v. Denno, and that the state consequently committed constitutional error in eliciting testimony of identifications made at this display. We find no error in the holding of the habeas court that this display was impermissibly suggestive. From testimony at the merits trial and at the habeas hearings, we know that the police brought four or five photos to the home of Miss Sweat and there staged a display in the presence of both Ison and Sweat. While Miss Sweat was momentarily absent from the room, Ison picked up one of the photos from the table and began scrutinizing it. When Miss Sweat returned and while Ison was holding Rudd’s photo in his hand, both Ison and Sweat at the same time identified it as the photo of the thief. The District Court essentially found that the witnesses made mutually, reinforcing identifications that they might not have made independently. On the facts of this case, we are not able to say that the District Court erred in holding the mutually reinforcing, simultaneous identifications to be improper. In reaching this conclusion we consider as important the witnesses’ lack of opportunity to obtain a clear view of the bandit at the crime as well as the ample time available to the police for staging separate displays. In connection with the display the District Court articulated an erroneous per se rule concerning simultaneous identifications by two or more witnesses. The court said: “Thus, this Court holds that any simultaneous identification of a suspect by two or more witnesses in the presence of each other is so impermissibly suggestive as to amount to a denial of due process, and any subsequent in-court identifications must be subjected to a per se exclusionary rule.” Pretrial identification procedures should not be found impermissibly suggestive on the basis of rigid application of categorical rules. For example, indicia of reliability such as a witness’ strong recollection from an independent, untainted source may in some cases counteract the suggestiveness in certain identification procedures. Also, exigencies of efficient police work may occasionally justify identification procedures that in other contexts would be unnecessarily suggestive. Because of these and other variables spanning the range of human experience, courts have wisely counseled against determination of constitutionally impermissible suggestiveness on other than a case-by-case basis. See, e. g., United States v. Sutherland, 428 F.2d 1152, 1156 (CA5 1970); Pearson v. United States, 389 F.2d 684, 688 (CA5 1968). In short, due process inquiries into impermissible suggestiveness should be made in the absence of per se rules. In addition to their testimony of pretrial recognition, both Ison and Sweat made in-court identifications. As noted previously, the constitutionality of such in-court identifications must be measured by the Simmons test of conduciveness to irreparable misidentification. As we read the opinion below, the habeas court did not apply this test to determine whether the in-eourt identifications were constitutionally permissible. As we have held in another part of this opinion, however, this issue may be appropriately resolved by a state trial court if the state retries petitioner. Subject to a favorable finding on this issue, the state should proceed without an in-court identification by either Sweat or Ison. Also, because the display itself exceeded the bounds of permissible suggestiveness, the state should not elicit testimony as to recognitions made at the display. Affirmed. . The District Court found that petitioner had exhausted his state remedies as required by 28 U.S.C. § 2254, the state has not contended otherwise, and the record is devoid of any indication that Rudd did not exhaust. . This circuit holds that admission into evidence of similar crimes committed close in time to show general scheme is not constitutional error. Dinkins v. Wainwright, 451 F.2d 587 (CA5, 1971). This is not to suggest, of course, that use of such evidence is nonreviewable in direct criminal appeals. See, e. g., United States v. Rodriguez, 474 F.2d 587 (CA5, 1973). . Under cross-examination Loos mentioned identifying Rudd at a pretrial lineup. Since this testimony was not in response to questioning by the state, “the admissibility of evidence of the lineup identification itself is not involved.” United States v. Wade, 388 U.S. 218, 240, 87 S.Ct. 1926, 1939, 18 L.Ed.2d 1149, 1165 (1967). Compare Gilbert v. California, 388 U.S. 263, 87 S.Ct. 1951, 18 L.Ed.2d 1178 (1967) (state elicits testimony of pretrial recognition at lineup; court reviews admissibility of that testimony). Indeed constitutional error might have been committed had the trial court prevented defense counsel from proving pretrial recognition in an attempt to mitigate the force of the in-court identification. See Pearson v. United States, 389 F.2d 684, 687-688 (CA5 1968). . Our discussion assumes, of course, that the petitioner has exhausted his state remedies. . The District Court also concluded that the showups were conducted in violation of Rudd’s Wade-Gilbert right to counsel. AYe agree that the showup in issue is governed by Wade-Gilbert principles. It was staged at the station house by the police for the purpose of exhibiting Rudd in connection with the specific offense for which he was then in custody. Under these circumstances it would be illogical to deny the applicability of Wade-Gilbert solely because the police did not hold a formal lineup under the lights with more than one subject on display. See Rivers v. United States, 400 F.2d 935, 940 (CA5 1968). See generally Comment, The Right to Counsel at Lineups: Wade and Gilbert in the Lower Courts, 36 U.Chi.L.Rev. 830 (1969). Under Kirby v. Illinois, 406 U.S. 682, 92 S.Ct. 1877, 32 L.Ed.2d 411 (1972), however, a showup governed by Wade-Gilbert would be constitutionally defective only if it was held after initiation of adversary judicial criminal proceedings. Since the District Court did not find precisely when the showup occurred, we cannot determine whether Rudd’s right to counsel was denied. We have already held that the showup was impermissibly suggestive within the meaning of Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967). Without regard to the Wade-Gilbert right to counsel the state should not use testimony as to identifications made at the showup should it decide to retry petitioner. Use of the second category of testimony — i. e. an in-court identification by Tilson or Sweat — would be conditional upon a favorable finding on the Kirby v. Illinois issue concerning time of occurrence or a finding that the in-court identifications would be of an origin independent of the showup, United States v. Wade, 388 U.S. 218, 239-242, 87 S.Ct. 1926, 18 L.Ed.2d 1149, 1164-1166 (1967). These prerequisites would, of course, be in addition to the necessity of a favorable finding on the irreparability issue discussed in text. . Use of an in-eourt identification by Miss ■ Sweat should, of course, be conditioned on the other prerequisites we have discussed in connection with the impermissibly suggestive showup, which Miss Sweat also attended.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Nannie Carr HARRIS, Incompetent, and Robert A. Eubanks, Guardian, Appellee, v. COMMISSIONER OF INTERNAL REVENUE, Appellant. No. 72-1343. United States Court of Appeals, Fourth Circuit. Argued Oct. 5, 1972. Decided May 4, 1973. William L. Goldman, Atty., Tax Div., Dept. of Justice (Scott P. Crampton, Asst. Atty. Gen., Mayer Rothwacks and William A. Friedlander, Attys., Tax Div., Dept. of Justice, on brief), for appellant. James H. Johnson, III, Chapel Hill, N. C. (Haywood, Denny & Miller, Chapel Hill, N. C., on brief), for appellee. Before BOREMAN, Senior Circuit Judge, and WINTER and RUSSELL, Circuit Judges. BOREMAN, Senior Circuit Judge: This is an appeal by the Commissioner of Internal Revenue from a decision of the United States Tax Court, 56 T.C. 1165. In the spring of 1962, Robert A. Eu-banks, the duly qualified guardian of taxpayer, Nannie Carr Harris, an incompetent, negotiated with one Robert I. Lipton for the sale of certain improved real estate owned by taxpayer in Chapel Hill, North Carolina. On May 18, 1962, Eubanks, as such guardian, and Lipton executed a contract providing for the sale of the property, subject to the required approval of the Superior Court of Orange County, North Carolina. One Thousand Dollars was to be paid upon securing the necessary judicial approval and the balance on or before August 1, 1962. Pursuant to the contract and the pertinent North Carolina statutes, Eubanks filed a petition with the Clerk of the Superior Court of Orange County on May 21, 1962, seeking authority to sell the property for $156,500, alleging as grounds therefor the low net income from the property, the insufficiency of the income to provide the support needed by taxpayer and to satisfy certain debts owed by her. On the same day, the Superior Court ordered (1) that Eu-banks offer the property to Lipton for $156,500, (2) that Eubanks file a report of the offer, and (3) that the sale be confirmed after ten days if no objections or upset bids were filed. Also on May 21, 1962, Eubanks made the offer and filed the report as ordered, and Lipton made the $1,000 down payment called for in the contract. The petition, court order and report filed May 21 did not deal with the disposition of sale proceeds. It appears that sometime between May 21, 1962, and June 1, 1962, during the 10-day period before the sale could be confirmed, Eubanks was advised that a reduction in income tax could be effected if the purchase price were payable in installments. On June 1, 1962, he filed a supplemental petition, seeking approval of an arrangement whereby Lipton would pay $46,500 upon delivery of the deed and would deposit the balance of $110,000 with First Federal Savings and Loan Association of Durham, North Carolina, as escrow agent, with instructions to the agent to pay $27,500 plus interest to the guardian on January 2 of each of the following four years. In addition to this supplemental petition, Eubanks’ attorney sent a letter to the Clerk in which he approximated the tax savings if the receipts from the sale of the property were reported over a period of five years. By order entered June 1, 1962, the Superior Court confirmed and approved the sale and authorized the plan of payment as requested in the supplemental petition. Subsequently, the closing date of the contemplated transaction was extended and Lipton assigned all his rights in the property to W. J. Darnell, George S. Goodyear, and George F. Lattimore, Jr. .(hereinafter referred to as the assignees). The property was ultimately deeded to the assignees on or about August 31, 1963, pursuant to an order entered by the Superior Court on August 23, 1963. Under the agreement between Eu-banks and the assignees, payment of the purchase price was to be substantially as set forth in the confirmation order of June 1, 1962, with only the payment dates changed to reflect the passage of time. Ultimately, the sum of $6,000 was paid during or before 1963, the sum of $40,500 was paid on or about January 17, 1964, and, also on January 17, 1964, the sum of $110,000 was paid to First Federal Savings and Loan Association of Durham pursuant to an escrow agreement of that date. In her tax return for 1964, taxpayer included in her taxable income $40,500, representing that portion of the sale price actually received by her on January 17, 1964. The Commissioner determined a deficiency of $30,757.32, ruling that (1) the $110,000 paid to First Federal Savings and Loan Association, as escrow agent, and (2) $4,070.04 interest credited to the escrow account in 1964, were constructively received by taxpayer in 1964. The Tax Court recognized the established rule that where payment is made by the purchaser to a third party at the seller’s behest the seller has constructively received the payment for tax purposes but held that the rule did not apply here because the $110,000 was paid to First Federal Savings and Loan Association at the direction of the Superior Court rather than by direction of taxpayer or her guardian. The Tax Court determined a deficiency of only $226.67. We reverse as to the $110,000 deposited in the escrow account. The Commissioner does not appeal the Tax Court’s holding as to the interest credited to the escrow account during 1964. Section 451(a) of the Internal Revenue Code of 1954, 26 U.S.C., provides: The amount of any item of gross income shall be included in the gross income for the taxable year in which received by the taxpayer, unless, under the method of accounting used in computing taxable income, such amount is to be properly accounted for as of a different period. Treasury Regulations Section 1.451-2(a), 26 C.F.R., sets forth the general rule with respect to constructive receipt of income: Income although not actually reduced to a taxpayer’s possession is constructively received by him in the taxable year during which it is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time, or so that he could have drawn upon it during the taxable year if notice of intention to withdraw had been given. It is clear that if taxpayer had not been incompetent and had made the same escrow agreement acting for herself, or if the escrow arrangement had been entered into solely by Eubanks acting on behalf of taxpayer as her guardian without the supervision of the local court, the $110,000 payment to the escrow agent would be treated as constructively received by her in 1964. Williams v. United States, 219 F.2d 523 (5 Cir. 1955); Rhodes v. United States, 243 F.Supp. 894 (W.D. S.C.1965); Pozzi v. Commissioner, 49 T.C. 119 (1967). Lipton had signed on May 18, 1962, a contract of sale calling for payment in cash on or before the date set for closing the transaction. Further, on January 17, 1964, Lipton’s assignees, the ultimate purchasers, were ready, willing and able to pay the entire remainder of the purchase price, $150,500, and in fact did irrevocably part with the full amount thereof on that date. Sale proceeds, or other income, are constructively received when available without restriction at the taxpayer’s command; the fact that the taxpayer has arranged to have the sale proceeds paid to a third party and that the third party is, with taxpayer’s agreement, not legally obligated to pay them to taxpayer until a later date, is immaterial. See Griffiths v. Commissioner, 308 U.S. 355, 60 S.Ct. 277, 84 L.Ed. 319 (1939); Hicks v. United States, 314 F.2d 180 (4 Cir. 1963). The sole question presented, therefore, is whether this rule is inapplicable for the reason that, where the property of an incompetent is being sold, the terms of the sale and the disposition of the sale proceeds must be approved by the local court under North Carolina law. In his brief filed with the Tax Court, the Commissioner argued as follows: Respondent’s [Commissioner’s] position is that the entire consideration was constructively received in 1964 since it was within the power and control of the petitioner to have received the funds at that time. * * * * * * It is the respondent’s position that the circumstances of this case are such that, when the purchase price was paid into the escrow account for the benefit of the petitioner, there was constructive receipt of the full amount. When negotiations were completed and the contract entered into on May 18, 1962, it was the intention of both parties that the sale would be a cash transaction. On that date petitioner was ready, willing and able to close the transaction for a cash payment of $156,500. On the day the sale was approved by the Court, petitioner became equitably entitled to the full purchase price. This contractual right was an asset which he could sell or otherwise transfer. It was within petitioner’s power and control to receive the purchase in cash, but instead he elected to have it delivered to the bank under an escrow agreement. The Tax Court noted that implicit in this argument is the assumption that taxpayer at one time had an enforceable right to receive the total sale proceeds in cash but that she then decided to voluntarily put herself under some legal disability with respect to payment, i. e., the escrow arrangement. The Court reviewed the applicable North Carolina statutory and ease law and determined that, in North Carolina, when a guardian of an incompetent sells real property under order of the court, the guardian is merely an “agent” of the court, and the sale is not consummated until it is confirmed by the resident judge, which confirmation represents the consent of the court to the sale. Pike v. Wachovia Bank and Trust Company, 274 N.C. 1, 161 S.E.2d 453 (1968). The Tax Court then concluded that Eubanks was merely acting for the Superior Court of Orange County in contracting for the sale of taxpayer’s property and that the May 18, 1962, contract of sale created no rights in any of the parties unless and until the sale was confirmed by the resident judge. Since the confirmation was contained in the order of June 1, 1962, which order also authorized and directed the use of the escrow arrangement, the court held that Eu-banks, on behalf of taxpayer, never had the power to receive the full purchase price in 1964, and thus did not constructively receive that amount in 1964. We find no error in the Tax Court’s analysis of the respective powers of Eubanks, as guardian, and the Superior Court of Orange County. We agree that, under North Carolina law, Eu-banks could not enter a binding agreement for the sale of taxpayer’s real property without the confirmation of the resident judge. The error of the Tax Court was in regarding the state court’s role in the proceedings as representing an interest adverse to, or independent of, the interests of the incompetent taxpayer, and in regarding the state court’s order to place the funds in escrow as a denial to the taxpayer and her guardian of dominion over the payment. North Carolina Gen. Stat. § 33-31, which requires judicial supervision of the sale of an incompetent’s property, actually supplements the guardianship protection afforded the incompetent. The resident judge must ensure that any sale is made “on such terms as may be most advantageous to the interest of the ward.” In City Bank Co. v. McGowan, 323 U.S. 594, 65 S.Ct. 496, 89 L.Ed. 483 (1945), the Supreme Court rejected the distinction between the acts of an incompetent and those of a court acting in her behalf. The question there was whether a transfer of the decedent’s property, made pursuant to court order because the decedent was incompetent, was in contemplation of the decedent’s death, which fact would make the property includible in the decedent’s estate for federal estate tax purposes. The Court stated, 323 U.S. at 598-599, 65 S.Ct. at 498: The issue is a narrow one. Literally Mrs. Vail neither made the transfers nor did she have any motive with respect to them. But a court stood in her place and unquestionably had the function of effectuating a transfer of her property and of determining what motive or purpose would have actuated her had she been competent to act. It seems to us that it is sticking in the bark to say that, in the circumstances, the transfers are not within the section because Congress did not add a phrase to the effect that where a court made the transfer, acting in lieu of the incompetent owner, such a transfer should be governed by the statute. We hold, therefore, that where, as in New York, the court is to substitute itself as nearly as may be for the incompetent, and to act upon the same motives and considerations as would have moved her, the transfer is, in legal effect, her act and the motive is hers. The act of the Superior Court of Orange County in directing, upon the request of Eubanks, that the $110,000 be placed in escrow was “in legal effect” the act of the taxpayer. We hold that the escrow deposit was constructively received, for income tax purposes, in 1964. Reversed. . N.C.Gen.Stat. § 33-31 (1966 Repl.Vol.): Special proceedings to sell; judge’s approval required. — On application of the guardian ... by petition, verified upon oath, to the superior court, showing that the interest of the ward would be materially promoted by the sale . . . of any part of his estate, real or personal, ... a decree may thereupon be made that a sale ... be had by such person, in such way and on such terms as may be most advantageous to the interest of the ward; all petitions filed under the authority of this section wherein an order is sought for the sale ... of the ward’s real estate . . . shall be filed in the superior court of the county in which all or any part of the real estate is situated ; . . . no . . . conveyance of the title [shall be] made, unless confirmed and directed by the judge, and the proceeds of the sale . . . shall be exclusively applied and secured to such purposes and on such trusts as the judge shall specify. . . . In the ease of a private sale, such as the one here, the sale may be confirmed if no upset bids are submitted within ten days after the report of sale is filed. N.C.Gen. Stat. § 1-339.37 (1969 Repl.Vol.). . The Superior Court summarized the proceedings, and concluded: This cause again coming on to be heard and being heard and it appearing to the court that under a prior order entered in this matter Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, reported to the court that he had an offer for the property described in the pleadings from Robert I. Lipton, Trustee, through Foushee-Olsen Realty Company for $156,500.00, of which sum $6,-500.00 is due and payable to FousheeOlsen Realty Company as commissions; the said report has remained on file in this office for more than ten days as required by law; no objections or upset bids have been filed and Robert A. Eu-banks, guardian for Nannie Carr Harris, incompetent, has filed a supplementary petition in which he prays that he be permitted to accept a down payment of $46,500.00 and that the remainder of the purchase price be deposited by Robert I. Lipton, Trustee, or his assigns with First Federal Savings and Loan Association of Durham, N. C., as escrow agent, with irrevocable authorization to the escrow agent to pay to Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, on the 2nd day of January 1963, the sum of $27,500.00, plus accumulated interest and on the 2nd day of January, 1964, 1965, and 1966, each, the sum of $27,500.00 plus accumulated interest so that the taxable income from the sale of this property can be reported by the guardian on an installment sale basis and over a period of five years; and it appearing to the court that it would be to the best interest of the estate of Nannie Carr Harris, incompetent, that this method of payment for the said property would be advantageous to the estate and should be approved by the court. NOW, THEREFORE, IT IS ORDERED, ADJUDGED AND DECREED, that the sale of the-property described in the pleadings by Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, to Robert I. Lipton, Trustee, or his assigns, for the full sum of $156,500.00 be and the same is hereby in all respects confirmed and fully approved. IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that the said Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, be and he is hereby authorized and permitted to accept the sum of $46,500.00 in cash and Robert I. Lipton, Trustee, or his assigns, is authorized to deposit with First Federal Savings and Loan Association of Durham, N. C., as escrow agent, under an irrevocable escrow agreement the remaining sum of $110,000.00 which escrow agreement shall authorize First Federal Savings and Loan Association of Durham, N. C., as escrow agent, to pay to Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, on the 2nd day of January, 1963, from the said funds $27,500.00 plus accumulated interest and on the 2nd day of January of the years 1964, 1965, and 1966, each, the sum of $27,500.00 plus accumulated interest to each date until transfer of the said funds to Robert A. Eu-banks, guardian of Nannie Carr Harris, incompetent, has been completed, or to the duly qualified representative of Nannie Carr Harris should she die before the escrow agreement terminates. IT IS FURTHER ORDERED AND DECREED, that Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, shall and he is hereby authorized, empowered and directed to execute and deliver to Robert I. Lipton, Trustee, or his assigns, a good and sufficient deed in fee simple, with taxes, insurance and rents adjusted as of the date of the closing of this matter and upon payment of $46,500.00 and delivery to him of a copy of the above mentioned escrow agreement between Robert I. Lipton, Trustee, or his assigns, and First Federal Savings and Loan Association of Durham, N. C., relative to the balance of $110,000.00. . In a second supplemental petition to the Superior Court filed on August 23, 1963, Eubanks reported that: (1) he had been unable to complete the sale of the property to Lipton; (2) Lipton had assigned his rights in the matter to Goodyear, Lattimore and Darnell; (3) the assignees had arranged through Goodyear Mortgage Corporation to finance the purchase of the property and the erection of a multiple unit motel and business building on the property for $850,000; and (4) the assignees would authorize one Lee W. Settle, Trustee in the deed of trust securing the indebtedness to Goodyear Mortgage Corporation, and the Goodyear Mortgage Corporation, to pay the first funds disbursed by the mortgagee in payment of the purchase price in the amount of $46,500, and that the Goodyear Mortgage Corporation would deposit the balance of $110,000 under the escrow agreement earlier contemplated. The Superior Court’s Order of August 23, 1963, provided in pertinent part: ORDERED, ADJUDGED AND DECREED that Robert A. Eubanks, Guardian of Nannie Carr Harris, incompetent be and he is hereby authorized, empowered and directed to execute a fee simple deed to the property described in the pleadings to George S. Goodyear, George F. Lattimore, Jr. and W. J. Darnell and is further authorized, empowered and directed to enter into a contract with the said parties, their spouses, and Lee W. Settle, Trustee, and Goodyear Mortgage Corporation to the effect that the first monies disbursed by Goodyear Mortgage Corporation on the . . . [demand] note of $850,-000.00 [executed by the assignees payable to the Goodyear Mortgage Corporation] shall be paid to Robert A. Eu-banks, guardian of Nannie Carr Harris, incompetent, and on or before December 15, 1963 and he may provide in that contract for the payment of $46,500.00 on or before the said date and for the payment of the remainder through an escrow agreement over a period of four (4) years as set out in an order of this Court dated June 1, 1962, and he is further authorized and directed to see that his deed to George S. Goodyear, George F. Lattimore, Jr. and W. J. Darnell, the deed of trust securing an indebtedness to Goodyear Mortgage Corporation, and an agreement relative to payments are filed for registration simultaneously in the Office of the Reister of Deeds of Orange County and to see that there are no intervening liens against the said property. . The escrow agreement between Lee W. Settle, Trustee, and the First Federal Savings and Loan Association, provided in part: Whereas, the order of the Clerk of the Superior Court of Orange County and approval by the Resident Judge of the Fifteenth Judicial District of the Superior Courts of North Carolina, authorized and permitted the party of the first part [Settle] to deposit the balance of the purchase price and in the sum of $110,000.00 with the party of the second part, as Escrow Agent, and under the following irrevocable terms and conditions, .... . Taxpayer reported the receipt of $5,000 of the proceeds of the sale on her 1963 individual income tax return and made an election to report the sale on the installment basis. On her 1964 return, she reported the receipt of $40,500 as a long-term capital gain installment on the 1963 installment sale. The issue here is whether the amount of the 1964 installment was understated and whether the amount deposited in escrow should have been included in the 1964 tax return. . This deficiency of $226.67 was apparently due to the fact that taxpayer originally claimed $10,000 as the basis of the property sold, the Commissioner used a basis of $1,000 in determining the deficiency, and the parties ultimately stipulated a basis of $6,000. . See footnote 1.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

L. F. STRASSHEIM COMPANY, a Wisconsin corporation, d/b/a Bowling Green Chair Co., Plaintiff-Appellant, v. GOLD MEDAL FOLDING FURNITURE COMPANY, a Wisconsin corporation, Defendant-Appellee. No. 72-1010. United States Court of Appeals, Seventh Circuit. Argued Jan. 24, 1973. Decided April 23, 1973. As Amended on Denial of Rehearing May 18, 1973. Charles B. Cannon, Chicago, Ill., Donald C. Heide, Kenosha, Wis., Lawrence F. Scinto, New York City, for plaintiff-appellant. James E. Nilles, Milwaukee, Wis., for defendant-appellee. Before SWYGERT, Chief Judge, and STEVENS and SPRECHER, Circuit Judges. STEVENS, Circuit Judge. The principal question is whether the district court properly found that newly discovered evidence, which plainly required an earlier judgment of patent validity to be set aside, was not sufficient to prove that the patentee had fraudulently concealed the invalidating prior public use of the invention. We accept the district court’s credibility determinations but disagree with its appraisal of the legal consequences of the patentee’s serious lack of diligence in connection with its patent application and in responding to relevant pretrial discovery requests. We therefore modify the judgment entered below. The parties are competing manufacturers of informal furniture, including folding chairs. Defendant is the owner of Patent ’816 covering a “non-sag back” feature of a collapsible director’s chair, and a design patent describing a rearwardly inclined arm rest assembly. In 1964, plaintiff, admittedly an infringer if the patents are valid, filed a declaratory judgment action alleging invalidity for various reasons, including public use and sale in this country more than one year prior to December 28, 1953, the filing date of the application for the ’816 patent. The district court found both patents valid and infringed. After plaintiff filed its notice of appeal, but before argument, the parties entered into a settlement agreement pursuant to which plaintiff paid $15,000 to defendant and the district court's injunction against further infringement remained in effect. Thereafter, the appeal was dismissed and, on October 31, 1968, the district court entered a “final judgment on mandate.” Less than one year later plaintiff filed a motion to reopen on the basis of newly discovered evidence. Plaintiff alleged that defendant was guilty of deliberate fraud and prayed for a new trial, the entry of a new judgment, treble damages, attorneys’ fees, and a reference to the United States Attorney and the Commissioner of Patents for appropriate investigation and discipline. The district court reopened the case, allowed further discovery, and, after a second trial, held Patent ’816 invalid and set aside the settlement, but otherwise denied the requested relief. The effect of that decision was to require defendant to refund the settlement payment of $15,000, less its damages for pre-1968 infringement of the design patent, such damages to be determined either by negotiation or an accounting, and to leave in effect the injunction against further infringement of the design patent. Plaintiff appeals, principally contending that the failure to find fraud is clearly erroneous and that, in any event, the relief is inadequate. I. December 28, 1953, is the date on which the application for the ’816 patent was filed. The evidenee adduced at the two trials establishes beyond any question that defendant was selling chairs embodying the “non-sag back” feature prior to December 28, 1952, and that the ’816 patent was therefore invalid. Amphenol Corp. v. General Time Corp., 397 F.2d 431, 433 (7th Cir. 1968). A summary of that evidence is a necessary background for an appraisal of the ultimate issues. The invention was conceived in July, 1951, and “reduced to practice” on September 14, 1951. In October, or possibly earlier in 1951, defendant employed an attorney named Young, now deceased, to file a patent application; he was sent an arm assembly for the No. 35 chair “with new designed back post and canvas back,” and his invoice for filing fees was paid. For unexplained reasons, however, Young did not file this application. In 1952, defendant manufactured chairs to order and also made some sales through distributors, one of whom maintained an inventory in Miami, Florida. An order placed by a customer in Hollywood, Florida, dated November 15, 1952, was filled on November 18, 1952, by taking 30 chairs out of defendant's stock in Miami. Those chairs had the “non-sag back” feature. On November 17, 1952, defendant sent a letter, enclosing a price list, to about 2,000 customers. The price list was: “Reissued November 15, 1952”; it included prices for 19 different styles of the “No. 35” chair. It also carried a note: “All No. 35 style chairs now regularly equipped with new patented feature — removable covers and non-sag backs.” The November 17, 1952, letter referred to the fact that defendant’s “October-Chicago Market was very favorable.” Defendant had exhibited at the furniture show in Chicago in October, 1952. It seems likely that the new chair was displayed at that time, but there is no finding or evidence directly on the point. In any event, as a result of defendant’s promotional efforts, the non-sag back was described in an issue of a trade publication mailed to about 12,000 subscribers on December 10, 1952, and, necessarily, prepared some time earlier. The new chair was unquestionably on the market before the end of 1952. In November of 1953, defendant became concerned about the status of its patent protection and wrote directly to the Patent Office to ascertain whether Young had, in fact, filed the application as requested well over a year earlier. A letter from the Patent Office, dated December 4, 1953, brought the distressing news that no application had been filed. Oti December 7, 1953, a new lawyer was retained with “authority to proceed as necessary to file the application on this matter at the earliest possible date, realizing that it must be done by early January, 1954.” At that time, of course, the new chair had been on the market for over a year and it was already too late to obtain patent protection. The newly retained lawyer was able to file by December 28; he testified that he made no attempt to determine the date of the first public offer or sale of the patented device. At this point we pause to note that in November and December of 1953 defendant’s executives either (1) were under the honest, but mistaken, impression that they had introduced the non-sag back chair at the Chicago show in January of 1953, or (2) well knew that their right to obtain patent protection was irretrievably lost and nevertheless sought to create that false impression. There is substantial evidence in the record consistent with either alternative; in the last analysis, however, the factual determination turns on an appraisal of the credibility of the executives who testified, and, skeptical as we may be based on our reading of the cold record, we are not prepared to substitute our judgment for that of the experienced trial judge who heard and saw the witnesses. We do note, however, that there can be no question about the ready availability of the true facts to defendant’s executives and attorney when the patent application was filed. The failure to make an appropriate investigation at that time— particularly since the critical importance of filing within one year of the first public offer was obvious to all concerned —reflects an extraordinary lack of diligence to which we consider it appropriate to attach legal significance. Defendant and its trial counsel also displayed a comparable lack of diligence in responding to discovery requests in advance of the first trial. In preparing to depose John B. Gittings, plaintiff’s counsel requested in June of 1964 that certain documents be produced for use at the deposition. That request plainly called for the production of the price list reissued on November 15, 1952, the letter to the trade enclosing that list, and the promotional article in the December trade publication. A copy of each of those items was in defendant’s possession at that time, and at least the letter enclosing the price list and the article were apparently seen by John B. Gittings shortly before his deposition was taken in Kenosha on July 16. Many other documents were produced in connection with the Kenosha deposition, but none of the items in question was mentioned or brought to the attention of plaintiff’s counsel. The explanation for this important oversight, though somewhat complex, may be summarized briefly. Price lists, advertising copy, and promotional items were normally retained in large scrapbooks, each covering a one-year period. Contrary to customary practice, the overlooked items dated in November and December of 1952, had been improperly placed in the 1953 book. The books for 1951, 1952 and 1953 were made available to plaintiff’s counsel, but neither he nor defendant’s counsel carefully examined the 1953 book because they apparently accepted the Gittings’ representation— whether express or implied is not clear —that the 1953 book would not contain any 1952 material. Anything after December, 1952, would not, of course, have been significant. The testimony of both of the Gittings brothers is consistent with the defense theory that although John had seen the letter enclosing the reissued price list and the trade publication article when he was rummaging through the documents in his basement in preparation for the Kenosha deposition, he had not realized the significance of the documents because the letter contained no reference to the non-sag back feature and the text of. the article referred only to 1953.” This theory also explains defendant’s inaccurate response to written interrogatories, as well as the inaccurate testimony given at the first trial. With some reluctance, the district court accepted the defendant’s explanation for the failure to disclose the critical, damaging documents. Again, however, we are persuaded that defendant’s lack of diligence, even though not constituting deliberate fraud, is of sufficient importance to require consideration in determining the appropriate remedy. At the time of the entry of the “Final Judgment on Mandate” on October 31, 1968, plaintiff had lost a lawsuit which it was plainly entitled to win. It had incurred expenses for legal fees and other costs of litigation that would not have been necessary if- defendant, or its counsel, had made a conscientious investigation of the timeliness of the application for the ’816 patent. Plaintiff entered into a voluntary settlement which gave defendant benefits it should never have received. Those benefits not only included the payment of $15,000, but also the protection against competition from chairs embodying the ’816 non-sag back feature and also a waiver of an appeal from the finding of validity of the design patent. We cannot retrospectively determine whether or not the 1968 appeal would have been successful, but it certainly was not frivolous. Thus, since 1968 defendant has had the benefit of an injunction against infringement of the ’816 , patent — a benefit that we do not know how to evaluate but which was plainly unwarranted — and also the benefit of an injunction against infringement of the design patent — a benefit which arguably it should never have received. These considerations would support a reinstatement of the appeal from the portion of the original judgment of validity of the design patent and the postponement of the ultimate determination of the pecuniary rights of the parties until that issue is resolved. ' However, defendant’s lack of diligence has already caused this litigation to be much more protracted than it ever should have been. We therefore decide that relief should be entered which will (1) promptly and completely terminate this litigation, and (2) insofar as practicable, impose upon defendant, and absolve plaintiff from, the costs consequent upon its exceptional lack of diligence. Even though plaintiff failed to sustain its heavy burden of proving actual fraud, defendant’s lack of diligence, both in 1953 and in 1964, was sufficiently serious to make this an “exceptional case” within the meaning of 35 U.S.C. § 285. Plaintiff, as the prevailing pai’ty, is therefore entitled to an award of reasonable attorneys’ fees. That right did not mature until the 1964 depositions in Kenosha had been concluded without the critical documents being produced; we therefox’e conclude that the award should only cover services subsequent to August 4, 19 64. The impossibility of accurately measuring the offsetting value of defendant’s damage claim for pre-1968 infringement of the design patent, on the one hand, and its unwarranted protection from post-1968 infringement of the ’816 patent, on the other, makes it dubious as to which party should recover fx-om the other even if the design patent is assumed to be valid. We need not face that issue because plaintiff has persuaded us that the design patent is completely lacking in invention and should be held invalid. The order terminating this litigation should provide for: 1. Return to plaintiff of the entire settlement payment of $15,000 plus interest ; 2. An award of attorneys’ fees covering the services of plaintiff’s counsel in this litigation subsequent to August 4, 1964; 3. A finding that the design patent is invalid for lack of invention; 4. Vacation of the injunction against infringement of the design patent; and 5. Except for such costs as the district court may tax against defendant, no other monetary award shall be made in favor of either party. The costs of this appeal shall be taxed against defendant. Plaintiff’s other requests for relief were properly denied in view of the district ^ court’s finding on the issue of fraud. The judgment entered on November 1, 1971, is vacated and the case is remanded for the entry of a new judgment consistent with the foregoing. Vacated and remanded. . U.S. Letters Patent No. 2,699,816 on “chair back” issued January 18, 1955, to William L. Gittings and others as assignors to Gold Medal Folding Furniture Company (defendant herein) pursuant to application dated December 28, 1953. . U.S. Letters Patent Des. 189,343, issued November 29, 1960, pursuant to application filed December 2, 1958. . A. 466. Defendant’s letter of November 30, 1953, to the Commissioner of Patents had said, in part, “would you please give us a prompt answer as according to our knowledge of the law the limitation on the time for filing will soon run out. ...” A. 463. . William D. and John B. Gittings were then the principal officers of the company. They were sons of William L. Gittings, who was president and presumably the principal owner of the company when the non-sag back chair was invented and patented. The sons were active in the business at that time, but obviously with less responsibility than after the death of their father in May of 1964. Although both were named in the notice of deposition, only John B. was in fact deposed. . “7. One speciment of each and every catalogue or other piece of advertising or sales promotional material published or distributed by the defendant illustrating or describing folding chairs made and sold by defendant and embodying the construction of the folding chair disclosed and claimed in patent No. 2,699,810, in suit; ***** “11. One specimen of each and every catalogue or other piece of advertising or sales promotional material jmblished by the defendant in the years 1950, 1951, 1952 and 1953, illustrating or describing folding chairs manufactured and sold by the defendant embodying an arm rest having a spindle at the front and portions thereof and connected to the front and portion of the arm rest below the latter; ” A. 726, 727. . For example, interrogatories 14 and 27 (a), and the answers thereto, were as follows: Interrogatory No. 14: “State the earliest date when the defendant sold a folding chair embodying the construction disclosed and claimed in patent No. 2,699,816, in suit. Defendant’s Answer: “Sometime shortly after January 15, 1953. Interrogatory No. 27(a) : “State the date when the defendant first began producing folding chairs embodying the construction disclosed and claimed in United States Letters Patent No. 2,699,816, in suit, which are referred to in the following testimony of John B. Gittings, given by him in his deposiiion taken by the plaintiff, in Kenosha, Wisconsin on July .16, 1964, said testimony being as follows (Tr.P. 70) : “ ‘Gosh, I don't know. I imagine we started shijiping them in January, 1953. We started producing them that previous fall to get them into stock.’ ” Defendant’s Answer: “Defendant at this time, does not know the date requested and it has been unable to find any records which would indicate this date.” A. 407. . For example, John B. Gittings testified: “Q. Mr. Gittings, in your deposition —would you tell the Court, first of all, when you first advertised, Gold Medal advertised that is, the subject matter of the ’816 non-sag back patent in suit? “A. In January, 1953. “Q. And I hand you — that was the first advertisement of any kind ; is that right? “A. Yes, sir. “Q. First offer for sale of any kind? “A. Right. * * * * * “Q. And you have searched your advertising material and you can find no advertising in 1952 of the non-sag back [446] feature? “A. I find no advertising matter at all that we advertised it in 1952. “Q. And you kept that in a scrapbook, did you? “A. Yes, sir, wo have a scrapbook.” A. 411, 419. And William D. Gittings testified: “Therefore, on the particular non-sag back feature, which we are talking about, I am sure that we began producing those back posts probably in late December, 1952. We were aware of the fact that we were going to introduce them in ’53 at the Chicago Furniture Show in January, and also by reason of our ’53 Catalog, which was mailed shortly after January 15th. It would do us no good to ship these chairs ahead of the resultant good that we could get from introducing it to the trade at the Shows and through the use of our catalogs. Therefore, I am sure that we did not produce these back posts prior to late December of ’52, and we started shipping the chairs — we have a normal ten-day cycle in our Assembly Department — after January 15th of ’53 when the catalog came out.” A. 430. . “Strassheim’s counsel had every right to rely on Gold Medal’s representations that it had produced all of the pertinent material in their files requested by Strassheim during the discovery period. * * * * * ‘•‘It is understandable that they might not remember events occurring more than fifteen years ago. More perplexing is the failure to disclose the damaging items contained in their own scrapbooks when requested so to do during the pendency of the trial. But a finding that this was deliberate concealment rather than a simple failure to examine their files and the scrapbooks carefully cannot be made. A finding of deliberate misrepresentation and fraud requires stronger and more convincing evidence than that which has been adduced.” A. 280, 283. . Fee awards pursuant to § 285 are most frequently predicated on a claim of fraud. In such cases we have required clear and definite proof of fraud. Armour & Co. v. Wilson & Co., 274 F.2d 143, 148 (7th Cir. 1960); Sarkes Tarzian, Inc. v. Philco Corp., 351 F.2d 557, 560 (7th Cir. 1965). The “exceptional case” justification for the allowance of fees is not, however, limited to the fraud category. See, e. g., Kearney & Trecker Corp. v. Giddings & Lewis, Inc., 452 F.2d 579, 597 (7th Cir. 1972); General Instrument Corp. v. Hughes Aircraft Co., 399 F.2d 373, 380-381 (1st Cir. 1968). The award in this case is supported not only by the patentee’s failure to verify or disclose critical facts at the time of application, but also by the same considerations that underlie the authorization of sanctions for failure to make discovery. See Rule 37, Fed.R.Civ.P. This case is truly exceptional because the record unambiguously demonstrates that the defendant’s “exceptional oversight” with respect to “critically important information” (cf. 399 F.2d at 381) resulted in an erroneous judgment and put jdaintiff to legal expenses that would otherwise have been unnecessary. . Although Gittings was deposed on July 16, he signed the deposition on August 4. We think this is the appropriate date from which to measure foes. . The claim in the patent is on the “ornamental” design for a collapsible chair, the dominant features of the design being shown in the heavy lines in these two figures:

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Anthony G. PIGNOTTI, as an Individual Member of Local #3 Sheet Metal Workers’ International Association, Appellee, v. LOCAL #3 SHEET METAL WORKERS’ INTERNATIONAL ASSOCIATION et al., Appellants. No. 72-1411. United States Court of Appeals, Eighth Circuit. Submitted Feb. 12, 1973. Decided April 20, 1973. Donald Fisher, Toledo, Ohio, for appellants. Edward F. Fogarty, Omaha, Neb., for appellee. Before GIBSON and ROSS, Circuit Judges, and BENSON, District Judge. United States District Judge for the District of North Dakota, sitting by designation. GIBSON, Circuit Judge. This case concerns the merits and the applicability of §§ 411 and 501 of the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. §§ 501 and 411, (commonly referred to as the Landrum-Griffin Act) to an internal dispute between certain union members and certain of the officers of a Local and International Union. The District Court of Nebraska, Judge Robert Denney, granted relief in an opinion reported in 343 F.Supp. 236 (D.Neb.1972). Plaintiff Anthony Pignotti is suing as an individual member of Local Union Number 3, Sheet Metal Workers’ International Association. There are six defendants; Local No. 3, Sheet-Metal Workers’ International Association (Local No. 3); Sheet Metal Workers’ International Association (International Association); Lester Foreman, Business Agent for Local No. 3; Walter Brader, President of Local No. 3; Edward J. Carlough, General President of the International Association; and David Todd, International Representative of the International Association and trustee of Local No. 3 under a trusteeship imposed by the International Association. The Omaha-Council Bluffs Sheet Metal Contractor Association and the Sheet Metal Workers’ National Pension Fund (National Fund) were named defendants in the complaint but have been subsequently dismissed. Under the collective bargaining agreement entered into on July 26, 1969, and running to May 31, 1972, the Contractor Association agreed that upon 30 days notice by Local No. 3, its members would begin deducting a designated amount from wages and pay that amount into a pension fund. A Pension Committee was appointed by Local No. 3 to study the various alternative pension arrangements. The committee met at various times from February 19, 1970, until December 18, 1970. The original members of the committee were Robert Wild, James Pignotti, the brother of the plaintiff, James Newberger, and Robert Holtz. At a later date Robert Wild left the committee and was replaced by defendant Walter Brader (president of the Local) who appointed himself to the committee. The committee contacted a number of major ■ insurance companies and received proposals from at least two of them. In addition the committee heard proposals from a savings and loan association and from the National Fund. The committee submitted a final report in January 1971. The members of the committee were not in agreement. Three pension plans, including the National Plan were sent by mail to the membership of Local No. 3 accompanied by letters of position by each of three of the four members of the pension committee. (James Pignotti for some reason was not included). A special meeting was called for March 25, 1971, “to vote for or against a pension plan,” and if approved, “the amount of money to be contributed and the month contributions will begin.” The motion put by defendant Lester Foreman, however, was to adopt the National Plan. On a standing vote the motion was defeated, 66 for to 93 against. At the next regular meeting, April 1, 1971, a motion was made to have a special order of business at the next regular meeting to vote on the question “to have or not to have a pension plan.” That motion carried. In the interim on April 20, 1971, a petition was presented in proper form to President Brader requesting a special membership meeting to vote by secret ballot whether “to eommenee contributing 20^ to the [National Plan] on June 2, 1971.” Brader stated that he did not honor the petition at that time because of the special order of business which would vote on the plan at the next regular meeting. That meeting was held on May 6. The motion was orally submitted to the members whether to have any plan. The vote was taken by secret ballot with the voters writing either yes or no on a blank piece of paper. There were 58 “no” votes and 43 “yes” votes. After this motion had been disposed of a motion was made by James Pignotti “to postpone indefinitely the pension plan and reference thereto (Rule 23).” The vote on this motion by show of hands was announced by Walter Brader as 24 “for” and 29 “against.” A division of the house was called for and the vote taken again with the result of 60 “for” and 30 “against” the motion. Thus the motion passed. President Brader wrote to the International Association to inquire whether the procedure followed at this meeting was proper. He was answered by Lonnie Gaither, assistant to General President Carlough, and advised that the motion to postpone indefinitely was out of order because no main motion was pending at the time of the motion and that the vote by a division of the house was not proper because he had already declared the vote on the question before the vote by division of the house was called for under Rule 27 of the Ritual. Brader then decided to honor the petition for the special meeting which had been presented to him on April 20. The announcement of the meeting was by post card and read: “The purpose of this meeting will be to vote by secret ballot for Sheet Metal Workers No. 3 to commence contributing 200 to the Sheet Metal Workers National Pension Plan on June 2, 1971.” After this meeting was called to order but before a vote could be taken on the pension plan,. Jess Steward raised a point of order challenging consideration of the pension plan on the grounds that “the issue was defeated at the last regular meeting, and this meeting constitutes a motion to reconsider and this is out of order.” President Brader overruled the point of order. The chair was challenged and the challenge upheld by a vote of 51-50. A motion to adjourn was made, a point of order raised against the adjournment and overruled by the chair, and the motion to adjourn passed. No vote on the pension plan was taken at this meeting. A protest against the adjournment was made to General President Carlough by a member present at the meeting. Brader also wrote to Car-lough and asked if the International Association could exercise its powers to call a special meeting to vote on the pension plan. On June 11, 1971, the representative of the International Association, Eugene Edwards, notified the officers of Local No. 3 that he was calling a special membership meeting of the Local for June 21. On June 15, written notice of this meeting was mailed to the entire membership. The meeting took place and 151 members signed in. There were 77 votes for participation in the National Plan, 71 against participation and 3 votes were not counted as incorrectly marked. On June 29 President Brader gave notice to the Contractor Association that the plan was to be put into effect as of August 1. A petition was then circulated by the anti-pension group and on July 15 it was presented to Brader. It was signed, as required, by more than 10 per cent of the membership of Local No. 3 and called for a special meeting “for the purpose of voting down the pension contributing plan previously passed on June 21, 1971.” Receiving no response to this petition, a complaint was filed on July 26, 1971, in the United States District Court for the District of Nebraska asking the Court to require a special meeting of Local No. 3. This suit was dismissed by the Court on August 31, 1971, for failure to state a claim. A special membership meeting was called for October 22, 1971, pursuant to the petition. The members voted by secret ballot. The vote was 175 against retaining the National Plan and 119 in favor of the Plan. On October 20, Brader sent a telegram to the Contractor Association requesting a meeting about the pension plan. No response was received to this communication. A second telegram was sent on November 17 and the Contractors responded agreeing to the meeting. The meeting was held on December 2. The Contractor Association agreed to reopen the contract to delete the pension plan but stated that they would require the Union to accept three conditions. Local No. 3 requested an opinion from its attorney on the contractors’ conditions and he submitted an opinion letter on January 3, 1972, in which he advised against agreeing to these conditions. On January 4, 1972, Local No. 3 was placed under a trusteeship by General President Carlough. David Todd, an International Representative, was trustee. On March 23, 1972, the General Executive Council ratified and approved this action. There was no opposition to the trusteeship presented to the Council. David Todd has indicated that he will continue the Local’s participation in the pension plan. The foregoing is a chronology of the events which led this dispute to the United States District Court. From these facts and the other findings of fact that Court found: “. . . defendants, Carlough, Brader and Foreman, early in 1971 set out to obtain the participation of Local #3 in the National Plan, whether the majority of the Union wanted the Plan or not * * * that the purpose of the trusteeship was to prevent any further action of the members toward implementing the vote to discontinue the Plan.” Pignotti v. Local No. 3 Sheet Metal Workers Int. Ass’n, 343 F.Supp. 236, 242-243 (D.Neb.1972). The Court further found that these activities constituted violation of both § 411 and § 501 and ordered relief as follows : (1) The defendants are jointly and severally liable for damages in the amount deducted from the wages of the members of Local No. 3 since August 2, 1971, and paid to the Sheet Metal Workers’ National Pension Fund. (2) Defendants are required to cease within 30 days participation on the part of the members of Local No. 3 in the Sheet Metal Workers’ National Pension Fund. (3) Defendants are enjoined from negotiating into any new contract any pension provision more binding than the one contained in the contract of July 26, 1969. (4) Defendants are enjoined from dissolving Local No. 3 in order to assign its members to locals that do participate in the National Plan. Appellants claim that certain of the findings of fact by the trial court are clearly erroneous. Although appellants’ presentation of these issues lack specificity in some instances, we have reviewed the objections and think the District Court’s findings of fact have sufficient evidentiary support in the record. They are, therefore, not clearly erroneous. Appellants’ legal arguments on this appeal can be divided into four areas. (1) The nature of the pension plan as the subject of collective bargaining brings it outside the scope of the Landrum-Griffin Act. (2) The appellants did not violate § 411. (3) The appellants did not violate § 501. (4) Some members of the Union may have now acquired vested rights in the pension plan which cannot be destroyed since they are not parties to this action. COLLECTIVE BARGAINING Appellants’ collective bargaining argument is that participation or non-participation in the pension plan is a collective bargaining issue rather than an internal union issue and that only internal union issues are the proper concern of the Landrum-Griffin Act. This argument is not well taken. The action seeks to preserve the democratic processes in Local No. 3, a proper subject of concern under the Landrum-Griffin Act. The issue raised is whether the method used by the Union officials to secure the Local’s participation in the plan, violated §§ 411 and 501 of the Act. SECTION 411 Appellants argue that each and every step in the passage of the Pension Plan was in accord with the International’s Constitution and by-laws (including Robert's Rules of Order), and thus cannot constitute a violation of § 411. They argue that far from denying democratic participation in the union affairs to the members of the local that they actually preserved such rights by their actions. Appellants cite Vestal v. Hoffa, 451 F.2d 706, 709 (6th Cir. 1971), cert. denied, 406 U.S. 934, 92 S.Ct. 1768, 32 L.Ed.2d 135 (1972) for the proposition that the union officials and not the courts are the proper parties to interpret the union’s constitution. We agree generally with this proposition of law, provided, as recognized in Vestal, that the interpretations are fair and reasonable. But we also recognize, as did the Court in Sabolsky v. Budzanoski, 457 F.2d 1245 (3d Cir.), cert. denied, 409 U.S. 853, 93 S.Ct. 65, 34 L.Ed.2d 96 (1972) that “[C]ourts have not hesitated to strike down so-called ‘authorized’ union conduct, alleged to be based on a rule or by-laws fairly interpreted, where such conduct violates the provisions of the Landrum-Griffin Act.” 457 F.2d at 1252. In our own case of Johnson v. Nelson, 325 F.2d 646 (8th Cir. 1963) we cut past the question of whether the interpretation of the by-laws and constitution of a union was “authorized” to determine whether the conduct of the union officials, in refusing to act according to the majority vote of the membership, constituted a violation of their § 501 fiduciary duties. The Act does not permit the violation of rights guaranteed to union members under § 411 upon a showing that the violation was in accord with the union’s constitution and by-laws. Appellants further argue that the allegation by the plaintiffs and the finding by the Court that the trusteeship was imposed for the purpose of preventing any further action by the members to implement the vote to withdraw from the National Plan was in effect an impermissible collateral attack on the trusteeship and not a direct attack as provided in § 464. Appellants contend that this deprived them of the benefit of the statutory presumption of validity which attaches to a trusteeship under § 464(c) for a period of 18 months, absent “clear and convincing proof” that the trusteeship was not established for a purpose allowable under the statute. Appellee correctly points out that the presumption is operative only in proceedings pursuant to that section of the Act attacking the validity of the trusteeship, and that Judge Denny did not invalidate the trusteeship but only found that it was established by Carlough for a purpose which was a violation of both § 411 and § 501. There was no finding that the ratification of the trusteeship by the International’s Executive Council was for a purpose other than one allowed by the Act and thus the trusteeship is still valid. We also note 29 U.S.C. § 466 provides that the remedies provided by the subehapter of which it is a part, which includes § 464, are not exclusive. Thus the right to sue under § 412 is not affected by the right to attack trusteeships under § 464. The 18-month presumption of validity for trusteeships is available only in proceedings under § 462. The District Court held that Trustee David Todd violated § 411 by refusing to take steps to implement the October 22 vote to withdraw from the National Plan and by his expressed intention to incorporate the National Plan into the next contract which would be negotiated while he was trustee and thus not be subject to ratification by the membership of Local No. 3. The Court recognized that a trusteeship suspends local autonomy for the duration of the trusteeship and that the trustee has no obligation to call meetings or allow the members to vote. However, the Court held that the trustee did have an obligation to carry out the vote which had been made prior to the imposition of the trusteeship. While we can find no cases on this issue, we believe that a trustee, as a fiduciary, has an obligation to correct the effects of past denials of rights guaranteed to union members by § 411, and his failure to correct these past injustices is in itself a violation of § 411 as well as being a violation of § 501. The Congressional impositions of fiduciary obligations upon agents and officers of unions would be meaningless if all of these duties could be abrogated by the mere device of imposing a trusteeship. Past wrongs call for a remedy, not technical objections. SECTION 501 Initially all parties agree that neither the International Association nor Local No. 3 have violated § 501 as that section imposes liability only on the individual union officials. See, Sabolsky v. Budzanoski, 457 F.2d 1245, 1249 (3d Cir.), cert. denied, 409 U.S. 853, 93 S.Ct. 65, 34 L.Ed.2d 96 (1972). We are invited by the appellants to reconsider our holdings in Johnson v. Nelson, 325 F.2d 646 (8th Cir. 1963), concerning the scope of § 501(a), on the basis of contrary decisions in the Second and Ninth Circuits. In Johnson v. Nelson we were concerned with a situation similar to the one in the instant case. The court there found that because of personal feelings the officials of a local union had refused to pay certain attorney’s fees that had been approved by a constitutional vote of the membership. Johnson viewed § 501 as imposing broad fiduciary duties on the officers, agents, shop stewards, and other representatives of a labor organization and that the officers by allowing their personal feelings to interfere with the performance of their duties “failed ‘to refrain from dealing with such organization [Local] as an adverse party or in behalf of an adverse party in any matter connected with his [their] duties’ [§ 501(a)].” 325 F.2d at 653. These acts constituted a breach of their fiduciary duties imposed by § 501(a). The Second Circuit in Gurton v. Arons, 339 F.2d 371 (2d Cir. 1964) and Coleman v. Brotherhood of Ry. & Steamship Clerks, Freight Handlers, Express & Station Employees, 340 F.2d 206 (2d Cir. 1965), has restricted the scope of § 501(a) only to situations involving “money and property” of the union. The Ninth Circuit appeared to follow Gurton in Phillips v. Osborne, 403 F.2d 826 (9th Cir. 1968). However, that Court in a recent case explicitly held this issue to be an open one in that Circuit, stating : “The position of the court in Johnson v. Nelson that § 501 is not limited to breaches of trust directly involving officers’ handling of union money or property has been termed the ‘majority’ view. Cefalo v. Moffett, 1971 [146 U.S.App.D.C. 117], 449 F.2d 1193, 1198 n. 15. The question remains open in this circuit. Our citation of Gurton v. Arons, supra, in Phillips v. Osborne, 9 Cir. 1968, 403 F.2d 826, 830, does not commit us to follow Gurton. We cited Gurton as merely illustrative of a point of view.” Kerr v. Shanks, 466 F.2d 1271, 1275 n. 2 (9th Cir. 1972). The reason for the difference in interpretation between Gurton and Johnson can be found in the interpretation of the legislative history of the Act as it was considered by each court. The Second Circuit in Gurton, as to the legislative history of the Act, referred the reader to the opinion of the district court, Guarnaccia v. Kenin, 234 F.Supp. 429, 442 (S.D.N.Y.1964), which stated: “The legislative history of the Section would appear to also be in accord with defendants’ position that the Section relates solely to questions of financial dealings. Thus during the course of debate, Senators McClellan and Ervin made it quite clear that the Section would relate solely to matters of money and property. See II Leg. History 1129-31 (1959).” This debate concerned the fiduciary provision included as § 501 of S. 1555, the Kennedy-Ervin Bill. Our court in Johnson v. Nelson, 325 F.2d at 650, made a careful analysis of Title V of the Landrum-Griffin Act and concluded the explicit language of § 501(a) imposed a broad fiduciary obligation on union officers and representatives and approved the thorough and detailed analysis of the legislative history contained in the district court opinion in Nelson v. Johnson, 212 F.Supp. 233, 284-296 (D.Minn.1963). Judge Larson’s analysis should be read for an in-depth understanding of the history of the Act. However, for the purpose of this opinion it will suffice to follow the Act from its introduction in the Senate to its ultimate passage. The original bill in the series was S. 1555 (the Kennedy-Ervin Bill). It was passed by the Senate containing a very narrow fiduciary provision, specifically pertaining to the handling of money and property of the labor organization by its officials. After passage by the Senate the bill was sent on April 25, 1959, to the House and referred to the Committee on Education and Labor. Four separate bills were introduced in the House. (1) H.R. 7265 (the Kearns Bill) on May 20, (2) H.R. 8342 (the Elliot Bill) on July 23, (3) H.R. 8400 and H.R. 8401 (Identical bills introduced concurrently and known as the Landrum-Griffin Bill) on July 24 and (4) H.R. 8490 (the Skelly Bill) on August 3. These were all referred to the Committee on Education and Labor. The significant bills of this group were the Elliot Bill and the Landrum-Griffin Bill. The Elliot Bill contained a fiduciary provision as § 501 which was identical to the one in the present Act. The fiduciary provision in the Landrum-Griffin Bill was identical to the Elliot Bill. The Committee reported favorably the Elliot Bill on July 30. The Committee Report contained the following comments on § 501: “The committee bill also contains provisions dealing with breaches of trust and other questionable transactions, which, although not seriously criminal nevertheless are incompatible with a strong and honestly run labor movement.” I Leg.Hist. 768. In the Supplementary Views by Representative Elliot and four other Members of the House it was stated: “Union officials occupy positions of trust. They hold property of the union and manage its affairs on behalf of the members. It is the duty of union officers just as it is the duty of all similar trustees to put their obligations to the union and its members ahead of any personal interest. “The committee bill sets forth this principle unequivocally and declares that union officers and agents occupy positions of trust in relationship to labor organizations and their members. It then sets forth their duties in terms which the common law applies to all persons who undertake to act on behalf of others: “ * * * to hold its money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted hereunder, to refrain from dealing with such organization as an adverse party in any matter connected with his duties and from holding or acquiring any pecuniary or personal interest which conflicts with the interests of such organization, and to account to the organization for any profit received by him in whatever capacity in connection with transactions conducted by him or under his direction on behalf of the organization. “We affirm that the committee bill is broader and stronger than the provision of S. 1555 which relate to fiduciary responsibilities. S. 1555 applied the fiduciary principle to union officials only in their handling of ‘money or other property’ (See S. 1555, sec. 610), apparently leaving other questions to the common law of the several States. Although the common law covers the matter, we considered it important to write the fiduciary principle explicitly into Federal Labor legislation. Accordingly the committee bill extends the fiduciary principle to all the activities of union officials and other union agents or representatives.” I. Leg.Hist. 839 (emphasis added). The additional Statement by Hon. Phil M. Landrum and Hon. Robert P. Griffin opposed the Elliot Bill in favor of their own substitute, the Landrum-Griffin Bill. But, of this substitute they said: “In general, the substitute is framed on the bill reported by the committee; we have retained the committee’s technical amendments and many other features of the committee bill which make a contribution to an effective labor reform measure. There are no ‘strangers’ in our substitute bill; every provision was thoroughly considered by the full committee.” I Leg.Hist. 87. On the floor of the House during debate, Representative Griffin made this statement concerning his bill: “For a moment, I believe attention should be focused upon the similarities between the committee bill and the substitute, H.R. 8400. For example, in both bills, * * * title V— covering the fiduciary responsibility of union officers, bonding, loans, restrictions against the Communists and exeonvicts holding office — [is] identical without a word or a comma changed.” II Leg.Hist. 1566. As previously stated the Committee reported the Elliot Bill favorably. When the committee approved Bill was considered by the House it was amended by substituting the Landrum-Griffin Bill in toto for the provisions of the committee approved Elliot Bill. II Leg.Hist. 1691. S. 1555 was then amended by substituting the Landrum-Griffin provisions (now number H.R. 8342 however) for its provisions. II Leg.Hist. 1701.. S. 1555, as thereby amended, was then passed by the House. II Leg.Hist. 1702. It went to a conference where § 501 survived unchanged and ultimately became § 501 of the Labor-Management Reporting and Disclosure Act of 1959. From this outline it can be seen that consideration of the remarks of Senators McClellan and Ervin in regard to § 501 of S. 1555 would tell us nothing about the legislative history of § 501 as finally passed without further reference to the legislative history of the Elliot Bill which was incorporated in the Landrum-Griffin Bill and which became the law. The quoted material shows that the Elliot Bill strongly favored the broad scope application of the fiduciary provisions of § 501(a) and not the narrow provisions referred to in the remarks of Senators McClellan and Ervin. Based on the history outlined above it appears clear that Gurton v. Arons, based as it was on the legislative history of the Kennedy-Ervin Bill which was amended out of existence, was unduly restrictive of the scope of the fiduciary duties of union officials commanded by § 501, and that Johnson v. Nelson, basing its decision on the legislative history of the Elliot Bill, was properly decided. The Third Circuit has recently adopted the broad scope interpretation of § 501. The United States District Court for the Western District of Pennsylvania had dismissed an action brought under § 501 on the ground that the remedy was available only in actions dealing with money or property of a labor organization, citing Gurton and its progeny. Antal v. Budzanoski, 320 F.Supp. 161, 164 (W.D.Pa.1970). On appeal the court first found that the complaint did state a cause of action dealing with the holding and expenditure of union funds and further, citing with approval Johnson v. Nelson, the court disagreed with the district court's “reading” of § 501. Sabolsky v. Budzanoski, 457 F.2d 1245, 1250-1251 (3d Cir.), cert. denied, 409 U.S. 853, 93 S.Ct. 65, 34 L.Ed.2d 96 (1972). The District of Columbia Circuit has recognized that it, at least impliedly, has adopted the broad scope view of § 501, Cefalo v. Moffett, 146 U.S.App.D.C. 117, 449 F.2d 1193, 1198 n. 15 (1971), “[by] approving] payment of counsel fees [in Bakery & Confectionary Workers Int. Union v. Ratner, 118 U.S.App.D.C. 269, 335 F.2d 691 (1964)] to an attorney who had successfully represented union members in a § 501 suit which sought relief for violations not involving property rights.” Appellants have not advanced any substantial arguments which would cause us to change our position with regard to the scope of § 501(a) and we decline to do so. In fact our re-examination of Nelson v. Johnson convinces us that the broader view of fiduciaries’ responsibilities is correct, based on Congressional intent and the explicit language of § 501(a). Appellants raise a second issue with regard to § 501. They argue that it gives jurisdiction for suits only for relief for the benefit of the labor organization. Appellants allege that this action falls outside the statute as it seeks relief for the individual members rather than relief for the benefit of the labor organization. This position was adopted by the Ninth Circuit in Phillips v. Osborne, 403 F.2d 826, 832 (9th Cir. 1968). In Phillips the officers of Local 580, International Brotherhood of Pulp, Sulphite & Paper Mill Workers, AFL-CIO, fearing that the members of the local would soon disaffiliate the local from the International Brotherhood and associate with the Western Pulp & Paper Workers, a newly formed, rival labor organization, placed the assets of the local in an escrow account under the control of the International Brotherhood and beyond the reach of the local union. The next day the members sought to have the assets returned to the local but the officers refused. The membership then voted to disaffiliate and join the Western group. Plaintiff- Phillips was the president under the new organization. Defendants were the former officers of the local who had transferred the assets. The relief requested was a pro rata distribution of the transferred assets to the members of Local 580 at the time of the disaffiliation. The court held that such relief was “not for the benefit of the labor organization.” We need not decide whether Phillips was correctly decided as the instant case is easily distinguishable as to the relief requested of the court. The restoration of orderly democratic processes to the local union is clearly a benefit to the labor organization, and a proper subject of concern to the entire membership. Bakery & Confectionary Workers Int. Union v. Ratner, 118 U.S.App.D.C. 269, 335 F.2d 691, 696 (1964); Retail Clerks Union Local 648 v. Retail Clerks Int. Ass’n, 299 F.Supp. 1012, 1022 (D.C.D.C. 1969). In Johnson v. Nelson the relief sought was a payment of fees owing to attorneys but the enforcement of such relief, as the enforcement of the mandate issued by the membership to its officers and disregarded in violation of their fiduciary duties, was clearly of benefit to the membership. Here the correction of the past violations of the rights of the members and the breaches of the fiduciary obligations by both the local and International officers will be a benefit to the Local even though the relief must necessarily include the restoration of the funds withheld as a result of the defendants’ wrongful acts. The final point raised by appellants, that some members of Local No. 3 might have a vested right in the pension fund which cannot be destroyed since they are not parties to the suit, is without merit. Appellants have not shown that any such person exists although they were in a position to do so if they wished. Further, this objection cannot be used to thwart correction of past abuses of trust. If such a situation does arise, the defendants conceivably are responsible therefor however, the legal effects of a vested interest situation, if any, must await future resolution. Judgment affirmed. . 29 U.S.C.A. § 411(a)(1) provides that: “Equal rights. — Every member of a labor organization shall have equal rights and privileges within such organization to nominate candidates, to vote in elections or referendums of the labor organization, to attend membership meetings, and to participate in the deliberations and voting upon the business of such meetings, subject to reasonable rules and regulations in such organization’s constitution and bylaws.” 29 U.S.C.A. § 501 provides in part: “(a) The officers, agents, shop stewards, and other representatives of a labor organization occupy positions of trust in relation to such organization and its members as a group. It is, therefore, the duty of each such person, taking into account the special problems and functions of a labor organization, to hold its money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted thereunder, to refrain from dealing with such organization as an adverse party or in behalf of an adverse party or in any manner connected with his duties and from holding or acquiring any pecuniary or personal interest which conflicts with the interests of such organization, and to account to the organization for any profit received by him in whatever capacity in connection with transactions conducted by him or under his direction or in behalf of the organization. . . ” . The reference to “Rule 23” is a reference to Rule 23 of the Ritual of the International Association which reads: “When a question is postponed indefinitely, it shall not come up again except by two-thirds vote.” . The Union cites Robert’s Rules of Order as authority for this ruling. Robert’s Rules are made applicable to the Local under Rule 5 of the Ritual. . The conditions were: “1. It [the request] is made in writing and in such a manner that it needs no further union ratification to complete the re-opening and execution of all necessary documents. - “2. The pension trustees release the contractor's association from all liability for the deletion and the union agrees to hold the association and it’s [sic] members harmless from any liability from deletion of the pension trust. “3. In the event agreement is reached to delete the pension provision as requested it will be conditioned that the pension cannot be reinstated during the remainder of this contract.” . The Court held that if the defendants could legally recover the amount of this judgment that had been paid into the Pension Fund, such amount could be used to satisfy this judgment. The funds are to be put into an escrow account. Following the new contract, if the parties can agree to a new and final vote on the question of participation in a pension fund such shall be held. If the vote favors participation the funds are to be paid from the escrow account to the particular fund chosen. If the vote opposes participation or if no agreement can be reached on having a vote the money is to be paid pro rata to the members of Local No. 3 from whose paychecks the funds were deducted. . Nevertheless it appears that the District Court’s finding that plaintiff and the anti-pension group were unfairly treated by the Union’s procedural decisions is correct. An example of this is the Union’s position that the vote favorable to the plaintiff on the motion to postpone indefinitely was improper because the chair had already announced the vote, The primary purpose of a call for a division of the house is to test the chair’s announcement of the vote in situations such as this where the chair’s announcement was obviously incorrect. . The legislative history of the Labor-Management Reporting and Disclosure Act of 1959 has been compiled by the National Labor Relations Board and published as a two volume set entitled Legislative History of the Labor Management Reporting and Disclosure Act of 1959. Citations relevant to legislative background will be to this set. . Section 501(b) reads in pertinent part: “When any officer, agent, shop steward, or representative of any labor organization is alleged to have violated the duties declared in subsection (a) of this section ... [a] member may sue such officer ... to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization.”

f2d_477/html/0836-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

INLAND TERMINALS, INC., Appellant, v. UNITED STATES of America, Appellee. No. 72-2116. United States Court of Appeals, Fourth Circuit. Argued Feb. 6, 1973. Decided April 26, 1973. Shale D. Stiller, Baltimore, Md. (Frank, Bernstein, Conaway & Goldman, Baltimore, Md., on brief), for appellant. Ann Belanger, Atty., Tax Div., U. S. Dept. of Justice (Scott P. Cramption, Asst. Atty. Gen., Meyer Rothwacks and Thomas L. Stapleton, Attys., Tax Div., U. S. Dept. of Justice, and George Beall, U. S. Atty., on brief), for appellee. Before WINTER and CRAVEN, Circuit Judges, and BRYAN, District Judge. WINTER, Circuit Judge: When the Internal Revenue Service assessed accumulated earnings taxes and interest against Inland Oil and Chemical Corporation (Inland Oil) and its wholly-owned subsidiary, Inland Terminals, Inc. (Terminals), for the taxable years ended December 31, 1965, and August 31, 1965, respectively, both paid the respective assessments and both sued for a refund. The district court gave judgment for Inland Oil for the amounts paid by it, because the court found that Inland Oil had proven reasonably anticipated business needs sufficient to justify its accumulated earnings. No appeal was taken from this ruling. In Terminals’ suit, the district court found that the subsidiary, Terminals, failed to prove that its reasonably anticipated business needs-justified its accumulation of earnings and gave judgment for the government. In arriving at this conclusion, the district court ruled that “ [ajlthough a parent corporation may under appropriate circumstances accumulate earnings for the reasonable needs of a subsidiary, a subsidiary may not ordinarily accumulate earnings for the needs of its parent.” 338 F.Supp. at 1335-1336. We disagree, and in Terminals’ appeal, we reverse and remand for further proceedings. I. Terminals is the wholly owned subsidiary of Inland Oil which, in turn, is owned by Alfred R. Himmelrich, Sr. and his sons, and they are the directors and officers of both corporations. Until the early 1960’s, Inland Oil’s business was primarily the resale of petroleum solvents to the paint and dry cleaning industries. Inland Oil purchased the raw materials, processed them, and distributed them. The subsidiary, Terminals, owned the land, storage facilities, and automotive equipment used in the business, and leased them to Inland Oil. The rentals paid by Inland Oil were Terminals’ sole source of income. Inland Oil competed with its suppliers, the major oil companies, in the sale of petroleum solvents. Its business activities were profitable only because the major oil companies granted it a “voluntary allowance” or discount. By 1965, the directors were concerned with the precarious nature of this arrangement. In the early 1960’s, changes in the paint and dry cleaning industries augured a decline in sales of petroleum solvents. As a result, the directors of Inland Oil by 1965 were considering two alternative courses. As found by the district court, these alternatives were: “(A) Diversification and expansion into the chemical solvent business, which would require a substantial outlay of cash, primarily because these products cost ten times more than petroleum solvents, and sales would generate a much higher total of accounts receivable; (B) Purchase of another property, preferably on the waterfront, to relieve the overcrowding at the existing plant . . . with the added possibility of opening of marine terminal facility at such new location.” 338 F.Supp. at 1332. The directors estimated that the latter course would cost $500,000. With a policy of only short term borrowing, the companies’ financial situation would not permit them to do both. The directors explored the relocation alternative with a real estate firm, but ultimately chose diversification into chemical solvents. During the ensuing years, Inland Oil increased its purchases of chemical solvents from $500,000 to $1,600,000. At the same time, Inland Oil’s cash and Treasury Bill accumulations decreased, while its accounts receivable increased. The increased purchases of more expensive chemical solvents and normal business growth contributed to the decline in cash and Treasury Bills, while the increased resale price of chemical solvents augmented the accounts receivable. Collectively, these factors required greater amounts of working capital. During the same period, Terminals was contemplating these expenditures: (i) replacement of its truck fleet with trucks equipped to transport chemical solvents, costing about $100,000; (ii) improvements to the existing plant and office facilities, costing about $40,000; (iii) purchase of another storage tank, costing about $35,000; and (iv) purchase of the necessary land and equipment if the directors chose the ultimately rejected relocation alternative, costing about $500,000. Terminals did ultimately make expenditures (i)-(iii), financing them wholly from current rental income. It abandoned plan (iv) when the directors opted for diversification. As was true with regard to Inland Oil, Terminals required greater working capital during this period. In 1965, Inland Oil had taxable income of $92,187.90. It paid $39,250.19 in federal income tax and $14,000 in dividends, leaving $38,937.71 in undistributed earnings to be added to its previously accumulated earnings of $247,525.36. The total accumulation at the end of 1965 was $286,463.07. In fiscal 1965, Terminals had taxable income of $30,755.93. It paid $4,781.65 in federal income tax, but ño dividends to Inland Oil, its sole shareholder, leaving $24,525.23 in undistributed earnings to be added to its previously accumulated earnings of $98,729.02. Terminals’ total accumulation at the end of 1965 was $123,254.25. The parent and the subsidiary together accumulated $63,462.94 in 1965 and at the end of the year, the accumulations of both parent and subsidiary totaled $410,717.32. II. An “accumulated earnings tax” is imposed on the “accumulated taxable income” IRC § 531, 26 U.S.C. § 531 (1967), of “every corporation . formed or availed of for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of any other corporation, by permitting earnings and profits to accumulate instead of being divided or distributed.” IRC § 532(a), 26 U.S.C. § 532(a) (1967). If a wholly owned subsidiary accumulates income for the purpose of avoiding the imposition of the individual income tax upon the individual shareholders of its parent, the accumulated taxable income of the subsidiary is subject to the tax. Treas.Reg. § 1.532-1(a)(2). There is a presumption that a tax avoidance motive exists where “the earnings and profits of a corporation are permitted to accumulate beyond the reasonable needs of the business.” IRC § 533(a), 26 U.S.C. § 533(a) (1967). See United States v. Donruss, 393 U.S. 297, 89 S.Ct. 501, 21 L.Ed.2d 495 (1969); Bahan Textile Machinery Co. v. United States, 453 F.2d 1100, 1101 (4 Cir. 1972). Inquiry, therefore, focuses on “the reasonable needs of the business.” “[T]he term . . . includes the reasonably anticipated needs of the business.” IRC § 537(a)(1), 26 U.S.C. § 537(a)(1) (1972). The Regulations establish that the reasonableness of the accumulation should be measured by the judgment of a “prudent businessman.” Treas.Reg. § 1.537- 1. Moreover, “[i]n order for a corporation to justify an accumulation of earnings and profits for reasonably anticipated future needs of the business, . the corporation must have specific, definite, and feasible plans for the use of such accumulation.” Treas.Reg. § 1.537- 1(b)(1). Bahan Textile, 453 F.2d at 1101; Oklahoma Press Publishing Co. v. United States, 437 F.2d 1275 (10 Cir. 1971). In applying this test to “projected expansion or investment plans,” the court shall review the plans “in the light of the facts during each year and as they exist as of the close of the taxable year.” Treas.Reg. § 1.537-1(b)(2). III. Both the appellant, Terminals, and its parent, Inland Oil, contended, in the district court, that their accumulations were necessary to finance their contemplated relocation or diversification. The district court found that Inland Oil’s plans to relocate or diversify were sufficiently concrete and reasonable in 1965 to justify its accumulated earnings. With respect to Terminals, the district court found that although it had generally contemplated in 1965 the expenditures referred to above, its plans were not sufficiently specific and definite to justify its accumulations. Treas.Reg. § 1.537-1(b)(1). The district court further relied on Terminals’ subsequent use of current income to finance these projects, its failure to consider funding the purchase of automotive equipment and its failure to offer evidence as “to depreciation, rentals, or purchase arrangements, contemplated or actual.” Finally, the district court held as we have earlier quoted, that Terminals could not accumulate earnings for the reasonably anticipated business needs of its parent, and therefore, the parent’s business needs could not be used to justify the subsidiary’s accumulation. For these reasons, the district court concluded that Terminals failed to rebut the presumption that it had accumulated earnings above its reasonable needs for the proscribed purpose of avoiding individual shareholder income tax. IRC § 533(a). See Donruss. The district court’s finding that Terminals’ plans contemplated in 1965 for its capital expenditures were not sufficiently specific and definite to justify its accumulation, standing alone, seems neither clearly erroneous nor legally incorrect. It is, therefore, to Inland Oil’s plans that we turn. In concluding that Terminals might not accumulate earnings for Inland Oil, the district court relied on Treas.Reg. § 1.537-3(b). It provides that if one corporation substantially controls and operates another, the business of the controlled corporation may be considered the business of the controlling corporation for the purposes of determining the reasonable business needs of the controlling corporation. In short, a parent can justify its accumulated earnings by reference to its subsidiary’s reasonable business needs. The district court apparently concluded that Treas.Reg. § 1.537-3(b) forbids the converse situation because it fails to mention it. We cannot agree with the district court’s conclusion that a wholly owned subsidiary cannot justify its accumulated earnings by reference to its parent’s reasonably anticipated business needs. First, we note that no other authority or commentator has suggested this conclusion. The sparse commentary supports the opposite conclusion. It reasons that the imposition of an accumulated earnings tax on a wholly owned subsidiary would be too harsh an incentive to pay dividends which, if distributed, would be subject only to a maximum effective tax rate of 7.2 per cent. Furthermore, Treas.Reg. § 1,-537-3(b) does not compel the district court’s conclusion. The government urges that since the regulation focuses on control, it implies that it is permissible for one corporation to justify its accumulated earnings by reference to the reasonable needs of another corporation only if it controls the other corporation. But this argument loses force when applied in a case where one family controls both corporations. Where a closely held family corporation wholly owns a subsidiary corporation, it would only indulge a fiction to say that control flowed in one direction rather than the other. Since the very purpose of § 1.537-3 (b) is to insure that substance prevails over form in the consideration of a corporate family’s reasonable business needs, we reject the government’s interpretation of § 1.537-3(b) as applied in these circumstances. The government relies on several cases to support the proposition that § 1.537-3 (b) should be strictly construed to forbid one corporation from accumulating earnings for another where it does not control the other. Latehis Theatres of Keene v. C.I.R., 214 F.2d 834 (1 Cir. 1954); Crawford County Printing & Publishing Co. v. C.I.R., 17 T.C. 1404 (1952); Stanton Corp. v. C.I.R., 44 B.T.A. 56 (1941). But these cases are distinguishable from the instant ease because they involve brother-sister, rather than parent-subsidiary corporations. Where brother-sister corporations are involved, earnings can be transferred between them only through the common shareholder or shareholders, who will be subject to a progressive individual income tax. Thus, if § 1.537-3(b) were not construed to bar justification of the accumulated earnings of one corporation by reference to the business purposes of its sister corporation, it would frustrate one of the major purposes of the accumulated earnings tax, which is to force earnings out of a corporation to its individual shareholders so that they can be taxed a second time at graduated individual income tax rates. On the other hand, a wholly owned subsidiary can transfer accumulated earnings directly to its parent, who will be taxed at most only at the relatively minimal rate for intercorporate dividends. IRC § 243, 26 U.S.C. § 243 (1967). Thus, it would not subvert the major purpose of the accumulated earnings tax to permit a wholly owned subsidiary to justify its accumulated earnings by reference to its parent’s reasonably anticipated business needs. We conclude, therefore, that in assessing the reasonable needs of a wholly owned subsidiary, it is permissible to consider the reasonable business needs of its parent, to the extent that the business needs of its parent have not already been cited pro tanto to justify the parent’s accumulation of earnings. IV. Under the district court’s view of the case, there was no occasion to determine whether Inland Oil’s reasonably anticipated business needs could justify both its and all or some part of Terminals’ accumulated earnings in 1965. Under our view, this determination must be made, and it should be made in the first instance by the district court. The record indicates a significant likelihood that Terminals can prove that the addition of its 1965 undistributed earnings (less the intercorporate dividend tax, if any) to Inland Oil’s accumulated earnings would not produce an amount which exceeded Inland Oil’s reasonably anticipated business needs for that year. Therefore, we do not reach Terminals’ further argument that the accumulated earnings tax is applicable solely where the subsidiary’s accumulation of earnings has the effect of avoiding individual rather than intercorporate income taxes. Accordingly, we reverse and remand this case for a determination of whether Terminals’ accumulated earnings can be justified by Inland Oil’s reasonably anticipated business needs which Inland Oil cannot itself satisfy, and for further proceedings not inconsistent with this opinion. Reversed and remanded. . 338 F.Supp. 1330 (D.Md.1972). . Inland Oil Balance Sheets for the calendar years 1965-1969 show the shift: Cash and Treasury Bills Accounts Receivable 12/31/65 $360,000 $268,000 12/31/66 300.000 309.000 12/31/67 234.000 444.000 12/31/68 112.000 580.000 12/31/69 118,000 603.000 . Terminals Balance Sheets: Cash and Treasury, Bills Cost of Autos, Trucks and Trailers Cost of Bulk Storage Equipment Cost of Building 8/31/65 $58,000 $109,000 $ 76,000 $23,000 8/31/66 81,000 127.000 76.000 23.000 8/31/67 74.000 167.000 80.000 23.000 8/31/68 45.000 206.000 111,000 38.000 8/31/69 25.000 218,000 111,000 70.000 These figures do not include the rentals due from Inland Oil, which were treated as accounts receivable. . Treas.Reg. 1.537-3(b) provides in pertinent part: If one corporation owns the stock of another corporation and, in effect, operates the other corporation, the business of the latter corporation may be considered in substance, although not in legal form, the business of the first corporation . . . . Thus, the business of one corporation may be regarded as including the business of another corporation if such other corporation is a mere instrumentality of the first corporation; that may be established by showing that the first corporation owns at least 80 percent of the voting stock of the second corporation. If the taxpayer’s ownership of stock is less than 80 percent in the other corporation, the determination of whether the funds were employed in a business operated by the taxpayer will depend upon the particular circumstances of the case . . .. . Cf. Proposed Treas.Reg. § 1.533-1(a)(3), 33 Fed.Reg. 9830-31 (1968) (proposing assessment of accumulated earnings tax on subsidiary where parent relies upon underlying value of its investment in the subsidiary to obtain funds for distributions to the parent’s shareholders, rather than cause the subsidiary to distribute its earnings and profits). . Greer, The Accumulated Earnings Tax-— New Decisions Focus Attention on an Old Problem, 51 Taxes 13, 16 (Jan. 1973) specifically criticizing the district court’s conclusions. See CCH, The Tax on Accumulated Earnings (1968). Cf. Treas. Regs. 1.1502-31(a)(18)(vi) and 1.1502-31(a)(19)(i). . Greer, supra n. 6, at 16. . “Brother-sister” corporations, as we use the term, are two or more corporations, owned and effectively controlled by one or more individuals. See United States v. Collins, 300 F.2d 821, 822 (1 Cir. 1962). . See Donruss, 393 U.S. at 303, 89 S.Ct. 501, 21 L.Ed.2d 495; Electric Regulator Corp. v. C.I.R., 336 F.2d 339, 346 (2 Cir. 1964); 7 Mertens, Law of Federal Income Taxation § 39.04 (1967 rev.).

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

In the Matter of PENN CENTRAL TRANSPORTATION COMPANY, Debtor. Appeal of BETHLEHEM STEEL CORPORATION, a Delaware corporation in No. 72-1292. Appeal of REPUBLIC STEEL CORPORATION, Cleveland, Ohio in No. 72-1293. Appeal of BLUEBIRD FOOD PRODUCTS COMPANY in No. 72-1294. Appeal of HARRY R. DEFLER CORPORATION in No. 72-1305. Appeal of UNITED STATES STEEL CORPORATION in No. 72-1306. Appeal of THOMAS J. HOLT CO., INC., in No. 72-1307. Appeal of MILLER LUMBER CO., INC., Montross, Virginia in No. 72-1308. Nos. 72-1292 to 72-1294 and 72-1305 to 72-1308. United States Court of Appeals, Third Circuit. Argued Jan. 29, 1973. Decided April 27, 1973. W. Bradley Ward, Samuel D. Slade, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., for Bethlehem Steel Corp. John S. Estey, William R. Dimeling, Montgomery, McCracken, Walker & Rhoads, Philadelphia, Pa., for Republic Steel Corp. and Miller Lumber. Robert C. Cohen, Meltzer & Schiffrin, Philadelphia, Pa., for Blue Bird Food Products Co. Henry T. Reath, Reeder R. Fox, Duane, Morris & Heckscher, Philadelphia, Pa., for H. R. Defler Corp. and U. S. Steel Corp. Ned Stein, Comanor & Stein, Philadelphia, Pa., for Thomas J. Holt Co., Inc. Marvin Comisky, Goncer M. Krestal, Blank, Rome, Klaus & Comisky, Paul R. Duke, Philadelphia, Pa., for appellee. Before SEITZ, Chief Judge, ALDI-SERT, Circuit Judge, and LACEY, District Judge. OPINION OF THE COURT SEITZ, Chief Judge. The basic issue presented on this appeal is whether a reorganization court in a § 77 proceeding has summary jurisdiction to enjoin a non-judicial set-off of claims for goods, services, and shipping losses and damages against freight charges, where such set-offs were effected prior to the Debtor’s filing for reorganization. The dispute arises out of a petition filed by the railroad trustees. The petition requested the court to issue an order- directing certain shippers, including appellants, to pay bills still outstanding for pre-reorganization freight services, i.e., for charges incurred prior to June 21, 1970. Appellants filed answers and briefs asserting the right of set-off against these charges; these set-offs involved claims on charges for supplies and freight loss and damage claims arising during the period prior to the commencement of the reorganization proceedings. Appellants contend that the amount of these set-offs exceeded the amounts owed for freight charges. Although an affidavit was filed by the trustees alleging the amounts due them, the hearing below focused relatively little upon the validity of these amounts. Rather, it consisted almost entirely of oral argument on whether the reorganization court’s summary jurisdiction as to these claims was defeated by the presence of appellant shippers’ competing claims. After hearing argument on this latter point, the court determined it had summary jurisdiction and entered an order enjoining any set-off by appellants against monies owed by them for pre-reorganization freight charges. However, it deferred ruling on the amount of those charges still outstanding. This appeal followed. Two conclusions were basic to the court’s determination that it had summary jurisdiction over this controversy. First, it concluded that a regulated carrier’s freight charges constitute a chose in action. Secondly, it concluded that under §§ 3(1) and 6(7) of the Interstate Commerce Act [49 U.S.C. §§ 3(1) & 6(7)(1971)], a shipper’s claims against the carrier are not a defense to the carrier’s claim for freight charges due. Therefore, since appellant shippers did not assert colorable adverse claims to the Debtor’s choses in action, the court determined that it had the right to exercise summary jurisdiction with respect to the carrier’s claims for freight charges. The court’s determination was based upon the holding of this circuit in Matter of Penn Central Transportation Company, 453 F.2d 520 (1972). There we held that where there is no bona fide dispute concerning the Debtor’s right in a chose in action at the time reorganization proceedings are instituted, the reorganization court can exercise summary jurisdiction under the statute with respect to the enforcement of that chose. Therefore, assuming the freight charges owed can be conclusively established on remand, the issue for our resolution becomes whether the pre-reorganization set-offs effected by appellants in settle-* ment of their claims created a bona fide dispute as to the Debtor’s legal entitlement to the freight charges previous to the filing of the reorganization petition. Under the Interstate Commerce Act, freight charges incurred pursuant to a filed tariff are accorded a legally superior status: that of a law. The only defense which can be raised to a carrier’s suit for these legal charges is that the services have been paid for, that the services were not rendered, that the services were charged under an inapplicable tariff schedule, or that the rates were unreasonable. The purpose of this limitation on defenses to an action by a carrier was to prevent secret kickbacks and preferences between large shippers and carriers. Thus, a set-off for damages incurred in shipment is not considered a defense since the potential for effecting preferences under such a guise seemed manifest. Similarly, a shipper and carrier cannot make provision for the supplying of goods and/or services in exchange for carriage. See, e.g., Northeast Airlines v. CAB, 345 F.2d 662 (1st Cir. 1965). Complementing this statutory scheme was a provision mandating that freight was not to be delivered until paid for in order to prevent the giving of preferences through the extension of credit. 49 U.S.C. § 2(1971). Present Interstate Commerce Commission regulations in fact require a carrier to institute suit promptly if payment for freight charges is not made within ten days. Therefore, freight tariffs are accorded a special legal status which make inapplicable analogy to normal rules of commercial law. Appellants rely principally upon the Supreme Court’s opinion in Chicago & N.W. Ry. v. Lindell, 281 U.S. 14, 50 S.Ct. 200, 74 L.Ed. 670 (1930). There, as here, a carrier sued to collect freight charges; the shipper counterclaimed, asserting a loss due to the carrier’s failure to perform under the shipping contract. The Court allowed the counterclaim to be asserted against the carrier in the same action, stating: The adjudication in one suit of the respective claims of plaintiff and defendant is the practical equivalent of charging a judgment obtained in one action against that secured in another. Neither is to be distinguished from payment in money. 281 U.S. at 17, 50 S.Ct. at 201. The Court justified its position as not being in contravention of the Interstate Commerce Act by concluding that it would be a matter of judicial economy to allow the suit: having both parties before the court, it would be most economical to have the court adjudicate the various controversies between those parties in one proceeding. The court would serve to ensure that in fact such suits were not products of collusive agreements designed to thwart the prohibitions of the Interstate Commerce Act. Although it is clear from Lindell that a counterclaim can be asserted against a carrier’s suit for freight charges, our court has reiterated that under the Interstate Commerce Act, the subject matter of the counterclaim is not a defense to the carrier’s claim for freight charges. Rather, it constitutes an independent claim. Southern Pacific Co. v. Miller Abattoir Co., 454 F.2d 357 (3d Cir. 1972). Its assertion by means of counterclaim is justified because the court can ensure that it does not result in circumvention of the Act and because it does further the administration of justice. The remaining question posed is whether the intervention of reorganization proceedings creates a different situation. The district court implicitly assumed that while a counterclaim or set-off can be asserted against the carrier in a suit for collection of outstanding freight charges, it cannot be similarly recognized when a carrier seeks enforcement of its claim in a reorganization proceeding. We agree. Because the subject matter of the set-off or counterclaim does not constitute a defense to the carrier’s freight claim, the intervention of reorganization proceedings forces analysis of different considerations. Since the Bankruptcy Act sets up a different process for disposition of creditor’s claims, we do not believe these shippers’ claims, which do not have the status of legal defenses, can defeat the right of the railroad to collect absolutely all legal charges for freight services outstanding and unpaid. Thus, at the inception of these proceedings, the carrier’s choses in action arising out of freight charges had the same status as the carrier’s deposits in the Bank Cases and were therefore not subject to a bona fide dispute because of the presence of other disputes between the Debtor and the holder of Debtor’s chose in action. Appellants merely had an independent claim against the Debtor which could have been litigated in the railroad’s suit for charges had not the supervening structure of the Bankruptcy Act intervened. One final issue raised by one of the appellants remains for disposition. It contends that under applicable Pennsylvania law, it extinguished its debt to the railroad by the non judicial set-off of a debt owed to it by the carrier, citing 12 P.S. § 601(1953). Even assuming the validity of appellant’s contention under Pennsylvania law, such a set-off would have been in express contravention of the Interstate Commerce Act. Indeed, the Act was so designed to prevent the kind of secret kickbacks which this type of practice could lead to. We believe our conclusion not only comports with the Supremacy Clause of the Constitution but in so doing, does not conflict with any other constitutional provision nor results in the granting of an unwarranted preference to other creditors. Therefore, we conclude the district court correctly determined in the first instance that it had summary jurisdiction over these disputes and had the power to enjoin their set-off. However, on remand, the court must require the Debtor to attempt to establish the amounts owing by clear and convincing evidence. Maggio v. Zeitz, 333 U.S. 56, 68 S.Ct. 401, 92 L.Ed. 476 (1948). The court must then afford appellants an opportunity to challenge those amounts. Only then will the reorganization court be able to determine whether there is such a bona fide dispute and defense to Debtor’s claim for freight charges as will defeat its exercise of summary jurisdiction. Given our conclusion that the reorganization court will have the right to exercise summary jurisdiction if the proper showing is made on remand, it follows that it can also exercise its sound discretion, once again, in determining whether or not to permit set-off or counterclaim against the Debtor’s charges. This procedure was approved by this court in the Bank Cases. Our disposition of this case renders it unnecessary to decide the other contentions raised by the parties. The order of the district court will be affirmed and the matter remanded to the district court for further proceedings consistent with this opinion. . One appellant’s answer does not assert a pre-reorganization set-off. Another’s answer does not clearly indicate that an attempted set-off was made before the filing of the reorganization petition. In view of our disposition of this appeal, we need not consider the effect of these variations. . Hereinafter cited as Bank Cases. . One appellant argues that because there was allegedly an effective nonjudicial set-off before these proceedings were instituted, there was no property of the Debtor in that appellant’s possession at the inception of the reorganization proceedings. We view that argument as but another formulation of the basic issue posed as to the reorganization status of the appellants’ claims. . We do not necessarily approve all the authority cited in this opinion.

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UNITED STATES of America, Plaintiff-Appellee, v. Noah Willis ALTIZER, aka Robert Van Horn, Defendant-Appellant. No. 72-3680 Summary Calendar. United States Court of Appeals, Fifth Circuit. May 8, 1973. James A. Robbins, Jr., Rome, Ga. (Court-appointed), for defendant-appellant. John W. Stokes, Jr., Robert L. Smith, Asst. U. S. Atty., Atlanta, Ga., for plaintiff-appellee. 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 481 F.2d 409. PER CURIAM: Appellant attacks the basis of a search warrant. His ground for attack is that the affidavit supporting the warrant was based on information obtained from his purported wife after her arrest without probable cause. He asserts the fruit of the poisonous tree doctrine. The search was of a trailer-home occupied by appellant and his purported wife. The district court held that appellant lacked standing to assert in his own defense the defalcation of the officers toward the wife. We agree. See Alderman v. United States (1969) 394 U.S. 165, 174, 89 S.Ct. 961, 22 L.Ed.2d 176, 187; Wong Sun v. United States (1963) 371 U.S. 471, 491-492, 83 S.Ct. 407, 9 L.Ed.2d 441, 458. The assignments of error based on the alleged illegal arrest of appellant and the search of his automobile are without merit. No product of the arrest was used against appellant in connection with his trial and conviction. The evidence obtained from the search of appel-) lant’s automobile was not improperly admitted. The automobile was not searched at the time of appellant’s illegal arrest, but only upon a search war-, rant which was issued on information also obtained from appellant’s purported wife. Affirmed. . The district court found that the purported wife was not in fact appellant’s wife but that they were occupying the trailer-home together.

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Roy Alton LANE, Petitioner-Appellant, v. ATTORNEY GENERAL OF the UNITED STATES, Respondent-Appellee. No. 72-1747. United States Court of Appeals, Fifth Circuit. April 26, 1973. William A. Clineburg, Atlanta, Ga., Court-appointed for petitioner-appellant. John W. Stokes, Jr., U. S. Atty., P. Bruce Kirwan, William P. Gaffney, Asst. U. S. Attys., Atlanta, Ga., for respondent-appellee. Before RIVES, THORNBERRY and GOLDBERG, Circuit Judges. GOLDBERG, Circuit Judge: Appellant, Roy Alton Lane, is currently an inmate of the Atlanta Federal Penitentiary. On February 1, 1963, he was sentenced by the United States District Court for the Northern District of Georgia to serve ten years imprisonment for bank robbery. After serving approximately one-third of his sentence, appellant was paroled on May 11, 1966. On July 2, 1970, after appellant had been on parole for more than four years, the United States Board of Parole issued a warrant charging him with violating certain conditions of his parole. Specifically, he was charged with (1) public drunkenness, (2) leaving his district without obtaining permission from his parole officer, (3) driving while under the influence of alcohol, (4) using alcoholic beverages excessively and failing to work regularly, and (5) failing to report to his probation officer as directed. On July 6, 1970, appellant was arrested pursuant to the warrant and imprisoned in the Fulton County, Georgia, jail. On July 13, 1970, appellant was interviewed in the Fulton County Jail by a United States Probation Officer. During the course of this interview, appellant signed an “Attorney-Witness Election Form” admitting that he had violated one or more of the conditions of his release on parole and stating that he wished to be given his revocation hearing upon his return to a federal institution. On July 29, 1970, appellant was transferred to the Atlanta Federal Penitentiary where he was interviewed by a caseworker on August 6, 1970. During the course of that interview appellant sipned a second “Attorney-Witness Election Form,” which indicated that he wished to waive the right to retain counsel. He alleges that he waived that “right” because he had no money with which to pay an attorney. On August 10, 1970, appellant’s parole revocation hearing was conducted at the Atlanta Federal Penitentiary. On September 21, 1970, the United States Board of Parole ordered that appellant’s parole be revoked and that he resume serving the remainder of his sentence. On December 14, 1971, appellant filed a petition for a writ of habeas corpus in the United States District Court for the Northern District of Georgia. Appellant alleged that the procedure followed at his parole revocation hearing violated his constitutional rights in that he was not afforded the assistance of counsel even though he was an indigent and could not pay for counsel himself. After receiving a response from the United States but without conducting an evidentiary hearing, the court below denied the petition. The court’s order makes clear that the learned judge based his decision on an understanding that the due process clause of the Constitution does not require that counsel be afforded parolees at parole revocation hearings. The judge below further found that appellant had voluntarily waived counsel. Appellant shortly thereafter filed a motion with the district court asking it to vacate its earlier order. Appellant urged several grounds in support of his motion, but his principal emphasis was on a claim that his “waiver” of counsel was neither voluntarily nor knowingly made. The district court adhered to its denial of habeas relief and found that the entire waiver issue was immaterial if the Constitution does not require counsel in the first place. Appellant brings this appeal from the denial of habeas relief. He urges reversal on two distinct grounds. First, he insists that the due process clause of the Constitution demands that parolees be represented by counsel at parole revocation proceedings. Secondly, appellant argues that if the government allows parolees who can afford it to furnish their own retained counsel at parole revocation proceedings, the equal protection clause of the Constitution is violated by the government’s refusal to furnish counsel to those who cannot afford to pay for their own attorneys. Although it has perhaps been heretofore supposed that resolving these issues required Sisyphean judicial labors, our task is eased by a rare but equally fortunate occurrence. We are guided to our decision by the sagacious words of an opinion in our own Circuit that is itself going to press as we write this opinion, Cottle v. Wainwright, 5 Cir. 1973, 477 F.2d 269. I. DUE PROCESS Appellant persuasively insists that Morrissey v. Brewer, 1972, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484, when read with the Supreme Court eases developing the right to counsel, e. g., Powell v. Alabama, 1932, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158; Gideon v. Wainwright, 1963, 372 U.S. 335, 83 S.Ct. 792, 9 L.Ed.2d 799; In re Gault, 1967, 387 U.S. 1, 87 S.Ct. 1428, 18 L.Ed.2d 527; Argersinger v. Hamlin, 1972, 407 U.S. 25, 92 S.Ct. 2006, 32 L.Ed.2d 530, requires us to hold that due process of law is violated when a person’s parole is revoked without his having had the assistance of counsel. We need not and do not decide that issue. As did the Supreme Court in Morrissey v. Brewer, supra, 408 U.S. at 489, 92 S.Ct. at 2604, 33 L.Ed.2d at 499, and as did this Court in a very recent case regarding state parole revocation proceedings, Cottle v. Wainwright, 5 Cir. 1973, 477 F.2d 269, we expressly pretermit any discussion of the question of whether due process requires the appointment of counsel for indigents facing revocation of their parole. We do not reach the “due process” argument because we find that a different constitutional principle, that of “equal protection of the laws,” mandates the appointment of counsel for indigent parolees where, as here, the authority revoking parole permits more affluent parolees to appear with retained counsel. Of course, the Equal Protection clause appears in the Fourteenth Amendment, which is applicable only to the states. But Bolling v. Sharpe, 1954, 347 U.S. 497, 74 S.Ct. 693, 98 L.Ed. 884, made clear that the federal government cannot, consistent with the due process required by the Fifth Amendment, which is applicable to the federal government, do that which the states are forbidden to do by the Equal Protection clause. See also Van Blaricom v. Forscht, 5 Cir. 1973, 473 F.2d 1323 (slip op. no. 72-1374, Feb. 21, 1973). II. EQUAL PROTECTION The equal protection issue was only recently before us for the first time in Cottle v. Wainwright, supra. There, this Court held that Florida, “once having provided for retained counsel . . . cannot constitutionally deny the same opportunity to indigents.” Here, the federal government unquestionably allows the appearance of retained counsel, 28 C.F.R. § 2.41. The question now before us is whether the federal government may constitutionally deny the assistance of counsel to those unable to pay attorney’s fees. In Cottle, supra, we agreed with the Tenth Circuit’s position as expressed in Earnest v. Willingham, 1969, 10 Cir., 406 F.2d 681, 683: “But at issue here is the question whether an agency of the Federal government can administratively afford counsel at revocation hearings to those financially able to retain one while refusing appointed counsel to those financially unable. To pose the question is to answer it, for Griffin [Griffin v. Illinois, 1956, 351 U.S. 12, 76 S.Ct. 585, 100 L.Ed. 891] and its progeny have made it clear beyond doubt that where liberty is at stake a State may not grant to one even a non-constitutional, statutory right such as here involved and deny it to another because of poverty. And it goes without saying that a Federal agency may not, consistently with Fifth Amendment due process, do that which a State is forbidden to do by Fourteenth Amendment due process.” The Cottle case controls and is dispositive of the case now before us. Judge Tuttle’s well-reasoned opinion in Cottle amply discusses the relevant legal issues, and there is little we can add to it. We note that Cottle’s recognition that the assistance of counsel cannot be said to be “an empty ritual” is particularly true on the facts of the instant case. The second “charge” against appellant, for example, alleged that he had travelled outside his district without permission. 28 C.F.R. § 2.28, however, specifically authorizes certain travel even without prior approval, and had appellant been afforded counsel, the regulation might have been found and utilized as a “defense” to the charge. Thus, even though appellant may have “admitted” the facts charged, a legal question may well have been controlling. Lastly, we note that virtually all of the commentators agree that the result reached in Cottle, which we reiterate today, is not only constitutionally required but is extremely desirable from a policy standpoint. See Comment, The Emerging Right to Counsel at Parole Revocation Hearings, 9 Houston L.Rev. 290 (1971). See also ABA Project on Minimum Standards for Criminal Justice, Standards Relating to Probation § 5.-4(a)(ii) (approved draft 1970); ABA Project on Minimum Standards Relating to Providing Defense Services § 4.2 (approved draft 1968); Cohen, Due Process, Equal Protection and State Parole Revocation Proceedings, 42 U.Colo.L. Rev. 197 (1970); Dyke, Parole Revocation Hearings in California: The Right to Counsel, 59 Calif.L.Rev. 1215 (1971); Model Penal Code § 305.15(1) (proposed official draft 1962); President’s Commission on Law Enforcement and the Administration of Justice: Report: The Challenge of Crime in a Free Society 150, Task Force Report: The Courts 54, and Task Force Report: Corrections 86-88 (1967); Sklar, Law and Practice in Probation and Parole Revocation Hearings, 55 Crim.L.C. & P.S. 175 (1964); Note, Parole Revocation in the Federal System, 56 Geo.L.J. 705, 719-726 (1968); Note, Parole: Rights and Revocation, 37 Brooklyn L.Rev. 550 (1971); Comment, Procedural Safeguards in Federal Parole Revocation Hearings, 57 N.W.U.L.Rev. 737, 758-760 (1963). III. Before appellant may obtain relief under our holding, he must first show (1) that he was in fact an indigent, and (2) that he has not willingly, knowingly, and voluntarily waived the right to have counsel appointed to represent him at the parole revocation hearing. Because the signed “Attorney-Witness Election Forms” state on their face that appellant waived only the “right” to retain counsel, the forms are not dispositive. A factual inquiry into these two questions must be had, and the case must therefore be remanded to the district court for further proceedings in accordance with this opinion. We leave to the district court in the first instance the task of fashioning an appropriate remedy should appellant show himself to be qualified for relief. It appears that the burden of that task may be considerably lightened by use of 18 U.S.C. § 3006A, which was not in effect in its current form at the time appellant’s parole was revoked. Although it has been suggested that § 3006A does not authorize use of federal funds to appoint counsel at revocation proceedings, 45 Comp.Gen. 780 (1966), that holding was made before the current version was enacted. Section 3006A(a) now specifically mentions “furnishing representation for any person financially unable to obtain adequate representation (3) who is subject to revocation of parole ...” and § 3006A(g) captioned “Discretionary appointments,” provides that, “Any person subject to revocation of parole . . . may be furnished representation whenever the United States magistrate or the court determines that the interests of justice so require and such person is financially unable to obtain representation.” It would be a jurisprudential anomaly if the act providing compensation for attorneys appointed to represent a person “who is subject to revocation of parole” did not contemplate such appointments. Modern jurisprudence cannot tolerate the denial of even a non-constitutional right to counsel solely because of indigency. Wealth as a classifier of rights is suspect in the embrace of the equal protection clause of the Constitution. The unconstitutionality of government-sanctioned inequality between indigents and non-indigents in the granting or withholding of human rights has been confronted and discussed in many contexts and with many aspects. In the right to counsel-bailiwick, however, we can find no room for equivocation or ambivalence or apologetics. If representation by counsel is a matter of right, be it constitutional, statutory, or even administrative, it can neither rise nor fall by counting-house standards. The constitutional road has been long, rugged, and sometimes tortuous in establishing that principle, and we find neither reason nor precedent to stray even a step from that revered path. To hold otherwise would travesty the hallowed concept of equal protection under the law that our Constitution demands. Granting the right to counsel affords a mighty and not a “ritualistic” protection, and the equality of that protection can be assured only if the indigent are furnished that which their more economically fortunate brothers can procure. No subtlety of constitutional law can be summoned to deny unto those who have not, while granting unto those who have, that which the Nation has vouchsafed. The district court is directed to determine whether appellant can qualify for relief. If so, the court is further directed to investigate the available facilities, procedures, and resources and to fashion a remedy for assuring that despite the fact that he is an indigent appellant may obtain representation of counsel at any federal parole revocation hearing. Reversed and remanded.

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James Jonathan MAPP et al., Plaintiffs-Appellants and Cross-Appellees, v. The BOARD OF EDUCATION OF the CITY OF CHATTANOOGA, etc., et al., Defendant-Appellee and Cross-Appellant. Nos. 71-2006, 71-2007, 72-1443 and 72-1444. United States Court of Appeals, Sixth Circuit. April 30, 1973. William E. Miller, Circuit Judge, filed opinion concurring in result. Weick, Circuit Judge, and O’Sullivan, Senior Circuit Judge, filed dissenting opinion. Avon N. Williams, Jr., Nashville, Tenn., for appellant Mapp in No. 71-2006; Raymond B. Witt, Jr., Chattanooga, Tenn., for appellant Bd. of Ed. in Nos. 71-2007 and 72-1444; Eugene Collins, Chattanooga, Tenn., for appellant City of Chattanooga in No. 72-1443 (Jack Greenberg, James M. Nabrit III, Norman J. Chachkin, Sylvia Drew, New York City, W. Frank Brown, III, Witt, Gaither, Abernathy & Wilson, Chattanooga, Tenn., on briefs). Avon N. Williams, Jr., Nashville, Tenn., for appellee Mapp in Nos. 71-2007, 72-1443 and 72-1444; Raymond B. Witt, Jr., Chattanooga, Tenn., for appellee Bd. of Ed. in No. 71-2006; Eugene Collins, Chattanooga, Tenn., for appellee City of Chattanooga in No. 71-2006 (John Henniss, W. Frank Brown, III, Ellis K. Meacham, Chattanooga, Tenn., Jack Greenberg, James M. Nabrit, III, Norman J. Chachkin, Sylvia Drew, New York City, on briefs). Before PHILLIPS, Chief Judge, WEICK, EDWARDS, CELEBREZZE, PECK, McCREE, MILLER, KENT and LIVELY, Circuit Judges, and O’SULLIVAN, Senior Circuit Judge, in banc. PER CURIAM. This is a school desegregation case involving the school system of Chattanooga, Tennessee. The present appeals are from the decisions of District Judge Frank W. Wilson reported in 329 F.Supp. 1374 (E.D.Tenn.1971) and 341 F.Supp. 193 (E.D.Tenn.1972). Appeals have been perfected by the City Board of Education and by the City of Chattanooga and its Mayor. An appeal also has been perfected by the plaintiffs from the decision reported at 329 F.Supp. 1374 (E.D.Tenn.1971). The appeals originally were heard by a panel of three judges of this court, whose decision was announced on October 11, 1972. The majority opinion of the panel remanded the case to the District Court for further consideration. The dissenting opinion favored affirmance of the judgments of the District Court. Thereafter, a majority of the judges of this court who are in regular active service ordered that the appeals be reheard by the court in banc. Fed.R.App.P. 35, Local Rule 3(b) of this court provides that: “The effect of the granting of a rehearing in banc shall be to vacate the previous opinion and judgment of this court, to stay the mandate and to restore the case on the docket as a pending appeal.” The comprehensive reported opinions of District Judge Wilson contained a full statement of the issues and pertinent facts, and repetition in this opinion is not required. Upon consideration of the briefs of the parties, the oral arguments before the court sitting in banc, and the entire record, we affirm the judgments of the District Court for the reasons stated in the opinions of Judge Wilson. Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 91 S.Ct. 1267, 28 L.Ed. 2d 554 (1971); Davis v. Board of Commissioners, 402 U.S. 33, 91 S.Ct. 1289, 28 L.Ed.2d 577 (1971); North Carolina State Board of Education v. Swann, 402 U.S. 43, 91 S.Ct. 1284, 28 L.Ed.2d 586 (1971); Brown v. Board of Education [II], 349 U.S. 294, 75 S.Ct. 753, 99 L.Ed. 1083 (1955), Brown v. Board of Education [I], 347 U.S. 483, 74 S.Ct. 686, 98 L.Ed. 873 (1954); Northcross v. Board of Education of Memphis City Schools, 466 F.2d 890 (6th Cir. 1972); Kelley v. Metropolitan Board of Education of Nashville & Davidson County, Tennessee, 463 F.2d 732 (6th Cir.), cert. denied 409 U.S. 1001, 93 S.Ct. 322, 34 L.Ed.2d 262 (1972); Davis v. School District of City of Pontiac, 443 F.2d 573 (6th Cir.), cert. denied, 404 U.S. 913, 92 S.Ct. 233, 30 L.Ed.2d 186 (1971). The Board of Education has filed a supplemental record in this court containing statistics said to reflect changes which have occurred after the decisions of the District Court. We decline to consider these statistics in the present appeal. Appropriate relief required by changed conditions is a matter for presentation to and consideration by the District Court. We reemphasize the holding of this court in Kelley v. Metropolitan Board of Education of Nashville and Davidson County, supra: “Like most decrees in equity, an injunctive decree in a school desegregation case is always subject to modification on the basis of changed circumstances.” 463 F.2d at 745-746. Affirmed. Since both parties appealed, no costs are taxed. WILLIAM E. MILLER, Circuit Judge (concurring in the result). I concur in the result reached by the Court in these appeals. As I read the opinion of the Supreme Court in Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 91 S.Ct. 1267, 28 L.Ed.2d 554 (1971), where vestiges of state-imposed segregation still exist, the district courts have broad powers to fashion remedies that will assure a unitary school system. A careful review of the record in this case indicates to me that the district judge was not only clearly justified in holding that vestiges of state-imposed segregation still existed in the Chattanooga system, but that he did not abuse his discretion in fashioning remedies within the precepts of the Swann decision. Since for these reasons I concur in the result, I do not feel committed to all of the language, reasons and conclusions set forth in the per curiam opinion of this Court or in the two opinions of Judge Wilson under review reported at 329 F.Supp. 1374 (E.D.Tenn., 1971) and 341 F.Supp. 193 (E.D.Tenn., 1972). WEICK, Circuit Judge, and O’SULLIVAN, Senior Circuit Judge (dissenting). As members of the original panel who wrote the majority opinion from which the en banc hearing was ordered, we respectfully dissent. Following the en banc hearing, the District Court’s opinion was affirmed, per curiam, without, in our opinion, adequate discussion of the assignment of errors or the merits of substantial and important issues raised on appeal by the School Board and the Board of Commissioners of the City of Chattanooga. The Commissioners were the taxing authority; however, the Board of Commissioners was not made a party initially, but has since been made a party to the judgment without affording it an opportunity to question the merits of the case. No consideration was given to the supplemental record certified to this Court by the District Court indicating substantial changes in conditions affecting the school system, brought about by mobility of both white and black families, which changes in our judgment impel a remand for consideration before we place our stamp of approval on the District Court’s opinions. We consider it right to say preliminarily that in our view no decision of the United States Supreme Court has held that in all events and without reference to the good faith and good conduct of the involved school or other state or municipal authorities, there must always be bussing to bring about a mix of the races. Goss v. The Bd. of Educ. of the City of Knoxville, Tenn. (6th Cir., No. 72-1766-1767, decided Mar. 29, 1973). In the case before us, the District Judge found that the Chattanooga School Board was guilty of no bad faith and that up to February 4, 1972, the Board had, in fact, established a unitary school system “within which no person is to be effectively excluded from any school because of race or color.” This was the command of Alexander v. Holmes County Board of Educ., 396 U.S. 19, 20, 90 S.Ct. 29, 24 L.Ed.2d 19 (1969). The District Judge’s opinion dealing with the Chattanooga Board’s good faith (not reported) had this to say: “This lawsuit has been in an area where the law has been evolving, and the Court cannot say that the defendants have acted in bad faith in failing always to perceive or anticipate that development of the law. For example, in all of its orders entered prior to the decision of the United States Supreme Court in the case of Green v. School Board of New Kent County, 391 U.S. 430, 88 S.Ct. 1689, 20 L.Ed.2d 716 (1968), this Court was itself of the opinion that genuine freedom of choice on the part of students in school attendance was compliance with the Equal Protection Clause of the Constitution. While the Board has vigorously contested the plaintiff’s contentions at every stage of this lawsuit, it further appears to the Court that when factual and legal issues have been resolved, the Board has at all times complied or attempted to comply in good faith with the orders and directions of the Court.” (Emphasis added). There seems now to have developed a view that since Swann v. Charlotte-Mecklenburg Bd. of Educ., 402 U.S. 1, 91 S.Ct. 1267, 28 L.Ed.2d 554 (1971), nothing other than bussing will satisfy the original command of Brown I and Brown II. This is not so. In the Swann decision the District Court found that the school authorities there involved had flouted the Brown commands. His opinion cannot be read as other than a finding that the school authorities were deliberately maintaining de jure segregation. The opposite is true in Chattanooga. Swann did no more than affirm the District Judge’s finding of deliberate creation or perpetuation of de jure segregation. We do not read Swann as holding that the Constitution requires that, black or white, a school child must now be denied the right to attend the school of his choice — desirable because of its nearness to his place of residence, or for any other circumstance prompting such choice —solely because of the color of his skin. In our view such a holding would collide with the commands of Brown I and Brown II, 347 U.S. 483, 74 S.Ct. 686 (1954) and 349 U.S. 294, 75 S.Ct. 753 (1955). Can obedience to Brown I and Brown II be accomplished only by imposition of an Attainder upon so many whose only contribution to the wrongs sought to be alleviated by Brown derives from the circumstance of their birth ? What will be the dimensions of such selective attainting of some, but not others, among the groups that make up our total society? See DeFunis v. Odegaard, Wash. 507 P.2d 1169 (1973). There a divided Supreme Court of the State of Washington held it proper to deny to a qualified student the right to study law at the State University, solely because of his race. This was done so that others of lesser qualifications, but of a different race, could be admitted to the law school. We have set out above that the District Judge believed that in Chattanooga the schools had been desegregated and that a unitary system had been established. We have affirmed such holding. Mapp v. Board of Educ. of City of Chattanooga, 373 F.2d 75 (1967). The District Judge then went on to say: “This lawsuit has been in an area where the law has been evolving, and the Court cannot say that the defendants have acted in bad faith in failing always to perceive or anticipate that development of the law.” Must every School Board now be expected, clairvoyantly, to guess what new judicial device may be considered by a District Judge to be a better way of serving desegregation, and make fresh adjustments if such device is found permissible by some appellate court? Across the nation, especially in the cities, rapid population shifts have brought about new concentrations of racial groups. Must the courts be ready to move in with fresh commands and new rerouting of buses? The chaos that can be the result is forecast by Chief Justice Burger’s language in Swann. “It does not follow that the communities served by such systems will remain demographically stable, for in a growing, mobile society, few will do so. Neither school authorities nor district courts are constitutionally required to make year-by-year adjustments of the racial composition of student bodies once the affirmative duty to desegregate has been accomplished and racial discrimination through official action is eliminated from the system. This does not mean that federal courts are without power to deal with future problems; but in the absence of a showing that either the school authorities or some other agency of the State has deliberately attempted to fix or alter demographic patterns to affect the racial composition of the schools, further intervention by a district court should not be necessary.” (Emphasis added.) (402 U.S. at 31, 32, 91 S.Ct. at 1283, 1284.) We must therefore consider the issues raised on appeal. I THE QUOTA SYSTEM The District Court misconstrued recent decisions of the Supreme Court as requiring racial quotas in the public schools. It ordered “a racial ratio of not less than 30% nor more than 70% of any race in each elementary school within the system with but five exceptions . . . . ” 329 F.Supp. 1374, 1382. The five schools excepted therefrom were found not to be imbalanced on account of past or present discrimination. Similar quotas were ordered for Junior High Schools. Senior High Schools are still under consideration. In our opinion, the decision in Swann v. Charlotte-Mecklenburg Board of Educ., 402 U.S. 1, 91 S.Ct. 1267 (1971), on which the District Court relied, does not mandate the adoption of quotas in each and every school in the system regardless of where the children reside. Mr. Chief Justice Burger, who wrote the opinion for the Court said: “If we were to read the holding of the District Court to require, as a matter of substantive constitutional right, any particular degree of racial balance or mixing that approach would be disapproved and we would be obliged to reverse. The constitutional command to desegregate schools does not mean that every school in every community must always reflect the racial composition of the school system as a whole.” (402 U.S. at 24, 91 S.Ct. at 1280). In Winston-Salem/Forsyth Bd. of Educ. v. Scott, 404 U.S. 1221, 92 S.Ct. 1236, 31 L.Ed.2d 441 (1971), in an Opinion in Chambers, Chief Justice Burger, after quoting the above language from Swann, stated: “Nothing could be plainer, or so I had thought, than Swann’s disapproval of the 71%-29% racial composition found in the Swann case as the controlling factor in the assignment of pupils, simply because that was the racial composition of the whole school system.” (404 U.S. at 1228, 92 S.Ct. at 1240). Chief Justice Burger further said: “The present status of the findings is not clear to me, but the District Court on reconsideration following the remand seems to have thought that it was compelled to achieve a fixed racial balance reflecting the composition of the total county system. The explicit language of the Court’s opinion in Swann suggests a possible confusion on this point. I do not attempt to construe that language, but simply to recite it verbatim: ‘The constitutional command to desegregate schools does not mean that every school in every community must always reflect the racial composition of the school system as a whole.’ 402 U.S. at 24 [91 S.Ct., at 1280].” (404 U.S. at 1230-1231, 92 S.Ct. at 1241). In Deal v. Cincinnati Bd. of Educ., 369 F.2d 55 (6th Cir. 1966), affirming 244 F.Supp. 572 (S.D.Ohio, 1965), cert. denied, 389 U.S. 847, 88 S.Ct. 39, 19 L.Ed.2d 114, we stated: “Moreover, our refusal to restrict the school board with a mathematically certain formula for the vindication of individual constitutional rights is not an innovation. The right to a trial by an impartial, fairly selected jury, is well established in our law and it has been protected against the same sort of disguised racial discrimination that has been attempted in the school desegregation cases. Eubanks v. State of Louisiana, 356 U.S. 584, 78 S.Ct. 970, 2 L.Ed.2d 991 (1958); Smith v. State of Texas, 311 U.S. 128, 61 S.Ct. 164, 85 L.Ed. 84 (1940); Norris v. State of Alabama, 294 U.S. 587, 55 S.Ct. 579, 79 L.Ed. 1074 (1935); Ex parte State of Virginia, 100 U.S. 339, 25 L.Ed. 676 (1879); Strauder v. State of West Virginia, 100 U.S. 303, 25 L.Ed. 664 (1879). However, it is equally clear that a defendant in a criminal case is not constitutionally entitled to demand a proportionate number of his race on the jury which is to try him nor on the venire or jury roll from which petit jurors are to be chosen. Swain v. State of Alabama, 380 U.S. 202, 208, 85 S.Ct. 824, 13 L.Ed.2d 759 (1965); Akins v. State of Texas, 325 U.S. 398, 403, 65 S.Ct. 1276, 89 L.Ed. 1692 (1945). While the two situations may not be completely analogous, the potential dangers to a criminal defendant, forced to face a racially imbalanced jury, are at least as great as the intangible, often speculative injuries threatening a student in a racially imbalanced school.” (369 F.2d at 61-62). The trouble is that the quota system, which in our judgment is alien to a free country, has been extended to other fields and with discriminatory and disastrous results. We see no occasion for the District Judge to rely on the drastic order of Judge McMillan considered in Swann, supra, or that of Judge Merhige, reversed in Bradley. The District Court was obviously influenced by the fact that the Supreme Court in Swann affirmed a very broad order of District Judge McMillan. This appears from a colloquy between the Court and counsel for the Board, at the evidentiary hearing, as follows: “THE COURT: Well, what is your question about what they did? Did they or did they not approve all of the procedures that had been followed in the Mecklenburg case? MR. WITT: They placed great— THE COURT: Well, just answer my question, did they or did they not approve every single procedure followed in the Mecklenburg case. MR. WITT: Yes. THE COURT: So is there any question about what they did ? MR. WITT: Yes.” (Tr. 1693-19-20) But the Supreme Court in Swann pointed out the background of defiance by that Board which occasioned the broad order: “As the voluminous record in this case shows, the predicate for the District Court’s use of the 71% — 29% ra- tio was twofold: first, its express finding, approved by the Court of Appeals and not challenged here, that a dual school system had been maintained by the school authorities at least until 1969; second, its finding, also approved by the Court of Appeals, that the school board had totally defaulted in its acknowledged duty to come forward with an acceptable plan of its own, notwithstanding the patient efforts of the District Judge, who, on at least three occasions, urged the board to submit plans." (Emphasis added.) (Footnotes omitted) (402 U.S. at 24, 91 S.Ct. at 1280). In our case, prior to the entry of the orders from which these appeals had been taken, no child was excluded from any school on account of color or race. The District Court found that the Board has acted in good faith and has at all times “complied or attempted to comply with the orders and directions of the Court.” The Board was not in default. This distinguishes Swann. The quota system results in the violation of the constitutional rights of innocent black children and white children in order to redress past violations of the constitutional rights of the plaintiffs. Both black and white children, without their consent or that of their parents, are forced by judicial fiat to be transported away from their homes and neighborhood schools to other strange places and schools, solely because of the color of their skin. These innocent children have committed no offense to justify such treatment. Plaintiffs seem to recognize this fact because one of the assignments of error in their appeal was their claim that the District Court erred in ordering the closing of black schools without ordering a sufficient number of white schools closed. Plaintiffs’ brief states: “Thus, black youngsters will be required to leave their neighborhoods to go to other schools for all grades or for grades 1-3 in numbers disproportionate to the numbers of blacks.” (Plaintiff-Appellants’ brief, p. 30). There is no provision in the Constitution which can be read as saying that the races must be mixed in each and every school in the system, and no provision requiring that white children be bussed away from their neighborhood schools in the suburbs, to schools in the inner city, or that black children must be bussed away from their neighborhood schools to schools in the suburbs, in order to achieve a racial mixture or quota. The Board can hardly be faulted for housing patterns of a community or for the concentration of blacks in the inner city, as these conditions exist in other cities thrpughout the country, regardless of the type of school system in operation, i. e., whether de jure or de facto. In his book, “Negroes In Cities,” Dr. Karl Taeuber states that residential segregation exists “regardless of the character of local laws and policies and regardless of other forms of discrimination.” He said substantially the same thing in his article, “Residential Segregation,” in the August, 1965 issue of Scientific American. In Bradley v. School Board of City of Richmond, 462 F.2d 1058 at 1066 (4th Cir. 1972), cert. granted, 409 U.S. 1124, 93 S.Ct. 936, 35 L.Ed.2d 255, 1973, the Court said: “[T]he root causes of the concentration of blacks in the inner cities of America are simply not known . . . ." And “Whatever the basic causes, it has not been school assignments, and school assignments cannot reverse that trend.” It is, of course, popular to blame the Boards of Education for everything, but it is unfair to require the educational system to dismantle this condition for which it was in no wise responsible. II UNITARY SCHOOL SYSTEM Unlike the District Court, we have experienced difficulty in understanding not only what constitutes a unitary school system, but also what steps the Constitution requires must now be taken to eliminate a de jure system and to bring about a unitary system. Other Judges, legal scholars and writers have had similar difficulty. We suggested in Northcross that the Supreme Court had not defined a unitary school system. Northcross v. Board of Educ. of Memphis, Tenn. City Schools, 420 F.2d 546 (6th Cir. 1969). We were corrected in a concurring opinion written by Chief Justice Burger, wherein he said: “The suggestion that the Court has not defined a unitary school system is not supportable. In Alexander v. Holmes County Bd. of Educ., 396 U.S. 19 [90 S.Ct. 29, 24 L.Ed.2d 19] (1969), we stated, albeit perhaps too cryptically, that a unitary system was one ‘within which no person is to be effectively excluded from any school because of race or color.’ ” Northcross v. Bd. of Educ. of Memphis, Tenn., 397 U.S. 232 at 236-237, 90 S.Ct. 891, 893, 25 L.Ed.2d 246 (1970). (Emphasis added). Under this definition the School Board already had achieved a unitary system long before the entry of the orders from which the appeals were taken. While this did not establish racial quotas, or a mixture in all of the schools as desired by plaintiffs, no pupil was excluded from any school on account of his color or race. This is all that Brown I and Brown II ever contemplated. These decisions, in our judgment, did not envision the use of school children to bring about an integration of the races. III MAXIMIZING INTEGRATION The District Court required the Board to establish that it had taken affirmative action to “maximize integration” in all feasible ways as required by Kelley and Robinson. The Supreme Court in Davis v. Board of School Comm’rs of Mobile County, 402 U.S. 33, 91 S.Ct. 1289, 28 L.Ed.2d 577 (1971), held that “school authorities should make every effort to achieve the greatest possible degree of actual desegregation, taking into account the practicalities of the situation.” (402 U.S. at 37, 91 S.Ct. at 1292). We have not found where the Supreme Court has ever required School Boards to “maximize integration”. The difficulty is that the District Court may well have understood the words to require integration of the races by fixed numbers or quotas in each public school in the system, regardless of where the pupils live, and regardless of their economic circumstances. This can be accomplished only by extensive and expensive bussing and by violation of the constitutional rights of both races. If it is desirable to integrate the races, why not start with adults, rather than to pick on defenseless school children? Of course, it would take an Act of Congress to compel adults to integrate. We doubt that Congress could ever be persuaded to pass such legislation, and if it were so persuaded, such law would clearly be unconstitutional in violation of the First Amendment which guarantees freedom of association. N. A. A. C. P. v. Alabama, 357 U.S. 449, 78 S.Ct. 1163, 2 L.Ed.2d 1488 (1958). In that case the Court denied enforcement of a state contempt citation against the petitioner, which citation was issued when petitioner refused to disclose its Alabama membership list. The adverse effect on the membership of disclosure of the roster of N.A.A.C.P. was, of course, somewhat speculative. Yet the Court held that the importance of the right of association was so great as to require protection, stating: “. . . [S]tate action which may have the effect of curtailing the freedom to associate is subject to the closest scrutiny.” (357 U.S., at 460-461, 78 S.Ct. at 1171). This principle was reaffirmed in Bates v. City of Little Rock, 361 U.S. 516, 80 S.Ct. 412, 4 L.Ed.2d 480 (1960). The language in the concurrence of Mr. Justice Black and Mr. Justice Douglas, is instructive. “. . . [W]e believe, as we indicated in United States v. Rumely, 345 U.S. 41, 48, at 56, [73 S.Ct. 543, 547, at 550, 97 L.Ed. 770] (concurring opinion), that First Amendment rights are beyond abridgment either by legislation that directly restrains their exercise or by suppression or impairment through harassment, humiliation, or exposure by government. One of those rights, freedom of assembly, includes of course freedom of association; and it is entitled to no less protection than any other First Amendment right as N. A. A. C. P. v. State of Alabama, 357 U.S. 449, at 460, [78 S.Ct. 1163, at 1170, 2 L.Ed.2d 1488], and De Jonge v. Oregon, 299 U.S. 353, at 363, [57 S.Ct. 255, at 259, 81 L.Ed. 278], hold. These are principles applicable to all people under our Constitution irrespective of their race, color, politics, or religion.” (Emphasis added) 361 U.S. at 528, 80 S.Ct. at 419. “All people” includes children. It should be pointed out that there is a marked difference between voluntary bussing and induced or forced bussing in the. effect on the children involved and their parents. No one can have any objection to the school system’s furnishing voluntary transportation from the child’s residence to the school nearest thereto. It is something entirely different when the child, solely because of the color of his skin, is assigned away from his neighborhood school, by a court order, and is required to be transported to another school (whether by his parents’ ear or by induced bussing) some distance away from his home. Brown I speaks of the feeling-of-inferiority effect on children as the result of discriminatory state action where the children are not permitted to attend certain public schools because of the color of their skin. This condition would seem to persist still if children of both races are prohibited by court order from attending schools nearest to their residences, merely because of the color of their skin, and are required to be taken elsewhere to school. IV BURDEN OF PROOF Where a dual system has been maintained, the courts have placed the burden of proof upon the School Board to establish that present racial imbalances in a particular school are not the result of past discriminatory actions, although the eases are not very clear as to just how or in what manner the Board can ever meet such a heavy burden. But in a case like ours, where the Board has always complied with the desegregation orders of the Court, and the plaintiffs have filed motions for further relief whenever new decisions have been announced expanding the rights of plaintiffs in school desegregation cases, it would seem to us to be only fair that plaintiffs should have the burden to prove that they are entitled to such further relief. The Board ought not to have the burden of disproving every contention which the plaintiffs may see fit to make in this case. In our judgment the Court erred in placing on the defendants the burden of proof in resisting plaintiffs’ motion for further relief. V PRACTICALITIES In considering desegregation plans the District Court must take into account the practicalities of the proposals. These include the cost thereof, how such proposals may affect the rights of the children involved in the assignments, induced bussing, and the educational achievement of such proposals. Boards of Education do not have unlimited funds to adopt any program which they please. Funds can be raised by taxation and appropriation. In the present case the Board of Education does not have the power to levy taxes or to appropriate funds to carry out its programs. Only the Board of Commissioners of the City has such power and authority. That Board was not made a party to the ease in the District Court until after the desegregation orders had been entered by the Court. We would assume that the Board of Commissioners has already appropriated the funds for the 1972-73 school year. If so, we do not know how an expenditure of $500,000 for buses would affect operation of the schools. The District Court has not ordered the Board of Commissioners to appropriate funds to provide for transportation of pupils, and we do not consider in this appeal the question whether it has the power to enter any such order. The Board of Commissioners is entitled, on remand, to a hearing on all issues of the case before any order is entered against it. We would not affirm the District Court’s opinions, but would remand for an evidentiary hearing to consider the changed circumstances and to proceed not inconsistent with this opinion. The District Court also should consider Title VIII of the Education Amendments of 1972, and its prohibition against the use of funds appropriated by Congress for bussing. In our judgment a quota system can discriminate invidiously in favor of one race against other races. Such a system can lower the quality of education and educational achievement, and instead of bringing harmony and good will between the races can polarize them. . Ross, “Why Quotas Won’t Work,” Reader’s Digest, Feb. 1973, page 51: “Current effort to atone for past discrimination against minorities is creating new victims by reverse discrimination. Can two wrongs make a right?” . Bradley v. School Board of Richmond, 462 F.2d 1058 (4th Cir. 1972), affirmed by an equally divided court in - U.S. -, 93 S.Ct. 1952, 36 L.Ed.2d 771. . See 83 Harvard Law Review 81, 82. . Many black people opposed forced bussing of their children. At the National Black Political Convention, held in Gary, Indiana (March, 1972), mandatory bussing and school integration were condemned as racist and as preserving a black minority structure. . 85 Harvard Law Review 3, 74, 76, 81, 83. . Brown I, 347 U.S. 483, 74 S.Ct. 686, 98 L.Ed. 873 (1954); Brown II, 349 U.S. 294, 75 S.Ct. 753, 99 L.Ed. 1083 (1955). . Kelley v. Metropolitan County Bd. of Educ. of Nashville & Davidson County, 436 F.2d 856 (6th Cir. 1970). . Robinson v. Shelby County Bd. of Educ., 442 F.2d 255 (6th Cir. 1971).

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Henry J. HOFFMAN, Jr., Plaintiff, Appellant, v. BETHLEHEM STEEL CORPORATION, Defendant, Appellee. No. 72-1149. United States Court of Appeals, Third Circuit. Argued March 1, 1973. Decided April 3, 1973. Robert E. Kopp, Civil Division, U. S. Dept. of Justice, Washington, D. C., Harlington Wood, Jr., Acting Asst. Atty. Gen., for plaintiff-appellant. John McN. Cramer, Reed, Smith, Shaw & McClay, Pittsburgh, Pa., for defendant-appellee. Before MARIS and ALDISERT, Circuit Judges, and GORBEY, District Judge. OPINION OF THE COURT GORBEY, District Judge. This action was initiated by Henry J. Hoffman, Jr., pursuant to the Military Selective Service Act of 1967 (the Act), to obtain unearned supplemental unemployment benefit (SUB) credit units. The appeal follows a non-jury trial at which judgment was entered in favor of the defendant, 335 F.Supp. 968. The issue posed on this appeal is whether the appellant, a returning veteran, should be given SUB credits for the period of his military service. Appellant was initially employed by appellee on May 3, 1966, in a position which was not temporary. On July 29, 1966, the plaintiff was granted a military leave of absence, having been inducted into the armed forces effective August 4, 1966. When the plaintiff was honorably discharged on August 2, 1968, he made a timely application for re-employment. The plaintiff was reinstated to his former position on August 6, 1968. Shortly thereafter, the plaintiff was placed on lay-off status, he was recalled for a period from September 3rd through September 7th, and was once again laid off for almost all of the remainder of the year. As of September 7, 1968, the plaintiff had been credited with seven and one-half SUB credit units, which accrue under Bethlehem Steel’s supplemental unemployment benefit plan (the Plan) and are used at the rate of one credit unit per week of lay-off. The Plan, which is designed to provide weekly benefits to augment state unemployment benefits, was established by a collective bargaining agreement between the defendant and the United Steel Workers of America, dated July 1, 1962. Under this Plan, the number of weeks for which covered employee receives benefits depends on the number of SUB credit units accrued. The formula by which an employee accrues credits, as set forth in paragraph 2.0 of the Plan, permits an employee to accrue one-half credit for each week “in which he has any of the following hours . . . : (a) hours work for the company, (b) hours not worked for which he is paid, such as vacation hours or hours for which he received jury allowance, (c) hours not worked and not paid for but which were lost because: (1) he was performing his duties as a member of the grievance committee, or president, vice-president, recording secretary, financial secretary and/or treasurer of the local of the union which is his collective bargaining representative, or (2) he was absent because of disability for which benefits are payable under Workmen’s Compensation or Occupational Disease Law or the company program of insurance benefits." On appellant’s return from military service, the company determined that he was not to be given any credits for the period of time spent in the military service. When Hoffman was laid off shortly after his return from military service, the company paid him SUB benefits based on .the seven and one-half credits, which he accrued between his first employment and his entry into the military service. The appellant challenges this determination, asserting that under 50 U.S.C. App. § 459 he must be deemed to have accrued SUB credits during his period of military service. It was stipulated that he would have accrued an additional forty-two and one-half SUB credits if he had continued to work regularly at Bethlehem instead of entering military service. After the company rejected Hoffman’s contentions, he brought this action in the district court which entered judgment for the defendant. In order to determine the appellant’s rights under the Act, it is necessary to examine the interrelationship between sections 9(b) and 9(c). The courts have consistently held that the statute treats two types of benefits: (1) “seniority, status and pay” and (2) “insurance and other benefits”. Kasmeier v. Chicago Rock Island & Pacific RR Co., 437 F.2d 151 (1971); Accardi v. Pennsylvania RR Co., 383 U.S. 225, 86 S.Ct. 768, 15 L.Ed.2d 717 (1966); Magma Copper Co., San Manuel Division v. Eager, 380 F.2d 318 (1967), rev’d. on other grounds, 389 U.S. 323, 88 S.Ct. 503, 19 L.Ed.2d 557 (1968). Seniority benefits are protected by § 9(b)(B)(i). Insurance and other benefits are protected by § 9(c). Section 9(c) was intended to add certain protections to the veteran and not to take away those which are granted him by § 9(b)(B) and other clauses of § 9(c). Accardi, supra, 383 U.S. at 232, 86 S.Ct. 868. The other benefits clause was added to the Act for the express purpose of entitling employees to receive, while in the service, such benefits as their employers accorded employees on leave of absence. Accardi, 383 U.S. at 231, 86 S.Ct. 768. If the accrual of SUB credits is an “other benefit”, appellant is entitled to no additional credits. The Plan specifically excludes employees on leave of absence from accruing benefits. A returning veteran’s rights under the Act are no greater than if he had been continuously employed during his military service. Fishgold v. Sullivan Dry Dock and Repair Corp., 328 U.S. 275, 66 S.Ct. 1105, 90 L.Ed. 1230 (1946); Gauweiler v. Elastic Stop Nut Corp., 162 F.2d 448 (1947). In determining an employee’s “seniority”, a returning veteran’s rights are not limited to treating him as being on a leave of absence. The Supreme Court stated in Accardi that the intention of Congress “was to preserve for the returning veterans the rights and benefits which would have automatically accrued to them had they remained in private employment rather than responding to the call of their country.” [383 U.S. at 229 and 230, 86 S.Ct. at 771.] .The court in Fishgold recognized that the Act guaranteed the veteran against loss of seniority by reason of his absence and that “his service in the armed services is counted as service in the plant so that he does not lose ground by reason of absence.” (328 U.S. at 285, 66 S.Ct. at 1111) This court has recognized that the veteran “is protected, while away, to the same extent as if he had been either continuously on the job in the plant or away on furlough or leave of absence for some personal reason.” Mentzel v. Diamond, 167 F.2d 299 (3d Cir. 1948). The issue therefore is whether the accrual of SUB credits are “seniority” or “other” benefits. “The term ‘seniority’ is not to be limited by a narrow, technical definition but must be given a meaning that is consonant with the intention of Congress as expressed in the 1940 Act.” Accardi, supra., 383 U.S. at 229, 86 S.Ct. at 771. That intention as described in Fishgold was to insure that returning veterans would not be penalized by reason of their absence from their civilian jobs but rather “to gain by their service to their country an advantage which the law withheld from those who stayed behind.” (328 U.S. at 284, 66 S.Ct. at 1111) The trial court has properly observed there is a distinction between rights which accrue with the passage of time and those for which some further act is required. Those which accrue with the passage of time are seniority rights which are protected under § 9(b). Those for which some other act is required, such as days of work, are not seniority rights protected by § 9(b) and would not accrue after the veteran returns. Kasmeier, supra. Here the learned trial judge observed that Bethlehem’s SUB benefits are accrued based on hours worked as spelled out in § 2.-0(e)(1)(ii) of the SUB plan. However, when that plan is analyzed, the same “bizarre results” are possible under Bethlehem’s plan as were possible under Accardi. In Accardi the court noted absolutely no distinction was made between a man that worked one day a month for 7 months and one who worked 365 days. This fact made it obvious that severance benefits did not in fact depend upon hours work but upon seniority. Similiarly, in Bethlehem’s plan no distinction is made between an employee who works 1 hour during the week and one who works 40 hours during the week. Each would accrue one-half of a SUB credit. It is illogical to say that a plan which permits the accrual of benefits to employees who worked 7 days out of 365 is based upon the passage of time while a plan which permits the accrual of benefits to an employee who works 1 hour out of 40 is based upon something more than the passage of time. In each, the employee receives credit for a full-time period regardless of the fractional part of the period which he works. This is not like Kasmeier where an employee only received the benefits when he worked the full period. Accordingly, we find that the SUB credits accrued pursuant to this Plan are seniority rights and as such are protected by § 9(b). Appellant is therefore entitled to the forty-two and one-half additional credits which he would have earned but for his military service. The decision of the district court will, therefore, be l’eversed. . 50 U.S.C.App. § 451 et seq. . Paragraph 9.2 of the Plan reads as follows : “Military Service” “If an employee enters the armed services directly from the employment of the company he shall, while in the service, be deemed for the purposes of the plan to be on leave of absence and shall not be entitled to any benefit. Only the credit units credited to him at the time of his entry into such service shall be credited to him upon his reinstatement as an employee of the company with unbroken continuous service, except as may otherwise be required by law.” . These sections read in part as follows: § 9(b) [50 U.S.C.App. § 459(b)] “(b) Reemployment rights. In the case of any such person who, in order to perform such training and service, has left or leaves a position . . . and . . . makes application for reemployment within ninety days after he is relieved from such training and service . . . . . . (B) If such position was in the employ of a private employer, such persons shall— (i) if still qualified to perform the duties of his position, be restored by such employer or his successor in interest to such position or to a position of like seniority status, and pay; . . ." § 9(c) [50 U.S.C.App. § 459(c)] “(c) Service considered as furlough or leave of absence (1) Any person who is restored to a position in accordance with the provisions of paragraph . . . (B) of subsection (b) shall be considered as having been on furlough or leave of absence during the period of training and service in the armed forces, shall be restored without loss of seniority, shall be entitled to participate in insurance or other benefits offered by the employer pursuant to established rules and practices relating to employees on furlough or leave of absence in effect with each employer at the time such person was inducted into such forces, and shall not be discharged from such position without cause within one year after such restoration. (2) It is declared to be the sense of the Congress that any person who is restored to a position in the accordance with the provisions of paragraph (B) of subsection (b) should be so restored in such manner as to give him such status in his employment as he would have enjoyed if he had continued in such employment continuously from the time of his entering the armed forces until the time of his restoration to such employment.” . 50 U.S.C.App. § 459(b) (B) (i). . 50 U.S.C.App. at § 459(c). . While Accardi, supra, refers to § 8(c), Section 8 of the 1940 Act was re-enacted as § 9 of the Selective Service Act of 1948, 62 Stat. 604, as amended 50 U.S.C. App. § 459. . Reference paragraph 9.2 of the Plan. The plan in Accardi had a similar provision which precluded employees on furlough or leave of absence from accruing benefits. (371 F.2d at 74) . This right was not questioned by the dissenting Justices in Eagar v. Magma Copper, 389 U.S. 323, 88 S.Ct. 503 (1968) (which reversed the court of appeals’ denial of vacation benefits to a returning veteran) who stated: “In dealing with the seniority problems under a like statutory provision, we held that the employee is to be treated as if he kept his position continuously during his stint in the Army. . . . petitioners do not contest [the employer’s] assertion that it does figure the length of vacation for returning servicemen as though they had been constantly on the payroll during the tour of duty in the military.” [Emphasis added.]

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

William E. COONS, Plaintiff-Appellant, v. WASHINGTON MIRROR WORKS, INC. and Electric Motors Corp., Defendants-Appellees. No. 433, Docket 72-1527. United States Court of Appeals, Second Circuit. Argued Jan. 31, 1973. Decided April 2, 1973. Rehearing Filed April 13, 1973. Rehearing Denied May 8, 1973. Charles Glatzer, New York City, of counsel (Glatzer & Silver, New York City, on the brief), for plaintiff-appellant. John F. Scully, New York City (Smith & Griffin, and Richard D. Smith, New York City, on the brief), for Washington Mirror Works, Inc. Murray L. Lewis, New York City (Fuchsberg & Fuchsberg, New York City, on the brief), for Electric Motors Corp. Before ANDERSON, FEINBERG and MULLIGAN, Circuit Judges. ROBERT P. ANDERSON, Circuit Judge: On June 11, 1969, William Coons, a truck driver, delivered a load of glass to Washington Mirror Works’ Bronx warehouse. As one of the crates of glass was being unloaded by means of an electric overhead hoist designed and installed by Electric Motors, one of the wheels of the hoist slipped off the track along which it moved laterally. As a result, the crate, which weighed approximately 1100 pounds, fell on Coons’ right leg, pinning him to the bed of the truck. Employees of Washington Mirror lifted the crate from his leg, and Coons was rushed to Fordham Hospital, where it was discovered that he had suffered a fracture of the lower leg and severe fracture and dislocation of his right ankle. Coons was able to return to work on March 9, 1970, although until about April 20, 1970 he could serve only as a helper, not as a driver. The trial of this action was conducted in three stages. First, the issue of Washington Mirror’s and Electric Motors’ liability to Coons was tried to a jury. By a special verdict it held Washington Mirror liable for negligence on the theory of res ipsa loquitur and Electric Motors liable for breach of warranty. This same jury then heard evidence with respect to the damages suffered by Coons and, again by special verdict, awarded him $14,160 for hospital and medical expenses, lost wages, and pain, suffering and disability. The jury specifically declined to award any damages for future pain, suffering and disability. Finally, the cross-claims for indemnification by the two defendants were tried to the court on the basis of the record developed during the first two stages. The trial court, D.C., 344 F.Supp. 653, concluded that each was equally responsible for the accident and therefore awarded each the right to 50% contribution. Coons’ sole argument on this appeal is that the j-ry awarded him insufficient damages for pain and suffering, past and future, because of an improper evidentiary ruling by the district court and a plainly erroneous omission from its charge. Three witnesses testified during the portion of the trial which dealt with plaintiff’s damages. Coons testified concerning his lost wages, and his past and continuing suffering; a physical therapist described the number and nature of the treatments she had administered to Coons; and a Dr. Tuby gave his expert opinion that Coons would permanently suffer some pain and swelling in his right ankle whenever he performed strenuous work. Coons was then recalled and testified that three days earlier he had been examined by a Dr. Stella, a physician chosen by Washington Mirror, and that under Dr. Stella’s direction Coons’ leg had been x-rayed and that the x-rays had been delivered to Dr. Stella. The trial court ordered the testimony concerning the x-rays stricken, and directed the jury to disregard it and not to draw any inferences from it. The exclusion of Coons’ testimony concerning the x-rays in the possession of Dr. Stella was not erroneous. The existence of the x-rays and their non-production by Washington Mirror did not give rise to any inference that they supported Coons’ claim of future pain and suffering because they were equally available to Coons, i. e. the actual x-rays taken or others which Coons could have had taken. See McCormick on Evidence, § 272, 656-658 (2d ed. 1972). In charging the jury, the court noted the failure of Coons to call his treating physician and stated that the jury might “draw such inferences as [it] believe[d] appropriate from this particular feature,” but he did not mention the failure of the defendant Washington Mirror to call Dr. Stella or refer to any inferences which could have been drawn from this. Plaintiff was entitled to the charge that the jury could draw the inference from Washington Mirror’s failure to produce Dr. Stella, who was retained by it and who had examined Coons on its behalf, that if Dr. Stella had testified, he would not have contradicted or qualified the testimony of plaintiff’s medical expert. Laffin v. Ryan, 4 A.D. 2d 21, 162 N.Y.S.2d 730, 734 (3d Dept. 1957). Accord, Rice v. Ninacs, 34 A.D. 2d 388, 312 N.Y.S.2d 246, 249 (4th Dept. 1970). Plaintiff’s counsel neither requested such a charge nor excepted to the charge as delivered and by virtue of his failure to claim this right at trial he is precluded from asserting it here, Rule 51 F.R.Civ.P., unless the omission constituted “plain error.” Finn v. Wood, 178 F.2d 583, 584 (2 Cir. 1950). On the face of the record here, particularly since plaintiff’s counsel strenuously argued this inference in his summation, we do not believe a “miscarriage of justice” has occurred. 5A Moore’s Federal Practice ¶ 51.04 at 2515 (1971). Therefore, we affirm the judgment of $14,160 in favor of Coons against Washington Mirror and Electric Motors. Turning to the cross-appeals from the trial court’s assessment of equal liability upon Washington Mirror and Electric Motors, there are two aspects of the findings of fact which were critical to the apportionment of liability. First is the finding that the hoist “was of improper, inadequate design which allowed the wheels . . . to be pulled off . . . by the weight of the load,” and that therefore Electric Motors had breached its warranty and that this breach was a cause of Coons’ accident. Second, the court found that Washington Mirror had been negligent in its operation of the hoist because (1) the crates were dragged along the floorbed of Coons’ truck while they were attached to the hoist, and (2) the crates were improperly slung from the hoist, and that these acts of negligence were causes of the accident. The court, therefore, apportioned the liability equally. Electric Motors asserts that the two factors found by the district court to have constituted negligence on the part of Washington Mirror also constituted misuse of the hoist, and therefore Washington Mirror cannot recover against Electric Motors for breach of warranty. Washington Mirror contends that the findings of improper slinging and negligent dragging were clearly erroneous and unsupported by the evidence, leaving only the improper design of the hoist as the proximate cause of the accident. We agree with Washington Mirror. To begin with, it should be noted that these factual findings by the court on the cross-claims are inconsistent with its rulings during the trial on the defendants’ liability to Coons. At that time, the court held that no specific negligent acts by Washington Mirror had been established, and therefore the jury could only conclude there was fault on the theory of res ipsa loquitur. Then on the cross-claims, which, by stipulation, were to be decided on the basis of the same record, the court found two specific negligent acts. The two conclusions are inherently inconsistent. We hold that the court was correct in its original position and incorrect in its later conclusion that Washington Mirror had committed specific acts of negligence. The only “testimony” concerning improper slinging was offered by counsel for Electric Motors in the course of the leading questions he posed to Earl Cad-well, an expert witness called by Washington Mirror. When he finally asked an acceptably phrased question concerning Washington Mirror’s method of slinging the crates for hoisting, the exchange was as follows: “Q. If force was applied to the top of the crate, could it cause that crate to topple? * * * * * * A. It couldn’t topple if the crate was under suspension in the sling.” At no time did Cadwell testify that the crates had been improperly slung; indeed, at one point he stated that the crates would not have been properly slung if the method suggested by counsel had been employed. Moreover, neither of Electric Motors’ expert witnesses testified that the crates had been improperly slung from the hoist. Because there was no evidence to support this conclusion by the district court, we are “left with the definite and firm conviction that a mistake has been committed.” United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948). Similarly, there is no evidence to support the trial court’s finding that the dragging of the crates was a proximate cause of the accident. Cadwell attributed the accident to “improper, inadequate design.” William Pariser, the president of Electric Motors and designer of the hoist, testified that in his opinion the accident was caused by “either the cable slipping or the [crate] knocking against something.” Arthur Weber, another expert called by Electric Motors, said that only a “jarring impact” would have caused the hoist to slip off its track, but a steady drag would not have caused this to happen. Because there is no basis in the record to support the trial court’s conclusion that the dragging of the crates was a proximate cause of the accident, we are again constrained to conclude that it was clearly erroneous. On the other hand, there is ample evidence to sustain the conclusion of both the jury and the court that Electric Motors had improperly designed the hoist and that this caused the accident. Cad-well, Pariser and Weber all testified that two additional wheels on the side of the hoist that fell would have prevented the accident; evidence was introduced to show that just two weeks before this accident such extra wheels had been installed on the other side of the hoist; and Cadwell testified that accepted professional engineering standards mandated the inclusion of such extra wheels in the design of a hoist of this type. We, therefore, conclude that Washington Mirror is entitled to full indemnification from Electric Motors on account of the breach of its implied warranty of the hoist’s fitness. The judgment on the verdict in favor of Coons, with his costs is affirmed; the judgments on the cross-claims are reversed and judgment will enter ordering Electric Motors to indemnify Washington Mirror, with its costs, for all damages due by Washington Mirror to Coons under the terms of the judgment in Coons’ favor. The appeal by Electric Motors is denied. ON PETITION FOR REHEARING PER CURIAM: By Petition for Rehearing the plaintiff-appellant, Coons, objects to that portion of the opinion which said that “counsel neither requested such a charge nor excepted to the charge as delivered. . ; and points out that in the course of a discussion on a motion to strike between counsel and the judge in the robing room, his attorney did mention his position with regard to the propriety of drawing an inference from the failure of the defendant Washington Mirror to call as a witness Dr. Stella who had examined the plaintiff on its behalf. He said: “The argument is that they examined this man, and I say there is an inference, Your Honor, that if they do not produce him, that his testimony would be adverse to them. That is my objection, sir.” We are of the opinion, however, that this remark made in the course of an argument on a motion to strike certain rebuttal testimony by the plaintiff concerning some x-rays taken of him and delivered to Dr. Stella, was not sufficient notice to the trial judge of plaintiff’s objection to the charge. Plaintiff’s counsel’s statement about the drawing of an inference was made in a context different from that of a discussion relating to the court’s instructions to the jury. The very brief mention by plaintiff’s counsel in the course of an argument on a motion to strike without any reference whatever to the jury charge makes it less than “clear that the trial judge understood the party’s position.” 5A Moore’s Federal Practice ¶ 51.04, at 2521 (2d ed. 1971). The circumstances are not governed by Keen v. Overseas Tankship Corp., 194 F.2d 515 (2 Cir.), cert. denied, 343 U.S. 966, 72 S.Ct. 1061, 96 L.Ed. 1363 (1952), on which appellant’s counsel now relies. As the opinion in this case made no specific mention of the robing room colloquy, the sentence commencing in line 3 from the bottom of page 866 of the opinion in this case is hereby amended to read as follows: “Plaintiff’s counsel neither requested such a charge nor excepted to the charge as delivered, although he did briefly assert the propriety of the inference during a colloquy with Judge Levet on the exclusion of Coons’ testimony concerning the x-rays. Because of counsel’s failure to make clear to the trial judge that he was objecting to the charge, he is precluded from asserting it here, Rule 51 F.R.Civ.P., unless the omission constituted ‘plain error.’ Finn v. Wood, 178 F.2d 583, 584 (2 Cir. 1950).” The opinion is in all other respects reaffirmed and the petition for rehearing is denied. . Dr. Tuby never treated Coons; he merely examined plaintiff twice. In fact, during cross-examination it was established that Dr. Tuby’s practice is presently limited to the examination of injured people and the preparation of reports for their lawyers. Coons was treated only by the doctors at Fordham Hospital and a Dr. Winters whose office was near plaintiff’s home in New Jersey, none of whom was called to testify.

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UNITED STATES of America, Plaintiff-Appellee, v. Larry HAYES, Defendant-Appellant. No. 72-1126. United States Court of Appeals, Tenth Circuit. May 4, 1973. Rehearing Denied June 4, 1973. Robert L. Pitler, Denver, Colo., for defendant-appellant. Paul D. Cooper, Asst. U. S. Atty., Denver, Colo. (James L. Treece, U. S. Atty., Denver, Colo., on the brief), for plaintiff-appellee. Before BARNES, HILL and HOLLOWAY, Circuit Judges. Honorable Stanley N. Barnes, of the Ninth Circuit, sitting by designation. HOLLOWAY, Circuit Judge. Defendant-appellant Hayes and his co-defendant Hess were found guilty by a jury of unlawful sale and delivery of LSD in violation of 21 U.S.C.A. § 331 (q) (2) (1968). Their convictions occurred on a retrial after prior convictions were set aside by this court. 10 Cir., 441 F.2d 542. Hess has not appealed his conviction and we are concerned only with that of Hayes. 'The case against Hayes was submitted to the jury on his possible guilt both as a principal and as an aider and abettor under 18 U.S.C.A. .§ 2. The defense was entrapment. After the verdict against him, Hayes was sentenced under the Federal Youth Corrections Act, 18 U.S. C.A. § 5010(b), and this appeal followed. Defendant Hayes essentially argues on this appeal that the trial court erred: (1) as a matter of law in not requiring the prosecution to produce as a witness the government’s paid informant and participant in the LDS purchase, Mr. Ellerton; (2) in not giving requested instructions that failure to produce Ellerton created a presumption that his testimony would be unfavorable to the prosecution; (3) in not concluding that there was entrapment as a matter of law; (4) in refusing to allow defendant Hayes to testify as to his state of mind in connection with the entrapment defense; and (5) in submitting an instruction on aiding and abetting as a basis of guilt. First, we consider defendant’s proposition that the trial court erred as a matter of law in not requiring the government to produce its paid informant, Mr. Ellerton, at trial. This contention was raised first in a pretrial motion which was argued to the trial court and denied. At the hearing the court indicated to defendant’s attorney that it would not require the government to call Ellerton as a witness, but the court stated that the government would have to advise defendant of Ellerton’s address so that he could be called as a defense witness, if desired. Defendant’s attorney stated that the defense would call him “[i]f the government would do that.” Government counsel then advised the court that they had Ellerton’s October, 1969, address but had had no contact with him since that time; that they could not find him for the last trial; that efforts were being made to locate him, which would continue; and that if he were found, defense counsel would be notified. The court accepted this statement by government counsel and entered a subsequent order denying the defense motion for production of Ellerton. Defendant’s motions after trial raised the question again, but were overruled. On appeal defendant says the conviction must be reversed since the government failed to produce Ellerton and made no showing of a reasonable effort to do so. He argues that Ellerton’s appearance is crucial as corroboration in a case like this where the defense is entrapment. Reliance is placed primarily on Velarde-Villarreal v. United States, 354 F.2d 9 (9th Cir.), and United States v. Clarke, 220 F.Supp. 905 (E.D.Pa.). Under various circumstances the courts have held the government to a duty to produce an informant or make a showing of a reasonable effort to do so. We are, however, persuaded to agree with the trial court that in this case the government was not obligated to call Ellerton as its own witness. The court accepted as sufficient the undertaking of the prosecution to seek his present location and' furnish it to the defense. We feel this was the proper measure of the government’s duty in this case. The government is not the guarantor of the appearance of its informant at trial, but is required to accord reasonable cooperation in securing his appearance where a timely request is made and his testimony might substantiate a claim of the defense. United States v. Tuck, 380 F.2d 857, 859 (2d Cir.); see also United States v. Makekau, 429 F.2d 1403 (9th Cir.), cert. denied, 400 U.S. 904, 91 S.Ct. 143, 27 L.Ed.2d 141. On this record we find no merit in defendant’s request for a reversal on the ground that the government failed to show a reasonable effort to ascertain Ellerton’s whereabouts. There was no motion or objection calling for a showing by the government as to such effort following the hearing on the motion to produce Ellerton. Throughout trial no move was made by the defense to raise the issue. The issue was raised in defendant’s motion for a new trial but our record shows only the motion and the order overruling it. In these circumstances we feel that it was not required that there be a showing or hearing on the reasonableness of the government’s efforts to locate Ellerton. We conclude that there was no error in the handling of matters relating to the production of Ellerton as a witness or information about him. Second, we will examine defendant’s assertion that the court erred in refusing to give his proposed instructions 10 and 11. The gist of the instructions was that an unfavorable inference may be drawn where the government fails to produce an available witness who has material testimony. We are not persuaded .by this assertion of error. As stated, our record contains no proof of the availability of Ellerton to testify at trial. The record shows only that at the time of the LSD transaction in 1969 Ellerton was a paid government informant working on a contingency basis and the subsequent representation by the prosecution at the pretrial hearing that they had Ellerton’s October, 1969, address but had had no contact with him since that time and that, at the time of this pretrial hearing, his whereabouts were then unknown. Without deciding whether such instructions are necessary, in any event one essentia] predicate for them — the witness’ availability — was not shown. See United States v. Pugh, 141 U.S.App.D.C. 68, 436 F.2d 222, 226; United States v. Makekau, supra; United States v. Peterson, 424 F.2d 1357, 1362 (7th Cir.), cert. denied, 400 U.S. 958, 91 S.Ct. 357, 27 L.Ed.2d 266. Thus there was no error in refusing the instruction. Third, we turn to defendant’s argument that he was entitled to a judgment of acquittal because entrapment was shown as a matter of law. He relies considerably on United States v. Bueno, 447 F.2d 903 (5th Cir.) and Liptak v. State, 256 So.2d 548 (Fla.App.). We are not persuaded that this record demonstrates that the defense was established as a matter of law. Entrapment occurs when the criminal design originates with agents of the government, who implant in the mind of an innocent person the disposition to commit the offense. Sherman v. United States, 356 U.S. 369, 372, 78 S.Ct. 819, 2 L.Ed.2d 848; Sorrells v. United States, 287 U.S. 435, 442, 53 S.Ct. 210, 77 L.Ed. 413; Martinez v. United States, 373 F.2d 810, 812 (10th Cir.). Where the proof shows that the agents merely afforded the opportunity for commission of the offense, without any creative activity on their part, there is no entrapment. Davidson v. United States, 411 F.2d 75, 77 (10th Cir.). It is true that there was considerable proof tending to show entrapment, such as defendants’ testimony that Ellerton repeatedly pleaded with them to sell him LSD ; that he said he needed it to sell to pay bills and care for his pregnant wife; that he said otherwise he feared harm from a “syndicate”; and that neither defendant had sold LSD until the incident with Taketa. Moreover there was no contradiction by the informant Ellerton or otherwise of such testimony as to inducements by Ellerton. See United States v. Bueno, supra, 447 F.2d at 906. However the defendants’ own admissions weakened the entrapment defense. Hayes admitted having given LSD to another person from a few tablets he had been given, but he denied any sale of LSD to anyone. Taketa and Hess testified that there was some price negotiation on the LSD sale. And Hayes admitted he replied to a question from Taketa about getting drugs in the future, saying “yeah, we could possibly do something in the future.” Hayes stated he felt very uncomfortable and said this to get Ellerton and Taketa out of the house. Thus the proof cuts both ways and was in conflict on the- entrapment defense, as well as on Hayes’ degree of involvement. As stated, defendant Hayes relies on United States v. Bueno, supra, and Liptak v. State, supra, upholding the defense of entrapment as a matter of law where the defense was supported by uncontradicted proof, respectively, of government involvement by furnishing a drug that was later unlawfully sold by a defendant, and the offer of illicit consideration as well as money by a female informant for an unlawful sale. See also Spencer v. State, 263 So.2d 282 (Fla.App.), cert. denied, 267 So.2d 835 (Fla.). We feel that reliance on the cases is misplaced. First, our record shows no conduct by government agents of such character. Moreover the Supreme Court has recently rejected reasoning similar to that found in the Bueno and Florida cases. See United States v. Russell, 411 U.S. 423, 93 S.Ct. 1637, 36 L.Ed.2d 366 (decided April 4, 1973), reversing United States v. Russell, 9th Cir., 459 F.2d 671. The Ninth Circuit had sustained an entrapment defense as a matter of law because of conduct of a government agent in supplying a scarce ingredient essential for manufacture of “speed” which the defendant later unlawfully sold. In reversing, the Supreme Court made it clear that the defense could not be sustained as a matter of law for such “overzealous law enforcement,” and that the entrapment defense turned on the question of predisposition. “It is only when the government’s deception actually implants the criminal design in the mind of the defendant that the defense of entrapment comes into play.” Id. at 436, 93 S.Ct. at 1645. We are satisfied that in our case this question of entrapment was one of fact on evidence conflicting as to predisposition and involving credibility, see also United States v. Gibson, 446 F.2d 719, 721 (10th Cir.); that it was properly submitted to the jury; and that the jury finding against defendant Hayes is supported by the record. Fourth, defendant argues that the court erred in not allowing him to testify as to his state of mind. He says he was not allowed to testify as to the reason why the LSD was sold. We will outline the principal matters in the record on this argument. Hayes refers to the trial court’s refusal to let Hess testify whether the transfer would have taken place but for the influences exerted on Hess by Ellerton. The trial court sustained an objection to the question on the ground that it was one of the ultimate questions the jury had to resolve. The court then also refused to allow Hess to testify whether he was in any other way influenced by Ellerton. While Hayes was testifying he was not permitted to state how he personally felt about Ellerton when he described a social visit with Ellerton at a girl’s house about a month before the LSD incident. Again Hayes was not allowed to answer why he felt uncomfortable the night of the transfer. In connection with both of these questions there was no offer of proof as to the answer Hayes would have given if he had been permitted to testify. Finally Hayes was asked whether he wanted to sell the LSD, and an objection was sustained to the question and to his answer, “No.” We cannot agree with the view expressed by the trial court that the testimony should be ruled out because it involved an ultimate question before the jury. Where a defendant’s intent is in issue he should be permitted to testify as to his motive and actual intent or state of mind. Crawford v. United States, 212 U.S. 183, 202-203, 29 S.Ct. 260, 53 L.Ed. 465; United States v. Edwards, 458 F.2d 875, 884 (5th Cir.); Whiting v. United States, 296 F.2d 512, 519 (1st Cir.); United States v. Kyle, 257 F.2d 559 (2d Cir.), cert. denied sub. nom., United States v. Gardner, 358 U.S. 927, 79 S.Ct. 312, 3 L.Ed.2d 301; Krogmann v. United States, 225 F.2d 220, 229 (6th Cir.); Collazo v. United States, 90 U.S.App.D.C. 241, 196 F.2d 573, 581, cert. denied, 343 U.S. 968, 72 S.Ct. 1065, 96 L.Ed. 1364; Haigler v. United States, 172 F.2d 986, 988 (10th Cir.). The fact that the issue of his intent is before the jury does not bar a defendant from his right to face the jurors and tell them his intentions and motives. Crawford v. United States, supra, 212 U.S. at 202-203, 29 S.Ct. 260. And he is entitled to testify whether he would have done the acts in question if inducements or pressures claimed had not existed. Whiting v. United States, supra, 296 F.2d at 519. We are persuaded, however, that the rulings here against the admission of some testimony were harmless error in the circumstances of this case. They did not affect the defendant’s substantial rights and should be disregarded. 28 U.S.C.A. § 2111; Rule 52(a), F.R.Crim.P. As stated, as to some questions no offer of proof was made to demonstrate the harm from the rulings. McDonald v. United States, 246 F.2d 727, 729 (10th Cir.), cert. denied, 355 U.S. 863, 78 S.Ct. 95, 2 L.Ed.2d 68. Moreover the defendants had developed the proof in considerable detail on the issues in question. They had shown Ellerton’s repeated entreaties to them and several rejections of them. Hayes testified that the night Ellerton first mentioned buying LSD he said he “was not interested in doing any kind of deal with him.” On the day of the LSD transaction when Ellerton told Hayes he was bringing someone by who had drugs he wanted to sell, Hayes testified he told Ellerton he didn’t want to meet anyone; that Ellerton kept insisting; and that Hayes said he could bring anyone by he wanted to, but added, “I don’t want to do a deal with anyone.” In view of the proof admitted we are satisfied that the further statements which the defendants sought to make would have had but very slight effect. See United States v. Edwards, supra, 458 F.2d at 884. On the record of all that happened our conviction is sure that the error had but very slight effect and thus the verdict and judgment should stand. Kotteakos v. United States, 328 U.S. 750, 764-765, 66 S.Ct. 1239, 90 L.Ed. 1557. Lastly appellant claims that the trial court erred by instructing that defendant could be convicted as an aider and abettor under 18 U.S.C.A. § 2. He says the proof is clear that Hayes had told Hess that “ . . . [t]his is your deal.” And appellant refers to other proof showing that Hess carried out the transaction with Taketa. Thus, he argues, the proof did not justify submission of the aiding and abetting instruction. We have referred earlier to proof showing the involvement of Hayes. We note that Hayes admitted he had indicated the good quality of the tablets when Taketa said “ . . [t]hey better be good or I will be back . . . ”, and that he accepted the money for them, which he says he did because Taketa handed it to him. In describing his own acts connected with the money, Hayes testified: “ . . .1 was just trying to get everyone out of that room, out of the house. I felt very uncomfortable.” As a whole the proof was sufficient for a reasonable inference that Hayes associated himself with the wrongful venture, that he participated in it as something he wished to bring about, and that he sought by his actions to make it succeed. Nye & Nissen v. United States, 336 U.S. 613, 619-620, 69 S.Ct. 766, 93 L.Ed. 919. We feel there was no error in submitting the aiding and abetting instruction to the jury. We conclude that no reversible error is demonstrated and accordingly the judgment is affirmed. . E. g., United States v. Cansler, 419 F.2d 952 (7th Cir.), cert. denied, 397 U.S. 1029, 90 S.Ct. 1278, 25 L.Ed.2d 540 (dictum); United States v. Tuck, 380 F.2d 857, 859 (2d Cir.) (dictum); Verlarde-Villarreal v. United States, 354 F.2d 9 (9th Cir.); United States v. Moore, 330 F.Supp. 684, 687 (E.D.Pa.) (dictum) aff’d, 446 F.2d 448 (3d Cir.), cert. denied, 406 U.S. 909, 92 S.Ct. 1617, 31 L.Ed.2d 820; United States v. Clarke, 220 F.Supp. 905 (E.D.Pa.); People v. Goliday, 8 Cal.3d 771, 106 Cal.Rptr. 113, 505 P.2d 537 (1973); Eleazer v. Superior Court, 1 Cal.3d 847, 83 Cal.Rptr. 586, 464 P.2d 42; State v. Jones, 247 So.2d 342 (Fla.App.); see also United States ex rel. Drew v. Myers, 327 F.2d 174, 179-182 (3d Cir.), cert. denied, 379 U.S. 847, 85 S.Ct. 88, 13 L.Ed.2d 52. Cf. United States v. Golden, 436 F.2d 941, 947 (8th Cir.) cert. denied, 404 U.S. 910, 92 S.Ct. 236, 30 L.Ed.2d 183; United States v. Wolfson, 322 F.Supp. 798, 819-820 (D.Del.) (dictum) aff’d, 454 F.2d 60 (3d Cir.), cert. denied, 406 U.S. 924, 92 S.Ct. 1792, 32 L.Ed.2d 124. . The proposed instructions were respectively those appearing in Federal Jury Practice and Instructions, Devitt and Blackmar, Sections 11.33 and 11.34, Vol. 1, pp. 249-251. . The proof was stronger on involvement by Hess in the transactions. Taketa testified that Hayes had said to Hess: “ . . . [T]his is your deal so go ahead.” Taketa said that Hayes stayed over to the side and was sort of semiretired on a bed in the corner of the room. Hess described the LSD sale in question as “ . . . the transaction between Mr. Taketa and myself.” Taketa testified that when he and Hess engaged in negotiations, Hess first told him it would take several hours to go and get the LSD and Taketa told him his time was limited. Hess then told Taketa that there were approximately 200 tablets of LSD in the immediate vicinity. Taketa said that they had discussed a price of $1.40 per tablet and that they later negotiated the price down to $1.30 per tablet. Taketa testified that Hayes left for a few moments and came back with a bag containing the tablets. However, both Hess and Hayes testified that Hess had gone out and gotten the tablets.

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UNITED STATES of America, Plaintiff-Appellee, v. Cecil STEMBRIDGE and Jessie Lee Stembridge, Defendants-Appellants. No. 72-2042. United States Court of Appeals, Fifth Circuit. April 13, 1973. Charles Yarborough, Ft. Worth, Tex. (Court appointed), Sharon Gabert, Ft. Worth, Tex., Bertrand C. Moser, Houston, Tex. (Court appointed for Cecil Stembridge), for defendants-appellants. Frank D. McCown, U. S. Atty., W. E. Smith, Asst. U. S. Atty., Ft. Worth, Tex., for plaintiff-appellee. Before COLEMAN and SIMPSON, Circuit Judges, and ESTES, District Judge. ESTES, District Judge: Appellants, Cecil Stembridge and Jessie Lee Stembridge, his wife, were each convicted of (1) conspiring, in violation of 18 U.S.C. § 371, with one Gerald Loveless to rob a federally insured bank, in violation of 18 U.S.C. § 2113(a) and (2) aiding and abetting Loveless in the robbery of the bank, in violation of 18 U.S.C. §§ 2 and 2113(a). Cecil was sentenced to imprisonment for five years on Count 1 and 20 years on Count 2; Jessie was sentenced to imprisonment for five years on Count 1 and 10 years on Count 2. The sentences were concurrent for both defendants. We affirm. On December 2, 1971, the Security State Bank of River Oaks, Texas, a federally insured bank, was robbed of approximately $9,250 by Loveless, who drove up to a drive-in teller’s window and placed in the teller’s drawer a bag containing a fake bomb and a note which read, “There is a bomb in this bag that I can set off by remote control. Give me all the money in one minute or I’ll blow this whole booth up.” At the trial, Loveless, who pleaded guilty, testified that Jessie had printed the robbery note. Appellants’ main contention in this appeal concerns the testi-. mony of the government’s handwriting expert, James Lile. Lile testified that by comparing the robbery note to handwriting exemplars produced by Jessie and a job application form signed “Jessie Lee Stembridge,” he was able to determine that the same person had prepared the hand-printing on all three exhibits. During a rigorous cross-examination, the defense counsel obtained Lile’s admission that when comparing the robbery note with the exemplars of Jessie’s writing-alone, he was not able to say that the same person printed both. The prosecutor then asked the expert to explain why he could not do so. He answered, “The writings on those nine pages [the exemplars] bear many of the classical characteristics which I have been trained to recognize as attempts of the writer to intentionally disguise or distort normal writing.” Although recognizing that handwriting/printing exemplars have been held to be identifying physical characteristics outside the protection of the Fifth Amendment privilege against self-incrimination, Gilbert v. California, 388 U.S. 263, 87 S.Ct. 1951, 18 L.Ed.2d 1178 (1967), Jessie contends that her exemplars were improperly used as testimonial evidence. She asserts that the testimony that her exemplars were disguised implies a consciousness of guilt and that implied admission violates her privilege against self-incrimination. A similar contention was presented to the Second Circuit, in United States v. Izzi, 427 F.2d 293 (2 Cir. 1970), which concluded that the contention was unsupported by the record and, therefore, did not decide the issue. The instant case could also be considered one in which the record does not support the contention, because the record clearly shows that the prosecution obtained the expert’s opinion that the exemplars were disguised not as an implied admission of guilt by Jessie but rather as an explanation of his difficulties in analyzing the handwriting in order to substantiate his analysis after a rigorous cross-examination challenging its validity. Be that as it may. Prior rulings of this Circuit in comparable situations lead us to reject appellant’s contention. Although identifying physical characteristics are outside the protection of the Fifth Amendment, Gilbert, supra; Schmerber v. California, 384 U.S. 757, 86 S.Ct. 1826, 16 L.Ed.2d 908 (1966), certain characteristics, such as voice and handwriting exemplars, require the physical cooperation of the accused in order to obtain valid samples. The accused has not been permitted to frustrate the prosecution’s right to this evidence by simply refusing to give the required exemplars. In Higgins v. Wainwright, 424 F.2d 177 (5 Cir. 1970), this court held that no constitutional right of an accused was violated by the introduction of evidence that he had refused to speak for identification purposes during a line-up. Also, in United States v. Nix, 465 F.2d 90 (5 Cir. 1972), this court held that it was not improper for the prosecutor in his closing arguments to the jury to comment upon the accused’s refusal to provide a handwriting exemplar as directed by the court and, further, that it was not improper for the court to charge the jury that if it found beyond a reasonable doubt that the accused had failed to provide an exemplar as ordered by the court, it might infer that a comparison of such samples with a questioned signature would have been unfavorable to the defendant and favorable to the prosecution. The Second Circuit has likewise stated that the prosecution “can rely before the grand jury and, if an indictment is returned, at trial, on the strong inference to be drawn” from the refusal of an accused to furnish handwriting exemplars. United States v. Doe, 405 F.2d 436, 438 (2 Cir. 1968). An attempt to disguise the handwriting in an exemplar is, in effect, a refusal to provide an exemplar, for if an accused were free to disguise his writing, without any sanctions, exemplars would be worthless. Hence it is not improper for the prosecution to show that the defendant attempted to avoid providing a valid handwriting sample by intentionally distorting his handwriting. Another contention in this appeal is that the job application form could not be used for comparison because there was no proof that Jessie had filled out the form. When she took the stand in her own behalf, Jessie admitted that she had signed the form, but when asked if she had filled it out, she equivocated, “I don’t know if I did or not.” However, Lile testified that the printing on the application form and the handwriting exemplar were produced by the same person. His testimony is sufficient evidence to establish that' Jessie produced the printing on the application form. Indeed, in the proposed Federal Rules of Evidence, such proof is expressly stated to be an “illustration” of “evidence sufficient to support a finding that the matter in question is what its proponent claims.” Since there was no objection at the trial to the use of the form, appellant recognizes that, to be sustained in this court, any error would have to be plain error. If there was any error in using the application form, it does not amount to plain error. We have considered the remaining contentions of the appellants and have found them without merit. The judgment of the district court is Affirmed. Rule 901(a) and (b)(3), Rules of Evidence for the United States Courts and Magistrates (approved Nov. 20, 1972, and transmitted to Congress), [56 F.R.D. 183, 331-332] (1972).

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James Boyd MACKEY, Plaintiff-Appellant, v. Raymond K. PROCUNIER et al., Defendants-Appellees. No. 71-3062. United States Court of Appeals, Ninth Circuit. April 16, 1973. Elizabeth Shelley Mercer (argued), Howard Anawalt, National Legal Program on Health Problems of the Poor, Los Angeles, Cal., for plaintiff-appellant. Marjory Winston Parker, Deputy Atty. Gen. (argued), Sacramento, Cal., for defendants-appellees. Before MERRILL, WRIGHT, and KILKENNY, Circuit Judges. MERRILL, Circuit Judge: Appellant is a state prisoner, serving a term of imprisonment at Folsom State Prison, Represa, California. He has brought this action charging violation of his civil rights by virtue of alleged cruel and unusual treatment received by him at the California Medical Facility at Vacaville in 1967. With his consent, he had been sent to Vacaville for the purpose of undergoing shock treatment. In his complaint, filed in propria persona, he alleges that, without his consent and not as a part of shock treatment to which he had consented, he was administered the drug, succinycholine, which he characterizes as a “breath-stopping and paralyzing ‘fright drug.’ ” As a consequence of what he calls “this ‘guinea-pig’ treatment” he alleges that he regularly suffers nightmares in which he relives the frightening experience and awakens unable to breathe. He charges the defendants with “deliberate and malicious intentional infliction of mental and emotional distress, causing plaintiff great pain of body and mind, resulting in a severe disturbance.” Defendants moved to dismiss for failure to state a claim upon which relief could be granted. Fed.R.Civ.P.12(b)(6). In granting the motion, and in concluding that no claim of violation of civil rights was stated, the District Court treated the allegations of the complaint as claims of malpractice and as asking the court to assess the propriety of a particular course of treatment. It is clear, however, that the claims were intended to go far beyond this. Prior to hearing on the motion to dismiss plaintiff secured the services of counsel in preparation of memoranda in opposition to the motion. These memoranda cast further light on the nature of plaintiff’s claim. The nature of the drug was discussed. It is recommended as an adjunct to electric-shock therapy and as a relaxant in conjunction with administration of anesthesia. It is not recommended for administration to fully conscious patients, apparently because of its frightening effects. It is asserted in memoranda that the staff at Vacaville is engaged in medical and psychiatric experimentation with “aversive treatment” of criminal offenders, including the use of succinycholine on fully conscious patients. It is emphasized that plaintiff was subjected to experimentation without consent. Proof of such matters could, in our judgment, raise serious constitutional questions respecting cruel and unusual punishment or impermissible tinkering with the mental processes. In our judgment it was error to dismiss the case without ascertaining, at the least, the extent to which such charges can be substantiated. The District Court dismissed the complaint as against defendants Pope and Procunier for the further reason that the complaint did riot “specifically allege participation by them in the alleged wrongful conduct. * * * ” The complaint did allege that the administering doctor was “acting under and through the authority” of these defendants. From the elaboration of the claims in memoranda, it would appear that plaintiff seeks to establish general participation in a program of experimentation and is not relying solely on principles of respondeat superior as to these defendants. While the nature of plaintiff’s claim in all these respects was not stated with specificity in the complaint drafted by him, the memoranda filed in connection with the motion to dismiss clearly indicate what was meant by reference to the “guinea-pig” treatment and to “deliberate and malicious infliction of mental and emotional distress.” Leave to amend the complaint was not sought. However, in response to plaintiff’s memoranda, defendants accepted them as “in the nature of an amendment to the complaint” and as “new allegations.” There can be no doubt that defendants were on notice as to the nature of plaintiff’s claim. Lack of formal articulation in an amended complaint was not protested. If such is felt desirable an amendment could be required. Reversed and remanded with instructions that the order dismissing the action be vacated, and for further proceedings. EUGENE A. WRIGHT, Circuit Judge (dissenting): Respectfully, I dissent. The record before the district court and before us convinces me that appellant consented to the treatment given him. Malpractice by a physician in a state penal institution does not give rise to a civil rights action. Riley v. Rhay, 407 F.2d 496 (9th Cir. 1969). . In brief on appeal the contentions with respect to “aversive treatment’’ arc put even more precisely. It is asserted that defendants are engaged, without patient consent, in a course of medical experimentation to ascertain whether, by instilling of fright and infliction of pain, accompanied by psychological suggestion, behavior patterns can be affected. E. g., Brief for Appellant at 9; at 15 n. 5 and accompanying text. . See, e. g., Robinson v. California, 370 U. S. 660, 667, 82 S.Ct. 1417, 8 L.Ed.2d 758 (1962). Cf. Furman v. Georgia, 408 U.S. 238, 239-240, 92 S.Ct. 2726, 33 L.Ed.2d 346 (1972); Jackson v. Indiana, 406 U.S. 715, 737, 92 S.Ct. 1845, 32 L.Ed.2d 435 (1972). . See, e. g., Eisenstadt v. Baird, 405 U.S. 438, 452, 92 S.Ct. 1029, 31 L.Ed.2d 349 (1972); Stanley v. Georgia, 394 U.S. 557, 564, 89 S.Ct. 1243, 22 L.Ed.2d 542 (1968). Cf. Roe v. Wade, 410 U.S. 113, 149-154, 93 S.Ct. 705, 725-727, 35 L.Ed. 2d 147 (1973).

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UNITED STATES of America, Appellee, v. Charles H. JACKSON, Appellant. No. 72-1708. United States Court of Appeals, Eighth Circuit. Submitted April 11, 1973. Decided April 20, 1973. Harold L. Holliday, Kansas City, Mo., filed appendix and brief for appellant. Bert C. Hurn, U. S. Atty., and Paul Anthony White, Asst. U. S. Atty., Kansas City, Mo., filed brief for appellee. Before GIBSON, BRIGHT and ROSS, Circuit Judges. PER CURIAM. A nine-count indictment charged the defendant Jackson with aiding and assisting in the preparation and presentation to the Internal Revenue Service of materially false and fraudulent Individual Income Tax 1040 Forms in violation of 26 U.S.C. § 7206(2). The Government dismissed Counts II, VIII, and IX prior to submission of the case to the jury. The jury found the defendant guilty on Counts I and III and acquitted him of Counts IV, V, VI, and VII. The defendant argues on appeal- that the District Court should not have allowed admitted documentary evidence to be taken to the jury room and that the District Court erred in refusing to give an instruction relating to the testimony of an accomplice. Finding these contentions meritless, we affirm the conviction. Judge Oliver first allowed the jury to inspect documentary evidence concerning Counts I and II while in the jury box. However, after the direct and cross-examination of Karen K. Carson, a witness taxpayer involved in Count III, Judge Oliver called a recess and agreed with both the Government and defense counsel that each juror would be given an indexed copy of a full set of all exhibits admitted into evidence in order to expedite the trial and to make it more practical for the jury to view the numerous exhibits. The defendant argues that this procedure of allowing admitted documentary evidence in the jury room focused undue prominence and emphasis to that evidence. That argument is not well taken. First, defense counsel at trial agreed to the use of this procedure. Second, since only exhibits that were properly admitted into evidence were given to the jurors to take into the jury room, such a procedure was entirely in order. This method of presentation of similar documentary evidence was not only well within the District Court’s discretion but also was a permissible decision for fairly expediting the trial. Second, the defendant argues that the District Court erred in refusing to allow an instruction relating to the testimony of an accomplice. However, defense counsel did not object in chambers or before the jury concerning the omission of this presently contested instruction. Since the defendant had failed to object to this instruction before the jury retired and since no plain error appears on the record, we reject this argument. Fed.R.Crim.P. 30; United States v. Valez, 431 F.2d 622, 623 (8th Cir. 1970). Judgment of conviction affirmed. . Honorable John W. Oliver, United States District Judge, Western District of Missouri, presided. . The defendant is represented by a different counsel on this appeal. . We held in United States v. Warner, 428 F.2d 730, 737 (8th Cir. 1970), cert. denied, 400 U.S. 930, 91 S.Ct. 194, 27 L.Ed.2d 191 (1970), also involving a violation of 26 U.S.C. § 7206(2), that “properly admitted illustrative materials may be sent to the jury room.”

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AMERICAN OFFSHORE WORKOVER, INC., Plaintiff-Appellee, v. The DOW CHEMICAL COMPANY, INC., Defendant-Appellant. No. 72-2711. United States Court of Appeals, Fifth Circuit. April 27, 1973. John M. McCollam, Charles M. Steen, New Orleans, La., for defendant-appellant. Richard T. Regan, Metairie, La., for plaintiff-appellee. Before COLEMAN and SIMPSON, Circuit Judges, and ESTES, District Judge. PER CURIAM: Defendant-appellant Dowell, a division of The Dow Chemical Company, (Dow-ell) was preparing to diversify its business to include the stimulation of old oil and gas wells (workover) in the Gulf of Mexico. It leased from plaintiff-appellee American Offshore Workover, Inc., (AOW) the vessel “Mr. Don” to be used as a mobile platform for servicing the wells in its offshore workover operations. The term of the lease was for three years and AOW was aware of the purpose for which Dowell had leased the vessel. Dowell used the vessel for one year in the western Gulf area without complaint, but when it attempted to move further eastward it was advised by AOW for the first time that such area was outside of the navigational capabilities of the “Mr. Don”. Because the navigational limits of the vessel precluded Dowell from working what it regarded as its prime workover market area, and AOW refused to modify the vessel to enable it to work the desired area, Dowell terminated the contract. AOW successfully sued for breach in the court below. We affirm. The “Mr. Don” was a self-propelled, self-elevating, mat-supported vessel, which meant it jacked up out of the water by supporting its weight on four legs that were attached to a mat which in turn rested on the bottom subsoil of the sea. The ability of such a vessel to support its weight on the bottom depended largely on the consistency of the sub-soil; soft-bottom areas usually failed to provide the requisite support and greatly added to the danger of the vessel’s turning over. The question whether Dowell was justified in terminating its contract with AOW is answered by examining the correspondence AOW sent Dowell informing the latter of the “Mr. Don” ’s limitations. We' approve the district court finding that such correspondence consisted simply of recommended safety practices because of erratic soil changes on the sea-bottom subject to modification as the situation changed. We reject Dowell’s contentions here as in the court below that it was ordered by the letters to eliminate completely a whole important market area without justifiable cause, and was hence justified in terminating the contract. The full texts of the two letters AOW sent Dowell are reproduced in the margin. At the onset of the first letter AOW expressly put Dowell on notice that the instructions to follow were subject to change. The letter was equally clear that the limitations imposed on the vessel were made in view of its self-elevating, mat-supported nature and the danger inhering in working in areas with “underconsolidated or very recent clay bottoms”. Indeed, a rather elaborate and cautious empirical “on location” test was ordered to “check bottom conditions to ascertain that sufficient bearing surface exists” to support the vessel. In short, there was no absolute prohibition against work in any area, but no more than a requirement that the sea-bottom be tested to ensure the safety of the vessel and her crew. The district court’s holding was supported by the record, Washington Aluminum Company v. Pittman Construction Company, 5 Cir. 1967, 383 F.2d 798, 804. We do not discern merit in Dowell’s other contentions, including its attack on the method of computation and amount of damages allowed for the breach of contract. Affirmed. . “July 15, 3968 The Dowell Division Dow Chemical Company 640 Oil & Gas Building 1100 Tulane New Orleans, Louisiana 70032 Attention: Mr. M. G. Harding Gentlemen: Until further notice operations of the Mr. Don in Jacked-up Configuration are not to be conducted in areas with under-consolidated or very recent clay bottoms. Operations will be limited to that portion of the Texas-Louisiana Gulf Coast between 89 cleg. 5' West Longitude and 95 deg. West Longitude. The ‘West Delta’ areas which cannot be served include Blocks 50, 57, 80, 85, 108, 110, 127, 128, 145, and 146, other areas east of the line 89 deg. 5' West Longitude are outside our operational capabilities. In every case, regardless of the location, the move supervisor will check bottom conditions to ascertain that sufficient bearing surface exists by elevating the vessel two or three feet above the water and holding that position for one hour. If after one hour the bottom soil is holding, the vessel can be elevated to the planned working height. The vessel will be immediately lowered should a list to either Port or Starboard or to the Stern or Bow develop which exceeds three degrees. Please be governed accordingly when ordering the vessel to work site. Should you have any questions, please advise. Yours very truly, AMERICAN OFFSHORE WORK-OVER, INC. /s/ Jack R. Hilder, Jr., Jack R. Hilder, Jr., President” “July IS, 190S Dowell Division Dow Chemical Company 1100 Tulane Avenue New Orleans, Louisiana 70119 Attention: Mr. Max Harding Subject: Mr. Don Operating Limits Dear Sir: Further to my letter of July 15, 1908, the operations of the M/V Mr. Don are limited to that portion of the Texas-Louisiana Gulf Coast between 89 deg. 30' West Longitude and 95 deg. 0' West Longitude. Your inquiry regarding Blocks 22 and 24 of the West Delta area is acknowledged. These blocks are appr- (sic) oved subject to the ‘on location’ test in accordance with the procedure outlined in my letter of July 15, 1908. Should you require any additional data, please advise. Yours very truly AMERICAN OFFSHORE WORK-OVER, INC. /s/ Jack R. Hilder, Jr., .Tack R. Hilder, Jr., President”

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Caselaw Access Project

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UNITED STATES of America, Plaintiff-Appellee, v. Donald Eugene ROBERTSON, Defendant-Appellant. No. 73-1049 Summary Calendar. United States Court of Appeals, Fifth Circuit. April 26, 1973. Charles L. Ruffner, Miami, Fla., for defendant-appellant. Robert W. Rust, U. S. Atty., Miami, Fla., Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Atty., Tax Div., Dept. of Justice, Washington, D. C., 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 January 11, 1972, defendant-appellant Donald Eugene Robertson (taxpayer) was charged with using a communication facility to facilitate the importation of a controlled substance into the United States in violation of Title 21, U.S.C., Section 843(b). On January 25, 1972, taxpayer entered a plea of guilty to the charge and was sentenced to three years probation and a fine of $9,350. Subsequent thereto, in July 1972, taxpayer filed a petition in the court below requesting specific performance of the negotiated agreement which led to his plea of guilty. The district court denied relief. We affirm. At the time of his arrest, taxpayer was in possession of approximately $40,000, which he gave in trust to his attorney Theodore Klein. After inconclusive negotiations between Klein and the U. S. Attorney’s Office, the United States filed a condemnation libel against that money. United States of America v. A Certain Quantity of United States Currency (Case No. 72-98-Civ-CF below). The parties then entered into a compromise settlement whereby the taxpayer agreed to pay $9,350 for termination of the libel action. The United States Department of Justice, however, questioned the legal basis for its filing a libel action in the circumstances of that case, so to avoid any procedural difficulties the parties then agreed that $9,350 would be paid as a stipulated fine as part of the taxpayer’s sentence in the § 843(b) criminal ease in the district court. The pertinent part of the Stipulation, Settlement Agreement and General Release which the Assistant United States Attorney signed on behalf of the government provided that in consideration of the $9,350 which taxpayer was to pay, “ * * * the plaintiff THE UNITED STATES OF AMERICA hereby releases, acquits and forever discharges the said claimant DONALD ROBERTSON of and from any and all manner of action and actions, cause and causes of action, claims, suits, debts, dues, sums of money, accounts, and demands whatsoever in law or in equity, which THE UNITED STATES OF AMERICA or any of its agencies ever had, now has, shall or may have against the claimant DONALD ROBERTSON for, upon or by reason of any matter, cause or thing whatsoever relating to any United States Currency which may be presently held by Theodore Klein, as escrow agent for the claimant DONALD ROBERTSON and more specifically relating to such currency adverted to in the law suit styled UNITED STATES OF AMERICA vs. A CERTAIN QUANTITY OF UNITED STATES CURRENCY, Case No. 72-98-CIV-CF presently pending in the United States District Court for the Southern District of Florida. Upon execution of this Stipulation, General Release and Settlement Agreement, and upon payment in hand to the UNITED STATES OF AMER-ICA the sum of Nine Thousand Three Hundred Fifty Dollars ($9350) the parties further agree that the cause styled UNITED STATES OF AMER-ICA vs. A CERTAIN QUANTITY OF UNITED STATES CURRENCY, Case No. 72-98-CIV-CF shall be dismissed with prejudice.” Shortly after the sentence was entered and the $9,350 fine paid, the District Director of the Internal Revenue Service filed a jeopardy assessment against taxpayer for $117,391.38 for Federal income taxes claimed to be due for the year 1971, of which $77,966.85 remains outstanding. By his petition below taxpayer complained that the assessment was in breach of the Stipulation, Settlement Agreement and General Release and sought to have that agreement specifically performed by restraining the assessment and collection of the assessed income tax deficiency. The taxpayer argued and the district court found, that the stipulation constituted a very broad release on the part of the government. We agree. Nonetheless, that release specifically referred to “any United States Currency which may be presently held by Theodore Klein, as escrow agent for the claimant Donald Robertson and more specifically relating to such currency adverted to in the law suit styled UNITED STATES OF AMERICA vs. A CERTAIN QUANTITY OF UNITED STATES CURRENCY, Case No. 72-98-CIV-CF presently pending in the United States District Court for the Southern District of Florida” and concluded with the dismissal with prejudice of the cause styled “UNITED STATES OF AMERICA vs. A CERTAIN QUANTITY OF UNITED STATES CURRENCY, Case No. 72-98-CIV-CF.” Thus the release was specifically limited to the fund referred to above. Its subject was further precisely defined by reference by style and number to the libel action against the $40,000 held in trust by taxpayer’s attorney, Klein. The stipulation, then, had no bearing upon any claims unrelated to the $40,000 held in trust by Mr. Klein. It did not cover any other funds of taxpayer, earned from his smuggling operations or elsewhere. As the district court found: The Internal Revenue Service has given [taxpayer] a credit for tax liabilities on that fund and is therefor apparently honoring the settlement agreement. There was no agreement relating to tax liabilities presented to this [c]ourt in Robertson’s criminal prosecution . The agreement is unambiguous on its face and, for that reason, additional testimony would not avail to alter its clear meaning. See e. g. Commissioner v. Danielson, 3 Cir. 1967, 378 F.2d 771, 778-779, cert. denied 389 U.S. 858, 88 S.Ct. 94, 19 L.Ed.2d 123. An alternative ground of affirmance is urged by the appellee: in the absence of a referral of the taxpayer’s civil liability to the Department of Justice, the Assistant State Attorney who signed the stipulation lacked authority to bind the Internal Revenue Service. We pretermit discussion of this contention as we find it unnecessary to reach it. Affirmed.

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Benjamin JONES et al., Plaintiffs, Appellants, v. James T. LYNN et al., Defendants, Appellees. No. 73-1057. United States Court of Appeals, First Circuit. Heard March 5, 1973. Decided March 22, 1973. Patrick J. King and Daniel D. Sullivan, Boston, Mass., with whom Robert Condlin, Cambridge, Mass., and Peter J. O’Connor, were on brief, for appellants. Arthur G. Coffey, Asst. Gen. Counsel, Boston, Mass., with whom John C. Conley, Gen. Counsel, Boston, Mass., was on brief, for appellees, Boston Redevelopment Authority and others. Frederic R. Kellogg, Asst. U. S. Atty., with whom James N. Gabriel, U. S. Atty., was on brief, for appellees, the Secretary of Dept. of Housing and Urban Development, and others. John Paul Sullivan, Boston, Mass., with whom Lewis H. Weinstein, Boston, Mass., was on brief, for appellees, First Church of Christ Scientist. Before COFFIN, Chief Judge, ALD-RICH and CAMPBELL, Circuit Judges. COFFIN, Chief Judge. This appeal, expedited to accommodate all of the parties and interests involved, presents the issue whether a complex area renewal project covering a substantial sector of Boston, the Symphony Area part of the Fenway Urban Renewal Project, the basic planning and federal financial commitment for which had been approved in 1967, but which is yet substantially incomplete, is subject in any way to the requirements of the subsequently enacted National Environmental Policy Act of 1969 (NEPA), 42 U.S. C. § 4331 et seq. Appellants, residents of the area, sought to enjoin further demolition and construction in the area until an environmental statement is issued in accordance with NEPA. Appellees are the Department of Housing and Urban Development (HUD), the source of federal financial assistance; the Boston Redevelopment Authority (BRA), the municipal agency in charge of the project; and the First Church of Christ, Scientist, a prominent occupant of the area and source of much of the planning. The district court denied injunctive relief, finding that “major federal action” terminated with the signing of the HUD-BRA Loan and Grant Contract in 1967, that HUD’s continuing role was minor since it was powerless to alter future courses of action, and that NEPA was not intended to be applied retroactively. I. Facts Some appreciation of the past history and present status of the project is necessary to recognize the grey zone in which we endeavor to strike a just and practicable balance. In the early 1960’s the Church, desirous of establishing an International Center on its present location and of developing the adjacent Symphony Area, commissioned the preparation of a master plan which incorporated these ideas with others calling for residential and commercial development. The Church plan was submitted to BRA and included in BRA’s larger proposed effort for development of the Fenway Area which was thereafter to consist of the Museum Area, Medical Center Area and the Symphony Area, all three sub-areas being of somewhat equal size and totalling 506 acres. Only questions relevant to the Symphony Area are before us. The entire Fenway Urban Renewal Plan, dated November 1, 1965, was approved by BRA on November 24, 1965; by the Boston City Council on December 20, 1965; by the Mayor of Boston on December 23, 1965; and by the Massachusetts Department of Commerce and Development on April 26, 1967 after the required public hearings. On December 22, 1967 HUD and BRA executed a Loan and Capital Grant Contract to provide federal assistance to this project pursuant to the Housing Act of 1949, 42 U. S.C. § 1450 et seq., which allows for a contractual relationship between a local public agency, here BRA, and the United States. The availability of federal assistance had been certified in compliance with the Housing Act only after HUD review of the program established that BRA had presented a “Workable Program for Community Improvement”. While the 1967 contract authorized BRA to sell project loan notes up to $14,488,759, a relocation grant of $719,-804 and a capital grant of $8,651,134, these sums were subsequently increased. On August 28, 1968 an amendatory contract added a rehabilitation grant of $12,000. More relevant here were an authorized increase in the amount of interest to be paid on temporary loan notes to be sold by BRA, the result of a June 24, 1970 amendment to the original contract; and an increased relocation grant to $5,660,424 and an increased current temporary loan authorization to $19,441,374, both the result of an August 11, 1972 amendment. Currently, approximately $1,866,000 out of an approved budget, exclusive of relocation funds, of some $13,769,000 — which includes the original federal capital grant of over eight million dollars with the remainder coming from state and local funds — remains unexpended or unencumbered. Approximately $4,675,000 of the federally-provided relocation grant is similarly at BRA’s disposal. A survey of the state of the real estate is more understandable than a financial analysis of monies unexpended. There are 27 parcels and sub-parcels in the part of the project which is before us. From the documents in evidence, we distill the following status, which we list for further reference in groups: Group Number of Parcels Present Status I 4 —development wholly or nearly completed (Nos. 2, 11, 16A, 16B-1); no Injunction sought as to these parcels. II 1 —site cleared; developer tentatively selected; planned for residence for the elderly; no Injunction sought as to parcel (No. 5). HUD will subject It to a modified environmental clearance procedure. III 3 —site cleared; developers not selected for two parcels (Nos. 6, 16B — 2); selected for the other (No. 3). As to this site HUD will submit It to a modified clearance procedure. No. 6 has no final planned purpose (except that It Is to be part residential and part commercial); No. 16B-2 Is planned for a park; No. 3 Is planned for middle income housing with HUD financing. IV 5 —sites where no demolition has yet occurred (Nos. 7, 9, 12, 13, 15 ). Nos. 7 and 15 are tentatively planned to be rehabilitated. Nos. 9, 12, and 13 are planned for low and middle Income housing, with HUD financing for at least Nos. 9 and 13. V 14 —no plans for acquisition or use (Nos. 1, 4, 8, 10, 14, ' 17, 18, 19, 19A, 19B, 20, 21, 22, 23). It is apparent that the parcels in groups IV and V and some or all of those in group III, a total of from 19 to 22 of the project’s 27 parcels, fall in the early stages of planning. Nevertheless, the entire project has been in the planning stage for some seven years and has been subject to numerous hearings and deliberations at various levels. II. General Applicability of NEPA to Previously Planned Projects. It is against this factual background that we endeavor to assess whether NEPA, enacted subsequent to the basic Loan and Capital Grant Contract, can be the source of any present obligation. We do not start with tabula rasa. The slate has been written on for some years. The question is whether there is at this time any requirement for a NEPA environmental statement — not the unrestricted analysis that might otherwise be expected if the project had not yet been launched, but a statement taking as a given those things which have been done in reliance on a preexisting plan. We dispose without difficulty of appellees’ contention that Congress intended to exempt from the application of NEPA pertinent projects simply because they had been previously decided upon. An environmental disturbance is no less consequential because of the date of its planning. If appellees are correct, the federal government is in a position where, once it has signed a multi-year contract providing for substantial funds for a project, it is proscribed from applying to that project the environmental analysis to which all other such contemporary projects are subjected, regardless of any flexibility that still might inhere in the planning process or of any feasible possibilities that may exist to achieve the same general goals with a more sensitive consideration of environmental factors. Such a broad proposition finds no support in the statutes, regulations, legislative history or considerations of policy. While Congress could have specifically exempted approved but uncompleted projects from the requirements of NEPA, it did not do so. Neither did it make NEPA specifically applicable to such projects. But it did refer to, the “continuing responsibility” of the federal government to “use all practical means ... to improve and coordinate Federal plans, functions, programs and resources”, .42 U.S.C. § 4331, and to act “to the fullest extent possible”, 42 U.S.C. § 4332, to carry out the policies of the act. And the “major Federal actions”, 42 U.S.C. § 4332(2)(C), proposals for which necessitate careful environmental review, include, in the words of the overseeing Council on Environmental Quality, “projects and continuing activities . . . supported in whole or in part through Federal contracts, grants, subsidies, loans, or other forms of funding assistance”. 36 Fed.Reg. 7724, § 5(a) (ii) (April 23,1972). Moreover, the legislative history is supportive of an environmental role for a federal agency so long as it remains meaningfully involved in a project. The Senate Report on the act states that the “ [e] nvironmental management functions” required by 42 U.S.C. § 4332(2) (C) as “necessary to support the policies established” should be implemented “as a part of [a federal agency’s]' existing programs and [its] ongo-' ing activities.” S.Rep.No.296, 91st Cong., 1st Sess. 21 (1969). Finally, sound public policy requires rejection of appellees’ proposed rule that NEPA is per se inapplicable to projects already underway as of the passage of the act. Among the goals of NEPA is the “preservation and enhancement of the environment”, 42 U.S.C. § 4331(c), for “present and future generations of Americans”, 42 U.S.C. § 4331(a). To the extent that these long-range remedial objectives can be realized in continuing projects, it cannot be expected that Congress would foresake them without even a hint to that effect. While it may be fruitless to apply procedural protections afforded by NEPA to a project which has been so far terminated to preclude any change in plans, “the only correct interpretation would seem to be that if the requirements of the Act can feasibly be applied — even if the project in question was begun prior to the enactment of NEPA — then they should in fact be applied,” Note, Retroactive Application of the, National Environmental Policy Act of 1969, 69 Mich. L.Rev. 732, 743 (1971). Though such applications of NEPA have been called retroactive, see, e. g., Natural Resources Defense Council v. Grant, 341 F.Supp. 356 (E.D.N.C.1972), they are in fact prospective since they seek to alter, within proper limits, the aspects of a proposal which have not yet been completed, and not to undo anything which has already proceeded to final construction. Thus, pursuant to the reasoning under facts virtually identical to those here, NEPA was properly applied to a HUD-financed project begun before 1970, but still continuing. Boston Waterfront Residents Ass’n v. Romney, 343 F.Supp. 89 (D.Mass.1972). III. Applicability of NEPA in this Case. The first, and basic question, is what are proper limits; what, in other words, can be regarded as prospective, and what not, but must fairly be regarded as vested. The purpose of NEPA’s section 4332(2)(C)’s impact statement is to guide and advise a federal agency in its decisional process. The statute is not a general empowering act. Unlike the Renegotiation Act, Lichter v. United States, 334 U.S. 742, 68 S.Ct. 1294, 92 L.Ed. 1694 (1948), it is not an authorization to undo what has already been done, and the extent that Congress could do this is not our issue. Rather, the question must be what agency decisions are yet to be made, and what decisions, although already made, remain open to revision. Completion is not measured by counting bricks in situ; nor by measuring as yet unpaid federal aid. Nor do we have the comparatively simple problem of a purely federal project. E. g., Environmental Defense Fund v. T. V. A., 468 F.2d 1164 (6th Cir. 1972). Commitments have been made to non-federal participants, as to whom, in the total mix, it would be inequitable to back out. The district court’s treatment of these questions was inadequate. We are all agreed that it adopted too narrow a focus in concluding that the execution of the contract in 1968 ended all possibility of future “major federal actions”. It should have made detailed findings as to the control possible for HUD to exercise under the contract and as to the nature of federal project aid yet to come. It should also have supported with some analysis its conclusion that the two amendments to the contract since the advent of NEPA were not “major federal actions”. To take the latter point first, we know too little about the eight-fold increase in the relocation grant and the one-third increase in the loan authorization, to dismiss them, in the words of the court in San Francisco Tomorrow v. Romney, 472 F.2d 1021 (9th Cir. 1973), as “but confirmation of the Federal Government’s earlier decision that the project proposal conformed to HUD requirements and was therefore eligible for a grant and loan.” The availability of eight times as much money for relocation as had been anticipated is understandably asserted to have had environmental repercussions as to the phasing of the plan and the sociological mix of the neighborhood in that a quicker-than-planned eviction of larger numbers of area citizens is substantially altering the community balance. The large increase in the loan authorization is suggestive of an expanded undertaking. In addition we are unable to assess the contractual rights of HUD, in terms of its present agreement, to affect the performance of the other contracting parties. We would be reluctant not to find a continuing major federal involvement so long as it was established that HUD retained any significant discretionary powers as might permit it to effect an alteration of building or design plans to enhance the urban living environment. Perhaps the most important area of inquiry, from a realistic point of view, is what future federal participation can reasonably be anticipated. Appellants claim the presence of further contemplated federal action here which goes far beyond that in San Francisco Tomorrow. HUD has recently approved the applications for federal mortgage insurance for two buildings and has stipulated to the preparation of a modified impact statement as to these two parcels. It is maintained that applications for federal mortgage insurance are pending for two other planned edifices, and at oral argument BRA represented that virtually every new building will be the subject of similar applications. It does not appear that the district court considered the relevance of these contentions which, if true, would seem to call for a comprehensive study of the uncompleted aspects of the entire project as being most consistent with the object of evaluating the “cumulatively significant impact” of the anticipated federal role. 36 Fed.Reg., supra at 7725. And one initial comprehensive study, which could be referred to and supplemented by less comprehensive individual studies for each parcel, would appear to reflect a better use of scarce resources. See, e. g., Sierra Club v. Froehlke, 359 F.Supp. 1289 (S.D.Tex. 1973). In such a case it would not seem sensible to adopt the piecemeal approach which HUD seeks to adopt, whereby it will prepare a modified impact statement separately for each proposed construction as a mortgage insurance application is filed, an approach akin to equating an appraisal of each tree to one of the forest. If HUD is expected to be part of the financing of most of the unplanned and/or undeveloped parcels, it seems a perversion of NEPA for it to approach each parcel, wholly depending in its timing of environmental review on the filing of applications for assistance and considering anew the scene as it is changed by each subsequent approval. Not only would this be wasteful of bureaucratic resources, but the plurality of possible appeals would suggest a wasteful prolongation of time spent in litigation. If the district court is to properly carry out the NEPA mandate, it must, if the planning reveals an expectation of substantial further federal assistance, order HUD to conduct an environmental study of the entire Fenway program under 42 U.S.C. § 4332(2)(C) with the goal of determining what changes can still be made and, just as important, of informing the members of the community and the public what the environmental impact will be, what adverse effects cannot be avoided, and what irretrievable commitment of resources are involved when any plan is fulfilled. See, e. g., Arlington Coalition v. Volpe, 458 F.2d 1323 (4th Cir. 1972); Morningside-Lenox Park Ass’n v. Volpe, 334 F.Supp. 132 (N.D.Ga.1971); Environmental Defense Fund v. Corps of Engineers, 325 F.Supp. 749 (E.D.Ark.1971); Environmental Defense Fund v. T. V. A., supra; Natural Resources Defense Council v. Grant, supra; Boston Waterfront Residents Ass’n v. Romney, supra. At the same time, the majority of the court does not recognize that future projects, if any, that contemplate no future federal assistance are obliged to come to a halt just because of the receipt of such prior to Congress’ enactment of NEPA. The majority would distinguish the eases cited in the separate opinion. Indeed, the majority feels that F.H.A. v. The Darlington, Inc., 358 U.S. 84, 79 S.Ct. 141, 3 L.Ed.2d 132 (1958), has been substantially miscited. IV. Futility of a NEPA Statement. Apart from the legal issue of NEPA’s application, appellees claim that, even if the post-1970 amendments were major federal actions, if significant powers are reserved, or if major future federal participation is reasonably expected, any environmental study performed at this late date would not justify any additional delay. They point to the lengthy history of planning and public meetings and discount the representations of appellants as to the need for consideration of population density, traffic problems, mix of low, middle, and high income housing, and time phasing of the individual projects as constituting merely an effort to seek review of urban renewal issues already fully aired. It may prove to be the case that an environmental review of so much of the project as may be subject to feasible alteration will yield few suggestions. But we hesitate to prejudge. The fact is that the planning focus had not had the environmental emphasis that NEPA has brought to the fore. Moreover, changes in the area, unforeseen in 1965 or 1967, have transpired, such as the alleged abandonment of plans for a major adjacent expressway. Were we to pass judgment on the possibilities for alteration in the Symphony Area segment of the Fenway plan mentioned by appellants as being irrelevant, trivial, or prohibitively expensive, we would be short-cutting the process, which has been committed in the first instance to the responsible federal agency. Our responsibility here is to prótect the integrity of the fact-finding process mandated by Congress in 42 U.S.C. § 4332(2) (C) and make certain that an environmental study is prepared and made available to the public as required by NEPA. In the words of Chief Judge Friendly, “preservation of the integrity of NEPA necessitates that the [agency] be required to follow the steps set forth in [§ 4332], even if it now seems likely that those steps will lead it to adhere to the present result.” City of New York v. United States, 337 F.Supp. 150, 160 (E.D.N.Y.1972). See also Hanly v. Mitchell, 460 F.2d 640, 648 (2d Cir. 1972). V. Laches. Appellees contend that NEPA was passed in 1970, that the Fenway Urban Renewal Project has been ongoing since 1967, and that we should therefore refuse to entertain appellants’ request for injunctive relief at this late date. We see, however, important reasons for rejecting this defense of laches. First, appellants have alleged, without contradiction, that many aspects of the project which trouble them environmentally have only recently been discovered as there are claimed deviations from the original proposal. Second, one of appellants’ major concerns is the increased relocation grant in August 1972, a federal action conceivably affecting various aspects of the entire project. Third, one of the main reasons why laches is recognized as a defense — the assumed prejudice to the party sought to be enjoined, see Environmental Defense Fund v. T. V. A., supra at 1182, cannot be said to exist here. As our prior discussion indicated, NEPA applies only so far as there exist reasonable alternatives to as-yet uncompleted parts of the project. The guidelines we will subsequently enunciate are intended to safeguard appellees from any prejudice which might otherwise result from the timing of this suit. Last, and most fundamental, however, is the observation of Chief Judge Friendly that the “tardiness of the parties in raising the issue cannot excuse compliance with NEPA; primary responsibility under the Act rests with the agency.” City of New York, supra, 337 F.Supp. at 160. See also Arlington Coalition, supra, 458 F.2d at 1329-1330; Environmental Defense Fund v. T. V. A., supra at 1182. We see no reason for not following this rationale here. VI. Relief. The task of accommodating the requirements of NEPA to this large and diverse project, where the stages of development of the various parcels range from completion to the absence of any detailed planning, requires imagination and flexibility on the part of HUD, BRA, other agencies and parties involved, and on the part of the court. In an effort to avoid heavy handed or unduly costly interference with those involved in the execution of the project, we set forth the following guidance. 1. The district court shall reexamine, make detailed factual findings, and set forth its conclusions of law on the following questions: a. Were the post-1970 amendments, regarding the increase in relocation assistance and loan authorization, major federal actions? b. To what extent, if any, do HUD’s reserved powers under the basic contract involve the exercise of discretion in such a way as to enable it to alter in any significant way the course or timing of development ? c. Was there explicitly or by necessary implication a reasonable expectation of further major federal financial participation in order to bring the Symphony Area of the Fenway Project to completion ? 2. If the answers to all three questions are negative, the prayer for injunctive relief should be denied and the project allowed to proceed. 3. If an affirmative answer is forthcoming to any of the three questions, continuing work on the project should be enjoined, subject to the “escape hatch” provisions of paragraph 4, infra, pending the preparation and issuance of an environmental statement on the uncompleted part of the project conceived as a whole. The “mid-stream” character of the project dictates certain departures from normal operating procedure. While the district court is best qualified to tailor the requirement to the situation, we make the following suggestions: a. Existing reports and studies should, where relevant, be utilized. While the old ground need not be plowed again, changes since 1967 affecting the area should obviously be taken into account. b. The study shall not only be more limited in scope than would be the case if the basic agreement had not been signed and work begun, but it shall be foreshortened in time. Subject to the right of HUD to approach the district court to seek either a shorter or longer period, we think that HUD should be given 90 days to complete a draft environmental statement and that the statement be given, if possible, accelerated review. We note that HUD may request such accelerated review from the Council on Environmental Quality. 36 Fed.Reg., supra at 7726. 4. While all work on the Symphony Area of the Fenway Project shall be immediately enjoined, we authorize the district court, pending its decision on the merits, to release the injunction in the following instances: a. As to those parcels where completion is near or where such binding commitments to a specific structure and purpose have been made such that changes in purpose, structure, or timing would work substantial injustice or public harm, the burden being on the defendants. b. As to parcels where there is a showing that there is no continuing or likely federal involvement. 5. We continue the temporary stay of construction subject to further determination by the district court as to any individual situations which may call for modification of the stay order. Such decisions, as well as the district court’s final order, will be appealable. COFFIN, Chief Judge (concurring). As stated in note 3, supra, I would go further than the majority. Even if it were to be concluded, with sufficient support, that the post-1970 amendments to the contract did not amount to “major federal action”, that HUD possessed no significant retained powers under the contract, and that future significant federal participation in the project was not reasonably anticipated, I would hold that the' Symphony Area of the Fenway Project should be subjected to a restricted environmental review. In City of Boston v. Volpe, 464 F.2d 254, 258 (1st Cir. 1972), we said that a project had not yet become sufficiently federalized so as to make the action of the local agency become federal action for purposes of NEPA because there existed no firm federal commitment of funds. It would therefore be anomalous to say that action on a project which has become federalized by such commitment ceases to be major federal action for purposes of NEPA upon that very commitment. And in Silva v. Romney, 473 F.2d 287 (1973), we recognized that those in partnership with the federal government may be properly subjected to legislation or court action which might be inappropriate in matters of purely private concern. This principle is not new, for “beyond challenge is the power of the Federal Government to impose reasonable conditions on the use of federal funds, federal property, and federal privileges .... [T]he Federal Government may establish and impose reasonable conditions relevant to federal interest in the project and to the overall objectives thereof.” Ivanhoe Irrigation District v. McCracken, 357 U.S. 275, 295, 78 S.Ct. 1174, 1185, 2 L.Ed.2d 1313 (1958). Without the need for a precise definition of when partnership begins, there can be no doubt that here, as early as December 1967 when the original HUD-BRA contract was signed, those parties had commenced to operate as partners. To assign such a label to this relationship does not settle the nature or extent of the parties’ obligations. More precise analysis must be undertaken. Since, were it not for the participation of a non-federal partner, the obligation of HUD would be clear, the real question is whether the BRA and those working on the Fenway Project can now be subjected to a duty of restraint during a review process which they did not foresee in 1967. In urging a narrow construction of NEPA and the concept of partnership here, appellees contend that the Housing Act of 1949, under which HUD has financed this project, is similar to the reeently adopted aid scheme of revenue sharing in the State and Local Fiscal Assistance Act of 1972, 31 U.S.C. § 1221 et seq. (1973 Supp.), and that federal interference in the project after the grant is made is therefore unwarranted and detrimental to federal-state relations. As a general proposition this argument misses its mark, for, most unlike revenue sharing, the Housing Act of 1949 establishes a categorical grant program which is the essence of partnership. In fact, the Secretary of HUD is empowered to “include in any contract or instrument made pursuant to [the act] such other covenants, conditions, or provisions . . . as he may deem necessary to assure that the purposes of [the act] will be achieved.” 42 U.S.C. § 1456(c)(7). Such pervasive powers are inconsistent with appellees’ reading of the act and description of the relationship between the parties. Moreover, in this case HUD was content only to include in amendments to the original contract a new anti-discrimination clause, but did not insert an environmental review clause. Were the obligation to conform to supervening national legislation to turn, as HUD urges, on the perspicacity of the contracting officer important national policies as to civil rights, labor, and environment could be easily thwarted, by design or inadvertence. Such fortuitous results are neither desirable nor consistent with a concept of partnership, which implies a reasonable reservation of powers in any federal-nonfederal contract to achieve vital national goals. See infra. Appellees also allege, however, that whatever relevance the concept of partnership might have for projects commenced under post-NEPA contracts, the federal partner is precluded from imposing new duties upon its nonfederal partner for programs begun pre-NEPA. The sanctity of contract is claimed to be impaired if the project is enjoined until HUD can issue an environmental study. But whether NEPA is applicable here because there may be, as we have stated, additional major federal acts to be performed or because the Fenway Urban Renewal Project is the type of partnership to which the statute applies as a result of the existence of a federalized project denominated a “proposal” for a “major Federal action”, there can be no complaint rising to constitutional proportions. Thus, for example, where purely private contracts have been altered or abrogated by subsequent federal legislation, no constitutional cause of action has been found to lie. Similarly, it is difficult to see how BRA can complain about being subjected to the significant requirement in NEPA that federally assisted programs reflect environmental planning in accordance with § 4332(2)(C). It cannot, I think, be gainsaid that where important and overriding public concerns are manifested in statutes like NEPA which are meant to have sweeping application and which cannot be said to confer any primary benefits on the United States as a contract party, cf. Perry v. United States, 294 U.S. 330, 55 S.Ct. 432, 79 L.Ed. 912 (1935), compliance with these new laws is a necessary appurtenance to the partnership status of the nonfederal contracting party, whenever the partnership may have commenced. One of the major legislative ends sought to be achieved by NEPA — the improvement of the “regulatory system” administered by each agency by requiring consideration of environmental factors at all stages of decision-making in federally assisted programs so as to preserve and improve the environment — is so important that “[tjhose who do business in the regulated field cannot object if the legislative scheme is buttressed by subsequent amendments to achieve the legislative end.” F.H.A. v. The Darlington, Inc., 358 U.S. 84, 91, 79 S.Ct. 141, 146 (1958). In that case the Court considered the application of a 1954 amendment to a 1946 housing act under which the federal government had contracted, in 1949, to provide mortgage insurance for an apartment house. In finding that the new law, as applied to the old contract, was merely operating prospeetively, the Court stated that “[fjederal regulation of future' action based upon rights previously acquired by the person regulatéd is not prohibited by the Constitution. . . . Immunity from federal regulation is not gained through forehanded contracts.” Id. at 91, 79 S.Ct. at 146. BRA, like the owners of the apartment house in The Darlington, has received and continues to receive the benefits of federal funding, and it is hard to find any valid reason for its failure to recognize its obligations to aid its federal partner in carrying out the mandate of NEPA. In fact, the continuing federal role here would seem to be much greater than that in The Darlington. See also Shannon v. HUD, 436 F.2d 809, 817 (3d Cir. 1970), where in view of the important concerns reflected in the 1968 Civil Rights Act, the court read that law as imposing certain conditions on HUD and its partner which had, prior to 1968, entered into a contract for a federal mortgage insurance guarantee. I also find unpersuasive HUD’s confession of an absence of power to effectuate any suggestions for change resulting from its NEPA study or other remedial avenues open to it. In the event that it interprets its specific contractual authority too narrowly to enable it to cope with the situation, it is possible that HUD or others who seek to vindicate the goals of NEPA will have available sufficient remedies, if and when the need arises, which may be found in the nature of the legislative scheme, Textile Workers v. Lincoln Mills, 353 U.S; 448, 457, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957), here perhaps in the area of environmental law, see Illinois v. City of Milwaukee, 406 U.S. 91, 93, 92 S.Ct. 1385, 31 L.Ed.2d 712 (1972), or in the area of federal housing legislation, see, e. g., Shannon v. HUD, supra, 436 F.2d at 822, or even as related to the obviously pervasive contracting power of the United States, see, e. g., United States v. Carson, 372 F.2d 429 (6th Cir. 1967), and United States v. Stadium Apartments, Inc., 425 F.2d 358 (9th Cir. 1970). In the NEPA context, for example, a problem might arise where a federalnonfederal partnership was engaged in a ten year construction project requiring an initial NEPA statement and periodic updates. If, in the eighth year, a study showed that an uncompleted portion would be environmentally unwise and that it should not be built, it is inconceivable that just because federal money had changed hands years ago, the United States would be without any remedy should its nonfederal partner resist alterations. I would therefore have preferred to direct that an injunction issue, subject to “escape hatch” clause 4a of the section entitled “Relief”, without the findings required by the majority. . We have already affirmed the denial of injunctive relief sought against the Church, involving buildings owned by it in close proximity to its “Mother Church” building, the exterior of which has been remodelled in accordance with the 1967 planning which contemplated the demolition of the buildings. Not only was this demolition the last inevitable integral step in an eight-year plan for completing the Church mall which has never been changed in this respect, but during the pendency of this appeal the tenants of the affected buildings have withdrawn from the case. Thus, bur affirmance, insofar as the Church is concerned, was based on the unlikelihood of appellants establishing a case for equitable relief. We did not reach the question whether, absent equitable considerations, there was a sufficient nexus between the Church and HUD to subject its area to the requirement of a NEPA statement. . We are not sure whether No. 15 is encompassed within appellants’ request for relief, since it may fall within the exception they have requested for residential and commercial rehabilitation which has already received approval. . The extent to which the writer of this opinion would go further is set forth in a concurring opinion. Because of the interest in expedition, we have adopted this expedient rather than reassign the opinion to another member of the court. . Two such powers, which may or may not be purely ministerial, would seem in particular to require not merely assertions by the contracting parties but such evidence of prior interpretation and invocation as might exist. One is the right to “monitor” the project, requiring, for example, HUD approval of BRA “proclamations” as to street, lighting, and sidewalk construction contracts, or FHA issuance of an allocation to a developer. The other is the opaque provision giving HUD the power to prevent BRA from “tak[ing] any steps which might in the opinion of the Secretary, violate Federal laws or regulations”. Could HUD invoke this power if post-1970 fair labor or air quality standards were being violated, rather than leave enforcement to the Secretary of Labor, 29 U.S.C. § 201 et seq., or the Environmental Protection Agency, 42 U.S.C. § 1857 et seq.? If so, does NEPA fall in the same category of “laws or regulations” ? . In referring to federal aid schemes as evidencing some sort of partnership, the writer has used a term virtually synonymous with “joint venture” used by the Supreme Court in Ivanhoe Irrigation District v. McCracken, 357 U.S. 275, 279, 78 S.Ct. 1174, 2 L.Ed.2d 1313 (1958), and identical with that used in Named Individual Members of San Antonio Conservation Society v. Texas Highway Dept., 446 F.2d 1013, 1027 (5th Cir. 1971). . It should be observed that if the project were a purely federal one, there would be no question but that it would be subject to some environmental review even though it had been commenced pre-NEPA and were well along toward completion. See, e. g., Environmental Defense Fund v. T.V.A., supra. . It is not, however, the Commonwealth of Massachusetts but rather the local planning agency with whom HUD has contracted. . See Environmental Defense Fund v. T.V.A., in which the court held that the continuing significant construction of the project causes that project to remain, for purposes of NEPA, a “proposal for action” until consummation. While that project was admittedly undertaken solely by a federal agency, the court’s interpretation of “proposal” obviously lias relevance for federal aid programs as well, where the concept and existence of “major Federal action” may be different. . See, e. g., Philadelphia, Baltimore & Washington R.R. v. Schubert, 224 U.S. 603, 613, 32 S.Ct. 589, 56 L.Ed. 911 (1912) (Employers’ Liability Act of 1908); United States v. Trans-Missouri Freight Ass’n, 166 U.S. 290, 342, 17 S.Ct. 540, 41 L.Ed. 1007 (1897) and United States v. Southern Pacific Co., 259 U.S. 214, 234-235, 42 S.Ct. 496, 66 L.Ed. 907 (1922) (Sherman Anti-Trust Act); Ball v. Halsell, 161 U.S. 72, 16 S.Ct. 554, 40 L.Ed. 622 (1896) and Calhoun v. Massie, 253 U.S. 170, 40 S.Ct. 474, 64 L.Ed. 843 (1920) (federal regulation of champerty). . The Darlington dealt with a statute which expressly provided for its application to pre-existing contracts. See also, e. g., Lichter v. United States, 334 U.S. 742, 787-789, 68 S.Ct. 1294, 92 L.Ed. 1694 (1948). But as it was not necessary for Congress to have explicitly stated its intent that NEPA affect pre-NEPA contracts — since in imposing new obligations on tiie federal government and its contractual partners NEPA makes no “exceptions of existing contracts", Louisville & Nashville R.R. v. Mottley, 219 U.S. 467, 479, 31 S.Ct. 265, 55 L.Ed. 297 (1911) (emphasis in original), reference to The Darlington here is meant to address appellees’ constitutional arguments that application of NEPA to the entire Fenway Project somehow unlawfully interferes with BRA’s pre-existing contract rights.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

James BARLOW et al., Petitioners-Appellants, v. J. Al AMISS, Sheriff of East Baton Rouge Parish, Respondent-Appellee. No. 72-2401. United States Court of Appeals, Fifth Circuit. April 30, 1973. William E. Rittenberg, New Orleans, La., for petitioners-appellants. William J. Guste, Atty. Gen., Gilbert L. Dozier, Gary Keyser, Baton Rouge, La., for respondent-appellee. Before GEWIN, SIMPSON and RONEY, Circuit Judges. SIMPSON, Circuit Judge. Plaintiffs-appellants, all inmates of the East Baton Rouge Parish Prison, brought this action purportedly on behalf of themselves and all others similarly situated, under Title 42, U.S.C., Section 1983, to restrain the Sheriff of East Baton Rouge Parish and his agents from alleged infringement of certain of appellants’ constitutional rights. Appellants’ first cause of action alleged that the Sheriff was interfering with appellants’ right to receive and read the religious newspaper “Muhammad Speaks” and the religious text the “Quran”. The second cause of action alleged that the Sheriff had adopted policies which prohibit appellants from corresponding with anyone not approved by the Sheriff and his agents, including “friends, relatives, newspapers, persons who can assist them in their defense, public figures, religious leaders both lay and clerical, governmental and judicial units and others.” The third cause of action asserted that the Sheriff and his agents unconstitutionally censor all incoming and outgoing inmate mail, “including correspondence with the courts, with governmental agencies, with public figures and with counsel.” The lower court enjoined the Sheriff and his agents from denying appellants the right to receive and read “Muhammad Speaks” and the “Quran.” At the same time, the lower court dismissed appellants’ second and third causes of action sua sponte, without allowing argument or an evidentiary hearing. Appellants have appealed from the dismissal of their second and third causes of action; we reverse and remand for further development of the facts. In their complaint, plaintiffs brought this action “on their own behalf and in behalf of all other inmates in the prison under the authority of the defendant.” At oral argument, however, appellants’ counsel stated that at the time the complaint was filed, all of the named plaintiffs were in fact incarcerated awaiting trial. None were convicted persons serving sentences or awaiting transfer. In ordering a remand for further proceedings, we find it necessary to sustain plaintiffs-appellants’ complaint only insofar as it alleged that persons incarcerated pending trial have been deprived of federal constitutional rights. In sustaining the sufficiency of a complaint brought by Negro union members for fair representation under the Railway Labor Act, the Supreme Court reiterated “. . . the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 1957, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80. In Cooper v. Pate, 1964, 378 U.S. 546, 84 S.Ct. 1733, 12 L.Ed.2d 1030, the Supreme Court held that a state prisoner who alleged that solely because of his religious beliefs he had been denied permission to purchase certain religious publications and had been denied privileges enjoyed by other prisoners had stated a cause of action which it was error to dismiss. Further at its last term, in Haines v. Kerner, 1972, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652, the Supreme Court upheld the sufficiency of a prisoner complaint which alleged damages due to claimed injuries and deprivation of rights sustained from being placed in solitary confinement. Haines was followed directly by Cruz v. Beto, 1972, 405 U.S. 319, 92 S.Ct. 1079, 31 L.Ed.2d 263, which held that the courts below had erred in dismissing a prisoner complaint which alleged denial of freedom to practice the Buddhist religion, and further alleged discrimination by prison officials between Buddhists and “prisoners who adhere to conventional religious precepts.” Both Haines and Cruz explicitly stated that the standard of Conley v. Gibson, supra, governs allegations of deprivations of rights protected by the federal constitution made by prisoners. This Court has applied the foregoing standard to reverse the dismissal of complaints brought by prisoners which alleged the deprivation of federal constitutional rights. See, e. g., Henry v. Van Cleve and Ross, 5 Cir. 1972, 469 F.2d 687; White & Claybrone v. Comm’n of Alabama Bd. of Corrections, 5 Cir. 1972, 470 F.2d 55; Williams v. Wainwright, 5 Cir. 1972, 461 F.2d 1080; Andrade v. Hauck, 5 Cir. 1971, 452 F.2d 1071. While the control of prison mail is a matter of internal prison administration with which the federal courts are loath to interfere, O’Brien v. Blackwell, 5 Cir. 1970, 421 F.2d 844; Brown v. Wainwright, 5 Cir. 1969, 419 F.2d 1308, the denial of free and unfettered communication between inmates and courts and attorneys may constitute a denial of federal constitutional rights, see Frye v. Henderson, 5 Cir. 1973, 474 F.2d 1263; cf. Cruz v. Hauck, 5 Cir. 1973, 475 F.2d 475. Insofar as appellants have alleged that inmates awaiting trial have been denied the right to uncensored communication with attorneys and courts, their second and third causes of action. clearly stated facts which, if proven, would entitle them to relief. They alleged facts sufficient to withstand a motion to dismiss, Haines v. Kerner, supra; Conley v. Gibson, supra. While we think it is clear that appellants are entitled to a hearing as to the issues raised in their complaint, we do not intimate any view regarding the proper disposition of their allegations. Nor do we prescribe the form of the necessary factual inquiry below. Reversed and remanded. . Plaintiff-appellants’ complaint continues : “Such censorship includes reading such correspondence and, on occasion, making copies thereof, even where the correspondence is between attorney and inmate and relates to actions pending in court against prison officials as defendants; such censorship also includes the refusal to mail out correspondence critical of the prison administration regardless of the addressee and even where such addressee is the inmate’s attorney.” . Since we regard the appellants’ second and third causes of action as sufficiently alleging the deprivation of rights guaranteed by the federal constitution to persons incarcerated awaiting trial, we find it unnecessary at this time to consider whether the named plaintiffs may properly represent the entire class of inmates of the East Baton Rouge Parish Prison. Neither do we consider the sufficiency of appellants’ complaint as it pertains to all inmates of the East Baton Rouge Parish Prison including inmates incarcerated pursuant to convictions in state court as well as inmates incarcerated pending trial. The proper resolution of these interrelated problems is initially for the district judge. . As we noted in Williams v. Wainwright, supra, op.cit., 461 F.2d at 1081, “Whether these claims should be graced .with a full-fledged evidentiary hearing or disposed of by utilization of tbe wide variety of available discovery techniques is a matter properly to be decided by the District Judge.”

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Frank SCHONFELD, Individually and as Secretary-Treasurer of District Council 9, International Brotherhood of Painters and Allied Trades, AFL-CIO, Plaintiff-Appellee, v. John PENZA, as Chairman and member, et al., Defendants-Appellants. Isaac SCHWARTZ et al., Plaintiffs-Appellees, v. Morris LEVY, Individually and as President of District Council No. 9, International Brotherhood of Painters and Allied Trades, AFL-CIO, Defendant-Appellant. Nos. 570, 571, Dockets 72-2373, 72-2382. United States Court of Appeals, Second Circuit. Argued Jan. 19, 1973. Decided April 23, 1973. Michael F. Dennis, New York City (Saul I. Weinstein, New York City, of counsel), for appellants Penza and others. Stephen C. Vladeck, New York City, for Intervenor International Brotherhood of Painters and Allied Trades, AFL-CIO, amicus curiae. Martin Raphael, Long Island City, N. Y., for appellee Sehonfeld. Julius S. Impellizzeri, New York City (William Hoppen, New York City, of counsel), for appellees Schwartz and others. Before FRIENDLY, Chief Judge, OAKES and TIMBERS, Circuit Judges. OAKES, Circuit Judge: The appeal here is from a preliminary injunction granted to restrain the ousting of a union official and the holding of an interim election. These two cases, consolidated for trial and appeal, result from the infighting that has marked the politics of the New York painters union, District Council No. 9 (the District Council), a group of locals of the International Brotherhood of Painters and Allied Trades (the International). Suit was brought by the appellees to prevent the institution of penalties meted out by the District Trial Board and modified by the International based on a decision by the Trial Board that appellee Schonfeld had committed acts violating the constitution and bylaws of the International. The cases involve the construction of important provisions of the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. § 401 et seq. The first case was brought by Frank Schonfeld, the Secretary-Treasurer (the chief executive officer of the District Council and the only official elected directly by the general membership), to restrain members of the Trial Board of the District Council and the President of the International from enforcing a decision of the Trial Board removing Schonfeld from office and declaring him ineligible for office for five years. Schonfeld has exhausted intra-union remedies by appeal to the General Executive Board (GEB) of the International. That appeal sustained the Trial Board’s removal of Schonfeld from office and ordered an immediate interim election to fill Sehonfeld’s position but modified the Trial Board’s penalty by making Sehonfeld eligible to run in the regular election to be held in June of 1973. Immediately after the GEB decision the second case (hereinafter sometimes the “Schwartz action”) was brought by rank and file members of locals affiliated with the District Council to restrain the International from carrying out the punishment for Schonfeld’s alleged union crimes. In both cases it was urged essentially that the District Council Trial Board was stacked against Schonfeld, that he was denied a fair hearing and that the purpose of the charges was to limit Schonfeld in his efforts to “democratize” the Council. The court below granted preliminary injunctive relief on the basis that Schonfeld’s removal and disqualification for re-election was an interference with the rights of members of the locals “to choose their own representatives,” 29 U.S.C. § 401(a), “to nominate candidates,” 29 U.S.C. § 411(a)(1), “to vote in elections,” id., and “to express any views, arguments or opinions . . . . ” 29 U.S.C. § 411(a)(2). The court went on to say that “If the activities of the antiSchonfeld clique are intended to chill Schonfeld’s free speech, or the freedom of speech of other members who may be deterred by the difficulties experienced by Schonfeld,” such activity could also be a sufficient basis for the cause of action asserted by the rank and file in the Schwartz action. Finally, relying on Martire v. Laborers Local 1058, 410 F.2d 32, 35-36 (3rd Cir.), cert. denied, 396 U.S. 903, 90 S.Ct. 216, 24 L.Ed.2d 179 (1969), and Mamula v. Steelworkers Local 1211, 202 F.Supp. 348 (W.D.Pa. 1962), the court held that prohibitions on a removed officer’s running for office affected his status as a union member and therefore could not be imposed without compliance with the procedural safeguards of 29 U.S.C. § 411(a)(5). The preliminary relief granted by the court took the form of enjoining the disciplinary actions ordered by the GEB, including Schonfeld’s removal from office, and staying the conduct of the special election. Interim control of the affairs of the District Council continued to be vested jointly in Schonfeld and Morris Levy, President of the District Council, as it had been by stipulation and order after the start of the Schonfeld action. We commence by disagreeing with the court below in respect to jurisdiction of the Schwartz action insofar as it challenges Schonfeld’s removal from office and ineligibility to run. Title IV of the LMRDA, 29 U.S.C. § 481 et seq., governs the election of union officers and requires that union members have “a reasonable opportunity . . . for the nomination of candidates and . . . the right to vote for or' otherwise support the candidate of [their] choice.” 29 U.S.C. § 481(e). The union member’s remedy for Title IV violations, following exhaustion of intra-union remedies, is to file a complaint with the Secretary of Labor, 29 U.S.C. § 482(a), who in turn may then seek relief in the federal courts upon finding probable cause to believe Title IV has been violated. 29 U.S.C. § 482(b). Cf. Trbovich v. UMW, 404 U.S. 528, 92 S.Ct. 630, 30 L.Ed.2d 686 (1972) (intervention by union member in suit brought by Secretary). Here, however, the union members relying on Title I, not Title IV, of the LMRDA, did not try to get the Secretary to file suit but rather did so themselves. In Calhoon v. Harvey, 379 U.S. 134, 85 S.Ct. 292, 13 L.Ed.2d 190 (1964), the Court held that the Secretary could not be by-passed and that Title I rights were “[p]lainly . no more than a command that members and classes of members shall not be discriminated against in their right to nominate and vote.” 379 U.S. at 139, 85 S.Ct. at 295 (emphasis supplied). The concurring opinion (Stewart and Harlan, JJ.) thought this too narrow a construction of Title I and that “there are occasions when eligibility provisions can infringe upon the right to nominate,” or more accurately as the opinion put it subsequently, “the equal right to nominate.” 379 U.S. at 143, 85 S.Ct. 292. But in any event by an 8-1 vote the Calhoon Court held that Title I rights were' not violated by restricting eligibility for elective office to 5-year members of the national maritime union with 180 days or more of seatime service in each of two of the preceding three years on unionized vessels. Thus, the Calhoon union members had to seek relief in the first instance from the Secretary, not the federal district court. The Schwartz action is indistinguishable from Calhoon insofar as it challenges Schonfeld’s removal from office. The exclusion of Sehonfeld from eligibility for the by-election does not infringe the “equal right,” i. e., the Title I right of District Council 9 members to nominate or elect since they personally are not discriminated against. They have the same right as any other union members to nominate any eligible candidate. If the order below in the Schwartz action were based solely upon Schonfeld’s removal from office or ineligibility to run in the interim election, then we would be required to reverse it. But, as mentioned above, the Schwartz action plaintiffs have also alleged in their complaint that the District Council’s removal of Sehonfeld from office and the restrictions on his subsequent eligibility constitutes a form of intimidation of the membership and of their duly elected officers and amounts to reprisal for efforts by Sehonfeld and others to advocate and implement changes in union structure and procedures. Moreover, these allegations are supplemented by those in the Sehonfeld complaint that the charges against Schonfeld were pretextual, that they were brought for the purpose of suppressing opposition and dissent within the union, and that they were “an expression of an anti-democratic policy and practice pursued over the past twenty years” which included a policy of “bringing charges or causing charges to be brought against those who exercise freedoms of speech, press, and assembly in their opposition.” As we read these allegations, they raise the question whether the sanctions on Sehonfeld in the peculiar context of the history of union factionalism presented here impede or infringe upon the free speech and association rights of union members protected by § 101(a)(2) of Title I of the LMRDA, 29 U.S.C. § 411(a)(2). See, e. g., Machinists Grand Lodge v. King, 335 F.2d 340, 343-347 (9th Cir.), cert. denied, 379 U.S. 920, 85 S.Ct. 274, 13 L.Ed.2d 334 (1964) (§ 101(a)(2) bars discharge of union officers for campaign activities); Salzhandler v. Caputo, 316 F.2d 445 (2d Cir.), cert. denied, 375 U.S. 946, 84 S.Ct. 344, 11 L.Ed.2d 275 (1963) (intra-union discipline of union member for alleged “libel” of New York painters’ union official barred by § 101(a)(2)). When rights of free speech and of association —as opposed to the rights of voting and election — of union members are invaded by the actions of union officers,, the requirement of initial appeal to the Secretary under Title IV is inapplicable. Navarro v. Gannon, 385 F.2d 512, 520 (2d Cir. 1967), cert. denied, 390 U.S. 989, 88 S.Ct. 1184, 19 L.Ed.2d 1294 (1968). We by no means suggest, however, that the free speech rights of union members are threatened or infringed upon every time a political dispute occurs in a union and the dissident members interpret some action by union officials as a threat. We do not wish to lend credence to any suggestion that the mere appendage of free speech allegations to an election complaint is sufficient to take the case out of Title IV’s requirements as interpreted by Calhoon. But federal courts need not necessarily wait to intervene until some sanction is directly imposed on union dissidents, for once suppressed “the democratic spirit” within a union “may not soon be revived.” Navarro v. Gannon, supra, 385 F.2d at 520. The competing values between Title I rights and Title IV procedural requirements are best reconciled, in our opinion, by limiting initial federal court intervention to cases where union action abridging both Title I and Title IV can be fairly said, as a result of established union history or articulated policy, to be part of a purposeful and deliberate attempt by union officials to suppress dissent within the union. Cf. Navarro v. Gannon, supra, 385 F.2d at 520. We think that the allegations in the complaints here were sufficient to meet this test. Moreover, given the lengthy history of intra-District warfare over the years, see note 2 supra, these were not mere conclusory allegations and certainly had some basis in fact, as the court below found, albeit in qualified language. Thus, the district court had jurisdiction over the free speech aspects of the Schwartz action complaint. Similarly, the district court had jurisdiction over Schonfeld’s individual action. He too asserts a free speech claim under Title I which, as mentioned, is cognizable in federal court without an initial appeal to the Secretary of Labor. Furthermore, the district court had jurisdiction over Schonfeld’s claim that restrictions on his future eligibility for office not imposed in accordance with the procedures specified in § 101(a)(5) of the LMRDA, 29 U.S. C. § 411(a)(5), violate his rights as a union member and are actionable under § 102 of the Act, 29 U.S.C. § 412. We take the view, along with the Third and the Seventh Circuits, that Title I of the Act protects the union-member relationship, but not the union-official or the union-employee relationship, and that hence removal from union office gives rise to no rights in the removed official as an official under the Act. Just as fully, however, we agree that rendering a man ineligible from seeking union office, whether for five years or three months, affects him as a member and permits him under the Act to challenge the fairness of the procedures resulting in such political exile. Thus the district court had jurisdiction of Schonfeld’s individual action. We next turn to the question whether the district court properly exercised its equitable discretion in granting a preliminary injunction. We agree with the district court’s finding of Schonfeld’s and Schwartz action plaintiffs’ probable likelihood of success on the merits, in view of the history of the almost suicidal union warfare for which the Rarback contingent bears much of past blame and the procedures employed in Schonfeld’s “trial” resulting in his removal and ineligibility. The district court found that Sehonfeld had an adequate remedy at law in an action for damages to recover his lost salary and perquisites of office in connection with his claim that his removal from office violated Title I. We disagree, especially in the light of the findings below, affirmed here, relative to the free speech and association claims. The court below, moreover, made the quite practical finding that it would also grant preliminary relief on the basis of preserving the status quo on the merits in connection with Schonfeld’s § 101(a)(5) claim, 29 U.S.C. § 411(a)(5), and his and the Schwartz members’ § 101(a) (1) or free speech and association claims, 29 U.S.C. § 411(a)(1). Quite plainly to proceed by way of holding an expensive, distracting and perhaps mootness-inducing special election in January when the case was before the district court (now, by virtue of this appeal, April) would be absurd. True, the affirmance of the granting of the preliminary injunction may moot the question of the propriety of the ineligibility penalty. But assuming that ultimately the plaintiff members in the Schwartz case and Sehonfeld do not prevail on their claims, there is nothing to prevent his removal at that time (assuming he has been re-elected in May so as to be in office), or the holding of a special election thereafter. In other words, the resolution of his controversy against Sehonfeld would not prevent the ultimate obtaining of a last full pound of flesh from him if that is the goal still sought. Sehonfeld continues to stand within the District Council’s danger. Contrariwise, if Sehonfeld prevails on the issues in one forum or the other or both, or if the rank and file union members who are plaintiffs in the Schwartz case prevail on their free speech and association claims, the fact that the pound of flesh has not here been taken will suit the occasion. We hold that the district court thus did not abuse its discretion in granting a preliminary injunction. The judgment of the district court is affirmed. In view of an application by Sehonfeld for a modification of the injunction which has been submitted to us but can be dealt with more appropriately by the district court, the mandate will issue forthwith. . The charges against Schonfeld for which he was tried by the “Trial Board” of the District Council and found wanting by a 3-1 vote were that he by-passed the Council’s “Agreement Committee” in agreeing that a tapers’ local rather than a painters’ local should have jurisdiction over certain taping and patching work preparatory to painting and that he had misrepresented the facts in presenting this matter to the Council Delegates. . The District Council had been, as found by District Judge Frankel, for many years dictatorily and repressively run by Martin Rarback. Schonfeld v. Raftery, 271 F.Supp. 128, 131 (S.D.N.Y.), aff’d, 381 F.2d 446 (2d Cir. 1967). When Schonfeld ran against Rarback (unsuccessfully) in 1961 he was subjected to intra-union discipline which was enjoined by District Judge Murphy as lacking in due process. Yochim v. Caputo, 61 Civ. 2223 (S.D.N.Y., Oct. 24, 1962) (unreported). This was not the only intra-union LMRDA litigation involving the District Council. See Salzhandler v. Caputo, 316 F.2d 445 (2d Cir.), cert. denied, 375 U.S. 946, 84 S.Ct. 344, 11 L.Ed.2d 275 (1963) (member could not be disciplined by union for libel relative to management of union funds). The subsequent trusteeship instituted by the International was dissolved by Judge Frankel’s order as in bad faith and to keep the Rarback group in power in Schonfeld v. Raftery, supra, 271 F.Supp. at 147, and it was as a result of the election held as a part of the relief ordered by Judge Frankel that Schonfeld was elected to succeed Rarback in 1967 and again in 1970. Robins v. Rarback, 325 F.2d 929 (2d Cir. 1963), cert. denied, 379 U.S. 974, 85 S.Ct. 670, 13 L.Ed.2d 565 (1965), involved a different plaintiff, but the same union and the issues of member discipline and alleged electoral abuses. Schonfeld v. Raftery, 335 F.Supp. 846 (S.D.N.Y.1971) (Lasker, J.), is another and separate LMRDA case involving the International and District Council 9. At least five other lawsuits involving the principals here have been instituted, some of which are pending. We commend Judge Brieant below for his evident assiduous efforts to bring harmony to the Council and terminate the feud. Like the Hatfields and McCoys, however, it appears that District Council No. 9 prefers to keep on “feudin’ and fusin’ and a-fightin’.” . The court correctly noted the proviso to § 411(a)(1), “subject to reasonable rules and regulations in such organization’s constitution and bylaws” and to § 411(a) (2) : Provided, That nothing herein shall be construed to impair the right of a labor organization to adopt and enforce reasonable rules as to the responsibility of every member toward the organization as an institution and to his refraining from conduct that would interfere with its performance of its legal or contractual obligations. 29 U.S.C. § 411(a) (2). . Safeguards against improper disciplinary action. — No member of any labor organization may be fined, suspended, expelled, or otherwise disciplined except for nonpayment of dues by such organization or by any officer thereof unless such member has been (A) served with written specific charges; (B) given a reasonable time to prepare his defense; (C) afforded a full and fair hearing. 29 U.S.C. § 411(a)(5). '. Every member of a labor organization shall have equal rights and privileges . to nominate candidates, to vote in elections or referendums of the labor organization, . . . and to participate in the deliberations and voting . . . subject to reasonable rules and regulations in' such organization’s constitution and bylaws. § 101(a)(1), 29 U.S.C. § 411(a)(1). . Air Line Stewards and Stewardesses, Local 550 v. TWU, 334 F.2d 805, 808-809 (7th Cir. 1964), cert. denied, 379 U.S. 972, 85 S.Ct. 648, 13 L.Ed.2d 563 (1965). But see Hamilton v. Guinan, 199 F.Supp. 562, 564-565 (S.D.N.Y.1961). . We do not decide the question whether because the district court had jurisdiction over the Schwartz action plaintiffs’ free speech Title I claims it also had “pendent jurisdiction” over the claims under Title IV. . The trial court found plaintiffs had a probability of success on the merits on three of their claims: (1) that under the union constitution the District Council Trial Board had no jurisdiction to try the charges in the first place; (2) that the union’s statute of limitations had run in regard to the tapers’ jurisdiction charge; and (3) that Schonfeld was not afforded a full and fair hearing as required by § 101 (a)(5) of the LMRDA, 29 U.S.C. § 411 (a)(5). Our affirmance of the preliminary injunction is based upon the third of these findings. Cf. Falcone v. Dantinne, 420 F.2d 1157, 1166 (3rd Cir. 1969). In view of the intense politicalization of the Local, it would be almost impossible to find an impartial trial board from the membership. We agree with the district court that any bias on the part of the trier of fact would not be cured by appellate review and that in any event the GEB had an interest in the outcome of the appeal. Review of the other findings we leave to later stages of these proceedings, or other cases, when we have a more fully developed factual record. Suffice it here to say that an injunction issued on the basis of the findings as to jurisdiction and the statute of limitations alone would raise difficult issues as to the extent § 101 (a) (5) authorizes federal district courts to review union disciplinary proceedings. Cf. Boilermakers v. Hardeman, 401 U.S. 233, 241-247, 91 S.Ct. 609, 28 L.Ed.2d 10 (1971).

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Edgar Allen JORGENSON, Jr., Appellant, v. UNITED STATES of America, Appellee. No. 72-1739. United States Court of Appeals, Eighth Circuit. Submitted April 13, 1973. Decided April 19, 1973. Edgar Allen Jorgenson, Jr., pro se. W. H. Dillahunty, U. S. Atty., and Richard’M. Pence, Jr., Asst. U. S. Atty., Little Rock, Ark., filed brief, for appellee. Before LAY and STEPHENSON, Circuit Judges, and TALBOT SMITH, District Judge. Eastern District of Michigan, sitting by designation. PER CURIAM. Petitioner appeals from the district court’s denial of his petition brought under Title 28 U.S.C. § 2255 to set aside his sentence and for resentencing. On August 31, 1971 appellant, represented by counsel, appeared before Judge Eisele and was sentenced to 3 years imprisonment upon his plea of guilty to violation of the Dyer Act, Title 18 U.S.C. § 2312. No direct appeal was taken from this sentence. Thereafter, petitioner filed a motion for reduction of sentence which was denied by Judge Eisele. Subsequently he filed a pro se petition for modification of sentence under Title 28 U.S.C. § 2255. After filing two amendments thereto, he employed counsel who filed an amended and substituted motion pursuant to Title 28 U. S.C. § 2255 for vacation of judgment and that his sentence be appropriately modified. It is from the district court’s denial of this petition that this appeal is brought. After reviewing the district court record, appellant’s briefs and the Government’s brief, we are satisfied that the appeal is without merit. In summary, appellant claims that the trial court erroneously considered several prior convictions and other erroneous information in imposing the 3 year sentence. The latter included information to the effect that petitioner was a parole violator and that a fugitive warrant had been issued for his arrest when in fact a certificate of discharge had been issued and the fugitive charge dismissed. Appellant urges that his sentence was imposed on the basis of assumptions regarding his record which were materially untrue and therefore this court should vacate his sentence and remand for reconsideration. Townsend v. Burke, 334 U.S. 736, 68 S.Ct. 1252, 92 L.Ed. 1690 (1948); United States v. Tucker, 404 U.S. 443, 92 S.Ct. 589, 30 L.Ed.2d 592 (1972). The sentencing Judge has already indicated that assuming all of appellant’s allegations to be true, he would not modify the 3 year sentence imposed. In denying appellant’s petition Judge Eisele stated:' Petitioner alleges that the Court erroneously considered several prior convictions in imposing sentence. After reviewing the petition the Court is convinced that it would not modify the three-year sentence upon a showing that all of the allegations contained therein are true. Therefore, an evidentiary hearing is unnecessary and will not be scheduled. We find no basis for interfering with the action of the trial court. Appellant further contends that he sustained a back injury while incarcerated which has caused an added condition of confinement not contemplated by the district judge in determining the severity of the sentence imposed. As indicated by the trial court this is not a proper basis for modifying the original sentence. Proper medical treatment must be, and can be, provided within the federal institution where petitioner is now confined, the United States Medical Center for Federal Prisoners at Springfield, Missouri. If the petitioner takes a contrary view, he may, of course, attempt to challenge the constitutionality of the conditions of his confinement under Title 42 U.S.C. § 1983, but not in the district court where this action was brought. Affirmed.

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CENTRAL GULF STEAMSHIP CORPORATION, Plaintiff-Appellee, v. INTERNATIONAL PAPER COMPANY and International Navigation Limited, Defendants-Appellants. No. 72-3382. United States Court of Appeals, Fifth Circuit. May 1, 1973. Francis G. Weller, Brunswick G. Deutsch, New Orleans, La., John S. Rogers, New York City, Robert B. Nolan, New Orleans, La., for defendants-appellants. Robert A. Acomb, Jr., New Orleans, La., for plaintiff-appellee. Before TUTTLE, GODBOLD and MORGAN, Circuit Judges. PER CURIAM: This is an appeal by International Paper Company and International Navigation, Limited, from a judgment granting a preliminary injunction prohibiting them from engaging in common carrier activities on two LASH vessels (the acronym deriving from “Lighter-aboard-ship,” descriptive of the motherships which carry barges previously loaded with cargo) and their respective barges in respect to which International Navigation, Limited, had contracted with plaintiff Central Gulf Lines for the ten year use of space on said vessels. In their brief appellants state that they “appeal primarily from the trial court’s conclusions of law, and do not for the purposes of this appeal contest extensively the findings of fact on which the conclusions are based.” However, upon review of the record it becomes apparent that no formal findings of fact and conclusions of law were ever entered in this case. The trial court orally stated the reasons for its decision, and in doing so briefly commented on the facts of the case, but it prefaced its statement of reasons with the following remarks: “Gentlemen, I am going to give you, because this matter is of some urgency and because I have had a chance to think about it, my judgment at this time and my reasons for judgment. I will supplement these at a later time with written reasons for judgment should they be required for purposes of appeal.” (emphasis added). In the judgment itself, the court stated, “After having heard the testimony of the witnesses, considering the verified complaint, the affidavits submitted in support of said Motion and in opposition thereto, and the legal authorities cited by all parties, it appearing to the Court after due deliberation that defendant is actually engaged in committing and will continue to commit the actions set forth below, all to the irreparable injury of the plaintiff, and the Court having made and orally assigned its finding of fact and conclusions of law, to be filed in writing at a later date, it is ORDERED . . . ” (emphasis added). Unfortunately, neither party requested the court to enter formal findings of fact and written reasons for entering the injunction. Neither party on appeal complains of this hiatus in the record, but they are nonetheless unable to point to any specific findings of fact by the trial court which would enable this court to make a proper determination in the case. We find it impossible to consider the merits of. this appeal without knowing the facts on which the trial court based its decision that Central Gulf Steamship was entitled to the injunction which it sought. We conclude, therefore, that the case must be remanded to the trial court for .the purpose of enabling that court to make formal findings of fact and conclusions of law upon which this court might judge the merits of the appeal. In the case of any subsequent appeal the parties may utilize, as they choose, the whole or any part of the appendix and/or briefs filed in this appeal. The case is remanded to the trial court for further proceedings not inconsistent with this opinion. . Rule 65(d), F.R.Civ.P., provides as follows: “Every order granting an injunction and every restraining order shall set forth the reasons for its issuance . . ."

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Melvin R. HAMILTON, Plaintiff-Appellant, v. Emery L. MILLER and Mary Katherine Miller, Defendants-Appellees. No. 72-1216. United States Court of Appeals, Tenth Circuit. Argued and Submitted Sept. 21, 1972. Decided May 1, 1973. John M. Daly, Gillette, Wyo. (George L. Arnold, Laramie, Wyo., with him on the brief), for plaintiff-appellant. John E. Stanfield, of Smith, Stanfield & Mendicino, Laramie, Wyo., for defendants-appellees. Nathaniel R. Jones, Charles R. Carter, and James I. Meyerson, New York City, on the brief for NAACP, amicus curiae. Sanford Jay Rosen, New York City, and David Minge, Laramie, Wyo., on the brief for American Civil Liberties Union, amicus curiae. Before LEWIS, Chief Judge, and JONES and McWILLIAMS, Circuit Judges. Of the Fifth Circuit, sitting by designation. LEWIS, Chief Judge. This appeal taken by the plaintiff Hamilton follows the entry of an adverse judgment in the District of Wyoming after trial to the court sitting without a jury. Hamilton’s complaint against the Millers alleged violations of the Civil Rights Act of 1866, 42 U.S.C. § 1982 and the Civil Rights Act of 1968, 42 U.S.C. § 3601, all arising from the failure of the Millers to rent to Hamilton an apartment located in Laramie, Wyoming. The appellate issues are limited to a consideration of whether the trial court erred in finding no actionable discrimination and to specific attacks upon three of the trial court’s findings as being clearly erroneous. Hamilton is a black student at the University of Wyoming. According to his testimony and that of others, he first tried to see the-apartment, listed as for rent in the local newspaper, on May 11, 1971. He, accompanied by his fiancee, was told by Mrs. Miller that the apartment had already been rented. Hamilton then returned to the University campus and consulted with the dean of students and with a white law student, Larry Clapp, who also served as a student government housing official. Hamilton sought both advice and assistance in his concern as to whether his civil rights had been abused. The following day Larry Clapp tried to rent from the Millers and was tentatively offered an apartment. Hamilton, soon thereafter, was again told by defendant Miller that no apartment was available. He informed Miller that Clapp did not want the apartment. A similar incident occurred one week later. A white University official was twice shown a Miller apartment as being available and the plaintiff was informed that no apartment was available. We have no hesitancy in stating that Hamilton established a strong prima facie case showing violations of the subject statutes. The trial court found and determined, however, that defendant’s evidence was sufficient to refute the prima facie case and concluded that on the total record the plaintiff had not succeeded in supporting his claim by a preponderance of the evidence. Mrs. Miller testified that when Hamilton and his fiancee first inquired about the apartment in May they indicated their interests to be limited to obtaining an apartment when the University fall term began in September. Mrs. Miller told them to return in August to see if there was then a vacancy. The trial court fully credited Mrs. Miller’s testimony and in so doing entered two of the findings which are now asserted to be clearly erroneous. We cannot upset such findings as a matter of law. Concerning the two following incidents when Hamilton was told there was no apartment available defense witnesses testified that Hamilton was extremely aggressive, demanding that the apartment be rented to him. Miller testified that plaintiff’s attitude and mannerisms led him to believe that Hamilton would be a troublesome tenant and that was the sole reason for his rejection. Miller stated, in effect, that he did not wish to personalize the rejection but preferred to deny the availability of the apartment. Miller’s testimony was fully credited by the trial court and premises the remaining findings that formed the judgment below. Again, we cannot disturb the findings as a matter of law. As in any case where a determination of credibility dictates a result the chance of an injustice is ever present. But we cannot, as we are here urged in effect to do, try the case de novo. Such is not the function of an appellate court. The resolution of conflicting evidence, as exists in this case, is particularly within the province of the trial court and findings must be given added weight when we consider the opportunity of the trial judge to hear and observe the witnesses. United States v. 79.95 Acres of Land, etc., Rogers Co., Okl., 10 Cir., 459 F.2d 185, 187; Rosenfield v. Kay Jewelry. Stores, Inc., 10 Cir., 384 F.2d 98, 100; Davis v. Cities Service Oil Co., 10 Cir., 420 F.2d 1278, 1279. Affirmed. . The trial court was critical of the conduct of University officials, characterizing it as acting “under false pretenses”, not in “good faith” and done for the purpose of “framing a law suit”. We give no comfort to such criticism. While actions intended to found a law suit are not favored they at times must be tolerated. See Bush v. Kaim, D.C., 297 F.Supp. 151; Newbern v. Lake Lorelei, Inc., D.C., 308 F.Supp. 407; Harris v. Jones, D.C., 296 F.Supp. 1082. It would be difficult indeed to prove discrimination in housing without this means of gathering evidence. See also Evers v. Dwyer, 358 U.S. 202 at 204, 79 S.Ct. 178, 3 L.Ed.2d 222, where the Supreme Court said it was “not significant” that a black man boarded a bus for the purpose of instituting litigation attacking segregated operation of the bus system. . We are urged to hold that the defendant should have the burden of establishing his defense through clear and convincing evidence. We are not so persuaded. It is true, of course, that prejudice is difficult to prove except circumstantially. But it is equally difficult to disprove and we see no compelling reason to vary from traditional rules applicable generally to civil cases.

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FULGHUM INDUSTRIES, INC., Plaintiff-Appellant, v. WALTERBORO FOREST PRODUCTS, INC., and Holly Hill Lumber Company, Defendants-Appellees. No. 72-2526. United States Court of Appeals, Fifth Circuit. April 11, 1973. Rehearing Denied June 6, 1973. Glenville Haldi, Atlanta, Ga., Randolph C. Karrh, Swainsboro, Ga., for plaintiff-appellant. Milton A. Carlton, Charles B. Merrill, Jr., Swainsboro, Ga., for defendants-appellees. Before RIVES, GOLDBERG and MORGAN, Circuit Judges. LEWIS R. MORGAN, Circuit Judge: The district court below, 345 F.Supp. 296, dismissed the instant civil action for lack of in personam jurisdiction over the non-resident defendant under the Georgia Long Arm Statute. We affirm. This action was originally brought by Fulghum Industries in the Superior Court of Jefferson County, Georgia. It was then removed to the United States District Court for the Southern District of Georgia and the decision there appealed to this court. The defendants, Walterboro Forest Products and Holly Hill Lumber Company, own and operate lumber mills in the State of South Carolina. They have no officers or agents located in the State of Georgia, but they do sell some of their products to Georgia customers. The plaintiff, Fulghum Industries, a Georgia corporation, contracted to design, engineer and construct for the defendants a sawmill to be installed and erected in South Carolina. The plaintiff originally learned from a third party that the defendants were planning to construct a lumber mill in South Carolina, and subsequently the plaintiff entered into negotiations with the defendants concerning that mill. As part of these negotiations officers of the defendants visited the Georgia plant of the plaintiff and other sawmills erected by the plaintiff in Georgia. Numerous telephone calls and mail communications to discuss the contract occurred between the Georgia plaintiff and the South Carolina defendants. A contract was -signed March 31, 1969, by the parties in their respective states. A dispute arose concerning payment for this plant and the inclusion in the final bill of a number of items of “extras”. The only question before this court is the dismissal of the complaint by the court below for want of jurisdiction. This court finds significant that this is an action on a contract involving parties of different states, unlike a situation where an unexpected tort leads to court action. The appellant has asserted that several recent decisions of the Georgia Supreme Court should control as to interpretation of the Georgia Long Arm Statute. But this court finds that these cases and other Fifth Circuit opinions cited by the appellant are not persuasive in this situation because all of these cases were sounded in tort whereas this action is in contract. The Georgia Long Arm Statute itself provides for the difference between an action in tort and one in contract as to jurisdiction. The only part of the Georgia Long Arm Statute applicable here is Georgia Code Annotated § 24-113.1 (a), which specifies that jurisdiction is obtained when a person “Transacts any business within this state; . . .”. The Court of Appeals of Georgia has clearly outlined what this requires. In Castleberry v. Gold Agency and Company, 124 Ga.App. 694, 185 S.E.2d 557, that Court stated that the cause for action must arise from the act of transacting the business. So it is seen that any other business the defendant engaged in in Georgia which is unrelated to the contract with Fulghum is irrelevant. We, therefore, agree with the court below that the Georgia statute does not extend to this situation. The district court is Affirmed. . Georgia Code Annotated § 24-113. . J. G. Penney Company v. Malouf Company et al., Ga.1973, 196 S.E.2d 145; Coe and Payne v. Wood Mosaic, Ga.1973, 195 S.E.2d 399. . Eyerly Aircraft Company v. Killian, 414 F.2d 591 (5 Cir. 1969); Jetco Electronic Industries v. Gardiner, 473 F.2d 1228 (5 Cir. 1973); Smith v. Piper Aircraft Corp., 425 F.2d 823 (5 Cir. 1970). . § 24r-113.1, Georgia Code Annotated, reads as follows: Personal jurisdiction over nonresidents of State.— A court of this State may exercise personal jurisdiction over any nonresident, or his executor, or administrator, as to a cause of action arising from any of the acts, omissions, ownership, use or possession enumerated in this section, in the same manner as if he were a resident of the State, if in person or through an agent, he: (a) Transacts any business within this State; or (b) Commits a tortious act or omission within this State, except as to a cause of action for defamation of character arising from the act; or (c) Commits a tortious injury in this State, caused by an act or omission outside this State, if the tortfeasor regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this State ; or (d) Owns, uses or possesses any real property situated within this State. (Acts 1966, p. 343; 1970, pp. 443, 444.) . A decision contra to this would certainly appear to chill the constitutional liberty of a citizen to travel to another state and consider engaging in even the simplest business venture. The court, however, has found it unnecessary to deal with the federal question of whether or not the due process laws would be violated if jurisdiction attached under the statute.

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UNITED STATES of America, Plaintiff-Appellee, v. Robert D. PHILLIPS, Defendant-Appellant. No. 72-3831 Summary Calendar. United States Court of Appeals, Fifth Circuit. May 3, 1973. John J. Browne, Houston, Tex., for defendant-appellant. Anthony J. P. Farris, U. S. Atty., Robert G. Darden, Asst. U. S. Atty., Houston, 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: In his appeal from a judgment of conviction of unlawful transportation in interstate commerce of stolen property in violation of 18 U.S.C.A. § 2314, Phillips asserts error in the denial of his motion for the suppression of evidence and contends that he was denied his constitutional right to a speedy trial. We disagree and affirm. Phillips first urges that his motion to suppress the stolen firearms, which he admittedly transported in interstate commerce, should have been granted because the supporting affidavit was sworn to before a municipal court judge in Texas, an officer not authorized to administer oaths. This precise question was, however, decided adversely to Phillips by the Texas Court of Criminal Appeals in O’Quinn v. State of Texas, 1970, 462 S.W.2d 583, We, of course, accept the state court’s interpretation of its own statute. Garner v. Louisiana, 1961, 368 U.S. 157, 166, 82 S.Ct. 248, 7 L.Ed.2d 207. Phillips’ second contention is that he was denied a speedy trial. He was indicted on June 15, 1970, and was released on bond June 30, 1970. His counsel was court-appointed on July 10, 1970. Pretrial motions for discovery and particulars were filed and were subsequently granted in part on October 26, 1971. Phillips’ counsel filed the motion to suppress, to which we have alluded, on October 17, 1972. On October 19, 1972, after a hearing, the motion was denied and Phillips filed á waiver of jury and a written stipulation in which he admitted all of the essential elements of the offense with which he was charged in the indictment, reserving only his objections to the evidence delineated in his motion to suppress. Phillips was found guilty by the court. Phillips never requested that his case be set for trial. There was no prejudice alleged or shown as the result of delay. Phillips did not testify or introduce any evidence other than the stipulated facts. Applying the balancing test of Barker v. Wingo, 1972, 407 U.S. 514, 92 S.Ct. 2182, 33 L.Ed.2d 101, that is the “length of delay, the reason for the delay, the defendant’s assertion of his right, and prejudice to the defendant,” we entertain no doubt that the district court was correct in holding that Phillips was not deprived of his right to a speedy trial. Affirmed. . IVe are not dealing here with a rule such as Rule 41(a), F.R.Crim.P. which would have no effect on a state warrant, and the case at bar is thus distinguishable from Navarro v. United States, 5 Cir. 1968, 400 F.2d 315, and United States v. Hanson, 5 Cir. 1972, 469 F.2d 1375, which cases were concerned witli a Texas Justice of the Peace Court not being a court of record. Nor does the case at bar involve a situation where federal officers participated in recovery of the evidence under the search warrant.

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MID-AMERICA TRANSPORTATION COMPANY, INC., Appellee-Cross Appellant, v. ROSE BARGE LINE, INC., and The M/V MARK EASTIN, its engines, boilers, tackle, equipment, etc., in rem and M/G Transport Services, Inc., Appellants-Cross Appellees. Nos. 72-1588, 72-1592. United States Court of Appeals, Eighth Circuit. Submitted April 10, 1973. Decided May 7, 1973. John C. Shepherd, St. Louis, Mo., for Rose Barge & M/G Transport Services, Inc. Wilder Lucas, St. Louis, Mo., for appellee. Before GIBSON, BRIGHT and ROSS, Circuit Judges. BRIGHT, Circuit Judge. While downbound on the Upper Mississippi River adjacent to the St. Louis, Missouri, harbor, the starboard lead barge of the M/V Mark Eastin’s 15-barge tow struck a sandbar and as a result three barges sustained damages and part of the cargo was lost. The owner of the barges, Mid-America Transportation Company, Inc., brought suit in admiralty for recovery of damages against two defendants in personam, Rose Barge Line, Inc., the firm contracting with the barge owners, and M/G Transport Services, Inc., the owner of the towboat, and against one defendant in rem, M/V Mark Eastin, the towing vessel. The district court found in favor of plaintiff-Mid-America for the cost of repairs and damage to the cargo and other expenses in the sum of $125,075 (an amount stipulated to by the parties) and for loss of use for the three damaged barges in the total additional sum of $4,587.80. The court ordered entry of judgment for these amounts without pre judgment interest. The defendants appeal this judgment, urging that the district court erred in finding that the tow’s starboard lead barge was out of the channel when it ran aground, thus creating a presumption of negligence which the defendant was unable to rebut. We affirm the finding of the district court. The plaintiff cross appeals, asserting that the district court erred in declining to award prejudgment interest on the $125,075 damage award. We reverse on this issue. I. The district court has related in detail the facts and circumstances of this case in its memorandum opinion. Mid-America Transportation Co. v. Rose Barge Lines, Inc., 347 F.Supp. 566 (E.D.Mo.1972). No worthwhile purpose would be served by repetition of these facts here. Giving due regard' to the opportunity of the trial court to make credibility determinations, we have concluded that these findings of fact rest upon an adequate evidentiary basis. Since these findings are not clearly erroneous, they may not be set aside on this appeal. Rule 52, Fed.R.Civ.P.; McAllister v. United States, 348 U.S. 19, 75 S.Ct. 6, 99 L.Ed. 20 (1954); Urian v. Milstead, 473 F.2d 948 (8th Cir., 1973); Humble Oil & Refining Co. v. American Oil Co., 405 F.2d 803, 814 (8th Cir.), cert. denied, 395 U.S. 905, 89 S.Ct. 1745, 23 L.Ed.2d 218 (1969). II. We turn to the cross appeal. The plaintiff, Mid-America, claims entitlement to prejudgment interest on the full amount of stipulated damages. Mid-America argues that recovery of interest represents an element of just compensation for the actual loss which it suffered. In denying the claim, the trial court stated: The court has reviewed the docket entries in this case, and finds no evidence of dilatory activity by defendants. The defenses were not frivolous and in all the circumstances prejudgment interest does not appear warranted in this case. [347 F.Supp. at 573.] Although in admiralty the award of prejudgment interest rests in the discretion of the trial court, interest should be granted unless there are exceptional or peculiar circumstances. American Zinc Co. v. Foster, 441 F.2d 1100 (5th Cir.), cert. denied, 404 U.S. 855, 92 S.Ct. 99, 30 L.Ed.2d 95 (1971); Sinclair Refining Co. v. SS Green Island, 426 F.2d 260 (5th Cir. 1970); The Wright, 109 F.2d 699 (2d Cir. 1940); The President Madison, 91 F.2d 835 (9th Cir. 1937). The exceptional or peculiar circumstances justifying denial of interest include delays in bringing or prosecuting the suit by the injured party. See American Zinc Co., supra, 441 F.2d 1100; The President Madison, supra, 91 F.2d 835. Here, the district court equated prejudgment interest with a penalty to be assessed against defendants for “dilatory action” or the assertion of “frivolous” defenses. But the prompt assertion of a good faith defense is not a relevant factor in determining the compensatory aspects of an award of damages, including an award of prejudgment interest. Since the record shows no reason to deprive the injured party of an award of prejudgment interest, we remand this cause to the district court so that it may make such award. However, since the plaintiff is not entitled to be put into a better position than it would have occupied had there been no collision with the sandbar, prejudgment interest shall be computed only from the time the expenditures were actually made, i. e., the time of payment, and such computation shall apply to the payment made to Farmers Export Company, Inc., as consignor, for the loss of the cargo as well as to payments for repairs, salvage services, and survey fees as may be shown by the record. Affirmed except as to denial of prejudgment interest, . The pleadings and interrogatories furnished an adequate basis for the trial court to charge Rose Barge Line, Inc., with liability for the negligent towing services provided by its subcontractor or agent, M/G Transport Services, Inc. See Todd Shipyards Corp. v. Moran Towing & Transp. Co., 247 F.2d 626 (2d Cir. 1957).

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Michael LEVY d/b/a Mike’s Market, Appellee, v. UNITED STATES of America, Appellant. No. 72-1567. United States Court of Appeals, Sixth Circuit. Argued Dec. 8, 1972. Decided April 26, 1973. Michael H. Stein, Dept. of Justice, for appellant; Harlington Wood, Jr., Asst. Atty. Gen., William W. Milligan, U. S. Atty., Alan S. Rosenthal, Atty. Dept. of Justice, Washington, D. C., on brief. Ronald Lee Grinker, Alan L. Sirkin, Cincinnati, Ohio, for appellee. Before EDWARDS and LIVELY, Circuit Judges, and CECIL, Senior Circuit Judge. PER CURIAM. In March 1965, Michael Levy, doing business as Mike’s Market, was authorized to participate in the Food Stamp Program pursuant to the Food Stamp Act of 1964 and its implementing regulations. He attended a training meeting on February 25, 1965, and an educational visit was made to his store on March 2, 1965. During succeeding weeks of 1965, 1966 and 1967, the high volume of redemption of food stamps to the total volume of sales prompted further educational visits to the market. On each of these visits Levy was contacted at which times he stated his familiarity with the regulations regarding the Food Stamp Program. In 1968, the Office of the Inspector General of the Department of Agriculture began an investigation of the market. This investigation revealed a number of alleged serious violations of the stamp program, the details of which are not necessary to discuss here for the purpose of this opinion. As a result of the findings of this investigation the case was referred to the United States Attorney on September 26, 1968 for appropriate criminal action. On June 23, 1970, the United States Attorney determined not to prosecute and returned the file to the Department of Agriculture. During this interim administrative proceedings were held in abeyance. On August 14, 1970, the Food and Nutrition Service of the Department of Agriculture began formal administrative proceedings. (Section 2022, Title 7, U.S.C.) The final conclusion of the administrative process in December 1970, was that the alleged violations were sustained, and that, “the known violations of the Food Stamp Program requirements were serious, repetitive and damaging to the program, and because prior efforts to obtain voluntary compliance were ineffective * * *." Mr. Levy’s market was disqualified from participation in the Food Stamp Program for a period of one year. Having exhausted his administrative remedies, Levy brought this action in the United States District Court for the Southern District of Ohio, Western Division, for a judicial review of his disqualification in a trial de novo as provided by Section 2022, Title 7, U.S.C. The district judge granted a permanent injunction, enjoining the government from disqualifying Levy, the plaintiff, from the Food Stamp Program, based on any activity of the plaintiff prior to May 1, 1968. The basis of the Court’s decision was that there had been undue administrative delay on the part of the government in beginning its administrative process. He relied upon a provision of 7 C.F.R. 272.6(b): “Such letter shall inform the retailer or food wholesaler that he may respond either orally or in writing to the charges contained therein within ten days of the mailing date thereof * * *." From this the trial judge finds, “Innate in the Regs, is the requirement of speed.” The Government perfected this appeal. We reverse. There is no time limit fixed either by statute or regulations in which administrative procedure must be begun after completion of an investigation. Reliance on the provision of the regulations above quoted is misplaced. It refers to a step in the administrative procedure. The delay in this case was not caused by negligence or an intention to delay the beginning of the administrative process. It was due to the time the United States attorney held the file before determining not to bring criminal proceedings. An administrative determination may not be invalidated because of lapse of time. N.L.R.B. v. Staub Cleaners, Inc., 418 F.2d 1086, 1089 (C.A.2), cert. den. 397 U.S. 1038, 90 S.Ct. 1357, 25 L. Ed.2d 649; Bryant Chucking Grinder Company v. N.L.R.B., 389 F.2d 565, 568 (C.A.2), cert. den. 392 U.S. 908, 88 S.Ct. 2055, 20 L.Ed.2d 1366; Pacemaker Corp. v. National Labor Relations Bd., 260 F.2d 880, 883 (C.A.7); F.T.C. v. Texaco, Inc., 381 U.S. 739, 85 S.Ct. 1798, 14 L.Ed.2d 714; Labor Board v. Katz, 369 U.S. 736, 748 fn. 16, 82 S.Ct. 1107, 8 L.Ed.2d 230. The Supreme Court has consistently adhered to the principle that laches is not a defense against the sovereign. Costello v. United States, 365 U.S. 265, 281, 81 S.Ct. 534, 5 L.Ed.2d 551; Utah Power & Light Co. v. United States, 243 U.S. 389, 409, 37 S.Ct. 387, 61 L.Ed. 791. The order granting a permanent injunction is vacated and the case is remanded to the District Court for a de novo trial on the merits.

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UNITED STATES of America, Appellee, v. Domingo RUIZ, Defendant-Appellant. No. 801, Docket 73-1217. United States Court of Appeals, Second Circuit. Argued April 19, 1973. Decided April 30, 1973. J. Jeffrey Weisenfeld, New York City, for defendant-appellant. Arthur J. Viviani, Asst. U. S. Atty. (Whitney North Seymour, Jr., U. S. Atty., S. D. N. Y., John W. Nields, Jr., Asst. U. S. Atty., on the brief), for appellee. Before CLARK, Associate Justice, WATERMAN and FEINBERG, Circuit Judges. Retired Associate Justice of the United States Supreme Court, sitting by designation. PER CURIAM: Appellant Ruiz was convicted below of conspiracy to distribute heroin. The sole issue in this appeal is whether the government introduced sufficient non-hearsay evidence of conspiracy to justify the admission into evidence of hearsay statements of Victor Torres, an alleged co-conspirator, implicating Ruiz. On April 18, 1972, undercover police officer Minichiello met Torres for the first time and offered to buy heroin. Upon learning that Minichiello had $1200, Torres led him to a Manhattan address where Torres spoke briefly to a group of people standing on the street beyond the officer’s hearing. Torres returned to the car in which Minichiello was waiting and talked about future purchases. Torres spoke with the nearby group a second time and then got into the car with Minichiello. About 20 minutes later Minichiello observed appellant Ruiz standing ten feet from the car. Ruiz looked at Torres and nodded his head at him. At this point Torres stated to Minichiello: “That’s my man. He’s got the package.” Torres left the car, joined Ruiz in front of the former’s nearby apartment building, and the two entered together. One minute later Ruiz emerged from the building, followed by Torres a few seconds later. Torres summoned Minichiello from the car, and the two went up to Torres’ second floor apartment, where a heroin sale was consummated. On May 2, 1972, Torres made a second sale to Minichiello. They drove together to Torres’ apartment building, where Torres left the car, entered his residence, and returned to the car. While the two waited, Ruiz passed by and nodded to Torres, who left the car without speaking to Ruiz and walked into his residence. Torres returned shortly and summoned Minichiello. They went to Torres’ apartment, where Torres removed heroin from a cupboard and sold it to Minichiello for $1200. When Torres was arrested on May 15, 1972, a search of his person turned up a slip of paper bearing the name “Mingo,” Ruiz’ nickname, and the telephone number “534-7972,” almost identical to Ruiz’ number at the time (534-7971). Ruiz argues specifically that the slip of paper was hearsay and therefore not relevant on the threshold question of whether there was a conspiracy. We disagree. The paper was not introduced to prove the truth or falsity of its contents. It was merely evidence supporting the inference that Torres knew Ruiz and anticipated calling him on the telephone. See United States v. Armone, 363 F.2d 385, 404 (2 Cir. 1966). Ruiz argues generally that there was insufficient evidence of conspiracy, whether or not the slip of paper was hearsay. At the first sale Torres waited until Ruiz arrived to make the heroin sale. Ruiz signalled to him and the two went into Ruiz’ residence for only one minute. Immediately thereafter, Torres brought Minichiello in and sold him heroin. Two weeks later a similar pattern of events occurred in connection with the second heroin sale. Torres waited until Ruiz appeared and signalled to him before he took Minichiello into his apartment and made the sale. This evidence was sufficient preponderance to warrant a finding of conspiracy. United States v. Geaney, 417 F.2d 1116, 1120 (2 Cir. 1969), cert. denied sub nom. Lynch v. United States, 397 U.S. 1028, 90 S.Ct. 1276, 25 L.Ed. 2d 539 (1970). The judgment is affirmed.

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SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. NATIONAL BANKERS LIFE INSURANCE COMPANY et al., Defendants, Tom Max Thomas et al., Defendants-Appellants. No. 71-3599. United States Court of Appeals, Fifth Circuit. April 18, 1973. Larry Huelbig, Dallas, Tex., for Thomas. Willard Herbert, Dallas, Tex., for Osorio. Charles P. Storey, Dallas, Tex., for Carr. Robert M. Cady, Dallas, Tex., for Hoover. John Bass, Dallas, Tex., Gene M. Gardner, Duncan, Okl., for So. Atlantic Corp. G. Bradford Cook, Gen. Counsel, S. E. C., Washington, D. C., Gerald E. Boltz, Robert F. Watson, Ernest Steve Watson, Fort Worth, Tex., Walter P. North, Associate Gen. Counsel, Jacob H. Stillman, Asst. Gen. Counsel, Alan Blank, Sp. Counsel, S.E.C., Washington, D. C., for plaintiff-appellee. Arthur F. Mathews, A. Douglas Me-lamed, John H. Korns, II, amicus curiae for Jarrell B. Ormand, Washington, D. C. Before COLEMAN, MORGAN and RONEY, Circuit Judges. LEWIS R. MORGAN, Circuit Judge: In this case the Securities and Exchange Commission filed a civil action to permanently enjoin certain corporations and individuals from distributing unregistered securities and engaging in fraudulent manipulative practices in connection with the sale of securities. Prior to the judgment below, nine of the defendants had agreed to permanent injunctions and the SEC had dismissed five defendants without prejudice to refiling. Of the original 28 defendants in this case, only the following actively contested at trial the issuance of an injunction: J. Quincy Adams, Audy By-ram, Waggoner Carr, James Farha, David Hoover, John Osorio, Phillip Proctor, Tom Max Thomas, and South Atlantic Company [SAC]. Nashwood Corporation was in default and the following did not actively contest the allegations of the complaint: Frank W. Sharp, Sharpstown Realty Co., Oak Forest Realty Co., and Oak Forest Investment Co. Only four of the defendants, Waggoner Carr, David Hoover, John Osorio and South Atlantic Corporation, have appealed the judgment of the district court. In an opinion which discusses thoroughly the facts, Judge Sarah T. Hughes held that the facts were ample to illustrate that there were manipulations, misrepresentations and fraud sufficient to constitute violations of the securities laws, and that a permanent injunction should be ordered. Each of the appellants allege that the facts are insufficient to justify his inclusion in the group covered by the injunction. An exhaustive study of the record of this case shows ample evidence to establish that each appellant was sufficiently connected with this complex affair to support the findings of involvement in past, present or imminent future violations so as to justify an injunction against manipulations in futuro. The judgment is affirmed. COLEMAN, Circuit Judge (concurring in part and dissenting in part): With no difficulty at all I can, and do, concur in the opinion of this Court affirming the judgment below as to David Hoover, John Osorio, and South Atlantic Corporation. As to the remaining appellant, Wag-goner Carr, I have serious doubt. As the opinion points out, this was indeed a “complex affair”. The trial record consumed 2,533 pages. Since I am in agreement as to all appellants except one, I restrict my discussion to the findings of the District Court applicable to Mr. Carr. These findings are reported, 334 F.Supp. 452-453: L. Waggoner Carr 1. At all times pertinent hereto defendant Waggoner Carr was a controlling shareholder of Nashwood. 2. Between approximately October of 1968 and June 1970 defendant Carr was a controlling shareholder and director of CB&T. 3. Between approximately October of 1969 and May of 1970 defendant Carr was chairman of the board and a member of the loan committee of CB&T. 4. At all times pertinent hereto defendant Carr was a controlling shareholder of SAC and RIC. 5. Between approximately April of 1969 and July of 1970 defendant Carr was a director, a vice president and chairman of the executive committee of RIC. 6. Between approximately April of 1969 and June of 1970 defendant Carr was a controlling shareholder of DB&T. 7. In his capacity as a controlling person of CB&T, defendant Carr approved the CB&T loan of $550,000.00 to Osorio and Carr, secured by 222,735 shares of SAC stock. While a controlling person and chairman of the board of CB&T and a controlling person of DB&T, those entities participated in a loan of $641,000.00 to NBL Plan, for the purpose of purchasing 22,500 shares of NBL stock. 8. As a controlling person, chairman of the board and member of the loan committee of CB&T, defendant Carr arranged for CB&T to make loans totaling approximately $165,-371.23 to FLAP, Inc. to enable FLAP, Inc. to purchase stock of NBL and OLI from Ling & Co. 9. As a controlling person of Nashwood and DB&T, defendant Carr approved the Nashwood purchase of NBL stock and used DB&T to finance such purchase, as more fully set out in paragraph J. 4. While a controlling person of Nashwood, which in turn owned West Virginia Life Insurance Company, that entity purchased MCI stock from Ling & Co., as more fully set out in paragraph J. 10. 10. As a controlling person of Nashwood, defendant Carr pledged 66,666 shares of NBL stock at SSB, as more fully described in paragraph J. 3. As to whether these findings justified an injunction against Carr, his counsel cogently urges: Carr’s pledge of unregistered stock was not a violation of the Securities Act, that the Commission failed its burden of proving that Carr aided and abetted the unlawful pledge of stock as collateral, that there is no evidence that Carr aided and abetted a scheme to manipulate and defraud, and that there was no evidence that Carr used the mails or-an instrumentality of commerce. Upon consideration of the record as a whole, and particularly the specific findings as to this appellant, I would reverse and remand with directions that as to' him the injunction be dissolved. . The original 28 defendants in this case were: National Bankers Life Insurance Co., National Bankers Life Insurance Co. Employees Retirement Plan, Master Control, Inc., Olympic Life Insurance Company, Nashwood Corporation, Flap, Inc., South Atlantic Company, Sharpstown Realty Company, Oak Forest Realty Company, Oak Forest Investment Company. Sharpstown State Bank, Dallas Bank & Trust Company, Frank W. Sharp, John Osorio, J. Quincy Adams, Waggoner Carr, Joseph P. Novotny, Tom Max Thomas, Sam Stock, Michael F. Ling, Donald S. Akins, Phillip I. Proctor, William B. Strange, Jr., James Far-ha, David Hoover, Audy Byram and H. E. McCain. . Securities & Exchange Commission v. National Bankers Life Insurance Company, 334 F.Supp. 444 (N.D.Tex.1971).

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UNITED STATES of America, Appellee, v. Jose Rafael TORRES, Appellant. No. 72-2386. United States Court of Appeals, Ninth Circuit. April 23, 1973. William Struthers (argued), Struthers & Harris, Livermore, Cal., for appellant. Donald F. Shanahan, Asst. U. S. Atty. (argued), Harry D: Steward, U. S. Atty., Stephen G. Nelson, Asst. U. S. Atty., San Diego, Cal., for appellee. Before BROWNING and ELY, Circuit Judges, and SOLOMON, District Judge. Honorable Gus J. Solomon, United States District Judge, Portland, Oregon, sitting by designation. SOLOMON, District Judge: Torres appeals his conviction for importing and possessing cocaine and heroin. 21 U.S.C. §§ 841(a)(1), 952 and 960. On January 18, 1972, Torres drove from San Diego to Tijuana with Isabel Figueroa and Anselmo Lebrón. They stayed in Tijuana about seven hours and then returned to the United States. The customs inspector at the San Ysidro Port of Entry found 1.75 ounces of heroin and .6 gram of cocaine in Torres’ jacket pocket. At trial, Torres asserted that he did not know how the drugs got there. He testified that there were no drugs in the jacket when he put it in the back seat of the car; that he put on the jacket when he got out of the car at the customs station; and that he did not notice the small package of drugs until the inspector found it. Lebrón rode in the back seat of the car. According to Torres, Lebrón put the drugs in the jacket while it was on the back seat. Torres called Figueroa as a defense witness, but she could not remember whether the jacket had been in the back. Torres also called Lebrón. Lebrón testified that Torres wore the jacket the entire time. Torres wanted to impeach Lebron’s testimony by introducing his prior conviction for selling heroin, for which Lebrón was on probation. The trial judge refused to permit Torres to do this on the ground that, absent surprise, one may not impeach his own witness. The Court also rejected Torres’ request that the Court call Lebrón as the Court’s own witness. Torres asserts that the Court’s refusal to permit impeachment was error requiring reversal. We agree. It was crucial to Torres’ defense to show that Lebron’s testimony was false and that Lebrón had reason to lie. It was in Lebron’s interest to lie to save himself from prosecution and from revocation of his probation for the prior conviction. If the Court had permitted Torres to introduce Lebron’s record, the jury might have disbelieved Lebron’s testimony and acquitted Torres. In United States v. Freeman, 302 F.2d 347, 351 (2d Cir. 1962), the Second Circuit rejected the rule against impeaching a party’s own witness as a pointless limitation on the “search for truth.” The Proposed Federal Rules of Evidence (Rule 607) also reject the old rule. The Advisory Committee recommended this change because: “A party does not hold out his witnesses as worthy of belief since he rarely has a free choice in selecting them. Denial of the right [of impeachment] leaves the party at the mercy of the witness and the adversary.” In the recent case of Chambers v. Mississippi, 410 U.S. 284, 93 S.Ct. 1038, 35 L.Ed.2d 297 (1973), the Supreme Court reversed a state court conviction in which a defendant was not permitted to impeach his own witness. Reversed.

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UNITED STATES of America, Plaintiff-Appellee, v. Joe Alfred LYNCH, Defendant-Appellant. No. 72-2165. United States Court of Appeals, Sixth Circuit. Argued April 3, 1973. Decided May 8, 1973. William T. Wuliger, court appointed, Cleveland, Ohio, on brief, for defendant-appellant. John P. Berena, Asst. U. S. Atty., Frederick M. Coleman, U. S. Atty., Cleveland, Ohio, on brief, for plaintiffappellee. Before EDWARDS, CELEBREZZE and LIVELY, Circuit Judges. PER CURIAM. Appellant in this case was convicted after jury trial on a charge of armed bank robbery, in violation of 18 U.S.C. § 2113(a) (d) (1970), and appeals his judgment and sentence of seven years under the Youth Corrections Act, 18 U. S.C. § 5010(c) (1970). Appellant was identified at trial by one of the bank robbers as the driver of the get-away car. When he was arrested by the FBI, he had in his possession approximately a third of the proceeds of the bank robbery, including $330 in marked or “bait” money. The principal appellate issue argued to the court is appellant’s contention that Judge Thomas committed reversible error when the jury, after two hours of deliberation, returned to court and informed him that they were deadlocked, five jurors being for guilty and seven for acquittal. Judge Thomas then sent them home for the weekend (to return the following Monday morning), telling them in part as follows: Mr. Noster and ladies and gentlemen of the jury, I received your note. However, because of the fact that the jury began its deliberations just this afternoon, I am going to request that you return Monday to resume your deliberations. I do want to say, though, that a jury, necessarily, to return a verdict, must have the unanimous concurrence of all twelve jurors. It is the duty of the jurors to consult with one another and to deliberate with a view towards reaching agreement, if they can do so without violence to their individual judgment. Each juror, of course, must decide the case for himself, but only after an impartial consideration of the evidence and of the discussion and of the consultation with his fellow jurors. Remember at all times, finally, that jurors are not partisans. You are judges, judges of the facts. A jury’s sole interest is to seek the truth from the evidence in the case. I would ask that you go home, remember carefully the instructions that you must not talk about this case over this long week end— .... No objection was made to the Judge’s statement to the jury at the time, as there had been no objection to his charge, which had dealt completely with the presumption of innocence and the requirement of proof beyond reasonable doubt. The jury on Monday morning was in possession of the Judge’s written charge setting forth these elements (among others) of the applicable law. It is appellant’s contention that the sentence, “A jury’s sole interest is to seek the truth from the evidence in the case” was in effect substituted by the Judge’s statement for the requirement of proof beyond reasonable doubt. Taking the Judge’s charge and this statement in proper context, we find no reason to conclude that the jury would believe that the requirement of proof beyond reasonable doubt had been eliminated. We find no reversible error as to this issue. On review of appellant’s complaint concerning the state’s failure to make available to defendant’s counsel a statement taken from defendant’s mother, we are convinced that the limited impeachment use made of same under the District Judge’s instruction did not constitute reversible error. The judgment of the District Court is affirmed.

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UNITED STATES STEEL CORPORATION, Plaintiff-Appellant, v. UNITED STATES of America et al., Defendants-Appellees. No. 72-1560. United States Court of Appeals, Tenth Circuit. Argued and Submitted March 27, 1973. Decided April 19, 1973. Rehearing Denied May 10, 1973. George W. Latimer, of Parsons, Behle & Latimer, Salt Lake City, Utah (Erie V. Boorman of Parsons, Behle & Latimer, Salt Lake City, Utah, on the brief), for plaintiff-appellant. Peter W. Gross, Atty., E. E. O. C. (C. Nelson Day, U. S. Atty., Salt Lake City, Utah, and William A. Carey, Gen. Counsel, John de J. Pemberton, Jr., Deputy Gen. Counsel, Julia P. Cooper, Chief, Appellate Div. and George H. Weiler, III, Atty., E. E. O. C., on the brief), for defendants-appellees. Before BREITENSTEIN and DOYLE, Circuit Judges, and TALBOT SMITH, District Judge. Sitting by designation. PER CURIAM. On March 2,1971, the Commissioner of the Equal Employment Opportunity Commission alleged in a complaint filed before the Commission, pursuant to § 706(a) of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5(a), that he had reasonable cause to believe that appellant, United States Steel Corp., Inc., had violated and continued to violate § 703(a) of the Act by discriminating against Negroes, American Indians and Spanish surnamed Americans on the basis of race and/or national origin in recruitment, hiring and promotional opportunities. Pursuant to §§ 709(a) and 710(a) of the Act, the EEOC filed a Demand for Access to Evidence of appellant. Within the allowed statutory period provided by § 710(c), appellant filed a petition in the United States District Court for the District of Utah, Central Division, to Dismiss Commissioner’s Charge and to Set Aside or Modify Demand for Access to Evidence. The EEOC cross-petitioned for an order enforcing its demand. In a Memorandum Decision filed September 2, 1971, the District Court denied appellant’s petition and allowed the cross-petition of appellees seeking enforcement of its demand for access to evidence. The sole issue before this court is whether the Commissioner’s charge sets forth facts with sufficient specificity to satisfy the requirements of 42 U.S.C. § 2000e-5(a) and thus warrant the enforcement of the Commissioner’s demand for access to evidence. The charge by the Commissioner alleged: Respondent diseriminatorily fails and/or refuses to recruit and/or hire Negroes, American Indians in the same manner in which it hires and/or recruits Anglos. Respondent diseriminatorily fails to provide Negroes, American Indians, and Spanish Surnamed Americans with an equal opportunity for promotions. Subsequent to the district court’s decision in this case, denying the motion of appellant and granting relief to the Commissioner, we dealt with the mentioned issue now presented here for review. See Mountain States Tel. & Tel. Co. v. EEOC, 466 F.2d 541 (10th Cir. 1972); Coors Co. v. EEOC, 464 F.2d 1270 (10th Cir. 1972, cert. denied, 410 U.S. 929, 93 S.Ct. 1365, 35 L.Ed.2d 584; Sparton Southwest, Inc. v. EEOC, 461 F.2d 1055 (10th Cir. 1972). These decisions control the present controversy. Accordingly, the judgment of the district .court is affirmed. . 42 U.S.C. § 2000e-5(a) provides in relevant part: (a) Whenever it is charged in writing under oath by a person claiming to be aggrieved, or a written charge has been filed by a member of the Commission where he has reasonable cause to believe a violation of this subchapter has occurred (and such charge sets forth the facts upon which it is based) that an employer, employment agency, or labor organization has engaged in an unlawful employment practice * * *

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Marco Antonio RIVERA, Appellant, v. UNITED STATES of America. No. 72-1669. United States Court of Appeals, Third Circuit. Submitted under Third Circuit Rule 12(6) March 1, 1973. Decided April 27, 1973. Charles B. Burr, II, Obermayer, Rebmann, Maxwell & Hippel, Philadelphia, Pa., for appellant. Joel D. Sacks, U. S. Atty., Julio A. Brady, Asst. U. S. Atty., Charlotte Amalie, St. Thomas, V. I., for appellee. Before SEITZ, Chief Judge and VAN DUSEN and ALDISERT, Circuit Judges. OPINION OF THE COURT SEITZ, Chief Judge. This is an appeal from a denial by the district court of a motion under 28 U.S. C. § 2255 to vacate sentence and set aside a judgment. In 1968, appellant’s retained counsel filed a notice of appeal from his conviction and life sentence. Subsequently his trial counsel was superseded on appeal by counsel appointed by this court. Appointed counsel did not file a brief and appendix as required by the rules of this court. Instead, he notified the court that he had been unable to find any basis for appeal. However, he took no other action. Many months later, after notice to counsel, the appeal was dismissed for want of timely prosecution. Thereafter, appellant himself filed the § 2255 motion with the district court claiming, inter alia, that he had been denied his right of direct appeal because of ineffective assistance of counsel. The district court denied the motion essentially on the ground that a § 2255 proceeding cannot be employed as a method of reviewing the action of the Court of Appeals in dismissing an appeal. We agree. The incongruity of a district court ruling and then implementing its ruling that the Court of Appeals erred in dismissing an appeal is self-evident. As the district court noted, appellant’s remedy is by way of a motion directed to the Court of Appeals requesting a recall of the mandate so that it could determine whether the appeal should be reinstated. See Williams v. United States, 307 F.2d 366 (9th Cir. 1962). Since a panel of this court has previously denied reconsideration, it is evident that if a motion to recall the mandate is filed and granted, the reinstatement issue should then be considered by the court en banc. We say this because of the court policy that a panel decision is not overturned except by en banc action. The judgment of the district court will be affirmed. . Overruled on another issue, Kaufman v. United States, 394 U.S. 217, 89 S.Ct. 1068, 22 L.Ed.2d 227 (1969). . Appellant’s present counsel was appointed by this court under the Criminal Justice Act. If appellant desires to file a motion to recall the mandate he may wish to apply to this court for the appointment of his present counsel for that purpose.

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NORCOAST CONSTRUCTORS, INC., and Morrison-Knudsen Company, Inc., a joint venture v. The UNITED STATES. No. 376-68. United States Court of Claims. May 11, 1973. Lyle L. Iversen, Seattle, Wash., attorney of record for plaintiff; Lycette, Diamond & Sylvester, Seattle, Wash., of counsel. R. W. Koskinen, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant. Before DAVIS, Acting Chief Judge, DURFEE, Senior Judge, and SKELTON, NICHOLS, KASHIWA, KUNZIG, and BENNETT, Judges. OPINION PER CURIAM. This is a Wunderlich Act (41 U.S.C. §§ 321, 322) Review case that was previously before the court on entitlement, 448 F.2d 1400, 196 Ct.Cl. 1 (1971). Now it is here on quantum. We reversed the original decision of the Armed Services Board of Contract Appeals (ASBCA) which would have denied recovery. After full briefing and oral argument, we affirm its quantum decision. Plaintiff, a joint venture, had contracted to furnish logistic support for an underground test nuclear explosion on Amchitka in the Aleutians, and among other things to “furnish and install diesel fuel storage facilities” for $139,900. It installed a welded steel tank and the dispute was whether defendant owned it at the conclusion of contract performance. The contracting officer held it did and the ASBCA affirmed. We held to the contrary and that the contracting officer’s decision was a constructive change order, for which an equitable adjustment was necessary. We suspended for the Board to determine quantum if the parties did not agree. They did not, and the Board awarded $40,000. This, it found, was the “salvage value” of the tank. Defendant owned the island and plaintiff, the ASBCA held, had no right to the use of it as a location for the tank. By a contract provision, it was required to remove all its property. Since the Board found the installation cost the plaintiff $150,000, the adjustment appears to allow a reasonable profit on the work covered by the diesel fuel storage item as constructively changed. Before the Board and here, the plaintiff urged that it had title to the tank until 1967, two years after the work on the instant contract was complete. At that time, it says, the contracting officer took title to it by his decision then rendered. In 1967 work on a follow-up nuclear explosion was getting underway, there was a demand for the tank, and its value in place on Amchitka was much enhanced. The removal requirement was waived, it says. This is in effect an eminent domain theory, rather than the disputes clause theory under which the case was dealt with hitherto. If plaintiff was suing for an eminent domain taking, it had no business before the ASBCA and we should not have suspended for determination of quantum there. Moreover, the plaintiff having at best a mere revocable license to leave the tank in place on Amchitka, up to 1967 (if the removal requirement was waived), its claim of value enhancement from the tank’s position runs counter to a recent Supreme Court decision, United States v. Fuller, 409 U. S. 488, 93 S.Ct. 801, 35 L.Ed.2d 16 (1973). Plaintiff says the amendment effected by the change order was to leave the $139,900 figure standing as> rental for use of the tank up to 1967, and add to it an obligation to pay the full market value of the tank as of that date, over $200,000. However, the contracting officer’s theory plainly was that the defendant owned the tank from the day it was installed. The result of the constructive change order was to amend the contract to effectuate the contracting officer’s interpretation, and that is what the equitable adjustment must pay for. Once this is clearly seen, no rational attack on the Board’s award on the ground of insufficiency can be made on the record before us. Bruce Constr. Corp. v. United States, 324 F.2d 516, 163 Ct.Cl. 97 (1963). Defendant would have us award only $10,000, apparently to eliminate all profit. We find it unnecessary to discuss this view. The quantum decision of the ASBCA is supported by substantial evidence. It is not arbitrary or capricious. It is in accordance with law. By Wunderlich Act standards, it is binding on the parties here. Accordingly plaintiff’s amended motion for summary judgment is granted, defendant’s cross motion for summary judgment is denied and judgment is entered for plaintiff in the sum of $40,000.

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WILLIAM GREEN CONSTRUCTION COMPANY, INC. and United States Fidelity & Guaranty Company v. The UNITED STATES. No. 124-72. United States Court of Claims. May 11, 1973. James V. Dolan, Washington, D. C., for plaintiffs; Stanley C. Morris, Jr., Washington, D. C., attorney of record. Richard A. Behrens, Michael Malley and Steptoe & Johnson, Washington, D. C., of counsel. Judith Ann Yannello, 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. ON DEFENDANT’S MOTION TO DISMISS THE PETITION DAVIS, Judge: Three separate government construction contracts are interlaced in this case. In November 1964 plaintiff William Green Construction Company (Green) agreed with the General Services Administration to build a women’s residence hall at Howard University in the District of Columbia (the Howard University contract). About the same time Green also contracted with GSA to construct a Post Office and Federal Office Building in Portsmouth, New Hampshire (the FOB contract). A year and one-half later, the same agency arranged with plaintiff Green to erect the National Training School for Boys in Morgan-town, West Virginia (Training School contract). Plaintiff United States Fidelity & Guaranty Company (USF & G) was the surety on the Howard University and FOB contracts; another company was surety on the Training School agreement. Green was also working, during this period, on three nonfederal projects on which USF & G was surety. In 1965-1966, during performance of the Howard University work, the contractor and the defendant had a serious dispute whether certain of the government specifications were defective and impossible to carry out. When Green refused on that ground to go forward, the contracting officer terminated for default. Green challenged this determination, insisting that its inability to proceed was justified by the defects in the defendant’s requirements. In the discussions which followed, defendant indicated that it intended to set off, against amounts which would be owing on the other two of Green’s federal contracts, the liquidated damages and excess completion costs assessable with respect to the just-terminated Howard University agreement. Green responded that such set-offs were improper — because the default-termination was unwarranted — and would make it financially impossible to proceed with completion of the other two contracts, and, more than that, the contractor’s entire business would be destroyed. For this reason, Green and USF & G asked the GSA to isolate the Howard University dispute and not to impose set-offs, but the Government refused to make such a commitment. Shortly after the Government had made it clear that it fully maintained its right of set-off, but before any set-off had actually occurred, Green informed GSA that, because of the threat to reduce payments on the other projects, it was financially unable to, and would not, proceed with the FOB and Training School contracts. These two agreements were then terminated by the Government for default. USF & G completed the FOB work, and apparently the other surety did the same for the Training School contract. Green likewise failed to complete the three nonfederal contracts it had, and went out of business. Green appealed to the General Services Board of Contract Appeals from the default-termination of the Howard University contract, but it never sought review by the Board of the defaults with respect to FOB and Training School. The Howard appeal asked, not only for the conventional modern adjustment for an improper default-termination, but also for damages for losses on FOB and Training School, as well as on the non-federal projects, and for loss of Green’s business as a whole. Because of the inclusion of these items of recovery, the Government moved the board to dismiss the appeal as for “breach of contract” and “unliquidated damages”, beyond the board’s authority. In 1968 the board partially granted this motion, dismissing all claims except that for an equitable adjustment under convenience-termination standards. Later, in 1971, the parties stipulated before the board that Green “was not in default at the time it received notice of the termination [of the Howard University contract] and the Government concedes the termination for default was erroneously made by the contracting officer. The appeal, therefore, should be granted as defined by the prior decisions of the Board in this ease.” The GSBCA then found that the contractor’s “right to proceed under the contract was improperly terminated for default”, and remanded to the contracting officer to determine the equitable adjustment for the unreimbursed costs of performing the Howard work. The stipulation expressly provided that “any equitable adjustment under the contract shall not be prejudicial to [the contractor’s] right to proceed in the Court of Claims for additional damages not the subject of such equitable adjustment.” GSBCA No. 2114, 71-2 BCA ¶ 9116. In 1972 Green and USF & G brought this action, alleging what we have thus far set forth, asking for the large damages (over $2,700,000) the board had dismissed from the Howard appeal, and claiming that those damages are recoverable on the theory that the United States breached all three of Green’s federal contracts. Count I of the petition asserts the full claim as a breach of the Howard contract, while Count II bottoms the very same claim on alleged breach of the FOB and Training School agreements. Defendant has moved to dismiss the petition for failing to state any proper claim. We think that the claimants do not have a “breach” claim against defendant on any of the three contracts, but that plaintiff Green does have a right to a convenience-termination type of equitable adjustment, under all three of them, and that such adjustments should be awarded administratively. We discuss the three agreements seriatim,. Howard University contract (Count I): The defendant’s notice of default-termination of the Howard contract triggered the default-termination clause which provided that, if it was determined for any reason “that the Contractor was not in default under the provisions of this clause”, or that “the delay was excusable”, the matter was to be treated as a convenience-termination if the contract contained a convenience-termination article, and, if not, the contract was to “be equitably adjusted to compensate for such termination.” We have held that the latter alternative calls for the general equivalent of a convenience-termination award. General Builders Supply Co. v. United States, 409 F.2d 246, 187 Ct.Cl. 477 (1969). It follows that when the GSBCA determined that Green’s right to proceed was wrongfully ended, and remanded for an appropriate adjustment, the contractor received the maximum to which it was entitled under the contract. There is no present complaint as to the amount of the equitable adjustment, and plaintiffs do not contend that such an award can or should cover the types of consequential damage they seek here. The petition suggests, however, that a breach claim for a wrongful default-termination somehow survived for these additional items of recovery. But it is very plain under our decisions that the administrative remedy is the only one available to the contractor. Green does not retain a “breach” claim, for an improper default, which can be brought in court and through which a supplemental award can be obtained. See General Builders Supply Co., supra, 409 F.2d at 248 n. 3, 187 Ct.Cl. at 480 n. 3; G. C. Casebolt Co. v. United States, 421 F.2d 710, 712, 190 Ct.Cl. 783, 486-487 (1970). The exclusive remedy “under the contract” substitutes for the “breach” claim which would otherwise exist, and becomes the claimant’s sole form of relief. The measure of recovery for a convenience-termination — costs incurred, plus a reasonable profit on work performed — is an adequate replacement for the common-law cause of action. See infra. It is worth noting, in addition, that in any event the type of consequential damage for which plaintiffs now press could not be obtained under Count I even if there were no such default-termination clause in the contract and this suit were properly one for common-law breach for wrongful cancellation of the Howard University pact. On the face of the petition it was not the wrongful termination itself which caused either Green’s inability to proceed on the other two federal contracts, or the stoppage of work on the three nonfederal projects, or plaintiff’s eventual going-out-of-business, but the subsequent and separate threat of set-offs against payments owing on the FOB and Training School projects. Whatever else those threats may have been, they were in no way violations of the Howard contract, nor were they directly or integrally linked to the Howard default termination. They were, instead, independent acts of the Government directed to the other two federal projects. Accordingly, defendant is quite right that Count I fails to state any claim at all and must be dismissed in toto. The equitable adjustment which Green is receiving, through the administrative proceedings, is all that it merits with respect to the Howard contract. FOB contract (Count II): A. Even if the default-termination of the FOB agreement was invalid, Green should have appealed to the GSBCA, just as it sought review of the Howard termination. That was the channel expressly marked out by the contract and it should have been followed. If the FOB termination was improper, an equitable adjustment would be made under that contract which embodied the same default-termination form as the Howard agreement. Plaintiffs try to avoid this conclusion by a number of arguments which we must reject. The first is that the claim in Count II is not for wrongful termination but for anticipatory breach of the FOB contract, through refusal to make progress payments. This is but a choice of phrasing to camouflage the irrefutable fact that the only detriment which came, or could come, to plaintiffs would be through a wrongful default-termination. Neither claimant suffered harm from the mere threat to withhold payment; neither would have suffered the harm charged from an actual withholding, if that is all there were. The injury could only come if the Government insisted that plaintiffs continued to have obligations under the FOB contract. If, for instance, the GSA had acquiesced (after the set-off threat) in Green’s abandonment of the FOB project, the denial of progress payments would not interfere with performance because there would be no further work to be done or paid for. A failure to issue a default-termination would amount to an acquiescence in abandonment. Cf. Ling-Temco-Vought, Inc. v. United States, 475 F.2d 630, 201 Ct.Cl. - (1973). Thus, it was only the defendant’s insistence, via the default-termination notice, that plaintiffs continued to have obligations under the FOB contract which precipitated any of the harms alleged. That was the heart of the matter. As in Allied Paint Mfg. Co. v. United States, 470 F.2d 556, 200 Ct.Cl. - (Dec. 1972), the contractor could have attacked the termination, through an appeal to the GSBCA, on the ground that other acts of the Government (i. e., the threats of set-off) excused Green’s failure to proceed. Another comparable case is Nolan Bros., Inc. v. United States, 405 F.2d 1250, 186 Ct.Cl. 602 (1969), in which we held that a convenience-termination subsumed and obviated an independent breach claim for defective design. We pointed out, in words directly applicable to the present case, “If the Government, as it might have done, had terminated the contract for default because plaintiff lagged (on account of the defective specifications) and the default was found excusable (as due to the defendant’s own fault), the termination would be converted, under the default clause, into a convenience-termination * * * ”, with the plaintiff recovering costs incurred plus a measure of profit, but not unearned profits. 405 F.2d at 1253, 1255, 186 Ct.Cl. at 607, 609-610. Plaintiff’s so-called “breach” claim has, in short, no viability independent of the validity of the default-termination, and that could be readily challenged through the “disputes” procedure. A second of claimant’s positions is that the entire termination-and-disputes remedy was aborted before the default notice. In Nolan Bros., Inc., supra, 405 F.2d at 1255 n. 5, 186 Ct.Cl. at 609 n. 5, we set apart “a case in which the contractor treats a government breach of warranty as ending the entire contractual relationship before the defendant attempts to exercise its right of termination.” Plaintiffs say that that is what happened here — that the whole contract was effectively ended before the default-termination — but their current stance is conclusively refuted by the significant fact that USF & G undertook to complete the FOB project after the termination. If the contract was not subsisting at that time, neither Green nor USF & G would have been under any obligation; the existence of the contract was the essential predicate for the surety’s agreement to complete. As in Nolan, we cannot see the plaintiffs had put an end to, or thought that they had put an end to, the contract before the Government invoked the default clause. The third point is that the set-off threats constituted a cardinal change, by effectively deleting the progress payment provisions of the FOB contract, and that a cardinal change is redressable only in court, not administratively. See Edward R. Marden Corp. v. United States, 442 F.2d 364, 194 Ct.Cl. 799 (1971). We do not agree that it is a contract change of any kind — cardinal or ordinary — for the Government to set-off against progress payments (let alone merely threatening to set-off) a federal claim on another contract (with the same contractor) which is believed in good faith, but mistakenly, to be valid. This is simply an exercise of the established right of set-off (see United States v. Munsey Trust Co., 332 U.S. 234, 67 S.Ct. 1599, 91 L.Ed. 2022 (1947); Burlington Northern Inc. v. United States, 462 F.2d 526, 199 Ct.Cl. 143 (July 1972)), which is not transformed into something else because the defendant’s claim turns out later to be without merit. In any event, and assuming for argument’s sake that the threats of set-off did equal a cardinal change excising the progress-payment provisions, it does not follow that such a “breach” claim would be any different from the “breach” claim in this case for simple violation of the progress-payments clause. As we have pointed out, that claim is swallowed up by the default-termination which was the event causing plaintiffs’ detriment. Violation of the payments article, or even .its deletion, would not have brought about the chain-of-events asserted by Green and USF & G if it were not for the default-termination. From claimants’ viewpoint that was the real villain in the drama, whom they should have pursued on his own scene. Lastly, we are told that an equitable adjustment of the convenience-termination type does not give full enough relief for the injuries suffered, and therefore plaintiffs should be allowed to seek, through this court, the part of the remedy which the administrative award cannot give them. The answer is that the premise is incorrect. “The only substantial difference between the sum calculated under” equitable adjustment or convenience-termination standards “and the amount recoverable in a common law action for contract breach is the noninclusion in the former of anticipated but unearned profits.” Nolan Bros., Inc. v. United States, supra, 405 F.2d at 1253, 186 Ct.Cl. at 607. This exclusion from relief of unearned profits is a settled policy which has long been accepted and enforced. 405 F.2d at 1254, 1255, 186 Ct.Cl. at 608-609, General Builders Supply Co. v. United States, supra, 409 F.2d at 251, 187 Ct.Cl. at 485-486; G. C. Casebolt Co. v. United States, supra, 421 F.2d at 713, 190 Ct.Cl. at 788. And even in a common-law suit there would be no recovery for general loss of business, the claimed loss of the entire Green net worth, and losses on the non-federal work — such damages are all deemed too remote and consequential. See Ramsey v. United States, 101 F.Supp. 353, 357-358, 121 Ct.Cl. 426, 433-435 (1951), cert. denied, 343 U.S. 977, 72 S.Ct. 1072, 96 L.Ed. 1369 (1952); Dale Constr. Co. v. United States, 168 Ct.Cl. 692, 738 (1964); Specialty Assembly & Packing Co. v. United States, 355 F.2d 554, 567, 568, 174 Ct.Cl. 153, 175 (1966). The conclusion must be that the administrative remedy is, as we have already said, a full and permissible substitute for the award of damages under the former “breach” claim. Plaintiffs err therefore in seeing themselves as under no duty to proceed administratively. On the contrary, Green should have appealed from the default-termination of the FOB contract and obtained its relief in that fashion. B. Not unexpectedly, the defendant suggests that, having failed to appeal, Green is now barred forever. We follow, instead, the rule of Zidell Explorations, Inc. v. United States, 427 F.2d 735, 737-738, 192 Ct.Cl. 331, 335-336 (1970), that, if the circumstances warrant, we will give a contractor who has failed to appeal a second chance. The time-limit for appeals to contract appeals boards is not beyond enlargement (Maney Aircraft Parts, Inc. v. United States, 453 F.2d 1260, 197 Ct.Cl. 159 (1972); Monroe M. Tapper & Associates v. United States, 458 F.2d 66, 198 Ct.Cl. 72 (1972)), and the Act of August 29, 1972, Pub.L. No. 92-415, 86 Stat. 652, gives us power to remand to a board “with such direction as it [the court] may deem proper and just.” To our mind this is a case, like Zidell, in which we should not rigidly hold the contractor to its original decision not to appeal. The three federal contracts were linked in plaintiff’s mind and it may have considered the enlarged recovery it originally sought in the Howard administrative proceedings to be a sufficient method of covering all three determinations. Then, too, plaintiff may well have been misled by its view, still strenuously espoused here, that its claims are entirely “breach” claims for court trial. We referred in Zidell to the great confusion since United States v. Carlo Bianchi & Co., 373 U.S. 709, 83 S.Ct. 1409, 10 L.Ed.2d 652 (1963), over which cases properly fall “under the contract” and which are for “breach”. This case is a prime exemplar. Especially since plaintiffs appear to have a valid right to substantial further relief, they should not be eternally punished for their initial mistaken choice of procedure. The case should go to the GSBCA for processing under the default-termination clause of the FOB contract. C. There has, as yet, been no decision that the termination of the FOB agreement was improper, but we think that on the undisputed facts there is no doubt that it was, and we now so hold as a matter of law since the board could not validly decide otherwise. All must now accept the Howard termination as incorrect; Green was not in default on that project and the default-termination was erroneously made by the contracting officer. There were, accordingly, no liquidated damages and no excess construction costs which could properly be offset against the FOB and Training School contracts. That threats to offset were nevertheless made is undisputed and indisputable. The connection is also clear between those threats and Green’s stopping work on the FOB and Training School projects. Defendant does not even hint that this stoppage was unrelated to, or had some cause other than, the menace of set-off. Nor is there any suggestion that plaintiffs are mistaken when they say they warned the defendant that they would need the progress payments on the two contracts, without substantial diminution. There is, moreover, not the slightest basis for thinking that Green should (or could) have gotten the necessary money from other sources. It follows, we think, that Green’s refusal to proceed on FOB must now be held to be excused. A serious threat in these circumstances to withhold necessary progress payments because of an erroneous off-set claim on another contract is an act of the Government, not attributable to the contractor, which excuses whatever technical default there may be. Construction contractors cannot be expected to continue working if the Government improperly holds back on substantial interim payments which enable the project to proceed. Cf. Litchfield Mfg. Corp. v. United States, 338 F.2d 94, 167 Ct.Cl. 604 (1964); Pigeon v. United States, 27 Ct.Cl. 167, 175-176 (1892); Overstreet v. United States, 55 Ct.Cl. 154, 173-174 (1920). D. The equitable adjustment to which Green is entitled under the FOB contract includes, not only the costs it incurred itself before termination, but also USF & G’s excess costs in completing the project. Defendant admits that, when a default-termination is converted to a convenience-termination, the contractor is entitled to any liquidated damages and reprocurement costs paid following the termination. That would include, since the surety stands here in the contractor’s place, USF & G’s unreimbursed excess completion costs, if appropriate and reasonable. Cf. J. D. Hedin Constr. Co. v. United States, 456 F.2d 1315, 1320-1327, 197 Ct.Cl. 782, 790-803 (1972). The equitable adjustment called for by the contract is flexible enough to cover that item, to the extent the contractor has incurred such costs as a result of the wrongful termination. On the other hand, as we have already indicated, USF & G’s costs of completing the three non-federal contracts, and the loss of Green’s net worth, are not proper items for an equitable adjustment under the FOB and Training School contracts. Training School contract (Count II): What we have said as to the FOB contract controls the Training School agreement. USF & G was not surety for that work and the petition therefore does not ask for recovery of amounts expended by the other surety (which is not a plaintiff here). But if the other surety has a claim, through Green, with respect to completion of the Training School comparable to that of USF & G for completion of FOB, the Training School equitable adjustment should take account of it if presented. Defendant’s motion to dismiss the petition is fully granted as to Count I, but as to Count II the court makes the following disposition: (a) the petition is dismissed to the extent that a claim for “breach” of the FOB and Training School contracts, triable in court, is stated; (b) the petition is construed as alternatively seeking equitable adjustments under those two contracts; and (c) the request for such equitable adjustment is remanded to the GSBCA under P.L. 92-415, 86 Stat. 652, this opinion, and General Order No. 3 of 1972, for appropriate administrative proceedings. Counsel for the plaintiffs is designated as the responsible reporting attorney under paragraph 9(a) of General Order No. 3. . The Howard contract provided that, if the default-termination was erroneous, the contractor would be entitled to an equitable adjustment — the equivalent of treatment as a convenience-termination. See infra. . In Allied Paint Mfg. Co., as here, the contractor’s position was that the default-termination was improper because wrongful acts of the GSA in the administration of other contracts adversely affected the claimant’s ability to perform all of its contracts, including those terminated. . Plaintiffs complain that in order to obtain relief from the FOB and Training School defaults, they would have to show that the Howard default was improper.— and “only under the Howard University contract could Green obtain the threshold determination (setting aside the Howard default) which was essential to obtaining any relief” under the other two agreements. But there was nothing to prevent Green from asking the GSBOA to suspend proceedings in the FOB and Training School cases to await the Howard determination. That is a very common practice where a significant issue in one matter depends upon the resolution of another case. . The FOB and Training School contracts were terminated in 1966. It was not until 1968 that the GSBCA dismissed, from the Howard appeal, the claims relating to the other two contracts. By that time the time for appealing the FOB and Training School defaults had long expired. . The cases in which we refused contractors a second choice — Briscoe v. United States, 442 F.2d 953, 966, 194 Ct.Cl. 866, 887-888 (1971); Richardson Camera Co. v. United States, 467 F.2d 491, 199 Ct.Cl. 657 (1972) — presented very different facts and circumstances. . The petition reproduces a letter from Green committing it to continue performance on the FOB and Training School contracts provided that GSA agreed not to offset claims unrelated to those two projects. . The petition sets forth a pre-termination letter from counsel for USF & G to GSA saying explicitly that “if the Government off-sets its claims arising out of the Howard University contract against funds earned by the Green Company on other contracts, the Green Company will be unable to proceed with work on the contracts not in dispute for lack of funds to pay laborers and materialmen.” . Green might have waited until a set-off was actually made, but the GSA’s intention had been made very plain and there apparently was planning and preparation work to do which would be entirely wasted if plaintiffs were not going forward once a set-off was actually made. In the circumstances we do not think Green was compelled to await an actual set-off. . See Defendant’s Reply to Plaintiffs’ Response In Opposition to Defendant’s Motion to Dismiss, at 9 n. 6. . USF & G has paid all laborers and materialmen, and Green is liable to USF & G for the full amount of the loss suffered in completing the FOB contract. . Count II demands, in the alternative, “such other relief as the court may deem appropriate.”

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The UNITED STATES v. The ONEIDA NATION OF NEW YORK et al. Appeal No. 13-71. United States Court of Claims. May 11, 1973. Marvin S. Chapman, Chicago, Ill., attorney of record, for appellees. Dean A. Dickie and Aaron, Aaron, Schimberg & Hess, Chicago, Ill., of counsel. A. Donald Mileur, Washington, D. C., with whom was Asst. Atty. Gen. Kent Frizzel, for appellant. M. Edward Bander, Washington, D. C., of counsel. Before DAVIS, Acting Chief Judge, and SKELTON, NICHOLS, KUNZIG, and BENNETT, Judges. KUNZIG, Judge: In issue in this government appeal from a decision of the Indian Claims Commission (the Commission) is whether the government owed and subsequently breached a fiduciary duty to protect the Oneida Indians in land dealings with the State of New York when the United States Government did not participate in the transactions. We hold that the federal government did owe a fiduciary duty to the Indians when, with knowledge of the transactions, the Government failed to protect the rights of the Indians. We do not hold that actual federal participation is a prerequisite to the imposition of this fiduciary obligation. To determine whether this duty was breached, the case must be remanded to the Indian Claims Commission for factual findings on the question of scienter on the part of the federal government. The Oneida Nation seeks, by this action, additional compensation for land which was ceded to the state pursuant to treaties with the State of New York between 1795 and 1846. These claims are based upon clauses 3 and 5 of the Indian Claims Commission Act, 25 U.S.C. § 70a (1970). Clause 3 is inapplicable here because it is expressly limited to transactions between the Indians and the United States Government. The federal government, however, might be liable under clause 5 (fair and honorable dealings) if a “special relationship” is established between the government and the claimant Indians affecting the controverted subject matter. Lipan Apache Tribe v. United States, 180 Ct.Cl. 487, 502 (1967). The Indians’ contention is that the “special relationship” was established by the Trade and Intercourse Act of 1790 which imposed a fiduciary duty upon the federal government regarding Indian land transactions. Accordingly, the Indians now seek recovery under the Indian Claims Commission Act. The Indian Claims Commission found for the Indians in all twenty-five (25) treaties. We have no difficulty affirming that decision as to the lands ceded pursuant to the Treaty of June 1, 1798 and the Treaty of June 4, 1802, because there were federal government representatives clearly in attendance at these treaty signings. We are faced with greater difficulty with the remaining twenty-three (23) treaties because there was no evidence at trial on the issue of knowledge by the federal government of the transactions transpiring pursuant to these treaties. The Government urges upon this court the position that although the knowledge or notice issue is important, it is unnecessary to reach the issue in this case because there is no “special relationship” or fiduciary duty imposed upon the United States by the Trade and Intercourse Acts arising from sales of New York land to the State of New York by resident Indians. This position we find untenable. Since the Government seemingly concedes that the Oneidas are entitled to prosecute their claims before the Indian Claims Commission pursuant to 25 U.S. C. § 70a (1970), the sole issue is whether and to what extent a fiduciary relationship exists between the Oneida Nation and the United States pursuant to the Trade and Intercourse Acts. Between 1785 and 1846 the Oneida Nation and the State of New York were signatories to twenty-seven (27) treaties in which the Indians ceded a vast majority of their land to the state. The Oneida Nation, as found by the Commission, was a tribal member of the Iroquoian Confederacy located along the shores of Oneida Lake in west-central New York. On June 28, 1785, the Oneida Nation joined with the Tusearora Tribe to cede certain lands located in New York to the State of New York. Thereafter, by the terms of the Treaty of 1788, the Indians ceded all of their lands to the State of New York, except for an area of approximately 100 square miles that was reserved for their own use and was to be held by them and their posterity forever (hereinafter referred to as the Oneida Reservation). Between 1795 and 1846, the State of New York entered into a series of twenty-five (25) treaties with the Oneidas whereby the State of New York acquired virtually the entire Oneida Reservation. I Fiduciary Duty There can be no doubt that a fiduciary relationship does exist between the Indians and the United States Government. This was first established by the Trade and Intercourse Act of 1790 which required governmental consent prior to any sale or conveyance of Indian lands. Although there have been revisions of this Act throughout the years, the basic requirement of federal consent in any disposition of Indian lands remains unchanged. Shortly after the enactment of the first Trade and Intercourse Act, President Washington, in a speech to a tribe of New York Indians, clearly defined the intended relationship between the federal government and the Indians: No State, no person, can purchase your lands, unless at some public treaty, held under the authority of the United States. The General Government will never consent to your being defrauded, but it will protect you in all your just rights. . . . But your great object seems to be, the security of your remaining lands; and I have, therefore, upon this point, meant to be sufficiently strong and clear, that, in future, you cannot be defrauded of your lands; that you possess the right to sell and the right of refusing to sell, your lands; that, therefore, the sale of your lands, in future, will depend entirely upon yourselves. But that, when you may find it for your interest to sell any part of your lands, the United States must be present, by their agent, and, will be your security that you shall not be defrauded in the bargain you may make. . . . That, besides the before mentioned security for your land, you will perceive, by the law of Congress for regulating trade and intercourse with the Indian tribes, the fatherly care the United States intend to take of the Indians. (Emphasis added.) American State Papers (Indian Affairs, Vol. I, 1832), p. 142. Judicial interpretation of the relationship between the Indians and the federal government has been consistent with President Washington’s statement. The Supreme Court has stated that the purpose of the Trade and Intercourse Act was to avoid improper and unfair disposition of Indian lands and to allow the federal government to act as parens patriae to effectuate this purpose. F.P.C. v. Tuscarora Indian Nation, 362 U.S. 99, 119, 80 S.Ct. 543, 4 L.Ed.2d 584 (1960). The Court of Claims has similarly not been shy in holding that the relationship is more than that of a nonparticipating bystander, or of a sovereign toward its ordinary citizens. It is a special relationship necessitating a special responsibility. Oneida Tribe of Indians of Wisconsin v. United States, 165 Ct.Cl. 487, 493, cert. denied, 379 U.S. 946, 85 S.Ct. 441, 13 L.Ed.2d 544 (1964). In Seneca Nation of Indians v. United States, 173 Ct.Cl. 917 (1965) (hereinafter referred to as the second Seneca case) this court went further and stated that: [t] his responsibility [i. e. that imposed by the Trade and Intercourse Act] was not merely to be present at the negotiations or to prevent actual fraud, deception, or duress alone; improvidence, unfairness, the receipt of an unconscionable consideration would likewise be of federal concern. (Emphasis added.) Id. at 925. Therefore we re-affirm previous decisions that held that the Trade and Intercourse Act establishes a fiduciary relationship between the Indians and the United States Government. II Applicability of Fiduciary Duty to State Transactions Despite the foregoing, the Government contends that this fiduciary relationship does not extend to transactions between resident Indians and the State of New York. It is urged that the second Seneca case is distinguishable from the instant case because there, the land transactions did not involve a state, but, rather, were between the Indians and private parties. Accordingly, the appellant argues that the special relationship described in the second Seneca case is limited to dealings between Indians and private parties. We cannot adopt such a narrow reading of the statutory and judicial basis of the fiduciary relationship described by Judge Davis. Sales to states were expressly prohibited in the original Trade and Intercourse Act itself. Although this language referring to the states was dropped in subsequent Trade and Intercourse Acts, it was replaced by language which forbids any and all purchases from the Indians absent federal governmental consent regardless of the parties. Judicial interpretation reinforces this position. Mr. Justice Whittaker in F.P. C. v. Tuscarora Indian Nation, supra, clearly did not limit the Trade and Intercourse Act to dealings between Indians and private parties. He only excluded dealings with the United States Government itself. Although Judge Davis did not deem it necessary to reach this issue of the applicability of the Trade and Intercourse Act to transfers to the State of New York in either of the Seneca cases (Seneca Nation of Indians v. United States, 173 Ct.Cl. 912, 915 (1965) and Seneca Nation of Indians v. United States, 173 Ct.Cl. 917 (1965)), his pithy opinions do not preclude a decision favorable to the Indians in this case. There is no compelling reason to draw a distinction between dealings by the Indians with private parties and dealings with the State of New York. President Washington drew no such distinction. The United States Government assumed a responsibility to protect the Indians in all their land transactions. There is no convincing evidence that Congress intended to draw a distinction between private individuals and state governments when they purchased land from Indians. The duty was owed to the Indians regardless of the other party to the transaction. The only logical exception is the one drawn by Mr. Justice Whittaker in F.P. C. v. Tuscarora Indian Nation, supra— the United States Government itself. We accordingly hold that the Trade and Intercourse Act is applicable to transfers between the Oneida Nation and the State of New York. This conclusion, however, does not automatically lead to complete affirmance of the Indian Claims Commission decision in this case. Ill Scienter The Government’s alternative argument in this case is that it cannot be held to a fiduciary duty for transactions in which it did not participate. The evidence is clear that government representatives were present at only two of the twenty-five (25) treaties in issue in this case. The Government would argue that the absence of participation in the remaining twenty-three (23) treaties releases it from any fiduciary duty that might have existed. Although the Government did not actually participate in the remaining treaties, we hold the fiduciary relationship would continue to exist if the Government had either actual or constructive knowledge of the treaties. With such knowledge, if the Government subsequently failed to. protect the rights of the Indians, then there would be a breach of the fiduciary relationship. This court does not see any distinction between participation and failure to exercise a duty, and knowledge and the failure to exercise the same duty. At oral argument, attorneys for both parties conceded that the issue of the Government’s knowledge of the transactions between the State of New York and the Oneida Nation was not pursued before the Indian Claims Commission. There is reason to believe that the Government might have known or had reason to know of the New York treaties and did not object to them. Should such be the case, then there would have been a breach of the fiduciary duty as to the twenty-three (23) remaining treaties as there was to the two treaties in which the government agents were in attendance. Since this is a factual question and since we are an appellate court in cases of this nature (Suquamish Tribe of Indians v. United States, 197 Ct.Cl. 775 (1972)), we are compelled to remand this case to the Indian Claims Commission for a determination on the limited issue of the Government’s knowledge (actual or constructive) of the New York treaties. Accordingly, we affirm the decision of the Indian Claims Commission as it refers to the Treaties of June 1, 1798 and June 4, 1802 and remand the remainder of the case to the Commission to decide the issue of whether the federal government actually knew or can be held to have known of the remaining twenty-three (23) treaties between the Oneida Nation and the State of New York. Affirmed in part; remanded in part. SKELTON, Judge (concurring in part and dissenting in part): I agree with that part of the court’s opinion that affirms the decision of the ICC with reference to the Treaties of June 1, 1798, and June 4, 1802, because representatives of the government were present at the signing of those treaties and the government is deemed to have knowledge of them. I reluctantly agree to the remand of the remainder of the case to the ICC to determine whether or not the government had any actual knowledge of the remaining 23 treaties at or about the time they were signed, as this was not developed at the trial. The burden was on the plaintiffs to offer proof of this kind and they failed to do so. It is doubtful if they should be given a second chance to introduce evidence of this kind which necessarily will be of ancient vintage if it exists at all. However, I do not agree with that part of footnote 16 that implies that the government “should have known” of the treaties by the possible existence of any of the slight circumstances mentioned in the footnote. I refer particularly to the fact that the government assisted in moving (“removing” as the footnote expresses it) some of the Indians from New York to Wisconsin. This could have been an act of kindness on the part of the government. The Indians could have had many perfectly valid reasons for wanting to go to Wisconsin that were in no way connected with a sale of their land. I do not think that the ICC should be led to believe that this court is of the opinion that the mere assistance of the government in helping the Indians move is sufficient to charge the government with knowledge of the treaties. Furthermore, in my opinion, a finding that the government “should have known” of the treaties, is not enough to impose liability on the government in the absence of “actual knowledge” on its part. This would actually be a conclusion of law. Knowledge is based on findings of fact, which should be left to the ICC as the fact finding body. I do not think we should tell the Commission what facts to find. BENNETT, Judge, joins in the foregoing opinion concurring in part and dissenting in part. . 26 Ind.Cl.Comm. 138 (1971). . Although the initial petition names twenty-seven (27) treaties, two of these, the Treaty of June 28, 1785 and the Treaty of September 22, 1788, are the subject of separate claims since they occurred prior to the enactment in 1790 of the first Trade and Intercourse Act (1 Stat. 137), thus reducing the number of treaties in issue to twenty-five (25). . The Indian Claims Commission Act, 25 U.S.C. § 70a (1970), reads in pertinent part: “The Commission shall hear and determine the following claims against the United States on behalf of any Indian tribe, band, or other identifiable group of American Indians residing within the territorial limits of the United States or Alaska: (1) claims in law or equity arising under the Constitution, laws, treaties of the United States, and Executive orders of the President; (2) all other claims in law or equity, including those sounding in tort, with respect to which the claimant would have been entitled to sue in a court of the United States if the United States was subject to suit; (3) claims which would result if the treaties, contracts, and agreements between the claimant and the United States were revised on the ground of fraud, duress, unconscionable consideration, mutual or unilateral mistake, whether of law or fact, or any other ground cognizable by a court of equity; (4) claims arising from the taking by the United States, whether as the result of a treaty of cession or otherwise, of lands owned or occupied by the claimant without the payment for such lands of compensation agreed to by the claimant; and (5) claims based upon fair and honorable dealings that are not recognized by any existing rule of law or equity. No claim accruing after August 13, 1946, shall be considered by the Commission.” . The Treaty of June 1, 1798 stated in part: PRESENT, Joseph Hopkinson Commissioner appointed under the authority of the United States to hold the Treaty [and] Egbert Benson, Ezra L’Hommedieu and John Taylor Agents for the State of New York. . The Treaty of June 4, 1802 stated in part: “PRESENT, John Taylor Agent appointed under the authority of the United States to hold the Treaty, and Ezra L’Hommedieu and Simon Dewitt Agents for the State of New York. . . .” . The Trade and Intercourse Act of 1790 reads in pertinent part: “. . . no sale of lands made by any Indians, or any nation or tribe of Indians within the United States, shall be valid to any person or persons, or to any state, whether having the right of pre-emption to such lands or not, unless the same shall be made and duly executed at some public treaty, held under the authority of the United States.” 1 Stat. 137, 138 (emphasis added). . By the Act of March 1, 1793, Sec. 8, 1 Stat. 329, 330, the 1790 Act was amended to read as follows: “That no purchase or grant of lands, or of any title or claim thereto, from any Indians or nation or tribe of Indians, within the bounds of the United States, shall be of any validity in law or equity, unless the same be made by a treaty or convention entered into pursuant to the constitution; and it shall be a misdemeanor, in any person not employed under the authority of the United States, in negociating [sic] such treaty or convention, punishable by fine not exceeding one thousand dollars, and imprisonment not exceeding twelve months, directly or indirectly to treat with any such Indians, nation or tribe of Indians, for the title or purchase of any lands by them held, or claimed: Provided nevertheless, That it shall be lawful for the agent or agents of any state, who may be present at any treaty, held with Indians under the authority of the United States, in the presence, and with the approbation of the commissioner or commissioners of the United States, appointed to hold the same, to propose to, and adjust with the Indians, the compensation to be made for their claims to lands within such state, which shall be extinguished by the treaty.” This version was carried forward, with slight changes, into the Act of May 19, 1796, Sec. 12, 1 Stat. 469, 472; the Act of March 3, 1799, Sec. 12, 1 Stat. 743, 746; the Act of March 30, 1802, Sec. 12, 2 Stat. 139, 143; the Act of June 30, 1834, Sec. 12, 4 Stat. 729, 730; and K.S. § 2116, now 25 U.S.C. § 177. . There are two Seneca opinions reported in Vol. 173. The above cited case is the second opinion of the two in the book and is thus known as the “second Seneca” ' case. . Supra note 5. . “The obvious purpose of that statute [Trade and Intercourse Act] is to prevent unfair, improvident or improper disposition by Indians of lands owned or possessed by them to other parties, except the United States, without the consent of Congress . . .” 362 U.S. 99, 119, 80 S.Ct. 543, 4 L.Ed.2d 584 (1960). . In both of the Seneca cases, Judge Davis refers to the Tuscarora litigation in which two Circuit Courts of Appeals held the Trade and Intercourse Act applicable to condemnations by the state. Tuscarora Nation of Indians v. Power Authority, 257 F.2d 885 (2nd Cir. 1958), cert. denied, 358 U.S. 841, 79 S.Ct. 66, 3 L.Ed.2d 76, appeal dismissed, 362 U.S. 608, 80 S.Ct. 960, 4 L.Ed.2d 1009 (1960); Tuscarora Indian Nation v. Federal Power Comm’n, 105 U.S.App.D.C. 146, 265 F.2d 338, 339 (1958), rev’d on other grounds, 362 U.S. 99, 80 S.Ct. 543, 4 L.Ed.2d 584 (1960). . Supra, note 4. . It was not necessary for the court to reach this point in either of the Seneca decisions. In the first, 173 Ct.Cl. 912 (1965), the decision rested on “narrower footings” ; in the second, 173 Ct.Cl. 917 (1965), there was actual government participation. . The mere presence of a government agent at a treaty signing might have, in fact, conveyed less knowledge to the Government about the transactions than knowledge acquired by other means. . Gunther, Governmental Power and New York Indian Lands — A Reassessment of a Persistent Problem of Federal-State Relations, 8 Buffalo L.Rev. 1, 6 (1958). . It should be noted that the Indian Claims Commission has yet to determine the issue of conscionability with regard to all of the treaties in this ease. . It is not difficult to contemplate possible items which could be construed as imposing constructive knowledge upon the Government. For example: the possibilities that the treaties were registered with some government agency; that there was pertinent correspondence relating to the treaties; that the treaties were reflected in federal land maps; that the treaties altered the state land tax structures which might have been reflected in federal government statistics; that the seat of the Government being in New York itself imposed knowledge; and other similar items. Finally, it was also suggested at oral argument that the United States Government actually assisted in the subsequent removal of these Indians to the State of Wisconsin. If this be the case, then it could be assumed that someone in the federal bureaucracy knew why the Indians were moving, i. e. the sale of their lands to the State of New York.

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60 CCPA ELLIS SILVER CO., INC., Appellant, v. The UNITED STATES, Appellee. Customs Appeal No. 5494. United States Court of Customs and Patent Appeals. May 17, 1973. Lane, Young & Fox, New York City, attorneys of record, for appellant. James G. MeGoldrick, New York City, of counsel. Harlington Wood, Jr., Asst. Atty. Gen., Andrew P. Vance, Chief, Customs Section, Washington, D. C., John N. Politis for the U. S. Before MARKEY, Chief Judge, RICH, BALDWIN and LANE, Judges, and ALMOND, Senior Judge. PER CURIAM. This appeal is from the decision and judgment of the United States Customs Court, Third Division, Appellate Term, 67 Cust.Ct. 564, A.R.D. 293 (1971), affirming the decision and judgment of the single judge, 63 Cust.Ct. 647, R.D. 11688, 308 F.Supp. 704 (1969), in a reappraisement proceeding involving the proper dutiable value of certain silverplated hollowware exported from England. Appraisement on the basis of constructed value under section 402(d) of the Tariff Act of 1930, as amended, was sustained on the ground that appellant had failed to establish that the prices paid fairly reflected market value of the goods and thus had not proven the correctness of the claimed basis of export value under section 402(b), as amended. Finding no reversible error below, we affirm the judgment of the Appellate Term of the Customs Court. Affirmed.

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Application of Robert G. BROWN. Patent Appeal No. 8887. United States Court of Customs and Patent Appeals. May 17, 1973. Rehearing Denied Aug 2, 1973. Timothy L. Tilton, James J. Hill, Chicago, Ill. (Dawson, Tilton, Fallon & Lungmus, Chicago, Ill.), attorneys of record, for appellant. S. Wm. Cochran, Washington, D. C., for the Commissioner of Patents; Jere W. Sears, Washington, D. C., of counsel. Before MARKEY, Chief Judge, RICH, ALMOND, BALDWIN, and LANE, Judges. ALMOND, Senior Judge. This appeal is from the decision of the Patent Office Board of Appeals sustaining the examiner’s rejection of claims 9 through 13, all the remaining claims of appellant’s application serial No. 403,522, filed October 13, 1964, entitled “Terrestrial Navigation System.” No claim has been allowed. The invention relates to a terrestrial nagivation system that is capable of all-weather operation. An object as stated is: * * * to provide a marine navigation system comprising an inertial system including a computer, a non-inertial velocity reference, and a third means such as [a] radiometric tracker or some other means of obtaining celestial angular measurements. The elements are interconnected in such a way that the integrated system is an effective, all-weather navigational apparatus with bounded errors, even in the event that only one celestial body may be tracked over a portion of a 24-hour cycle. The application sets out “a block-diagram representation of the apparatus constituting the inventive system” in Fig. 1, reproduced below: The application states: In the drawing, it is seen that four natured components are employed in the basic navigation system. One is a pure inertial system which includes an inertial platform and sensors similar to that provided by the Autoneties Division of North American Aviation, Inc. under the designation N7. Also provided is a computer which serves a multi-purpose role as a necessary part of the pure inertial system and as the data-processing center for all components of the system. This computer might take the form of a programmable, general-purpose digital computer, such as an IBM 7074 (but not necessarily as large physically or in memory capacity), with appropriate analog-to-digital interfacing to other components in the system where necessary. The computer must have the capability of solving a set of recursive equations according to the Kalman least-squares filtering theory, as will be explained presently. It also must have the capability of handling the other data-processing chores encountered in a conventional hybrid-inertial system application. The inventive system also includes a celestial tracker which is capable of tracking one or more celestial bodies, and this might take the form of the radiometric sun-moon tracker supplied by Collins Radio Company under the designation AN/SRN-4. The inventive system also includes a non-inertial velocity reference instrument which may, in a marine application, be an electromagnetic log similar to that currently used by the United States Navy. Additionally, the system may receive from other sources, such as LORAN, discrete position information, and these pieces of information will be incorporated into [the] system through the computer. All of system components just described need not be operative at the same time. For example, the invention described here is an effective navigational device if the tracker is operative for only a portion of a 24-hour day, as would be the ease in sun tracking. The brief states that “the present invention corrects the data received from' the pure inertial system by estimating the propagation in time of the errors contained in that system and subtracting these error estimates from the signal outputs of the pure inertial system.” The manner in which appellant obtains the error estimates is best described in the brief as follows: The present invention takes the output signals of the pure inertial system (with its attendant errors) and the output signals of the non-inertial sources of navigation information (with its own attendant errors); and it feeds this information into a data processor where a difference is taken between corresponding ones of the signals. Thus, a third set of signals is generated which is representative only of the difference between the errors in the inertial data and the errors in the non-inertial data. It is important to realize that the true navigation data, being identical for both inertial and non-inertial sources of like functioning will be subtracted out, so that only the difference in error signals is subsequently operated upon. These difference error signals are operated on according to least-squares digital filtering techniques which were developed by Kalman * * *, and hence referred to as “Kalman filtering”. The application cites two published articles in connection with reference “to the recursive equations of Kalman’s least-squares filtering theory,” according to which the system is operated. Claim 9 reads (with paragraphing as employed by appellant at oral argument) : 9. A system for terrestrial navigation comprising: inertial means including a plurality of inertial sensors defining a platform, said sensors generating a first set of signals representative of navigation data in a reference co-ordinate frame; non-inertial means for generating a second set of signals representative of navigation data having a predetermined relation to the navigation data generated by said inertial means; signal processing means receiving said first and second sets of signals for generating signals representative respectively of estimates of corresponding sets of predetermined navigational parameters, said signal processing means including difference means for generating signals representative of the differences between corresponding parameters of said sets of navigational parameters, said signal processing means further including discrete-time recursive least-squares filter means receiving said difference signals for generating signals representative of estimates of errors in said first set of signals; and correction means for correcting said first set of signals in response to said signals representative of the error estimates in said first set of signals to thereby provide a third set of signals representative of improved estimates of said navigational parameters, said filter means characterized by a discrete-time linear state model with uncorrelated stochastic driving functions, said model representing the dynamic variation of the errors in platform orientation, position and velocity in said first set of signals, said model further representing time-correlated errors in said inertial sensors and time-correlated errors in said first set of signals, said filter means further characterized by defining a linear relation between the states- in said state model and said difference signals. Claims 10-13 are either directly or indirectly dependent on claim 9 and, for reasons which will become apparent, require no further discussion. The claims stand rejected for failure to comply with 35 U.S.C. § 112, particularly the first paragraph thereof, and as unpatentable over patents to Seliger et al. and Manoni. Since we find the rejection for failure of the application to disclose the invention as required by the first paragraph of section 112 must be sustained, none of the other rejections, which were in part alternative to this section 112 rejection, will be considered. The examiner considered the application disclosure deficient in failing to set forth the manner of use of a general purpose computer, such as the IBM 7074, mentioned in the specification as used in “simulated test runs,” to “solve the set of recursive equations according to the Kalman least-squares filtering theory” to achieve appellant’s objectives, “particularly in view of applicant’s position that the novelty in the case is the manner of applying * * * [that] theory to information processing.” After specifically criticizing the sufficiency of the disclosure insofar as it mentions an electromagnetic log as a possible Non-Inertial Velocity Reference (see Fig. 1), the examiner stated: It is noted, however, that the use of hollow rectangles to indicate structure of this device will be considered justified if applicant fully identifies a suitable prior art disclosure thereof, and enters a teaching in the specification of how to incorporate such device into the disclosed combination. The examiner further stated: The following are illustrative recitations in these new claims of “means” which are not thought to find adequate counterpart apparatus support in the specification: In claim 9: — signal processing means —difference means —recursive least-squares filter means —means for correcting said first set of signals. Appellant responded by referring to a publication for a description of a magnetic log and by submitting two affidavits directed to the question of adequacy of the disclosure. One affidavit was that of the inventor Brown, a Ph.D. in electrical engineering, experienced in inertial navigation systems design work, and the other by Robert Á. Sharpe, who had a master’s degree in electrical engineering and was an experienced programmer of digital computers to solve scientific mathematical equations. These affidavits, which will be discussed in more detail later, were regarded by the examiner as failing to demonstrate that the application disclosure was adequate. The board agreed with the examiner that the application did not comply with the disclosure requirement of section 112, including the position that the affidavits were not persuasive on that point. Opinion The only drawing in the application representing the apparatus claimed is the block diagram of Fig. 1, supra. Systems said to be suitable for certain of the blocks are identified broadly in the specification, as by reference to “a pure inertial system which includes an inertial platform and sensors similar to that provided by the Autonetics Division of North American Aviation, Inc. under the designation N 7” (emphasis ours) and “sources, such as LORAN,” of “discrete position information.” But no particular description of the various output signals from those systems or of the operative relationship between them to utilize such signals is set forth. In effect, the application might be regarded as leaving significant operative relationships to be determined from the mathematical equations set out, including those embodying Kalman’s least-squares filtering theory. While a “mathematical model” of the system utilizing a digital computer is discussed in the specification, the program for the computer is not disclosed even though such a program is said to have been actually prepared for the mathematical model. Under the circumstances, the examiner and board clearly had a reasonable basis for questioning the adequacy of the disclosure to enable a person of ordinary skill in the art to make and use a navigation system as defined in the claims. See In re Ghiron, 442 F.2d 985, 58 CCPA 1207; In re Marzocchi, 58 CCPA 1069, 439 F.2d 220, 169 USPQ 367 (1971). Appellant argues that his disclosure was adequate, relying largely on the aforementioned affidavits of Brown and Sharpe as evidence. He regards the invention as involving two technologies, the art of navigation systems and the art of programming digital computers, and urges that the knowledge of persons skilled in both technologies is the criterion for sufficiency here, relying on In re Naquin, 398 F.2d 863, 55 CCPA 1428 (1968). Clearly, the examiner and the board accepted that criterion, and we do also. This itself points to a very significant distinction over Naquin where the examiner considered the sufficiency of the disclosure in terms of the person skilled in only one of the two technologies involved and the board, although disagreeing with that legal criterion, erroneously sustained the examiner on the basis that it could not say “as a matter of law” that the examiner erred. The question here narrows down to whether the affidavits of Brown and Sharpe demonstrate that persons skilled in the two fields would have been taught to make and use the invention. The principal factual assertions of the affidavits relate to Sharpe’s writing, in 1963, a “computer program to perform the computations necessary to solve” a “set of recursive equations relating to what * * * Brown described as a navigational problem.” Brown stated that he met with Sharpe “on several occasions to discuss the problem with him and explain the definitions of the terms” and that “each of said meetings lasted for a period of not longer than about two hours.” Brown further asserted that, at the time of the meetings, he “had prepared a description of a solution of the problem which included substantially no information in addition to that set forth in * * * [his] application as filed.” Sharpe acknowledged receipt from Brown of “a set of papers describing the problem in mathematical terms. “He stated that he met with Brown “on several occasions * * * for brief periods to discuss the definition of terms used in * * * [the] set of papers” and that he worked “only from said set of papers and the information transmitted in said meetings.” Sharpe additionally stated that “the information conveyed to him via said set of papers and • said meetings with * * * Brown was substantially the same information as is disclosed in * * * [the present] application.” Brown further asserted that “the level of skill of programming of scientific, mathematical problems prior to filing the instant application reached a relatively high degree of sophistication in mathematics as compared with most mechanical and other electrical arts.” He stated that the skilled programmer at the time typically had “a baccalaureate degree in engineering or mathematics,” that some had the “equivalent formal education required for a Masters Degree,” and that “such a person * * * would need no further disclosure [than the application] in order to enable him to solve these equations.” Brown concluded : That, in his opinion, the implementation of such program to perform the computations defined in Equations (4)-(8) of the application was well within the skill of the art at the time of the invention; and that the disclosure set forth in said application as filed would enable a person skilled in the art at the time of invention to practice the invention. We do not find the affidavits to overcome the objections properly raised as to the adequacy of the application disclosure by the examiner and board. The fact that Sharpe had actually produced a computer program, not disclosed in the application, to solve the recursive equations in the mathematical model does not demonstrate that the application disclosure would have taught a person of ordinary skill in the art how to make and use the claimed system. It is not factually established that Brown did not convey to him vital information in addition to that set out in the application. The affiants’ characterization of the information conveyed as “substantially” the same as that in the application amounts to the conclusions of the affiants without any revelation of the facts on which the conclusions were based. Certainly “several” meetings each lasting no longer than two hours, could have afforded an opportunity to convey additional information that was critical to an adequate disclosure without the affiants with their high level of scientific training actually recognizing it. The assertion of Sharpe that no disclosure additional to that in the application would have been necessary to enable a person skilled in scientific programming to prepare a program to solve the recursive equations is primarily a matter of opinion tied into the ultimate issue. While we do not ignore that opinion, we do not consider it as significant factually as the more basic assertions, accepted by the court in Naquin, that “the average computer programmer is familiar with subroutines for running integration, addition, etc.” Moreover, the deficiencies which the examiner and board found in appellant’s application were not based only on the failure to disclose the computer program used with appellant’s “mathematical model.” Thus the board stated: * * * we note that the claims are not directed to a computer alone but to a system of apparatus that includes celestial, inertial and radio-metric units which must coact with and be accommodated by the computer into an operative system of apparatus. As we understand Appellant’s affidavits the programming effort alleged to be obvious was that of solving certain equations on a computer, not in a program which coordinated the various discrete units into apparatus that accepts physical inputs and yield physical outputs. In other words, Appellant’s asserted computer program is not coextensive with the scope of the appealed claims but is directed to the portion thereof which the Examiner has characterized as a “mathematical model.” Appellant’s contention that application to actual apparatus would be too costly is not convincing because the monopoly sought by the appealed claims is not of the solution, of a mathematical model but of an extensive installation for which the record presents no details of how this would be built nor any evidence that it would have been obvious to supply the missing parts of the system. We consider that position sound and do not find that appellant has answered it. His disclosure is basically a mathematical analysis of a procedure suitable for use in an inertial navigational system which is blended with non-inertial sensing means. Its substance resembles more that in a theoretical thesis than in a description of an operative system. The most tangible disclosure is of a “mathematical model” of the system. While a successful mathematical model may well have value in developing a practical system, a discussion of such a model would not necessarily be adequate to disclose how to make the actual navigation system, particularly where there is so little description of the operative relationships of the elements as here. Appellant cites In re Bernhart, 417 F.2d 1395, 57 CCPA 737 (1969), but that case does not establish any rule contrary to the principles applied here. No rejection for inadequate disclosure was before the court there. The board, an augmented panel including the three members involved here, did reverse a rejection for inadequacy of disclosure. However, the issues raised by such a rejection involve factual considerations which differ from case to case. Indeed, the court regarded the mathematical equations to be programmed in Bernhart to be simpler, and apparently therefore easier to program, than those of a prior art Taylor patent on which it sustained the rejection of certain of the claims. Accordingly, the rejection of claims 9-13 for inadequacy of the application disclosure under the first paragraph of section 112 is affirmed. Affirmed. . Appellant’s brief presents a description that is more informative in a number of respects than the application disclosure. . R. E. Kalman, “A New Approach to Linear Filtering and Prediction Problems,” ASME Trans., J. of Basic Engr., V. 82, pp. 35-45, Mar. 1960; and R. E. Kalman and R. S. Buey, “New Results in Linear Filtering and Prediction Theory,” ASME Trans., J. of Basic Engr., Mar. 1961, pp. 95-108. . No. 3,214,575, granted October 26, 3965 on an application filed September 34, 1961. . No. 3,342,982, granted September 19, 1967, on an application filed September 25, 1961.

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WASHINGTON MANUFACTURING COMPANY, Appellant, v. BRAND AND PURITZ, Appellee. Patent Appeal No. 8964. United States Court of Customs and Patent Appeals. May 24, 1973. G. Cabell Busick, Mason, Fenwick & Lawrence, Washington, D. C., attorney of record, for appellant. Claude A. Fishburn, Orville O. Gold, Fishburn, Gold & Litman, Kansas City, Mo., attorneys of record, for appellee. Before MARKEY, Chief Judge, RICH, BALDWIN and LANE, Judges, and ALMOND, Senior Judge. PER CURIAM. This is an appeal from the decision of the Trademark Trial and Appeal Board, abstracted at 168 USPQ 672 (1970), dismissing appellant’s opposition to the registration of DEE DEE DEB for “coats and suits for junior misses,” Application Serial No. 290,249 filed February 5, 1968. Appellant asserted that the mark so resembles its registered marks DEE CEE for “shirts, jackets, slacks, shorts, dungarees, and pajamas for men, women, and children,” Registration No. 791,077 issued June 15, 1965, and “DEE-CEE” for virtually the same goods, Registration No. 691,712 issued January 19, 1960, that there is a likelihood of confusion, mistake or deception within the meaning of § 2(d) of the Lánham Act, 15 U.S.C. § 1052(d). The board concluded that when the marks DEE DEE DEB and DEE CEE are viewed in their entireties, the resemblance is not such as to reasonably lead to a likelihood of confusion. We agree with both the reasoning and conclusion of the board in this ease. The decision of the board is accordingly affirmed. Affirmed.

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Application of Walter JEANMAIRE. Patent Appeal No. 8925. United States Court of Customs and Patent Appeals. May 17, 1973. Burgess, Dinklage & Sprung, New York City, attorneys of record, for appellant. James F. Woods, New York City, of counsel. S. Wm. Cochran, Washington, D. C., for the Commissioner of Patents. John W. Dewhirst, Washington, D. C., of counsel. Before MARKEY, Chief Judge, and RICH, BALDWIN and LANE, Judges, and ALMOND, Senior Judge. BALDWIN, Judge. This appeal is from the decision of the Patent Office Board of Appeals sustaining the examiner’s rejection of claims 2-3 and 5, all the claims remaining in appellant’s application, for obviousness under 35 U.S.C. § 103. The Invention Appellant’s invention relates to the addition of a series of “pre-opening conveyor belts” to a known cotton bale opening machine. The resulting apparatus is shown schematically in the application drawing as follows: The bale opening machine includes a series of reciprocating conveyor belts FlF5 with bale opening devices A1-A4 located therebetween. The bales B1-B5 are reciprocated back and forth over the opening devices and the opened cotton fibers drop onto conveyor belt T. To maintain the bales close together during their back and forth movement, conveyors F1-F5 are sequentially operated as recited in claim 2 “in such manner that the rearmost belt in the direction of each reciprocating movement is first to be moved.” A series of pre-conveyor belts G2-G6 supply bales B7-B11 that are in increasing degrees of “blooming” from left to right. A final pre-conveyor G1 automatically supplies bale B6 to the upstream conveyor belt F5 when a photocell Z indicates the completion of the opening of bale Bl. In his brief before the board, appellant gave the background and purpose of his invention as: In the prior art it is known to permit blooming or blossoming of bales simply by untying such and permitting the untied bales to come to ambient conditions in the bale opening area. It should be appreciated that if a bale is untied and then permitted to bloom, after a given amount of time during which the blooming is more or less completed, the bale becomes increasingly difficult to transport because the compressive forces holding the bale tufts together relax as a function of time, and therefore it is difficult, if not impossible, to neatly pick up a bloomed bale and move it from its blossoming location onto the first of a series of picking means stations. According to the instant invention, this specific difficulty is absolutely avoided by providing the series of pre-opening conveyor belts referred to above, which are preferably linearly aligned with the picking means. By permitting a bale to blossom on these pre-opening conveyor belts, no significant material transfer difficulty is encountered because it is not necessary to physically lift the bale during blossoming or after blossoming with conventional material transfer means such as a form [fork?] lift truck. Claim 5, the sole independent claim, reads: In a bale opening apparatus comprising a plurality of aligned conveyor belts, a plurality of bale opening means disposed between adjacent conveyor belts, means for reciprocating said conveyor belts whereby bales resting thereon are reciprocated in operative relation to said opening means in such manner as to open said bales therewith; control means associated with the downstream-most conveyor belt and bale thereon which, upon sensing completion of the opening of said downstream-most bale, causes the remaining bales to move downstream one conveyor belt length and causes a new, previously untied bale to be positioned on the upstream-most conveyor belt; the improvement which comprises a multiplicity of streamwise alligned pre-opening conveyor belts upstream of, streamwise aligned with the proximate to the upstream-most conveyor belt having bale-opening means associated therewith, wherein each of said pre-opening conveyor belts supports a bale and wherein said control means is operatively connected to all of said pre-opening and bale opening means-associated-convey- or belts and causes a bale on the downstream-most of said pre-opening conveyor belts to be transferred to the upstream-most of said opening means-associated conveyor belts, causes the downstream movement of bales onto the next successive downstream-most conveyor belt and causes a fresh bale to be placed upon the upstream-most pre-opening conveyor belt in an untied condition. Claims 2 and 3 both depend from claim 5. As noted above, claim 2 requires that the reciprocating conveyor belts be sequentially operated “in such manner that the rearmost belt in the direction of each reciprocating movement is first to be moved.” Claim 3 recites that the “control means is a photoelectric element.” The References Platt et al. (Platt) relates to a bale opening device shown as follows in Figure 2: Platt’s device differs from appellant’s mainly in that a single “loading convey- or 31” delivers a bale to the first of a series of reciprocating conveyor belts of the bale-opening device. The loading conveyor is automatically advanced to supply an unopened bale when a photocell 47 detects that the downstream-most bale on the reciprocating conveyor belt 38 has been fully opened, that is, all of its fibers have been removed. When an untied bale is initially placed on the conveyor 31, a “normally open momentary manual switch 98 * * * provided in parallel with [the] photocell contacts” permits the “loading conveyor” to be moved to properly position the new bale thereon in order “to ready the new bale for the next automated advance of all of the bales * * A photograph in The Saco-Lowell Bulletin, bearing a date of June 1951, shows a worker manually feeding portions of three bales of cottom to a device for processing. An additional three bales are shown next to the device and are apparently being allowed to “bloom.” The Rejection The examiner held that it would have been obvious to modify Platt by providing additional loading conveyors in view of the prior knowledge in the art that cotton bales are conventionally untied and allowed to “bloom” prior to opening such as evidenced by The Saco-Lowell Bulletin. Regarding the additional limitation in claim 2, the examiner stat§d: Appellant argues in regard to the rejection of claim 2, “while it is possible that the conveyor belts of the reference associated with the picking means thereof could be adapted to sequentially initiate or reciprocate as required by the instant claim 2, it is just as clear that it would take knowledge outside the four corners of the reference and beyond the skill of a routineer in the art to introduce this sequential initation [sic] or reciprocation”. This is not conceded. To a person skilled in the art, the sequential operation of the conveyor belts so that the rearward-most belt is first to be moved could be readily accomplished. One skilled in the electrical arts is certainly considered to be capable of installing a drive to said conveyor belts that would sequentially initiate reciprocation thereof as well as a person skilled in the mechanical arts. Furthermore, whether or not the conveyor belts are sequentially operated, the primary purpose of said conveyor belts is to pass a bale of cotton over the plucking means for the removal of tufts of cotton from the bottom of the bale. Therefore, whether the belts are sequentially operated does not change the fact that the primary function of the apparatus of Platt et al. and the claimed apparatus is to remove tufts of cotton from the bottom [of] a bale of cotton for further processing. The board noted that the single loading conveyor of Platt allows a bale to partially bloom thereon. It stated: It is axiomatic in any system of continuous processing that required time intervals are maintained by adjusting the lengths or speeds of operation of the conveyors so that merely stating the requirement of additional time for “blooming” would suggest to a person of ordinary skill that this could be done by providing the loading convey- or with additional length in the reference patent. Whether this additional time be afforded by a single conveyor or by a plurality of serial conveyors is clearly a matter of engineering judgment. Opinion Appellant urges in his brief (1) that the prior art does not suggest the automatic advancement of the bales on the pre-conveyors to supply an un-opened bale to the bale opening conveyors when the downstream-most bale thereon is completely opened; (2) that the loading conveyor of Platt is not related to the blooming process of the untied bales; and (3) that the prior art does not suggest the use of a plurality of pre-conveyors rather than a single pre-conveyor. Appellant contends that the photocell control means 47 in Platt is not interconnected to the conveyor 31. He quotes part of the Platt disclosure, which, he contends, indicates that conveyor 31 is operated by a manual switch. Placed in context, the quoted disclosure does not detract from the clear teachings of Platt that feed conveyor 31 is fully automated with the Platt picking-section control means. After explaining that all of the bales in Figure 2 continue to advance to the left when the leftmost bale is no longer of sufficient height to operate photocell 47, Platt states: As the advance of bales continues, the photocell 48 operates when the rearmost bale has advanced beyond it to energize relay coil 96 to close its contact 96-1 in series with loader motor 78. When the bales have advanced sufficiently to operate photocell 47, reversing of the direction of bale movement will take place as explained above. When sufficient reverse movement has occurred to again operate photocell 46, not only will the bales again advance but loader motor 78 will be operated, since its contacts 96-1 are closed and its contacts 95-5 have closed by reason of the action of the reversing relay 95 in the forward direction of conveyor motor 56. The bale on the loader conveyor 81 will be advanced simultaneously with the advance of the other bales to the first opening unit and the apparatus will again take up its reciprocating movement as explained above. All of the bales having been advanced and each opener unit being occupied by a bale, a new bale may then be placed on loader conveyor 31, and that conveyor advanced to ready the new bale for the next automated advance of all of the bales by means of manual loader switch 98. Bales may be varied as loaded for blending. [Emphasis ours.] Thus Platt fully meets appellant’s first argument. With regard to appellant’s second argument, appellant does not and can not contend that he was the first to discover the difficulties involved in handling a fully bloomed cotton bale. Clearly there would have been nothing unobvious to one skilled in the art in minimizing those difficulties by allowing some of the blooming to take place on Platt’s conveyor 31. Before the board, appellant conceded that some blossoming would take place on the Platt pre-conveyor. Appellant stated that “the function of blossoming conveyor belt 31 of Platt et al. is spread among a multiplicity of conveyor belts in the instant application so that it is possible to permit blossoming of bales in a continuous manner within the same time sequence as is set forth for the picking means.” The only difference in that regard is that Platt’s single pre-conveyor, while “continuous,” is somewhat less continuous than appellant’s plurality of pre-conveyors. While appellant argues that his apparatus allows complete blossoming of the bales in the pre-conveyor system, there is nothing in the claims which would require sufficient pre-conveyors to allow complete blossoming. Moreover, appellant’s specification does not indicate such an absolute requirement, one of the objects being to “permit each bale to remain untethered for several hours previously, freed from their ties, to relax and adapt themselves to the climate in the room, thereby permitting easier picking of the contents thereof.” According to appellant, it takes approximately 24 hours for a bale to completely bloom. With regard to appellant’s contentions concerning the difference in numbers of pre-conveyors between his invention and that of Platt, we agree with the position of the board quoted above. We again note that no critical number of pre-conveyors is either called for by the claims or indicated in appellant’s specification. As to claim 2, the role played by the sequential reciprocation recited therein is made dear by the following excerpt from appellant’s specification, with reference to his Figure 1 reproduced supra: The conveyor belts are driven in the manner that the Bales B1-B5 are moved continuously back and forth in the direction indicated by the double-headed arrow P over the opening devices A1-A4 in such a manner that the bales lie close together. For this purpose, the drives of the conveyor belts F1-F5 are driven in such a manner that upon movement to the right the movement of the belt F5 starts earlier than that of the belt F4, the movement of the belt F4 starts earlier than that of the belt F3, etc., and that upon movement to the left the movement of each belt which is further to the right starts moving before the adjacent belt which is further to the left. [Emphasis added.] Thus the function of the sequential reciprocation is to keep the bales on the opening conveyors close together by using the rearmost conveyors to push the rearmost bales upon against the bales which are ahead of them in the direction of travel. Turning to the prior art, Platt’s Figure 2, supra, clearly shows the bales on the reciprocating conveyors as abutting one another while they reciprocate over the opening means. That arrangement would prevent Platt’s photocells, such as photocell 48 from falsely sensing that a bale has been fully picked when in truth it is only sensing a gap between the bales. The difficulty we have with the rejection of claim 2 is that Plátt does not disclose sequential reciprocation or any other method of keeping his reciprocating bales close together. In fact, Platt indicates that all of the conveyors are driven by the single drive means 58 and conveyor drive motor 56, which would apparently preclude sequential reciprocation of the several conveyors. Neither the examiner nor the board has pointed out any reason why it would have been obvious to modify the reciprocating conveyors in Platt to operate “sequentially.” Whether such modification “could be readily accomplished” as suggested by the examiner is not determinative of whether it would have been obvious to do so, and the record does not indicate that this particular modification would have been within the skill of those of ordinary skill in the art. Accordingly, the rejection of claim 2 is reversed. For the foregoing reasons, we affirm the board’s decision sustaining the rejection of claims 5 and 3, and reverse its decision as to claim 2. Modified. . Serial No. 684,833, filed November 21, 1967. . Cotton bales “bloom” or “blossom” by acclimatization to room conditions for a certain period of time after their steel hoops and jute coverings are removed. . U. S. Patent No. 3,381,341, issued May 7, 1968 on an application filed October 1, 1964.

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Application of Konstant YANUSH. Patent Appeal No. 8951. United States Court of Customs and Patent Appeals. May 17, 1973. Keith D. Beecher, Jessup & Beecher, Los Angeles, Cal., attorneys of record, for appellant. S. Wm. Cochran, Washington, D. C., for the Commissioner of Patents; Fred W. Sherling, Washington, D. C., of counsel. Before MARKEY, Chief Judge, RICH, BALDWIN and LANE, Judges, and ALMOND, Senior Judge. MARKEY, Chief Judge. This is an appeal from the decision of the Patent Office Board of Appeals rejecting, under 35 U.S.C. § 103, claims 1-6, 9, and 10 of application serial No. 678,045, filed October 25, 1967, for “Apparatus for Making Woolen Footwear and the Like.” We affirm. THE INVENTION The invention is clearly set forth in claim 1: 1. In apparatus for molding woolen footwear and the like, the combination of: a mold for receiving a quantity of wool soaked in an aqueous solution and including a first outer mold element having a boot-shaped cavity corresponding substantially to a first half of a boot to be molded in the apparatus, and a second outer mold element having a boot-shaped cavity corresponding substantially to a second half of a boot to be molded in the apparatus; an inner mold element having an external surface corresponding to the interior of the boot to be molded, and vibrating means positioned to engage at least one of said outer mold elements to cause said outer mold elements to vibrate and hammer against the soaked wool contents of said mold so as to cause the wool in said mold to assume a hard consistency suitable for footwear. The remaining claims all depend on and stand or fall with claim 1. THE PRIOR ART The references were to Frieder et al., 287,492; Yanush, 3,067,467; Yanush, 2,-975,480; Ludwig, 3,160,921; Abbott, 3,-323,188. Frieder et al. disclose outer and inner mold elements and a vibrator means positioned to engage the mold and facilitate molding of mixtures of plastic and fibrous material. Yanush, 3,067,467, shows the claimed footwear mold, sans vibrator. OPINION Appellant’s sole argument is that his molding machine includes a component that “hammers” against the material in the mold. The result is a finished footwear product, an improvement over that of Yanush, 3,067,467, which required post-molding treatment. Appellant nowhere points to any distinction between the structure set forth in the appealed claims and that rendered obvious by Yanush, 3,067,467, and Frieder et al. Appellant disputes the board’s statement that “appellant would endow his claims with some of the characteristics of apparatus and other characteristics of the process of using that apparatus.” Yet his entire argument is directed to a process limitation, i. e. to the operation of a vibrator to “hammer” rather than to “settle” materials in a mold. Appellant’s use limitation does not impart a structural feature different from those of the prior art. The last paragraph of 35 U.S.C. § 112, allowing an element to be expressed as a means for performing a function, cannot aid appellant. Frieder et al. disclose the same means (a vibrator) for accomplishing the hammering function. Appellant has not denied that the Frieder vibrator inherently possesses that capability. In re Ludtke, 441 F.2d 660, 58 CCPA 1159 (1971). Whether a vibrator is operated gently to settle materials in a mold or more forcefully to “hammer” them is a process limitation which does not limit or define the claimed apparatus. We find no error in the board’s decision. Accordingly it is affirmed. Affirmed. ALMOND, Senior Judge (concurring). With all due respect, I cannot agree with the reasoning of the principal opinion. Appellant in this case has combined an apparatus for making woolen footwear, an apparatus which appears to closely correspond to that in an earlier patent of his, with means to vibrate the mold elements for a stated purpose. In my view, that purpose is the function specified for the vibrating means, i. e., “to cause said outer mold elements to vibrate and hammer * * In that regard, I consider the word “vibrating” appearing before “means” to be a redundant and less specific functional definition of the means in question than appears after the word “means.” The board made it clear that it regarded as well known the combination of a molding apparatus with a vibrator to settle the material to be molded. For this reason, it apparently felt that the combination of the molding apparatus in question here with a vibrator would be obvious no matter what function the vibrator served. The board went on to say: Appellant does not appear to challenge the combination of a vibrator with a mold for the purpose of filling the mold but directs his argument to the nature of the material which is to be placed in the mold for shaping into the form of a boot. This argument is based upon the appealed claims which do not set forth merely the structure of the mold and its vibrator but purport to limit the claim to the use of a particular material to be molded, that is, moistened felt. To me, this obviously means that the process limitation referred to by the board in the portion quoted in the principal opinion refers to the use of the apparatus to mold woolen footwear and not the operation of the vibrator per se. For this reason, I think the principal opinion gives the wrong impression as to what the board decided. I regard the board’s opinion as saying, in effect, that it is of no avail to state in the claim that the apparatus is to be used to mold woolen footwear or that the vibrating means employed is to work upon the woolen material. I agree with the board that these are merely characteristics of the process to be carried out by the apparatus which in and of themselves do not make the claims patentable. However, I do not believe that it is proper to say that the language in the claim calling for “means * * * to vibrate and hammer” “is a process limitation which does not limit or define the claimed apparatus.” In my view, this is proper claim language sanctioned by 35 U.S.C. § 112, par. 3 that does define and limit the claim by defining the action of the vibrator. Nevertheless, I do feel that the combination called for by the claim would have been obvious to one of ordinary skill in the art at the time the invention was made and, accordingly I would affirm the board.

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Judson Douglas WETMORE, Appellant, v. Wendell S. MILLER, Appellee. Patent Appeal No. 8909. United States Court of Customs and Patent Appeals. May 17, 1973. Rehearing Denied July 5, 1973. Robert M. Taylor, Jr., Douglas E. Olson, Los Angeles, Cal. (Lyon & Lyon), Los Angeles, Cal., attorneys of record, for appellant. Francis Thomas, Jr., Washington, D. C. (Bacon & Thomas), Washington, D. C., of counsel. William P. Green, Los Angeles, Cal., attorney of record, for appellee. Before MARKEY, Chief Judge, RICH, BALDWIN and LANE, Judges, and ALMOND, Senior Judge. MARKEY, Chief Judge. This appeal is from the decision of the Board of Patent Interferences in interference No. 96,363, awarding priority as to its two counts to Miller, the senior party. Appellant provoked the interference by copying in his application serial No. 499,923, filed October 21, 1965, two claims from appellee’s patent No. 3,247,-315, issued April 19, 1966 on an application filed April 27, 1962. The board resolved the case on the basis of ancillary matters raised by appellee’s motion to dissolve. It ruled that appellant was barred from making count 1 by 35 U.S.C. § 135 because he “was not claiming ‘the same or substantially the same subject matter’ ” set forth in that count within one year from the date appellee’s patent was granted.' It held that count 2 was not supported by appellant’s application. We affirm as to count 2. As to count 1, we reverse and remand for such action as may be appropriate in view of evidentiary records which the board found unnecessary to discuss. THE SUBJECT MATTER The invention relates to a connector described broadly in count 1 as follows (paragraphing supplied): 1. A connector for attachment to an end of an elongated element, said connector comprising a generally tubular member formed of sheet form spring material adapted to extend about and retain said end of the element, said spring material being circularly discontinuous to present two edges which are shiftable relative to one another generally circularly about said element in a relation varying the internal size of said member, the resilence of said member tending to tighten the member by its own resilience to a small transverse dimension condition for securing said member and element together, and means fixed to said member for retaining said member in a larger dimension condition for initial reception of said end of the element and releasable to free the member for construction by its own resilience to said small dimension condition while said means remain fixed to said member. The connector may be used to receive the ends of two elements or wires in abutting relationship and secure them in that condition. Appellee discloses several embodiments in which the “means * * * for retaining said member in a larger condition * * * ” constitute elements such as shoulders or tabs actuatable to a releasing condition to allow the member to constrict rapidly toward its normal diameter. In another form of appellee’s device the “means” is a tube of solder which collapses when the device is heated to the melting temperature of the solder. The latter form is more specifically defined in count 2 which reads as count 1 with the following language replacing the last paragraph thereof: * * * soldering material retaining said member in a larger dimension condition for initial reception of said end of the element and adapted upon melting to free the member for constriction by its own resilience to said small dimension condition and to solder the member to said element. Appellant discloses what he designates as “recoverable articles” and his disclosure includes embodiments in which the “recoverable” material may be a split-cylinder type spring of metal. The spring is held under tension at greater than its preset diameter by a “fusible insert” of tubular shape disposed within the spring. When the article is heated the fusible insert melts and the spring retracts toward its normal diameter, to connect elements or wires therein. Appellant discloses that a ball of solder and flux may be positioned within the fusible member so that the solder and flux are also caused to fuse and the solder “supplements the fusible member as encapsulating material.” COUNT 2 The board first considered count 2 which appellee charged was not supported by appellant’s application. In agreeing with appellee, the board noted that appellant does disclose the use of a heat fusible insert for retaining a split spring member in a distended position. However, it stated that appellant “has not and cannot point to any explicit disclosure that such heat fusible insert for that purpose is to be solder.” It also noted that, while solder is referred to for another purpose, there is no suggestion that it be used for the fusible insert as required by count 2. The board was plainly correct on both points. Nowhere in the application is there any disclosure that the insert be made of solder instead of the various non-metallic compositions which are disclosed. The disclosure of a ball of solder positioned in the fusible insert as an additional element obviously does not constitute a disclosure that the insert itself be made of solder. The decision as to count 2 will be affirmed. COUNT 1 Priority as to count 1 was awarded appellee on the ground that appellant was prohibited from making the claim corresponding thereto by the provision of 35 U.S.C. § 135 reading: (b) A claim which is the same as, or for the same or substantially the same subject matter as, a claim of an issued patent may not be made in any application unless such a claim is made prior to one year from the date on which the patent was granted. Appellee’s patent was cited as a reference against appellant’s application on June 6, 1966. Appellant undertook to overcome the patent by an affidavit under Rule 131. Under date of May 16, 1967 the examiner advised appellant that Rule 131 action was not appropriate because “the same invention” was being claimed in the patent and in appellant's application. Appellant copied the patent claims which became counts 1 and 2 on August 4, 1967, more than one year from the date on which appellee’s patent issued. The issue as considered by the board and argued here by the parties is whether appellant was claiming substantially the same subject matter as count 1 in a claim under prosecution during the one year period specified in section 135(b). That issue is in accord with the criterion that has been adopted by this court in determining the applicability of section 135(b) in like situations. See Rieser v. Williams, 255 F.2d 419, 45 CCPA 953 (1958); Stalego v. Heymes, 263 F.2d 334, 46 CCPA 772 (1959). In making its determination, the board considered specifically appellant’s original claim 12 and claims 22 and 23 which had been added by amendment during the statutory period. Those claims (with claims 10 and 11 on which claim 12 depends) read: 10. A recoverable article comprising a recoverable member and a fusible member, said recoverable member and said fusible member being in abutting relation, said recoverable member being a spring, said fusible member being a rigid member which holds said spring in a distended state. 11. The article of claim 10 wherein said spring is a split cylinder. 12. The article of claim 11 wherein said fusible member is tubular. 22. A heat recoverable article comprising a heat recoverable member and a fusible member, said recoverable member being a split cylindrical spring and said fusible member being placed within such spring and holding it in a recoverable position. 23. The article of claim 22 wherein the fusible member is in the form of a cylinder placed within the cylindrical spring and contacts the inner walls of the spring. The board recognized that both count 1 and appellant’s claims are drawn to the combination of a tubular member of spring material and a second element that holds the spring in a distended shape. It could not detect “any material differences” between the “structural cooperation between the recited elements of structure and the functions performed by them,” as recited in the count and appellant’s claims. However, it found the term “fusible” in appellant’s claims was “a material limitation defining a material distinction” between the invention claimed in appellant’s claims and in count 1. It further held that the difference amounted to “more than a matter of mere scope.” Thus, it stated: This term, “fusible”, is the one term that limits the invention claimed by Wetmore to his disclosed conception as embodied in identifiable species within the generic concept defined by the count in issue. Wetmore disclosed and claimed no structure other than a member of a heat fusible material for retaining the recoverable member in its distended condition where some means external to the recoverable member was required. On the other hand the count broadly covers one concept by Miller as embodied in at least three other structural configuration [s], utilizing mechanically release-able “means” (a tab) for retaining the tubular spring member in its distended condition, in addition to another concept as embodied in two configurations utilizing solder as the releasable “means”, i. e. a heat fusible member. We think the board attributed too much significance to the fact that count 1 applies to “one concept by Miller embodied in at least three other configurations” that utilize tabs or like projecting means, a form which appellant’s claims 12, 22 and 23 did not cover. On the other hand, it did not give sufficient weight to the other “concept as embodied in [appellee’s] two configurations utilizing solder as the releasable ‘means’,” the coverage of which “configurations” by appellant’s claims 12, 22 and 23 and the count does not appear to have been questioned by appellee. Viewed with this in mind, the additional restrictions imposed on appellant’s claims by the word “fusible” amounts to a difference in scope alone. The count has necessarily been considered allowable over the prior art and is broader than appellant’s claims 12, 22 and 23. Therefore, the “fusible” limitation of appellant’s claims must be regarded as not necessary to patentability and not “material” for present purposes. See Stalego v. Heymes, supra, wherein the question whether claims are drawn to substantially the same subject matter is equated to whether the differences are material. Accordingly, we are satisfied that appellant was claiming substantially the same subject matter in count 1 within the meaning of section 135. This conclusion is in conformity with the position of the examiner as evidenced by the refusal to consider appellant’s Rule 131 affidavit in the ex parte prosecution and the denial of appellee’s motion to dissolve for failure to comply with section 135. The decision of the board is affirmed as to count 2. As to count 1, the decision is reversed and the appeal remanded for such action, in accordance with this opinion, as may be required with respect to the “evidentiary records presented on behalf of the parties” which the board found it “not necessary * * * to discuss” in view of the holding it made. Modified and remanded. . Appellant’s application is designated a division of eopending application serial No. 211,747, filed July 23, 1962, and was accorded the benefit of that filing date. . The board observed : No question has been clearly raised herein as to the cross-readability of count 1 and the claims of Wetmore on the disclosures of the parties. Further, the question of Wetmore’s right to make a claim corresponding to count 1 for lack of supporting disclosure has not been raised.

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Application of Borje Oscar ROSAEN and Robert L. Firth. Patent Appeal No. 8921. United States Court of Customs and Patent Appeals. May 10, 1973. Robert C. Hauke, Hauke, Gifford, Patalidis & Dumont, Lathrup Village, Mich., attorneys of record, for appellants; Frank P. Cyr, Washington, D.C., of counsel. S. Wm. Cochran, Washington, D.C., for the Commissioner of Patents; Fred W. Sherling, Washington, D. C., of counsel. Before MARKEY, Chief Judge, RICH, BALDWIN, and LANE, Judges, and ALMOND, Senior Judge. LANE, Judge. This appeal is from the decision of the Patent Office Board of Appeals affirming the examiner’s rejection of claims 16-19 and 22-23 of appellants’ application, entitled “Fluid Cylinder,” as unpatentable under 35 U.S.C. § 103 in view of certain prior patents. We affirm. The claimed subject matter relates to a multi-chambered fluid cylinder and piston device having four actuating chambers, two of which are pressurized to extend the device and two of which are pressurized to retract the device. Appellants state that the relationship between the cross-sectional areas of the various chambers as set forth in the claims provides an extension force up to about two times the retraction force. Appellants’ preferred embodiment is illustrated in Fig. 1 of the application drawings reproduced herein. Claim 17 is representative of the appealed claims. Claim 17, with subparagraphing and Fig. 1 reference numerals added for clarity, reads: 17. In a fluid device [10] having a first tubular member [12] provided with a closed end [14], a rod [18] connected to the closed end of said tubular member and extending axially into the interior of said tubular member, a first piston [20] fixedly mounted on said rod and axially spaced from the closed end of the first tubular member, a second piston [30] movably mounted on said rod and forming a first chamber [34] intermediate the closed end of said first tubular member and said second piston and a second chamber [44] intermediate said pistons, a second tubular member [24] having a closed end [26] and telescopically received in the open end of said first tubular member [12] and over said first piston [20] so that said first piston forms a third chamber [40] intermediate the closed end of said second tubular member and said first piston, and said second tubular member [24] being radially spaced from said first tubular member [12] to form a fourth fluid chamber [48] intermediate the inner surface of said first tubular member and the exterior surface of said second tubular member, means [46] connecting said first tubular member [12] and said second tubular member [24] so the movement of said second piston [30] along said rod produces movement of said second tubular member [24] whereby expansion of said first [34] and third [40] chambers and relative movement of said pistons toward one another produces extension of said fluid device, and expansion of said second [44] and fourth [48] chambers and separation of said pistons produces retraction of said fluid device, the improvement comprising forming said chamber so that said first chamber [34] has a cross sectional area greater than the sum of the cross sectional area of the second [44] and fourth [48] chambers; means [42] for simultaneously connecting said first and third chamber to a common fluid pressure source [38] to expand said fluid device; and, means [52] for simultaneously connecting said second and fourth chamber to a common fluid pressure source [56] to retract said fluid device. In more simple terms, the improvement recited in claim 17 is that the cross-sectional area of the first chamber 34 is greater than the sum of the cross-sectional areas of the second and fourth chambers 44 and 48. Claim 16 recites that the sum of the first and third is greater than the sum of the second and fourth. Claims 18 and 19 recite that the third is greater than the sum of the second and fourth. Claim 22 recites that the sum of the first and third is twice as great as the sum of the second and fourth. The board adopted the examiner’s rejection of all of the claims as obvious under 35 U.S.C. § 103 over a patent to Rosaen (hereafter the Rosaen patent), a co-inventor of the subject matter presently claimed, in view of either Onions, Schmidt or Bohler. These referenee patents each relate to fluid cylinders or motor devices which, like appellants’ constructions, are formed by two concentric tubular members with pistons, and each reference construction provides four chambers. In one embodiment of the Rosaen patent, the third chamber is pressurized to extend the cylinder and, as in appellants’ device, the second and fourth chambers are pressurized to retract it. The first chamber is vented to the atmosphere and the cross-sectional area of the third .chamber is made equal to the sum of the areas of the second and fourth chambers to provide equal force in both directions. In another embodiment, only the second and third chambers are pressurized, and the size of the second chamber relative to the third chamber is selected so that either movement in each direction is equalized or “any desired difference in the rate of movement in the two directions can be produced.” Onions discloses pressurizing two chambers to extend or retract the device in one direction, and one of the other two chambers is filled with compressed gas to automatically retract or extend the device in an opposite direction. The second of the other two chambers may be pressurized to operate the device should gas leakage occur. Schmidt discloses one embodiment wherein the first and third chambers are pressurized to extend the device while the second and fourth chambers are vented to the atmosphere. In another Schmidt embodiment, all four chambers are pressurized “ [wjhere power retraction is desired, i.e., a double stroke actuator * * Bohler discloses pressuring only the first and third chambers as in Schmidt’s first embodiment. The board found that the claimed subject matter differed from that disclosed in the Rosaen patent in that the fourth chamber is pressurized according to the claims on appeal rather than vented to the atmosphere as in the Rosaen patent. It agreed with the examiner’s conclusion that pressurizing the fourth chamber of the fluid cylinder disclosed in the Rosaen patent would have been obvious to one skilled in the art in view of the teachings of the other references relied upon. OPINION The principal argument advanced by appellants is to the effect that pressurizing the fourth chamber of the Rosaen cylinder would not have been an obvious modification of the Rosaen patent. Appellants state that only three of the four chambers are actuated and that the single chamber actuated to extend the device has a cross-sectional area equal to the sum of the cross-sectional areas of the two chambers actuated for retraction so that the thrust in both directions will be equal. Appellants contend that pressurizing the fourth chamber to introduce imbalance in the system, the objective of the presently claimed device, is contrary to the primary purpose of the Rosaen patent. A Rosaen affidavit expresses these views, and Rosaen concluded therein that the claimed subject matter would not have been obvious from the prior art relied upon. The examiner was not persuaded by the affidavit. The board did not mention the affidavit but did affirm the examiner. Schmidt discloses that pressurizing the fourth chamber would in fact introduce imbalance in the system, and appellants have not contended that such a result would be unexpected. Schmidt also discloses that “[i]n many applications, fluid actuators are required to apply an appreciably greater force in one direction than in the other.” Such disclosure indicates the desirability of providing imbalance. It seems clear to us that at the time appellants’ invention was made, the desirability of using four chambers actuated to provide unequal pressure and therefore greater force in one direction than in the other was appreciated by those skilled in the art. We do not think the disclosure of the Rosaen patent would have dissuaded those skilled in this art from adopting this recognized alternative. Appellants state that the Rosaen patent disclosure is limited to one objective realized by one, solution. We conclude that the Rosaen patent discloses a device which may be adapted to satisfy other known objectives by known modifications. Finding that the other references demonstrate the desirability of such modification, we agree with the board. We conclude that as a whole, the claimed subject matter would have been obvious within the meaning of § 103. The decision of the board is accordingly affirmed. Affirmed. . Serial No. 660,454 filed August 14, 1967. . U.S. Patent No. 3,335,642 issued August 15, 1967, on an application filed January 8, 1965. . U.S. Patent No. 2,193,736 issued March 12, 1940. . U.S. Patent No. 3,371,582 issued March 5, 1968, on an application filed September 16, 1965. . French Patent No. 986,331 published July 30, 1951.

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NATIONAL LABOR RELATIONS BOARD, Petitioner, v. WOLVERINE WORLD WIDE, INC., Respondent. No. 72-1944. United States Court of Appeals, Sixth Circuit. Argued April 13, 1973. Decided May 23, 1973. Jerome H. Brooks, Director, Region 7, N. L. R. B., Detroit, Mich., Howard Kaufman, N. L. R. B., for petitioner-appellant; Peter G. Nash, Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Abigail Cooley Baskir, Attys., N. L. R. B., Washington, D. C., on brief. Peter A. Patterson, Grand Rapids, Mich., for respondent-appellee; Miller, Johnson, Snell & Cummiskey, Grand Rapids, Mich., on brief. Before PECK, MILLER and LIVELY, Circuit Judges. LIVELY, Circuit Judge. From the beginning of these proceedings the Respondent, Wolverine, has insisted that its distribution center located in Rockford, Michigan is not an appropriate bargaining unit under Section 9 (b) of the National Labor Relations Act, as amended, 29 U.S.C. § 159(b). Wolverine has maintained throughout the proceedings that all manufacturing operations of the company in the State of Michigan should be included as one bargaining unit. The unit thus contended for by the Respondent would include facilities in Grand Rapids, Ithaca, Green-ville, Big Rapids and Reed City, Michigan as well as in Rockford. Together these facilities constitute the Hush Puppies/Wolverine/Ski Products Division of Wolverine World Wide, Inc. At the hearing held pursuant to Section 9(c) of the Act to determine an appropriate unit, Wolverine presented a number of officers of the Division who testified concerning its organization and methods of operation. It was stipulated that the distribution center at Rockford had approximately 100 eligible employees. The function of the distribution center was to receive shoes produced at the various plants of the Division, store them until orders.were received, and then ship them to customers. At the time of the hearing, one manufacturing operation was being carried on at the distribution center. This involved stitching the soles on shoes which came to the center with soles cemented and unstitched. This manufacturing operation was scheduled for removal from the distribution center. Testimony showed that company production schedules were prepared weekly in the central office and distributed to the various plant managers who then had the responsibility of calling in or laying off employees to meet the schedule. The distribution center was managed by a superintendent who reported directly to the manager of warehousing. The manager of warehousing testified that each unit manager under him had more or less autonomous control of his unit, subject to his overall supervision. The unit manager of the distribution center had the authority to hire and fire, subject to review, and using the facilities of the central personnel office of the Company. The manager of warehousing testified that it would be “a strange set of circumstances if he would overrule the decision of a unit manager to let an employee go,” and that, in fact, he had never overruled a decision to fire a man. The employment manager of Wolverine testified concerning the corporate organization for labor and employee relations and the various rules and guidelines in force throughout the company. He also described the procedures for transfer of employees between various facilities, and a number of fringe benefits available to employees throughout the company. An employee handbook was introduced which he testified generally governs the policies, practices, procedures, rules and regulations concerning employees of the corporation in all of its divisions. The testimony of this witness confirmed that the local unit manager made the decisions on hiring, firing, and disciplining of employees and that staff officers only made recommendations. The testimony developed that similar procedures were followed with respect to transfers, leaves of absence, promotions, overtime and pay adjustments. In all of these matters the Company promulgated general guidelines and regulations, but each individual unit manager possessed a significant degree of discretion in matters affecting employees. From the entire record it is evident that the individual facility managers had authority beyond the mere power to implement centrally formulated policies. In NLRB v. Pinkerton’s, Inc., 428 F.2d 479 (6th Cir. 1970), while overturning a unit determination made by the Board, this Court affirmed the principle that the Board’s decision on whether a given unit is appropriate will not be disturbed except for an abuse of discretion or violation of the statute. In that opinion, at pages 484 and 485, there are set forth four controlling principles by which the Board is bound in making a unit determination. The Respondent in this case particularly stresses the fact that its labor policy is centrally determined, which is one of the principles referred to in Pinkerton’s. Although there is evidence of centrally determined labor policies, the Board was justified in finding that the individual unit managers of Wolverine, while operating within company guidelines, maintained individual initiative in a number of personnel areas and had final responsibility in matters of critical importance to employees. The Board was also justified in finding from the record that there is substantial geographic separation between some of the plants and only minimal interchange of employees among the various facilities. There was no recent collective bargaining history from which to determine whether a local unit manager would have authority in collective bargaining. We conclude that the Board has articulated “ . . . substantial reasons for its unit determination” and that this determination does not unreasonably deny the Respondent “adequate protection from the results of piecemeal unionization.” 428 F.2d at 484-485. See also Michigan Hospital Service Corporation v. NLRB, 472 F.2d 293 (6th Cir. 1972). Upon consideration of the entire record it is clear that the Board did not abuse its discretion in designating the distribution center as an appropriate bargaining unit. NLRB v. American Life & Accident Insurance Co. of Kentucky, 394 F.2d 616 (6th Cir.) cert. denied 393 U.S. 913, 89 S.Ct. 237, 21 L.Ed.2d 199 (1968). In its order finding that the distribution center in Rockford, Michigan was an appropriate unit for the purpose of collective bargaining, the Board, through its regional director, ordered an election which was held on January 26, 1971. Seventy-five eligible employees out of a total eligibility list of 105 voted on that date. One union received 38 votes, with 35 being cast for no union and two votes for another union. The Respondent filed objections to the election based on the fact that “ . . . the Rockford, Michigan area was beset at that time with severe weather conditions approaching blizzard or near blizzard proportions.” It was alleged that the failure of 28.5 per cent of the eligible employees to vote in an election decided by three votes, in view of the severe weather conditions, required the rescheduling of the election. Affidavits verifying the weather conditions in the Rockford area were filed with the objections. No affidavit from any employee stating that he or she was prevented from voting by reason of the weather on the day of the election was filed by Wolverine. No hearing was held on the objections to the election, and the regional director issued a supplemental decision overruling the objections and certifying the results of the election. On appeal the Respondent argues that the Board erred in failing to conduct hearings on its objections to the election. There is no statutory requirement that hearings be held, but the Board’s Rules and Regulations do provide for a hearing “ . . . if it appears to the regional director that substantial and material factual issues exist which can be resolved only after a hearing, . . ..” 29 C.F.R. § 102.69 (c). Only one case was cited concerning the effect of weather conditions on the validity of a labor election. In Red Wing Potteries, Inc., 88 NLRB 1234 (1950), the Board held that inclement weather was not a sufficient reason to set aside an election; however, in that case 91 per cent of the eligible voters did cast ballots. In the present case only 71.5 per cent of the eligible employees voted, but the information submitted with the objections failed to show a direct causal relationship between the weather conditions and the failure of nearly 30 per cent of the eligible voters to participate in the election. The question presented is whether the Respondent, by its objections, disclosed the existence of substantial and material factual issues. Respondent states that the requirement of the Board Rules that reasons for objections consist of a short statement to be filed within five days precluded it from conducting a full-scale investigation and presenting detailed evidence. However, it contends that the objections and affidavits did raise substantial and material factual issues which could only be resolved at a hearing which would develop all of the evidence available. The extent of the administrative investigation conducted by the regional director as a result of the objections filed by Respondent is not disclosed in the record. The regional director found that Red Wing Potteries, Inc., supra, was dispositive of the issue. Since Red Wing involved the failure of nine per cent of the eligible voters to participate and this case involves a failure of 28.5 per cent to do so, there is a substantial difference between the cases. We do not agree that Red Wing Potteries, Inc., supra, is dis-positive of this case, since it is conceivable that a party could make a showing that weather conditions have caused an otherwise valid election to be non-representative. Nevertheless, in order to require a hearing the objecting party must show what evidence will be introduced to support its contentions and not merely rely on inferences as Respondent did in this case. NLRB v. Louisville Chair Co., 385 F.2d 922 (6th Cir. 1967), cert. denied 390 U.S. 1013, 88 S.Ct. 1264, 20 L.Ed.2d 163 (1968); NLRB v. Tennessee Packers, Inc., Frosty Morn Division, 379 F.2d 172 (6th Cir.) cert. denied 389 U.S. 958, 88 S.Ct. 338, 19 L.Ed.2d 364 (1967). Wide discretion has been entrusted to the Board in its supervision of elections and we do not find an abuse of this discretion in failing to conduct hearings on the objections filed by the Respondent. Sometime after the election, the union filed a number of charges of unfair labor practices including refusal to bargain. The Trial Examiner found in favor of the union on all of these charges and recommended an Order which was adopted by the Board. The Board’s Decision and Order is reported at 197 NL RB No. 11. The Order of the Board is supported by substantial evidence and enforcement is hereby granted.

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Caselaw Access Project

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2024-08-24T03:29:51.129683

Clyde COLLIER, Petitioner-Appellant, v. John W. WINGO, Warden, Kentucky State Penitentiary, Eddyville, Kentucky, Respondent-Appellee. No. 72-1960. United States Court of Appeals, Sixth Circuit. Argued April 20, 1973. Decided May 15, 1973. Kurt Meier (Court Appointed), Newport, Ky., on brief for appellant. Jackson D. Guerrant, Frankfort, Ky., for appellee; Ed W. Hancock, Atty. Gen., on brief. Before CELEBREZZE, PECK and KENT, Circuit Judges. PER CURIAM. The appellant was convicted in a Kentucky state court of armed robbery and is presently serving a life sentence. He contends that in spite of his requests his court-appointed attorney failed to perfect a direct appeal from his conviction. The question of whether the appellant was denied the effective assistance of counsel was first presented to the Boone Circuit Court of Kentucky upon a motion to vacate and set aside the judgment of conviction. In that court, the appellant presented as evidence an October 29, 1963, letter from his court-appointed attorney which purported to be in response to a letter of the appellant dated October 10, 1963. The appellant testified that he had also written an earlier letter, but the attorney testified that he had not received any letter from the appellant other than the October 10, 1963, letter. The Circuit Court denied the requested relief. The appellant then filed this petition for habeas corpus relief in the District Court, submitting in addition to the evidence presented to the Boone Circuit Court, a letter from his attorney dated September 23, 1963. This letter, written prior to the expiration of the time for filing a direct appeal, indicated that it was in response to a letter of the appellant and arguably indicated that the appellant requested him to perfect a direct appeal. For present purposes, it is important to note only that the existence of the letter contradicts the attorney’s testimony before the Boone Circuit Court. The District Court denied the petition on the ground that this question had been presented to the Kentucky courts in the motion to set aside sentence. The evidence and allegations presented to the District Court indicate that the hearing before the Kentucky Circuit Court was not a full and fair hearing as contemplated by Townsend v. Sain, 372 U.S. 293, 83 S.Ct. 745, 9 L.Ed. 2d 770 (1963), because the appellant was at that time unable to produce the letter of September 23, 1963. Townsend holds that the Federal Court must provide an evidentiary hearing if it appears that the state court did not reliably find relevant facts either at the time of the trial or in a collateral proceeding. 372 U.S. at 313-314, 83 S.Ct. 745. Inasmuch as the appellant would be entitled to relief if the truth of his allegations is established, Douglas v. California, 372 U.S. 353, 83 S.Ct. 814, 9 L.Ed.2d 811 (1963), Anders v. California, 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493 (1967), and inasmuch as the factual allegations and evidence purport to be contradictory to sworn testimony upon which the state court relied, we feel required to remand the cause to the District Court for an evidentiary hearing and a determination as to the relevant facts concerning his alleged request for a direct appeal from his conviction, and as to the legal consequences of such facts as may be established. The judgment of the District Court is reversed, and the case is remanded to the District Court for further proceedings consistent herewith.

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Caselaw Access Project

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2024-08-24T03:29:51.129683

UNITED STATES of America, Appellee, v. John Jacob BOBO et al., Appellants. Nos. 71-2077, 71-2078, 71-2079. United States Court of Appeals, Fourth Circuit. Argued Nov. 3, 1972. Decided April 23, 1973. William B. Long, Jr., Greenvilie, S. C. (Thomas W. Whiteside, Spartanburg, S. C., on brief), for appellant John Jacob Bobo. Albert Q. Taylor, Jr., Greenville, S. C., for appellant Jack M. Gray. Klyde Robinson, Charleston, S. C., and Geddes H. Martin, Columbia, S. C., for appellants William Duward McEwen and Paul Goldberg. Oscar W. Bannister, Jr., Asst. U. S. Atty. (John K. Grisso, U. S. Atty., on brief), for appellees. Before HAYNSWORTH, Chief Judge, BOREMAN, Senior Circuit Judge, and WIDENER, Circuit Judge. WIDENER, Circuit Judge: Appellants Jack M. Gray and John Jacob Bobo were convicted for violation of 18 U.S.C. § 1952 on indictments charging that they used mail telephone facilities and Western Union teletype services in interstate commerce with intent to promote, manage, establish and carry on an unlawful activity, that being a business enterprise involving gambling in violation of the laws of the State of South Carolina. Appellants Jack M. Gray, John Jacob Bobo, William Duward McEwen and Paul Goldberg were convicted for conspiracy to conduct, finance, manage, supervise, direct or own an illegal gambling business involving five or more persons within the meaning of 18 U.S.C. § 1955. Another defendant, Porter, was convicted for the substantive violation of 18 U.S.C. § 1955. After this appeal was taken, Porter moved for voluntary dismissal of his appeal, which motion was granted. Certain other co-defendants pleaded guilty to these same violations, while other co-defendants pleaded guilty to violations of 18 U.S.C. § 1084. (§ 1084 relates to interstate transmission of wagering information.) The proper disposition of these appeals lies in the quagmire of facts involved. While the facts surrounding each allegation can best be considered separately, a basic outline is necessary for understanding the contentions raised on appeal. Appellant Jack Gray was a New York resident, where he occasionally placed small bets with local bookmakers. He was transferred by his employer to Greenville, South Carolina, nine or ten years ago. Unable to locate a South Carolina bookmaker for approximately three years, Gray continued placing bets, through friends, with New York bookmakers. Gray located appellant Porter, with whom he began betting locally, and also Bobo, with whom he began betting in Spartanburg, South Carolina. Appellant Bobo and his helper, Kirkland, communicated and exchanged bets not only with Gray and his helper, Segan, but also with appellant Porter in Greenville and with appellants McEwen and his helper, Goldberg in Charleston, South Carolina. It should be noted here that all appellants, except Gray, admit to be bookmakers receiving and making bets on athletic contests, in violation of state law, for a time period and in a dollar amount sufficient to meet the specific requirements of 18 U.S.C. § 1955. They do, however, contend that they did not act together so as to constitute a business involving five or more persons, which is also required by the Act. Gray contends that he is a mere bettor with a system and not a bookmaker. During the period October, 1970 through January, 1971, appellants Mc-Ewen and Goldberg, by their own admission, operated, in violation of state law, a bookmaking establishment known as the Uptown Sports Center, 476 King Street, in Charleston, South Carolina. They had so operated for several years and were generally known in Charleston as bookmakers. They normally received bets from their customers, some of whom were bookmakers, and they in turn placed bets with other persons and sometimes those others were bookmakers. The appellants tried to bet by a system, each with his own refinements. Gray developed a system whereby he could not lose. He might not always win, but he could not lose. Gray noticed that the betting line out of New York and the line out of South Carolina would fluctuate. The line is a point spread between teams in an athletic contest, which is determined by the bookmaker or makers offering the bet. The line might come from New York at, say, New York plus seven points in a game between New York and Dallas. But Gray noticed that up until game time the line would fluctuate in different places, particularly where local prejudices would influence the betting. The variation Gray first observed was the line in New York to be Dallas plus 2% and the South Carolina line to be New York plus 2. By betting both sides, if the game score differential was zero to four points, he would win both bets. In fact, the game ended 13-13, so Gray did win both bets (commonly called a split bet). Gray realized that he could, by taking advantage of the local variation in the line, increase his chances of winning over that of a bettor merely using a single bookmaker in one area. When Gray located Bobo in Spartanburg, he then had access to two or three New York lines and Bobo’s and Porter’s lines in South Carolina. Gray further refined his system by obtaining an additional advantage from a New York bookmaker. If Gray would agree to bet $500 per game on all 13 pro-football games played over the weekend, the New York office would give him a % point advantage from the line. By obtaining the same concession from Bobo in South Carolina, he was in a position to bet both sides of a game, with an additional point variation plus any difference already existing in the several lines. Bobo further fit into the scheme as follows: Gray was required to bet $500 on each game being played in order to acquire his concession of % point. Gray, like any other bettor, had to pay the vigorish on his losing bets. Gray agreed to pass on wagers from Bobo when the wager sought by Bobo was a wager that Gray could make under his system. Thus, Gray fulfilled his obligation for total number of bets, and since it was Bobo’s bet he placed, he eliminated the possibility of losing the 10% vigorish in the event of the loss, and would win both sides if the score fell within the point spread. This also facilitated Bobo’s efforts to balance his books prior to the weekly games. Gray would also take what are called juice bets from appellant Porter. It appeared that Porter’s specialty was his superior ability to predict scores based on his knowledge of the teams involved. A juice bet is a bet very likely to win because of information known to the better which, if known to the bookmaker, would change the odds or the bookmaker would not offer the bet at all. These appellants have raised a total of nine allegations and each appellant states in his brief that he incorporates and adopts any of the legal arguments of the others which might inhere to his benefit. While we do not normally consider it our obligation in a case of multiple appeals to weed out which arguments best fit the various appellants, the consideration of each argument shall; unless otherwise stated, apply to each appellant. I During the course of the investigation and prosecution of this case, the government made extensive use of information gathered by the use of wiretaps. With regard to these wiretaps, the appellants make the following allegations : 1. The provisions of Title III of the Omnibus Crime Control Act of 1968 violate the Fourth Amendment guarantee against unreasonable searches and seizures. 2. There was insufficient showing by the government that “other investigative procedures” would not have been effective as required by 18 U.S.C. § 2518(1) (c). 3. There was insufficient compliance by the government with the mandatory requirements for authorization contained in 18 U.S.C. § 2516(1). The Fourth Amendment says that: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” Men may differ, and many courts have differed, as to what is a reasonable search and seizure, but it is beyond question that the Fourth Amendment only prohibits unreasonable searches and seizures. Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1925); Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967). The Supreme Court has, on numerous occasions, discussed the nature of the right protected by the Fourth Amendment. In Wolf v. Colorado, 338 U.S. 25, 27, 69 S.Ct. 1359, 1361, 93 L.Ed. 1782 (1949), the court stated that “The security of one’s privacy against arbitrary intrusion by the police — which is at the core of the Fourth Amendment— is basic to a free society.” Perhaps the clearest statement by the court was in Camara v. Municipal Court, 387 U.S. 523, 528, 87 S.Ct. 1727, 1730, 18 L.Ed.2d 930 (1967): “The basic purpose of this Amendment, as recognized in countless decisions of this Court, is to safeguard the privacy and security of individuals against arbitrary invasions by governmental officials.” Thus, through the explicit language of the Amendment itself and the cases interpreting it, we know that the Fourth Amendment means what it says — unreasonable searches are prohibited. The court has likewise recognized that the requirements of the Fourth Amendment are not inflexible or obtusely unyielding to the legitimate needs of law enforcement. Osborn v. United States, 385 U.S. 323, 330, n. 9, 87 S.Ct. 429, 17 L.Ed.2d 394 (1967); Ohio ex rel. Eaton v. Price, 364 U.S. 263, 80 S.Ct. 1463, 4 L.Ed.2d 1708 (separate opinion) (1963). It is, then, with an eye toward implementing the Fourth Amendment’s goal of securing the sanctity of personal privacy and at the same time accommodating the legitimate ends of law enforcement, that we view the challenged provisions of the Omnibus Crime Control Act of 1968 to see if it is constitutionally valid. The subject of electronic surveillance has been before the Supreme Court in several recent cases; so, we are not without guidelines with which to make our determination. In Berger v. New York, 388 U.S. 41, 87 S.Ct. 1873, 18 L. Ed.2d 1040 (1967), the Supreme Court considered the constitutionality of the New York permissive eavesdrop statute. N.Y. Code Crim. Proc., § 813-a. Although Berger struck down the New York statute, the court made it clear that electronic surveillance is permissible when judicially authorized under the most precise and discriminating circumstances which meet the requirements of the Fourth Amendment. Berger at 56, 87 S.Ct. 1873; Osborn, supra. In Berger, the court contrasted safeguards present in the Osborn case, in which the court had earlier upheld an authorization for electronic surveillance, and the elements which were lacking in the New York statute which was declared unconstitutional. We read Berger and Katz as enumerating certain safeguards without which an authorization for the interception of wire or oral communications may not be valid: a neutral and detached judicial authority must be interposed between the government and the public; a showing of probable cause that a particular offense has been or is being committed; the communications, conversations, or discussions sought to be intercepted should be described with particularity; the period during which the interception is authorized must be limited so it is not the equivalent of a series of intrusions pursuant to a single showing of probable cause; the order must be promptly executed; extensions or renewals of the order must have separate showings of probable cause; the order must terminate the eavesdropping once the conversation sought is seized; there must be some showing of special facts to excuse the lack of notice occasioned by necessary secrecy; and the order must provide for a prompt return which must be made describing what has been seized. The court, in Berger, concluded that the statute’s blanket grant of permission to eavesdrop was without adequate judicial supervision or protective procedures. In Katz, the failure of the order to provide certain safeguards was held fatal. In Osborn, probable cause consisted of affidavits of a witness in a federal court sought to be bribed by an attorney. The order approved there, and cited with approval in Berger, illustrates safeguards which, when effected, will avoid conflict with the Fourth Amendment. The order described the type of conversation sought with particularity; the officer could not search unauthorized areas; once the conversation was intercepted, the officer could not use the order for further search; one limited intrusion was authorized, rather than a series or a continuous surveillance; new order was issued when the officer sought to resume the search and probable cause was shown for the new order; the order was executed by the officer with dispatch ; the officer was required to make a return on the order showing how it was executed and how it was seized, and he did so. The factors listed in Berger, Katz and Osborn are, of course, important, but we must look, as did the Supreme Court, to the totality of the circumstances and the overall impact of the statute to see if it authorizes indiscriminate and irresponsible use of. electronic surveillance or if it authorizes a reasonable search under the Fourth Amendment. The Crime Control Act was by no means ill-advised or hastily conceived legislation. Congress expressed an awareness of the decisions of the Supreme Court in Osborn, Berger and Katz, and made an effort to comply with the standards which had been enunciated in those cases. Sen.Rep. No. 1097, 90th Cong., 2nd Sess., 1968 U.S.Code Cong. & Admin.News, p. 2112 et seq.; United States v. Cox, 449 F.2d 679, 684 (10th Cir. 1971), cert. den., 406 U.S. 934, 92 S.Ct. 1783, 32 L.Ed.2d 136 (1972); United States v. Cox, 462 F.2d 1293, 1303 (8th Cir. 1972). The legislative history shows that the specific requirements for valid legislation were considered. The need for the legislation was the subject of.extensive study not only by the Congress but also by the President and many study committees of the various bar groups. The Presidental Commission found that organized criminals use wire and oral communications and recommended that surveillance of such communications was essential to the effective detection and prosecution of crime. President’s Commission on Law Enforcement and Administration of Justice, (1967). Of course, the fact that the legislation is necessary and the fact that Congress attempted to comply with the Supreme Court’s rulings does not mean that the statute is constitutional, but we properly should give consideration to the care with which the legislation was drawn. The statute’s purpose was not only to authorize certain limited electronic surveillance, but also to correct and prevent many of its abuses in the sphere of private as well as criminal investigations. Sen.Rep. No. 1097, 90th Cong., 2nd Sess., 1968 U.S.Code Cong, and Admin.News, p. 2112 et seq. Such abuses were also noted by the Supreme Court in Berger, supra, 388 U.S. at 46, 47, 87 S.Ct. 1873. The basic scheme of the Act is to prohibit all interception of wire and oral communications except as authorized by the Act itself. The provisions of the Act with which we are here concerned, 18 U.S.C. §§ 2515-2520, set out a comprehensive scheme for judicial authorization of interception of oral and wire communications. As previously noted, the issue here is not whether wiretapping is per se unconstitutional. It is clear from Berger, Osborn and Katz that a statute authorizing wiretapping which contains sufficient prior safeguards is constitutionally permissible. Utilization of the provisions of the Act is commenced by an intercept authorization application which itself must be authorized by the Attorney General or any Assistant Attorney General specially designated by the Attorney General. 18 U.S.C. § 2516(1). The application must be made to a federal judge of competent jurisdiction and it must be made in writing upon oath or affirmation. The application must contain: (1) the identity of the applicant and the person authorizing the application; (2) a detailed statement of the facts and circumstances relied upon by the applicant to justify his belief that the order should issue. Such statement must set out the particulars of the type of offense being investigated, a particular description of the place where the interception is to be made, a particular description of the type of communications to be intercepted and the identity, if known, of the person committing the offense and whose communications are to be intercepted; (3) a complete statement as to why normal investigative procedures are not being used; (4) a statement of the period for which the interception is required to be maintained; (5) any history of previous authorization applications involving the same persons or places involved in the present application. 18 U.S.C. § 2518. The judge to whom the application is made may refuse to grant the order, require additional information if he so desires, or approve the application. Id. The judge may approve the application only if he determines that there is probable cause to believe that a particular offense is, has been, or is about to be, committed; that there is probable cause for belief that communications concerning the offense will be intercepted; that normal investigative procedures have failed or reasonably appear likely to fail; and that there is probable cause for belief that the place to be tapped is used in connection with the offense, or leased to, listed in the name of, or commonly used by, the person involved in the offense. 18 U.S.C. § 2518(3). If the judge approves the order, he must specify the persons, if known, and places which are subject to the order, the type of communications to be intercepted and the offense to which it relates, the identity of the applicant, the person authorizing it and the agency authorized to execute it, and the period for which it is effective. 18 U.S.C. § 2518(4). The order must terminate the eavesdropping when the objective is attained and may extend in no event longer than thirty days. The order must also direct that it be executed as soon as practicable and that it shall be executed in a manner which minimizes the interception of extraneous matter. 18 U.S.C. § 2518(5). The Act further provides for prompt return by the officer. 18 U.S.C. § 2518(8)(a). We agree with the two circuit courts and over ten district courts which have considered the matter and held that the Act is constitutional. Even a casual reading shows that it does not permit the irresponsible and indiscriminate use of electronic surveillance condemned in Osborn, Berger and Katz. And, upon close analysis, we are of opinion that the statute successfully meets the fundamental criteria there enunciated. The court, in Berger, frowned upon the failure of the New York statute to require belief that any particular offense had been or is being committed and its failure to require showing with particularity the persons, places and types of conversations to be intercepted. The Crime Control Act, as noted above, does not allow such indiscretion. The New York Act had no provision for notice and had no requirement of a showing of exigent circumstances to cure that defect. By contrast, the Crime Control Act requires such a showing. The court, in Berger, was quite concerned with the provisions of the New York statute authorizing sixty-day orders upon a single showing of probable cause and extensions thereof merely upon a showing that the extension is in the public interest. The Crime Control Act allows an order, at the most, to be effective for only thirty days; and the safeguards surrounding such order convince us that the thirty-day provision is not of itself a constitutional infirmity. With regard to the maximum period of authorized interception, Sen.Rep. No. 1097, 90th Cong., 2d Sess., April 29, 1968, 1968 U.S.Code Cong. & Admin.News, at p. 2190, provides in pertinent part as follows: “Where it is necessary to obtain coverage to only one meeting, the order should not authorize additional surveillance. . . . Where a course of conduct embracing multiple parties extending over a period of time is involved, the order may authorize proportionately longer surveillance but in no event for longer than 30 days, unless extensions are granted. . What is important is that the facts in the application on a case-by-case basis justify the period of time of the surveillance.” This congressional intent is expressed in the Act in sections 2518(1) (d), 2518(4) (e) and 2518(5) which provide that the order shall extend only so long as necessary to achieve its objective, with a maximum period of thirty days unless extended. An order which does not automatically terminate upon interception of the communications there described may be granted only upon a particular description of facts establishing probable cause to believe that additional communications of the same type will occur thereafter. The order as issued may only last for a maximum of thirty days unless extended. All extensions of orders must comply with the same requirements as an original order. Thus, while the thirty-day limit may cause some contention, we are of opinion that the Act sufficiently circumscribes the time limit of effectiveness of orders so as to be unobjectionable in a constitutional sense. We are convinced that the Crime Control Act, because of its precise and discriminate requirements and its provision for close judicial supervision, does not violate the Fourth Amendment. The provisions of the Act relating to emergency authorizations not requiring prior judicial scrutiny are not before us and as to them we express no opinion. The appellants next contend that there was an insufficient showing by the government that “other investigative procedures” would have been ineffective as required by 18 U.S.C. § 2518(1) (c). As previously mentioned, the Crime Control Act provides that an application for an authorization order must contain a full and complete statement as to whether or not other investigative procedures have been tried and failed or why they reasonably appear to be unlikely to succeed if tried or to be too dangerous. If the Crime Control Act could be validly utilized in any investigation, it would seem to be one involving gambling operations using telephone facilities almost exclusively as a means for communications. We also note the finding of the President’s Commission concerning the extensive use by criminals of telephone facilities. In this ease, the government contends that the affidavit of Roger J. Fontanella, Special Agent of the FBI, sufficiently establishes that normal investigative techniques were not and would not be sufficient. We agree. Fontanella is a gambling investigative expert with five years’ experience. His affidavit states, in pertinent part, the following: “Based upon my knowledge and experience as a Special Agent of the Federal Bureau of Investigation in the investigation of gambling cases and my association with other Special Agents who have conducted investigations of gambling activities, normal investigative procedures reasonably appear to be unlikely to succeed in establishing that Jack M. Gray, John Jacob Bobo, William Duward McEwen, Charles Smith, Paul Goldberg, and others as yet unknown, are involved in gambling activities on the telephone in violation of South Carolina and Federal laws, what is the full extent of the interstate gambling conspiracy, who are involved as co-conspirators, aiders and abettors, and what is the hierarchy of this illegal gambling operation. This is based upon the following: d. Through my experience and the experience of other Special Agents who have worked on gambling cases, records that have been seized in gambling raids have generally not been sufficient to establish the interstate elements of federal offenses because such records are difficult to interpret and are sometimes in code. Many • times these records are of little or no significance without further knowledge of the gambler’s activities and the interstate nature of the gambling operation. The confidential informants referred to in this affidavit refuse to testify against the parties named herein because of fear for their personal safety. Physical surveillances on gambling operations heretofore mentioned have failed to furnish substantial information of a federal gambling violation because there is little or no personal contact between these persons. If surveillance is conducted on a regular basis, it would jeopardize the investigation. Furthermore, the utilization of undercover agents would not likely prove a federal violation due to the small number of people who have access to the overall plan or scheme. e. For the reasons set out herein-above, all normal avenues of investigation would fail to produce the desired proof, in my opinion. I further believe that the only reasonable way to develop the necessary evidence of violations of Federal statutes relating to gambling by those persons named herein is to intercept wire communications to and from the telephones subscribed to and/or used by individuals previously mentioned. f. Investigation indicates that the following listed telephone numbers have been used, are being used, and will continue to be used to carry on the business of bookmaking as described above: Telephones 244-0928 and 244-0966, which are listed to Jack M. Gray, 815 Edwards Road, Apartment 26, Williamsburg Manor, Greenville, South Carolina. Telephones 583-2505 and 583-9871, which are listed to Thomas D. Stead-man, 955 Howard Street, Spartanburg, South Carolina. Telephones 723-6010 and 723-6420, which are listed to Uptown Sports Center, 476 King Street, Charleston, South Carolina.” In our view, the above affidavit constituted a sufficient basis from which the district court could have, and did, conclude that normal investigative procedures reasonably appeared unlikely to succeed. We find no merit to the contention that §§ 2518(1) (c) and 2518(3) (c) were not complied with. Appellants further contend that the authorization applications did not comply with § 2516(1) and § 2518 which provide, in part: § 2518 “(1) . . . Each application shall include the following information: (a) the identity of the investigative or law enforcement officer making the application, and the officer authorizing the application; . (4) Each order authorizing or approving the interception of any wire or oral communication shall specify . . . (d) the identity of the agency authorized to intercept the communications, and of the person authorizing the application; The application for the wiretap authorization order in this case took the following course: On December 2, 1970, the director of the FBI made a request for authorization to apply for an order. The request was reviewed by the Criminal Division of the Department of Justice and forwarded to the Attorney General with the recommendation that it be approved. Sol Lindenbaum, the Attorney General’s Executive Assistant reviewed the request and likewise recommended approval. Attorney General John N. Mitchell approved the request for authority to apply for the interception order by personally initialing a memorandum addressed to Assistant Attorney General Will Wilson, which stated, in part: “This is with regard to your recommendation that authorization be given to Joseph 0. Rogers, Jr., United States Attorney, District of South Carolina, to make application. “Pursuant to the powers conferred on me by Section 2516 of Title 18, United States Code, you are hereby specially designated to exercise those powers for the purpose of authorizing Joseph 0. Rogers, Jr., to make the above described application.” Based upon the Attorney General’s approval, the Criminal Division sent a letter, dated December 3, 1970, to the United States Attorney for South Carolina. The letter was actually signed by Deputy Assistant Attorney General Henry Peterson, who was authorized to, and did, sign Will Wilson’s name. It appears that Peterson had been authorized to sign Wilson’s name to letters of authorization for applications for wiretap orders after such applications had been approved by the Attorney General. Only Peterson and one other assistant were so authorized. This is not a case of indiscriminate signing of authorizations. The Attorney General had personally approved the order in question. Any authorization letter bearing Will Wilson’s name could only have been signed by one of two persons. Thus, responsibility for the application’s approval or denial can be fixed at any stage of its transmittal. This court only recently had occasion to address the issue of compliance with the authorization provisions of the wiretap act. In United States v. Giordano, 469 F.2d 522 (4th Cir. 1972), we held that where neither the Attorney General nor the Assistant Attorney General had actually authorized the applications the provisions of the Act had not been complied with. In Giordano, “neither Mitchell nor Wilson had heard of the Giordano application or signed the letters bearing their respective initials and signature.” Giordano, at p. 524. The opinion further stated: “Most other courts (citations omitted) have followed another approach in deciding the issue of compliance with §§ 2518(1)(a) and 2518(4)(d). These courts have said that once the Government has proved that Mitchell properly authorized the initial application, the fact that the Judge might have been told that Will Wilson rather than Mitchell was the source of the authorization was a matter of form, not substance. But here, there was no proper authorization at all. Neither Mitchell nor Will Wilson — nor any Assistant Attorney General for that matter — authorized the Giordano wiretap application. “Perhaps it can plausibly be argued that when an application is properly authorized and only the identity of the source is mistakenly transmitted to the judge, he would have authorized the wiretap had he known the real facts. But where in the first place there is no proper authorization, this argument is unavailable.” Giordano at p. 530. In this case, unlike Giordano, the Attorney General personally initialed a memorandum approving the specific wiretap authorization here questioned. The fact that Mitchell himself had approved the request was made known to the judge to whom the application was made. (Appendix, Vol. I, Sec. IB.) As previously mentioned, the authorization which finally left the Attorney General’s office bore the name of Will Wilson. Wilson, however, did not sign his name; it was placed there by Peterson, one of the two men who were authorized to sign for Wilson in the event Mitchell personally approved the wiretap authorization. We are of opinion that where, as here, a Deputy Assistant Attorney General, specifically authorized, signs the Assistant Attorney General’s name, and the Attorney General specifically authorizes the application, there has been sufficient compliance with §§ 2516 and 2518 of the Act. See also United States v. Cox, supra; United States v. Becker, 461 F.2d 230 (2nd Cir. 1972). Accordingly, we reject appellants’ contentions relating to the wiretaps in this case. II Appellants contend that the district court should have dismissed Count I as being an unindictable conspiracy. Count I charges a conspiracy to violate 18 U. S.C. § 1955 which makes it a violation to conduct, finance, manage, supervise, direct or own all or part of an illegal gambling business. To be in violation of the Act, the gambling business must, among other things, involve five or more persons. There is no special significance to the number five other than representing a policy decision by Congress to exclude small operations from the coverage of the statute. The gist of appellants’ argument is that the indictment, in effect, charges a conspiracy to conspire. To support their allegation, appellants cite a common law principle known as the Wharton rule. The essence of the rule follows: “When to the idea of an offense plurality of agents is logically necessary, conspiracy, which assumes the voluntary accession of a person to a crime of such a nature that it is aggravated by a plurality of agents can not be maintained.” 2 Wharton, Criminal Law, § 1604, at 1862 (12th Ed. 1932). The rule has been discussed by the Supreme Court, e. g., Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946), and various circuit courts, including the Fourth Circuit. Lisansky et al. v. United States, 31 F.2d 846 (4th Cir. 1929); Curtis v. United States, 67 F.2d 943 (10th Cir. 1933). The cases decided on the issue of what constitutes an unindictable conspiracy-reveal that Wharton’s rule, rather than being a rule, is a concept, the confines of which have been delineated in widely diverse fashion by the courts. Practically the only point of agreement among the cases which have considered the issue is the validity of the rule as applied to the crimes listed by Wharton in enunciating the rule. Those were: dueling, bigamy, incest and adultery. The boundaries of the rule have been narrowly drawn in this circuit. In Lisansky v. United States, 31 F.2d 846 (4th Cir. 1929), the opinion reads as follows: (quoting 5 R.C.L. 1072) “The principle is confined within very narrow limits. It applies where the immediate effect of the act in view, which is the gist of the offense, reaches only the participants therein; and is in such close connection with a major wrong as to be inseparable from it. * * * It is only where the concurrence to commit an offense and the consummated act are so connected that they really constitute one act, every element inculpatory of each party, so that the separation of the whole into its constituent elements and a prosecution for each as a distinct offense would place the parties twice in jeopardy, that the rule applies.” Before proceeding further, we should note the presence of notions of double jeopardy and merger in the quote from Judge Parker’s opinion. Under the early common law, a conspiracy was said to merge with the completed felony which was its object and it was improper to separate the offenses for the purpose of prosecution. It is now, however, settled in the federal courts that prosecution for conspiracy, as well as for the commission of the substantive offense, is permissible, offending neither the principles of merger nor double jeopardy. Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946); Callanan v. United States, 364 U.S. 587, 81 S.Ct. 321, 5 L.Ed.2d 312 (1961). According to the Supreme Court, “the common law rule that the substantive offense, if a felony, was merged in the conspiracy, has little vitality in this country.” Pinkerton, supra, 328 U.S. at 643, 66 S.Ct. at 1182. Thus, to the extent that Wharton’s rule was or is founded upon the concepts of double jeopardy or merger, it must be viewed as having no validity. This circuit’s enunciation of the rule was further limited in Old Monastery Co. v. United States, 147 F.2d 905 (4th Cir. 1945): “Usually the principle is applied to situations in which the concurrence (or agreement) and the substantive crime (or consummated offense) are so intimately and so closely connected that they in reality constitute a single act. Adultery is frequently cited as probably the clearest of such cases. But, as Circuit Judge Parker pointed out, this principle is to be confined to very narrow limits. . . . . . . “When, therefore, as in the instant ease, the conspiracy embraces not merely the necessary parties to the illegal sale, the seller and the buyer, but other conspirators as well, we think that Monastery’s altogether technical contention is of no avail. In Clark & Marshall, supra, the rule is thus stated: ‘If, however, the contemplated crime be one of which concert or consent is a constituent part, such as fornication, adultery, bigamy, incest and the like, the mere agreement or accord of the parties to the offense cannot be so separated from the offense itself as to support an indictment for conspiracy.’ [Italics ours.] Then, in a footnote to this statement, it is said: ‘But the implication of a third person will make it a conspiracy. . . .'" In Pinkerton, supra, the Supreme Court commented on the Wharton rule as follows: “There are, of course, instances where a conspiracy charge may not be added to the substantive charge. One is where the agreement of two persons is necessary for the completion of’ the substantive crime and there is no ingredient in the conspiracy which is not present in the completed crime. [Citations omitted] But those exceptions are of a limited character.” We are of opinion that the following elements must coexist or else the rule may not apply: the immediate effect of the act in view, which is the gist of the substantive offense, reaches only the participants therein; the agreement of the participants is necessary for the completion of the substantive offense; and the conspiracy must be in such close connection with the substantive offense as to be inseparable from it. Remembering that the assignment of error is that the conspiracy charged is an unindictable offense, we then apply the principles just above stated to the indictment here in question. A violation of § 1955 necessarily affects the great number of persons who place bets with the gambling business involved and with whom the gambling business involved places bets. Many persons may be reached in the immediate effect other than the participants in either the gambling business or the conspiracy. A gambling business, the operation of which is made unlawful by § 1955, may be operated without the agreement of the minimum of five persons involved. The five persons need make no agreement; all they need to be is involved. The conspiracy charged here is not in such close connection with the operation of the gambling business as to be inseparable from it. Two persons, for example, could conspire to manage, conduct, finance, etc., an unlawful gambling operation as defined in the statute. Such persons indicted for conspiracy might very well be separate and apart from the five or more persons involved in the gambling business itself. We are accordingly of opinion that the Wharton rule is not applicable to the indictment in this case. Accord United States v. Benter, 457 F.2d 1174 (2nd Cir. 1972); United States v. Becker, 461 F.2d 230 (2nd Cir. 1972); United States v. Mainello, 345 F.Supp. 863 (E.D.N.Y. 1972); contra, United States v. Greenberg, 334 F.Supp. 1092 (D.Ohio, W.D.1971); United States v. Figueredo, 350 F.Supp. 1031 (M.D.Fla., 1972). III Appellants contend that the trial court erred in charging that six defendants had pleaded guilty. The pertinent part of the charge is: “Six of the defendants ... as you have previously been advised have entered pleas of guilt to various violations of certain federal gambling laws, and are not on trial in this case. “The five remaining defendants . are on trial; and it will become ultimately your duty to determine the respective defendants on trial guilt or innocence as to the specific charges remaining in the indictment on which they stand indicted. Not all of the defendants are charged in the two remaining counts. “The fact that some defendants have seen fit to enter pleas of guilt gives rise to no inference of any defendants’ guilt who now stands on trial, and does not relieve the government in any wise of its burden under the law of proving the guilt of each individual defendant as charged in the specific counts that will be submitted to you, of proving the guilt of an individual defendant from the evidence in the case and beyond a reasonable doubt.” The government had indicted eleven persons under Count I, yet only five were on trial. The government explains that more were indicted to be sure they met the five or more requirement of 18 U.S. C. § 1955. It was not unreasonable for the court to explain the posture of the case as it stood before the jury and explain who was on trial and who was not. In view of the limiting instruction which was given, we do not think the action of the trial court was so improper as to require reversal. We also note that the trial court, without objection, at the beginning of the trial, had given the jury a preliminary charge in similar language. The unexplained deferral of the defense objection until the end of the trial does not add to its weight. IV Appellants have lodged objections to those portions of the charge regarding the elements of the substantive offense contained in 18 U.S.C. §' 1955. We note at the outset that the statute contains its own definition of “illegal gambling business” and the court charged the jury at least twice in the exact language of the statute. He further charged the jury that the word business should be given its normal customary meaning. The act itself defines illegal gambling business as a gambling business which, among other things not pertinent here, “involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business.” In spite of the fact that the statute limits itself to cases involving five or more persons and the court so instructed the jury, appellants contend that the language of the charge was so broad that the jury may have believed that they could convict even if each defendant were in business only for and by himself. We do not think any reading of the instructions would support the construction urged by appellants. Even beyond the language of the statute, the court told the jury that a business enterprise usually involves a continuing course of conduct; that persons could be in business together even though they did not work under the same roof; and that defendants may conduct their activities at great distances from each other and still be part of an overall organization, that organization being a business directed toward some business or end. The judge further charged: “Consider whether the defendants had a common purpose in their dealing with each other. . . .” [Emphasis added.] We think the trial court more than adequately conveyed the idea to the jury that the government had to establish a single business rather than merely a number of unrelated individual businesses. All appellants, except Gray, contend that appellant Gray’s request number sixteen should have been granted. Gray’s request recites the statutory language (which was charged on numerous occasions), except the request used “and” instead of “or,” requests separate definitions of certain words, and requests the jury be charged the words be given their “plain and ordinary” meaning. The judge, as above mentioned, told the jury to give the term business its normal customary meaning, so that part of Gray’s charge number sixteen was substantially given. If the substance of a requested charge is given, the refusal to use the very words is not error. United States v. Johnson, 337 F. 2d 180 (4th Cir. 1964), aff’d, 383 U.S. 169, 86 S.Ct. 749, 15 L.Ed.2d 681. The trial judge defined the word “conducts” in the words of House Report No. 91-1549, 1970 U.S.Code and Congressional Admin. News Service, 91st Cong., 2nd Sess., Vol. 2, p. 4029. He declined to define the words “finance,” “manage,” “supervise,” “direct,” or “own” in the very restrictive definitions sought by appellants. Instead of offering definitions of such words in their “plain and ordinary” meanings, appellants offered instruction substituted into, and grafted onto, Webster’s definitions, until, other than “own,” the “plain and ordinary” meaning of the words was submerged in argument. “Own” is such a common word that no definition is required. In addition, charge sixteen sought to charge the jury the above descriptive words must have existed in the conjunctive before a finding of guilt could result, while the statute uses the disjunctive “or.” So, the charge as offered was quite properly refused in any event. The only other objection to the charge of any consequence is that the trial court, at one point in the charge, used the word “participate.” Appellants object to only one use of the word in a forty-four page charge. The court used the word in the following context: “Next the government would have to establish that five or more persons participated in such business knowingly, willfully, and intentionally performing acts and causing to be performed acts either to conduct, finance, manage, supervise, direct, and control all or part of said business.” Appellants’ objection stems from the fact that Congress deleted the word “participate” from the original wording of the statute. The legislative history shows that the language was deleted because the word “participate” might be construed so as to include mere bettors in making up the statutory five persons required for a conviction under the Act. The language “involves five or more persons who conduct, finance, manage, supervise, direct or own all or part of such business,” was used instead of “participate.” See Hearings, Subcommittee No. 5, Committee on the Judiciary, House of Representatives, 91st Cong., 2nd Sess., Ser. No. 27, p. 191. Taken in the context in which it was used, the word “participate” in the charge is unobjectionable. The judge did not use it in lieu of the statutory language, but in addition to it. One who conducts, finances, manages, supervises, directs or owns certainly participates. The use of the word in the charge was not as an element of the crime but by way of explanation of the elements which must be proved. And the court listed all of the elements in the statute. The trial judge had made it clear on numerous occasions what was required for a conviction and specifically charged twice that a mere bettor would not suffice. We are of opinion that the court’s use of the word “participate” was quite proper in that its use in conjunction with the statutory elements of the crime was by way of explanation and in fact was a further restriction on the criminal liability of defendants. Accordingly, we find no merit to this contention. V The sufficiency of the evidence is also challenged. McEwen, Goldberg and Bobo contend that the evidence was insufficient to sustain a jury finding that there was an illegal gambling business involving five or more persons. Bobo contends that he ran a business separate and apart from Gray, who was the one who actually used interstate telephone facilities, and that he had no knowledge that Gray was using such facilities. With regard to both of these allegations, it is well to note that the standard for appellate review of the sufficiency of the evidence is that a guilty verdict “must be sustained if there is substantial evidence, taking the view most favorable to the government, to support the findings of guilt.” United States v. Sherman, 421 F.2d 198, 199 (4th Cir. 1970). It is also well settled that circumstantial “evidence may support a verdict of guilty, even though it does not exclude every reasonable hypothesis consistent with innocence.” United States v. Gilmore, (4th Cir. No. 72-1529, Aug. 28, 1972). With regard to the first contention, we note that illegal organizations must be, by their very nature, clandestine. They do not file articles of incorporation, execute partnership agreements or provide written contracts for the perusal of government agents. Proof of their existence necessarily involves, to a great extent, the utilization of circumstantial evidence. Appellants’ theory is that only one inference may be drawn from the facts, that being that the bookmakers in this case ran strictly individual businesses and that the cooperation between them was not enough to come under the statute. The jury, however, chose not to accept such theory, and the issue here is whether there is evidence to support the theory accepted. The government contended that the seemingly independent operations had, in effect, joined together in an overall business, the purpose of which was to enhance individual profits, share the individual risks and eliminate competition in certain respects. A review of the extensive record in this case convinces us that there is substantial evidence to support a finding of guilt consistent with the government’s theory. The basic operation of the bookmaking schemes in this ease was explained in the initial factual statement of this opinion. The evidence established beyond question that the defendants maintained constant communications between themselves, laying off bets with one another to balance their books on an almost day to day basis. They also exchanged line information regularly. By using the same line, they could prevent outsiders from playing them against each other, which was what-they were frequently doing to other bookmakers. Without Bobo in Spartanburg and Porter in Greenville, Gray could not have developed his system which required access to at least two lines in different locations. Bobo, in turn, laid off bets with Gray. They all laid off bets with each other in order to achieve the goal of balanced books essential to a bookmaking system without risk of loss. Moreover, the government’s proof did not show only isolated incidents and contacts; the evidence showed a regular, consistent course of conduct. We believe the evidence, viewed as it must be at this stage of the proceedings, amply supports the government’s theory that appellants’ mutually advantageous association constituted an illegal gambling business within the meaning of 18 U.S.C. § 1955. With regard to Bobo’s contention that the evidence is insufficient to support his conviction of violation of 18 U.S.C. § 1952, we likewise affirm the jury’s guilty verdict. Bobo argues that Gray was the one who actually used interstate telephone facilities. The facts set out in the first part of this opinion and immediately above show that the closest connection in this case was between Gray and Bobo. The evidence is overwhelming that they were working together. After enjoying the fruits of Gray’s labor over interstate telephone lines, Bobo cannot be heard now to eschew the burdens. It is inconceivable that Bobo could not have known that Gray was making interstate calls. On at least six occasions, Gray and Bobo discussed the “man up there,” what Gray was getting from “up the road,” and many times the calls to Bobo would be just after or just before a call to the “man” or “up there” and the parties would mention the call. True, the man “up there” could have been in South Carolina, but in view of Gray’s association with New York bookmakers, we find the jury’s conclusion beyond challenge at this point. In our view, the evidence is sufficient to support the verdict of guilty. VI Gray contends that he is a mere bettor with a system and not a bookmaker: That the jury’s verdict that Gray was not a mere bettor should not be set aside has been previously discussed, and nothing would be added by further exploration of that point. VII Lastly, Gray contends that he was denied a fair and impartial trial on account of the tactics of the government during the trial in the prosecution of the case; that a tape recording which was seized during a gambling raid was improperly introduced into evidence; and that the United States Attorney improperly interjected a personal opinion into his closing argument. We are of opinion that the tape recording was properly identified as having been made during the period of the conspiracy and was properly introduced into evidence. It was found in Gray’s home. See United States v. Fuller, 441 F.2d 755 (4th Cir. 1971). The opinion of the United States Attorney expressed in argument, which should be avoided, was no more than stating a contention. While we do not believe it was improper in the context in which it was used, if improper, it was not so prejudicial as to require reversal, particularly in the absence of either timely objection or motion for mistrial. United States v. Browning, 390 F.2d 511 (4th Cir. 1968). The United States Attorney vigorously and skillfully prosecuted the case, as was his obligation, but his tactics were not unfair. We note the case was also vigorously defended. We have considered all the various points raised on appeal and are of opinion they are without merit. The convictions are Affirmed. . In other words, if a player or customer bets one hundred dollars with a bookmaker on a specific athletic contest, he stands to lose the entire $100, but if he wins the bet, he may only win $90. The 10% overage which the bookmaker takes is termed vigorish. A bookmaker thus can win 10% of the total bets placed with him by balancing his books by taking equal amounts of money on the favorite and underdog, using the same line. . The Act also provides for State procedures which follow State enabling legislation not now before the court. . The Act permits orders which do not automatically terminate on a specified date upon a detailed showing of probable cause to believe that the same type of communications will occur thereafter. In no event may the same order run for longer than thirty days. . The Act contains other provisions which need not be detailed here, including safekeeping of the recordings, disclosure to the accused at least ten days prior to trial, and reports which must be made by the judge and the investigative agency. . United States v. Cox, 449 F.2d 679 (10th Cir. 1971), cert. den., 406 U.S. 934, 92 S.Ct. 1783, 32 L.Ed.2d 136 (1972); United States v. Cox, 462 F.2d 1293 (8th Cir. 1972); United States v. Focarile, 340 F.Supp. 1033 (D.C.Md.1972); United States v. LaGorga, 336 F.Supp. 190 (W.D.Pa.1971); United States v. King, 335 F.Supp. 523 (S.D.Cal.1971); United States v. Becker, 334 F.Supp. 546 (S.D.N.Y.1971); United States v. Lawson, 334 F.Supp. 612 (E.D.Pa.1971); United States v. Perillo, 333 F.Supp. 914 (D.Del.1971); United States v. Leta, 332 F.Supp. 1357 (M.D.Pa.1971); United States v. Scott, 331 F.Supp. 233 (D.D.C. 1971); United States v. Cantor, 328 F.Supp. 561 (E.D.Pa.1971); United States v. Sklaroff, 323 F.Supp. 296 (S.D.Fla.1971). One district court has held that the Act, because of the discretion given the judge, is unconstitutional because it would conceivably permit a judge to enter an order in contravention of the Fourth Amendment. United States v. Whitaker, 343 F.Supp. 358 (E.D.Pa.1972). See also the dissent to the denial of certiorari in United States v. Cox, 406 U.S. 934, 92 S.Ct. 1783, 32 L.Ed.2d 136. . Extensions are subject to additional scrutiny not present in the New York Act. . No objection is made to any formal aspect of the application or order other than as discussed below. . Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946); United States v. Katz, 271 U.S. 354, 46 S.Ct. 513, 70 L.Ed. 986 (1926); Gebardi v. United States, 287 U.S. 112, 53 S.Ct. 35, 77 L.Ed. 206 (1932); United States v. Benter, 457 F.2d 1174 (2nd Cir. 1972); United States v. Becker, 461 F.2d 230 (2nd Cir. 1972); United States v. Smolin, 182 F.2d 782 (2nd Cir. 1950); United States v. Sager, 49 F.2d 725 (2nd Cir. 1931); Old Monastery Co. v. United States, 147 F.2d 905 (4th Cir. 1945); Lisansky v. United States, 31 F.2d 846 (4th Cir. 1929); Chadwick v. United States, 141 F. 225 (6th Cir. 1905); United States v. New York Central & R. R. Co., 146 F. 298 (Cir.Ct.S.D.N.Y1906); United States v. Dietrich, 126 F. 659 (Cir.Ct.D.Neb.1904); Thomas v. United States, 156 F. 897 (8th Cir. 1907); United States v. Greenberg, 334 F.Supp. 1092 (D.Ohio, W.D.1971); United States v. Mainello, 345 F.Supp. 863 (E.D.N.Y.1972); United States v. Iannelli, 339 F.Supp. 171 (W.D.Pa.1972); United States v. Figueredo, 350 F.Supp. 1031 (M.D.Fla., 1972). . When a betting person has more money bet on a participant than he wishes, he transfers all or a part of the bet to someone else. This is called laying off.

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2024-08-24T03:29:51.129235

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UNITED STATES of America, Plaintiff-Appellee, v. George BROADWAY, Defendant-Appellant. No. 72-2122. United States Court of Appeals, Fifth Circuit. May 14, 1973. George Slover, Jr. (Court-appointed), Roy L. Merrill, Jr., Dallas, Tex., for defendant-appellant. Eldon B. Mahon, U. S. Atty., W. E. Smith, Asst. U. S. Atty., Fort Worth, Tex., for plaintiff-appellee. Before DYER, SIMPSON and MORGAN, Circuit Judges. SIMPSON, Circuit Judge: George Broadway appeals from his conviction and sentence to three years confinement under a single count which charged him with transporting and causing to be transported in interstate commerce a falsely made and forged security in violation of Title 18, U.S.C. Section 2314. Several points of claimed error are raised on appeal, one of which we find meritorious, requiring reversal of the judgment of conviction. We conclude that the trial judge committed reversible error when he permitted the jury to hear evidence as to other offenses not charged in the indictment. For the benefit of the trial court after remand, we discuss two additional contentions which we find to be of no merit: (1) the questioned use by the government of a photographic identification spread, and (2) Broadway’s claim that his Sixth Amendment right to a speedy trial was violated by preindictment delay. On May 4, 1971, two boxes containing four hundred blank Travelers Express Company Inc. (Travelers hereinafter) Money Orders (Nos. 052- 3765 ;601 through 052 3766 000) were delivered to Phillips Grocery in Dallas, Texas. -On June 9, 1971 Phillips Grocery discovered that two hundred of the money orders (Nos. 052 3765 801 through 6 000) were missing, and reported the loss to Travelers, which issued a stop payment order. On May 26, 1971, the appellant George Broadway entered the Uniroyal Merchandising Company in the K Mart Building in Dallas, Texas, and presented Travelers Express Money Order No. 052 3765 939, one of the missing series, made payable to George Broadway in the face amount of $50.00, in payment of a $12.63 bill for merchandise. Broadway endorsed the money order in the presence of Mr. Cleveland Lee, Jr., a Uniroyal employee. As identification, Broadway presented a Western Auto Credit card and a valid Texas Drivers License. The address on the driver’s license was 1450 Minuet Lane, Dallas, a home previously owned by defendant’s mother, but occupied by others since 1968. A telephone number was furnished by Broadway and written on the back' of the money order by Lee. This was the telephone number of an unrelated party. The money order which Broadway presented for payment at Uniroyal was eventually received for payment at the Security National Bank, Faribault, Minnesota in the ordinary course of banking business through interstate commerce. This money order with last three figures of 939 was the money order specified in the indictment under which Broadway was tried. Lee further testified that a day or so earlier he had refused to accept the same or a similar money order tendered by Broadway because of no identification being presented. Over defense counsel’s strenuous objection at trial the government as a part of its case in chief also put in evidence two other similarly made out money orders, Nos. 052 3765 864 and 052 3765 873, both from the series which had disappeared from Phillips Grocery. These were each negotiated near in time to the indictment money order, were payable to George Broadway and bore an endorsement similar to No. 939. The appellant was not identified in either instance as the person who negotiated the money order, but was connected to the endorsements by expert handwriting testimony. The court allowed the additional money orders to be received in evidence as going to proof of intent and guilty knowledge on the part of appellant. The court gave a cautionary instruction to the jury prior to admitting the money orders or permitting testimony about them. The instruction was to the effect that proof of other offenses not alleged in the indictment could not be used to prove the offense charged, but could only be used to determine state of mind or intent. The handwriting expert testified that the signatures on all three money orders had been made by the same person who had signed other documents which bore signatures stipulated to be appellant’s George Broadway. The government then, while introducing evidence tending strongly to show that appellant signed money orders 864 and 873 presented no evidence as to who put the money orders into commerce by uttering them. This bears emphasis, for transporting or causing to be transported in interstate commerce is the salient feature of a charge under Section 2314. We start with the general rule which is of course that evidence which shows or tends to show commission of crimes not charged is inadmissible in a trial for a particular crime, Weiss v. United States, 5 Cir. 1941, 122 F.2d 675, 682, cert. denied, 1942, 314 U.S. 687, 62 S.Ct. 300, 86 L.Ed. 550. There are recognized exceptions to the rule. Evidence of commission of other crimes closely related in both time and nature to the crime charged may be admitted to establish identity, Halfen v. United States, 5 Cir. 1963, 321 F.2d 556, 558, cert. denied, 1964, 376 U.S. 934, 84 S.Ct. 704, 11 L.Ed.2d 653, guilty knowledge, United States v. Dryden, 5 Cir. 1970, 423 F.2d 1175, 1178, cert. denied, 398 U.S. 950, 90 S.Ct. 1869, 26 L.Ed.2d 290, intent, United States v. Smith, 5 Cir. 1970, 433 F.2d 1266, 1270, cert. denied, 1971, 401 U.S. 977, 91 S.Ct. 1206, 28 L.Ed.2d 328, motive, Huff v. United States, 5 Cir. 1959, 273 F.2d 56, 60, or a common scheme, plan, design or system of criminal activity of which the crime charged is a part, United States v. Sutherland, 5 Cir. 1970, 428 F.2d 1152, 1156. The reported cases note dangers in the admission of such other crime evidence to prove elements of the crime charged. Such evidence may severely prejudice the defendant “by the confusion of issues, or the likelihood that the jury may illogically assume that since the defendant has committed one offense he may well, for that reason alone, be guilty of another . ” Labiosa v. Government of Canal Zone, 5 Cir. 1952, 198 F.2d 282, 284-285. The strong possibility of prejudice inherent in the use of such evidence has led courts to restrict use of evidence of other crimes. For example, other crime evidence may be received only if the element of the offense which the evidence is introduced to establish is contested, Lovely v. United States, 4 Cir. 1948, 169 F.2d 386, cert. denied, 1949, 338 U.S. 834, 70 S.Ct. 38, 94 L.Ed. 508, and is not established by other uncontroverted evidence relating to the principal offense, United States v. Byrd, 2 Cir. 1965, 352 F.2d 570, 574. On the issues of intent and guilty knowledge in this trial the government’s direct proof was slim. Broadway’s defense as it later came in was limited to the contention that while he cashed the money order as charged in the indictment and as testified to by Lee he did not know that it was stolen or forged, and thus proof of the guilty knowledge and intent requisite to a violation of Title 18, U.S.C., Section 2314, were lacking, Hulsey v. United States, 5 Cir. 1966, 369 F.2d 284, 287. Evidence of the uttering of similar money orders at dates near to those of the charged offense would ordinarily be relevant to establishment'of the elements of intent and guilty knowledge otherwise lacking in the government’s proof. As the additional money orders came from the same missing series as the indictment money order evidence concerning the other two money orders would tend to show a common scheme or design of criminal activity involving the two hundred missing money orders. Such evidence could demonstrate a pattern of criminal conduct pointing directly toward the act charged, Lovely v. United States, supra, and hence could permit the finder of fact to infer circumstantially the intent and knowledge with which the act charged was committed, c. f., Bishop v. United States, 10 Cir. 1968, 396 F.2d 762, 763. But recognition of the legitimate evidentiary purpose served by proof of similar crimes simply underscores the flaw in the proof below. lYe have had occasion to hold that proof of similar offenses in a situation involving identity must “ . . .be clear and that evidence of a vague and uncertain character regarding such an alleged offense should not be admitted.” Labiosa v. Government of Canal Zone, supra, 198 F.2d at 284-285. There is no Fifth Circuit case fixing standards in the situation where, as here, evidence of other crimes is tendered as proof of intent and guilty knowledge. But the Eighth Circuit has required, in eases where intent or guilty knowledge is sought to be proved by evidence of similar offenses that the proof of other related offenses “ . . . be plain, clear, and conclusive, and evidence of a vague and uncertain character is not admissible.” United States v. Spica, 8 Cir. 1969, 413 F.2d 129, 131; Kraft v. United States, 8 Cir. 1956, 238 F.2d 794; Gart v. United States, 8 Cir. 1923, 294 F. 66; Paris v. United States, 8 Cir. 1919, 260 F. 529. By the requirement that evidence of other crimes be plain, clear and conclusive, the probative value of the evidence is held to outweigh the possibility of prejudice to the defendant. United States v. Spica, supra, 413 F.2d at 132. We see no valid reason for the rule to differ as to the nature of the proof required between an identity situation as in Labiosa,, supra, and a situation where the proof of other offenses is offered to shore up a weak case as to intent and guilty knowledge, as in the ease at bar. Directing our attention once more to the facts here and applying the “plain, clear and conclusive” test, the fatal flaw in the evidence below becomes apparent. Proof of like crimes would consist of proof of transporting similar falsely made or forged securities in interstate commerce, or causing them to be so transported by placing them in the flow of commerce. This was precisely what the government was not able to prove. It simply proved at most that George Broadway placed his true name endorsement on such other securities. Without proof of encashment or passing by Broadway the offenses were no longer similar, assuming that some offense was proved by proof of Broadway’s endorsement in the two additional money orders. Proof of such offense, whatever it was, was not proof of a violation of Sec. 2314 or of a similar offense. The essential ingredient of transporting or causing to be transported was lacking. It was prejudicial error requiring reversal of the conviction, to permit the jury to receive this evidence. Upon retrial testimony as to money orders 864 and 873 should not be admitted. Our holding is simply that when proof of an assertedly similar offense is tendered to establish necessary intent, the other offense proved must include the essential physical elements of the offense charged, and these physical elements, but not the mental ingredients of the offenses must be clearly shown by competent evidence. An independent preliminary examination of the proffered evidence, out of the jury’s presence should be conducted to determine admissibility under these standards. Appellant further contends that he was denied Fifth Amendment due process of law because agent Lish of the FBI employed a photographic spread identification procedure with the witness Lee at a time when Broadway was in state custody and hence readily available for a line-up identification. While a line-up identification may normally be more accurate, Simmons v. United States, 1968, 390 U.S. 377, 386, fn. 6, 88 S.Ct. 967, 972, fn. 6, 19 L.Ed.2d 1247, 1254, fn. 6, the record indicates that the photo spread procedures specified by this Court in United States v. Sutherland, 5 Cir. 1970, 428 F.2d 1152, were followed. The trial court found that the photo spread was not impermissibly suggestive and we see no reason to overturn that finding. Further, the testimony of agent Lish demonstrated that at the time the photo identification was made the investigation had not narrowed itself so as to fix upon Broadway as the accused with concomitant rights to counsel, Cf. Kirby v. Illinois, 1972, 406 U.S. 682, 92 S.Ct. 1877, 32 L.Ed.2d 411. As the photo spread identification was not impermissibly suggestive, and Mr. Lee’s in court identification of Broadway was untainted, appellant’s additional contention that he was entitled to a line-up on the day of trial has no merit whatsoever. Broadway contends finally that he was denied his right to a speedy trial by reason of pre-indictment delay. The record shows that the alleged offense was committed on May 26, 1971; Broadway was indicted on December 13, 1971, and tried April 6-19, 1972. Agent Lish of the FBI interviewed Broadway in the Dallas City Jail, where he was being held on state charges, on July 9, 19, and 21, 1971. Lee identified Broadway from the picture spread on July 19, 1971. Broadway was not arrested until January 15, 1972 after his indictment was returned on December 13, 1971. Appellant argues that probable cause for his arrest was established no later than July 19, 1971 and that unnecessary delay between that date and the indictment date unduly prejudiced him. Although the FBI special agent in charge of the investigation testified that he was investigating 200 stolen money orders at the same time, and although the appellant was in state custody on other charges between July and December, he asserts that a hold should have been placed on him earlier, and that he was prejudiced by this delay in some unspecified way. There is no merit to this point. The Sixth Amendment right to speedy trial accrues only when a defendant becomes an accused, either through arrest, indictment, or information; the applicable statute of limitations is the usual safeguard against pre-indictment delay, United States v. Marion, 1971, 404 U.S. 307, 92 S.Ct. 455, 30 L.Ed.2d 468. See further, Barker v. Wingo, 1972, 407 U.S. 514, 92 S.Ct. 2182, 30 L.Ed.2d 101. Appellant’s generalized allegations of loss of witnesses, loss of witness memory, and his own indigency are insufficient to show prejudice. Cf. United States v. Judice, 5 Cir. 1972, 457 F.2d 414, 418. The first point discussed, improper admission of evidence tending to show commission of other offenses, requires reversal for a new trial. Reversed and remanded. . The indictment as returned charged Broadway in Count One with violation of Section 2314 on May 26, 1971. Counts Two and Three charged a co-defendant, Means with two similar violations on May 24, 1971. Before appellant’s trial, the case was disposed of as to Means by acceptance of a plea of guilty as to Count Two. Count Three was dismissed at the time of Means’ sentence, May 5, 1972. . The appellant also questions on appeal the sufficiency of the evidence to support the jury’s finding of guilty. In view of our reversal for a new trial we will not allude further to this asserted ground of error. The text outlines the evidence to the extent necessary to deal with the other contentions on appeal. . Both were dated “5-10-71”, both were in the face amount of $87.00, and both were signed in the blank for “Purchaser or Agent,” : “Betty Washington, 2516 Houston, San Antonio.” The handwritten portions appeared to be written by a different hand from each other and from the indictment money order. As noted in the text the face amount of the indictment money order was $50.00. Its payor (or “purchasers or agent”) was “Betty Smith, 1419 Hillbrand, San Antonio.” . United States v. Harrison, 5 Cir. 1972, 461 F.2d 1127, relied on by the United States is not apposite. In Harrison, we approved the receiving of testimony as to the cashing of other forged money orders not covered by the indictment, in a prosecution under Title 18, U.S.C. Sec. 2314. The defendant there was proved to have actually passed two of the three other crime money orders. Her fingerprint was on the third, and the error in receiving the third money order was held not prejudicial in view of the strong nature of the other proof. This element of the proof as to other offenses was significantly lacking in the case at bar. The difference is critical in our view. . Knowledge, intent and the like are typical menial elements. These may be inferred by the trier of fact, from the totality of the circumstances, in the same manner in which the trier of fact is entitled to infer such elements in determining guilt or innocence of the offense on trial. Cf. United States v. Hopkins, 6 Cir. 1966, 357 F.2d 14, 18, cert. denied 358 U.S. 858, 87 S.Ct. 107, 17 L.Ed.2d 84.

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James BURSTON, Petitioner-Appellant, v. E. B. CALDWELL, Warden, Georgia State Prison, Respondent-Appellee. No. 72-3053. United States Court of Appeals, Fifth Circuit. May 14, 1973. Wayne S. Hyatt, Atlanta, Ga., court appointed, for petitioner-appellant. Arthur K. Bolton, Atty. Gen., Daniel I. MacIntyre, Atlanta, Ga., for respondent-appellee. Before TUTTLE, THORNBERRY and DYER, Circuit Judges. DYER, Circuit Judge: In 1935, Burston and two other blacks were tried in the Superior Court of Fulton County, Georgia, on two counts of robbery and on one count of assault with intent to rob. Upon conviction, Burston was sentenced to 3 consecutive prison terms totaling 44 years: 12-20 years for robbery of $42.25, 3-4 years for the assault, and 20 years for robbery of $4.-30. After serving 20 months of his sentence, he escaped and remained at large for some 34 years, apparently leading a productive life. Burston was returned to Georgia custody in 1971, and subsequently filed a pro se habeas corpus petition. At his post-conviction hearing before the Superior Court of Tatnall County, Georgia, Burston alleged: (1) that he was denied the assistance of counsel at his 1935 trial; (2) that if he had counsel, his counsel was ineffective; (3) that he did not receive an arraignment hearing; (4) that he was not tried by jury; and (5) that the grand and traverse juries were unconstitutionally composed. The Tatnall County court denied him habeas relief. Burston appealed and the Supreme Court of Georgia affirmed. Burston v. Caldwell, 1972, 228 Ga. 795, 187 S.E.2d 900. Subsequently, Burston filed a habeas petition in the court below, alleging the same grounds for relief as he had urged in the Georgia courts. On the basis of the transcript of proceedings at the State evidentiary hearing and the State court’s Findings of Fact and Conclusions of Law, the district court dismissed the petition. We reverse. At his State habeas hearing, Burston testified that at the time of his trial in 1935 he did not have any money and “couldn’t hire a lawyer.” Although he conceded that immediately before the trial a lawyer did come to the detention cell where he and the two other co-defendants were being held, he maintained that the attorney was not his counsel since he had not hired him and nobody had “made him my lawyer.” Burston also claimed that the lawyer never talked to him about the trial. “He just asked me if I was with the other boys. I said, ‘yeah, they got us all for the same thing.’ And he left and he talked with the other guys about twenty or thirty minutes.” The printed indictment against the three defendants listed a lawyer as “Defendant’s attorney” (singular possessive) without specification of which, or all, defendants were represented. Moreover, Burston argued that even if he was technically represented by a lawyer at his trial, his counsel was ineffective because of the lack of time and privacy for consultation and because of the lawyer’s inadequate investigation. See Barker v. Wainwright, 5 Cir. 1972, 459 F.2d 8; Wedding v. Wingo, 6 Cir. 1972, 456 F.2d 245; Moore v. United States, 3 Cir. 1970, 432 F.2d 730; United States ex rel. Washington v. Maroney, 3 Cir. 1970, 428 F.2d 10. Had he had a reasonably thorough interview with counsel, Burston asserted, he could have given the attorney names of witnesses who could have established an alibi for him. In addition, according to Burston, the victim stated that he was robbed by three persons and he identified the other two men, but could not identify Burston as one of the assailants. Burston therefore claimed that if the counsel listed on the indictment did in fact represent all three defendants, his representation of Burston was in conflict with his representation of the other defendants because Burston’s interests were at odds with those of the other two eodefendants since they had been identified but Burston had not. The only two witnesses who were present at the State habeas proceeding were Burston, who appeared in his own behalf, and the Classification Officer at the Georgia State Prison, who testified for the State concerning the contents of the indictments and official docket entries regarding Burston’s 1935 conviction. There were several conflicts between Burston’s pro se petition and his testimony at the evidentiary hearing in Tatnall County, the most glaring of which was that in his petition he stated that he was found guilty by a jury whereas at the State court hearing he asserted that he could not remember being tried by a jury and did not see a jury in the court room, where he stayed only 15 minutes. Burston, unrepresented by counsel at the State hearing, explained that because he was uneducated, ignorant in legal matters, and indigent, he had to rely on the help of a fellow inmate to prepare his habeas petition and that, although he did not understand what the petition said too well, he signed it because the inmate-scriber had assured him that it was based on the official court records and was truthful. Finally, Burston explained that if there was any conflict between the allegations in the petition and his present testimony, what he was swearing to in court was the truth of what happened. Despite the conflicts in Burston’s story, he consistently maintained that the lawyer listed on the indictment did not represent him and, even assuming that the attorney did, he was ineffective. The only evidence which the State presented in opposition to Burston’s verified petition and sworn testimony were the docket entries from his 1935 trial. The trial transcript was not introduced, nor was there any testimony from the attorney, jury foreman, or any other witness who was present at the trial. Admitting that it was unable to determine “what the truth of the case is,” the Tatnall County court, nevertheless, held that none of Burston’s constitutional rights had been denied and that he was then serving a legal sentence. The district court dismissed Burston’s habeas petition without holding an evidentiary hearing and without obtaining a copy of the transcript from the original trial, instead relying solely on the transcript of the State post-conviction hearing. We agree with Burston’s primary contention on appeal that this was error. The disputed facts were not resolved at the State hearing and the State court’s factual determinations are not fairly supported by the record as a whole. We must, therefore, remand the case for further proceedings. Townsend v. Sain, 1963, 372 U.S. 293, 313, 83 S.Ct. 745, 9 L.Ed.2d 770; see Boyd v. Dutton, 1972, 405 U.S. 1, 92 S.Ct. 759, 30 L.Ed.2d 755; Lujan v. United States, 5 Cir. 1970, 424 F.2d 1053. A District Court sitting in habeas corpus clearly has the power to compel production of the complete state-court record. Ordinarily such a record — including the transcript of testimony (or if unavailable some adequate substitute, such as a narrative record), the pleadings, court opinions, and other pertinent documents — is indispensable to determining whether the habeas applicant received a full and fair state-court evidentiary hearing resulting in reliable findings. Townsend v. Sain, supra at 319, 83 S.Ct. at 760. If, after reviewing the original trial transcript and all other evidence in the record, the district court determines that the evidence is insufficient to reach a decision in this case in accordance with the Townsend guidelines, or if the transcript of the original trial is unavailable altogether, then the court is directed to conduct a full evidentiary hearing. See Smith v. Beto, 5 Cir. 1972, 467 F.2d 1374. Although Burston’s argument that the denial of assistance of counsel at the State habeas hearing constituted a denial of due process is without merit, the district court has the discretion under the Criminal Justice Act to appoint counsel for Burston for the federal evidentiary hearing, if one is held. The judgment of the district court is reversed and the cause remanded for further proceedings consistent with this opinion. Reversed and remanded.

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UNITED STATES of America v. Robert Elia IANNELLI, Appellant in No. 72-1702, a/k/a Bobby I. Delores Iannelli, a/k/a Dee Steve Bruno, et al. Appeal of Anthony CANCILLA, in No. 72-1696. Appeal of Albert CAMMARATA, in No. 72-1697. Appeal of Albert DIULUS, in No. 72-1698. Appeal of Maurice ORLANSKY, in No. 72-1699. Appeal of Philip SCOLIERI, in No. 72-1700. Appeal of William C. FUSARO, in No. 72-1701. Appeal of Nicholas GOBOS, in No. 72-1703. Nos. 72-1696 to 72-1703. United States Court of Appeals, Third Circuit. Argued April 9, 1973. Decided May 4, 1973. Edwin J. Martin, Stanton D. Levenson, Watzman, Levenson & Snyder, James K. O’Malley, Morris, Safier & Makoroff, Melvin Schwartz, Cooper, Schwartz, Diamond & Reich, James E. McLaughlin, McArdle, McLaughlin, Paletta & McVoy, William F. Cercone, Jr., Pittsburgh, Pa., for appellants. Richard L. Thornburgh, U. S. Atty., Kenneth A. Bravo, Terrance A. Norton, Sp. Attys., U. S. Dept. of Justice, Pittsburgh, Pa., for appellee. Before ADAMS and GIBBONS, Circuit Judges, and LORD, District Judge. OPINION OF THE COURT GIBBONS, Circuit Judge. The appellants, charged with violations of the federal anti-gambling statutes, and with conspiracy, appeal from sentences imposed after a jury verdict. The Government’s case was based in substantial part on evidence obtained through a court-ordered electronic surveillance. Appellants advance these common contentions: 1. That Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. §§ 2510-20, is unconstitutional. We have held otherwise. United States v. Cafero, 473 F.2d 489 (3d Cir. 1973). 2. That Title VIII of the Omnibus Crime Control Act of 1970, 18 U.S.C. § 1955, under which they were charged, is unconstitutional. We have held otherwise. United States v. Ceraso, 467 F.2d 653, 657-658 (3d Cir. 1972). 3. That the Government did not comply with the authorization requirements of 18 U.S.C. § 2516(1). The record discloses that Attorney General Mitchell approved the application evidencing his approval by initialling a memorandum. We have held that this procedure is sufficient. United States v. Ceraso, 467 F.2d 647, 649-652 (3d Cir. 1972). 4. That the Justice Department made an unlawful disclosure of intercepted communications when the communications were disclosed to an agent of the Intelligence Division, Internal Revenue Service, and to an agent of the audit branch of the same service working with the Intelligence Division agent. These Internal Revenue Service agents are investigative or law enforcement officers within the meaning of 18 U.S.C. § 2510(7) and disclosure was appropriate to the performance of their duties. 18 U.S.C. § 2517(1). In any event the suppression remedy specified in 18 U.S.C. § 2518(10) applies to unlawful interceptions. A civil remedy applies to unlawful disclosures. 18 U.S. C. § 2520. 5. That the authorizing judge abused his authority in permitting continuance of the surveillance, considering the sketchy nature of the progress reports which, in the order authorizing the surveillance, he required. The sufficiency of these reports was a matter for the supervising judge, and the breadth of his discretion must be viewed in light of the fact, that he could under 18 U.S.C. § 2518(6) have dispensed with progress reports entirely. See United States v. LaGorga, 336 F.Supp. 190, 194 (W.D.Pa.1971). We find no error. 6. That applying “Wharton’s Rule” they cannot be convicted both of a conspiracy in violation of 18 U.S.C. § 301 and of a substantive violation of 18 U.S.C. § 1955, because a § 1955 violation requires a minimum of five participants. More than five participants were, however, charged in the indictment. Thus the possible application of “Wharton’s Rule” is not presented. See United States v. Becker, 461 F.2d 230 (2d Cir. 1972), petition for cert. filed, 41 U.S.L.W. 3160 (U.S. July 28, 1972) (72-158); Developments in the Law-Criminal Conspiracy, 72 Harv.L.Rev. 920, 956 n. 252 (1959). 7. That there were multiple conspiracies, and Kotteakos v. United States, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557 (1946), requires reversal. Our review of the record convinces us that there was sufficient evidence of an overall conspiracy to sustain the verdict. See Blumenthal v. United States, 332 U.S. 539, 68 S.Ct. 248, 92 L.Ed. 154 (1947); United States v. Kenny, 462 F.2d 1205 (3d Cir.), cert. denied, 409 U.S. 914, 93 S.Ct. 234, 34 L.Ed.2d 176 (1972). 8. That the trial judge erred in refusing to charge that each defendant must have knowledge that five or more are participating in the enterprise before there can be a conviction under 18 U.S.C. § 1955. That section prohibits gambling businesses illegal under state law. The number of participants is merely a jurisdictional element, determining when the illegality has a sufficient effect upon interstate commerce. See United States v. Ceraso, supra at 657-658. The jury does not have to find knowledge of such jurisdictional elements in order to convict. See, e. g., United States v. Roselli, 432 F.2d 879, 891 (9th Cir. 1970), cert. denied, 401 U.S. 924, 91 S.Ct. 883, 27 L.Ed.2d 828 (1971); United States v. Blassingame, 427 F.2d 329 (2d Cir. 1970), cert. denied, 402 U.S. 945, 91 S.Ct. 1629, 29 L.Ed.2d 114 (1971); United States v. Miller, 379 F.2d 483 (7th Cir.), cert. denied, 389 U.S. 930, 88 S.Ct. 291, 19 L. Ed.2d 281 (1967). 9. That an ex parte conference between the prosecutor and the trial judge, in which the prosecutor called to the attention of the court the fact that a government witness had lied on the stand, required the grant of a mistrial. The witness in question was put on the stand on the next court day and corrected his testimony. Had the conference never taken place the effect of the initial testimony and the later corrected testimony upon the jury would have been identical. Assuming the ex parte conference was improper (as to which we have no occasion to rule, although clearly the circumstances were exigent) it did not prejudice the defendants. 10. That evidence from a pen register, a number recorder and a technowriter, all electromechanical devices used to determine telephone numbers from electrical impulses, was improperly admitted. The extent to which a foundation must be laid for the admission of evidence obtained from using such electromechanical devices is a matter within the trial court’s discretion, which in this case was exercised soundly in view of the testimony of the government witnesses. Some of the evidence consisted of secondary logs rather than original magnetic tapes. There was ample opportunity to cross-examine as to the preparation of the logs. There was no error here. See IV Wigmore, Evidence, §§ 1193-94. Appellant Iannelli contends (1) that there was insufficient evidence for the jury to convict him on Count IV, 18 U. S.C. § 1342 and (2) that if we reverse on that count there must be a new trial on all counts because the conviction on these counts was tainted. Mindful that Iannelli could be convicted under Count IV as an aider and abettor, 18 U.S.C. § 2, the evidence on that Count amply meets the test of Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L. Ed. 680 (1942). Appellants Cancilla and Cammarata contend that they were not served with an inventory of the intercepted communications. 18 U.S.C. § 2518(8) (d). They eventually received actual notice well in advance of the hearing on a motion to suppress. There was no prejudicial error here. See United States v. Cafero, supra; United States v. Ripka, 349 F.Supp. 539 (E.D.Pa.1972). Appellant Cancilla contends that prejudicial error occurred when an FBI agent mentioned that he had been the subject of a prior gambling investigation. But his attorney opened the door to the testimony in question on cross-examination of the agent and did not, on redirect, object when the question was asked. After a recess, when counsel did finally object, the court gave a proper limiting instruction. There was no error. We have considered and we reject Caneilla’s contention that the evidence is insufficient to support his conviction as a participant in the gambling enterprise. We have considered and reject the same contention made on behalf of appellant Diulus. See United States v. Ceraso, supra; United States v. Riehl, 460 F.2d 454, 459 (3d Cir. 1972). Appellant Scolieri, against whom the sole evidence is recorded telephone calls, contends these were not sufficiently identified. Circumstantial evidence supports the identification. See United States v. Addonizio, 451 F.2d 49, 71-72 (3d Cir.), cert. denied, 405 U.S. 936, 92 S.Ct. 949, 30 L.Ed.2d 812 (1972); United States v. Alper, 449 F.2d 1223, 1229 (3d Cir. 1971), cert. denied, 405 U.S. 988, 92 S.Ct. 1248, 31 L. Ed.2d 453 (1972). The judgments of the district court will be affirmed.

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Milton E. HUSTON, Appellant, v. GENERAL MOTORS CORPORATION, Appellee. No. 72-1630. United States Court of Appeals, Eighth Circuit. Submitted Feb. 16, 1973. Decided April 25, 1973. Rehearing and Rehearing En Banc Denied May 22, 1973. J. D. Riffel, Kansas City, Mo., for appellant. Peter A. Janiak, Equal Employment Opportunity Commission, San Francisco Litigation Center, San Francisco, Cal., amicus curiae. Paul Scott Kelly, Jr., Kansas City, Mo., for appellee. Before LAY and BRIGHT, Circuit Judges, and NICHOL, District Judge. Sitting by designation. BRIGHT, Circuit Judge. Milton E. Huston, a member of the World Wide Church of God, observes his religious sabbath from Friday evening to Saturday evening. He claims General Motors discriminated against him and discharged him from employment because of these beliefs. He filed a complaint with the Equal Employment Opportunity Commission (EEOC) for violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. The Commission sought, without success, to conciliate the employee’s dispute with General Motors. Huston then attempted to bring an action against General Motors in the federal district court. The district court dismissed his action as untimely since Huston failed to file a formal complaint within the 30-day time limitation imposed by 42 U.S.C.A. § 2000e-5(e). We reverse and remand for further proceedings. The record indicates that Huston filed his complaint with the EEOC on March 26,1970. During the following two years the charges were referred to the Missouri Commission on Human Rights and then back to the EEOC. After efforts to secure relief through conciliation proved unsuccessful, Huston received a right-to-sue letter from the EEOC on March 21, 1972, which, under the Act, is a prerequisite to bringing a civil action. The EEOC also mailed a memorandum to Huston which, when signed, constituted a request to the federal district court to appoint counsel and to authorize commencement of the action without payment of fees, costs, or security. This letter further requested that it be filed as a complaint to satisfy the 30-day time limitation for filing the suit. In addition, the EEOC sent the following documents : an affidavit form on which Huston might disclose his financial status, an application to proceed without payment of fees, costs, or security and for appointment of counsel, and a memorandum from the General Counsel of the Commission which stated in part: * * * It is the position of the Equal Employment Opportunity Commission that a suit under Section 706(e) of Title VII is properly instituted if, within 30 days of receiving a Notice of Right to Sue Letter, the charging.party files that letter with the Court and/or presents the letter to the Court and requests that counsel be appointed in the case. On April 12, 1972, well within the 30-day period following his receipt of instructions from the.EEOC, Huston tendered certain of these documents to the clerk of the United States District Court for the Western District of Missouri. The clerk did not file the documents nor give them a docket number, but he did enter an order appointing four lawyers associated with the Legal Aid and Defender Society of Kansas City to represent Huston. As a result of personnel changes in the Legal Aid Society, there was a delay in processing Huston’s case, and no formal complaint was filed in the district court until May 22, 1972. Thus this formal complaint was filed more than 30 days after Huston’s receipt of the right-to-sue letter and more than 30 days after appointment of counsel. On motion of appellee, the district court dismissed the action, holding that: (1) the 30-day limitation was crucial and mandatory under the Act; (2) the documents submitted did not constitute the filing of a complaint undér the provisions of the Federal Rules of Civil Procedure; and (3) no extenuating circumstances existed to justify an extension of the time limitation for more than 30 days beyond April 12, when the clerk entered an order appointing counsel for Huston. We agree that the time limitation imposed by the statute generally bars any civil proceeding which is not initiated within 30 days after the complaining party receives a right-to-sue letter from the EEOC. Stebbins v. Nationwide Mutual Insurance Co., 469 F.2d 268 (4th Cir. 1972); Goodman v. City Products Corp., Ben Franklin Div., 425 F.2d 702 (6th Cir. 1970) (no action permitted 31 days after suit letter). However, the courts are not in agreement as to the effect on the time limitation, when, as here, the plaintiff within 30 days of receipt of the suit letter, tenders such letter to the district court and requests appointment of counsel. In Harris v. National Tea Co., 454 F.2d 307 (7th Cir. 1971), the court held that the initiation of the request tolled the 30-day limitation period until appointment of the attorney, after which the period continued to run. Thus a request for counsel made on the sixth day after receipt of the right-to-sue letter would give appointed counsel 24 days to file his formal action after his appointment. A failure to file within that time period bars the action. Accord, Torockio v. Chamberlain Mfg. Co., 328 F.Supp. 578, 580 (W.D.Pa.1971); Rice v. Chrysler Corp., 327 F.Supp. 80, 84 (E.D.Mich.1971). The Harris, Rice, and Torockio courts cited and relied in part on language in Goodman, supra, 425 F.2d 702, in holding that the complaints were not timely filed. Cf. Archuleta v. Duffy’s, Inc., 471 F.2d 33 (1973) (relying on Goodman in refusing to permit an amendment of the complaint after the 30-day period for the purpose of correctly naming the corporate defendant); Brady v. Bristol-Meyers, Inc., 332 F.Supp. 995 (E.D.Mo.1971), rev’d on other grounds, 459 F.2d 621 (8th Cir. 1972) (requiring filing of formal complaint under Rules 3 and 8(a) of Fed.R.Civ.P. within 30 days unless plaintiff misled as to time requirements by some action of the federal court). The Sixth Circuit which decided Goodman has indicated that Goodman does not preclude the consideration of equitable principles in determining whether the time limitation has been met. Harris v. Walgreen’s Distribution Center, 456 F.2d 588 (1972). In Harris, plaintiff applied for appointment of counsel within the 30-day period but the district court denied his application. He filed an amended petition after the 30-day period, reciting the elements of his claim and again seeking appointment of counsel. The district court dismissed the petition because it was outside the 30-day period. In reversing, the court of appeals held: We believe on equitable grounds the motion for counsel should be regarded as tolling the statute until it was disposed of. This decision is in no way in conflict with an earlier decision of this court, Goodman v. City Products Corp., 425 F.2d 702 (6th Cir. 1970). In that case the opinion for the court carefully noted: “Finally, as regards the appellant’s contention that the 30 day limitation should here be extended on general equitable principles, suffice it to say that there is no allegation or showing in the record of circumstances justifying a tolling of the statute on recognized equitable principles.” Goodman v. City Products Corp., supra at 704. Further, pursuant to the Congressional purpose when after decision on the motion for counsel the time remaining is unreasonably short for securing a lawyer and filing the complaint, the District Judge’s order granting or denying the motion for appointment of counsel should set a reasonable time. Normally we would expect the statutory period of 30 days to be employed as a guide in this regard. McQueen v. E.M.C. Plastic Co. [302 F.Supp. 881 (E.D.Tex.1969)]; Prescod v. Ludwig Industries [325 F.Supp. 414 (N.D.Ill.1971)]; Austin v. Reynolds Metals Co. [327 F.Supp. 1145 (E.D.Va.1970)]. It is relevant to the ruling above to note that no prejudice is alleged to have resulted to defendant from any delay, nor can we find any prejudice. [Harris at 592.] In Pace v. Super Valu Stores, Inc., 55 F.R.D. 187 (S.D.Iowa 1972), plaintiff, 26 days after receiving his right-to-sue letter, presented documents to the district court similar to those presented by appellant Huston and requested appointment of counsel and the right to proceed without payment of fees or costs. The court denied the request after the 30-day time limit had elapsed but granted plaintiff 20 days to file his handwritten complaint. The plaintiff complied and the court thereafter appointed counsel, who filed a formal complaint two arid one-half months later. Judge Stuart sustained the complaint, stating: I hold that the papers filed without aid of counsel on May 10, 1971 were sufficient to constitute the bringing of an action under 42 U.S.C. § 2000e-5(e) and that the requirement of filing within thirty days was met and the action is not subject to dismissal on that ground. Even if it were held that the papers filed May 10, 1971 were not sufficient to constitute the bringing of an action the Court believes Congressional intent would be more nearly satisfied by following the line of cases which holds that the filing of the notice of right to sue letter within the thirty day period tolls the statute and that the filing of a complaint within a reasonable time thereafter constitutes substantial compliance with the act. Reyes v. Missouri-Kansas-Texas R.R. Co. [53 F.R.D. 293], supra. [Id. at 190.] In light of the Supreme Court’s stated policy of liberal interpretation of the procedural requirements in regard to layman-initiated proceedings under Title VII, Love v. Pullman Co., 404 U.S. 522, 92 S.Ct. 616, 30 L.Ed.2d 679 (1972), we hold that the presentation of a request for the appointment of an attorney within the 30 days specified in § 703(e) constitutes the bringing of the civil action under Title VII. We think this interpretation of the statutory language comports with the remedial nature of the statute, Sanchez v. Standard Brands, Inc., 431 F.2d 455, 460-461 (5th Cir. 1970); Norman v. Missouri Pacific R.R., 414 F.2d 73 (8th Cir. 1969); Reyes v. Missouri-Kansas-Texas Ry. Co., 53 F.R.D. 293 (D.Kan.1971), and the valid consideration that a layman, completely unskilled in the law cannot be expected to file a formal complaint within the short period of time specified in the statute, and he should not be forced to forfeit his claim when he has done everything within his power within 30 days to bring about legal proceedings to enforce his rights, McQueen, supra,, 302 F.Supp. at 884; Sciaraffa v. Oxford Paper Co., 310 F.Supp. 891, 898 (D.Me.1970). We believe this construction is consistent with the statutory history underlying the provisions of § 706(e) of the Act. Section 707(b) of the House version of Title VII granted enforcement powers to the Equal Opportunities Commission which could, following its unsuccessful efforts to obtain the employer’s compliance with law “within ninety days, bring a civil action to prevent the respondent [employer] from engaging in such unlawful employment practice * * *." H.R.Rep.No.914, 88 Cong., 1st Sess. (1963), as reported by the U.S. Equal Employment Opportunity Commission in Legislative History of Titles VII and XI of Civil Rights Act of 1964 at 2012. The Senate modified the House proposal by stripping the Commission of its power to initiate a civil action, but the Senate bill gave an aggrieved person the right to bring his own suit in federal court within a 30-day period and further authorized the federal court to appoint counsel and permit a complainant to commence action without payment of fees, costs, or security. However, in making this change, the Senate, as evidenced by Senator Humphrey’s remarks, was not oblivious to the plight of the poor: Since it is recognized that the maintenance of a suit may impose a great burden on a poor individual complainant, the Federal court may, on application of the complainant, appoint an attorney for him and authorize the commencement of the action, without the payment of fees, costs, or security. [Legislative History * * *, supra, at 3004.] Legislation which evinces such concern over the burden imposed upon a working man or woman seeking to enforce Title VII rights requires a practical and reasonable construction of its enforcement provisions. Since Congress granted a complainant only 30 days to bring a Title VII action, such action must be deemed brought within the 30-day period when the layman initiates a proceeding in the district court, including, as here, applying to the district court for the appointment of an attorney and for the right to proceed without payment of fees, costs or security. In ruling on such application, the district court should specify a reasonable period of time for the filing of a formal complaint against the employer. A more restrictive construction of the statute, as shown by a substantial number of cases in which a Title VII complainant did not file a formal complaint within 30 days, serves only to deprive many deserving working men and women of their Title VII remedy. We reverse the district court and direct that the complaint be reinstated. . The relevant portion of the statute read: (e) If within thirty days after a charge is filed with the Commission or within thirty days after expiration of any period of reference under subsection (c) of this section (except that in either case such period may be extended to not more than sixty days upon a determination by the Commission that further efforts to secure voluntary compliance are warranted), the Commission has been unable to obtain voluntary compliance with this subchapter, the Commission shall so notify the person aggrieved and a civil action may, within thirty days thereafter, be brought against the respondent named in the charge (1) by the person claiming to be aggrieved * * *. Upon application by the complainant and in such circumstances as the court may deem just, the court may appoint an attorney for such complainant and may authorize the commencement of the action without the payment of fees, costs, or security. Í42 U.S.C.A. § 2000e-5(e) (1970).! As amended March 24, 1972, the statute now provides that the aggrieved party shall have 90 days after notice to bring a civil action. 42 U.S.C.A. § 2000e-5(f) (Supp.1972). . The text of this letter read : Dear Mr. Huston : This is to advise you that conciliation efforts in the above matter have failed to achieve voluntary compliance with Title VII of the Civil Rights Act of 1964. Pursuant to Section 706(e) of the Act, you are hereby notified that you may, within thirty (30) days of the receipt of letter, institute a civil action in tiie appropriate Federal District Court. If you are unable to retain an attorney, the Federal Court is authorized in its discretion, to appoint an attorney to represent you and to authorize the commencement of the suit without payment of fees, costs or security. If you decide to institute suit and find you need assistance, you may take this letter, along with the Commission determination of reasonable cause to believe Title VII has been violated, to the Clerk of the Federal District Court nearest to the place where the alleged discrimination occurred, and request that a Federal District Judge appoint counsel to represent you. Please feel free to contact the Commission if you have any questions about this matter. . This enclosure read : Clerk United States District Court Dear Sir: Enclosed is the Notice of Right to Sue within 30 days which I have received from the Equal Employment Opportunity Commission. I wish to file this letter as a complaint, in order to stop the running of the 30-day period afforded me for filing a suit pursuant to Section 706(e) of Title VII of the Civil Rights Act of 1984, 42 U.S.C. 2000e-5(e). The enclosed memorandum from the General Counsel of the Equal Employment Opportunity Commission, indicates that this is the proper procedure for me to follow. Pursuant to Section 706(e), I hereby request that the Court appoint counsel for me in this case, since I am unable to obtain counsel. I also request that the Court authorize the commencement of this action without payment of fees, costs, or security. Please treat this letter as my application for appointment of counsel and'for commencement of the action without prepayment. /s/ Milton E. Huston (signature) . The documents tendered included (1) the right-to-sue letter; (2) the letter from the EEOC as indicated in note 3; (3) the application to proceed in forma pauperis and for appointment of counsel; and (4) the affidavit of financial status. Apparently the memorandum from the General Counsel of the EEOC was not offered.

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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. Harold Dean AVERITT, Defendant-Appellant. No. 72-1513. United States Court of Appeals, Sixth Circuit. Argued Nov. 27, 1972. Decided May 2, 1973. Dale Quillen, Nashville, Tenn., for defendant-appellant. Charles H. Anderson, U. S. Atty., Nashville, Tenn., for plaintiff-appellee. Before PECK and MILLER, Circuit Judges, and O’SULLIVAN, Senior Circuit Judge. O’SULLIVAN, Senior Circuit Judge. This is an appeal from conviction of appellant of possession and transportation of unstamped distilled spirits, in violation of 26 U.S.C. § 5604(a)(1) and 18 U.S.C. § 2. The District Court had overruled defendant’s motion to suppress evidence allegedly seized in violation of the Fourth Amendment of the United States Constitution, and subsequently the defendant, Harold D. Averitt, was found guilty by a jury. The defendant raises two issues on this appeal. First, that the treasury agents who stopped and searched his pickup truck lacked probable cause to support the search; and second, that the means employed by the officers to effectuate the search and seizure were unreasonable under the particular circumstances of this case. 1. Probable cause. On May 26, 1971, two agents of the Alcohol, Tobacco and Firearms Division of the United States Treasury Department and one agent of the Tennessee Alcoholic Beverage Commission commenced a surveillance operation on rural property of Henry B. Manners, Jr., situated in Stewart County, Tennessee. Located upon this property was a smokehouse approximately 45 feet from the house, and a barn. At 4:30 P.M. Treasury Agent Rollins positioned himself on a hillside 200 yards from the smokehouse and through the use of a 20-power spotting scope kept the Manners property under observation. The other officers concealed their automobile in a wooded area a quarter of a mile from the scene and kept in contact with Agent Rollins by radio. At 5:30 P.M. Agent Rollins observed the owner of the property, Henry B. Manners, Jr., arrive at the farm in his pickup truck hauling a mule. After unloading the animal in the barn, Manners returned to the house and then at approximately 6:20 P.M. he came out of the house and backed his automobile up to the smokehouse. He removed from the trunk of the car 37 one gallon glass jugs marked with red Coca Cola labels and containing a clear liquid. He placed them in the smokehouse. Agent Rollins testified that one gallon glass jugs of this type are commonly used in the illicit whiskey trade. Several hours later two men in a 1968 Chevrolet pickup truck, bearing 1971 Tennessee license plates numbered YB-7209, arrived at the Manners property, stopped at the house, and then backed the truck up to the smokehouse. Henry Manners emerged from the house with a quantity of empty paper bags, entered the smokehouse, and the three men then loaded filled paper sacks from the smokehouse into the truck. Agent Rollins testified that from his observation post he could hear the sound of jugs hitting together in the paper sacks. Throughout the period of surveillance Agent Rollins described all this activity to the other two officers over the radio and when the pickup truck departed he requested the two officers in the car to intercept the truck, which was carefully described as to make, color and license plates. Included in his radio advice to these officers was his statement, * * i them, I said, he is unloading whiskey in this Ford.” At trial, an objection to the foregoing was disposed of by the District Judge as follows : “The Court: All right, let’s have what you saw. You saw they were full apparently and had liquid in them.” Whether the officer’s statement that “he is unloading whiskey” was a conclusion, it was part of the advice upon which the officer conducting the surveillance and the arresting officers reasonably concluded that defendant and his companions were engaged in the illegal enterprise of transporting moonshine. It is not denied that the gallon jugs which were transferred from the smokehouse into the pursued vehicle were in fact moonshine whiskey. We do not consider that this Court’s decision in United States v. Wells, 467 F.2d 65, can be distinguished from the case before us. The intercepting agents followed the truck toward Erin, Tennessee, on a narrow road. They were not in uniform and the car was devoid of any official markings or lights, but the vehicle did have a siren. When they arrived at a point wide enough to permit them to do so, the officers pulled abreast of the truck, sounding the siren and focusing a flashlight in the truck driver’s eyes. The vehicles collided, forcing the truck off the road into a field where it finally came to rest against a mound of earth some 75 yards into the field. The officers found 50 broken jugs and 25 intact ones containing unstamped distilled spirits in the truck. The driver of the truck,. the appellant, was apprehended and placed under arrest. We are not here considering the sufficiency of the evidence to sustain a conviction; we consider only whether officers conducting the search and seizure and the surveilling officer had “probable cause” as required by the Fourth Amendment. The Supreme Court’s decision in Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L. Ed. 543, continues to be respected as a proper statement of what constitutes probable cause, justifying a warrantless search of a vehicle carrying contraband —as in this case, moonshine. “On reason and authority the true rule is that if the search and seizure without a warrant are made upon probable cause, that is, upon a belief, reasonably arising out of circumstances known to the seizing officer, that an automobile or other vehicle contains that which by law is subject to seizure and destruction, the search and seizure are valid.” 267 U.S. at 149, 45 S.Ct. at 283. While there were facts in that case as well as in the case of United States v. Wells, 467 F.2d 65 (6th Cir. 1972), which are not present here, we do not consider that such factual differences forbid our using Carroll and Wells as analogous to our decision. We believe they are controlling, and think it unnecessary to enter upon an extensive discussion of the facts in Carroll, Wells, and the case before us. We hold that there was probable cause for the warrantless search of the involved vehicle. 2. Misconduct of officers. We find without merit appellant’s contention that the conduct of the pursuing officers in stopping appellant’s vehicle was such as to render the search unreasonable. Appellant and his companion were aware that they were being pursued because they were engaged in illegal conduct. We consider that the government’s address to us contains a substantially correct statement of the background facts. “Agent Scharber testified that they followed the truck until they got to a place wide enough so that they could pull it over safely. When they did reach such a place they immediately tried to get in front of the truck, sounded the siren, and shined a flashlight in the driver’s eyes. The need having been established to stop the truck, the agents used only that force necessary to stop- the truck. In the absence of uniforms and a flashing light, there were no other means to stop the truck. Indeed, the agents were in the process of being forced off the road themselves by the truck at the time the truck ran off the road.” Appellant relies upon a decision of this Circuit, United States v. Costner, 153 F.2d 23, where a search was held to be illegal because the involved search and seizure was consummated by the employment of “unreasonable means.” A fair reading of that decision makes clear that the condemned conduct of the officers resided in the firing of five shells of buckshot from a sawed-off shotgun at the accused vehicle. Judge Hick’s opinion recites: “In this case, after locating and giving chase to the suspected car and while they were at no time far- behind it, Inspector Rudd fired five shells of buckshot at it from a sawed-off shotgun while it was traveling up to 80 miles an hour on a public highway. It is fortunate that the car was stopped without injury to the occupants. One of them was probably innocent of any wrongdoing, since appellee testified that he had picked up his companion, a boy named Jenkins, who was going to visit his sister near Sevierville, and since the Government dismissed the case as to Jenkins. Further, we think that prudent officers might have reasonably anticipated the presence of innocent travelers on the highway in the line of fire. Further, it may be observed that there was no real necessity for shooting the tires down in an effort to capture the car for there is no evidence that it was about to elude the officers.” 153 F.2d at 26. We think the foregoing exhibits the inapplicability of that ease to the one before us. In Costner, the District Judge sustained the claim of unreasonableness. The District Judge in this case did not. Judge Hicks made this further observation in Costner. “There is no formula for testing the reasonableness of the conduct of the searching and seizing officers. ‘Each case is to be decided on its own facts and circumstances.’ ” 153 F.2d at 26. We are impressed that the very great danger to “innocent travelers on the highway” brought about condemnation of the officers’ conduct in Costner. We decline to hold that the conduct of the officers in this case warrants a holding that it rendered illegal the search that was made. Judgment affirmed. WILLIAM E. MILLER, Circuit Judge (dissenting). The starting point for analyzing this case is, of course, the Fourth Amendment. The case law interpreting the Amendment establishes that law enforcement officers conducting a search or seizure must obtain a warrant unless the circumstances under which they are acting fall within one of the limited and closely guarded exceptions to this general rule. Coolidge v. New Hampshire, 403 U.S. 443, 91 S.Ct. 2022, 29 L.Ed.2d 564 (1971); Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967). One exception commonly referred to as the exigent circumstances rule, concerns the stopping of moving vehicles on the highway. Even when this exception is invoked and no warrant is obtained, a law enforcement officer must be acting upon knowledge amounting to probable cause that the vehicle he stops on the highway has committed or is committing an offense. Brinegar v. United States, 338 U.S. 160, 69 S.Ct. 1302, 93 L.Ed. 1879 (1949); Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1925); United States v. McKenzie, 446 F.2d 949 (6th Cir. 1971). Therefore, it must be determined whether at the time the government agents halted the defendant’s truck they had probable cause to believe that the defendant was transporting illicit whiskey in the vehicle. Probable cause has been defined by the Supreme Court as “facts and circumstances within their (the officers) knowledge and of which they had reasonably trustworthy information to warrant a man of reasonable caution in the belief that” an offense is being committed or has been committed. Carroll v. United States, 267 U.S. 132, 162, 45 S.Ct. 280, 288, 69 L.Ed. 543 (1925). Although this definition had its genesis in earlier cases this basic statement from Carroll has been quoted, paraphrased or cited approvingly throughout the search and seizure cases up to the present time. See Adams v. Williams, 407 U.S. 143, 147, 92 S.Ct. 1921, 32 L.Ed.2d 612 (1972). The government asserts (and the majority apparently agrees) that the intercepting officers had a right to rely on the statement of Agent Rollins that a violation of the law was taking place and that immediate action had to be taken. This argument, however, assumes too much and avoids the crux of the issue since only if Agent Rollins had probable cause to believe a violation of the tax laws was in progress could the actions of the intercepting agents, acting upon Agent Rollins’s instructions, be upheld. This same basic argument was proposed and specifically rejected in Whiteley v. Warden, 401 U.S. 560, 568, 91 S.Ct. 1031, 28 L.Ed.2d 306 (1971), which settles the issue here. No effort is made by the majority to distinguish this recent Supreme Court ruling. The only observation of Agent Rollins which even hints at illegal activity was the viewing of 37 one gallon glass jugs containing a clear liquid being unloaded into the smokehouse by Henry B. Manners, Jr., and the subsequent loading of filled paper sacks into the defendant’s truck. Agent Rollins did not know what actually was in the jugs transferred from the car trunk into the smokehouse or even that the paper sacks subsequently loaded into the truck contained these same glass jugs. At best the government agent had a bare suspicion that the truck was carrying moonshine. Suspicion or even reasonable suspicion will not suffice and are not a substitute for the higher constitutional standard of probable cause. The record is barren of any evidence to indicate why surveillance of the Manners property had been •undertaken. There is no evidence that the defendant or the other men involved were known whisky runners. Nor is there evidence of any illegal distilling operation on the premises or in the area, or that the government agents were acting pursuant to an informer’s tip. Therefore, I conclude that Agent Rollins did not have sufficient knowledge to satisfy the constitutional standard of probable cause and that the agents acting under his instruction were in no better position. The district court in my view erred in overruling the defendant’s motion to suppress and the case should be reversed and remanded to the court below for further proceedings. The majority opinion, I believe, seriously erodes the protections of the Fourth Amendment and disregards controlling precedent. Since the search was illegal, the highly questionable means employed by the officers in effectuating the search need not be reached. Addendum to above dissenting opinion of WILLIAM E. MILLER, Circuit Judge. After the above dissenting opinion was written and circulated, the majority opinion was revised in certain minor respects. This necessitates a few additional observations: 1. Agent Rollins’ conclusory statement that “he is unloading whiskey” cannot rise to any higher level than the observations upon which it was allegedly-based — observations which, in my view, fall far short of showing probable cause. Rollins could not possibly have had knowledge of the contents of the jugs or the sacks. At most he could only guess. But even so this conclusory statement was in effect stricken from the record by the trial court when he said, in response to an objection, “All right, let’s have what you saw. You saw they were full apparently and had liquid in them.” This was an admonition to the witness to stick to the facts — what he actually saw — and to avoid conclusions. Hence, I feel that my statement in the dissenting opinion above that the conclusion of Rollins was stricken from the record (see footnote 2) was, and is, correct. No magic or formal words are required to sustain objections to testimony or to strike or exclude it from consideration. 2. As stressed in the dissent, unless Rollins had probable cause from what he observed to believe that defendant was “unloading whiskey” — which I believe he clearly did not — his conclusory statement to that effect to the other officers adds nothing to the existence of probable cause, as Whiteley v. Warden, 401 U.S. 561, 91 S.Ct. 1031, 28 L.Ed.2d 306 (1971), teaches, a decision which the majority continues to ignore. 3. Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1925), relied upon by the majority, was a prohibition case involving the stopping and search of an automobile and is factually a far cry from the case before us, although its definition of probable cause has continuing validity. As I evaluate the facts of this case the government has wholly failed to establish that the officers had a reasonably grounded belief that the law was being violated. What the government has failed to prove has been supplied by the majority opinion by its own ipse dixit. . Agent Rollins also said, “Manners, the heavy-set dark-headed man [the latter being appellant Averitt], and man with cowboy hat begin to bring liquor out. * * * Manners and the heavy-set man [Averitt] bring the liquor and hand it up to the man with the cowboy hat up in the truck.” . It was stipulated that resolution of defendant’s motion to suppress would await the evidence adduced at the trial. The statement “he is unloading whiskey” was indeed relevant to the subject matter of such motion. The District Judge did not, as suggested by the dissent, footnote 2, strike this conclusion from the record. . See Brinegar v. United States, 338 U.S. 160, 176 n. 15, 69 S.Ct. 1302, 93 L.Ed. 1879 (1949). . My views would not undermine the authority of the opinion of this Court in United States v. Wells, 467 F.2d 65 (6th Cir., 1972), for I deem the cases to be clearly distinguishable upon their facts. First, in Wells, testimony of one of the investigating officers was admitted without objection that he thought that the containers which he observed “were liquor.” In the present case proffered testimony somewhat to the same effect was ordered by the district judge to be stricken from the record. Second, in Wells, there were additional facts, not present here, tending to support the idea that the automobile was transporting illicit whiskey. For example, Officer Batts. in that case testified that he noticed that the rear of the car was “sitting down” ; that the tires were “somewhat ballooned” ; and that the driver was “having some difficulty holding this ear on curves as he went around curves.” It is well known that testimony of this kind in liquor cases has been frequently sustained by the courts as relevant facts bearing upon the question of probable cause. In brief the prosecution in Wells, as this Court ruled, carried its burden of proof to establish probable cause, whereas the opposite is true in the present case.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Edgar MARTINEZ and Ruth Martinez his wife, Appellants, v. E. J. KORVETTE, INC. No. 72-1101. United States Court of Appeals, Third Circuit. Argued Feb. 9, 1973. Decided May 10, 1973. S. Khan Spiegel, Arthur M. Dolin, Larner & Dolin, Philadelphia, Pa., for appellants. Robert St. Leger Goggin, Marshall, Dennehey & Warner, Philadelphia, Pa., for appellee. Before McLAUGHLIN, GIBBONS, and WEIS, Circuit Judges. At the time of argument Judge Weis was a District Judge, sitting by designation. OPINION OF THE COURT WEIS, Circuit Judge. In this diversity action for malicious prosecution, the court below granted the defense motion for a directed verdict at the conclusion of the plaintiff’s testimony. A motion for a new trial was later denied and a Memorandum Order filed. (335 F.Supp. 886, E.D.Pa.1971). On October 24, 1969 plaintiff, Ruth Martinez, accompanied by her husband and brother-in-law went to one of the Korvette stores in the suburban Philadelphia area, planning to buy a new coat. Her testimony was that before trying on any of the new coats she took off her old trench coat and laid it on top of the display rack. After some time, Mrs. Martinez decided on a purchase but was then unable to find the old trench coat. She strolled to another portion of the store to look at other items of clothing, went to a check out counter in that area, and advised the clerk that, since the trench coat had disappeared, plaintiff intended to wear the new one home. Mrs. Martinez claimed that the new coat was purchased by the use of a credit card, and that she was given a sales slip and a cash register receipt. After the plaintiff walked out of the store she was accosted by a female security officer who asked her about the coat. The two women then went back inside the building where Mrs. Martinez dis- . played the sales receipt. However, when she and the security officer went to see the cashier who had handled the particular transaction, she could not be found. The plaintiff then was taken to the security office in the store where she was shown her old trench coat and was told by the security people that it had been found on a hanger on the rack. After refusing to sign a document which the plaintiff described as one releasing Korvette, the parties proceeded to a police station where a hearing was held before a justice of the peace. The evidence about what transpired at the magistrate’s office is extremely brief. Mrs. Martinez testified there, as did the female security officer, a finding of guilt was made, and the defendant sentenced to pay a fine. Later, an appeal was taken to the Court of Common Pleas of Montgomery County. No one from the defendant’s store appeared at the time set for the trial and the case was dismissed. There was no testimony in the district court as to what evidence was introduced by the parties at the magistrate’s hearing or anything tending to show that the guilty finding was returned as the result of fraud or corruption. The trial judge, therefore, was confronted with positive evidence of a guilty finding against the plaintiff by the justice of the peace as well as testimony by Mrs. Martinez which would, if believed, establish her innocence of the crime in fact. The Pennsylvania courts have historically taken a grudging view toward recovery in suits for malicious prosecution, and have imposed a heavy burden which must be met before a case may be submitted to a jury. The plaintiff has the burden of proving lack of probable cause and despite the difficulty of establishing a negative, the requirement is rigidly enforced. In Miller v. Pennsylvania Railroad, 371 Pa. 308, 89 A.2d 809, 812 (1952), the court said: “Plaintiff has produced no affirmative evidence that defendant lacked probable cause. Plaintiff does not make out a prima facie case simply by proving his arrest on a criminal charge and his acquittal.” In Byers v. Ward, 368 Pa. 416, 84 A.2d 307, 309 (1951), it was said: “Want of probable cause is an indispensable element. [citation]. And such want is in no sense dependent upon the guilt or innocence of the accused. Probable cause does not depend on the state of the case in point of fact but upon the honest and reasonable belief of the party prosecuting. * * * “The question of want of probable cause is exclusively for the court. Where there is no conflict in the testimony, the court has no need for a finding of a jury.” See, also, Psinakis v. Psinakis, 221 F.2d 418 (3rd Cir. 1955). The Restatement of Torts, § 667, holds that, absent evidence of fraud, perjury or corruption in procurement, the conviction of the accused by a magistrate, even though later reversed by an appellate tribunal, conclusively establishes the existence of probable cause. While there is some question that Pennsylvania would consider such evidence to be conclusive, see MacDonald v. Schroeder, 214 Pa. 411, 63 A. 1024 (1906), it is, at the least, strong prima facie evidence of probable cause. The remaining relevant parts of the plaintiff’s testimony established that the security officer was dealing with a woman who had worn a new coat out of the store, who claimed that a sales receipt which she displayed proved payment for the coat but who was unable to corroborate her version when given the opportunity to locate and identify the cashier allegedly involved. This, coupled with the fact that the plaintiff’s coat had been found in or on the rack where the new garments were hung, would be evidence tending to show the existence of probable cause rather than lack of it. While we are required in the present posture of the case to consider the evidence in the light most favorable to the plaintiff, and thus to accept Mrs. Martinez’ statement that she had paid for the coat, no such obligation was imposed upon the security officer at the time the event occurred. The fact that the plaintiff protested her innocence then does not establish knowledge of lack of her guilt on the part of the security personnel. In the absence of the conviction, obviously the evidence of probable cause is not overwhelming, but the burden was not on the defendant to establish that factor, but rather on the plaintiff to negative it. When the unimpeached fact of conviction is weighed along with all of the plaintiff’s other, testimony, it is clear that she has failed to meet her burden of showing lack of probable cause. When arguing the motion for dismissal, plaintiff’s counsel took the position that, having established that Mrs. Martinez was not guilty but had been arrested, he had made out a prima facie ease. The Pennsylvania cases cited above make it clear that proof of the fact of innocence does not establish lack of probable cause and that in the absence of other proof the plaintiff’s case must fall. Pennsylvania does impose more stringent requirements on plaintiffs in cases of malicious prosecution than in other tort areas. This is a matter of policy well within the realm of authority inherent in the state and must be respected by federal courts in a diversity action. For a more complete review of the applicable law in a case stronger for the plaintiff than the one at bar, see Thomas v. Korvette, 476 F.2d 471 (3rd Cir. 1973). The action of the trial judge will be affirmed. GIBBONS, Circuit Judge (dissenting). This is an appeal from the entry of a directed verdict in favor of defendant at the end of the plaintiffs’ case. Rule 50, Fed.R.Civ.P. The case is a diversity action for malicious prosecution, to which Pennsylvania law is applicable. It presents, however, an issue of the respective roles of judge and jury in the federal courts, as to which, even in a diversity case, state law is not entirely dispositiye. The question whether there was any evidence from which the jury could have inferred a lack of probable cause is one as to which federal standards control. See Part II of Judge Rosenn’s concurring opinion in Thomas v. E. J. Korvette, Inc., 476 F.2d 471 (3d Cir. 1973). As Judge Rosenn points out, in an action for malicious prosecution, if the facts bearing on probable cause are in dispute, the judge should instruct the jury to find the facts by special interrogatories, and based on these facts, make a ruling as to whether there was probable cause. At the end of the plaintiffs’ case the record contained evidence that Mrs. Martinez had been convicted before the justice of the peace. This conviction, though reversed when the case was retried in the Court of Common Pleas, is under Pennsylvania law prima facie proof that the charging party had probable cause. But it is no more than prima facie proof; evidence of probable cause. “It is everywhere held that the actions of each of these judicial bodies [justices of the peace and grand juries] are affirmative evidence of probable cause.” Miller v. Pennsylvania R. R., 371 Pa. 308, 317, 89 A.2d 809, 813 (1952). The action of a grand jury is in Pennsylvania entitled to the same evidentiary value on the issue of probable cause as is the finding of a justice of the peace. Id. That neither is conclusive is established by Judge Jones’ opinion for this court in Hornin v. Montgomery Ward & Co., 120 F.2d 500 (3d Cir. 1941). In that ease the arrested party was held for the grand jury and indicted. He was acquitted at trial. This court affirmed a jury verdict against the employer of the charging party. It found sufficient evidence of lack of probable cause in the circumstances surrounding the plaintiff’s arrest, despite the grand jury indictment. Judge Jones, no stranger to the law of Pennsylvania, wrote: “As late as Altman v. Standard Refrigerator Co., Inc., supra, 315 Pa. [465] page 480, 173 A. [411] page 417, the Supreme Court of Pennsylvania quoted with approval its earlier definition of probable cause as stated in McClafferty v. Philp, 151 Pa. 86, 24 A. 1042, where it was said that ‘ “Probable cause” is generally defined to be a reasonable ground of suspicion, supported by circumstances sufficient to warrant an ordinarily prudent man (in the same situation) in believing the party is guilty of the offense.’ It was, therefore, the duty of the court below, as it is this court’s duty on appeal, armed with the above test and cognizant of the facts which the jury could and presumably did find, to determine whether the conclusion of a want of probable cause could be found by the jury.” 120 F.2d at 503. Judge Jones then reviewed the evidence, not dissimilar to that in this case, and concluded: “The evidence not only justifies a finding that Stark, by the exercise of ordinary prudence, should have known that he did not have probable cause for proceeding against Hornin, but it further indicates that Stark was actually aware of the want of probable cause.” 120 F.2d at 503. As Judge Weis’ opinion points out, the circumstances under which Mrs. Martinez left the store were sufficient to arouse in an ordinarily prudent person the suspicion that she had hung her old coat on the rack, put on a new coat, and left the store without paying for it. At this point Mrs. Martinez was taken to the security office. But her testimony is that she produced a register receipt for the coat: “I showed them the receipt and then he said to me, ‘Well let me have the coat for a minute.’ I took off my coat and he took the receipt.” (Tr. 28). The security officer took the coat and receipt upstairs apparently to check with the register clerk. “When he went up with the coat and the receipt — he took it upstairs. That’s when the others came in. He was gone about ten minutes, and when he came back down he had this paper for me to sign. Q What was that paper as far as you know? A Well, I didn’t read much of it. It said something about releasing Korvette’s. He started putting my name down and my address, and then I told him I would not answer any more questions and I wasn’t going to sign. He said, ‘It’s just something to say we weren’t harassing you.’ It was something like that. I said, T will not sign it.’ Q All right. What happened after that? A Then he said, ‘Well if you don’t answer the questions here, you will answer them in the police station.’ That’s when he called the police.” (Tr. 29-30). Mr. Martinez testified that the coat had been paid for by use of a Unicard credit card and a register receipt was issued. (Tr. 44-45). Assuming the testimony of Mr. and Mrs. Martinez to be truthful, as in this posture of the case we must, the jury could have found that prior to the decision to charge Mrs. Martinez the security officer was aware that she had a register receipt which she claimed was for the coat, that the receipt was in fact for the coat, that he had taken the receipt and the coat and had verified that in fact the receipt was genuine, that he had thereupon attempted to coerce Mrs. Martinez into executing a paper releasing Korvette's from any charge of harassment, and that only when she refused to sign the release did he decide to charge her despite his knowledge that the receipt was genuine. If the jury so found, I submit, the court would have been required to hold that the plaintiffs had established a lack of probable cause, judged against the standard of the ordinary prudent man similarly situated. I am as aware as the next man of the enormous problems which retailers face in dealing with shoplifters. Possibly such problems would justify the Commonwealth of Pennsylvania in abolishing the cause of action for malicious prosecution. They do not, however, justify us in blurring the historic line between the functions of judge and jury in the federal courts, for that line is predicated upon federal constitutional considerations. So long as we must entertain diversity cases we must try them by appropriate federal standards. I would reverse and remand for a new trial. . See also Byers v. Ward, 368 Pa. 416, 34 A.2d 307 (1951).

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AMERICAN PUBLIC LIFE INS. CO., Appellant, v. Virgil WHEELER, Appellee. Virgil WHEELER, Appellant, v. AMERICAN PUBLIC LIFE INS. CO., Appellee. Nos. 72-1531, 72-1509. United States Court of Appeals, Eighth Circuit. Submitted Feb. 15, 1973. Decided April 13, 1973. Robert J. Donovan, Marianna, Ark., for Wheeler. Ronald A. May, Little Rock, Ark., for American Public Life Ins. Co. Before HEANEY and ROSS, Circuit Judges, and BENSON, Chief District Judge. ROSS, Circuit Judge. Virgil Wheeler brought an action for a declaratory judgment against American Public Life Insurance Company (American Public) in an Arkansas state court, to interpret a policy of insurance issued to Wheeler by American Public's predecessor, Washington Standard Life Insurance Co. (Washington Standard). Upon removal to the United States District Court for Arkansas under 28 U.S. C. §§ 1441(a) and 1332(a), the lower court rejected American Public’s defenses to the policy and ordered that it be enforced as written. No attorneys fees were awarded. 344 F.Supp. 950 (E.D.Ark. 1972). Both parties appeal. The policy in question was initially issued to Wheeler by Washington Standard on December 4, 1958, as Policy No. 2679. It was sold to Wheeler by one Mrs. Roberson, an agent of Washington Standard at that time, who took Wheeler’s application and later delivered the policy to him after the insurance company had approved his application. The policy was subsequently destroyed by fire sometime in 1962, and a duplicate copy was issued to Wheeler on March 8, 1963, by Washington Independent Life Insurance Company (Washington Independent), the company which took over the control of Washington Standard subsequent to the initial issuance of the policy. This policy on the life of Virgil Wheeler, provides for a $7,500.00 death benefit and an endowment benefit at the maturity date (December 4, 1973) of $1,700.00. The policy also includes what is generally referred to as a “Dollar A Day” Plan under which Wheeler had the option to either receive $100.00 annually; to apply that sum against annual premiums; or to authorize the insurance company to invest the sum for him. Wheeler chose the option of having the insurance company invest the $100.00 annual sum as provided by the terms of the policy, and the company has made such investment on his behalf throughout the years following the initial issuance of the policy. That investment was valued at over $1,500.00 at the time of the trial below. The annual premium for all of the Benefits and the Investment Plan was $365.00, hence the name “Dollar A Day” Plan. The controversy between Wheeler and American Public relates to the amount which Wheeler will be entitled to elect as a settlement option on the maturity date of the policy, December 4, 1973. Wheeler contends that according to a provision in the policy, contained in an inserted page designated “Insert-JEB-1” he is entitled to a guarantee of $37,500.00 on the maturity date. The insert is as follows: “GUARANTEED OPTIONS OF SETTLEMENT ON MATURITY DATE FOR EACH $1,000 OF ORIGINAL AMOUNT INSURED If the Insured is living on the Maturity Date and if all premiums have been paid and there is no indebtedness to the Company hereon, the Insured, upon surrender of this policy may, in lieu of receiving the Ultimate Amount as provided on the first page hereof, select one of the following options: Option 1. . . . Option 2. . . . Option 3. Receive in cash the Ultimate Amount of . $5,000 or Option 4. . . . . . ." This provision appears on the LOAN PROVISION page of the policy. Wheeler’s contention is that since the Face Amount of his policy is $7,500.00 he is entitled, under Option 3, to 7.5 multiplied by $5,000.00, or $37,500.00 in cash on the maturity date. In addition, an inserted sheet explaining the “Dollar A Day” Investment Plan is included in the duplicate policy and contains a table for the purpose of illustrating and explaining the “Dollar A Day” Plan, as follows: “The following table is for illustration purposes only and is based on the assumption that the annual appreciation percentage outlined below will be constant: Percent of Annual Appreciation Amount Paid Into Fund Amount of Appreciation Value At End of 15 Years 0 $1400.00 $ 0 $ 1,400.00 5 1400.00 657.86 2,057.86 10 1400.00 1,627.25 3,072.25 20 1400.00 5,703.51 7,103.51 30 1400.00 15,228.53 16,628.53 40 1400.00 37,141.93 38,541.93 It is understood that the percentage of annual appreciation may vary throughout the 15 years and the above table is designed and presented solely for the purpose of explanation.” The primary contention of American Public is that “Insert-JEB-1” was clearly inserted in the “Dollar A Day” Plan by mistake and that the most Wheeler is guaranteed at the end of the 15 years is $1,700.00 as provided by the policy without reference to the “Insert.” The main policy also contained a provision generally referred to as an Incontestability clause which reads as follows: " . . . This policy shall be incontestable after it has been in force during the lifetime of the Insured for a period of two years from its Policy Date, except for non-payment of premiums; . . ." The trial court found that the incontestability clause barred American Public’s assertion of mistake in this action, but went on to state that “assuming, but not deciding that the respondent is entitled to the defenses it claims” there was insufficient evidence offered to show that in fact any mistake had occurred. 344 F.Supp. at 954-955. In so holding, the district court found that the “Insert-JEB-1” provision was originally in the policy as issued to Wheeler and was intended to be a part thereof and concluded that the policy should be enforced in accordance with that option. On this appeal American Public contends that the court erred in holding that the incontestability clause should bar the assertion by it of a mistake, and in its finding that no mistake had in fact occurred. Wheeler appeals from the failure of the district court to award him attorneys fees under Ark.Stats.Ann. 66-3239 (Repl.1966). We affirm the judgment of the trial court and award attorneys fees. We have carefully examined the record and the briefs and conclude that there was sufficient evidence to justify the trial court’s determination that “Insert-JEB-1” was included in the original policy issued to Wheeler. However, we believe that the finding that “Insert-JEB-1” was “intended to become a part of the policy issued by the company to the petitioner, Virgil Wheeler,” 344 F.Supp. at 955, was clearly erroneous to the extent that it implies that Washington Standard intended to include the insert in the policy. The evidence is clear and uncontradicted that this form was intended to be used only in “Juvenile Estate Builder” policies sold to parents for their children under the age of 14 years. These policies contemplated premium payments to the insurance company for a period in excess of 40 years instead of the 15 years of premium payments provided in the “Dollar A Day” Plan sold to Wheeler. It is not difficult to understand the higher guaranteed value at maturity of the Juvenile Estate Builder policy when viewed in this light and it defies all logic to assume that the insurance company intended to use this form in a 15 year “Dollar A Day” policy. On the other hand, the evidence does warrant the finding that Wheeler thought he was buying the exact policy that was issued and that the agent explained the policy to him in a manner which caused him to believe it would have a value of $37,500.00 at maturity. Assuming, without deciding, that the pleadings of American Public would have permitted the trial court to reform the insurance contract because of mistake, we do not believe that under the law of Arkansas, reformation was permissible under the proof adduced in this case. In York v. McKamey, 175 Ark. 1170, 300 S.W. 371, 372 (1927), the Supreme Court of Arkansas stated the rule as follows: “It is the rule of this court that in a suit to reform a written instrument, the evidence must be clear, unequivocal, satisfactory, and decisive, and that a mere preponderance of the evidence is not sufficient, and that reformation cannot be had, except for mutual mistake, or mistake of one party accompanied by fraud or other inequitable conduct of the other party.” See also Robinson v. Home Indemnity Co., 438 F.2d 1273, 1275 (8th Cir. 1971); Weiss v. Turney, 173 F.2d 617, 619 (8th Cir. 1949); Calvert Fire Ins. Co. v. Hardwicke, 232 Ark. 466, 338 S.W.2d 329, 330 (1960); Corey v. Mercantile Ins. Co., 205 Ark. 546, 169 S.W.2d 655, 658-659 (1943); Barton-Mansfield Co. v. Wells, 183 Ark. 174, 35 S.W.2d 337, 339 (1931). In this case the evidence is clear that there was not a mutual mistake. The insurance company made a unilateral mistake in including the Insert-JEB-1 in the policy. But there was uncontradicted evidence from Wheeler and Mrs. Wheeler that Wheeler only purchased the policy upon being assured by the agent that the guaranteed value of the policy at maturity would be $37,500.-00. That such an amount was reasonable to expect was confirmed by the agent’s testimony. Under these circumstances neither mutual mistake nor mistake of one party coupled with fraud or inequitable conduct of the other party could be found, and American Public was not entitled to reformation. See Weiss v. Turney, supra, 173 F.2d at 618-619; Greenhaw v. Combs, 74 Ark. 336, 85 S.W. 768, 770 (1905). Because of the result we have reached on the reformation issue, we do not reach the question of the effect of the incontestability clause. We recognize that the result we have reached is inequitable to American Public and provides a windfall to Wheeler. But this does not alter our obligation to apply the law of the State of Arkansas to the facts of this case. Wheeler correctly argues that he was entitled to attorneys fees under Ark. Stats. Ann. 66-3239 (Repl.1966), and that even though the trial court failed to award the fees, this Court may make the determination. Maryland Casualty Co. v. Turner, 235 Ark. 718, 361 S.W.2d 646, 650 (1962). We have examined the record and have concluded that Wheeler is entitled to an attorneys fee of $500.00 for services rendered in trial and on this appeal. In setting this figure, we cannot ignore the inequitable result described in the preceding paragraph. The judgment of the trial court is affirmed but modified to include the award of attorneys fees as hereinbefore set forth. . Washington Standard Life, the initial issuer of this policy was subsequently taken over by Washington Independent Life Ins. Co., the latter assuming all control and obligations of the former, including the policy in issue. American Public, appellant herein, assumed the control and obligations of Washington Independent through a bulk reinsurance agreement entered into on January 2, 1965, and continues to date as the insurer under the policy. . As stated in Weiss v. Turney, 173 F.2d 617, 619 (8th Cir. 1949) (applying Arkansas law) : “To warrant reformation on the ground of mutual mistake it must appear that by reason of the mistake both parties have done what neither intended; in other words, the instrument must do violence to the understanding of both parties.” (Emphasis added.) See also 17 R. Anderson, Couch Cyclopedia of Insurance Law, § 66:25 at 265-267 (1967). On the other hand: “If one party is mistaken as to the identity of the subject matter of the bargain, or as to a basic assumption regarding it, other party is usually mistaken as to the first party’s state of mind. But such a double mistake, if innocent, is immaterial. A mistake of this sort is always called unilateral since the error on one side is irrelevant.” 13 S. Williston, A Treatise on the Law of Contracts, § 1570A at 465 (Jaeger ed.) 1970). (Emphasis added.)

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Donald A. DEATS, Appellant, v. Felix RODRIGUEZ, Warden, New Mexico State Penitentiary, Appellee. No. 72-1637. United States Court of Appeals, Tenth Circuit. Argued March 28, 1973. Decided May 3, 1973. Charles T. Flett, Arvada, Colo., for appellant. Jay R. Rosenthal, Sp. Asst. Atty. Gen. (David L. Norvell, Atty. Gen., with him on the brief), for appellee. Before SETH and BARRETT, Circuit Judges, and SMITH, District Judge. Of the Eastern District of Michigan, sitting by designation. SETH, Circuit Judge. The petitioner, Donald A. Deats, appeals from an order of the United States District Court for the District of New Mexico dismissing his petition for a writ of habeas corpus. Appellant was found guilty in a New Mexico state court of aggravated burglary and larceny of property, and sentenced to concurrent terms in the New Mexico State Penitentiary. He exhausted all possible state remedies and applied to the United States District Court for a writ of habeas corpus, urging as error: 1. That because of pretrial publicity and the refusal of the state judge to grant a change of venue, he did not have a fair trial. 2. That the closing argument of the district attorney which contained references to appellant’s refusal to talk to the police officers who arrested him was prejudicial and denied him due process of law. 3. That the presence of a felon on the jury, which fact should have been known to the prosecuting attorney, since the prosecuting attorney allegedly secured the conviction of the jury member, was prejudicial. Deats’ petition for a writ of habeas corpus was dismissed by the trial court without a hearing. Because the closing argument of the district attorney was prejudicial and requires reversal, it is not necessary to discuss the first or third allegation of error. We trust that when the state retries appellant, the publicity which occurred prior to 1967 when appellant was tried for the crimes herein will have long been forgotten, and a new jury for a new trial will not raise the issue of the effect of a felon sitting on the jury. During his closing arguments, the district attorney made the following remarks : “MR. BRANDENBURG: . . . Why didn’t Mr. Deats tell it when the officer talked to him? He showed a reluctance to testify. “MR. CALKINS: Object. I will reserve it. I won’t object to that point. “THE COURT: All right. Proceed. “MR. BRANDENBURG: Why didn’t Mr. Deats tell the officer? If this is the way it happened, why didn’t he tell them right then? If you were caught in a situation like Mr. Deats was caught in, and you are innocent, what is the first thing you are going to tell the police? Aren’t you going to tell them exactly what you have been doing ? Aren’t you going to tell them about calling Mr. Farnum? Aren’t you going to tell them the whole story so they can check it out? And if it turns out to be true, are you going to languish in jail and say, ‘Forget it, I don’t want to talk to you?’ I think you will consider this also. . . . ” At the conclusion of the district attorney’s closing argument and out of the presence of the jury, Deats’ counsel moved for a mistrial on the ground that the closing argument was highly prejudicial and inflammatory. The motion was denied. The New Mexico Court of Appeals, in State v. Montoya, 80 N.M. 64, 451 P.2d 557, refused to consider this point of alleged error because appellant’s counsel had withdrawn his objection to the prejudicial statements during closing argument. The New Mexico Supreme Court also refused to rule on this point. Deats v. State, 80 N.M. 77, 451 P.2d 981. We find this case to be controlled by United States v. Arnold, 425 F.2d 204 (10th Cir.), and United States v. Nolan, 416 F.2d 588 (10th Cir.), where we held that comments by the prosecuting attorney on an accused’s silence were plain, fundamental error, and that we would overlook the lack of objection in the trial court to consider the error. The issue was again considered in Johnson v. Patterson, 475 F.2d 1066 (10th Cir., 1973), where we held that any comment on an accused’s silence cannot be made at trial under the guise of its being a prior inconsistent statement admissible under the rule of Harris v. New York, 401 U.S. 222, 91 S.Ct. 643, 28 L.Ed.2d 1, when the accused takes the stand. It is difficult to distinguish the problem here raised from that in Griffin v. California, 380 U.S. 609, 85 S.Ct. 1229, 14 L.Ed.2d 106, wherein comment on a failure to take the stand is not permitted. Also in the circumstances where a defendant does not take the stand, but a prior statement is admitted, this silence is not held to be inconsistent with the prior statement. If the accused chooses to remain silent on arrest, but at trial, for any one of several good reasons unrelated to the truth or falsity of his statement, chooses to take the stand on his own behalf, whatever he may there say is inconsistent with his prior silence under the view contrary to that taken by this court. Anything said is inconsistent with silence. Thus any change of mind by the accused from initial silence to taking the stand necessarily creates an inconsistent position or statement which cannot be avoided, and is under the contrary view subject to comment. Under such a view, the theory is that if the testimony on the stand is true, the substance of it would have been given by the accused on arrest. It is difficult, however, to speculate as to whether the defendant should or would have said something under the circumstances of his arrest, and this the jury should not do in deciding his guilt or innocence. The rule which has been adopted by this circuit gives effect to the advice given to the accused that he may remain silent without a penalty for later deciding to take the stand. This rule is just as effective in reaching the truth as any other rule. Silence is not an untruth. Reversed and remanded for further proceedings. BARRETT, Circuit Judge (dissenting). I must respectfully dissent, on basically the same grounds and for the same reasons stated by Judge Breitenstein in his recent dissent in Johnson v. Patterson, 475 F.2d 1066 (10th Cir. 1973). The search for truth is and must always be the primary object of the criminal justice system. With this in mind, we have held that it is well established that there is a vast difference in the case of an accused who voluntarily takes the stand, and of the accused who refrains from testifying. Sinclair v. Turner, 447 F.2d 1158 (10th Cir. 1971), cert. denied 405 U.S. 1048, 92 S.Ct. 1329, 31 L.Ed.2d 590 (1972). In that decision we quoted from Johnson v. United States, 318 U.S. 189, 63 S.Ct. 549, 87 L.Ed. 704 (1943) as follows: We cannot permit an accused to elect to pursue one course at the trial and then, when that has proved to be unprofitable, to insist on appeal that the course which he rejected at the trial be reopened to him. However unwise the first choice may have been, the range of waiver is wide. Since the protection which could have been obtained was plainly waived, the accused cannot now be heard to charge the court with depriving him of a fair trial. 318 U.S. at 201, 63 S.Ct. at 555. The crux of the controversy here does not involve the Fifth Amendment privilege against self-incrimination, but rather the issue of credibility. Judge Breitenstein observed in Johnson, supra, in the dissent: 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 [opinion] is to suppress a fact which reasonably bears on credibility and, hence, on truth. 475 F.2d 1066 at 1069. An accused has no right to set forth to the jury all of the facts which tend in his favor without laying himself open to a cross-examination on those facts. Fitzpatrick v. United States, 178 U.S. 304, 20 S.Ct. 944, 44 L.Ed. 1078 (1900); Reagan v. United States, 157 U.S. 301 (1895); Sinclair v. Turner, supra. Deats’ pre-trial silence was properly referred to for impeachment purposes because of the inconsistency between his silence at the time of arrest and his testimony at trial. The record does, in fact, reflect that Deats did speak with police officers following his arrest. At trial, not only did Deats deny his guilt of the burglary and larceny charges predicated on his defense of alibi, but he called other witnesses who testified in corroboration. This, then, was purely and simply a credibility test. Deats effectively waived his Fifth Amendment right against self-incrimination when he voluntarily took the stand and presented his alibi defense testimony.

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The WESTERN FIRE INSURANCE COMPANY, Plaintiff and Appellant, v. NATIONAL UNION FIRE INSURANCE COMPANY, Defendant and Appellee. No. 71-1701. United States Court of Appeals, Ninth Circuit. April 11, 1973. Rehearing Denied May 2,1973. J. Gordon Cook (argued), Renaud, Cook, Miller & Cordova, Phoenix, Ariz., for appellant. Richard A. Black (argued), Phoenix, Ariz., for appellee. OPINION Before CHAMBERS and HUFSTEDLER, Circuit Judges, and FERGUSON, District Judge. CHAMBERS, Circuit Judge: During the night of May 4, 1967, Leonard Monti, Jr., shot his mistress. It happened in their restaurant bedroom. Successively he had two theories. First, he said it must have happened while he was asleep. Later, he remembered that he shot her, believing mistakenly in the dark that he was shooting at a burglar. As a result, the girl is a helpless quadriplegic. Now, at the instance of two insurance companies we must sift through the ashes' of the tragedy. Monti, Jr., is a member of the Monti family which has operated La Casa Vieja, a noted Mexican restaurant at Tempe, Arizona, for many years. The restaurant’s corporate name was Monti’s La Casa Vieja Restaurant, Inc. Leonard Monti, Sr., obviously was the dominant figure in the operation. It is appropriate to call Monti, Jr., the manager. He “lived-in” at the restaurant and it seems to have been his duty to protect the place against burglars. (He had other duties.) National Union had issued a policy of public liability insurance covering the company and its officers while acting as such officers. This was a large policy. Western had written a small homeowner’s policy to Monti, Jr., but this excluded liability if he was engaged in a business pursuit at the time of the accident. The victim wasted little time in suing Monti, Sr., the Casa Vieja Restaurant Company, and Monti, Jr., in an Arizona state court. The theory of the complaint was that Monti, Jr., when he shot, was acting in his executive capacity as an officer of the company. If he was consciously but negligently protecting the restaurant’s property, the company was liable and Western had no liability on its homeowner’s policy. The exclusion excluded it out. National Union commenced the defense of all defendants named in the state complaint. The theory of the complaint seemed to require it. (Monti, Jr.’s version to the police on the unfortunate night of the shooting was, “I must have been asleep.” If this were a fact, National Union probably had no liability.) The victim’s lawyers took the discovery deposition of Monti, Jr. By this time his story had changed to point a finger in the direction of where the greatest insurance coverage was. He now pointed to the shooting as being a conscious tragic mistake while protecting the restaurant company’s interest. If so, National Union was in trouble. The deposition was stopped. National Union recognized a conflict of interest. Under court supervision, counsel for National Union withdrew from representing Monti, Jr., but remained to represent the restaurant company. At this point, Monti, Jr., went to see the broker who wrote his homeowner’s policy for Western. Soon he was in the hands of Western’s regular defense lawyers and they became Junior’s attorneys of record. Naturally, in this shift there was some paper work, Monti, Jr., was told by letter from National Union that he should go get lawyers to represent him, but that National Union would pay their fees. Then with the appearance of Western’s attorneys, previously unknown to Junior, he assigned in writing his letter agreement with National Union to Western, not to his new attorneys. The case went to trial. The jury returned a verdict of $209,000 for the victim against the restaurant company, necessarily on the basis of a conscious act of a company officer protecting the company’s property. This negated the theory that the act was that of a mere homeowner done in his sleep. So National Union had to pay the sizeable judgment and its own attorney fees. Despite its written undertaking to pay the separate attorney for Junior, it was unhappy and reneged. We suspect it felt (and perhaps rightly so) that Western’s attorneys had done as much to “stick” National as the victim’s attorneys. So Western paid its attorneys who had represented Junior and brought this diversity suit in a United States district court to get from National Union that which National Union had agreed to pay. Upon the basis of affidavits, a motion for summary judgment was granted National Union, denying Western any relief. The district court forthrightly concluded that Western was just taking care of its own interest. But Western insists on its “contract rights”; National Union agreed to pay and it ought to pay. The position of each excites no sympathy, but we affirm. It is possible that the district court pulled its trigger too quickly and there was a genuine issue of fact to be resolved, i. e., whose interests were Western’s attorneys, while representing the captive client Monti, really protecting? But Western says it bases its right to recover solely on the assignment of Junior to it of his letter contract with National Union. But that states Western out of court, because if that is it, Western for the moment was indulging in being a broker for lawyers, an illegal thing. Only by admitting that the lawyers of Junior were serving it can it escape the onus of a contract against public policy. Counsel for both parties here are highly reputable lawyers. But there has been a bumbling that makes them all look worse than they deserve. We cannot underwrite just how the same object might have been accomplished without a legal shadow coming across it. But one may suggest that Western could have pointed Junior in the direction of its own attorneys. Junior could have employed Western’s attorneys and the attorneys could have relied on National Union’s letter to Junior. Also, there might have been ways that National Union and Western could have contracted between themselves. But on the basis of the assignment to Western, which hired the attorneys for Junior and paid them, we hold Western cannot recoup what it paid out. Summary judgment affirmed. The Honorable Warren J. Ferguson, United States District Judge for the Central District of California, sitting by designation. . Law Offices SHIMMEL, HILL, KLEINDIENST & BISHOP 10th Floor 111 West Monroe Phoenix, Arizona 85003 Telephone 252-7431 Area Code 602 July 11, 1967 (CERTIFIED MAIL) Mr. Leonard F. Monti, Jr. Monti’s La Casa Vieja 3 West First Street Tempe, Arizona Re: [Plaintiff] v. Monti’s La Casa Vieja Restaurant, Inc., an Arizona corporation ; Leonard F. Monti and Leonard F. Monti, Jr., Maricopa County Superior Court Cause No. 200370. Dear Mr. Monti: Please be advised that this morning, July 11, 1967, the Court granted the motion of Shimmel, Hill, Kleindienst & Bishop to withdraw as your attorney in defense of the above suit. The court did not, however, grant our motion to stay the matters to be heard on July 13, 1967, at 8:45 A.M. in Division #2, as we have described in our letter of July 5, 1967. You are at liberty to employ your own attorney to defend this action on your personal behalf and it is necessary that you do so in order to prevent the possibility of judgment being entered against you in this matter. The National Union Fire Insurance Company will and does by this letter agree to pay you the reasonable cost of defending this suit, including payment of your attorney’s fees. National Union Fire Insurance Company will further assist you in selecting an independent attorney, experienced in the defense of civil litigation if you desire them to do so. It is to be understood by you, however, that National Union Fire Insurance Company continues to assert its position that it is not and will not be liable for any sum for which you may become obligated to pay under Paragraph One of the Insuring Agreements. It is the position of National Union Fire Insurance Company in this regard that you were not at the time and place [Plaintiff] alleges she was injured, and under the circumstances surrounding the accident, insured under Paragraph Three of the Insuring Agreements of National Union Fire Insurance Company Policy No. CPC 535711. May we impress upon you the urgency of obtaining your own counsel before Thursday, July 13, 1967, in order that your own attorney can appear at such scheduled hearings. Very truly yours, /s/ Richard A. Black For Schimmel, Hill, Kleindienst & Bishop RAB/blj . We conclude that the assignment of Junior’s claim to Western in order that Western could hire attorneys for Junior violated Arizona public policy and thus was void. See A.R.S. § 32-267, subsec. 8; Rules of the Arizona Supreme Court, Rule 29(a) 17 A.R.S. (1955); ABA Canons of Professional Ethics, Canon 35 (in effect at the time of this transaction); ABA formal Opinion No. 198; and the following Opinions of the Committee on Rules of Professional Conduct, State Bar of Arizona: Opinion No. 1 (1954), Opinion No. 17A (1956), Opinion No. 67 (1960), and Opinion No. 294 (1969). . The assignment here obviously does not come within the ambit of cases that permit a lawyer to pledge a prospective fee as security for a loan. Further, we do not deal with such situations as legal aid or approved group legal services, which on one basis or another are ofttimes legally authorized.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

MID-AMERICA INDUSTRIES, INC., a Delaware corporation, et al., Plaintiffs-Appellees, v. UNITED STATES of America, Defendant-Appellant. No. 72-1515. United States Court of Appeals, Eighth Circuit. Submitted Feb. 15, 1973. Decided April 20, 1973. Rehearing Denied May 25, 1973. Ben L. Paddock, Fort Smith, Ark., for appellee. Thomas L. Stapleton, Atty., Tax Div., Dept. of Justice, Washington, D. C., for appellant. Before HEANEY and BRIGHT, Circuit Judges, and BENSON, Chief District Judge. District of North Dakota, sitting by designation. HEANEY, Circuit Judge. The United States appeals from a decision of the trial court awarding taxpayers a refund of $36,561.04, plus interest, for corporate taxes paid under protest for calendar years 1964-1967. The sole issue on this appeal is whether the taxpayers constituted a “controlled group of corporations” under § 1563 of the Internal Revenue Code of 1954. The Automotive, Inc. (Automotive), a closely held Delaware corporation, headquartered in Fort Smith, Arkansas, began business as a jobber of automobile parts in 1920. By 1957, it had a number of branch offices located in various cities throughout Arkansas, Oklahoma, and Texas. At that time, Automotive’s management decided to divide this structure into a number of smaller subsidiary corporations, each of which would own and operate stores located within a particular trade area. These subsidiaries were organized as of the beginning of the year 1958. Employees of Automotive, the various subsidiaries and two other firms historically associated with Automotive, were allowed to purchase between twenty-one and twenty-three percent of the shares of the single class of common stock issued by each of the subsidiaries, with Automotive owning the remainder. Simultaneously with the establishment of the subsidiaries, Automotive caused another corporation, Automotive Employees Securities Corporation (Securities Corporation), to be formed. The sole purpose of Securities Corporation was to maintain a market for the stock in the subsidiaries held by the employees. To facilitate this purpose, the stock of each subsidiary was issued subject to conditions restricting its transfer. The conditions required that notice of all proposed stock transfers be given to the respective subsidiary corporations, and that for thirty days after said notice, Securities Corporation had the sole option to purchase the stock at its most current book value. An option in favor of Securities Corporation also arose whenever any stockholder terminated his employment with Automotive or an affiliated firm. Securities Corporation was informed of each notice of proposed sale and employment termination by the parent or the subsidiaries, and it consistently purchased the subsidiaries’ stock when its option arose and resold the stock to other employees. In preparing their tax returns for the tax years at issue, Automotive and each of the subsidiaries availed themselves of the exemption from the corporate surtax which is provided to most corporations for their first $25,000 of income. See, 26 U.S.C. § 11(d). The returns were audited by the Internal Revenue Service. The I.R.S. determined that Automotive and its subsidiaries constituted a “controlled group of corporations” as that term is used in §§ 1561-1563 of the Code. Consistent with that determination, the Commissioner allowed this group of corporations (the taxpayers) only one surtax exemption among them, and disallowed the other fifteen surtax exemptions. Following notice of the Commissioner’s action, the taxpayers elected, under § 1562 of the Code, to retain their surtax exemptions, and to pay an additional six percent tax rate on the first $25,000 of income of each corporation. Thereafter, they filed this suit below to recover the additional six percent paid, contending that they were not members of a controlled group as defined by the statute. Section 1563(a)(1) of the Code defines the term “controlled group of corporations” to include a parent corporation and its subsidiaries in which the parent owns eighty percent or more of •the outstanding stock. However, in computing the parent’s percentage ownership of subsidiaries in which it holds an interest in excess of fifty percent, certain outstanding stock is excluded by § 1563(c)(2)(A) from consideration. Because of this exclusion, a parent may be deemed to own in excess of eighty percent even though it holds legal title to a lesser percentage of the outstanding stock, if the employee-owned stock of the subsidiary is: “ * * * subject to conditions [1] which run in favor of such parent (or subsidiary) corporation and [2] which substantially restrict or limit the employee’s right * * * to dispose of such stock * * *." 26 U.S.C. § 1563(c)(2)(A)(iii). The parties agree that the second requirement of the excluding provision is met. They also agree that employees of the respective subsidiaries owned a sufficient portion of the stock of each subsidiary. so that if the conditions were found to “run in favor of” Automotive, then Automotive is properly deemed to have owned in excess of eighty percent of each subsidiary’s stock. Thus, the only question before us is whether or not the conditions ran in favor of Automotive. The trial court held that they did not. We disagree. The phrase “run in favor of” is receptive of a number of different interpretations. We are convinced that Congress intended that the phrase should be interpreted far more broadly. Moreover, we believe that the restrictions ran in favor of Automotive because, as a practical matter, it had not given up its control over the disposition of the subsidiaries’ stock. We agree with the trial court’s finding that the conditions on their face ran in favor of Securities Corporation. However, we are convinced that, in reality, they ran in favor of Automotive because Automotive had ultimate control over the disposition of the stock of the subsidiary corporations. Automotive at all times owned between seventy-seven and seventy-nine percent of the stock in each of the subsidiaries. Moreover, because of its large interest in each subsidiary, Automotive maintained dominant control over the subsidiaries and could, at its discretion, alter the conditions restricting the transfer of the subsidiaries’ stock. See, Superior Beverage Co. of Marysville, Inc., 58 T.C. 918, 928-931 (1972). For example, if Automotive at anytime became displeased with the manner in which Securities Corporation was conducting the purchase and sale of the stock of the subsidiary corporations, it could, by exercising its control over the subsidiaries, alter the conditions so that they no longer purported to run in favor of Securities Corporation. Such an action would take away Securities Corporation’s sole function and reduce it to inactivity. Automotive could then cause the conditions to directly “run in favor of” a more amenable third party, or itself. Similarly, in the event that an employee of either Automotive, or one of its subsidiaries, exercised his stock ownership rights contrary to the interest and desires of Automotive, Automotive could cause the termination of his employment and thereby force the sale of his stock. The advantage of Automotive’s power was evident. Through it, Automotive could maintain ultimate control over the disposition of stock in the subsidiaries which is technically owned by outsiders. It was able to indirectly maintain the same control as can a parent corporation in whose favor transfer restrictions run directly. The latter arrangement is clearly denied full benefit of the multiple surtax exemptions and tax reduction by §§ 1561-1563 of the Code, and we are of the view that the former indirect arrangement is as well. The reports of the House of Representatives Ways and Means Committee and the Senate Finance Committee relating to the Revenue Act of 1964, of which §§ 1561-1563 are a part, emphasize that the purpose of the surtax exemption was to aid small, rather than medium and large, businesses. H.R. Rep. No. 749, 88th Cong., 1st Sess. 116-118 (1963); S.Rep. No. 830, 88th Cong., 2d Sess. 148-150 (1964), U.S.Code Cong. & Admin.News, p. 1313. Moreover, these reports state that Congress intended by these specific sections to provide additional aid to small businesses by reducing the tax on the first $25,000 of income from thirty to twenty-two percent, and that it desired that these benefits should be limited “in the cases where a parent corporation owns or controls one or more other corporations * * *." (Emphasis added.) H.R.Rep. No. 749, supra at 117; S.Rep. No. 830, supra at 149, U.S.Code Cong. & Admin.News, p. 1426. We believe that in order to effect Congress’s intent, in interpreting the phrase “run in favor of,” courts must go beyond a mere formal ownership test and closely examine the question of control. The following observations of the Tax Court in Barton Naphtha Co., 56 T.C. 107, 116-117 (1971), lend support to this position: “The exclusion of * * * [restricted employee-owned] stock is no more than a special refinement upon the 80 percent common ownership requirement designed to assure the denial of multiple surtax exemptions where the common shareholder owns less than 80 percent of the stock but enjoys the prohibited degree of control as a result of restrictions applicable to stock held by outsiders. * * * * * * “ * * In emphasizing such attributes of ownership as voting and dividend rights or the shareholder’s ability to realize full market value on the sale of stock, petitioners ignore the critical requirement that the restrictions relate to the right of disposition, rather than incidents of ownership, of employees * * *. It is plainly the use of substantial restrictions as a method of retaining the reins of corporate control which is the sole concern of the statute.” (Emphasis added.) There is no doubt in our minds but that Automotive had maintained the “prohibited degree of control,” and that the conditions indirectly ran in favor of Automotive. Section 1563(c)(2)(A) (iii) does not require that the conditions run directly in favor of the parent or subsidiary, but instead conditions which indirectly favor either the parent or subsidiary should also cause the stock to be excluded. See, Treas.Reg. § 1.1563-2(b)(2)(iii) (1965). A contrary position would, in our view, put form over substance. Nor does it matter that the corporate structure involved predated the enactment of §§ 1561-1563. Congress specifically stated that this statute would have the effect of denying the full benefits of the tax reduction to “medium and large enterprises which use, or might choose to use, the multiple corporate form of organization.” (Emphasis added.) H.R.Rep. No. 749, supra at 117; S.Rep. No. 830, supra at 149, U.S.Code Cong. & Admin.News, p. 1426. Accordingly, we hold that the taxpayers were members of a “controlled group of corporations,” and that they were subject to the additional six percent tax imposed by § 1562 on multiple corporations which elect to retain separate surtax exemptions. Reversed. . All statutory citations herein are to the Internal Revenue Code of 1954, 26 U.S.C. . The facts are more fully set out in the published Memorandum Opinion of the trial court. Mid-America Industries, Inc. v. United States, 341 F.Supp. 597 (W.D.Ark.1972). . These firms are The Automotive, Inc. of Tulsa and Motive Parts Warehouse, Inc. The ownership of these two other firms during the pertinent tax years was different from that of Automotive, but they were offshoots of Automotive. In 1969, Automotive and Motive Parts Warehouse, Inc., were reunited through a reorganization in which Mid-America Industries, Inc., became the parent. . The incorporators of Securities Corporation were: C. R. Warner, Jr., Heartsill Ragon and John Safford. Automotive for many years was a client of the law firm in which Mr. Warner and Mr. Ragon were partners, and of the accounting firm in which Mr. Safford was a partner. These three men remained the sole shareholders, officers and directors of Securities Corporation until the end of 1966, when they sold their stock to a group of fourteen men who were employed by either Automotive or Motive Parts Warehouse, Inc. . The conditions to which the stock was subject are as follows: “No transfer of common stock of this Corporation shall be valid, whether by sale, gift, devise, inheritance, operation of law, levy or legal process, foreclosure of lien, or otherwise, until thirty (30) days after the Company, through its Secretary, shall have had written notice by certified mail of the proposed transfer, and the number of shares proposed to be transferred. During such thirty-day period the Automotive Employees Securities Corporation, an Arkansas corporation, shall have the sole option to buy said shares at the book value as shown by the books of the corporation at the last preceding annual audit, less dividends paid thereafter. Such option may be exercised by the Automotive Employees ‘Securities Corporation’ by written notice to the last known address of the shareholder of record within the option period. This option in favor of Automotive Employees Securities Corporation shall also arise whenever the owner of any share, or shares, of common stock ceases to be an active employee for whatever cause — resignation, retirement, discharge, transfer or otherwise, of the one of the following companies by which he is employed at the time he acquires said stock: [There follows a list naming all the Subsidiaries. ] said option to be exercised as set forth above within thirty (30) days of the termination of said active employment. Payment for such shares shall be in cash upon surrender of the certificate or certificates for said shares, properly endorsed. “If the aforesaid option shall not be exercised by optionee within the prescribed time, then said share or shares may be retained or transferred to any person whomsoever, provided, however, that failure of optionee to purchase any share or shares of common stock under its option, and the sale or transfer to any other person, or the retention of said shares by an ex-employee, shall not as to the future sale or transfer of said shares or share, or of any share or shares issued in lieu thereof, discharge any such share or shares of common stock from any of the restrictions herein contained; it being the intent that all restrictions hereby imposed upon the sale or transfer of shares of common stock shall apply to all such shares, whensoever, howsoever or by whomsoever acquired in the hands of all holders or owners, whether original shareholders or subsequent purchasers or transferees and whether acquired through the voluntary or involuntary act of a shareholder, or by operation of law, and whether a part of the first authorized issue or of any subsequent or increased issue. In the event that any share, or shares, shall be transferred or retained in violation of this restriction, then payment of all dividends shall be suspended upon said share of stock forthwith.” . Act, of February, 26,1964, Pub.L.No. 88-272, § 235, 78 Stat. 19,116-125. . The committees also stated: “While your committee recognizes the advantages of use of multiple corporations, your committee believes, as it has in the past, that, where corporations owned and controlled by the same interests engage in different businesses in the same area or conduct the same type business in different geographical locales, there are legitimate business reasons for use of separate corporations and, therefore, the separate corporations should generally be recognized as separate taxpayers, retaining the benefit of use of multiple surtax exemptions. However, your committee does not intend to eneonrage the formation of these multiple corporations and therefore proposes to apply higher tax rates [ — the six percent additional income tax rate on the first $25,000 income of each corporation — ] to corporations which are members of an affiliated group of corporations. * * * ” (Emphasis added.) H.R.Rep.No.749, supra at 118; S.Rep.No.830, supra at 149-150, U.S.Code Cong. & Admin.News, p. 1426.

f2d_477/html/1033-01.html

Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

ENVIRONMENTAL DEFENSE FUND, INC., et al., Appellants, v. Robert F. FROEHLKE, Secretary of the Army, et al., Appellees. No. 72-1628. United States Court of Appeals, Eighth Circuit. Submitted Feb. 16, 1973. Decided April 20, 1973. Edward Lee Rogers, Gen. Counsel, East Setauket, N. Y., for appellants. Eva R. Datz, Atty., Dept. of Justice, Washington, D. C., for appellees. Lyman Field and F. Philip Kirwan, Kansas City, Mo., for intervenors. Before HEANEY arid ROSS, Circuit Judges, and BENSON, Chief District Judge. District of North Dakota, sitting by designation. HEANEY, Circuit Judge. The primary issue on this appeal is-whether the trial court erred in refusing to enjoin the defendants from proceeding with all activities relating to the construction of the Harry S Truman Dam and Reservoir Project on the Osage River in Missouri, pending the filing of a final Environmental Impact Statement (E.I.S.) by the Corps of Engineers in accordance with § 102(2)(C) of the National Environmental Policy Act of 1969. 42 U.S.C. §§ 4321, 4332(2)(C). The project was authorized by Congress in 1954. Its basic purpose was to alleviate the flooding of towns and farms along the Osage, Mississippi and Missouri Rivers. The project was reauthorized in 1962 to promote conservation, power development and recreation. The dam, if built according to present design, will consist of an earth-fill embankment about 5,000 feet in length, a concrete structure slightly less than 1,000 feet long, and a dike 7,500 feet in length. Maximum height of the dam will be ninety-six feet above the valley floor. The reservoir will inundate 209,300 acres at full flood control pool and 55,600 acres of land at conservation or multi-purpose level. The reservoir’s capacity is 5,202,000 acre-feet at flood control level. The dam will be located in the vicinity of Warsaw, Missouri, immediately upstream from the Lake of the Ozarks. The expected total cost of the project to the federal government is $234,692,000,' The first contract was awarded on July 15, 1963, six years prior to the passage of NEPA. By June of 1972, $74,000,000 had been expended for planning, land acquisition, road relocation and construction. In March of 1972, the plaintiffs initiated this action in the United States District Court for the Western District of Missouri, seeking to enjoin the defendants from proceeding with the project. They contended that the defendants were proceeding with the project in violation of NEPA, the Fish and Wildlife Coordination Act of 1934, 16 U.S.C. § 661 et seq.; the Environmental Improvement Act of 1970, 42 U.S.C. § 4371; the Water Bank Act of 1970, 16 U.S.C. § 1301 et seq.; various other statutes and the United States Constitution. The principal violation alleged was the failure to prepare and file an E.I.S. pursuant to § 102(e) of NEPA. The plaintiffs asked the court to enjoin road relocations, land acquisitions, construction activity and all other work on the project until a final E.I.S. was filed in accordance with NEPA. Carefully directed pretrial proceedings were conducted by the court in March and April, 1972. In May of 1972, the court held an evidentiary hearing on the merits. Thereafter, the parties stipulated that the environmental impact of the project would be significant, particularly with respect to fish fauna, archaeological and paleontological sites, wildlife and waterfowl habitat, mussels, society, agriculture and economics. The parties further stipulated that certain activities would be halted by the Corps of Engineers pending the completion of a final E.I.S. They agreed: (1) that a draft E.I.S. would be prepared by September 15, 1972, and a final E.I.S. by March 1, 1973; (2) that the plaintiffs could include data, comments and statements as appendices to the studies; and (3) that specified guidelines would be followed by the Corps in preparing the study. They were unable to agree on the crucial question of whether the Corps should be required to cease all activities until the final E.I.S. had been filed and reviewed. That question was left for the court to decide. The District Court’s judgment, accompanied by a detailed and scholarly memorandum opinion, was entered on September 13, 1972. Environmental Defense Fund, Inc. v. Froehlke, 348 F.Supp. 338 (W.D.Mo.1972). The court held that the plaintiffs were entitled to judicial review of the defendants’ actions, and that the defendants were obligated to comply with the provisions of NEPA in completing the project, even though the project was well under way before NEPA was passed. It found that the Corps had started the preparation of an E.I.S. prior to the commencement of this action and was completing it as fast as the circumstances permitted. It enjoined the defendants from proceeding with certain activities and contracts, including those which the defendants had agreed to defer, but permitted the defendants to continue certain on-going construction activities, road relocations, cemetery relocations, voluntary property acquisitions, and design contracts, pending the filing of a final E.I.S. Moreover, it retained jurisdiction of the matter pending the filing of the final E.I.S. The court held, however, that the plaintiffs were not entitled to an injunction halting all work on the project pending a final E.I.S. It did so on the grounds that not every violation of NEPA gives rise to a right to blanket injunctive relief. The court stated: “It is our judgment that the procedures provided for in the final judgment and decree, if and when complied with, will assure full compliance with NEPA and all other applicable law as promptly' as is practicable under the circumstances. It is further our judgment that the issuance of a blanket injunction stopping all construction would not speed the preparation or enhance the probabilities that a sufficient EIS will be prepared. Under these circumstances, we believe that a proper balancing of the factors which must be given appropriate consideration under general equity principles requires that the most substantial costs incident to the termination or suspension or work to an extent greater than that provided in the final judgment and decree should be avoided.” Environmental Defense Fund, Inc. v. Froehlke, supra at 353. The court gave the following additional reasons for its action : (1) The work, which will go forward pending the filing of an E.I.S., will only have a minimal environmental impact on the Osage Basin. No work will be done on the dam which will impede the free flow of the river and affect the fish, wildlife and wildfowl habitat in or along the river. The new roads will affect some wildlife habitat, but the old road sites will, in time, partially replace the habitat lost. (2) The project was commenced six years prior to the passage of NEPA, and a number of contracts have been let pursuant to congressional authorization. Substantial cost would be involved in terminating these contracts. Additional costs would be incurred in start-up costs if the ultimate decision is to proceed. Moreover, the defendants were in various stages of acquiring land, and the cost involved in terminating such acquisitions would be substantial. (3) The Corps of Engineers was acting in good faith in bringing the project into compliance with NEPA. It began the preparation of a preliminary E.I.S. prior to the initiation of this action. It filed that statement in October, 1972, and committed itself to filing a final E. I.S. by May 1, 1973. It agreed to permit the plaintiffs to file data, comments and statements with the Corps for inclusion in the E.I.S. It also committed itself to follow the guidelines set out by the court in preparing the final E.I.S. (4) The families involved desire that the cemetery relocations be continued. We affirm the trial court’s judgment. A trial court must consider all the circumstances in determining whether a project may be permitted to proceed pending the completion of an E.I.S. See, Environmental Defense Fund, Inc., et al. v. Robert F. Froehlke, Secretary of the Army, et al., 473 F.2d 346, at 356, n. 21 (8th Cir. 1972). We recognize that the injunction is the vehicle through which the congressional policy behind NEPA can be effectuated, and that a violation of NEPA in itself may constitute a sufficient demonstration of irreparable harm to entitle a plaintiff to blanket injunctive relief. See, Environmental Defense Fund, et al. v. Tennessee Valley Authority, et al., 468 F.2d 1164 (6th Cir. 1972); Environmental Defense Fund, Inc., et al. v. Robert F. Froehlke, Secretary of the Army, et al., No. LR-71-C-199 (E.D.Ark. March 8, 1973). Here, we find that the trial court did not abuse its discretion in granting limited injunctive relief. The record bears out the trial court’s finding that the river and life within it would not be harmed while the E.I.S. was being completed, and that only minimal environmental damage would be inflicted on the adjacent land during that period. Moreover, the record supports the trial court’s finding that the road relocations had insignificant environmental effects and had independent economic benefits. The record also supports the trial court’s conclusion that substantial additional costs would be incurred by the defendants if they were forced to discontinue the project and restart it at a future date. It also convinces us that the amount of money projected to be spent on the project in the intervening period is not sufficient to affect the balance of costs and benefits that must be struck by the defendants and other decision-makers in determining whether or not to continue this project after the final E.I. S. is filed. In short, we are persuaded that this is not a case where, unless the plaintiffs receive now whatever relief they are entitled to, “there is [a] danger that it will be of little or no value to them or to anyone else when finally obtained.” Lathan v. Volpe, 455 F.2d 1111, 1117 (9th Cir. 1971). In conclusion, we note that the District Court has retained jurisdiction of this matter. It will thus, if prompt requests are made, have an opportunity to rule on the sufficiency of the new E. I.S. and an opportunity to review, under the arbitrary and capricious test, the decision made by the defendants with respect to proceeding with the project. Affirmed. . The District Court stated : “ * * * The question, for example, of to what extent, if any, the requirements of the Fish and Wildlife Coordination Act, 16 United States Code §§ 661 et seq., may be applicable may be presented at some later stage of this case and need not now be decided.” Environmental Defense Fund, Inc. v. Froehlke, 348 F.Supp. 338, 364 (W.D.Mo.1972). We agree that this issue can be handled at a later stage of this proceeding. See, Environmental Defense Fund, Inc., et al. v. Robert F. Froehlke, Secretary of the Army, et al., 473 F.2d 346, at 355 (8th Cir. 1972). . See, Environmental Defense Fund, et al. v. Tennessee Valley Authority, et al., 468 F.2d 1164 (6th Cir. 1972); Scherr v. Volpe, 466 F.2d 1027 (7th Cir. 1972); Arlington Coalition on Transportation v. Volpe, 458 F.2d 1323 (4th Cir. 1972); Environmental Law Fund v. Volpe, 340 F.Supp. 1328 (N.D.Cal.1972); Morning-side-Lenox Park Assn. v. Volpe, 334 F.Supp. 132 (N.D.Ga.1971); Nolop v. Volpe, 333 F.Supp. 1364 (D.S.D.1971); Guidelines for Federal Agencies Under the National Environmental Policy Act, 36 Fed.Reg. 7724, 7727 (1971). See also, Environmental Defense Fund, Inc., et al., v. Corps of Engineers of the United States Army, et al., 470 F.2d 289 at 292 (8th Cir. 1972). . The District Court stated : “ * * * Plaintiffs’ implicit concern that the ultimate judgment of Congress may be affected by the amount of previously authorized money that may actually be spent by the time it reviews the EIS is not a proper argument for the judicial forum. * * * ” Environmental Defense Fund, Inc. v. Froehlke, supra at 348 F.Supp. 354. We disagree. As the Court in Environmental Defense Fund, et al. v. Tennessee Valley Authority, et al., supra 468 F.2d at 1183, states: “ * * * [T]he more time and resources appellants are allowed to invest in this project, the greater becomes the likelihood that compliance with section 102 of the NEPA, and the reconsideration of the project in light of the provisions of section 101, will prove to be merely an empty gesture. Arlington Coalition on Transportation v. Volpe, supra, 458 F.2d at 1327, 1332-1334. * * * " As a practical matter, the amount of money already expended on pre-NEPA projects will enter into the calculus of decision-makers détermining whether or not to go ahead with the project. It is a factor which a court must take into account in determining whether to enjoin on-going construction. See, Environmental Defense Fund, Inc., et al., v. Corps of Engineers of the United States Army, et al., supra 470 F.2d at 301.

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Caselaw Access Project

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Josephine JURINKO and Ida M. Seibert, Appellants, v. EDWIN L. WIEGAND COMPANY, a corporation and Local 1020, UAW, an unincorporated association. Josephine JURINKO and Ida M. Siebert v. EDWIN L. WIEGAND COMPANY, Appellant, a corporation and Local 1020, UAW, an unincorporated association. Nos. 72-1043, 72-1044. United States Court of Appeals, Third Circuit. Argued Feb. 6, 1973. Decided April 17, 1973. As Amended June 25, 1973. Irving L. Bloom, Dent & Bloom, Greensburg, Pa., Robert Allen Sedler, College of Law, University of Kentucky, Lexington, Ky., for cross appellants in No. 72-1043 and appellees in No. 72-1044. Arnold D. Wilner, Theodore Goldberg, Baskin, Boreman, Wilner, Sachs, Gondelman & Craig, Pittsburgh, Pa., Roger Edgar, Bryan, Cave, McPheeters & Me-Roberts, St. Louis, Mo., Eric P. Reif, Reed, Smith, Shaw & McClay, Pittsburgh, Pa., for appellees in No. 72-1043 and appellant in No. 72-1044. Before BIGGS and GIBBONS, Circuit Judges, and HUYETT, District Judge. OPINION OF THE COURT BIGGS, Circuit Judge. The plaintiffs-appellees cross-appellants, Mrs. Josephine Jurinko and Mrs. Ida M. Seibert, alleged in Count II of their complaint filed against Edwin L. Wiegand Company (Wiegand) that Wiegand refused to employ them in its factory because they were married women, thereby discriminating against them on the basis of sex in violation of Title YII of the Civil Rights Act of 1964, 42 U.S. C. § 2000e-2(a)(1) Jurisdiction is based on 42 U.S.C. § 2000e-5(f) and 28 U.S.C. §§ 1343(3) and 1331(a). The Equal Employment Opportunity Commission found probable cause to believe that Wiegand had engaged in a discriminatory employment practice but could not mediate the matter. On February 14, 1969, Wiegand offered employment to Mrs. Jurinko and Mrs. Siebert, but on the advice of a representative of EEOC both rejected the offer. This action was instituted on February 28, 1969, and after trial to the court, Judge Teitelbaum found that Wiegand had no general policy of discriminating against married women, but he did find that Mrs. Jurinko and Mrs. Siebert were discriminated against and that such discrimination was not based on a “bona fide occupational qualification.” Judgment was entered in the plaintiffs’ favor awarding them $15,784 representing back wages, together with an award of an additional sum in the amount of $3,946 for attorney fees. Judge Teitelbaum also directed Wiegand to offer Mrs. Jurinko and Mrs. Siebert employment “at the next nearest opportunity.” , Wiegand appealed the court’s judgment at our No. 72-1044, asserting (1) that the plaintiffs’ claims are barred because charges were not filed with the Commission within 90 days of the occurrence of the alleged unlawful employment practice as required by 42 U.S.C. § 2000e-5(d), (2) that the evidence does not support the district court’s conclusion that the plaintiffs were discriminated against on account of their marital status, (3) that if there was such discrimination, it was based on a “bona fide occupational qualification” which the plaintiffs did not satisfy, and (4) that the damages awarded plaintiff Siebert were excessive. The plaintiffs have appealed at our No. 72-1043 insofar as the judgment holds that Wiegand’s general hiring policy for production department jobs did not discriminate against married women and insofar as it denied recovery of back pay after Feb. 14, 1969, and held that plaintiffs’ reinstatement should be as new employees without seniority. It should be noted that the plaintiffs have not appealed from the failure of the district court to treat this suit as a class action under Rule 23, F. R.Civ.P., 28 U.S.C. A pre-trial stipulation was entered into by the parties and filed, and reference will be made to it from time to time. The material facts are substantially uncontested, and as Judge Teitelbaum stated: “[I]t is the inferences to be drawn or not to be drawn from the facts that are the core of the controversy.” 331 F.Supp. at 1185. According to the stipulation the plaintiffs were employees of Wiegand for a number of years prior to December 10, 1953; that at that time both were discharged from employment because of their respective marriages; that Wiegand’s policy of discharging women upon their marriages and of not hiring married women was instituted at the close of World War II for the purpose of providing jobs for “bread winners” returning after the war and that this policy was lawful at least until July 2, 1965, the effective date of the Civil Rights Act of 1964. In July, 1965, the plaintiffs approached Wiegand’s Personnel Director and requested that they be reinstated in their former jobs. The Personnel Director refused this request, stating they were not entitled to reinstatement and in any event the company was not then hiring employees. Thereafter, on September 7, 1965, Mrs. Jurinko submitted a written application for employment with Wiegand, and Mrs. Seibert submitted a similar request to Wiegand on January 10, 1966. At this time, both plaintiffs were informed that the company was not then hiring any employees but that their applications would be kept on file for future reference. In June, 1966, the plaintiffs again contacted the Personnel Director seeking employment and were again informed that Wiegand was not hiring at that time. The plaintiffs filed a charge of discrimination against Wiegand with the Equal Employment Opportunity Commission on July 29, 1966. The district court stated as follows in respect to the contention of Wiegand that the charges were not timely filed: “The company contends that because the charge was filed with the Commission more than 90 days after the original meeting in June of 1965, it was untimely, and therefore this Court lacks jurisdiction of this action. Section 2000e-5(d) of 42 U.S.C. does provide that charges with the Commission shall be filed within 90 days of the occurrence of the alleged unlawful employment practice. It is clear, however, that the plaintiffs’ reapplication in June of 1966 represents the occurrence of an alleged unlawful employment practice, and consequently this Court is not without jurisdiction. See Cox v. United States Gypsum Co., 409 F.2d 289 (C.A. 7, 1969).” 331 F.Supp. at 1186, n. 3. We are in agreement with the district court’s conclusion, for there were three separate and distinct acts, the latter of which occurred within the 90-day period. Therefore the 90-day statutory period commenced to run anew from the last allegedly unlawful employment practice. Molybdenum Corp. of America v. Equal Employment Opportunity Commission, 457 F.2d 935 (10 Cir. 1972). The ground raised by Wiegand, that the plaintiffs’ failed to timely pursue their administrative remedy, is thus without merit. Turning to the contentions in the matter of the district court’s conclusions regarding discrimination, the statistical evidence and the attitude of Wiegand’s personnel directors are well set out in Judge Teitelbaum’s opinion, 331 F.Supp. at 1186, as follows: “Statistically, the evidence is that (1) at all relevant times the company employed, in production, approximately 900 persons; (2) of these approximately 900 persons, 59 were women on July 2, 1965, 58 on May 15, 1966, 56 on December 31, 1966, and 44 on March 1, 1971; (3) at all relevant times, of the women employed only three were married; (4) at all relevant times, only two married women, other than the plaintiffs, applied for employment in production [It must be noted in this regard that both of these women were hired in January of 1969, after the Commission had notified the plaintiffs of their right to sue Wiegand under the Civil Rights Act.]; and (5) during the period from May 15, 1966 to December 31, 1966, forty-three new employees were hired, all of whom were males. There is no evidence of the qualifications of the forty-three males hired. There is evidence, however, that the plaintiffs’ applications were on file during the period from May 15 to December 31, 1966, that the company was aware of their applications, and that prior experience and a good work record with the company (which each plaintiff had) were qualifications which favored an applicant. Asked why the plaintiffs had not been hired during that period, the then Personnel Director testified that he ‘ * * * really [didn’t] know * *- * ’ but that it ‘ * * * could [have been] many reasons * * *.’ A later Personnel Director testified that the company’s practice of permitting ‘bumping’ (by seniority) for each new job opening in production made it mandatory that new employees be physically able to perform each and every job in production (since the new employees were ultimately ‘bumped’ to the most physically taxing jobs) and that the assumption under which the company operated was that women were physically unable to perform each and every production job. In conclusion, both Personnel Directors testified that the company had not pursued a policy of discrimination against married women.” On the basis of the above facts, the court concluded: “We do not think however, that the statistical evidence introduced in this case reasonably supports a conclusion that the company’s general hiring policy discriminated against married women. The low number of married women employees of the company must be considered in light of the company’s pre-Civil Rights Act policy and the number of married women who have applied for employment since the termination of that policy. The uncontradicted testimony is that from 1965 through 1968, the plaintiffs were the only married women who applied to the company for work in production. Two others apparently applied in early 1969 and both were offered employment. A general policy of discriminatory hiring cannot logically be concluded. With specific regard to the plaintiffs, however, the evidence of the company’s extensive hiring of men during a period when the plaintiffs, with prior experience and good work records, were actively seeking employment from the company, we think is sufficient to support, if only preponderantly, an unexplained inference of discrimination.” 331 F.Supp. at 1187. The record shows that if Wiegand did change its prior policy of not employing married women in the production department it kept remarkably silent about it. Its Personnel Director, Bushnell, did state to the union on a form supplied by the Government that the company was obeying the Civil Rights Act of 1964, but Bushnell did not tell the union that the company was “going to be hiring married women from here on in.” Such forms were posted on the bulletin boards, but again, Bushnell never posted any notices that female employees in the production department would no longer be discharged upon marriage. Nevertheless, we cannot say that the district court’s conclusion that no general discriminatory hiring policy existed was unwarranted. Nor was the evidence insufficient to support the finding of a violation of Title VII as to these particular plaintiffs. The evidence, especially the fact that during the six month period following the plaintiffs’ application (and when the plaintiffs were told that the company was not then hiring), 43 new male employees were hired despite the facts of plaintiffs’ prior experience and good work records with the company, does support an inference of discrimination as the district court found. Plaintiffs made out a prima facie case of unlawful discrimination, thereby shifting the onus of going forward with evidence to Wiegand. As was said in Hodgson v. First Federal Savings and Loan Association of Broward County, Florida, 455 F. 2d 818, 822 (5 Cir. 1972), “In discrimination cases the law with respect to burden of proof is well settled. The plaintiff is required to make out a prima facie case of unlawful discrimination at which point the burden shifts to the defendant to justify the existence of any disparities. See, e.g., Norris v. Alabama, 294 U.S. 587, 55 S.Ct. 579, 79 L.Ed. 1074 (1935); Muniz v. Beto, 434 F.2d 697 (CA 5, 1970); Weeks v. Southern Bell Telephone and Telegraph Company, 408 F.2d 228 (CA 5, 1969); Gates v. Georgia-Pacific Corporation, 326 F.Supp. 397 (D.C.D.Or.1970). Once the plaintiff has made out his prima facie case we look to the defendant for an explanation since he is in a position to know whether he failed to hire a person for reasons which would exonerate him.” See also United States v. Hayes International Corporation, 456 F.2d 112 (5 Cir. 1971). In the case at bar, Wiegand was unable to offer any explanation for its having filled its 43 job vacancies solely with men to the exclusion of the plaintiffs, and it failed to rebut the inference, i.e., prima facie case, of discrimination. That the plaintiffs may not have been physically qualified to perform all jobs in the factory is not relevant to this issue, for the company did not determine this while plaintiffs’ applications were pending nor did it assert this as a reason for not hiring the plaintiffs. Nor are the two conclusions concerning the absence of a general policy of discrimination but the presence of discrimination against these plaintiffs inconsistent. Wiegand originally took the position that discrimination against married females was not discrimination “on the basis of sex within the meaning of the Act.” This position was, of course, dropped in the light of Phillips v. Martin Marietta Corp., 400 U.S. 542, 91 S.Ct. 496, 27 L.Ed.2d 613 (1971). In the Phillips case the Supreme Court made it clear that under Title VII of the Act, 42 U.S.C. § 2000e-2, an employer may not refuse to hire women with preschool age children while hiring men with such children. The facts of the Phillips case are somewhat different from those of the ease at bar but the analogy between Phillips and the instant case is plain. Employment practices which vary in their applicability to married females and married males constitute discrimination on the basis of sex, the only distinguishing characteristic being the sex of the married persons. A different standard is clearly applied to men than to women. See Sprogis v. United Air Lines, Inc., 444 F.2d 1194 (7 Cir.1971), cert. denied 404 U.S. 991, 92 S.Ct. 536, 30 L.Ed.2d 543 (1971). Wiegand now argues, however, that the plaintiffs failed to prove discrimination on the basis of sex since no showing was made as to whether the men hired while the plaintiffs’ applications were pending were married. Wiegand’s point is well taken, and we agree that the plaintiffs did not make out a case of sex discrimination based on their status as married women. Discrimination against married women constitutes discrimination on the basis of sex only if a different standard, i. e., the marital status of the person, has been applied to men and women. Absent proof of the standard applied to men, obviously the plaintiffs have not established that such standard differs from the one applied to women. Although the judgment therefore cannot stand on the theory that the plaintiffs were discriminated against because they were married women, nevertheless, as discussed above, the evidence is sufficient to support the judgment on the theory that the plaintiffs were discriminated against because of their status as women. We recognize that the latter theory was not overtly an issue in the case, for the complaint alleged discrimination against married women and discrimination against women as such was not included in the list of contested issues contained in the pre-trial stipulation. An appellate court, however, may uphold a judgment on any theory which finds support in the record and may affirm the decision of a lower court if the result is correct “although the lower court relied upon a wrong ground or gave a wrong reason.” Under Rule 15(b), F.R.Civ.P., 28 U.S.C., a liberal provision is made for amendments to conform the pleadings to the evidence, and this court may consider issues so raised even though no formal application is made to amend. See Underwriters Salvage Co. of New York v. Davis and Shaw Furniture Co., 198 F.2d 450, 453 (10 Cir.1952). “The fact that this involves a change in the . legal theory of the action, is immaterial so long as the opposing party has not been prejudiced in presenting his case.” Nor do we think that the pretrial stipulation prevents this court from applying proper legal principles to the facts disclosed by the proof. The same considerations which govern under Rule 15(b) should also control the determination of whether a different theory is foreclosed by the stipulation, that is whether the defendant would be prejudiced, i. e., whether it had a fair opportunity to defend and whether it could offer any additional evidence on the different theory. In the case at bar, we see no way in which Wiegand’s presentation of its case could have been prejudiced. There is no dispute as to the essential facts, only the inferences therefrom. Wiegand had full opportunity to justify its failure to hire the plaintiffs. Moreover, the company’s main line of defense to the plaintiffs’ alleged theory of discrimination against them on account of their status as married women was that women as a class were physically unable to perform each and every production job. See note 11, supra, for an explanation of the company’s policy which it contended set up the so-called “bona fide occupational qualification.” This defense is irrelevant to the issue of discrimination against women on account of their marital status, but it is relevant to the theory now being considered, discrimination against women as a class and the plaintiffs as members of this class. We therefore hold that the conclusion of the district court that the plaintiffs were discriminated against must be affirmed, albeit on a different theory than that relied upon below. As to damages, the district judge stated: “Damages are computed as follows. The parties have stipulated that if the plaintiffs had been employed by the company for the years 1966, 1967 and 1968, Mrs. Jurinko and Mrs. Seibert would have earned $5,127.00, $5,855.00 and $5,959.00, and $5,099.00, $5,855.00 and $5,959.00, respectively. For the period from July of 1966 to February of 1969, Mrs. Jurinko would have earned a total of approximately $14,377.00 and Mrs. Seibert would have earned a total of approximately $14,363.00. In assessing back pay, however, § 706(g) of the Civil Rights Act requires that, ‘ * * [I]nterim earnings or amounts earnable with reasonable diligence by * * * persons discriminated against shall operate to reduce the back pay otherwise allocable.’ 42 U.S.C. § 2000e-5(g). The parties have also stipulated that during the period from July of 1966 to February of 1969 Mrs. Jurinko, working elsewhere, made a total of $6,478.00. Reducing $14,377.00 by $6,478.00 results in damages in the amount of $7,899.00 to Mrs. Jurinko. Mrs. Seibert, on the other hand, did not work during this period. While she testified that she undertook some efforts to obtain other employment, we think that Mrs. Jurinko’s successful efforts are a more accurate measure of ‘amounts earnable with reasonable diligence.’ The amount of Mrs. Seibert’s damages, then, are $14,363.00 less $6,478.00, or $7,885.00. In addition, the plaintiffs are to be offered employment in production with the company, of course, as new employees. An appropriate Order will be entered.” 331 F.Supp. at 1188. Section 706(g) of Title VII, 42 U.S.C. § 2000e-5(g), authorizes appropriate judicial relief from unlawful discriminatory practices. “This grant of authority should be broadly read and applied so as to effectively terminate the practice and make its victims whole,” Bowe v. Colgate Palmolive Company, 416 F.2d 711, 721 (7 Cir. 1969), and we believe that courts have a duty to grant relief which so far as possible eliminates the discriminatory effects of the past as well as bars like discrimination in the future. Louisiana v. United States, 380 U.S. 145, 154, 85 S.Ct. 817, 13 L.Ed.2d 709 (1965). We can perceive no basis for the trial court to have refused to award back seniority or for its conclusion that “the plaintiffs are to be offered employment in production with the company, of course, as new employees.” Seniority is, of course, of great importance to production workers for it determines both opportunities for job advancement and the order of layoff in the case of a reduction in a company’s operating forces. It is our view that the plaintiffs are entitled to seniority and back pay dating from the time of the discriminatory employment practice up to the time they are actually reinstated. Only in this way will the present effects of the past discrimination be eliminated. The trial court refused to accept this view, having found that the “discrimination ceased in February of 1969 when the company finally offered the plaintiffs employment,” for the “rejection of the offers was not within the control of the company and should not work to its disadvantage.” We cannot agree with this position. The terms of the 1969 job offers were within Wiegand’s control, and it did not offer the plaintiffs back seniority or back pay. The offer that was made did not rectify the effects of its past discrimination, and the plaintiffs were under no duty to accept such an offer. See Sprogis v. United Air Lines, supra. Even though the discrimination ceased with the job offers, as the district court found, the effects of such discrimination did not cease. Under the circumstances of this case, it is the latter which is the more significant factor in formulating an appropriate remedy. While it is true that acceptance of these job offers would have mitigated damages, plaintiffs did not act unreasonably in refusing the offers. Thus “amounts earnable with reasonable diligence” can not be equated with a compulsion to accept Wiegand’s offer, but rather, must be determined as to post February, 1969 earnings by the district court on remand. Lastly, we do not think that the damages awarded to Seibert were excessive. The district court properly reduced the amount of damages awarded her by an amount it considered “earnable with reasonable diligence,” and we do not think the award, so reduced, constituted an abuse of discretion. See Local 53 of International Association of Heat and Frost Insulators and Asbestos Workers v. Vogler, 407 F.2d 1047, 1052 (5 Cir. 1969). The district court is directed to modify its judgment to expand the award to the plaintiffs to include seniority and back pay from the date of the unlawful employment practice in June, 1966, up to the date on which they are actually reinstated. In all other respects, the judgment will be affirmed. GIBBONS, Circuit Judge (concurring). I agree with the analysis of the issues in this case set forth in Judge Biggs’ opinion with one exception which in no way affects the outcome. It seems to me that the admitted policy of discrimination against married women, which antedated the enactment of 42 U.S.C. § 2000e-2 and which never operated against married men, together with the evidence establishing that a discriminatory policy continued to operate against the appellants who are married women after the passage of the Act, sufficiently establish that these married women were discriminated against on the basis of their sex. Thus, I do not agree that we must decide the cases on a theory different from that relied on by the district court. . Count I of the complaint was dismissed by Judge Teitelbaum on Wiegand’s motion that the cause of action asserted was barred by the statute of limitations. This ruling is not challenged before us in this court. . Section 703 of the Civil Rights Act, 42 U.S.C. § 2000e-2, provides as follows : “(a) It shall be an unlawful employment practice for an employer — (1) to fail or refuse to hire * * * or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s * * * sex. * * * (c) It shall be an unlawful employment practice for a labor organization — (1) to exclude or to expel from its membership, or otherwise to discriminate against, any individual because of his * * * sex. * * * “(e) Notwithstanding any other provision of this subchapter, (1) it shall not be an unlawful employment practice for an employer to hire and employ employees * * * on the basis of his * * * sex * * * in those certain instances where * * * sex * * * is a bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enterprise. * * *” . The Commission’s findings are not controlling in this action. See Fekete v. United Steel Corp., 424 F.2d 331 (3 Cir. 1970). . See 42 U.S.C. § 2000e-2(e)(l), supra note 2. . The suit originally included a local union as defendant but Judge Teitelbaum found the union was free from fault and dismissed the action against it. This ruling is not challenged here. . Judge Teitelbaum’s opinion is reported at 331 F.Supp. 1184 (W.D.Pa.1971). . Judge Teitelbaum correctly stated in note 1 to his opinion, 331 F.Supp. at 1185: “This action was instituted as a class action on behalf of all similarly situated persons. The evidence, however, does not reveal any other similarly situated persons, and therefore the minimum prerequisite to the maintenance of a class action under F.R.Civ.P. 23, viz., that the class be so numerous that joinder of all members is impracticable, is not satisfied. Accordingly, this action is not properly maintainable as a class action and will not be treated as one.” . Pursuit of the administrative remedy is a prerequisite to a suit such as that at bar. . The production department is what we are concerned with; there has been no suggestion of discrimination against married women in Wiegand’s clerical force. . For example, the Personnel Director at the time plaintiffs’ applications were on file testified that he “really [didn’t] know . . .” why plaintiffs had not been hired. . Due to plant wide seniority provisions in Wiegand’s labor agreement, job vacancies were bid on by the existing labor force with the result that new employees were often “bumped” to the most physically taxing jobs in production. Wiegand therefore had a policy requiring that new employees be physically able to perform each job in production. This policy cannot provide the basis for a “bona fide occupational qualification.” It is clear that Wiegand proceeded on the assumption that women as a class were physically unable to perform each and every job in production, but as Judge Teitelbaum pointed out in his thorough and thoughtful opinion, 331 F.Supp. at 1187-1188: “In Ridinger v. General Motors Corp., 325 F.Supp. 1089 (D.C.S.D.Ohio, 1971), the Court decided that, ‘[A] bona fide occupational qualification is not established by an assumption or “stereotyped characterization” that very few women could perform a particular job.’ “To establish a ‘bona fide occupational qualification,’ the Court held, requires reference to individual capacities of individual women. See Weeks v. Southern Bell Telephone and Telegraph Co., 408 F.2d 228 (C.A. 5, 1969) and Richards v. Griffith Rubber Mills, 300 F.Supp. 338 (D.C.Or., 1969). Wiegand’s assumption, therefore, falls short of establishing an acceptable qualification, and its discriminatory employment practices regarding the plaintiffs are thus rendered legally indefensible.” (Notes omitted.) We agree with the district court’s conclusions. . Contrary to the company’s argument, the plaintiffs did not have the burden of proving that they were so qualified in making their prima facie case of discrimination. Rather, we think that once plaintiffs have made a prima facie showing of discrimination it was incumbent upon the company to prove that the plaintiffs were not qualified in justification of its failure to hire them. See Hodgson v. First Federal Savings and Loan Association of Broward County, Florida, supra. . Paragraph 15 of the complaint states: “ [Defendant Company continued its practice of refusing to hire married women as production employees and of discharging any female production employee who became married.” . “Pretrial Stipulation * * * II. The contested issues raised by the written pretrial statements of the parties are: “(1) Did the Company refuse to hire the plaintiffs when they made application for employment in July of 1965 and at various times in 1966? “(2) If the answer to No. 1 above is yes, then was the failure to hire due: (1) to a policy of discrimination which required that the Company’s female production employees be and remain single as a condition of employment.” . See Picture Music, Inc. v. Bourne, Inc., 457 F.2d 1213 (2 Cir. 1972). . Helvering v. Gowran, 302 U.S. 238, 245, 58 S.Ct. 154, 158, 82 L.Ed. 224 (1937). Accord, J. E. Riley Investment Co. v. Commissioner of Internal Revenue, 311 U.S. 55, 61 S.Ct. 95, 85 L.Ed. 36 (1940). See also Securities and Exchange Commission v. Chenery Corporation, 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1943); Lum Wan v. Esperdy, 321 F.2d 123 (2 Cir. 1963). . 3 Moore’s Federal Practice ¶ 15.13 [2], at 985. . See New Amsterdam Casualty Co. v. Waller, 323 F.2d 20 (4 Cir. 1963). We do not think that we are foreclosed from considering this theory of recovery for the issue of discrimination against women as a class was injected into the case by Wiegand and was therefore tried below with Wiegand’s implied consent. By its own admission and evidence, Wiegand discriminated against women by employing a sterotyped characterization that women were physically unqualified for the jobs the plaintiffs had applied for. See note 11, supra. See F.R.Civ.P. 15(b) and 16. Rule 16 should be read in light of Rule 15(b). See 3 Moore’s Federal Practice ¶ 15.13 [1], at 982 and note 11 cited to that text. . Section 706(g) of Title VII, 42 U.S.C. § 2000e-5(g) provides in part: “If the court finds that the respondent has intentionally engaged in or is intentionally engaging in an unlawful employment practice charged in the complaint, the court may enjoin the respondent from engaging in such unlawful employment practice, and order such affirmative action as may be appropriate, which may include reinstatement or hiring of employees, with or without back pay. . . . Interim earnings or amounts earnable with reasonable diligence by the person or persons discrimimated against shall operate to reduce the back pay otherwise allowable.” . 331 F.Supp. at 1188. . 331 F.Supp. at 1188, n. 8. . 42 U.S.C. § 2000e-5(g) provides in part: “Interim earnings or amounts earnable with reasonable diligence by the person or persons discriminated against shall operate to reduce the back pay otherwise allowable.” . The back pay, of course, must be reduced by the amounts which the district court found to be “interim earnings or amounts earnable with reasonable diligence.” Since such amounts pertained to pre-February, 1969 earnings, the post February, 1969 back pay to be awarded must be similarly reduced.

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Earl E. ROBINSON, Plaintiff, Appellee, v. POCAHONTAS, INC., et al., Defendants, Appellants. No. 71-1256. United States Court of Appeals, First Circuit. Heard March 8, 1973. Decided May 4, 1973. Frank H. Handy, Jr., Boston, Mass., with whom Viola B. Kneeland, Richard B. Kydd, and Kneeland, Splane & Kydd, Boston, Mass., were on brief, for appellants. Albert P. Zabin, Boston, Mass., with whom Schneider & Reilly, Inc., Boston, Mass., were on brief, for appellee. Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges. McENTEE, Circuit Judge. This is a diversity suit in which plaintiff, Earl E. Robinson, a seaman, seeks recovery from the defendant, Sea Coast IV, Inc., the charterer of the vessel on which he was injured, for negligence under the Jones Act, 46 U.S.C. § 688 (1970), and for unseaworthiness and maintenance and cure under the general maritime law. The jury awarded the plaintiff verdicts of $45,000.00 on the Jones Act and unseaworthiness counts and $21,366.06 on the maintenance and cure claim, of which amount $10,000.00 was designated as punitive damages. On entering judgment the trial court added pre-judgment interest in the amount of $9,589.90, bringing plaintiff’s total recovery to $75,955.56. Arguing that the trial court erred in a number of respects in instructing the jury and that it abused its discretion in awarding pre-judgment interest, Sea Coast appeals. The pertinent background facts are as follows. On April 20, 1967, Robinson, while a crewman on the M/V Arthur J. Minners engaged in fishing operations in the Gulf of Mexico, slipped on some fish slime and fell, injuring his back. After receiving preliminary treatment at a small Mississippi port, Robinson was hospitalized under the care of Dr. Alleman, a company physician, in Abbe-ville, Louisiana. Following testing, Dr. Alleman informed the Minners’ captain that he suspected plaintiff of malingering and also that he had syphilis. The captain then discharged Robinson who departed for his home in Virginia. When Robinson arrived in Richmond on May 16, 1967, his back condition had become critical and he required immediate medical attention. After receiving this care, he was admitted to the United States Public. Health Service Hospital in Baltimore where physical therapy was administered and a myelogram taken. Although this test proved to be negative, indicating no serious back injury, plaintiff’s condition showed little improvement. After leaving the hospital on June 15, 1967, he placed himself under the care of a private physician in spite of Sea Coast’s order that he receive all treatment through the free Public Health Service Hospital. Thereafter, his condition was diagnosed as a herniated disc and in early 1968 corrective surgery was performed at a private medical facility. While this operation and the post-operative therapy which he received alleviated his symptoms to some extent, he still did not achieve a full recovery. In the meantime Sea Coast was demonstrating a marked reluctance to honor its obligation to pay maintenance to the plaintiff. Initially payments were withheld on the pretext that Robinson, having contracted venereal disease, had been fired for cause. When this charge was not substantiated, however, payments were made,, but on an irregular basis. In late 1967, in spite of the fact that defendant was informed that Robinson would lose his home if he was not paid his back wages, defendant refused to authorize this expenditure and Robinson’s mortgage was foreclosed. Finally, in 1968, when plaintiff refused to accept a settlement offer which was characterized by his counsel as “totally inadequate,” all payments were terminated. In December 1969 Robinson moved from Virginia to Baltimore and again received treatment at the Public Health Service Hospital. When his condition showed no further improvement, he returned to his private doctors and, following another myelogram, a second ruptured disc was discovered. Plaintiff’s experts testified that surgical intervention would again be necessary to correct this condition. On this background, Sea Coast first takes issue with the trial court’s instruction that the jury might award plaintiff the private medical expenses he incurred if it found that he acted reasonably in seeking aid at facilities other than those of the United States Public Health Service. Specifically, Sea Coast argues that the evidence was insufficient to justify submitting this issue to the jury in view of the general rule that, absent unusual or emergency circumstances, a seaman who is ordered to receive treatment at a public marine hospital may not consult private physicians or incur additional medical expenses and expect to pass on these costs to his employer. Our review of the record, however, convinces us that this instruction was justified. During plaintiff’s initial stay in the marine hospital in 1967 a myelogram was taken and was reported to be negative. Thereafter, in spite of the fact that he showed little improvement, plaintiff received no treatment except physical therapy and no further diagnostic tests were made. His experience in 1969 was substantially the same. Again he was placed on a physical therapy program which did little to improve his condition and, since no myelogram was taken, his second ruptured disc was not discovered. Given these facts, it is clear that each time plaintiff entered the marine hospital his condition was incorrectly diagnosed. On this basis it is fair to infer that on both of these occasions the treatment he needed was either not tendered or would not have been forthcoming. Cf. Nunes v. Farrell Lines, Inc., 129 F.Supp. 147 (D.Mass.), modified, 227 F.2d 619 (1st Cir. 1955). Under these circumstances, we hold that the trial court’s submission of this issue to the jury was clearly appropriate. Sea Coast next argues, in light of the absence of a specific demand for unearned wages in the maintenance and cure count of the complaint, that the trial court erred in instructing the jury that this item could be included in its award on this claim. This argument is not persuasive for at least two reasons. In the first place, at least since The Osceola, 189 U.S. 158, 175, 23 S.Ct. 483, 47 L.Ed. 760 (1903), it has been settled that the right to recover wages through the end of the voyage or, as in this case, through the end of the fishing season, see Vitco v. Joncich, 130 F.Supp. 945, 949-950 (S.D.Cal.1955), aff’d, 234 F.2d 161 (9th Cir. 1956), is a recognized element of a disabled seaman’s claim for maintenance and cure. See, e. g., Bartholomew v. Universe Tankships, Inc., 279 F.2d 911, 913-915 (2d Cir. 1960); Manard v. St. Lawrence Carriers, Inc., 266 F.Supp. 500, 501 (D.Del.1967); Vitco v. Joncich, supra, 130 F.Supp. at 949 and cases cited; Gilmore and Black, The Law of Admiralty, § 6-12 (1957). In view of the unequivocal acceptance of this rule, although the better practice would be to spell out a claim for unearned wages in the pleadings, a demand for these wages would seem to be implicit in Robinson’s complaint. In addition, however, in the instant case Sea Coast never made its position clear that such an award would be beyond the scope of the pleadings until after the court had instructed the jury. During trial no objection was raised to Robinson’s testimony concerning his rate of compensation or the fact that these wages had not been paid. Indeed, Sea Coast rigorously cross-examined plaintiff on these issues. Under these circumstances, especially since the complaint could have been amended if this issue had been seasonably raised, Sea Coast may not now challenge the propriety of this award. Sea Coast’s further contention that the trial court’s instruction permitting an award of punitive damages was erroneous as a matter of law is also without merit. Support for such an award is found in Vaughan v. Atkinson, 369 U.S. 527, 82 S.Ct. 997, 8 L.Ed.2d 88 (1962), where the Supreme Court held that a seaman could recover attorneys’ fees as damages where a shipowner was callous, willful, or recalcitrant in withholding these payments. Mr. Justice Stewart, dissenting primarily on the question of the extent of a seaman’s recovery for maintenance and cure but seemingly in agreement with the majority’s fundamental premise, stated: "[I]f the shipowner’s refusal to pay maintenance stemmed from a wanton and intentional disregard of the legal rights of the seaman, the latter would be entitled to exemplary damages in accord with traditional concepts of the law of damages. McCormick, Damages, § 79. While the amount so awarded would be in the discretion of the fact finder, and would not necessarily be measured by the amount of counsel fees, indirect compensation for such expenditures might thus be made.” Id. at 540, 82 S.Ct. at 1004. Such awards or the right thereto have been upheld in the progeny of Vaughan. See, e. g., Solet v. M/V Capt. H. V. Dufrene, 303 F.Supp. 980, 989 (E.D.La.1969); Roberson v. S/S American Builder, 265 F.Supp. 794, 800 (E.D.Va.1967); Stewart v. S.S. Richmond, 214 F.Supp. 135, 136-137 (E.D.La.1963). The answer to Sea Coast’s further argument that the right to maintenance is essentially a contractual right and that generally punitive damages are not awarded for the breach of such rights is also found in Vaughan, supra 369 U.S. at 532-533, 82 S.Ct. at 1000-1001, where the Court stated: “Maintenance and cure differs from rights normally classified as contractual. As Mr. Justice Cardozo said in Cortes v. Baltimore Insular Line, supra, 371 [of 287 U.S. 367, 174 of 53 S.Ct. 173, 77 L.Ed. 368], the duty to provide maintenance and cure ‘is imposed by the law itself as one annexed to the employment. . . . Contractual it is in the sense that it has its source in a relation which is contractual in origin, but given the relation, no agreement is competent to abrogate the incident.’ [Footnote omitted.] ” Finally, defendant’s assertion that the evidence was insufficient to warrant charging the jury on punitive damages merits little discussion. In view of the defendant’s initial use of the venereal disease charge to justify withholding these payments, its refusal to pay past due unearned wages when notified that plaintiff was in danger of losing his home, and its termination of all payments after plaintiff refused to accept its settlement offer, the appropriateness of this instruction seems clear. Sea Coast’s final argument that the trial court erred in adding pre-judgment interest to the verdicts requires, at the outset, resolution of an issue on which the record is silent, namely whether this award was made pursuant to state or federal law. In this regard plaintiff argues, since this is a diversity action, that state law should have been applied and that the application of the “remedial” Massachusetts pre-judgment interest statute, 38 M.G.L.A. c. 231 § 6B, to the case at bar would be an appropriate state-law supplement to federal maritime policy. Sea Coast, on the other hand, contends that the federal admiralty rule, under which an award of pre-judgment interest would rest within the discretion of the trier of facts, see, e. g., American Union Transport Co. v. Aguadilla Terminal, Inc., 302 F.2d 394, 395 (1st Cir. 1962); O’Donnell Transportation Co. v. City of New York, 215 F.2d 92, 95 (2d Cir. 1954), should be employed since this suit was brought to enforce rights created by the general maritime law. On this issue it is clear that Sea Coast must prevail. In MooreMcCormack Lines, Inc. v. Amirault, 202 F.2d 893 (1st Cir. 1953), a diversity action in which the issue was whether this same Massachusetts statute should be applied to augment personal injury awards resulting from the collision of two vessels, this court said: “But this is not a ‘typical diversity case’ under which a federal district court sitting in Massachusetts would be obliged to apply the local substantive law of Massachusetts in accordance with Erie R. R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, and Klaxon Co. v. Stentor Electric Mfg. Co., Inc., 1941, 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477. The claims sued on here were not based upon Massachusetts law, but were for maritime torts. It is well settled that by force of the Constitution itself, when a common law action is brought, whether in a state or in a federal court, to enforce a cause of action cognizable in admiralty, the substantive law to be applied is the same as would be applied in an admiralty court — that is, the general maritime law, as developed and declared, in the last analysis, by the Supreme Court of the United States, or as modified from time to time by Act of Congress. Jansson v. Swedish American Line, 1 Cir., 1950, 185 F.2d 212, 216, and cases cited. The fortuitous circumstance that in the present case there was diversity of citizenship between the parties plaintiff and defendant may give an added basis for jurisdiction in the federal district court, under 28 U.S.C. § 1332. But whether such diversity existed or not, it is still true that the substantive law to be applied in determining both liability and the amount of damages to be embodied in the money judgment is federal law, not state law.” Id. at 896-897. See Canova v. Travelers Insurance Company, 406 F.2d 410 (5th Cir.), cert. denied, 396 U.S. 832, 90 S.Ct. 88, 24 L.Ed. 2d 84 (1969); Newburgh Land & Dock Company v. Texas Company, 227 F.2d 732 (2d Cir. 1955). In light of this express authority, we may assume that this pre-judgment interest award was entered pursuant to the federal maritime rule. The further question which arises, of course, is whether the trial court abused its discretion in making this award. In this regard we find Newburgh Land & Dock Company v. Texas Company, supra, instructive. In that case, a diversity action in which the trial court added pre-judgment interest to a jury verdict for collision damages, the second circuit, in vacating this award, observed: “[i]t is the federal law that in actions at law when the award of interest rests in discretion, it is the jury who must exercise it. . ” Id. at 735. Given this rule, it is apparent that the trial court’s award of pre-judgment interest in the instant case violated the province of the jury and therefore may not stand. In addition, although plaintiff did include demands for interest in his complaint, since he did not request that the jury be instructed that it might, in its discretion, add pre-judgment interest to its award, we conclude that it would be inappropriate to remand this issue to the trial court for further consideration. See Newburgh Land & Dock Company v. Texas. Company, supra, at 735. The judgment is modified by striking out the award of pre-judgment interest and, as modified, is affirmed. . The court instructed the jury as follows: “A seaman does not have a free hand in choosing his physician and deciding on his own treatment. The United States Public Health Service maintains marine hospitals at which seamen may receive low cost or free, in some instances, care and treatment. An ill or injured seaman who has been given a hospital ticket, as it is called, by the vessel and provided with transportation to the nearest marine hospital usually must accept the medical services available to him in that hospital. However, if on reasonable grounds a seaman refuses to accept medical treatment at a marine hospital and justifiably, in your view, gets treated by a physician or hospital other than the marine hospital, then he may recover as part of maintenance and cure expenses for medical bills that he actually incurred, . . . . ” We feel that this instruction accurately reflected the law on this issue. . We add that our conclusion that plaintiff is entitled to recover the private medical expenses he incurred in the past should not be read as relieving plaintiff of his duty to comply with defendant’s orders in obtaining medical care in the future. Thus, if defendant directs plaintiff to llave future surgery performed at tlie Public Health Service Hospital, absent a showing that these facilities are in some manner inadequate or unavailable, plaintiff must comply with this request or bear the cost himself. See Nunes v. Farrell Lines, Inc., supra, at 148. . Justice Stewart was of the same view. “The duty to provide maintenance and cure is in no real sense contractual, and a suit for failure to provide maintenance or cure can hardly be equated, therefore, with an action for breach of contract. ‘The duty . is one annexed by law to a relation, and annexed as an inseparable incident without heed to any expression of the will of the contracting parties.’ Cortes v. Baltimore Insular Line, 287 U.S. 367, 372 [53 S.Ct. 173, 174, 77 L.Ed. 368].” Vaughan v. Atkinson, supra, at 534, 82 S.Ct. at 1001. . We need not address Sea Coast’s further claim that it may not be held liable for punitive damages because no proof was offered (1) that the agent who represented it in the maintenance negotiations was incompetent, or (2) that it had participated in or ratified his callous acts since these issues were not preserved for appeal. . Plaintiff’s attempt to overcome the import of Amirault by suggesting that it was “expressly overruled” in Romero v. International Terminal Operating Co., 358 U.S. 354, 79 S.Ct. 468, 3 L.Ed. 2d 368 (1959), is not persuasive. While it is true that in Romero the Supreme Court overturned the holding of Doucette v. Vincent, 194 F.2d 834 (1st Cir. 1952), that a civil action on a maritime claim might be maintained on the law side of the federal court, even in the absence of diversity of citizenship, as a claim arising under the Constitution within 28 U.S.C. § 1331 (1970), we do not view the jurisdictional rationale of Doucette as having been of seminal importance to the court’s choice of law decision in Amirault.

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H & J FOODS, INC., Plaintiff-Appellee, v. Gail REEDER, dba Nutrifoods Co., Defendant-Appellant. No. 71-1669. United States Court of Appeals, Ninth Circuit. April 25, 1973. Francis A. Utecht (argued), Fulwider, Patton, Rieber, Lee & Utecht, Long Beach, Cal., for defendant-appellant. James W. Geriak (argued), James J. Short, Lyon & Lyon, Los Angeles, Cal., for plaintiff-appellee. Before CHAMBERS, HAMLEY, and GOODWIN, Circuit Judges. . Circuit Judge Hamley lias not participated in the within opinion, being temporarily disabled. OPINION CHAMBERS, Circuit Judge: “Hunza” seems to be a word with some sales appeal when exploited in the rapidly growing health foods business. A small operator, Floyd Hampson, who was using the name of Hunza for some of his products, registered the name as a trademark in the United States Patent Office in 1957. It was registered for: “Vitamin-Mineral Food Supplement, including Herbs and Grasses, in Powdered, Tablet and Tea Forms.” Hampson’s early advertising, before the health food business generally burgeoned, is marvelous. According to his claims, the Hunzas were a healthy little tribe of agrarians in the high mountains of Asia where the soil is especially rich and unique. Hampson had found himself a similar Eden, a farm near Cherry Creek hard by the little town of Duvall, Washington. There mud on the farm had the texture of hand cream. There Hunza grass was grown, but not allowed to mature. Its tender shoots were cut with a field chopper. Then it was idyllically processed by flash dehydration. One might remain lost in the puffery, except the great product, never touched by human hands, came down to reality with the postscript notation: “Does not contain alfalfa.” Maybe Hampson was before his time (or maybe he just did not live in Southern California where one’s odd dreams can often be richly exploited), but he did not do well financially with his “great” product. Eventually in 1968 he sold his dreams and the trademark to Herman Jacobs, one of the owners of H & J Foods, Inc., for $500.00. Jacobs turned it over to the company. Tangibly, in addition to the copyright, there came along a lot of Hampson’s unused labels. But somehow, someway, one Rowe, the predecessor of Reeder, the defendant, operating as Nutrifoods Co. in Southern California, became aware of the legend of Hunza and he started producing health foods, labelling them Hunza®. The printer’s bug ® is the historical symbol for a registered trademark. Neither Rowe nor Reeder ever attempted to register Hunza as a trademark. (H & J is also a Southern California food producer.) Within a few months after the purchase, H & J had sued Reeder, seeking an injunction and an accounting of profits. The first count was for trademark infringement. The second was a pendent count for unfair competition. H & J Foods, Inc., received a judgment against Reeder of $26,519.07 plus interest and heavy costs, which included attorney fees of $14,040.00. The attorney fees are allowable under California’s statutory law on unfair competition. Fleischmann Distilling Corp. v. Maier Brewing Company, 386 U.S. 714, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967); Friend v. H. A. Friend & Co., 416 F.2d 526 (9th Cir. 1969). On this appeal, the whole result is attacked. We affirm the granting of the injunction, but hold that the assignment carried no right to profits before the date of the assignment. Further, this result will necessarily require a heavy reduction in the attorney fees allowed. Also, some adjustment will have to be made in the amount assessed as the cost of the accounting. Reeder does not challenge the validity of Hampson’s registration of “Hunza.” He does, however, challenge the assignment of the mark to Jacobs. Most of his objections are to the district court’s findings of fact. The claim that Reeder presses most vigorously is that the assignment was invalid because it was “in gross,” and an assignment apart from the business with which the mark has been associated. See Mister Donut of America v. Mr. Donut, Inc., 418 F.2d 838 (9th Cir. 1969), and 15 U.S.C. § 1060. While Hampson did not transfer much except the trifling amount of goodwill along with his trademark, the reason was that he had little else to transfer in the way of tangible assets related to “Hunza.” The district court found that “Herman Jacobs contacted Hampson and by assignment August 7, 1968, purchased from Hampson for $500 all right, title and interest in and to the trademark ‘Hunza,’ including the right to sue for past infringements, together with the goodwill of the business symbolized and appurtenant to the mark, Registration No. 644,085, and a quantity of ‘Hunza’ labels, advertising news releases, and promotional materials.” Except as to past infringement, we believe the court’s finding is supported by the evidence, and is therefore proper. Hampson gave up the right to use the mark, “Hunza,” and Jacobs acquired all of Hampson’s related tangible assets of any conceivable value. In this case, this was sufficient. Cf. Sterling Brewers, Inc. v. Schenley Industries, Inc., 441 F. 2d 675 (C.C.P.A.1971). Reeder further contends that H & J has used the “Hunza” mark on products so dissimilar to the registration specifications that the mark is invalid. Although we might have found differently, the district court found substantial similarity, and we do not believe that finding is clearly erroneous. On H & J’s pendent claim arising under California’s unfair competition law, the court found that the public was likely to be deceived by Reeder’s use of the mark “Hunza,” and the bug,®. We express no opinion on the validity of the finding to the extent it involves use of ®. The finding of deception based on use of “Hunza” alone is sufficient, and it is supported by the evidence. See Payne v. United California Bank, 23 Cal.App.3d 850, 100 Cal.Rptr. 672 (1st Dist.1972). A specific finding of “palming off” was not necessary. Much of the award stems from damages for infringement by Reeder prior to the assignment from Hampson to Jacobs. Such pre-assignment damages are disfavored, and they are allowed only when the right to sue is clearly spelled out in a valid assignment. George W. Luft Co., Inc., v. Zande Cosmetic Co., Inc., 142 F.2d 536 (2d Cir. 1944). Here, the only evidence of Hampson’s intent to assign the right to sue for past infringement is the following statement of Herman Jacobs. “[Hampson] also gave a remark. He said, ‘If you get the mark, you can sue that guy in Tulsa, Oklahoma, Akin [a former partner of Reeder], because he is using the mark illegally.’ ” We do not pass on the question whether this parol evidence was properly admitted. We do feel, however, this kind of testimony is insufficient to entitle H & J to pick up pre-assignment damages. The language, if admissible, is not express enough. This conclusion will have a heavy impact on the amount of damages, and as above indicated, the district court must reconsider on remand the amount of attorneys’ fees and the amount of costs. The district court was not clearly erroneous in its implicit rejection of Reed-er’s “clean hands” argument. As an epilogue, we note that probably counsel would have served their clients just as well without overridiculing each others’ briefs. The briefs, perchance, were written for their respective clients, not us. The judgment is affirmed as to the granting of the injunction. Otherwise, the judgment is remanded for proceedings consistent with this opinion. Each side will bear its own costs of the appeal. . United States Patent Office Trademark Registration No. 644,085.

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UNITED STATES of America, Appellee, v. Tommy Ray WEST, Appellant. No. 72-2428. United States Court of Appeals, Fourth Circuit. Submitted April 12, 1973. Decided May 7, 1973. William L. Cofer, Winston-Salem, N. C. (Court-appointed counsel), on brief for appellant. William L. Osteen, U. S. Atty., and Bradley J. Cameron, Asst. U. S. Atty., on brief for appellee. Before SOBELOFF and BOREMAN, Senior Circuit Judges, and WINTER, Circuit Judge. PER CURIAM. On May 4, 1972, Tommy Ray West was convicted of possessing and concealing counterfeit Federal Reserve notes and was sentenced to imprisonment for 24 months. Upon motion of his counsel, the District Court extended West’s existing appearance bond until May 15, 1972, at which time he was directed to report to the United States ' Marshal to commence serving his sentence. West did not appear as ordered on May 15. Subsequently, he was convicted of bail jumping in violation of 18 U.S.C. § 3150 and received a 24-month sentence which was to be served concurrently with the sentence imposed on May 4. West now contends that his failure to report to the United States Marshal as ordered is not an offense punishable under 18 U.S.C. § 3150, since the United States Marshal is neither a court nor a judicial officer. Section 3150 provides in pertinent part: Whoever, having been released pursuant to this chapter, willfully fails to appear before any court or judicial officer as required, * * * shall, (1) if he was released in connection with a charge of felony * * * be fined not more than $5,000 or imprisoned not more than five years, or both * * *. (Emphasis supplied.) The term “judicial officer” is then defined by 18 U.S.C. § 3152(1) as “any person or court authorized pursuant to section 3041 of this title, or the Federal Rules of Criminal Procedure, to bail or otherwise release a person before trial or sentencing or pending appeal in a court of the United States”; and section 3041 does not mention the office of United States Marshal. We have also examined the applicable rules of the Federal Rules of Criminal Procedure, Rule 46, and find no express or implied mention of a Marshal in connection with the authority to bail or otherwise release a person before trial or sentencing or pending appeal. In view of this restrictive definition of “judicial officer,” we agree with defendant that a United States Marshal is not a judicial officer under 18 U.S.C. § 3150. Notwithstanding the fact that a United States Marshal is not to be equated with a judicial officer under § 3150, we affirm West’s conviction. The essence of the crime of bail jumping is willful failure to appear before “any court or judicial officer as required.” As a condition of defendant’s bond, the court ordered him to report to the United States Marshal at a specific time to begin serving his sentence. An unnecessary waste of judicial time and energy would result if we were to require that each person in West’s position appear before the court itself. No discretionary action at all is involved. Under these circumstances it is appropriate to view the United States Marshal as the designated agent of the court for the limited purpose of taking West into custody. Cf. United States v. Cardillo, 473 F.2d 325 (4th Cir. 1972). Accordingly, we dispense with oral argument and affirm the judgment of the court below. Affirmed. . 18 U.S.C. § 3041 provides in pertinent part: For any offense against the United States, the offender may, by any justice or judge of the United States, or by any United States magistrate, or by any chancellor, judge of a supreme or superior court, chief or first judge of common pleas, mayor of a city, justice of the peace, or other magistrate, of any state where the offender may be found * * * be arrested and imprisoned or released * * *. . In a case involving construction of the same statutory language, the United States Court of Appeals for the Fifth Circuit held that a probation officer is not a judicial officer within the meaning of 18 U.S.C. § 3150. United States v. Clark, 412 F.2d 885 (5th Cir. 1969).

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John P. KINSEY and Edith B. Kinsey, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. No. 644, Docket 72-2071. United States Court of Appeals, Second Circuit. Argued March 26, 1973. Decided May 7, 1973. John S. Murtha, Hartford, Conn. (Murtha, Cullina, Richter & Pinney, and Peter G. Gillin, Hartford, Conn., on the brief), for petitioners-appellants. William A. Friedlander, Atty., Tax Div., Dept. of Justice (Scott P. Crampton, Asst. Atty. Gen., and Meyer Rothwacks, Atty., Tax Div., Dept. of Justice, on the brief), for respondent-appellee. Before FRIENDLY, Chief Judge, LUMBARD, Circuit Judge, and THOMSEN, District Judge. Of the District of Maryland, sitting by designation. THOMSEN, District Judge: This appeal by taxpayers John P. Kinsey (Kinsey) and his wife presents the question whether they were entitled to exclude from gross income the liquidating dividends received by DePauw University on shares of stock of Container Properties, Inc. (Container), which Kinsey had given to DePauw after the directors and stockholders of Container had adopted a plan of liquidation under § 337 of the Internal Revenue Code, had already made distributions in liquidation of a major portion of its assets, and had taken steps to dispose of the rest. The facts, which are not disputed, are set out in the opinion of the Tax Court, 58 T.C. 259 (May 10, 1972). Container was a Connecticut corporation organized in 1948 to own and lease real property. On April 26, 1965, immediately before the transactions involved in this case, 572 shares of its stock were outstanding. Kinsey owned 425 shares (74.30%), his wife 40 shares (7.00%); Kunkel and Banta, who were employees and directors of Container, owned 63 shares (11.01%) and 42 shares (7.34%) respectively; the remaining 2 shares (.35%) were owned by Seeton. Container owned all of the issued and outstanding shares of two other corporations (LaPorte and Carolina), both of which were engaged in the business of owning and leasing real property. At a meeting of Container’s board of directors on April 26, the directors unanimously recommended the liquidation of Container under § 337 of the Internal Revenue Code of 1954. On the same day, Container’s shareholders unanimously approved the board’s recommendation. On April 30, Container’s directors authorized, as the first step in the liquidation, the distribution by Container of all its LaPorte and Carolina stock to Container’s shareholders of record as of April 30, 1965. At the time of the adoption of the liquidation plan there was in existence an agreement, made in 1963, under which Container was obligated to sell and Boise Cascade Corp. (Boise) was obliged to purchase all the real estate leased by Container and its subsidiaries to Boise and its predecessor in title. Container had the right to designate the date on which the sale would take place, upon giving 120 days notice. By letter to Boise dated May 14, Container designated September 15, 1965, as the closing date. Kinsey is an alumnus of DePauw, and at a meeting in New York in May he agreed to make a gift to his alma mater. On July 7, in satisfaction of his commitment, Kinsey transferred to DePauw 325 shares of Container stock and similar proportional amounts of LaPorte and Carolina stock, which had been distributed to him by Container. On July 12, Robert E. Crouch, the secretary of alumni affairs for DePauw and a personal acquaintance of Kinsey for about 15 years, acknowledged receipt of the certificates representing the shares so transferred. No restrictions were placed upon the further transfer of those shares. It was the normal policy of DePauw to sell any stock it received as a gift. The shares in question were not sold, because Kinsey had advised Crouch to hold the stock pending advice from Kinsey as to how it could be liquidated. No such advice was requested by DePauw or given by Kinsey before DePauw received Container’s distribution in liquidation in October 1965. The 325 shares transferred to De-Pauw represented a 56.80% interest. Under Connecticut law a vote of two-thirds of the shareholders is required for a corporation to adopt a resolution of liquidation or to terminate such a resolution previously adopted by the shareholders. After the transfer of shares to DePauw, the liquidation proceeded in accordance with the plan adopted on April 26. No action was ever taken by anyone to terminate the liquidation of Container, LaPorte or Carolina. On September 15, Container transferred all of its real property to Boise for $533,334. At special meetings of the respective boards of Container, LaPorte and Carolina on September 15, the directors of each corporation resolved to dissolve the corporation on October 31, 1965, to pay all claims owed to creditors and to distribute in complete liquidation all remaining properties of the corporations to their respective shareholders. From the date of adoption of the plan of liquidation in April until the completion of the sale of its assets in September, Container had continued to earn rental and interest income and to incur some operating expenses. On October 22 and December 6 distribution of the remaining assets of all three corporations was made. Container mailed checks to DePauw totaling $237,499.66, representing distributions in liquidation with respect to and in exchange for the 325 shares of Container stock which had been transferred by Kinsey to DePauw. Container filed a certificate of dissolution with the Secretary of State of Connecticut on November 17. On their tax return for taxable year 1965, the Kinseys claimed a charitable deduction in the amount of $237,499.66 based upon the transfer of 325 Container shares to DePauw on July 7, 1965. As noted above, the question at issue in this case is whether Kinsey was entitled to exclude from his gross income the capital gain resulting from the distribution in liquidation of those shares. Kinsey argued in the Tax Court and argues here that an outright gift of 325 Container shares was made to DePauw on July 7; that all incidents of ownership inherent in that block of stock vested in DePauw on that date; that the gift preceded the time when an enforceable right to the liquidation proceeds accrued; that the 325 shares represented a controlling interest in Container; that the amount of the liquidating distributions could not be determined at the time of the gift and could not be correctly ascertained until September 15, when the Container board passed the final resolution of dissolution; that the plan of liquidation was revocable, without Kinsey’s concurrence, from the time of the gift until the final liquidation distributions were authorized. The Commissioner argued and argues that the transfer of 325 shares to De-Pauw constituted an anticipatory assignment of income which, however devised, should not serve to insulate Kinsey from the incidence of taxation with respect to the liquidating distribution attributable to those shares. Referring to the corporate actions set out above, the Commissioner argued and argues that despite any remote, technical possibility of a rescission of the plan of liquidation, and the fact that a liquidating dividend had not yet been formally declared at the time of the gift, the taxpayer had for all practical purposes transferred nothing but a right to receive a liquidating dividend, and that this reality controls the tax consequences. After discussing the facts and law, the Tax Court held that the liquidation had proceeded to a stage where the transfer of Container shares was in substance a transfer of the liquidation proceeds soon to come due on such shares, and concluded: “On the facts presented us here, petitioners cannot be allowed to insulate themselves from the incidence of taxation with respect to the liquidating distributions ascribable to the shares donated to DePauw.” 58 T.C. at 266. In Hudspeth v. United States, 471 F.2d 275 (8 Cir. 1972), the leading authorities are carefully and accurately analyzed; that analysis need not be repeated here. A close case on the facts is Jacobs v. United States, 280 F.Supp. 437 (S.D. Ohio, 1966), affirmed, 390 F.2d 877 (6 Cir. 1968). In Jacobs the taxpayers owned 1935 out of 1935 shares of outstanding stock of a Kentucky corporation. After its shareholders had adopted a plan of liquidation under § 337 of the Code and approved a sale of the corporation’s assets, and after part of the sale price had been received and the corporation had filed a notice of the plan with the Commissioner, taxpayers transferred to the Jacobs Family Foundation 90 shares of the corporation’s stock. The district judge, whose opinion was adopted by the Sixth Circuit, held that the taxpayers had made a gift of 90 shares of the corporation to an “exempt charitable organization rather than an assignment of a right to liquidation dividends and is therefore entitled to judgment”. He based his conclusion on the following finding: “In spite.of the arguments concerning the unlikelihood of a repudiation of the dissolution proceedings prior to their finality, the fact remains that such abandonment was entirely possible.” 280 F.Supp. at 439. The facts in Hudspeth, supra, are also generally similar to the facts in the instant case. In Hudspeth the taxpayer had made the gift to a charity after the plan of complete liquidation had been adopted and steps to carry it into effect had been taken. The gift in Hudspeth left the donor with a majority of the stock. The district court found the crucial issue to be whether, after adoption, the plan of liquidation was irreversible under state law. If so, the taxpayer was “absolutely and indefeasibly entitled in the immediate future to the liquidating distributions on the stock donated by him”, Hudspeth v. United States, 335 F.Supp. 1401, 1404 (E.D.Mo.1971), and there had been an assignment of income. The court, after examining state law, found that the adopted plan had been reversible and, therefore, following Jacobs, held that no assignment of income had occurred. The Eighth Circuit disagreed, saying, 471 F.2d at 277: “In viewing the applicable Missouri statutes we find the lower court’s interpretations to be untenable as the dissolution proceedings were, in fact, ‘started’ at the time of the shareholders’ approval of the plan of complete liquidation. As a result, the liquidation would have been irreversible as of April 10, 1964, under the laws of Missouri in effect at the time of this dissolution, and on the basis of the test outlined by the District Court we would have to conclude that the taxpayers’ gifts were anticipatory assignments of the inherent gains and thus taxable to him. “However, a review of the pertinent Federal law in this area convinces us that we must further reject the lower court’s finding that the crucial question in this case is, in effect, a determination of whether it was technically possible under Missouri law for the taxpayer to abandon the impending dissolution between the time of his gift and the time of the actual liquidation distributions. While Jacobs suggests such a test, we cannot concur in its application herein. Instead, we must sustain appellant’s contention that the realities and substance of the events must govern our determination, rather than formalities and remote hypothetical possibilities. Corliss v. Bowers, 281 U.S. 376, 50 S.Ct. 336, 74 L.Ed. 916 (1930); Howard Cook, 5 T.C. 908 (1945).” Among the cases discussed in Hudspeth was the Tax Court’s decision in the instant case, Kinsey v. Commissioner, 58 T.C. 259. The Eighth Circuit analyzed the Tax Court decision as follows: “* * Although the donee had received a majority interest in the corporation, the court distinguished Rushing [52 T.C. 888], by noting that a two-thirds vote of the shareholders would have been required to rescind the earlier authorization to liquidate and thus the donee could not have suspended the dissolution on its own. The taxpayer in Kinsey had argued, like the taxpayer herein, that the date of the gift preceded the time when an enforceable right to the liquidation proceeds accrued (i. e., when the corporation’s board passed the final resolution of dissolution), but the court held: “ ‘With so much having transpired not only before the date of Kinsey’s gift but also before the date of the final resolution to dissolve in September, we cannot consider the September 15 resolution a necessary and important accessory to the April authorization to liquidate. This final resolution was truly a mere formality, required by state law to officially bring the liquidation to an end.’ ” 471 F.2d at 280. The Eighth Circuit continued: “Similarly, the corporation’s filing of the Articles of Dissolution and Liquidation with the state of Missouri [i. e. the filings by MMS, the corporation involved in Hudspeth] were merely ministerial acts necessary to complete the liquidation under state law. We cannot countenance transfers such as presented herein and eviscerate established principles of anticipatory assignment of income by considering remote, hypothetically possible abandonments in the face of unrebutted evidence that the taxpayer intended to and did, in fact, complete the liquidation of his corporation. Through his continued control of the corporation he had foreclosed the possibility of having his intent vitiated. He had made contributions not of stock, but of the proceeds of the liquidation, and he is properly taxable on the gain arising therefrom.” 471 F.2d at 280. The Missouri law and the retention by the donor of a majority of the stock in Hudspeth made it a stronger case for the Commissioner than the instant case. But we believe that the basic principle stated by the Eighth Circuit — “that the realities and substance of the events must govern our determination, rather than formalities and remote hypothetical possibilities” — is applicable here, and should control. The realities and substance of the events in this case are that a plan of liquidation of Container under § 337 had been adopted by its directors and shareholders; that said decision could only have been reversed by a two-thirds vote of the shareholders; that although De-Pauw had a majority of the shares it did not have two-thirds; and if one or more of the other shareholders sufficient to make up two-thirds had joined DePauw in attempting to stop the liquidation, the practical effect would have been to jeopardize the right of the shareholders to treat the previous distributions as capital gains rather than ordinary income and to subject the corporation to a tax on the property sold to Boise. Moreover, it would have been contrary to DePauw’s policy of liquidating shares of stock given to it, whereas the completion of the liquidation was in accord both with that policy and with the obvious intention of Kinsey. Realistically considered, in the light of all the circumstances, the transfer of the Container stock to DePauw was an anticipatory assignment of the liquidation proceeds. Lucas v. Earl, 281 U.S. 111, 50 S.Ct. 241, 74 L.Ed. 731 (1930); Helvering v. Horst, 311 U.S. 112, 61 S.Ct. 144, 85 L.Ed. 75 (1940). The decision of the Tax Court is affirmed. . All dates referred to are in 1965, unless otherwise indicated. . In their 1965 return Kinsey and his wife included, as a distribution in liquidation, entitled to capital gain treatment, the gain realized by them upon the distribution by Container of the LaPorte and Carolina stock. . Under the agreement Container was to receive $533,334, Carolina $800,000 and LaPorte $666,666. . Within a specified three-year period, beginning September 15, 1965. . Conn.Gen.Stat.Anno., § 33-376 (c), § 33-329(d). . On the same date, Carolina transferred all of its real property to Boise for $800,000, and LaPorte transferred all of its real property to Boise for $666,660. . With the exception of assets in the amount of $26,335.47, which were retained to satisfy accounts payable and taxes and to provide a reserve for expenses. . During the 1965 taxable year Container distributed $961,935.01 to the Kinseys. The major portions of this amount, $365,-821.20 and $485,322.79, represented the value of the stock of Carolina and LaPorte, respectively, which was distributed to the Kinseys on April 30, 1965.

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Harry H. HINES, Jr., Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee. No. 72-2731. United States Court of Appeals, Fifth Circuit. May 2, 1973. James P. Knight, Jr., Thomas A. Bell, Jackson, Miss., for plaintiff-appellant. Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwaeks, Atty., Jane Edmisten, App. Div. Tax Div., Dept. of Justice, Washington, D. C., H. M. Ray, U. S. Atty., Oxford, Miss., Jack D. Warren, Tax Div., Dept. of Justice, Washington, D. C., for defendant-appellee. Before RIVES, GOLDBERG and MORGAN, Circuit Judges. GOLDBERG, Circuit Judge: This is an appeal from the denial of a claim by taxpayer, Harry H. Hines, Jr., for a recovery of income taxes and interest assessed and paid for the years 1966 and 1967. Although this appeal involves only taxpayer’s personal income tax liability, the controlling question is one of corporate taxation: Whether the proceeds from the sale of property that had been distributed to taxpayer by a family-owned corporation were properly imputed to the distributing corporation when that corporation (1) did not negotiate the sale prior to the distribution and (2) did not participate in the sale after the distribution. We hold that the Commissioner and the District Court improperly imputed the proceeds to the corporation and we reverse the District Court’s denial of taxpayer’s claim. I. THE FACTUAL SETTING The District Court’s Memorandum Decision, reported at 344 F.Supp. 1259, lucidly summarizes both the factual context and the legal issue involved in this case. Accordingly, we set forth only those facts essential to an understanding of our disposition of this appeal. Taxpayer was a director and secretary of Peeler Realty Company, Inc., a Mississippi corporation having its principal place of business in Kosciusko, Attala County, Mississippi. [Hereinafter “Peeler Realty”]. Peeler Realty is a family-owned corporation, incorporated in 1950 by taxpayer, taxpayer’s grandmother, Mrs. Ethel Peeler, and taxpayer’s grandfather, S. J. Peeler, a successful businessman who for many years operated a large lumber business, in Kosciusko. In the course of conducting that business, S. J. Peeler acquired a large amount of cutover timberland located in Attala and adjoining counties in Mississippi, most of which he obtained at tax sales in the late 1930’s for amounts ranging from fifty to seventy-five cents per acre. At the first meeting of the incorporators and subscribers of Peeler Realty, on November 6, 1950, S. J. Peeler transferred some 27,500 acres of timberland and numerous low-cost rental houses situated in Kosciusko to Peeler Realty for 3,998 shares of the corporation’s 4000 shares of authorized capital stock. Immediately thereafter, he began transferring his shares to his wife, children, and grandchildren by way of gifts. By August 25, 1965, shortly before the period here in issue, he had divested himself of all of his stock interest in the corporation. The business operations of Peeler Realty consisted almost entirely of holding the timberland conveyed to it by S. J. Peeler and renting out the low-cost houses. Although the corporation would occasionally sell small tracts of land or easements over the land and would sometimes market small quantities of timber, the corporate income was derived primarily from rents collected on the low-cost houses. Between 1954 and 1967, the corporation showed a profit in only four years; the losses during the other years were attributed primarily to the fact that the rental income was insufficient to pay the annual operating expenses and the ad valorem taxes on the timberland. The corporation’s surplus account showed a deficit balance of $45,950.97 on October 31, 1966, the end of its fiscal year, and the deficit increased to $46,334.21 on October 31, 1967. In the mid 1960’s, the pulpwood industry in Attala County began to grow. The Georgia-Pacific Corporation had already purchased timberlands in the area and was eager to purchase other timberland to support its Mississippi mill operations. Moreover, during this period, the International Paper Company and the St. Regis Paper Company each built a pulpwood mill in Mississippi. In November, 1964, following a “timber cruise,” the Georgia-Pacific Corporation made a written offer to pay a cash price of $57 per acre for Peeler Realty’s timberland. As an alternative inducement — designed to accommodate Peeler Realty’s desire to reduce the tax incidence of a sale of its timberland— Georgia-Pacific Corporation offered to pay a purchase price of $50 per acre in Georgia-Pacific stock, in the hopes of effecting a tax-free exchange. When these offers were rejected, Georgia-Pacific Corporation agreed to pay from $60 to $63 per acre for the timberland. Some of the shareholders of the company were eager to sell the land to obtain cash, which they needed for various personal reasons. A minority of the shareholders, representing 930 shares, did not wish to sell. Taxpayer was willing to sell for the right price, but he did not think the Georgia-Pacific offer was sufficient. Other large paper mills and lumber dealers were also interested in acquiring Peeler Realty’s timberland. In the latter part of 1965, taxpayer discussed a possible sale with International Paper Company, Weyerhaeuser Company, St. Regis Paper Company, and Attala Lumber Company. International Paper Company and St. Regis Paper Company made “cruises” of the timberlands after the corporation indicated it was interested in selling the land. Peeler Realty did not, however, enter into any solid negotiations with either of these firms. Eventually, it was decided that the one firm offer from Georgia-Pacific was not acceptable because it was not high enough. On December 27, 1965, the shareholders and directors of Peeler Realty conducted a meeting to discuss the corporation’s financial condition. At this meeting, Robert W. Hartford (a lawyer and certified public accountant who had served S. J. Peeler for years and who had been elected chairman of the board of Peeler Realty on August 27, 1965) outlined the financial condition of the corporation and set forth the alternative courses of action available. Mr. Hartford advised the meeting that if things continued as they were going, the corporation would soon be bankrupt. He discussed the pros and cons of liquidation and of separating the heavily-taxed land from the corporation. The majority of the shareholders wanted to sell the timberlands, and taxpayer, who was the informal spokesman for most of the shareholders, was fully aware of the tax consequences that would follow if the sale were made by the corporation. The tax basis of the property was quite low, not exceeding $40,000, and the selling price clearly would be in excess of the 1.5 million dollars which had already been offered by Georgia-Pacific and rejected as insufficient. Furthermore, taxpayer and Hartford were aware that a corporate sale would result in the payment of a capital gains tax by the corporation followed by the imposition of an additional tax on the individual shareholders after distribution. Liquidation and dissolution, a method provided by the Internal Revenue Code to avoid double taxation, was not thought feasible because the corporation could not be terminated because S. J. Peeler’s will left certain real property to the corporation and he had become mentally incompetent to change his will. On January 18, 1966, the directors held a special meeting and decided to recommend to the shareholders that the corporation’s timberland be distributed to the shareholders as tenants in eommon, with the interest of each to be determined by his or her pro rata interest in the corporate stock. The shareholders authorized the withdrawal and a law firm was engaged to prepare the conveyance, prior to which it was necessary to do substantial searching of the land records of the counties in which the land was located. The deed was executed by the directors on March 30, 1966, divesting Peeler Realty of title to the timber-lands and' leaving as its only asset the low-cost houses producing rental income. Once the deed was executed and recorded, the attorneys were authorized to make a title search of each tract and perform any work determined to be necessary in order to cure defects in the title and make the lands marketable. The shareholders also executed a power of attorney giving taxpayer, Hartford, and Mrs. Ethel Peeler authority to handle the land and to sell it if they decided that a sale should be made. The power invested in the attorneys-in-fact by the document was very extensive, granting them an almost unlimited power to dispose of the property. In October of 1966, as soon as the attorneys had completed their title search and the attorneys-in-fact had received assurances of the availability of title insurance, the attorneys-in-fact sent “Sales Guidelines” to International Paper Company, Georgia-Pacific Corporation, St. Regis Paper Company, and Attala Lumber Company, inviting them to submit sealed bids for the purchase of the land. The “Sales Guidelines” contained the conditions and terms of the sale and the method and manner of bidding on the land. The bids were opened in the office of Peeler Realty on November 14, 1966, and on December 15, 1966, International Paper Company’s bid was accepted and the land was sold and conveyed to it on December 15, 1966 for $2,533,580.50. The money received from the sale of the timberlands, less expenses of the sale amounting to $99,831.27, was paid to the tenants in common, the shareholders of Peeler Realty. Taxpayer reported his pro rata portion of the proceeds from the sale of his interest in the timberland and claimed long-term capital gains status. Peeler Realty did not report the proceeds of the sale by its shareholders on its corporate income tax, nor did it treat them as additions to its earned surplus on the corporation’s books. II. ACTION BY THE I.R.S. AND THE COURT BELOW The Commissioner concluded that the gain on the sales of the land should be imputed to Peeler Realty because the distribution lacked a normal and justifiable commercial motivation and was made for the principal purpose of avoiding tax. By imputing the proceeds of the sales to the corporation, the Commissioner determined that Peeler Realty had current earnings and profits out of which to pay a dividend, see 26 U.S.C. § 316, and that therefore the distribution to the shareholders constituted a regular dividend to the extent of the current earnings and profits and the balance constituted a return of capital to the extent of the shareholder’s basis .in the Peeler Realty stock, with any excess being eligible for capital gains treatment. See 26 U.S.C. § 301. A deficiency of $7,900.24 in federal income taxes was then assessed against taxpayer, which he paid. After filing for refund without success, he instituted this suit in the District Court. Relying on United States v. Cumberland Pub. Serv. Co., 1950, 338 U.S. 451, 70 S.Ct. 280, 94 L.Ed. 251, and on Sections 336 and 346 of the Internal Revenue Code, taxpayer argued that the gain from the sale of the property was improperly imputed to Peeler Realty because (1) Peeler Realty had not negotiated the sale of the timberlands and (2) because the distribution of the timberland was a liquidating dividend under Section 346. The government responded that the proceeds from the sale of property distributed by a going concern in anticipation of a sale by the shareholders and with no valid business purpose other than tax avoidance are properly imputed to the distributing corporation. The principal authorities relied on by the Commissioner were Commissioner v. Court Holding Co., 1945, 324 U.S. 331, 65 S.Ct. 707, 89 L.Ed. 981; Commissioner v. Transport Trad. & Term. Corp., 2 Cir. 1949, 176 F.2d 570; and United States v. Lynch, 9 Cir. 1951, 192 F.2d 718. The District Court found that: (1) Peeler Realty had not negotiated the sale of its timberland to anyone prior to transferring it to the shareholders and after the transfer, the stockholders were not obligated to sell the land to any particular purchaser and in fact they arranged their own sale with no participation by the corporation; (2) the distribution was not a liquidating distribution under Section 336 or Section 346 of the Internal Revenue Code; and (3) the primary or principal purpose for the distribution of the land was to avoid the double tax that would have arisen had the corporation sold the land and then distributed the proceeds. The District Court realized that the factual situation in the case at hand differed from that in the cases relied upon by the government in that in all of those cases the corporation to which income was attributed had participated in the sale transaction from which the income arose. The Court reasoned, however, that those cases nevertheless justified an imputation of the income from the sale of the timberlands to Peeler Realty, and an order was entered denying taxpayer’s claim for a refund. III. THE APPLICABLE LAW The controlling question on this appeal is whether the gains from the sale of the timberlands could properly be imputed to Peeler Realty when the District Court explicitly found that Peeler Realty had not participated in the transaction in which the timberlands were sold. The starting point of our analysis is the Internal Revenue Code itself. Under Section 311 of the Code, as enacted at the time the transaction we here review, gain was ordinarily not realized by a corporation that distributed property to its shareholders. Section 311 was not, however, intended to alter the law regarding the imputation of gain to a distributing corporation from a sale of distributed property by the corporation’s shareholders when the corporation actually participates in the transaction in which the distributed property is sold. Our consideration of the propriety of applying the imputed income rule to Peeler Realty must begin with an analysis of Commissioner v. Court Holding Co., supra, the principal Supreme Court pronunciation in this area. In Court Holding, negotiations were entered into by a corporation with a particular purchaser for the sale by the corporation of its only asset, an apartment house. These negotiations culminated in an oral agreement by the corporation to sell the property. Subsequently, the corporation learned of the double tax that would arise if the corporation first sold the property and then distributed the proceeds of the sale to its stockholders. The corporation therefore refused to sell the property, and instead, distributed the property to its shareholders who in turn sold the property to the same purchaser with whom the corporation had negotiated on the same terms as the corporation had negotiated. The Tax Court found that the sale was really made by the corporation in performance of the prior agreement and attributed the gain to the corporation. The Fifth Circuit reversed, disagreeing with the Tax Court’s fact-finding, but the Supreme Court reversed the Fifth Circuit, holding that the finding of the Tax Court that the sale was in reality made by the corporation must be accepted if supported by evidence. The Court stated: “Rather, the transaction must be viewed as a whole, and each step, from the commencement of negotiations to the consummation of the sale, is relevant. A sale by one person cannot be transformed for tax purposes into a sale by another by using the latter as a conduit through which to pass title. To permit the true nature of a transaction to be disguised by mere formalisms, which exist solely to alter tax liabilities, would seriously impair the effective administration of the tax policies of Congress.” Commissioner v. Court Holding Co., supra, 324 U.S. at 334, 65 S.Ct. at 708, 89 L.Ed. 985 (footnotes omitted). The Supreme Court’s next consideration of the imputed income rule came in United States v. Cumberland Pub. Serv. Co., supra. In that case a corporation desired to go out of business, but its shareholders’ offer to sell their stock to a competitor was rejected. The competitor countered with an offer to buy the corporation’s equipment; however, the corporation turned down this offer in order to avoid paying a heavy capital gains tax. The shareholders of the corporation then offered to acquire the equipment from the corporation and sell it to the competitor themselves, thereby avoiding capital gains treatment for the corporation. That offer was accepted and the plan was consummated. The Commissioner attributed the gain from the sale to the corporation, but the Court of Claims refused to impute the gain, finding as a fact that the sale had been made by the shareholders, not the corporation. The court reasoned that the sale was made by the shareholders because although the transaction was for tax avoidance purposes, the corporation at no time intended to sell the equipment and the liquidation and dissolution genuinely ended the corporation’s activities and existence. In affirming the Court of Claims, the Supreme Court placed great emphasis on the fact that the corporation had in fact been liquidated, but the Court also emphasized the importance of the ultimate finding of the lower court that the sale in question was made by the shareholders rather than by the corporation itself. A reading of Court Holding and Cumberland establishes that the proceeds of the sale of property distributed by a corporation to its shareholders should be imputed to the corporation only if the sale was in fact made by the corporation, not by the shareholders. In the instant case the District Court imputed to Peeler Realty the proceeds of a sale by its shareholders without finding that Peeler Realty had in fact made the sale. Moreover, the District Court found that Peeler Realty had neither negotiated the sale prior to distribution nor participated in the sale after distribution. The government argues that imputation was nonetheless proper because subsequent case law indicates that the imputed income rule must apply even where there are no pre-distribution sales negotiations, if the transfer was made (1) by an ongoing concern (2) in anticipation of a sale by the shareholders, and (3) with no valid business purpose aside from motives of tax avoidance. We cannot agree. Our reading of the applicable case law in this area convinces us that the District Court erred. We hold that the sine qua non of the imputed income rule is a finding that the corporation actively participated in the transaction that produced the income to be imputed. Only if the corporation in fact participated in the sale transaction, by negotiation, prior agreement, postdistribution activities, or participated in any other significant manner, could the corporation be charged with earning the income sought to be taxed. Any other result would unfairly charge the corporation with tax liability for a transaction in which it had no involvement or control. We are aided in reaching this conclusion by the Tax Court’s reasoning in Waltham Netoco Theatres, Inc. v. Commissioner, 1968, 49 T.C. 399, aff’d, 1 Cir. 1968, 401 F.2d 333. In Waltham, after finding that a corporation had negotiated a sale prior to distributing property to its shareholders, the Tax Court imputed the proceeds of a sale by the corporation’s shareholders to the distributing corporation. The court specifically rejected the government’s argument, raised again in the case before us, that “the protection of Cumberland may not be available to nonliquidating distributions in kind by an ongoing corporation and that the corporation may be held taxable simply on the ground that there was a tax motivated preconceived plan.” Id., 49 T.C. at 405. In Waltham, the government had relied on United States v. Lynch, 9 Cir. 1951, 192 F.2d 718; Commissioner v. Transport Trad. & Term. Corp., 2 Cir. 1949, 176 F.2d 570, and A. B. C. D. Lands, Inc. v. Commissioner, 1964, 41 T.C. 840, as it does here, but the Tax Court noted that “ [p] articularly since the actual facts of the above cited cases do not require the more general rationale found in the opinions, we see no point in exploring such wider horizons until we are compelled to do so.” Waltham Netoco Theatres, Inc. v. Commissioner, supra, 49 T.C. at 406. In affirming Waltham, the First Circuit accepted the rationale of the Tax Court and noted that non-imputation under Cumberland would be available to the nonliquidating corporation only “if the sale were the result of independent and active negotiations by its stockholders with [the purchaser] . . . .” Waltham Netoco Theatres, Inc. v. Commissioner, 1 Cir. 1968, 401 F.2d 333, 335. See also Ripy Bros. Distillers, Inc. v. Commissioner, 1948, 11 T.C. 326. The cases relied on by the government also support the position we reach. In each of these cases, which we list in the margin, the court specifically found that the taxpayer to whom income was imputed had participated in the sale made by other parties either through prior negotiations, prior agreements, or post-distribution assistance in the sale. Although there is dicta in Commissioner v. Transport Trad. & Term. Corp., supra, that indicates the Second Circuit might accept the government’s argument, that case itself does not support imputation in the case at hand because its holding was based upon a finding that the sale from which income was imputed had already been negotiated by a controlling parent corporation prior to distribution by the taxpayer and that the subsequent sale was but a step in a sales transaction that had been finalized prior to distribution. Similarly, United States v. Lynch, supra, contains language that the Ninth Circuit was influenced by the government’s imputation theory, but we read the court’s holding in that case as being based primarily on the fact that the selling shareholders utilized the distributing corporation’s sales facilities and received favored treatment from the distributing corporation. We therefore conclude that Lynch is not compelling authority for imputing income to Peeler Realty, for the District Court found that Peeler Realty did not participate in the sale by its shareholders either before or after the distribution. Only A. B. C. D. Lands, Inc. v. Commissioner, supra, actually supports the government’s position, for the Tax Court in that case held that regardless of corporate participation it would impute income to a distributing corporation because the distribution was made by an ongoing corporation for tax avoidance purposes with an expectation of immediate sale by the shareholders. Although we agree with the result reached in that case, we do so only because there were ample factual findings by the Tax Court to support a finding that the sale was in fact participated in by the distributing corporation, and we expressly disavow the imputation theory espoused in that case. Although there does appear to be a monumental loophole in Section 301 of the Internal Revenue Code, which allows deficit corporations to distribute appreciated property without having the distribution taxed as ordinary income to the distributee, we do not think it proper to attempt to plug that loophole by conjuring up visions of corporate sales where no corporate activities justify such images. The tax loophole in this situation is not based upon imputation or non-imputation of corporate sales, but the aperture exists because distributions of appreciated property by a deficit corporation are not deemed distributions in the nature of dividends. We are not nearly so certain as the Internal Revenue Service, which administers the Code, that absent imputation the passage is marked “no trespassing” into the domains of ordinary income taxation under the facts of this case, but the government takes a different position. Under the law and regulation, who are we to say nay, though as pathfinders we may have reached a different result. Court Holding has not been judicially elasticized to the degree that the government argues and its tentacles have to a large extent been amputated. Moreover, we do not believe that it is our function to play loop the loop for the government because of some result oriented tax theory. In light of the fact that Peeler Realty had never actively negotiated with International Paper Company, the ultimate purchaser, and in light of the fact that the sale of the timberlands was conducted by competitive bidding, without Peeler Realty negotiating with the final purchaser, we do not find the District Court’s fact finding that Peeler Realty did not participate in the sale of the timberlands clearly erroneous. We therefore hold that it was error to impute the proceeds of the sale of the timberlands to Peeler Realty and that the District Court’s denial of taxpayer’s claim for a refund must be reversed, for, absent imputation, Peeler Realty had no earned surplus from which an ordinary income-producing dividend could be paid. Certainly, the fact finding of a legally auspicated tax avoidance motive does not inject taxability into the transaction. Gregory v. Helvering, 1935, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596; Blueberry Land Co. v. Commissioner, 5 Cir. 1966, 361 F.2d 93; Howell Turpentine Co. v. Commissioner, 5 Cir. 1947, 162 F.2d 319. Furthermore, we do not think that this taxpayer has been treated to a windfall. Taxpayer would not have been taxed at ordinary income rates had Peeler Realty liquidated, and although Peeler Realty did not in fact liquidate, it came close to liquidating, retaining only passive income-producing property, and it would have liquidated entirely had it not been for the unfortunate circumstance of S. J. Peeler’s irrevocable will. In a circumstance such as this, where the Code would not tax a liquidating corporation even if the corporation negotiated the sale, we do not think that the Code or the case law justifies imputing taxable income to a corporation that did not participate in the sale of the distributed property and that was only prevented from obtaining the safe harbor of liquidation by the quirk of an irrevocable bequest. IV. CONCLUSION Our diagnosis of the transactions here clinically examined convinces us that Peeler Realty was not infected with Court Holding’s selling virus. Though we detect symptoms of imputation, we must have a proven pathology and not merely a visceral reaction before we can find that taxpayer’s receipts are attributable to Peeler Realty without significant corporate selling kinetics. The wailing cry of the government is that the distribution of Peeler Realty’s timberland does not receive ordinary income taxation absent imputation, and so it will bemoan our holding that imputation is impossible absent a finding that the corporation effectuated or participated in the sale of the timberlands. We feel, however, that the government’s laehrymosity and lamentations should arise from the fact that Congress has deemed that the distribution of appreciated property by a deficit corporation does not of itself produce ordinary income for the recipient shareholder. This Court will not make sellers out of non-sellers when the government coffers should be enriched, if at all, by making recipients of appreciated assets ordinary-income taxpayers. It is for Congress to make that decision, and until it does we read Court Holding and its progeny as dealing with corporate activities and not with the problem of receipts by taxpayers in the nature of dividends. We therefore remit to the lawmakers the duty of codifying, for as the shoemaker sticks to his last, we must stick to our special role of interpreting the words of Congress. We hold that the District Court erred in imputing to Peeler Realty income arising from Peeler Realty’s shareholders’ sale of timberlands and that therefore taxpayer’s claim for a refund should not have been denied. Reversed. . S. J. Peeler’s stock interest was ultimately divided among the members of his family as follows: Mrs. Ethel Peeler (wife of S. J. Peeler) 1,000 shares Mrs. Lacy (daughter of S. J. Peeler) 750 shares Mr. Hines (taxpayer, son of Mrs. Lacy) 250 shares Mrs. Seay (daughter of S. J. Peeler) and her children 750 shares Mrs. H. Elmo Peeler (widow of S. J. Peeler’s son) and her children 1,000 shares . A “timber cruise” is evidently a survey of timberlands to determine their economic potential. . See 26 U.S.C. § 331 et seq. . Prior to the sale of the timberlands to International Paper Company, the attorneys-in-fact sold a small tract of the land for the sum of $8,000, which was included in the total proceeds distributed among the shareholders. . Section 311, as enacted at the time of this transaction, excluded three types of property from its nonrecognition treatment: Lifo inventoried goods, properties with liabilities in excess of basis, and certain installment obligations. In 1969, Section 311 was amended to also exclude certain distributions of property in redemption of stock from non-recognition treatment. Apparently Section 311 had been interpreted broadly up until the 1969 amendment, and Congress was attempting to narrow the scope of the non-recognition provision. The amendment, not applicable to the transaction sut judice, was enacted to prevent non-liquidating corporations from achieving corporate purposes by redeeming their stock with property whose value exceeded basis without having to recognize gain on the transaction. Thus it would seem that had Peeler Realty distributed its timberlands in redemption of stock in 1966, there would have been no recognition of gain to it, absent application of the imputed income doctrine. See S.Rep. No.91-552, 91st Cong., 1st Sess., 2 U.S.Code & Admin.News, pp. 2316-17 (1969); Conf.Rep.No.91-782, 91st Cong., 1st Sess., 2 U.S.Code Cong. & Admin. News, p. 2448 (1969). . See S.Rep.No.1622, 83d Cong., 2d Sess., 3 U.S.Code Cong. & Admin.News, pp. 4621, 4884 (1954); Comment, The Imputed Sale and Anticipatory Assignment of Income Doctrines: Their Effect on IRC §§ 311 & 316, 15 Buffalo L.Rev. 154 (1965). . The government distinguishes the case at hand from Cumberland, as well as from Commissioner v. Falcon Co., 5 Cir. 1942, 127 F.2d 277; Howell Turpentine Co. v. Commissioner, 5 Cir. 1947, 162 F.2d 319; Acampo Winery and Distilleries, Inc. v. Commissioner, 1946, 7 T.C. 629, and United States v. Cummins Distillers Corporation, 6 Cir. 1948, 166 F.2d 17, relied on by taxpayer, on the ground that all of those cases involved a liquidating corporation, while in the instant case the District Court found that Peeler Realty Company was not in either partial or full liquidation. Taxpayer contends that Peeler Realty was in fact in partial liquidation as defined by Section 346(b) and would have been fully liquidated were it not for the fact that taxpayer’s grandfather had become incompetent to change his will, which left property to the corporation. Of course, if Peeler Realty were in fact a liquidating corporation, this suit would not have been needed, since the Internal Revenue Code provides that ordinarily no gain should be recognized to a corporation on the distribution of property in partial or complete liquidation. See 26 U.S.C. § 336. However, the question of whether a corporate distribution is a liquidation is a question of fact, Cleveland v. Commissioner, 3 Cir. 1964, 335 F.2d 473; Fowler Hosiery Co. v. Commissioner, 7 Cir. 1962, 301 F.2d 394, and we are unable to say that the District Court’s factual finding of no liquidation is clearly erroneous. . General Guaranty Mortgage Co. v. Tomlinson, 5 Cir. 1954, 335 F.2d 518; Commissioner v. Transport Trad. & Term. Corp., supra; United States v. Lynch, supra; Blueberry Land Co. v. Commissioner, 5 Cir. 1966, 361 F.2d 93; Meurer Steel Barrel Co. v. Commissioner, 3 Cir. 1944, 144 F.2d 282; Snively v. Commissioner, 5 Cir. 1955, 219 F.2d 266; Wichita Term. El. Co. v. Commissioner, 10 Cir. 1947, 162 F.2d 513; A.B.C.D. Lands, Inc. v. Commissioner, supra; Waltham Netoco Theatres, Inc. v. Commissioner, supra. . A.B.C.D. Lands, Inc. v. Commissioner is persuasively criticized in Comment, The Imputed Sale and Anticipatory Assignment of Income Doctrines : Their Effect on IRC §§ 311 & 336, 15 Buffalo L.Rev. 154 (1965). . At oral argument we requested the parties to brief the question of how the taxpayer should be taxed if the Court did not impute the proceeds from the sale of the property back to the corporation, and if it did not treat the distribution as one in partial liquidation. The government responded that absent imputation, taxpayer was entitled to capital gains treatment on the appreciated property received from Peeler Realty because “[u]nder the applicable statutory scheme, the existence of earnings and profits is a prerequisite to a determination that a corporate distribution is taxable.” Therefore, since the government conceded that the timber-lands were not inventory under Section 312(b) of the Code, earned surplus could only be derived by application of the imputed income rule. See 26 U.S.C. §§ 301 and 316. . The application of the imputed income rule depends upon the factual findings of the District Court, which must be accepted unless clearly erroneous. Cf. Commissioner v. Court Holding Co., supra; United States v. Cumberland Pub. Serv. Co., supra; Salvatore v. Commissioner, 2 Cir. 1970, 434 F.2d 600. In the case before us, the District Court did not find that Peeler Realty made the sale of the timberlands, nor did it find that Peeler participated in the sale. Because the District Court did not make these findings, and because it found, in fact, that Peeler Realty did not participate in the sale of the timberlands, we hold that as a matter of law the District Court’s application of the imputed income rule was error. . See also note 5, supra.

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2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

Donald CONOVER, on his own behalf and on behalf of all others similarly situated, and Gerald Myers, a minor by his parent and natural guardian, Margaret Myers, Appellants, v. Honorable Frank M. MONTEMURO, Jr., Administrative Judge, Family Court Division, Philadelphia Court of Common Pleas, and Leonard Rosengarten, Director, Juvenile Probation, Family Court Division, Philadelphia Court of Common Pleas. No. 71-1871. United States Court of Appeals, Third Circuit. Argued Sept. 15, 1972. Decided Dec. 20, 1972. As Amended Jan. 16, 1973. Resubmitted en banc March 29, 1973. On Rehearing En Banc May 8, 1973. Edwin D. Wolf, Lawyers’ Committee for Civil Rights Under Law, J. Grant McCabe III, Philadelphia, Pa., for appellants. John B. Martin,- Duane, Morris & Heckscher, Joseph Matusow, Philadelphia, Pa., for appellees. Before McLAUGHLIN, ADAMS and GIBBONS, Circuit Judges. OPINION OF THE COURT GIBBONS, Circuit Judge. This is an appeal from an order of the district court dismissing a class action which challenged on due process and equal protection grounds the intake procedures of the Family Court Division of the Philadelphia Court of Common Pleas. The action has had an unfortunately complex procedural history, a recitation of which is necessary for an appreciation of the exact issues presented to this court for review. The action was filed originally by the plaintiff Conover, on his own behalf and on behalf of all others similarly situated, on April 8, 1969. Conover, a juvenile, alleged that he had been arrested on three occasions and had on each occasion been subjected to an “intake interview” by probation officers employed by the Philadelphia Juvenile Court. These probation officers, he alleged, in an essentially standardless procedure, or at least a procedure employing standards in no way related to the purposes of the Pennsylvania Juvenile Court Law of 1933, decide whether to file a petition, pursuant to section 4 of that law, Pa.Stat.Ann. tit. 11, § 246 (1965). That complaint referred to the provision of the juvenile court law prohibiting preliminary hearings in juvenile cases, Pa.Stat.Ann. tit. 11, § 246(3) (1965), and contrasted the treatment of adult offenders, who under Pennsylvania law have a right to a preliminary hearing and to indictment by a grand jury. Pa.Const. art. 1, § 10. Named as defendants were Honorable Frank J. Montemuro, Jr., Administrative Judge, Family Court Division, Philadelphia Court of Common Plea's, Arlen Specter, District Attorney of Philadelphia and Leonard Rosengarten, Director, Juvenile Probation, Family Court Division, Philadelphia Court of Common Pleas. The complaint sought both injunctive and declaratory relief, but not money damages. It invoked jurisdiction under 28 U.S.C. §§ 1331 and 1343 and under 42 U.S.C. § 1983. It sought class action treatment pursuant to Fed.R.Civ.P. 23, requested the convening of a three-judge district court pursuant to 28 U.S.C. § 2281 et seq., and asked for the issuance of a temporary restraining order. The request for a temporary restraining order was brought on for hearing on April 9, 1969. The district court, after a hearing, declined to issue a temporary restraining order. An appeal from that denial was taken to this court, but after oral argument that appeal was dismissed by stipulation. The district court, pursuant to 28 U. S.C. § 2284, requested then Chief Judge Hastie to convene a three-judge court. Judge Hastie declined to do so on the ground that although the complaint nominally challenged the constitutionality of Pa.Stat.Ann. tit. 11, § 246 (1965), its substance was that the persons charged with the administration of the statute are exercising their power in an improper way, and not that the statute, properly construed, required the allegedly improper practices. The case thereafter proceeded before a single district court judge. On April 18, 1969 Gerald Myers, another juvenile, filed a motion for leave to intervene on his own behalf and as a class representative, asserting a fear that settlement discussions between Con-over, the original plaintiff, and the named defendants, might result in the withdrawal of prosecution in the juvenile court and an attempt by Conover to withdraw the action prior to an adjudication of the rights of the class of which Myers was a member. By an order dated May 2, 1969 Myers was permitted to intervene as plaintiff. At this time no class action determination had been made by the district court. See Fed.R.Civ.P. 23(c)(1). Meanwhile, on April 26, 1969 the named defendants filed an answer and a motion to dismiss the complaint. Judge Montemuro and Mr. Rosengarten moved for a dismissal on the grounds (1) that the district court lacked jurisdiction, (2) that they were immune from suit, and (3) that the federal court should abstain. In a detailed opinion and order filed on September 24, 1969 Judge Fullam considered and rejected each of these contentions. Conover v. Montemuro, 304 F.Supp. 259 (E.D.Pa.1969). He denied the defendants’ motion to dismiss the declaratory judgment action on jurisdictional or immunity grounds, and reserved until trial their motion to dismiss the action for an injunction. After this interlocutory opinion and order was filed the plaintiffs Conover and Myers made a motion for an order pursuant to Fed.R.Civ.P. 23(c)(1) that the action, brought as a class action, be so maintained. The district court gave the defendants an opportunity to file any objections to the confirming of the class action, and after a hearing, over such objections, on October 8, 1970 entered the following order: “And Now, this 8th day of October, 1970, it appearing that the class plaintiff has described in his complaint falls within the requirements of Fed.R.Civ.P. 23(b)(2), it is ORDERED that this action may be maintained as a class action on behalf of all juveniles in Philadelphia, Pennsylvania, who have been or will be affected by action of the defendants alleged in the complaint.” No other findings were made with respect to the class action determination. See Interpace Corporation v. City of Philadelphia, 438 F.2d 401 (3d Cir. 1971). After extensive discovery the ease proceeded to final hearing on April 13, 1971. In that hearing the plaintiff class representatives attempted to establish: a. that juvenile defendants were denied equal protection on the ground that Pennsylvania law provides for discharge of adults at a preliminary hearing against whom a prima facie case is not established, but does not provide for the discharge of juveniles at the intake interview against whom a prima facie case of delinquency is not established. b. that juvenile defendants were denied due process because of the overbroad discretion allowed to the intake interviewer and the vagueness of the standards for his decision whether to file a delinquency petition. c. that juvenile defendants were denied due process by the arbitrary and irrational choice of cases in which to file delinquency petitions. d. that juvenile defendants were denied due process because the intake standards were not reasonably related either to probable cause or' to the purposes of the Juvenile Court Law. Plaintiffs’ principal le'gal arguments were based on In re Gault, 387 U.S. 1, 87 S.Ct. 1428, 18 L.Ed.2d 527 (1967), and In re Winship, 397 U.S. 358, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970). At the completion of the hearing, in which the testimony of eight witnesses was taken and twenty exhibits received in evidence, the defendants renewed their motion to dismiss on the ground that the federal court should abstain. The renewed motion was prompted by the Supreme Court’s decisions, on February 23, 1971, long after the district court’s denial of the original motion, of Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971); Samuels v. Mackell, 401 U.S. 66, 91 S.Ct. 764, 27 L.Ed.2d 688 (1971); Boyle v. Landry, 401 U.S. 77, 91 S.Ct. 758, 27 L.Ed.2d 696 (1971); Perez v. Ledesma, 401 U.S. 82, 91 S.Ct. 674, 27 L.Ed.2d 701 (1971); Dyson v. Stein, 401 U.S. 200, 91 S.Ct. 769, 27 L. Ed.2d 781 (1971), and Byrne v. Karalexis, 401 U.S. 216, 91 S.Ct. 777, 27 L.Ed.2d 792 (1971). The district court asked the parties to brief the issues raised by these cases prior to the submission of proposed findings of fact. On July 21, 1971 it filed an opinion and order, 328 F.Supp. 994, dismissing the action without prejudice to the right of the plaintiffs to raise the same issues in an appropriate case on the authority of the Younger v. Harris group of cases. That is the order appealed from. The July 21, 1971 order was entered prior to and without the benefit of Judge Van Dusen’s exegesis for this court of Younger v. Harris and its companion cases in Lewis v. Kugler, 446 F.2d 1343 (3d Cir. 1971), and without the Supreme Court’s refinement of the issues of jurisdiction and federalism in Mitchum v. Foster, 407 U.S. 225, 92 S.Ct. 2151, 32 L.Ed.2d 705 (1972). Since the district court did not reach the merits it had no occasion to consider whether McKeiver v. Pennsylvania, 403 U.S. 528, 91 S.Ct. 1976, 29 L.Ed.2d 647 (1971), which deals with another aspect of Pennsylvania Juvenile Court procedures casts any greater light upon the fourteenth amendment issues presented by those proceedings than did In re Gault, supra, and In re Winship, supra. Although the ease comes before us with a full record, the absence of findings of fact by the district court precludes us from reaching the merits of this class action. We are presented only with the alternatives of an affirmance if we conclude that the complaint was properly dismissed or a remand for appropriate findings. The broad class action determination quoted above placed before the court claimants in these categories: 1. Philadelphia juveniles who have not been, but in the future will be, subjected to the intake procedures complained of. As to any specific Philadelphia juvenile it may be said that the likelihood of his being subjected to the intake procedures is so remote as to be speculative. It is a virtual certainty, however, that some Philadelphia juveniles will be subjected to the intake procedures. Thus it is a virtual certainty, not a matter of speculation, that there are some members of the class against whom no actual proceeding is pending but who will be subject in the future to the intake procedures. 2. Philadelphia juveniles who have been subjected to the intake procedures and the detention and interrogation which those procedures' entail, and who have been discharged without formal petitions being filed against them. These fall back into category 1, but with the added disability that if they are again subjected to the intake procedures their prior processing may be known to the probation officer administering the intake. 3. Philadelphia juveniles who have ' been subjected to the intake procedures, against whom petitions for their adjudication as delinquents have been filed, who have proceeded to a hearing, and whose hearing terminated in an adjudication that they were not delinquent. 4. Philadelphia juveniles who have been subjected to the intake procedures, against whom petitions have been filed, who have proceeded to a hearing, and whose hearing is still pending. 5. Philadelphia juveniles who have been subjected to the intake procedures, against whom petitions have been filed, who have proceeded to a hearing, and who have been adjudicated delinquent. Conover, the original plaintiff, was adjudicated on one of the three petitions pending against him and discharged on the other two. Thus he is in category 5 above. As to Myers, the intervenor, a demurrer was sustained to the petition against him and he was discharged. Thus he is in category 4 above. Since both had been subjected to the intake procedures, and both ran the risk of being subjected to them in the future, they were pressing claims in which they had a concrete interest in an adversary context. The district court recognized as much both when it refused to grant the original motion to dismiss the complaint and when it found them to be adequate class representatives for a class encompassing all five categories of claimants. Of the five categories of claimants, only those in category 4 are literally claimants against whom a state proceeding is pending. Thus assuming, without deciding, that juvenile court proceedings should be equated to the state criminal prosecutions pending in Younger v. Harris and its companion cases, only that limited category of claimants should have been affected by those cases. The district court held, nevertheless, that those cases mandated a dismissal as to the entire class. It reasoned: “The procedure challenged affects persons only when they are brought into the juvenile court process. When this process has begun, the Younger and Samuels cases say, the federal courts must not interfere. . . . What plaintiffs’ argument really means is that the named plaintiffs are no longer proper representatives of the class. Plaintiffs argue that this action may nevertheless proceed with some redefinition of the class. I disagree. As to those persons who are now in the juvenile intake process and those who will be in the future, the principles set forth in the cited cases clearly apply. As to those who have been through the juvenile process, the issues presented in this ease are either moot (if the proceedings were terminated in favor of the juvenile) or they can be raised in federal court only through a petition for a writ of habeas corpus. Under the latter procedure, state remedies must be exhausted before the federal courts may pass on the merits of the constitutional claim. 28 U.S.C. § 2254(b).” 328 F.Supp. at 995. Almost all of this reasoning is inconsistent with our subsequent decision in Lewis v. Kugler, supra. Since the decision of the Supreme Court in Mitchum v. Foster, supra, our conviction that Lewis v. Kugler was correctly decided has been reinforced. From those cases, from the Younger v. Harris group of cases and from other relevant authorities these rules of general application may be deduced: A. When an action is brought under the Federal Civil Rights Acts raising federal constitutional claims, prior resort, to the state courts, even where there may be an available state remedy, is not required. E.g., Zwickler v. Koota, 389 U.S. 241, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967); Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961). There is no doctrine of exhaustion of state remedies applicable to the federal courts’ jurisdiction under 28 U.S.C. § 1343. E.g., Wilwording v. Swenson, 404 U.S. 249, 92 S.Ct. 407, 30 L.Ed.2d 418 (1971) (per curiam); McNeese v. Board of Education, 373 U.S. 668, 672, 83 S.Ct. 1433, 10 L.Ed.2d 622 (1963) ; Rodriguez v. McGinnis, 456 F.2d 79 (2d Cir.), cert. granted sub nom. Oswald v. Rodriguez, 407 U.S. 919, 92 S.Ct. 2459, 32 L.Ed.2d 805 (1972). B. The Civil Rights Act of 1871, 42 U.S.C. § 1983, is an express exception to the anti-injunction statute, 28 U.S.C. § 2283, Michum v. Foster, supra; Cooper v. Hutchinson, 184 F.2d 119 (3d Cir. 1950). Thus the pendency of a state court proceeding does not deprive a federal court of equity of jurisdiction to issue an injunction in cases brought on the authority of 42 U.S.C. § 1983. C. A federal court may as a matter of discretion abstain in favor of an available state court adjudication if there is an unresolved question of state law which only the state courts can authoritatively construe and which may by virtue of such an authoritative construction avoid the decision of a federal constitutional issue. For convenience we refer to such abstention as Pullman type abstention. Such abstention involves no decision on the merits of the claim or even on the appropriateness of injunctive relief and is availed of ás a device whereby a federal court may avoid a premature decision of a federal constitutional issue. D. Weighed against the undesirability of a premature decision of the federal issue is the mandate from Congress in the Civil Rights Acts passed pursuant to the fourteenth amendment that federal courts will afford a prompt remedy for violations of that amendment and that such remedy includes federal fact finding. See Mitchum v. Foster, supra. Thus, if abstention in face of a state court adjudication would be likely to cause delay or if the evidentiary and ultimate facts on which the fourteenth amendment claims depend are in dispute the federal court should exercise its discretion against Pullman type abstention. E. In determining whether or not, in a case in which it has undoubted power to act, a federal court should on equitable principles enjoin a state court criminal prosecution, the federal equity court must take into account the available remedy at law of raising the federal constitutional claim in the pending state proceeding. That available remedy at law in the state court, when weighed with the comity due to a court of a coordinate sovereignty, will, in the absence of additional exceptional circumstances, always militate against the issuance of an injunction halting or interfering with the state prosecution. For convenience we refer to this rule as Younger type nonintervention. It is not abstention in the Pullman sense because it involves a decision on the merits of the claim for equitable relief that there is an adequate remedy at law in the state courts and that therefore federal equitable relief is inappropriate. The issue is not one of power or jurisdiction in this instance but simply of the appropriateness of equitable relief. F. When the issuance of a declaratory judgment will have the same practical effect on a pending state prosecution as the issuance of an injunction, the same Younger considerations govern the appropriateness of that relief. Samuels v. Mackell, supra. G. Even if a state prosecution is pending, injunctive or declaratory relief against state officers with respect to violations of federal constitutional rights not amounting to an injunction which will halt or substantially interfere with a pending prosecution may still be available. Lewis v. Kugler, supra at 1349. The award of either declaratory or injunctive relief may not present any problem of the comity due to a court of a coordinate sovereignty and will be governed by general legal or equitable considerations. If the requested declaratory relief against state officers would, however, adjudicate an issue such as the lawfulness of a search and seizure which on the basis of collateral estoppel might affect the state prosecution, then the federal court should not grant such relief. See Id. H. The exhaustion requirement of the habeas corpus statute, 28 U.S.C. § 2254(b), does not apply to proceedings brought under 28 U.S.C. § 1343 and 42 U.S.C. § 1983. Until the state court proceeding produces a judgment of the state courts resulting in confinement, 28 U.S.C. § 2254(b) does not apply by its terms even to federal habeas corpus jurisdiction. It is simply not relevant to the Civil Rights Act. Wilwording v. Swenson, supra; Rodriguez v. McGinnis, supra. The district court decision did not correctly apply these rules. First, it assumed that the Younger principle applied to those class members against whom an actual proceeding had not yet commenced. As we made clear in Lewis v. Kugler, supra, that principle operated only against those persons then actually enmeshed in the toils of a state criminal proceeding. Next, it assumed that the exhaustion requirement of 28 U.S.C. § 2254(d) was in some manner applicable to an action brought under 42 U.S.C. § 1983. As to those class members who have not yet been confined as a result of a state court judgment, 28 U.S.C. § 2254(d) is inapplicable by its terms. As to those class members who are confined as a result of a judgment finding them to be delinquent, there is no authority which warrants engrafting the requirements of 28 U.S.C. § 2254(d) upon an action brought pursuant to 42 U.S.C. § 1983. Wilwording v. Swenson, supra; Rodriguez v. McGinnis, supra. The district court acted solely on the authority of Younger v. Harris, supra, and Samuels v. Mackell, supra. Thus we are not aware of that court’s views as to the substantiality of the fourteenth amendment claims alleged on behalf of the class as to the possibility of a construction by the Pennsylvania courts of Pa.Stat.Ann. tit. 11, § 246 which would avoid a decision on those claims, or as to the availability of any Pennsylvania procedure which would provide the opportunity for such a construction. On the record before us, the original and the intervening plaintiffs have been processed through the Family Court Division of the Philadelphia Court of Common Pleas apparently without any opportunity to obtain an adjudication of their claims with respect to the intake procedures. Assuming the legal sufficiency of the petition that they be adjudged delinquent, and assuming the sufficiency of the evidence of their delinquency, we know of no Pennsylvania procedure whereby they may test the legality of the steps leading to a decision to file a formal petition against them. Such a procedure may exist, but it has not been called to our attention. Nor have the defendants called to our attention any civil remedy, outside the scope of the Pennsylvania Juvenile Court Act, by which the class members might obtain a construction of the Pennsylvania statute which would avoid a decision by the federal courts on the fourteenth amendment claims. Moreover, defendants have suggested no likely construction of Pa.Stat.Ann. tit. 11, § 246 (1965) which would avoid the claim that the probation officers in the intake process exercise virtually unbridled discretion. In such circumstances we may not, on the appellate level, affirm on the basis of a Pullman type abstention which the district court did not consider. At the same time, since the district court made no findings of fact, we cannot at this stage of the case rule out the possible propriety of such an exercise of the district court’s discretion. However, even if a Pennsylvania remedy exists, the district court cannot abdicate its responsibility as an article III court to determine facts which are of constitutional significance. Even with Younger type nonintervention the federal court must make the factual determination whether extraordinary circumstances exist which would take the case outside the ordinary rule that the state remedy at law is adequate. As Justice Holmes noted: “[T]he determination as to their rights turns almost wholly upon the facts to be found. . . . When those are settled the law is tolerably plain. All their constitutional rights we repeat, depend upon what the facts are found to be. They are not to be forbidden to try those facts before a court of their own choosing, if otherwise competent.” Prentis v. Atlantic Coast Line, 211 U.S. 210, 228, 29 S.Ct. 67, 70, 53 L.Ed. 150 (1908). The purpose of Congress in enacting the Civil Rights Acts was to provide a federal forum for the enforcement of federal rights. See Mitchum v. Foster, supra, 407 U.S. at 241, 92 S.Ct. 2151. Where an adjudication of those rights rests heavily on a factual determination, the ultimate responsibility for making this determination lies with the article III courts. There is in the district court’s opinion the suggestion of mootness. This suggestion is erroneous. Completion of the juvenile court proceedings did not remove Conover and Myers from membership in the class defined in the order which made the class action determination. They still were juveniles in Philadelphia who might in the future be subjected to the challenged intake procedures. They continued to press their objections to that procedure in an adversary context. See Sierra Club v. Morton, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972); Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970); Flast v. Cohen, 392 U.S. 83, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968); Shannon v. HUD, 436 F.2d 809 (3d Cir. 1970). Indeed, even if their own claims had become moot, and they had not, see, e.g., Sibron v. New York, 392 U.S. 40, 50-58, 88 S.Ct. 1889, 20 L.Ed.2d 917 (1968); Carafas v. LaVallee, 391 U.S. 234, 88 S.Ct. 1556, 20 L.Ed.2d 554 (1968); numerous class members remained whose claims were very much alive. See Moore v. Ogilvie, 394 U.S. 814, 89 S.Ct. 1493, 23 L.Ed.2d 1 (1969). Conover and Myers remained adequate representatives of the entire class. See Gatling v. Butler, 52 F.R.D. 389, 395 (D.Conn.1971); Adens v. Sailer, 312 F.Supp. 923 (E.D.Pa.1970). Finally there is the narrow issue whether, even as to class members actually before the Family Court Division of the Philadelphia Court of Common Pleas, the ruling in Samuels v. Mackell, supra, would preclude declaratory relief of some kind. Lewis v. Kugler, supra at 1349, is relevant here. That ease suggests that if an actual proceeding is pending, as to those class members against whom those proceedings are pending certain types of declaratory relief will be inappropriate. It holds that the federal court should not foreclose the merits of the issue of legality of a search or seizure by granting a declaratory judgment. Such a determination would in effect substitute federal court fact finding for that already available in the state court on an issue going to the ability of the state to prove its charge. See e. g., Stefanelli v. Minard, 342 U.S. 117, 72 S.Ct. 118, 96 L.Ed. 138 (1951). This case does not present the same kind of issue. Declaratory relief with respect to the intake procedures will not necessarily hinder the eventual adjudicatory process of the Court of Common Pleas or substitute federal fact finding in any case in which a petition for adjudication of delinquency may be tried. Thus Lewis v. Kugler, supra, is not authority for the withholding of declaratory relief, even as to those class members presently before the Pennsylvania courts. In that case we pointed out that in the exercise of its broad equitable powers, a district court could fashion a remedy which would prevent deprivation of constitutional rights while at the same time avoiding unnecessary encroachment on state and local government functions, 446 F.2d at 1351-1352. Since a remedy with respect to the intake procedures would not necessarily interfere with the adjudication functions of the Commonwealth’s juvenile court, it is therefore not necessarily precluded by Younger v. Harris, supra, or Samuels v. Mackell, supra. If the district court was in error in rejecting the defendant’s claims to judicial immunity, 304 F.Supp. at 262, we would be required to affirm the dismissal of the complaint on that basis even though we did not agree with the grounds on which the court acted. See Riley Co. v. Commissioner, 311 U.S. 55, 61 S.Ct. 95, 85 L.Ed. 36 (1940); Helvering v. Gowran, 302 U.S. 238, 58 S.Ct. 154, 82 L.Ed. 224 (1937). Thus it is appropriate to comment that we agree with Judge Fullam’s interpretation of Pierson v. Ray, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967), and Bauers v. Heisel, 361 F.2d 581 (3d Cir. 1966), which distinguishes, for purposes of judicial immunity, actions for damages from actions for injunctive relief. Our leading case of Cooper v. Hutchinson, supra, was an action for an injunction against a state court judge. It was neither limited nor overruled by Bauers v. Heisel, supra. See also Mitchum v. Foster, supra. Compare Bethea v. Reid, 445 F.2d 1163 (3d Cir. 1971) with Cooper v. Hutchinson, supra; cf. Magaziner v. Montemuro, 468 F.2d 782, 788 n. 5 (3d Cir. 1972). The ease will be remanded to the district court for findings of fact and conclusions of law. The parties have suggested at oral argument that because of some procedural changes in the intake procedures of the Family Court division of the Philadelphia Court of Common Pleas it may be appropriate to supplement the record. Our ruling does not preclude such action if the district court concludes that it is appropriate. If the district court concludes that what we have referred to as Pullman type abstention is appropriate it should inform us what possible narrowing constructions of the Pennsylvania Juvenile Court Law have been suggested, how these constructions would avoid the decision of the fourteenth amendment claims asserted on behalf of the class and what Pennsylvania procedure is available to class members for raising the issues. If it concludes that such abstention is inappropriate it should proceed to the merits of the fourteenth amendment claims, under the Pennsylvania Juvenile Court Law as applied and to the fashioning of an appropriate remedy if any is found to be necessary, consistent with the principles set forth in this opinion. ADAMS, Circuit Judge (concurring). Since the beginning of our constitutional history, the scope of authority properly exercisable by federal courts of equity has been circumscribed by a policy generally inhibiting interference with state criminal proceedings. Resting upon principles of equity jurisprudence and federal-state comity, this policy of non-intervention posits the existence of dual sovereignties in our system of government and recognizes the value in permitting each to perform its own separate functions without interference from the other. This fundament forecloses a federal court from acting, except in narrow circumstances, to enjoin state criminal proceedings when the plaintiff has an adequate remedy at law and will not suffer irreparable harm as a result of federal court inaction. Requiring, in part, a determination of the contours of this policy of federal non-intervention, the present case may be thought to implicate basic values of our constitutional scheme of government and thus to require a sensitive adjudicative touch. In resolving the issues raised, we must be mindful that our judicial power extends only to deciding the specific case presented to us. While attempting to maintain the essential role of federal courts both in preserving a healthy relationship between the nation and the states and in protecting constitutional rights, the federal judiciary must be alert to the dangers inherent in deciding cases more broadly than required by the precise issues presented. The goal must be reasoned, principled results based solely upon grounds necessary to the disposition of the controversy. Since the majority opinion may be thought to stand for more than the narrow decision appropriate in light of the facts of this case, I feel constrained, in concurring in the result, to state the reasons for my position. This suit was brought in the federal district court on April 8, 1969. On September 24, 1969, the district court, in an opinion and order relying upon the Supreme Court’s decision in Zwickler v. Koota, rejected the argument that it should abstain, and instead denied defendants’ motion to dismiss the complaint. It permitted the suit to proceed as a class action and, after extensive pre-trial preparation, held a hearing on the merits on April 13, 1971. Prior to the district court hearing, the Supreme Court had handed down, on February 23, 1971, a series of cases defining in some detail the authority of federal courts to enjoin, or to issue a declaratory judgment effectively terminating, pending state criminal proceedings. On the basis of those decisions, the district court concluded that it was interdicted from granting the declaratory or injunctive relief requested by the plaintiffs, and dismissed the complaint on July 12, 1972. Whether that dismissal was improper is the question this Court must now decide. I. Before analyzing the applicability of the recent Supreme Court cases limiting federal equity power, it is appropriate to state the reasons for my agreement with the majority’s position that this controversy is not moot and can properly be maintained by the named plaintiffs. For 180 years, the federal courts, powerless to issue advisory opinions, have decided only those questions affecting the rights of litigants before them. Federal judicial power exists to adjudicate only those cases that are “definite and concrete, touching the legal relations of parties having adverse legal interests. . It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.” A jurisdictional concept, the requirement that federal courts not decide moot cases serves to keep the exercise of federal judicial power within constitutional bounds. The standing doctrine seeks to insure that the parties before the court have sufficiently adverse interests in the outcome of the litigation so that the issues will be fully, adequately, and concretely presented. Although closely related, the mootness concept and the standing doctrine often reflect different concerns. Mootness raises the question whether the litigation itself is of such a eharaeter as to fall within the “case or controversy” limitation imposed upon the judicial power of Article III of the Constitution, whereas standing tests whether the particular litigant is the proper party to raise the issues involved. In cases of the kind presented here, the mootness concept and the standing doctrine are often difficult to separate. For example, because the named plaintiffs are not presently being subjected to the procedure they claim to be unconstitutional, it might be argued that, as to them, the case is moot. Neither declaratory nor injunctive relief could correct the alleged past wrong. At the same time, it might be contended that the named plaintiffs lack standing to challenge the Pennsylvania procedure of detaining juveniles without a prompt preliminary hearing on probable cause, because the asserted wrong is past and only a presently detained juvenile would be a proper party to litigate the issue. Whichever contention is pressed— mootness or standing — each is predicated, in this particular case, on the ground that this suit, looking solely to future relief, is not properly maintainable since the named plaintiffs have suffered only a past wrong. These arguments are without merit to the extent they overlook that this suit is a class action, as the district court permitted, on behalf of “all juveniles in Philadelphia, Pennsylvania, who have been or will be affected by action of the defendants alleged in the complaint.” In Washington v. Lee, for example, Negro citizens brought a class action seeking a declaratory judgment and injunction against Alabama officials concerning their rights, and those of others similarly situated, not to be segregated by the state penal system. Although the named plaintiffs were in jail when the complaint was filed, they had been released by the time of trial. In answer to the defendants’ argument that the named plaintiffs lacked standing to challenge the Alabama statutes and practices involved, the three-judge federal district court first noted that another court had stated in a similar case that to have standing plaintiffs must show past use and a right to and a reasonable possibility of future use of the facilities in question. Instead of following that rule, the three-judge court held that, as to future use, the named plaintiffs did not have to demonstrate an intention to violate the law in such manner as to subject themselves in the future to imprisonment. The three-judge court held that to acquire standing, the plaintiffs must show that the operation of the jails “ ‘permit[s] the recurrence of comparable violations.’ ” The Supreme Court affirmed per curiam. Analyzing a similar question in terms of the mootness concept, not the standing doctrine, another court has come to the same conclusion. In Gatling v. Butler, plaintiff, an indigent juvenile, sought review of her delinquency adjudication, but was prevented by defendants, state officials, who would not docket the appeal without payment of a filing fee as required by Connecticut statute. Alleging that application of the statute deprived her and others similarly situated of equal protection and due process, the plaintiff requested the convening of a three-judge district court to determine' her case on the iperits and asked for injunctive and declaratory relief. The court was informed that a state court hearing had been scheduled for consideration of plaintiff’s earlier application for waiver of filing fees. It therefore reserved decision pending outcome of the state court hearing. When the state court later granted plaintiff leave to file her appeal without payment of the filing fee, defendants urged the district court to dismiss the complaint on the ground, inter alia, that the state court had eliminated any controversy. The court held that the suit was not moot as to other class members even on the assumption that plaintiff’s own case was moot, and that the named plaintiff could continue to litigate the issues as representative of the class. Thus, whether the present case is analyzed in terms of mootness or standing, the result is the same: it is properly maintainable by the named plaintiffs, if, as will be discussed infra, they are not otherwise barred by the doctrine enunciated in the Younger line of eases. Even assuming that the case is moot as to the named plaintiffs, as the district court suggested, mootness as to them does not necessarily imply mootness as to the class represented. Indeed, at least as to some members of the class — those picked up and detained but who have not yet been discharged or given a preliminary or adjudicative hearing- — it is clear that there is a “real and substantial controversy,” “touching the legal relations of parties having adverse legal interests.” Under these circumstances, the ease is not moot and may .properly be maintained by the named plaintiffs at least as class representatives. II. Federal injunctive relief as a remedy for alleged unconstitutional action by state officials is neither novel nor noteworthy. In Ex Parte Young, a federal court, having preliminarily enjoined railroads from complying with a Minnesota statute reducing their rates, adjudged Young, the state attorney general who had been enjoined from enforcing the statute, in contempt after he filed a state court petition to order the railroads to conform to the statute. The Supreme Court affirmed the judgment of contempt, holding that the suit was not barred by the 11th Amendment. It did not question the existence of federal power to enjoin a state official. The legislative response to the apparent shift in the distribution of power between nation and state wrought by Ex Parte Young included the enactment of statutory curbs upon the scope of federal jurisdiction. Not all limitations on federal judicial power, however, came from the Congress. The courts themselves began to develop self-imposed limitations on the exercise of federal power to enjoin state officials. A. The Abstention Doctrine Railroad Commission v. Pullman Co., though perhaps not the birthplace of the abstention doctrine, is at least the case that secured its foundations. In an action to enjoin an order of the Texas Railroad Commission that sleeping cars must be in the charge of conductors (white) not porters (black) as unauthorized by Texas law and as violative of the equal protection, due process, and commerce clauses of the Constitution, Mr. Justice Frankfurter, speaking for a unanimous Court, held that the district court should have exercised its equity discretion and abstained. First, because the case touched “a sensitive area of social policy” and because decision of constitutional questions should be avoided if possible, the Court thought it best for such cases to be decided on the basis of the state law questions involved “if a definitive ruling on the state issue would terminate the controversy.” Second determination by the federal court of the state law question would be unwise: “[N]o matter how seasoned the judgment of the district court may be, it cannot escape being a forecast rather than a determination.” However, the court noted another factor of importance : “Few public interests have a higher claim upon the discretion of a federal chancellor than the avoidance of needless friction with state policies. . ." As a technique for refusing to exercise federal jurisdiction when the case’s result might turn on issues of state law, the abstention doctrine rests fundamentally upon a reluctance to decide avoidable, federal constitutional questions. Of course, a policy of eschewing unnecessary constitutional decisions cannot by itself justify abstaining. Instead, when underlying and determinative state law issues are present, the federal court could satisfy the policy of avoiding constitutional decision by deciding the ease itself on the basis of state law. That federal courts are not inherently powerless or incompetent to resolve state law issues is clear: in diversity cases, for example, they must often do so. But, because of the presence of state law questions, the fact that a federal decision regarding them cannot be determinative, and the kind of disruption that an erroneous federal decision pertaining to state law may cause to state policy, federal abstention in favor of at least a preliminary state court adjudication is justified. Application of the abstention doctrine, however, must be predicated upon the presence of a state law question capable of making constitutional decision unnecessary. The absence of such a state law question in the present case precludes refusing to adjudicate this controversy on abstention grounds. Unlike the Pullman case, where the authority of the Railroad Commission under Texas law to issue the challenged order was unclear, here there is little question regarding the authority as a matter of Pennsylvania law to detain juveniles during the intake process without a preliminary hearing on probable cause. Pennsylvania explicitly prohibits preliminary hearings in juvenile proceedings. Under these circumstances, a state court decision would not render unnecessary a determination of the federal constitutional issue raised by plaintiffs. And, as the cases make clear, abstention is not justified solely to afford the state courts an opportunity to pass upon the federal constitutional question presented. B. Strict Adherence to Prerequisites of Equity — The Younger Line of Cases In addition to developing the abstention doctrine to counteract to some degree the shift in federal-state relations threatened by the implicit rationale underlying Ex Parte Young, the federal courts have taken special precautions, in suits to enjoin state officials, to insure that federal interference occur only when necessary to protect the plaintiff’s rights. To determine whether the exercise of equitable power is necessary, the courts have focused upon whether the plaintiff has an adequate remedy at law and whether he will suffer irreparable injury as a result of federal court inaction. When requested to interfere with state criminal proceedings, the federal courts have been particularly strict in applying equity requirements. In Douglas v. City of Jeannette, for example, petitioners, members of Jehovah’s Witnesses, brought suit in federal court to restrain threatened state prosecution of them for violating a city ordinance prohibiting the solicitation of orders for merchandise without first obtaining a license and paying a license tax. The Supreme Court held that the district court, in the exercise of its equity powers, should not “interfere with or embarrass threatened proceedings in state courts save in those exceptional cases which call for the interposition of a court of equity to prevent irreparable injury which is clear and imminent. . . . ” In the circumstances of that case, the Court found no irreparable injury. “It is a familiar rule that courts of equity do not ordinarily restrain criminal prosecutions. No person is immune from prosecution in good faith for his alleged criminal acts. Its imminence, even though alleged to be in violation of constitutional guarantees, is not a ground for equity relief since the lawfulness or constitutionally of the statute or ordinance on which the prosecution is based may be determined as readily in the criminal case as in a suit for an injunction. * * * * * * “It does not appear from the record that petitioners have been threatened with any injury other than that incidental to every criminal proceeding brought lawfully and in good faith, or that a federal court of equity by withdrawing the determination of guilt from the state courts could rightly afford petitioners any protection which they could not secure by prompt trial and appeal pursued to this Court. The Supreme Court has recently re-affirmed the principle of Douglas regarding federal interference with state criminal proceedings. In Younger v. Harris, Harris was charged in a state court with violating the California Criminal Syndicalism Act. He then filed suit in a federal district court alleging that the prosecution and the existence of the California statute “chilled” his First Amendment rights, and asked that the district attorney be enjoined from prosecuting him. A three-judge district court issued the requested injunction, after holding that it had authority to restrain the district attorney and that the statute was void for vagueness and overbreadth. The Supreme Court reversed the judgment “as a violation of the national policy forbidding federal courts to stay or enjoin pending state court proceedings except under special circumstances.” In the companion case of Samuels v. Mackell, the Court held that the same rule applies to declaratory judgment actions. Revealing a deep concern for federal-state relationships and the delicacy with which cases requesting federal interference with pending state criminal proceedings must be handled, the Younger decision “rests on the absence of the factors necessary under equitable principles to justify federal intervention . ,” As the Supreme Court asserted : “[the] longstanding public policy against federal court interference with state court proceedings .... [rests in part upon] [t]he basic doctrine of equity jurisprudence that courts of equity should not act, and particularly should not act to restrain a criminal prosecution, when the moving party has an adequate remedy at law and will not suffer irreparable injury if denied equitable relief.” The Court found neither of these equity prerequisites present in Younger. An adequate legal remedy was available in the pending state criminal proceeding where Harris would be able to raise his constitutional claims by way of defense. In addition, denial of federal equitable relief would not, in the Court’s view, cause Harris irreparable injury which, for purposes of cases requesting federal interference with state criminal proceedings, the Court defined as having to be “ ‘both great and immediate.’ ” “ ‘No citizen or member of the community is immune from prosecution, in good faith, for his alleged criminal acts. The imminence of such a prosecution even though alleged to be unauthorized and hence unlawful is not alone ground for relief in equity which exerts its extraordinary powers only to prevent irreparable injury to the plaintiff who seeks its aid.’ ” * * * * * * “ ‘It does not appear from the record that petitioners have been threatened with any injury other than that incidental to every criminal proceeding brought lawfully and in good faith . . . .’” As will become apparent, plaintiffs have here presented a case sufficiently distinguishable from the Younger series of cases so as not to require the same result. Both Younger and Samuels presented factual situations in which defendants in criminal cases were each attempting to attack the constitutionality of the statute upon which his state prosecution was based. In both these cases, because the constitutional challenge was to the very law forming the basis for prosecution, declaratory or injunctive relief, resting upon a holding of unconstitu- ' tionality, would effectively have brought the pending state criminal proceeding to a halt. In each of the Younger series of cases, the interest of the state in prosecuting criminal proceedings without interference would have been seriously frustrated by the requested federal court action. At the same time, in none of the Younger line of cases would federal court interposition have produced a corresponding, appreciable gain for the protection of federal constitutional rights. Younger, Samuels, and Perez v. Ledesma each presented situations in which the prosecuted parties could raise their constitutional assaults during the course of their' pending state criminal trials. Moreover, in Boyle v. Landry, none of the plaintiffs had been prosecuted, charged, or even arrested under the particular statute they were challenging. The present case, on the other hand, produces a significantly different factual pattern. First, no one is here attacking the constitutionality of the statute forming the basis for the delinquency proceeding, itself. Plaintiff Conover, for example, is not urging that assault and battery cannot constitutionally be made a delinquency violation or crime, nor is he praying for injunctive or declaratory relief against a pending delinquency adjudication. Rather, plaintiffs are here attempting to secure only a federal court judgment that holding juveniles without a preliminary hearing or an equivalent proceeding to ascertain probable cause is unconstitutional Under these circumstances, a federal court’s declaration of unconstitutionality or an injunction requiring the officials to institute a preliminary hearing procedure would in no way adversely affect the state’s legitimate interest in conducting its delinquency hearings without direct interference. No delinquency hearings would be enjoined. Indeed, the sole effect of giving plaintiffs the relief they seek would be a requirement that, in the future, preliminary hearings or an equivalent proceeding to determine probable cause be held. Simply put, the state would no longer be permitted to detain juveniles without a determination of probable cause for such detention. The foregoing view, that plaintiffs in the present case are not requesting the kind of federal interference proscribed by Younger and Samuels, is supported by this Court’s recent decision in Lewis v. Kugler. There, plaintiffs brought suit under § 1983 on behalf of themselves and all others similarly situated and alleged that while travelling upon New Jersey highways, they had been subjected to arbitrary stops and unreasonable searches by state policemen. They sought, inter alia, a declaration that the alleged practice of selective searches is unconstitutional and an injunction against its continuance. At the time suit was filed, ten of the thirty-seven named plaintiffs were subject to pending state criminal proceedings. Dealing with the recent Younger line of cases, the Court first noted that they “are pertinent . . . only insofar as the complaint seeks relief in the nature of an injunction against state criminal proceedings or declaratory relief which would interfere with state criminal proceedings.” Because the ten plaintiffs being prosecuted would have an opportunity to raise their constitutional claims in the state proceedings, the Court denied an injunction against prosecution and “a declaratory judgment that the searches and seizures forming the basis of the state criminal proceedings against the 10 are unconstitutional . .” The Court also held, however, that the federal district court could consider the claims of the ten plaintiffs being prosecuted, along with the claims of the other plaintiffs, in determining whether the practice of selective searches was unconstitutional. “This case differs from Samuels, however, in that the 10 plaintiffs being prosecuted, in addition to seeking relief against the prosecutorial authorities, also seek relief against the New Jersey State Troopers. As we have noted, that relief is not barred by the Younger and Samuels line of cases . . . .” Lewis v. Kugler, then recogizes that the principle of Younger and Samuels applies when the relief sought is against a pending state criminal prosecution. The Court permitted relief by those being prosecuted to the extent such relief would not interfere with pending criminal proceedings. The effect of granting equitable relief in the present case, as in Lewis v. Kugler, will not seriously interfere with or terminate any state adjudications of delinquency. That equitable relief is not here barred by the Younger line of cases does not imply, of course, that the plaintiffs are necessarily entitled to an injunction or a declaratory judgment. Determining the propriety of granting or denying such relief in this case depends upon whether plaintiffs have an adequate remedy at law and whether they will suffer irreparable harm in the absence of a federal equity court’s aid. Because the present record is inadequate to enable this Court to make such a determination, I agree with the majority’s conclusion that this case should be remanded to the district court for findings of fact and conclusions of law. The district court may well find, for example, that state habeas corpus or declaratory relief is available and adequate to provide a determination of the constitutional claims presented here. Although the availability of relief in the state courts does not, in § 1983 suits, preclude federal court action on exhaustion grounds, such procedures may constitute the “adequate remedy at law” barring equitable relief. Moreover, a § 1983 suit for damages in the federal court may or may not be “adequate” to satisfy the claim of plaintiffs and the class they represent. In view of the circumstances presented here, this case should be remanded to the district court. If that court decides that plaintiffs have an adequate remedy at law or will not suffer irreparable harm as a result of federal court inaction, dismissal of the case would be in order. On the other hand, if the necessary equity factors are demonstrated, the district court should proceed to adjudicate the matter and award, if plaintiffs prevail on the merits, appropriate relief. Before SEITZ, Chief Judge, and MCLAUGHLIN, VAN DUSEN, ALDI-SERT, ADAMS, GIBBONS, ROSENN and HUNTER, Circuit Judges. OPINION OF THE COURT SUR PETITION FOR REHEARING- AD AMS, Circuit Judge. Honorable Frank M. Montemuro, Jr., Administrative Judge of the Family Court Division of the Philadelphia Court of Common Pleas, has petitioned for a rehearing by the Court en banc of several issues involved in the panel’s previous disposition of this appeal. Having reviewed the contentions pressed by the petition for rehearing, the opinions previously filed by the panel are hereby reinstated except for those portions of the majority opinion discussing the doctrine of judicial immunity in the context of a § 1983 suit for injunctive relief. This disposition in no way implies any view concerning the applicability of the judicial immunity doctrine in injunctive suits under 42 U.S.C. § 1983, but merely reflects the conclusion of this Court that, in the circumstances of the present case, the prudent employment of judicial power counsels withholding a definitive judgment upon this issue at the present time. The district court held that Judge Montemuro is a proper party defendant to the injunctive aspect of this action. In his petition for rehearing Judge Montemuro conceded — at least for the purpose of this appeal — that the judicial immunity doctrine creates no per se bar to a federal court’s enjoining a state court judge. Mindful of the various views on this issue, we decline to pass judgment at this time upon whether the judicial immunity doctrine is an absolute bar, a partial bar, or no bar at all in § 1983 suits for injunctive relief against state court judges. To do otherwise in the present appeal, keeping in mind Judge Montemuro’s concession that federal judges possess the power to enjoin state judges, would be to decide an issue not necessary to the disposition of this case, at least at this stage. We do not now, therefore, express any view concerning the district court’s ruling upon this issue. Upon an issue of such significance, when to decide is not necessary; it may well be necessary not to decide. GIBBONS, Circuit Judge (concurring in the result). The opinion of the court on appellees’ petition for rehearing reaches the correct result. I concur in that result and in the reinstatement of those portions of the majority opinion heretofore filed of which the opinion of the court on appellees’ petition for rehearing approves. I do not concur, however, in the express reservation of approval of that part of the majority panel opinion which dealt with the contention that state court judges are immune from federal injuncfive relief. That reservation, in the context of this case, is unfortunate since it serves to introduce elements of uncertainty in areas of the law which heretofore were certain, and to create ambiguities for the district court as to the effect of our mandate on remand. The introduction of these uncertainties and ambiguities in an opinion disposing of the petition for rehearing is entirely unwarranted, since that petition did not address itself to the immunity issue. Thus, the majority has chosen the vehicle of an opinion on a petition for rehearing on other issues to act sua sponte in expressing its reservations about that part of the panel opinion dealing with immunity. That the majority would so far depart from the normal practice of this court can only lend substance and respectability to positions on the now uncertain areas of the law which, at least to me, were heretofore insubstantial and unrespectable. The first area of the law to which uncertainty has been introduced is that of appellate procedure. The judgment appealed from dismissed the plaintiffs’ complaint. “In the review of judicial proceedings the rule is settled that, if the decision below is correct, it must be affirmed, although the lower court relied upon a wrong ground or gave a wrong reason.” Helvering v. Gowran, 302 U.S. 238, 245, 58 S.Ct. 154, 158, 82 L.Ed. 224 (1937). Compare Law Students Civil Rights Research Council, Inc., v. Wadmond, 401 U.S. 154, 158 n. 9, 91 S.Ct. 720, 27 L.Ed. 2d 749 (1971), in which the Supreme Court declined to examine the judicial immunity doctrine. In Wadmond, an injunction had been entered against the appellee-defendants, who did not file a cross-appeal when the plaintiffs appealed. Thus the appellees in Wadmond were barred on appeal from attacking on immunity grounds an injunction against them from which they did not appeal. They ran afoul of another equally well settled rule that a party who is not satisfied by a final judgment cannot be heard in opposition thereto when his adversary appeals unless he has filed a cross-appeal. Morley Construction Co. v. Maryland Casualty Co., 300 U.S. 185, 191, 57 S.Ct. 325, 81 L.Ed. 593 (1937). A nonappealing party in other words, may not attack a judgment, but may support it by any matter, appearing in the record. These two rules of appellate procedure were placed in a nice juxtaposition by Mr. Justice Brandeis: “[A] party who does not appeal from a final decree of the trial court cannot be heard in opposition thereto when the case is brought here by the appeal of the adverse party. In other words, the appellee may not attack the decree with a view either to enlarging his own rights thereunder or of lessening the rights of his adversary, whether what he seeks is to correct an error or to ing in the record, although his argusupplement the decree with respect to a matter not dealt with below. But it is likewise settled that the appellee may, without taking a cross-appeal, urge in support of a decree any matter appearment may involve an attack upon the reasoning of the lower court or an insistence upon matter overlooked or ignored by it.” United States v. American Railway Express Co., 265 U.S. 425, 435, 44 S.Ct. 560, 564, 68 L.Ed. 1087 (1924) (Footnote omitted). These rules apply to appeals from the district court to this court as well as to appeals to the Supreme Court. 9 J. Moore, Federal Practice ¶ 204.11[3] at 933 (2d ed. 1972). Under these rules the Supreme Court properly declined to consider the immunity contention which had been rejected by Judge Friendly in the district court. Law Students Civil Rights Research Council, Inc. v. Wadmond, 299 F.Supp. 117, 123-124 (S.D.N.Y.1969) (three-judge court.) . But under these rules, in considering the judgment dismissing the complaint this court was required to consider whether, even though the grounds relied on by the district court were erroneous, a valid ground for dismissal was presented in the record. The immunity contention was a matter of record. It had, indeed, been rejected in a district court opinion on an interlocutory aspect of the case. Conover v. Montemuro, 304 F.Supp. 259 (E.D.Pa.1969). Acceptance of the immunity doctrine would require an affirmance. Have we now adopted a new set of rules as to when a completely successful appellee must file a cross-appeal? If we have adopted a new set of rules, what is the effect, upon remand, of the failure of a completely successful appellee to cross-appeal ? If we have not adopted a new set of rules, what is the intended effect, upon remand, of the majority opinion on rehearing? The ambiguities of the majority opinion leave these matters for resolution by the district court. If that court concludes that we have in fact adopted a new set of rules as to when a completely successful appellee must file a cross-appeal, then it must resolve the issue whether by failing to file a notice of cross-appeal the appellees have made the original district court ruling on immunity res adjudicata. If, on the other hand, it concludes that we have not adopted a new set of rules as to when a notice of cross-appeal must be filed, then it must interpret the basis for the excision of the immunity discussion from the panel opinion. Possibly some sort of waiver is operating against appellees. If so, the district court must determine whether the waiver is for this round of the fight or for the complete bout. So I ask, on behalf of the district judge who must deal with the case on remand, is the immunity contention, which was specially pleaded and never abandoned, still in the case? The question is hardly academic, in view of the majority’s sua sponte action in withholding approval of the discussion of that contention. This brings me to the reference in the majority opinion on rehearing to “various views on this issue.” The issue is whether state court judges are immune from the compulsory civil process of an injunction of the article III courts. There is no thoughtful opinion, indeed no reasoned analysis, so holding. The majority of this court declines at this time to express a view of the law which recognizes a distinction between judicial immunity from civil liability in damages and immunity from civil process. In fact by declining such expression what it has done is withdraw this court’s imprimatur from what was settled law in this circuit. In Allen v. Biggs, 62 F.Supp. 229 (E.D.Pa.1945) (Ganey, J.), the district court recognized that judges of this court could not be sued for money damages for acts done in the performance of their official duties. That case, unlike this, involved a federal judicial officer. It recognized that the privilege of freedom from liability for damages was a matter of common law, but the opinion did not specify whether the source of the privilege was state or federal common law. The same issue came before this court, this time with respect to a state judicial officer sued for money damages, in Picking v. Pennsylvania R. Co., 151 F.2d 240, 250 (3d Cir. 1945). Judge Biggs, the defendant in Allen v. Biggs, supra, held that state court judges were not immune from damage suits brought in the federal courts pursuant to the jurisdiction conferred by the Civil Rights Act of 1870. Recognizing the common law privilege referred to in Allen v. Biggs, he said: “But the privilege as we have stated was a rule of the common law. Congress possessed the power to wipe it out. We think that the conclusion is irresistible that Congress by enacting the Civil Rights Act sub judice intended to abrogate the privilege to the extent indicated by that act and in fact did so.” 151 F.2d at 250. In Cooper v. Hutchinson, 184 F.2d 119 (3d Cir. 1950), this court considered an application for injunctive relief against a state court judge for prohibiting an out-of-state attorney from representing a defendant in a capital case. Judge Goodrich recognized that there was equitable jurisdiction in the federal courts to issue such an injunction. Cooper v. Hutchinson, supra, is, of course, most notable for the proposition that the Civil Rights Act of 1870 is an express exception to the Anti-Injunction Act of 1792, a view ultimately adopted by the Supreme Court in Mitchum v. Foster, 407 U.S. 225, 92 S.Ct. 2151, 32 L.Ed.2d 705 (1972). But it is also a clear holding that a state court judge is not immune from the civil process of an injunction issued by a federal court. Judge Biggs, in Picking v. Pennsylvania R. Co., supra, proved to be less prophetic than usual, for in Tenney v. Brandhove, 341 U.S. 367, 71 S.Ct. 783, 95 L.Ed. 1019 (1951), the Supreme Court rejected his construction of the Civil Rights Act of 1870 as abolishing common law privileges. Tenney v. Brandhove, supra, recognized that the common law immunity of legislators from civil liability in damages survived the Civil Rights Act. In Bauers v. Heisel, 361 F.2d 581 (3d Cir. 1966), cert. denied, 386 U.S. 1021, 87 S.Ct. 1367, 18 L.Ed.2d 457 (1967), this court recognized that Tenney v. Brandhove, supra, overruled Judge Biggs’ construction of the Civil Rights Act, and that Allen v. Biggs, supra, rather than Picking v. Pennsylvania R. Co., supra, was the governing precedent with respect to actions seeking money damages from state court judges. In Pierson v. Ray, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967), the Supreme Court, in a case involving a suit against a state court judge for money damages, reiterated that the Civil Rights Act had not abolished all common law immunities, and that the judge was immune from liability for damages. The vigorous dissent of Justice Douglas, tracing the legislative history of the Civil Rights Act, espouses the construction of that statute announced in the Picking case by Judge Biggs. If I were free to do so I would espouse the same construction, especially since the unwillingness of state judges to enforce the law on behalf of freedmen and loyalists in the post-Civil War years figured so prominently as a motivation for the enactment of the statute. But in our framework of government, history, including legislative history, is what a majority of the Supreme Court chooses to make of it. Thus we are bound by the Pierson v. Ray, supra, construction of the Civil Rights Act. But the holdings of Tenney v. Brandhove, supra, and of Pierson v. Ray, supra, are quite clearly limited to the Picking situation, and do not apply to Cooper v. Hutchinson, supra. The Supreme Court did not either in Tenney or in Pierson, refer to Cooper v. Hutchinson, supra, although for years it had demonstrated its awareness and knowledge of the significance of that case. Neither Tenney nor Pierson mention the injunction problem, and both explicitly refer to the common law as the source of the immunity which they recognize. Thus, the starting point of any discussion of judicial immunity from the civil process of the federal courts must be the common law as of 1870. Here we have rather clear contemporaneous expressions. In Pierson v. Ray, supra, the Court found the common law of judicial immunity in Bradley v. Fisher, 80 U.S. (13 Wall.) 335, 20 L.Ed. 646 (1871). The Bradley litigation, of which Bradley v. Fisher, supra, is only one aspect, precisely illustrates the distinction between immunity from civil liability in damages and immunity from coercive civil process. Bradley was the attorney for Dr. Suratt in the criminal case growing out of the assassination of President Lincoln. Fisher was the judge who presided at that trial. Judge Fisher took umbrage at the manner in which Bradley conducted the defense and at the conclusion of the case struck Bradley’s name from the roll of the court; Bradley sued Fisher for damages consequent thereon. Justice Field, writing for the Court on the authority of Randall v. Brigham, 74 U.S. (7 Wall.) 523, 19 L.Ed. 285 (1869), held that Judge Fisher could not be made to answer in damages. Randall v. Brigham, supra, had held that judges of a state court could not be held liable for damages for wrongfully disbarring an attorney. That case arose, of course, prior to the enactment of the Civil Rights Act of 1870, so that the Pierson v. Ray, supra, issue was not presented. Taken together, then, Bradley v. Fisher, supra, and Randall v. Brigham, supra, establish that neither federal nor state judges may be held liable in damages for acts in the performance of their judicial duties. But Judge Fisher was not the only judge who had taken umbrage at the way in which Bradley had represented Dr. Suratt. The Supreme Court of the District of Columbia had also disbarred him for his alleged contumacy toward Judge Fisher. Bradley filed in the Supreme Court of the United States a petition for an original writ of mandamus directed to the Supreme Court of the District of Columbia to restore him to the roll of attorneys. Justice Nelson, writing for the Supreme Court, held that the peremptory writ of mandamus should issue to the judges of the Supreme Court of the District of Columbia. Ex parte Bradley, 74 U.S. (7 Wall.) 364, 19 L.Ed. 214 (1868). Thus in the very term in which the Court first recognized the common law immunity of judges from damage actions it also recognized that such immunity had nothing at all to do with those civil processes by which the future conduct of judges was controlled. Ex parte Bradley, supra, relied upon Chief Justice John Marshall’s opinion in Ex parte Crane, 30 U.S. (5 Pet.) 188, 8 L.Ed. 92 (1831), which had held that mandamus would issue against a federal circuit judge to compel him to sign a bill of exceptions so that a writ of error might be pursued in the Supreme Court. See also Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964). Chief Justice Marshall found authority for the issuance of this writ against a judge in Section 13 of the Judiciary Act of 1789, 1 Stat. 73. It will be recalled that in Marbury v. Madison, 5 U.S. (1 Cranch) 137, 175, 2 L.Ed. 60 (1803), the Court had held that § 13, to the extent that it attempted to confer original mandamus jurisdiction upon the Supreme Court to entertain suits against nonjudicial officers, was unconstitutional. Ex parte Crane, supra, distinguished mandamus in the exercise of the Court’s appellate jurisdiction. Marshall wrote: “That a mandamus to sign a bill of exceptions is ‘warranted by the principles and usages of law,’ is, we think, satisfactorily proved by the fact, that it is given in England by statute; for the writ given by the statute of Westm. II., is so, in fact, and is so termed in-the books. The judiciary act speaks of usages of law generally, not merely of common law. In England, it is awarded by the chancellor; but in the United States, it is conferred expressly on this court, which exercises both common law and chancery powers; is invested with appellate power, and exercises extensive control over all the courts of the United States. We cannot perceive a reason, why the single case of a refusal by an inferior court to sign a bill of exceptions, and thus to place the law of the case on the record, should be withdrawn from that general power to issue writs of mandamus to inferior courts, which is conferred by statute. In New York, where a statute exists, similar to that of Westm. II., an application was made to the supreme court for a mandamus to an inferior court to amend a bill of exceptions, according to the truth of the case. The court treated the special writ given by the statute as a mandamus, and declared, that it was so considered in England; and added, that ‘though no instance appears of such a writ issuing out of the king’s bench, where an inferior court refused to seal a bill of exceptions, there is no case denying to that court the power to award the writ.’ ‘It ought to be used, where the law has established no specific remedy, and where in justice and good government there ought to be one.’ ‘There is no reason why the awarding of this particular writ does not fall within the jurisdiction of this court, or why it should be exclusively confined to the court of chancery.’ In the opinion, then, of the very respectable court, which decided the motion made for a mandamus, in Sikes v. Ransom, 6 Johns. 279, the supreme court of New York possesses the power to issue this writ, in virtue of its general superintendence of inferior tribunals. The judiciary act confers the power expressly on this court. No other tribunal exists by which it can be exercised.” 30 U.S. at 193-194. The quoted language “warranted by the principles and usages of law” is from Section 13 of the Judiciary Act of 1789 which created the Supreme Court's appellate jurisdiction, and that section confers the identical appellate jurisdiction “from the circuit courts and the courts of the several states.” It is perfectly clear, then, that the Court had the same power to issue corrective civil process to a state court. The Bradley cases are significant, for present purposes, because they deal with the issue of judicial immunity in the context of the court’s nonadjudicatory judicial duties. Bradley v. Fisher, supra, holds that immunity from liability in damages applies even to such nonadjudicatory functions as controlling membership in the bar. Ex parte Bradley, supra, therefore, must be read as dealing with activities as to which the common law immunity is applicable. In this context the case of Ex parte Virginia, 100 U. S. 339, 25 L.Ed. 676 (1879), is notable, for it recognizes that a state court judge can be made to answer criminally for violating the criminal provisions of the Civil Rights Act of 1870 in the performance of nonadjudicatory judicial duties. It seems clear that the same judge would under Bradley v. Fisher, supra, have been immune from liability for damages. Thus, the common law immunity recognized in Pierson v. Ray, supra, is confined to liability for damages. It is not even an immunity from criminal liability. Section 14 of the Judiciary Act of 1789, the so-called “all writs” section, the modern counterpart of which is found at 28 U.S.C. § 1651(a), gave all the courts of the United States the power “to issue writs . . . which may be necessary for the exercise of their respective jurisdictions, and agreeable to the principles and usages of law.” From the virtual identity of language in the case of § 13 “warranted by the principles and usages of law”, and in the case of § 14 “agreeable to the principles and usages of law” it seems clear that the law with respect to amenability to civil process was the same under both sections. The occasions upon which a lower federal court would be called upon to direct its process to state court judges were, of course, limited by the narrow grant, prior to 1870 of civil jurisdiction in such courts. There was no federal question jurisdiction in the lower federal courts until the Civil Rights Act of 1866,14 Stat. 27, and no general grant of such jurisdiction until 1875. See 18 Stat. 470. Thus it was only the Supreme Court which was likely to have occasion, prior to 1875, to issue corrective civil process against state or lower federal courts, and it is the practice of that Court that we must look for guidance as to the scope of judicial immunity. It was once asserted with some force that state court judges were immune from the civil process of the Supreme Court issued pursuant to Section 13 of the Judiciary Act of 1789. In Martin v. Hunter’s Lessee, 14 U.S., 4 L.Ed. 97 (1 Wheat.) 304 (1816), the assertion arose in the context of the refusal of the Court of Appeals of Virginia to obey the mandate of the Supreme Court in a case sustaining a claim based upon a treaty of the United States. The Virginia court contended that a writ of error could not run to it because it enjoyed sovereign immunity, and its judgments were, therefore, entirely immune from the power of the article III courts. Justice Story’s opinion forcefully rejects the contention that the actions of state court judges are beyond the reach of the Supreme Court’s corrective process, reverses the judgment of the Court of Appeals of Virginia, but declines to reach the question whether, if the second time around the mandate is disobeyed, the Supreme Court will issue a writ of mandamus. 14 U.S. at 361. The clear implication of Story’s opinion, however, is that if compulsory process must be directed to a state court judge in order to enforce the Supreme Court’s mandate, it will be. See also Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 5 L.Ed. 257 (1821). Justice Johnson’s concurring opinion is more tentative. He says: “It will be observed, in this case, that the court disavows all intention to decide on the right to issue compulsory process to the state courts; thus leaving us, in my opinion, where the constitution and laws place us— supreme over persons and cases, so far as our judicial powers extend, but not asserting any compulsory control over the state tribunals.” 14 U.S. at 361. Johnson’s timidity with respect to compulsory process acting upon the state court judges directly is not based upon any notion that at common law judges generally were immune from civil process. He merely expresses doubt considering the availability of injunctive relief directed against the parties, as to the necessity for resorting to compulsory or restrictive process upon the state tribunal. 14 U.S. at 381. For the most part Johnson has been proved to be right. Even with respect to removal jurisdiction, which especially prior to 1870 was the one area in which lower federal and state court judges were likely to come into conflict, the lower federal courts usually were able to vindicate their jurisdiction under Section 12 of the Judiciary Act of 1789 and subsequent removal statutes by the issuance of injunctions running to the parties only. See, e. g., Dietzsch v. Huidekoper, 103 U.S. 494, 497, 26 L.Ed. 497 (1880); French v. Hay, 89 U.S. (22 Wall.) 250, 22 L.Ed. 857 (1874). But the eventuality of contumacy in the removal situation is recognized in 28 U.S.C. § 1447(b) which authorizes the lower federal courts to issue writs of certiorari, and such writs have on occasion been directed to state courts. E. g., State Improvement-Development Co. v. Leininger, 226 F. 884 (N.D.Cal.1914). In Deen v. Hickman, 358 U.S. 57, 79 S.Ct. 1, 3 L.Ed.2d 28 (1958) (per curiam), the Supreme Court faced the problem of a contumacious state court. It granted leave to file a petition for mandamus against a Texas court which persisted in a course deemed to be inconsistent with the mandate in a prior case. The writ did not actually issue, since the Court assumed that the Texas court would, the second time, obey. But Deen v. Hickman, supra, recognizes that the same power to issue compulsory corrective process to state judges exist as was recognized in Ex parte Bradley, supra, and in Ex parte Crane, supra, with respect to federal judges. See also In re Herndon, 394 U.S. 399, 89 S.Ct. 1107 22 L.Ed.2d 367 (1969) (per curiam), recognizing the power of the court to entertain a contempt motion directed against a judge who flouted the court’s mandate. There is no distinction between the Supreme Court’s power, under Section 13 of the Judiciary Act of 1789, to issue a writ of mandamus, and the power of the lower federal courts, under Section 14 of that Act, to issue the same writ. Marbury v. Madison, supra, held that the writ could only be issued by the Supreme Court in aid of its appellate jurisdiction, not as an original matter. McIntire v. Wood, 11 U.S. (7 Cranch) 504, 3 L.Ed. 420 (1813), interpreted § 14 as confining the lower federal courts’ mandamus jurisdiction to cases in aid of their jurisdiction and not to original proceedings. That was so, except in the District of Columbia, until the enactment in 1962 of 28 U.S.C. § 1361. From this it might be argued that although judges are subject to compulsory civil process in aid of the jurisdiction of the issuing court, appellate or original, they are nevertheless immune from original corrective process such as an injunction. There are several defects in this argument. The first defect is historical. Both the writ of mandamus and the writ of injunction emanated from the same source, the King’s Chancellor. As to mandamus, see Chief Justice John Marshall’s discussion, quoted above, in Ex parte Crane, supra. The equity jurisdiction of the lower federal courts, conferred originally in Section 11 of the Judiciary Act of 1789, is the jurisdiction of the Court of Chancery in that year. See, e.g., Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 90 L.Ed. 256 (1946); Sutton v. English, 246 U.S. 199, 38 S.Ct. 254, 62 L.Ed. 664 (1918); Farrell v. O’Brien, 199 U.S. 89, 25 S.Ct. 727, 50 L.Ed. 101 (1905). The Chancellor’s equity jurisdiction had its origin in the King’s Special Council, which was the predecessor of the Privy Council, and which aided the Crown in the exercise of its prerogative, which embraced matters not within the jurisdiction of the law courts. The Special Council eventually delegated to the Chancellor disposition of matters of grace which were within the King’s prerogative. From this practice grew the Chancellor’s equity, as distinguished from his ordinary jurisdiction. See 1 J. Pomeroy, A Treatise on Equity Jurisprudence, §§ 31-38 (5th ed. 1941). (Hereinafter Pomeroy). “From later records it appears that the council acted on all applications to obtain redress for injuries and acts of opression, wherever, from the heinousness of the offense, or the rank and power of the offender, or any other cause, it was probable that a fair trial in the ordinary courts would be impeded, and also wherever, by force and violence, the regular administration of justice was hindered.” 1 Pomeroy, § 31 at p. 37. Thus, the equitable jurisdiction referred to in the Judiciary Act of 1789 was an aspect of the sovereignty of the King, ceded to the central government by article III of the Constitution, and conferred by Congress on the lower federal courts in § 11 of that Act. Judicial immunity, on the other hand, presented a different aspect of the King’s sovereignty. The King was the repository of all sovereignty, including judicial power. The common law judges were his surrogates in exercising his judicial power. Their immunity was merely a corollary to his. Permitting an action for damages against one of the King’s surrogates in a court of coordinate authority would slander his justice. Floyd v. Barker, 12 Co.Rep. 23, 25, 77 Eng.Rep. 1305, 1307 (Star Chamber 1607); Randall v. Brigham, 74 U.S. (7 Wall.) 523, 539, 19 L.Ed. 285 (1868); Pierson v. Ray, 386 U.S. 547, 558, 565, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967) (Douglas, J. dissenting). But the rationale for immunizing the King’s surrogates from damage suits in courts of coordinate authority simply does not apply when the issue is immunity from the compulsory civil process of the Chancellor exercising the King’s prerogative. Indeed the very suggestion that the law judges were immune from compulsory civil process issued by the Chancellor exercising the King’s prerogative is inconsistent with the long history of complaints by the law judges to Commons about the Chancellor’s interference with proceedings in their courts. See 1 Pomeroy § 39 at p. 44. The King’s prerogative, formerly exercised by the Chancery Court, is by virtue of article III, a part of the judicial power of the United States, and is exercised by each of the federal courts within the respective jurisdictions conferred by Congress. There is simply no valid distinction between the powers of any of these courts to subject judges to compulsory process in the exercise of the prerogative on behalf of what in matters of federal concern is the superior sovereignty. The second defect is pragmatic. The effect upon the respondent judge is the same in each ease. He is directed, upon pain of punishment for disobedience, to conform his future conduct to the issuing court’s order. If a judge is immune from one such order he should be immune from all. Notions of judicial independence, to the extent that they are relied upon to support the common law immunity of judges, apply equally to any compulsory process, whether issued in aid of the jurisdiction of the issuing court, or as an original proceeding. The cases, then, in which the Supreme Court has entertained applications for writs of mandamus to federal and state court judges, and the cases in which federal courts have directed writs of certiorari or subpoenas to state court judges, are authority for the absence of any judicial immunity from civil coercive process directed at controlling future conduct, and those cases have in no way been affected by the decision in Pierson v. Ray, supra. Those cases in which since Pierson v. Ray, supra, courts have directed their attention to the distinction between immunity from liability for damages and immunity from compulsory process to control future conduct have recognized as much. See Erdmann v. Stevens, 458 F.2d 1205, 1208 (2d Cir. 1972), cert. denied, 409 U.S. 889, 93 S.Ct. 126, 34 L.Ed.2d 147 (1972); Littleton v. Berbling, 468 F.2d 389 (7th Cir. 1972), cert. granted, 411 U.S. 915, 93 S.Ct. 1544, 36 L.Ed.2d 306 (1973); Jacobson v. Schaefer, 441 F.2d 127, 130 (7th Cir. 1971); Peek v. Mitchell, 419 F.2d 575 (6th Cir. 1970); United States v. McLeod, 385 F.2d 734, 738 n. 3 (5th Cir. 1967) (implicitly); Haley v. Troy, 338 F.Supp. 794, 800 (D.Mass.1972); Cassidy v. Ceci, 320 F.Supp. 223, 228 (E.D.Wis.1970); Rakes v. Coleman, 318 F.Supp. 181, 192 (E.D.Va.1970); Koen v. Long, 302 F.Supp. 1383, 1389 (E.D.Mo.1969), aff’d per curiam, 428 F.2d 876 (8th Cir. 1970), cert. denied, 401 U.S. 923, 91 S.Ct. 877, 27 L.Ed.2d 827 (1971); Law Students Civil Rights Research Council, Inc. v. Wadmond, 299 F.Supp. 117, 123 (S.D.N.Y.1969) (three-judge court) (Friendly, J.), aff’d on other grounds, 401 U.S. 154, 158 n. 9, 91 S.Ct. 720, 27 L.Ed.2d 749 (1971) (appellants did not appeal on this ground); Stambler v. Dillon, 288 F.Supp. 646, 649 (S.D.N.Y.1968); see also United States v. Clark, 249 F.Supp. 720, 727-728 (S.D.Ala.1965) (three-judge court) (decided prior to Pierson v. Ray, supra). As to the opinions referred to by the majority as representative of the other side of the issue, not one of the cited cases actually discusses the distinction between an action for damages and compulsory process directed at future conduct. Each opinion either does not disclose whether a claim for injunctive relief was pleaded, or deals only with a claim for money damages, or denies injunctive relief because of the inadequacy of the factual allegations, or simply fails to recognize the difference between the two kinds of relief. The authority of Cooper v. Hutchinson, supra, has been in no way impaired by Pierson v. Ray, supra, and none of the respectable body of thoughtful opinion to which the majority makes reference reflects in the slightest upon its soundness. If we were to hold that judges are immune from coercive civil process as well as from liability for money damages we would be embarking upon unchartered waters indeed. It is true that the occasions on which it has been found necessary to subject judges to coercive civil process have been relatively infrequent. The infrequency, however, must be considered against the availability of last resorts such as those considered by the Supreme Court in In re Herndon, supra, and Deen v. Hickman, supra. If a new doctrine were announced, immunizing judges from coercive civil process, the occasions of contumacy might dramatically increase. I can think of no countervailing gain from the invention of a new immunity doctrine which would justify this risk. One might make the contention that state court judges should be free from coercive civil process issued by any court except the Supreme Court, and that such a distinction would suffice to guard against contumacy since the Supreme Court would remain free to act. I would ask why any such distinction should be made, since all of the article III courts exercise the judicial power of the United States to the extent of their respective jurisdictions. Indeed I would see any such distinction as positively harmful, since it is perfectly clear that with a population of over 200 million the Supreme Court alone simply is unable to exercise effective appellate jurisdiction over the state judiciary and must for the most part leave the vindication of federally protected rights in the hands of the other article III courts. Those courts protect such rights from state interference at present chiefly through their habeas corpus and Civil Rights Act jurisdiction. 28 U.S.C. § 2254, § 1343. It has been suggested that Congress should route appeals in state cases through an intermediate article III court. See Hufstedler, Comity and The Constitution: The Changing Role of The Federal Judiciary, 47 N.Y.U.L.Rev. 841 (1972). The trend toward a caseload situation where that may be essential seems clear. This is hardly the time to invent new doctrines of immunity which would complicate the performance of additional duties by the lower federal courts with respect to state court litigation. I would advise the district court that it was right when it rejected the defense of judicial immunity in the context of a Civil Rights Act complaint seeking injunctive relief. MCLAUGHLIN, Circuit Judge, concurs in this opinion. ALDISERT, Circuit Judge (concurring). Judge Gibbons’ scholarly defense of his position compels this brief response. I find nothing in his analysis which refutes the basic rationale expressed by Chief Justice Warren in Pierson v. Ray, 386 U.S. 547, 554, 87 S.Ct. 1213, 1218, 18 L.Ed.2d 288 (1967): “This immunity applies even when the judge is accused of acting maliciously and corruptly, and it ‘is not for the protection or benefit of a malicious or corrupt judge, but for the benefit of the public, whose interest it is that the judges should be at liberty to exercise their functions with independence and without fear of consequences.’ (Scott v. Stansfield, L.R. 3 Ex. 220, 223 (1868), quoted in Bradley v. Fisher, supra, 349, note, at 350 [of 80 U.S. (13 Wall.)].) It is a judge’s duty to decide all eases within his jurisdiction that are brought before him, including controversial cases that arouse the most intense feelings in the litigants. His errors may be corrected on appeal, but he should not have to fear that unsatisfied litigants may hound him with litigation charging malice or corruption. Imposing such a burden on judges would contribute not to principled and fearless decision-making but to intimidation.” This reasoning seems to be applicable to injunctive actions against state judges predicated on the performance of judicial acts. Inherent in the injunction process are the necessary sanctions available to insure enforcement of decrees. Because these sanctions take the form of imprisonment or fine for contempt, I perceive this “intimidation” to be as pernicious as the threat of an adverse money judgment. Moreover, I am not willing to accept the characterization that Judge Gibbons’ view is “settled law in this circuit.” I suggest that his approach is a formidable effort to engraft an exception to the landmark case of Bauers v. Heisel, 361 F.2d 581 (3d Cir. 1966). In any event, any notion that the law is settled in this field should have been completely dispelled when the Supreme Court granted certiorari on April 2, 1973, in Littleton v. Berbling, 468 F.2d 389 (7th Cir. 1972). . The district attorney was eventually dismissed by stipulation when it appeared that his office had nothing to do with the intake procedures of the Philadelphia Juvenile Court. . See, e. g., Wisconsin v. Constantineau, 400 U.S. 433, 437-439, 91 S.Ct. 507, 27 L.Ed. 2d 515 (1971); Fornaris v. Ridge Tool Co., 400 U.S. 41, 91 S.Ct. 156, 27 L.Ed.2d 174 (1970) (per curiam); Harman v. Forssenius, 380 U.S. 528, 534, 85 S.Ct. 1177, 14 L.Ed.2d 50 (1965); Railroad Comm’n of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). But cf. Allegheny Airlines, Inc. v. Pennsylvania Pub. Util. Comm’n, 465 F.2d 237 (3d Cir. 1972). . This abstention doctrine is generally traced to Justice Frankfurter’s opinion in Railroad Comm’n of Texas v. Pullman Co., supra. . But cf. Allegheny Airlines, Inc. v. Pennsylvania, supra, which did not involve the court’s civil rights jurisdiction. . Several courts have approved of this distinction. See Erdmann v. Stevens, 458 F.2d 1205, 1208 (2d Cir.), cert. denied, 409 U.S. 889, 93 S.Ct. 126, 34 L.Ed.2d 147 (1972); Littleton v. Berbling, 468 F.2d 389 (7th Cir. 1972); Jacobson v. Schaefer, 441 F.2d 127, 130 (7th Cir. 1971); Peek v. Mitchell, 419 F.2d 575 (6th Cir. 1970); United States v. McLeod, 385 F.2d 734, 738 n. 3 (5th Cir. 1967) (implicitly); Haley v. Troy, 338 F.Supp. 794, 800 (D.Mass. 1972); Cassidy v. Ceci, 320 F.Supp. 223, 228 (E.D.Wis. 1970); Rakes v. Coleman, 318 F.Supp. 181, 192 (E.D.Va. 1970); Koen v. Long, 302 F.Supp. 1383, 1389 (E.D.Mo. 1969), aff’d per curiam, 428 F.2d 876 (8th Cir. 1970), cert. denied, 401 U.S. 923, 91 S.Ct. 877, 27 L.Ed.2d 827 (1971); Law Students Civil Rights Research Council, Inc. v. Wadmond, 299 F.Supp. 117, 123 (S.D.N.Y. 1969) (three-judge court) (Friendly, J.), aff’d on other grounds, 401 U.S. 154, 158 n. 9, 91 S.Ct. 720, 27 L.Ed.2d 749 (1971) (Appellants did not appeal on this ground); Stambler v. Dillon, 288 F.Supp. 646, 649 (S.D.N.Y. 1968); United States v. Clark, 249 F.Supp. 720, 727-728 (S.D.Ala. 1965). Cf. Hadnott v. Amos, 394 U.S. 358, 89 S.Ct. 1101, 22 L.Ed.2d 336 (1969). . See Mitchum v. Foster, 407 U.S. 225, 231-233 & n. 10, 92 S.Ct. 2151, 32 L.Ed.2d 705 (1972); Younger v. Harris, 401 U.S. 37, 43-45, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). . 389 U.S. 241, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967). . Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971); Samuels v. Mackell, 401 U.S. 66, 91 S.Ct. 764, 27 L.Ed.2d 688 (1971); Boyle v. Landry, 401 U.S. 77, 91 S.Ct. 758, 27 L.Ed.2d 696 (1971); Perez v. Ledesma, 401 U.S. 82, 91 S.Ct. 674, 27 L.Ed.2d 701 (1971); Dyson v. Stein, 401 U.S. 200, 91 S.Ct. 769, 27 L. Ed.2d 781 (1971); (per curiam); Byrne v. Karalexis, 401 U.S. 216, 91 S.Ct. 777, 27 L.Ed.2d 792 (1971) (per curiam). . Muskrat v. United States, 219 U.S. 346, 351-353, 31 S.Ct. 250, 55 L.Ed. 246 (1911) (interpreting Hayburn’s Case, 2 Dall. 409, 1 L.Ed. 436 (1972). . North Carolina v. Rice, 404 U.S. 244, 246, 92 S.Ct. 402, 30 L.Ed.2d 413 (1971) (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-241, 57 S.Ct. 461, 81 L.Ed. 617 (1937)). . See id. . See Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 151-152, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970); Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962). . 263 F.Supp. 327 (N.D.Ala. 1966), aff’d 390 U.S. 333, 88 S.Ct. 994, 19 L.Ed.2d 1212 (1968) (per curiam). . See Singleton v. Board of Commissioners, 356 F.2d 771 (5th Cir. 1966). . 263 F.Supp. 327, 330 quoting Henderson v. United States, 339 U.S. 816, 823, 70 S.Ct. 843, 94 L.Ed. 1302 (1950). . Lee v. Washington, 390 U.S. 333, 88 S.Ct. 994, 19 L.Ed.2d 1212 (1968) (per curiam). . 52 F.R.D. 389 (D.Conn. 1971). . Compare Evers v. Dwyer, 358 U.S. 202, 79 S.Ct. 178, 3 L.Ed.2d 222 (1958); Jenkins v. United Gas Corp., 400 F.2d 28 (5th Cir. 1968); Kelly v. Wyman, 294 F.Supp. 887, 890 (S.D.N.Y. 1968) (3-judge court) aff’d sub nom. Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). . See Vaughan v. Bower, 313 F.Supp. 37, 40 (D. Ariz.) (3-judge court), aff’d, 400 U.S. 884, 91 S.Ct. 139, 27 L.Ed.2d 129 (1970); Cypress v. Newport News General & Nonsectarian Hosp. Ass’n, 375 F.2d 648, 657 (4th Cir. 1967). . See North Carolina v. Rice, 404 U.S. 244, 246, 92 S.Ct. 402, 404, 30 L.Ed.2d 413 (1971) (per curiam) (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-241, 57 S.Ct. 461, 81 L.Ed. 617 (1937)). . The majority opinion may be read to hold broadly that the judicial immunity doctrine presents no obstacle to the maintenance of an injunctive suit. It should be noted, however, that it is at least doubtful whether the issue is squarely before us. The district court held there was no immunity and the defendants have not filed a cross-appeal on this ruling. Furthermore, even if before us, the judicial immunity doctrine might not have to be met head-on in the present case. Plaintiffs are attacking the procedural rules adopted by a state court. It may be contended that they are not assailing a decision or ruling by a judge acting in his judicial capacity. Under these circumstances, the judge may bo a nominal party to this action. . 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). Later in Hague v. CIO, 307 U.S. 496, 59 S.Ct. 954, 83 L.Ed. 1423 (1939), plaintiffs brought suit in federal court against city officials praying an injunction restraining them from preventing plaintiffs from remaining in the city, distributing printed material, or holding jmblic meetings. The Supreme Court did not question the propriety of exercising federal equitable power. See Lewis v. Kugler, 446 F.2d 1343, 1350 (3d Cir. 1971). . See generally H. M. Hart & H. Wechsler, The Federal Courts and the Federal System 846-57 (1953). . 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). . Id. at 498, 61 S.Ct. at 644. . Id. at 499, 61 S.Ct. at 645. . Id. at 500, 61 S.Ct. at 645. . See Siler v. Louisville & Nashville R.R., 213 U.S. 175, 29 S.Ct. 451, 53 L.Ed. 753 (1909). . See Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). . See Baggett v. Bullitt, 377 U.S. 360, 375-378, 84 S.Ct. 1316, 12 L.Ed.2d 377 (1964). . 11 P.S. § 246(3) (1965). Compare Wisconsin v. Constantineau, 400 U.S. 433, 439, 91 S.Ct. 507, 27 L.Ed.2d 515 (1971). In Constantineau, the majority apparently rejected Chief Justice Burger's dissenting view that abstention was proper since the state Supreme Court might hold the practice, challenged there, to be violative of the state constitution. 400 U.S. at 440, 91 S.Ct. 507. . Damico v. California, 389 U.S. 416, 88 S.Ct. 526, 19 L.Ed.2d 647 (1967); McNeese v. Board of Educ., 373 U.S. 668, 672, 83 S.Ct. 1433, 10 L.Ed.2d 622 (1963). Accord, Askew v. Hargrave, 401 U.S. 476, 478, 91 S.Ct. 856, 28 L.Ed.2d 196 (1971); Zwickler v. Koota, 389 U.S. 241, 248, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967). . 319 U.S. 157, 63 S.Ct. 877, 87 L.Ed. 1324 (1943). For a later ease discussing the same principle in a slightly different context, see Stefanelli v. Minard, 342 U.S. 117, 72 S.Ct. 118, 96 L.Ed. 138 (1951). . Id. at 163, 63 S.Ct. at 881. . Id. (citations omitted). . Id. at 164, 63 S.Ct. at 881. . 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). . Id. at 41, 91 S.Ct. at 749. Younger concerned only the propriety, not the power, of a federal court’s enjoining a state criminal prosecution. The court left open the question “whether 28 U.S.C. § 2283, which prohibits an injunction against state court proceedings ‘except as expressly authorized by Act of Congress’ would in and of itself be controlling under the circumstances of this case.” Id. at 54, 91 S.Ct. at 755. That question, however, has now been resolved by Mitchum v. Foster, 407 U.S. 225, 92 S.Ct. 2151, 32 L.Ed.2d 705 (1972), holding that 42 U.S.C. § 1983 is excepted from the operation of the anti-injunction statute, 28 U.S.C. § 2283. Under Mitchum, then, federal courts have the power, in § 1983 cases, to enjoin ;state criminal proceedings. AVhether that power should be exercised in any particular case depends upon the considerations set out in Younger. See Mitchum v. Foster, 407 U.S. at 243, 92 S.Ct. 2151. . 401 U.S. 66, 91 S.Ct. 764, 27 L.Ed.2d 688 (1971). . 401 U.S. at 54, 91 S.Ct. at 755. . Id. at 43-44, 91 S.Ct. at 750. . Id. at 46, 91 S.Ct. 746, quoting Fenner v. Boykin, 271 U.S. 240, 243, 46 S.Ct. 492, 70 L.Ed. 927 (1926). . Id. quoting Watson v. Buck, 313 U.S. 387, 400, 61 S.Ct. 962, 85 L.Ed. 1416 (1941). . Id. at 47, 91 S.Ct. at 752, quoting Douglas v. City of Jeannette, 319 U.S. 157, 164, 63 S.Ct. 877, 87 L.Ed. 1324 (1943). . Because of the reasons upon which my position is grounded, it is neither necessary nor appropriate to decide whether the present case involves a pending state criminal proceeding. Some may well have questioned after the Younger series of cases whether the rule enunciated there and the policy considerations from which it stems are applicable to cases not involving pending state criminal proceedings. In the Younger group, however, the majority opinions emphasized over and over again that state criminal proceedings were pending. In fact, it was because of the pending state proceedings that the Court believed the federal plaintiffs had an adequate remedy at law, namely, a constitutional defense to the criminal prosecutions. See Younger v. Harris, 401 U.S. 37, 46—49, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). Moreover, it was because of the pending proceedings that the Court required, for reasons of comity, that the plaintiffs demonstrate irreparable harm “ ‘both great and immediate.’ ” Id. at 46—47, 91 S.Ct. 746. Any uncertainty about the reach of the Younger principle has to a great extent been set to rest. In Lake Carriers’ Ass’n v. MacMullan, 406 U.S. 498, 92 S.Ct. 1749, 32 L.Ed.2d 257 (1972), the Supreme Court stated that the oases in the Younger series “were premised on considerations of equity practice and comity in our federal system that have little force in the absence of a pending state proceeding. In that circumstance exercise of federal court jurisdiction ordinarily is appropriate if the conditions for declaratory or injunctive relief are met.” Id. at 509, 92 S.Ct. at 1757. . In Boyle v. Landry, 401 U.S. 77, 91 S.Ct. 758, 27 L.Ed.2d 696 (1971), the allegations of the complaint failed to demonstrate irreparable injury. “Not a single one of the citizens who brought this action had ever been prosecuted, charged, or even arrested under the particular intimidation statute.” Id. at 80, 91 S.Ct. at 760. In Perez v. Ledesma, 401 U.S. 82, 91 S.Ct. 674, 27 L.Ed.2d 701 (1971), the practical effect of declaratory or injunctive relief would have been as in Younger and Samuels, the effective termination of state proceedings. Both Dyson v. Stein, 401 U.S. 200, 91 S.Ct. 769, 27 L.Ed.2d 781 (1971) (per curiam) and Byrne v. Karalexis, 401 U.S. 216, 91 S.Ct. 777, 27 L.Ed.2d 792 (1971) (per curiam), were cases where criminal prosecutions were pending and in which the district court made no findings of irreparable harm. . 401 U.S. 77, 80, 91 S.Ct. 758, 27 L.Ed. 2d 696 (1971). . Although plaintiffs did originally request injunctive relief against the state’s proceeding on any juvenile petition, at oral argument counsel indicated that in his view such relief is barred by the Younger principle. See fn. 40, supra. . See Brown v. Fauntleroy, 143 U.S.App.D.C. 116, 442 F.2d 838 (1971) (right to preliminary hearing for juveniles); Cooley v. Stone, 134 U.S.App.D.C. 317, 414 F.2d 1213 (1969) (per curiam) (right to preliminary hearing for juveniles); Pugh v. Rainwater, 332 F.Supp. 1107 (S.D.Fla.1971) (same for adults). . 446 F.2d 1343 (3d Cir. 1971). See Pugh v. Rainwater, 332 F.Supp. 1107 (S.D.Fla.1971). . 446 F.2d at 1347. . Id. at 1349. . Id. . See Lake Carriers’ Ass’n v. MacMullan, 406 U.S. 498, 509, 92 S.Ct. 1749, 32 L.Ed. 2d 257 (1972). . Although habeas corpus relief can, under some circumstances, be sought by one detained, see Henry v. Henkel, 235 U.S. 219, 228, 35 S.Ct. 54, 59 L.Ed. 203 (1914) (in “exceptional circumstances”); Baker v. Grice, 169 U.S. 284, 18 S.Ct. 323, 42 L.Ed. 748 (1897); Ex Parte Royall, 117 U.S. 241, 252-253, 6 S.Ct. 734, 29 L.Ed. 868 (1886); Reis v. U. S. Marshal, 192 F.Supp. 79 (E.D.Pa.1961); compare Commonwealth ex rel. Levine v. Fair, 394 Pa. 262, 146 A.2d 834 (1959) with Commonwealth ex rel. Bittner v. Price, 428 Pa. 5, 235 A.2d 357 (1967) (per curiam), habeas relief or an appeal on the issue of improper pretrial detention is generally unavailable once an indictment has been returned or a finding of guilt has been made. See, e. g. Rivera v. Government of Virgin Islands, 375 F.2d 988 (3d Cir. 1967); Grace v. United States, 375 F.2d 119 (9th Cir. 1967); Blue v. United States, 119 U.S.App.D.C. 315, 342 F.2d 894 (1964), cert. denied, 380 U.S. 944, 85 S.Ct. 1029, 13 L.Ed.2d 964 (1965). See generally Amsterdam, Criminal Prosecutions Affecting Federally Guaranteed Civil Rights: Federal Removal and Habeas Corpus Jurisdiction to Abort State Court Trial, 113 U.Pa.L.Rev. 793 (1965). At oral argument, counsel pointed out that the problem of obtaining state habeas relief might be compounded by the fact that one state judge would be required to review a decision by one of his brethren. . E. g., Wilwording v. Swenson, 404 U.S. 249, 251, 92 S.Ct. 407, 30 L.Ed.2d 418 (1972) (per curiam). Zwickler v. Koota, 389 U.S. 241, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967); Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961). . Plaintiffs’ due process argument must rest, in part at least, on the premise that the Fourth Amendment’s bar against unreasonable searches and seizures applies to the “arrest” or “detention” of persons as well as the seizure of goods. See Terry v. Ohio, 392 U.S. 1, 8-9, 16, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968); Henry v. United States, 361 U.S. 98, 100-101, 80 S.Ct. 168, 4 L.Ed.2d 134 (1959); Brown v. Fauntleroy, 143 U.S.App.D.C. 116, 442 F.2d 838 (1971). “[I]t can no longer be seriously contended that an action for money damages will serve adequately to remedy unconstitutional searches and seizures.” Lewis v. Kugler, 446 F.2d 1343, 1350 (3d Cir. 1971). See Mapp v. Ohio, 367 U.S. 643, 652, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961); Lankford v. Gelston, 364 F.2d 197, 202 (4th Cir. 1966) (en banc). . Although at this stage of the proceedings the question before us is whether the district court improperly declined to exercise its jurisdiction, it might be helpful to note what is at the heart of this controversy. Plaintiffs have alleged that: (1) it is a denial of equal protection for the Commonwealth to provide adults a preliminary hearing to determine probable cause and yet at the same time deny such a safeguard to juveniles; (2)' it is a denial of due process for the state to detain juveniles without a preliminary hearing or an equivalent procedure to determine probable cause and (3) it is a denial of due process for the Commonwealth to incarcerate juveniles on the basis of an “intake interview” lacking procedural protections. These are serious claims raising complex legal issues. Detaining juveniles without a probable cause hearing has been assailed by sociologists as well as legal scholars. See generally, L. Forer, “No One Will Lissen,” 67-83 (Grossett Dunlap 1971); Weiss, The Poor Kid, 9 Duquesne L.Rev. 590, 596-599 (1971). Many believe that such incarceration, far from serving a salutory purpose, frequently does just the reverse: those already alienated may become more bitter when confronted by a system they perceive to be unjust and insensitive. . Conover v. Montemuro, 477 F.2d 1073 (3d Cir. 1972). . Id. at 1073. . The district court in this case noted (1) that Pierson v. Ray, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967), and Bauers v. Heisel, 361 F.2d 581 (3d Cir. 1966), both involved actions for damages under § 1983, and (2) that Judge Montemuro was a person “working in a quasi-judicial capacity.” We intimate no view concerning the significance of these two factors in the determination whether, generally or in a particular case, a state judge enjoys immunity from a § 1983 injunctive suit. On the possible relevance of the distinction between judges acting in judicial capacities and those acting in quasi-judicial capacities, see e. g., Ex Parte Virginia, 100 U.S. 339, 25 L.Ed. 676 (1879). . “Even though there is no absolute immunity against an injunction issued by a federal court to a state court judge, certainly this power should be exercised with greater restraint than in the case of other state officers. An injunction should not be issued except where the lack of an adequate remedy at law is very clear and where the possibility of relief in the state courts is effectively foreclosed. It should not issue unless the irreparable injury is of a grave and substantial nature.” Appellee’s Petition for Rehearing En Banc at 2. (Emphasis added) . Compare, e. g., Robinson v. McCorkle, 462 F.2d 111 (3d Cir. 1972) (declaratory judgment); Gaito v. Ellenbogen, 425 F.2d 845 (3d Cir. 1970); Cooper v. Hutchinson, 184 F.2d 119 (3d Cir. 1950); Mackay v. Nesbett, 412 F.2d 846 (9th Cir. 1969), aff’g, 285 F.Supp. 498 (D.Alaska 1968), cert. denied, 396 U.S. 960, 90 S.Ct. 435, 24 L.Ed.2d 425 (1969); Cade v. Carpenter, 367 F.2d 572 (5th Cir. 1966); Rhodes v. Houston, 309 F.2d 959 (8th Cir. 1962), aff’g, 202 F.Supp. 624 (D.Neb.1962), cert. denied, 383 U.S. 971, 86 S.Ct. 1282, 16 L.Ed.2d 311 (1966), 372 U.S. 909, 83 S.Ct. 724, 9 L.Ed.2d 719 (1963); Gay v. Heller, 252 F.2d 313 (5th Cir. 1958); Kenney v. Fox, 232 F.2d 288 (6th Cir.), cert. denied, 352 U.S. 855, 77 S.Ct. 84, 1 L.Ed.2d 66 (1956); Tate v. Arnold, 223 F.2d 782 (8th Cir. 1955); with, e. g., Littleton v. Berbling, 468 F.2d 389 (7th Cir. 1972), cert. granted, 411 U.S. 915, 93 S.Ct. 1544, 36 L.Ed.2d 306. Erdman v. Stevens, 458 F.2d 1205, 1208 (2d Cir. 1972), cert. denied, 409 U.S. 889, 93 S.Ct. 126, 34 L.Ed.2d 147 (1972); Jacobson v. Schaefer, 441 F.2d 127, 130 (7th Cir. 1971); Law Students Civil Rights Research Council, Inc. v. Wadmond, 299 F.Supp. 117, 123 (S.D.N.Y. 1969) (3-judge court), aff’d on other grounds, 401 U.S. 154 n. 9, 91 S.Ct. 720, 27 L.Ed.2d 749 (1971); Cassidy v. Ceci, 320 F.Supp. 223 (E.D.Wis.1970); Rakes v. Coleman, 318 F.Supp. 181 (E.D.Va.1970). It is significant that the United States Supreme Court recently granted certiorari in a case raising this specific issue. Berbling v. Littleton, supra, cert. granted, sub nom. O’Shea v. Littleton, Spomer v. Littleton, 411 U.S. 915, 93 S.Ct. 1544, 36 L.Ed.2d 306 (1973). The petition and briefs set forth in extenso the various cases and authorities bearing on the matter. . See also, Jaffke v. Dunham, 352 U.S. 280, 281, 77 S.Ct. 307, 1 L.Ed.2d 314 (1957) (per curiam); Brown v. Allen, 344 U.S. 443, 459, 73 S.Ct. 397, 97 L.Ed. 469 (1953); J. E. Riley Co. v. Commissioner, 311 U.S. 55, 59, 61 S.Ct. 95, 85 L.Ed. 36 (1940); United States v. American Ry. Express Co., 265 U.S. 425, 435, 44 S.Ct. 560, 68 L.Ed. 1087 (1924); Frey & Son v. Cudahy Packing Co., 256 U.S. 208, 210, 41 S.Ct. 451, 65 L.Ed. 892 (1921). . See Dombrowski v. Pfister, 380 U.S. 479, 484 n. 2, 85 S.Ct. 1116, 14 L.Ed.2d 22 (1965); Stefanelli v. Minard, 342 U.S. 117, 124 n. 12, 72 S.Ct. 118, 96 L.Ed. 138 (1951). . In Pierson v. Ray, supra, Chief Justice Warren did not say whether the common law referred to was state or federal. Justice Frankfurter in Tenney v. Brandhove, supra, seems to assume that the federal court must look to the common law of the state in question. See 341 U.S. at 375, 71 S.Ct. 783. No Pennsylvania case has ever suggested that judicial immunity includes immunity from coercive civil process. . Shortly after the issue of state sovereignty became heated in Chisholm v. Georgia, 2 U.S. (2 Dall.) 419, 1 L.Ed. 440 (1793); and before Martin v. Hunter’s Lessee, 14 U.S. (1 Wheat.) 304, 4 L.Ed. 97 (1816), and Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 5 L.Ed. 257 (1821), state judges were subjected to the compulsory process of the federal courts. As early as 1795, Pennsylvania State Court judges were subpoenaed to testify in a trial in the circuit court, Pennsylvania District. They did not appear, and the United States Attorney applied for a body attachment. The attachment did not issue, but tlie judges at circuit withheld the arrest as a matter of grace. Mr. Justice Paterson, sitting as a circuit justice, had this to say: “We pay no respect to persons. The law operates equally upon all; the high and low, the rich and poor. If we issue a subpoena to a justice or a judge, and it is not obeyed, we should be more strict in our proceedings against such characters, than against others, whose office did not so strongly point out their duty.” United States v. Caldwell, 2 U.S. (2 Dall.) 333, 1 L.Ed. 404, 25 Fed.Cas. 238 (1795). . In fact, the English judges could be made to account for their actions before the King. In 1607, the Court of the Star Chamber stated that: “ [I]t appears by . precedent and chronicle, that the King did ex-amino the corruption of his Judges before himself in the Parliament, and not by force of any commission.” Floyd v. Barker, 12 Co.Rep. 23, 26, 77 Eng.Rep. 1305, 1308 (1607). . The Chancellor’s interference with proceedings in other courts was not limited to the law courts. Under English law the Ecclesiastical courts had jurisdiction to dispose of a decedent’s personalty. See 2 R. Roper, Treatise on the Law of Legacies at 1791 et seq. (1847). However, this jurisdiction did not extend to assets of an estate which were subject to a trust. Mr. Justice Story notes that: “[I]f the Spiritual Courts attempt to enforce the payment of a legacy which involves a trust, a Court of Equity will award an injunction in order to protect its own exclusive jurisdiction.” (Footnotes omitted). 1 J. Story, Equity Jurisprudence at 601 (13th ed. 1886). . Cade v. Carpenter, 367 F.2d 572 (5th Cir. 1966) (per curiam) Compare the above with United States v. McLeod, supra, decided in the same court. . Robinson v. McCorkle, 462 F.2d 111 (3d Cir. 1972); Rhodes v. Houston, 309 F.2d 959 (8th Cir. 1962) (per curiam), aff’g 202 F.Supp. 624 (D.Neb.1962), cert. denied, 383 U.S. 971, 86 S.Ct. 1282, 16 L.Ed. 2d 311 (1966), 372 U.S. 909, 83 S.Ct. 724, 9 L.Ed.2d 719 (1963); Gay v. Heller, 252 F.2d 313 (5th Cir. 1958); Kenney v. Fox, 232 F.2d 288 (6th Cir.), cert. denied, 352 U.S. 855, 77 S.Ct. 84, 1 L.Ed.2d 66 (1956). . Gaito v. Ellenbogen, 425 F.2d 845 (3d Cir. 1970), involved a claim for money damages and the immunity discussion refers to this claim. MacKay v. Nesbett, 412 F.2d 846 (9th Cir. 1969) (per curiam), aff’g 285 F.Supp. 498 (D.Alaska 1968), cert. denied 396 U.S. 960, 90 S.Ct. 435, 24 L.Ed.2d 425 (1969), turns not on immunity but on scope of review in a disbarment proceeding. . Tate v. Arnold, 223 F.2d 782 (8th Cir. 1955). The ease involves a claim both for money damages and for injunctive relief. The opinion makes no distinction between the two claims but, significantly, explicitly recognizes Cooper v. Hutchinson, supra, as contrary authority, 223 F.2d at 785.

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Caselaw Access Project

2024-08-24T03:29:51.129235

2024-08-24T03:29:51.129683

The KROGER COMPANY, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. NATIONAL LABOR RELATIONS BOARD, Petitioner, v. PLUMBERS, STEAMPITTERS, & PIPEFITTERS LOCAL NO. 155, Respondent. Nos. 72-1598 and 72-1737. United States Court of Appeals, Sixth Circuit. Argued Dec. 11, 1973. Decided May 2, 1973. J. Mack Swigert, Taft, Stettinius & Hollister, Cincinnati, Ohio, for The Kroger Co. by Stanley R. Zirkin, N. L. R. B. Marcel Mallet-Prevost, Asst. Gen. Counsel, N. L. R. B., Washington, D. C., John J. A. Reynolds, Jr., Director, Region 26, N. L. R. B., Memphis, Tenn., for N. L. R. B. Tom Gentry, Little Rock, Ark., J. Mack Swigert, Taft, Stettinius & Hollister, Cincinnati, Ohio, for Plumbers, Steamfitters, and Pipefitters Local No. 155. Before WEICK and McCREE, Circuit Judges, and O’SULLIVAN, Senior Circuit Judge. O’SULLIVAN, Senior Circuit Judge. This litigation began with a charge by the Kroger Company that Plumbers, Steamfitters & Pipefitters Local No. 155 was guilty of violating Section 8(b)(4)(i)(ii)(A) and (B) of the National Labor Relations Act (29 U.S.C. § 158(b)(4)). The misconduct charged arose from the Kroger Company occupying a store built by its landlord at a shopping center in North Little Rock, Arkansas. Such misconduct consisted of picketing the Kroger store and the distribution of handbills at entrances to the shopping center; it began on the day that Kroger opened its store on July 27, 1971. The trial examiner, affirmed by the Board, held the picketing was a violation of Section 8(b)(4)(ii)(B) of the Act, but did not violate Section 8(b)(4)(i)(ii)(A) or Section 8(b)(4)(i)(B) of the Act, and that the distribution of the handbills was a protected activity under the proviso contained in Section 8(b)(4) of the Act — information picketing. We have consolidated the Board’s petition for summary enforcement of its finding of violation — our No. 72-1737— with Kroger’s petition for review of the Board’s finding that the distribution of handbills in combination with picketing was not a violation of the Act — our No. 72-1598. Local 155 filed no exceptions to the trial examiner’s findings, and has not appeared or filed a brief to this Court. It apparently took no part in the proceedings before the trial examiner, and made no effort to justify its alleged misconduct. We grant enforcement of the Board’s order as to the Section 8(b)(4)(ii)(B) violation and remand the matter to the Board to grant the relief asked by Kroger’s Petition for Review. Such an order would require Local 155 to cease and desist from picketing and passing out handbills. The only contest between Kroger and Local 155 derived from Kroger’s failure to yield to the union’s request that it incorporate into any lease made by it a requirement that Kroger’s landlord use only building contractors whose employees were members of a building trades union. All of Kroger’s employees are members of an appropriate union and it hires only union men or contractors to do any necessary repair or other work at its stores. These are the background facts. The construction at the involved shopping center was financed by Metropolitan Trust Company (Metro), the owner of the building site. Metro had engaged Rock Steel Building Company, Inc. as general contractor to erect the center. Part of the work was performed by West Rock, Inc., a wholly owned subsidiary of Rock Steel. Neither Rock Steel nor West Rock was unionized. Kroger’s involvement was that it had leased from Metro part of one of the buildings that was being constructed by Rock Steel and its subsidiary. Kroger was going to operate a retail food store and had no control over its construction since Rock Steel was under contract to Metro. Sometime around January 11, 1971, the union commenced picketing at the job site with placards that read: “Local Union No. 155, Plumbers and Steamfitters, for informational purposes is picketing West Rock, Incorporated, as it does not meet the standard of wages, hours and working conditions established by Local 155 in this area.” West Rock filed an unfair labor practice charge against the Local, but it was later withdrawn. During this same period, and in mid-January, 1971, the local union’s business manager, J. W. Woodson, contacted James Patterson, Kroger’s division construction engineer. Woodson asked if Patterson knew that a “non-union pipe-fitter [was] being employed” at the site. Patterson was unaware of this and advised Woodson that it was Kroger’s policy to employ only union help and that if there was any problem at the site he should talk with either Metro or Rock Steel. Woodson then indicated that Kroger should incorporate a clause in its leases whereby any buildings it was to lease could only be constructed by union labor. Patterson said that this was outside his field and that he did not think that Kroger would place such a limitation in its leases. Woodson then told Patterson: “This is a very strong union neighborhood and I think it would be very detrimental to the Kroger Company if there were any picketing out there.” Construction of the leased building was completed and Kroger opened its store for business on July 27, 1971. At about 8:00 A.M. on the opening day, the store manager observed two pickets, one stationed at each of the two entrances to the shopping center. There was a third individual who was placing handbills on the windshields of the cars in the parking lot. The placards of the pickets read: “The building occupied by Kroger-Sterling Stores & others on this site were [sic] constructed by Contractors paying less than the established wage scale for plumbers and steamfitters in this area .... Plumbers and Steamfitters Local Union No. 155.” The handbills contained the legend “Notice to the Public,” and went on to say: “The building housing the Kroger, Sterling Stores, and others was constructed by some contractors who paid their employees less than the prevailing wage rates paid for similar work in the Little Rock area. “Our organization has continuously sought to improve the wages and working conditions of employees in the Little Rock area. We are believers in ‘Wages not Welfare’. We believe that everyone who works is entitled to be paid a reasonable wage for his efforts. “We further believe that employers who cut wages and attempt to reduce the earning power of the workers in our area are contributing directly to a situation which ultimately costs all of us tax monies. “We believe these are facts that you should consider in making your decisions as to whether or not you would want to patronize an establishment built under such conditions. “Plumbers & Steamfitters Local No. 155.” (Emphasis supplied.) These handbills were also distributed to persons coming into the shopping center. While the picketing and handbilling continued, Kroger required the services of several companies — all union shops — to come to its store to make repairs to equipment there. One company, however, did its work, but only after the pickets had left for the day. Another company, John B. Dyke, had to have its work performed by another concern, Plant Electric, when one of Dyke’s own employees failed to make the necessary repairs. Dyke had sent its employee, William Russell, business agent of the local representing Dyke’s employees, to the Kroger store to make the repairs. At the hearing Kroger attempted to show that Russell refused to cross the picket line, but this testimony was rejected by the hearing examiner as being hearsay. Whatever caused Russell to not do the repair work assigned to him, his conduct necessitated Dyke to employ another company to do it instead of simply sending another one of its own men. It is a fair inference that the presence of the pickets was the cause of Russell’s failure to do work at the Kroger store. The picketing was effective. An inference fairly .drawn from these facts supports a finding that the union’s picketing and handbilling, although directed at the consumer, did in fact induce individuals to refuse to perform or to delay the performance of their services in sympathy with the union. Síich purpose is a violation of Section 8(b)(4)(i)(B) of the Act. American Bread Company v. NLRB, 411 F.2d 147 (6th Cir. 1969). Aside from the invitation and pressure upon repairmen and others not to enter the picketed premises of Kroger, the more serious and ominous objective of Local 155’s activities was, by its handbills, to suggest to proposed customers of Kroger not to patronize its store. After reciting that the building newly occupied by Kroger had been constructed by contractors who paid less than prevailing union wages, the handbill said to the prospective customers that such facts should be considered by them in deciding “whether or not you want to patronize an establishment built under such conditions.” This was clearly an invitation to the public to boycott the Kroger store. It is difficult to envisage just what Kroger could then do to assuage Local 155. Its choices were either to vacate the store built by its landlord, thereby-breaching its lease and exposing itself to dire consequences, or to make an agreement with Plumbers, Steamfitters and Pipefitters to require every prospective landlord to employ only union contractors or Kroger would not do business with them. We think the picketing and the hand-billing must be related to the conversation and conduct in January, 1971, whereby the Local 155 picketed the construction site and sought to persuade Kroger to incorporate in all of its leases a condition that it would occupy no building constructed by a nonunion contractor. What happened, then, in July, 1971, was but fulfillment of the January suggestion that “it would be very detrimental to the Kroger Company if there were any picketing out there.” Kroger was already committed by contract to occupy the building being constructed for it by its landlord. Whichever horn of the dilemma Kroger chose — an immediate cessation of business with Metropolitan Trust Co., or a promise to cease doing business with Metro or any other future landlord who used non-union contractors —it would be joining in a violation of Section 8(b)(4)(i)(ii)(A) of the Act. These sections proscribe inducement or encouragement of any individual employed in commerce in a refusal “to perform any service” where an object thereof is to force an employer — here Kroger — to enter into any agreement “prohibited by'Section 8(e),” which Section also proscribes union conduct having an object of forcing a person engaged in commerce “to cease doing business with any other person.” Certainly, the picketing here was designed to induce, and was in some degree successful in inducing, others not to perform services for Kroger. It is clear also that an objective of the union’s conduct was to coerce or induce Kroger “to cease doing business with” Metropolitan. Section 8(e) provides: “(e) It shall be an unfair labor practice for any labor organization and any employer to enter into any contract or agreement, express or implied, whereby such employer [here Kroger] ceases or refrains or agrees to cease . . . doing business with any other person [Metropolitan and other landlords of Kroger].” The 1971 request of the union that Kroger cease doing business with any other person — including a landlord — who would not agree to use only union labor cannot, in our view, be disassociated from the picketing and handbilling of July and August 1971. The trial examiner did attempt such disassociation. “I do not find that Kroger was required to enter into any agreement prohibited by Section 8(e). Woodson did suggest that Kroger have put in its lease language requiring the lessor to use union contractors but this casual suggestion was never pursued. I would not find a separate unlawful objective on evidence as tenuous as this.” (Emphasis supplied.) We consider that the picketing and handbilling cannot be separated in their objectives. The examiner’s order appears to us to be inconsistent with his exoneration of Local 155 of violation of Section 8(b)(4)(i)(ii)(A) and Section 8(b)(4)(i)(B) of the Act, and inconsistent with his holding that the handbilling was a protected activity. His order requires that Local 155. “1. Cease and desist from threatening, coercing and restraining the Kroger Co., or any other person engaged in commerce, where an object thereof is to force The Kroger Co., to cease doing business with Metropolitan Trust Company and/or to force Metropolitan Trust Company to cease doing business with Rock Steel Building Co., or any other person engaged in commerce.” No purpose would be served by extensive review of relevant authorities or dissertation of the facts and law here involved. We find the language contained in the dissent of Board Member Ralph E. Kennedy a clear explication of our views. He said, in part: It is well settled that the words “ ‘induce or encourage’ are broad enough to include in them every form of influence and persuasion.” International Brotherhood of Electrical Workers, Local 501, et al. v. N. L. R. B., 341 U.S. 694, 701-702 [, 71 S.Ct. 954, 95 L.Ed. 1299]. It is likewise well settled that no proof of success or effectiveness of the picketing in creating a work stoppage is necessary in order to establish a violation. N.L.R.B. v. Associated Musicians, Local 802, AFL, 226 F.2d 900 (C.A.2, 1955), cert. denied 351 U.S. 962 [, 76 S.Ct. 1025, 100 L.Ed. 1483]. In the instant case, the mere presence of the picket line was sufficient to constitute inducement or encouragement of individuals employed by Kroger, Price Fuel Electric, Arkansas Sign and Neon Company, John B. Dyke Company, and others. In any event, an inference is warranted that the picket line was effective, at least insofar as the Dyke door equipment repair incident is concerned. I am also of the view that the failure of the Trial Examiner to find that the distribution of handbills, containing substantially the same message as the picket placards and conducted simultaneously and in generally the same area as the picketing, was tantamount to picketing and was unprotected by the Act was erroneous. In Lumber and Sawmill Workers Local Union No. 2797 (Stoltze Land & Lumber Company), 156 NLRB 388, the Board found that the distribution of handbills in circumstances strikingly similar to those involved here amounted to picketing. Similarly, in Lawrence Typographical Union No. 570 a/w International Typographical Union AFL-CIO (Kansas Color Press, Inc.), 169 NLRB 279, enfd. 402 F.2d 452 (C.A. 10, 1968), the Board found that handbilling in circumstances where it constituted a part of the union’s campaign, which included picketing, also constituted picketing. See also Nashville Building and Construction Trades Council Castner-Knott Dry Goods Store, 188 NLRB No. 69. I must also dissent to the failure of my colleagues to find that Respondent’s conduct here had an object of forcing or requiring Kroger to agree that in the future all construction work on buildings to be occupied by it would be done by union contractors or subcontractors, and that in the event Kroger leased space from an owner or a developer of a shopping center its lease would provide for a union-built facility. To me, this object is implicit both from Respondent’s picketing and handbilling here, such conduct having occurred after the store had been completed and opened for business, and from the conversations early in January 1971, between Respondent’s Business Manager Woodson and Kroger’s Construction Engineer Patterson. I fail to see in what manner Kroger could settle the dispute with Respondent except to now agree that in the future it would subcontract only to union contractors or deal only with firms employing union contractors. Such activity is clearly proscribed by Section 8(b)(4)(A) of the Act. The Columbus Building and Construction Trades Council, AFL-CIO (Merchandise Properties, Inc.), 149 NLRB 1224, Columbus Building and Construction Trades Council, AFL-CIO (The Kroger Co.), 164 NLRB 516. On the basis of the foregoing, I would find that by its picketing and handbilling Respondent violated Sections 8(b) (4) (i), (ii)(A) and (B) of the Act as alleged in the complaint. It might be thought that inasmuch as the picketing and handbilling ceased sometime in August, 1971, our consideration of the matter is academic. However, the Board’s brief to us says: “On October 29, 1971, the United States District Court for the Eastern District of Arkansas enjoined both the picketing and the handbilling under Section 10(l) of the Act pending resolution of the case by the Board. See Reynolds v. Plumbers, Local 155, 79 LRRM 2224 (E.D.Ark., 1971).” Therefore, if the Board’s approval of the handbilling is approved, such hand-billing might indeed be resumed. We remand this case to the Board for entry of orders consistent with our opinion.

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George NIEVES et al., Plaintiffs-Appellants-Appellees, v. Russell G. OSWALD, Commissioner of Correctional Services, and Vincent R. Mancusi, Superintendent of Attica Correctional Facility, Defendants-Appellees-Appellants. Nos. 462, 737, Dockets 72-1974, 72-2322. United States Court of Appeals, Second Circuit. Argued Feb. 21, 1973. Decided April 20, 1973. Herman Schwartz, Buffalo, N. Y. (Edward I. Koren, ACLU Prison Rights Project, Buffalo, N. Y., Kenneth Kimerling, National Lawyers Guild, New York City, William E. Hellerstein, Legal Aid Society of New York, Morton Stavis, New York City, Stanley A. Bass, New York City, on the brief), for plaintiffs-appellants-appellees. John H. Stenger, Sp. Asst. Atty. Gen., Buffalo, N. Y. (Louis J. Lefkowitz, Atty. Gen. of N. Y., on the brief), for defendants-appellees-appellants. Before FEINBERG, MULLIGAN and TIMBERS, Circuit Judges. FEINBERG, Circuit Judge: Once again we find ourselves dealing with the complexities of 28 U.S.C. § 2281, which has the deceptively simple heading in the United States Code of “Injunction against enforcement of State statute; three-judge court required.” That section and its “Federal statute” counterpart, 28 U.S.C. § 2282, have been accurately described as creating many problems “so complex as to be virtually beyond belief.” This case is a depressingly excellent example, since it presents not merely familiar and difficult problems of jurisdiction, but the added complexity of a last minute attempt to affect appellate review by a motion to withdraw the prayer for injunctive relief. So far as we know, this nuance is an addition to three-judge court esotérica in this circuit. See Part III infra. This litigation offers further proof, if such is needed, of the need for modification or repeal of the three-judge court statutory scheme. I Appellants are nine prisoners at the Attica Correctional Facility who sue for themselves and on behalf of all other inmates who were at that institution at the time of the notorious prison revolt in September 1971, and who, as a result of alleged misconduct during that uprising, are subject to disciplinary hearings. Appellants are also possible targets of a special grand jury empaneled in November 1971 to investigate the unfortunate events at Attica. The complaint, brought under 42 U.S.C. § 1983 in the United States District Court for the Western District of New York, alleges that the conduct of disciplinary proceedings in New York prisons denies or threatens to deny them various rights guaranteed by the United States Constitution. The complaint prays for preliminary and permanent injunctive relief against the holding of disciplinary hearings and the imposition of punishment without certain procedural safeguards; declaratory and other relief is also sought. In November 1971, defendants consented to a temporary stay of disciplinary hearings involving any charges against inmates arising from the events at Attica until the special grand jury made its report or until the merits of plaintiffs’ action were determined. Plaintiffs moved to convene a three-judge court, as the complaint effectively sought to restrain “the enforcement, operation, or execution” of state regulations, 28 U.S.C. § 2281, which govern disciplinary proceedings in state prisons. In March 1972, Chief Judge John O. Henderson denied that motion as well as defendants’ motion to dismiss the complaint for failure to state a claim upon which relief could be granted. In June 1972, the district court ruled against plaintiffs on the merits, except that it granted the plaintiff class limited rights to counsel, in order to protect their privilege against self-incrimination, including the right to consult with counsel prior to any proceeding and to have counsel present during those portions of the proceeding when the inmate is present. As to that, the court ordered injunctive relief. Plaintiffs appeal from denial of the application for a three-judge court and from denial of all but limited relief on the merits of their constitutional claims; defendants appeal from the ruling that permitted limited right to counsel. Because we believe that Judge Henderson improperly refused to convene a three-judge court, we do not reach the various contentions of the parties on the merits, and we reverse and remand for further proceedings. II In Idlewild Bon Voyage Liquor Corp. v. Epstein, 370 U.S. 713, 715, 82 S.Ct. 1294, 8 L.Ed.2d 794 (1962) (per curiam), the Supreme Court stated that when an application for a three-judge court is addressed to a district judge, his inquiry is limited to determining (1) whether the constitutional question is substantial; (2) whether the complaint at least formally alleges a basis for equitable relief; and (3) whether the case otherwise comes within the requirements of the three-judge statute. If all criteria are established, the single judge must convene a statutory three-judge court. See Abele v. Markle, 452 F.2d 1121, 1126 (2d Cir. 1971). Whether these criteria were met in this case depends in turn on the allegations of the complaint, see Goosby v. Osser, 409 U.S. 512, 521 n. 7, 93 S.Ct. 854, 860, 35 L.Ed.2d 36 (1973), all of which are deemed to be true. Id. Plaintiffs claim that the procedures governing disciplinary hearings commenced or to be commenced — procedures required by New York regulations cited at note 3 supra — are constitutionally deficient in, inter alia, the following respects: Inmates are denied an opportunity to present witnesses in their defense and to confront adverse witnesses against them, since they are not permitted to be present when adverse testimony is taken; the rules governing prisoner conduct are so vague as to be void; the testimony of adverse witnesses is unsworn; inmates are not given Miranda-type warnings even though statements made in disciplinary proceedings may be used in subsequent criminal prosecutions; inmates are denied assistance of counsel or of effective counsel-substitute; inmates receive inadequate notice of the rule allegedly violated, of the rules under which fact-finding is to be had, and of the precise facts underlying the charges; and inmates are denied a decision by an unbiased decision-maker and are not accorded a written opinion by the deciding tribunal based upon substantial evidence. As Judge Henderson perceived in his June 1972 decision on the merits, plaintiffs’ constitutional attack is really based on two distinct theories. Most broadly, plaintiffs challenge the application of the regulations, which do not require the above-claimed procedural safeguards, to any serious disciplinary proceeding in state prisons. Indirectly, by raising questions of self-incrimination, plaintiffs also challenge on a somewhat narrower basis the absence of these safeguards when inmates are threatened, as are plaintiffs, with prison-disciplinary and subsequent criminal proceedings. Judge Henderson believed that neither theory required a three-judge court. While his March 1972 opinion denying plaintiffs’ motion to convene did not squarely address the first, more general, theory, his later opinion reflects his conclusion that the constitutional questions thus raised were insubstantial. As to the narrower theory, he concluded in the earlier opinion that it failed to satisfy the requirements of section 2281, as the claim raised “not ... a question of state-wide concern, but rather only local concern precipitated as a result of the unusual . . . occurrences at Attica.” We think both conclusions were erroneous. Turning to plaintiffs’ broader theory, an insubstantial federal question is presented if the claim is “ ‘obviously without merit’ or because ‘its unsoundness so clearly results from the previous decisions of [the Supreme Cjourt as to foreclose the subject . . . .’ ” Ex Parte Poresky, 290 U.S. 30, 32, 54 S.Ct. 3, 4, 78 L.Ed. 152 (1933) (citations omitted). Decisions of this court, binding as they are on the district courts within this circuit, whether they be of the single or three-judge variety, may also foreclose a constitutional challenge as insubstantial. See Lewis v. Rockefeller, 431 F.2d 368, 371 (2d Cir. 1970). Judge Henderson believed that plaintiffs’ more general constitutional attack was “a mirror image of the arguments presented to and rejected” by this court, sitting en banc, in Sostre v. McGinnis, 442 F.2d 178 (2d Cir. 1971), cert. denied, 404 U.S. 1049, 92 S.Ct. 719, 30 L.Ed.2d 740 (1972) and 405 U.S. 978, 92 S.Ct. 1190, 31 L.Ed.2d 254 (1972). We do not believe, however, that our decision in Sostre renders plaintiffs’ constitutional theory “essentially fictitious” or “wholly insubstantial,” Bailey v. Patterson, 369 U.S. 31, 33, 82 S.Ct. 549, 7 L. Ed.2d 512 (1962), or “obviously without merit,” Ex Parte Poresky, supra. As the Supreme Court has only recently informed us: The limiting words “wholly” and “obviously” have cogent legal significance. In the context of the effect of prior decisions upon the substantiality of constitutional claims, those words import that claims are constitutionally insubstantial only if the prior decisions inescapably render the claims frivolous; previous decisions which merely render claims of doubtful or questionable merit do not render them insubstantial for the purposes of 28 U.S.C. § 2281. Goosby v. Osser, supra, 409 U.S. at 518, 93 S.Ct. at 858. Applying these guidelines here, we note first that Sostre disclaimed comment on “the constitutional adequacy” of the state regulations now before us. 442 F.2d at 199 n. 42. Moreover, not all the procedural guarantees here sought were expressly considered by us in Sostre, although we did reject the claim that due process necessarily entitled a prisoner to all of the following protections : legal counsel, confrontation, cross-examination, right to call witnesses, and “a written statement of evidence and rationale.” Id. at 196-198. While Judge Kaufman’s opinion did not specifically address itself to other protections that these plaintiffs contend are due them but denied — e. g., an impartial tribunal, rules of conduct which are not vague, adequate written notice of the rule violated — the district court in Sostre had mandated most of these, and we registered our “disagreement with Judge Motley’s conclusion that each of the procedural elements incorporated in her mandatory injunction are necessary constitutional ingredients of every proceeding resulting in serious discipline of a prisoner.” Id. at 198; cf. id. at 203. We held that, at a minimum, a prisoner is entitled to be “confronted with the accusation, informed of the evidence against him . . . and afforded a reasonable opportunity to explain his actions.” Id. at 198. In providing these minima and rejecting universal application of those safeguards required by Judge Motley, however, we did not state that none of the rejected safeguards were ever to be constitutionally required in any case; yet there is merit to plaintiffs’ assertion that this is an inevitable effect if the regulations of which they complain apply to all serious disciplinary proceedings without exception. Plaintiffs argue that such a result is not required by Sostre and is unconstitutional; the Sostre court observed, id. at 196, that due process safeguards vary with factual settings. While cross-examination and confrontation (to take two examples) may have been unnecessary to accurate resolution of facts on which Sostre’s punishment was based, plaintiffs assert them to be critical here or whenever punishment turns on recollections and perceptions of adverse witnesses. Although we express no view as to the merits of these and other contentions, we hold that they are not “inescapably” foreclosed by Sostre. Even more significantly, plaintiffs’ more particularized theory of relief — the unconstitutionality of the regulations as applied where both disciplinary and criminal proceedings against an inmate are in the offing — unquestionably raises grave constitutional issues. Under these special circumstances, plaintiffs say, a prisoner’s dilemma is particularly acute: Since he cannot speak for fear of self-incrimination and cannot call favorable witnesses or cross-examine adverse ones, he can neither explain his actions nor refute the charges against him. See Clutchette v. Procunier, 328 F.Supp. 767, 778-779 (N.D.Cal.1971). Moreover, this claim is not, as the district judge recognized, foreclosed by Sostre. In his view, however, it was a matter of local concern only, resulting from the specialized situation growing out of the Attica revolt. Resolution of the merits by a single judge was therefore appropriate as plaintiffs did not meaningfully seek to enjoin the operation of a statute statewide. Concededly, because a court of three judges is only necessary to protect against “improvident state-wide doom by a federal court of a state’s legislative policy,” Phillips v. United States, 312 U.S. 246, 251, 61 S.Ct. 480, 483, 85 L.Ed. 800 (1941), the Supreme Court has permitted single-judge adjudication where local ordinances are sought to be enjoined, see, e. g., Ex Parte Collins, 277 U.S. 565, 568, 48 S.Ct. 585, 72 L.Ed. 990 (1928); or where action taken pursuant to a state statute in fact affects only a particular region or district within a state, e. g., Moody v. Flowers, 387 U.S. 97, 102, 87 S.Ct. 1544, 18 L.Ed.2d 643 (1967). See generally Currie, The Three-Judge District Court in Constitutional Litigation, 32 U.Chi.L.Rev. 1, 29-37 (1964). More recently, the Court has indicated that a complaint seeking to enjoin regulations promulgated by a statewide authority with jurisdiction over specialized institutions throughout a state will not require a three-judge court if the regulation in fact applies merely to a relatively small proportion of those institutions. Board of Regents v. New Left Education Project, 404 U.S. 541, 92 S.Ct. 652, 30 L.Ed.2d 697 (1972). These limitations have no application here, however. So far as we can determine, the governing regulations before us are authorized by statute, were promulgated by state-wide authority and apply in all state prisons. See Sostre v. McGinnis, supra, 442 F.2d at 199 n. 42. To be sure, these regulations, insofar as they allegedly jeopardize rights only of inmates confronted by probable future criminal prosecution, will not affect every prisoner. In the same sense, however, few state statutes or regulations affect all or most citizens of a state, yet a three-judge court may well be necessary. E. g., Goosby v. Osser, supra (pre-trial detainees allege election law unconstitutionally denies them right to vote). We do not suppose that prisoner conduct that may also violate the New York Penal Code is an isolated phenomenon, peculiarly confined to Attica. Our conclusion is further fortified by the recently promulgated state regulation, which squarely contemplates the problem of self-incrimination in prison disciplinary proceedings throughout the state in light of possible subsequent criminal prosecution. We hold that this challenge to the regulations sufficiently implicates well-considered state policy of state-wide application to require three-judge court adjudication of the claim for injunctive relief. Cf. Lewis v. Rockefeller, supra, 431 F.2d at 370 & n. 1 (regulation governing role of counsel at Parole Board prisoner-release hearings held sufficiently state-wide to require three-judge court). A few further observations seem appropriate. We recognize that the three-judge court statutes are technical enactments, to be restrictively construed. Phillips v. United States, supra, 312 U.S. at 251, 61 S.Ct. 480. In this spirit, we have previously declined to reverse decisions of single district judges, even where sections 2281 or 2282 might literally apply, when we unhesitatingly agreed with the resolution of the merits of a ease by the court below, and where convening a statutory district court seemed therefore a patently wasteful formality. We also agree with those who note the anomaly of requiring three judges to decide a case in which, as here, the state, for whose protection statutory courts were originally devised, is content to litigate the ease before a single federal judge. See, e. g., Currie, supra, at 77. Nevertheless, though adherence to the letter of section 2281 (and judicial gloss thereon) may appear unduly formalized, and though it regrettably adds to the growing Supreme Court caseload, it may also forestall further delay that results from ultimately meaningless efforts, following disposition by a court of appeals, to obtain Supreme Court review: The Court apparently will consider, on its own motion, whether three judges were initially required, see Kennedy v. Mendoza-Martinez, 372 U.S. 144, 153, 83 S.Ct. 554, 9 L.Ed.2d 644 (1963); Currie, supra, at 76, and, if so, the entire litigation must commence anew before a court of three judges. See, e. g., Goosby v. Osser, supra; Schneider v. Rusk, 372 U.S. 224, 83 S.Ct. 621, 9 L.Ed.2d 695 (1963) (per curiam). Thus, in appropriate cases, we have not hesitated to reverse a single judge disposition with instructions to convene a three-judge court. E. g., Gold v. Lomenzo, supra note 6; Kramer v. Union Free School District, 379 F.2d 491 (2d Cir. 1967). But for the development discussed below, that course is the one we would follow here. III Our decision to remand is somewhat complicated, but eventually reinforced, by what has occurred in this case on appeal. Following submission of briefs in which plaintiffs urged and defendants opposed the necessity for a three-judge court, and following oral argument at which the three-judge court issue was vigorously pursued by the panel, with the parties adhering to their positions, plaintiffs moved in this court for permission to withdraw their prayer for injunctive relief. Obviously, if such a motion had been made and granted in the district court, the troublesome questions regarding jurisdiction of the single judge would not be before us. Compare Rosario v. Rockefeller, 458 F.2d 649, 651-652 n. 2 (2d Cir. 1972), aff’d, 410 U.S. 752, 93 S.Ct. 1245, 36 L.Ed.2d 1 (1973); Carter v. McGinnis, supra note 4, 351 F.Supp. at 789 n. 2. But we do not believe that resolution of the issue of district court jurisdiction can be so easily manipulated after submission of an appeal. Even more significantly, if plaintiffs’ application were granted by us, then the limited injunction that Judge Henderson has already entered and from which defendants cross-appeal, would also fall away. This would suggest a remand to the district court as the sensible course, in any event, to consider the changed situation anew, since plaintiffs do not suggest that they are uninterested in preserving the substance of what they already have. Accordingly, we deny plaintiffs’ motion, without prejudice to renewal before Judge Henderson following remand. If renewed and granted at that time, plaintiffs should seek entry of a fresh decree declaratory in form only, from which a timely appeal to this court can again be taken. Should plaintiffs elect to stand on their prayer for injunctive relief, a three-judge court is required for adjudication of the claims. Case remanded to the district court for further proceedings consistent with this opinion. . ALI, Study of the Division of Jurisdiction Between State and Federal Courts 332 (1969). . See, e. g., H. Friendly, Federal Jurisdiction: A General View 50 (1973); Report of the Study Group on the Caseload of the Supreme Court 28-30 (1972) ; 1970 Reports of the Proceedings of the Judicial Conference of the United States 78-79 (1970). . Procedures for Implementing Standards of Inmate Behavior and for Granting Good Behavior Time Allowances, 7 N.Y.C.R.R. Ch. V, Pts. 250-53. . The judge also granted plaintiffs’ motion that the action be maintained as a class action, but denied plaintiffs’ motion to consolidate the action with Carter v. McGinnis, 320 F.Supp. 1092 (W.D.N.Y. 1970), and 351 F.Supp. 787 (W.D.N.Y. 1972), notice of appeal filed by defendants, Dec. 29, 1972. . But see Part III infra. . We nevertheless have jurisdiction over this appeal, or “something sufficiently similar,” Gold v. Lomenzo, 425 F.2d 959, 961 (2d Cir. 1970). . The reference at 442 F.2d 195 n. 29 seems noncommittal. . In his concurring opinion in Sostre, Judge Waterman expressed his understanding that “decision as to what are wholly acceptable minimum standards [of due process] is left for another day through case-by-case development.” 442 F. 2d at 206 n. 2. . As to the need for three-judge court adjudication of a challenge to regulations “as applied” in circumstances like these, see C. Wright, Law of Federal Courts 190 (1970). . N.Y. Correction Law § 112 (McKinney’s Consol.Laws, c. 43, 1968); id. § 137 (1972-73 Supp.). . Compare the decisions cited in note 4 supra, growing out of an inmate uprising in Auburn Correctional Facility in November 1970. . 7 N.Y.C.R.R. § 253.4, made part of the record on appeal by order dated February 9, 1973. We hasten to add that this regulation was not before the district court at the time of its decision. . We note in passing that plaintiffs’ complaint does allege threat of irreparable injury and lack of adequate legal remedy, satisfying the second Idlewild requirement, that the basis for injunctive relief must formally appear. . E. g., Sardino v. Federal Reserve Bank, 361 F.2d 106, 114 & n. 10 (2d Cir.), cert. denied, 385 U.S. 898, 87 S.Ct. 203, 17 L.Ed.2d 130 (1966) (two members of a reviewing appellate court panel and the single judge whose decision is before it— all of whom agreed that the claim was meritless — could be constituted as the three-judge court); see Astro Cinema Corp. v. Mackell, 422 F.2d 293 (2d Cir. 1970); Green v. Board of Elections, 380 F.2d 445, 449 (2d Cir. 1967), cert. denied, 389 U.S. 1048, 88 S.Ct. 768, 19 L.Ed.2d 840 (1968). . Had plaintiffs initially requested declaratory relief only, no three-judge court would have been required. Cf. Kennedy v. Mendoza-Martinez, supra, 372 U.S. at 155, 83 S.Ct. 554. . Cf. Thoms v. Heffernan, 473 F.2d 478, 487-88 (2d Cir. 1973) (Timbers, J., dissenting) (protesting manipulation of appellate jurisdiction by style of relief framed by three-judge court). Plaintiffs’ moving papers admit that “[a]t the oral argument ... it became clear that continuing appellants’ request for injunctive relief might well result in a remand . . . . ” But compare Merced Rosa v. Herrero, 423 F.2d 591 (1st Cir. 1970). . We see no reason why such an appeal if taken could not be expedited, should the request he made.

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Orville E. STIFEL, II, Plaintiff-Appellant, v. William F. HOPKINS, Esq., et al., Defendants-Appellees. No. 72-1424. United States Court of Appeals, Sixth Circuit. Submitted Oct. 3, 1972. Decided May 1, 1973. Orville E. Stifel, II, pro se. Lindhorst & Dreidame by James L. O’Connell, Cincinnati, Ohio, for defendant-appellee, William F. Hopkins. Before PHILLIPS, Chief Judge, and EDWARDS and McCREE, Circuit Judges. McCREE, Circuit Judge. This case presents the question whether a federal prisoner who is incarcerated in a state other than the state of his domicile prior to conviction can show that he is a citizen of the state of incarceration for purposes of federal diversity jurisdiction. The District Court held that as a matter of law the prisoner was precluded from making this showing, and dismissed the complaint for lack of jurisdiction. We reverse. In 1969, appellant was convicted by a jury of violating 18 U.S.C. § 1716 (1970), by mailing an “infernal machine” that exploded and caused the death of the addressee upon opening the package. Appellant’s conviction was subsequently affirmed by this court. United States v. Stifel, 433 F.2d 431 (6th Cir. 1970), cert. denied, 401 U.S. 994, 91 S.Ct. 1232, 28 L.Ed.2d 531 (1971), and he is now serving a life sentence in the federal penitentiary in Lewisburg, Pennsylvania. Prior to his arrest and conviction, appellant lived with his parents in Cincinnati, Ohio, and concededly was a citizen of Ohio. As we recognized in our consideration of his prior appeal, he was known in his community “as something approaching a model young man.” 433 F.2d at 431. In 1971, following the denial of certiorari by the Supreme Court in appellant’s criminal case, he instituted this action against his parents and against the attorney who represented him throughout the criminal proceedings. Reciting that plaintiff was a citizen of Pennsylvania, that defendants were citizens of Ohio, and that the amount in controversy exceeded $10,000, the complaint, which was filed in United States District Court for the Southern District of Ohio, invoked the diversity jurisdiction of the court. The complaint asserted that the attorney had fraudulently induced plaintiff to retain him and had deliberately and negligently engaged in acts of professional misconduct to the detriment of plaintiff; that plaintiff’s parents had agreed to pay the attorney a large sum of money for representation of their son and then obtained a judgment in federal court against plaintiff in the amount of their debt to the attorney; and that plaintiff was entitled to compensatory and punitive damages from the attorney and to injunctive relief against the payment of any moneys by plaintiff’s parents to the attorney. Defendant attorney moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction. In support of this motion, he submitted an affidavit stating that plaintiff resided with his parents in Ohio until he was incarcerated in federal prison in Pennsylvania and that Stifel was in prison at the time of suit. Plaintiff filed a counter-affidavit in which he stated that he was 25 years of age, unmarried, and childless; that from July 1969 he had resided in Pennsylvania and would continue to do so indefinitely; that all his personal belongings and assets were in Pennsylvania and that all his business transactions were conducted in Pennsylvania; that, because of the actions of his attorney as set out in the complaint, he had been subject to public scorn and ridicule in Ohio, had become a “notorious person” there, and was a “target of great public hostility” in his former community, and that he therefore did not intend ever to return to Ohio. He stated that he considered Pennsylvania his home and intended to remain there indefinitely. Plaintiff subsequently submitted a supplemental memorandum in which he asserted that federal prisoners have some choice of the particular prison facility in which they will be incarcerated and that transfers are often allowed, and he contended that he had decided to remain in Pennsylvania despite urgings by unnamed prison officials that he transfer to a facility in Indiana. The District Court granted the motion to dismiss. The court accorded no weight to appellant’s affidavit on the ground that appellant was not voluntarily in Pennsylvania and his intentions regarding his domicile if and when he should be released from prison were irrelevant. Appellant’s domicile, the court held, remained in Ohio until appellant should have voluntarily changed it, and a prisoner cannot perform such a voluntary act because he is at all time subject to the physical and legal compulsion of federal authorities. On appeal, plaintiff contends that a rule of law that precludes a prisoner from showing that he has changed his domicile and thereby denies him access to federal court is a rule that is based solely on the litigant’s status as a prisoner, and as such violates the due process clause of the Fifth Amendment. He contends that it works arbitrarily to discriminate against prisoners and to deprive them of an important federal right —the right to sue in federal court. He claims that the rule constitutes an irrebuttable presumption in violation of the Fifth Amendment, that it restrains his First Amendment right to form and express his thoughts, and that it places unjustifiable obstacles in the path of prisoner-litigants that would not have to be overcome by unconfined citizens. We agree with appellant that the District Court should not have ruled as a matter of law that appellant could not make the requisite showing of a change of domicile. We reach this result not on constitutional grounds but instead on the basis of our interpretation of the meaning of the word “citizen” in the statute defining the diversity jurisdiction of the federal courts. Federal district courts have diversity jurisdiction of civil actions between “citizens of different states” if the amount in controversy exceeds $10,000. 28 U.S.C. § 1332(a)(1) (1970). The determination of a litigant’s state citizenship for purposes of diversity jurisdiction is a matter of federal law, Ziady v. Curley, 396 F.2d 873, 874 (4th Cir. 1968); Taylor v. Milam, 89 F.Supp. 880, 883 (W.D.Ark.1950); see 1 J. Moore, Federal Practice (pt. 1) ¶ 0.74 [1], at 707.1 (2d ed. 1972), although federal courts may look to state law for guidance in defining terms, formulating concepts, or delineating policies. See Napletana v. Hillsdale College, 385 F.2d 871, 872 (6th Cir. 1967). Thus, although it is settled that citizenship for purposes of 28 U.S.C. § 1332(a) means domicile rather than residence, Gilbert v. David, 235 U.S. 561, 569, 35 S.Ct. 164, 59 L.Ed. 360 (1915); Williamson v. Osenton, 232 U.S. 619, 624, 34 S.Ct. 442, 58 L.Ed. 758 (1914); see D. Currie, Federal Courts 250 (1968); 1 J. Moore, supra, ¶ 0.74 [3], considerations on which federal courts rely in determining domicile often derive from state choice-of-law rules that have been developed in such diverse contexts as probate jurisdiction, taxation of incomes or intangibles, or divorce law. See 1 J. Moore, supra, ¶ 0.74 [3.-1], at 707.53; C. Wright, Law of Federal Courts § 26, at 86 n. 4 (2d ed. 1970); Restatement (Second) of Conflict of Laws § 11, comment o (1971); cf. Note, Evidentiary Factors in the Determination of Domicile, 61 Harv.L.Rev. 1232, 1233-34 (1948). Although this importation of the law of conflicts into resolution of federal jurisdictional questions can have the unfortunate consequence of causing federal courts to lose sight of important federal interests that may be involved, conflicts law is useful in providing basic working definitions. But see Currie, The Federal Courts and the American Law Institute (pt. 1), 36 U.Chi.L.Rev. 1, 10-12 (1968). To acquire a domicile within a particular state, a person must be physically present in the state and must have either the intention to make his home there indefinitely or the absence of an intention to make his home elsewhere. Gilbert v. David, supra, 235 U.S. at 569-570, 35 S.Ct. 164; Gallagher v. Philadelphia Transp. Co., 185 F.2d 543, 546-547 (3d Cir. 1950); see 1 J. Moore, supra, ¶ 0.74 [3.-1]; C. Wright, supra, § 26. A threshold inquiry, then, is whether a person has the legal capacity to form the intention to abide where he resides. Although in a federal diversity case the capacity of a person to sue or be sued is to be determined by the law of the state of the litigant’s domicile, Fed.R.Civ.P. 17(b), and although state law may define certain concepts or relations that bear on the question of a litigant’s disability to perform particular acts, see Spurgeon v. Mission State Bank, 151 F.2d 702 (8th Cir. 1945), cert. denied, 327 U.S. 782, 66 S.Ct. 682, 90 L.Ed. 1009 (1946), the determination in a diversity case whether a litigant can acquire .citizenship in a particular state is a federal question to be resolved in accordance with federal principles. Cf. O’Brien v. Avco Corp., 425 F.2d 1030, 1034 (2d Cir. 1969); Ziady v. Curley, supra; Napletana v. Hillsdale College, supra. If appellant is not legally capable of establishing a domicile in Pennsylvania, it must be either because he is in Pennsylvania under compulsion and for that reason cannot, as a matter of law, form the intent to make the state his home, or because he is under a civil disability resulting from his status as an inmate of a federal prison. We will consider each of these possible reasons in turn. I In his essay on the subject of domicile in 1830, Joseph Story stated the rule to be that “[rjesidence in a place by constraint, or involuntarily, will not give the party a domicile there; but his antecedent domicile remains.” Hogan, Joseph Story’s Essay on “Domicile,” 35 B.U.L.Rev. 215, 221 (1955). It has since become black-letter law that a person cannot acquire a domicile of choice in a place if he is there by virtue of physical or legal compulsion. See, e. g., Neuberger v. United States, 13 F.2d 541, 542 (2d Cir. 1926); Shaffer v. Tepper, 127 F.Supp. 892, 894 (E.D.Ky.1955); Wendel v. Hoffman, 24 F.Supp. 63, 64-65 (D.N.J.1938); 1 J. Beale, The Conflict of Laws § 21.1 (1935); 1 J. Moore, supra, ¶ 0.74 [3.-3], at 707.67; Restatement (Second) of Conflict of Laws, supra, § 17; Note, Domicile as Affected by Compulsion, 13 U.Pitt.L.Rev. 697, 699 (1952); Recent Decision, 26 Mich.L.Rev. 571, 572 (1928). The rule has been applied, in a variety of contexts, to political refugees, see White v. Burnley, 20 How. (61 U.S.) 235, 248-249, 15 L.Ed. 886 (1858); to persons living in forced exile, see Neuberger v. United States, supra; cf. Guessefeldt v. McGrath, 89 F.Supp. 344, 347 (D.D.C.1950), aff’d, 88 U.S.App.D.C. 383, 191 F.2d 639 (1951), rev’d on other grounds, 342 U.S. 308, 72 S.Ct. 338, 96 L.Ed. 342 (1952); to evacuees, see Hiramatsu v. Phillips, 50 F.Supp. 167 (S.D.Cal.1943), noted in 42 Mich.L.Rev. 321 (1943); and to servicemen, see Kinsel v. Pickens, 25 F.Supp. 455 (W.D.Texas 1938); Radford v. Radford, 26 Ky.Law Rep. 652, 82 S.W. 391 (1904). It has also been consistently applied to inmates of penal institutions. See Cohen v. United States, 297 F.2d 760, 774 (9th Cir.), cert. denied, 369 U.S. 865, 82 S.Ct. 1029, 8 L.Ed.2d 84 (1962) (mailing of notice of tax deficiency); United States v. Stabler, 169 F.2d 995, 998 (3d Cir. 1948) (venue for cancellation of citizenship); White v. Fawcett Publications, 324 F.Supp. 403, 404 (W.D.Mo.1970) (diversity of citizenship) ; Urbano v. News Syndicate Company, 232 F.Supp. 237, 239 n. 1 (S.D.N.Y.1964), rev’d on other grounds, 358 F.2d 145 (2d Cir. 1965), cert. denied, 385 U.S. 831, 87 S.Ct. 68, 17 L.Ed.2d 66 (1966) (capacity to sue); Shaffer v. Tepper, 127 F.Supp. 892, 894-95 (E.D.Ky.1955) (diversity of citizenship); Ferguson’s Adm’r v. Ferguson’s Adm’r, 255 Ky. 230, 73 S.W.2d 31 (1934) (jurisdiction to appoint administrator of estate); People v. Cady, 143 N.Y. 100, 37 N.E. 673 (1894) (voting residence); Anno., 132 A.L.R. 509, 510 (1941) (venue); Restatement (Second) of Conflict of Laws, supra, § 17 comment c; 1 J. Beale, supra, § 21.3, at 158-59; cf. Ott v. Ciccone, 326 F.Supp. 609, 613 & n. 3 (W.D.Mo.1970); Wendel v. Hoffman, 24 F.Supp. 63 (D.N.J.1938). As one commentator has observed, this rule was doubtless designed to help persons who presumably would prefer to retain their old domicile in spite of enforced presence elsewhere. It is also based on the proposition that, if a person is forced to do a certain act, he cannot at the same time be doing the thing of his own free will. Intent, which is of its very nature voluntary cannot co-exist with compulsion. Note, Domicile as Affected by Compulsion, supra, 13 U.Pitt.L.Rev. at 699. See also 1 J. Beale, supra, § 21.1, at 154; Recent Decision, 26 Mich.L.Rev. 571, 572 (1928). As an abstract proposition, the rule is unassailable. It makes eminent good sense to say as a matter of law that one who is in a place solely by virtue of superior force exerted by another should not be held to have abandoned his former domicile. The rule shields an unwilling sojourner from the loss of rights and privileges incident to his citizenship in a particular place, such as, for example, paying resident tuition at a local university, invoking the jurisdiction of the local divorce courts, or voting in local elections. However, in practice this salutary principle has hardened into a per se rule that prevents any prisoner from ever effecting a change of domicile, although at the same time it will yield with respect to persons in other situations when its application would produce illogical or socially undesirable results. See generally Comment, Domicile of Choice — Fixed Rules, 36 Yale L.J. 408, 410-12 (1927). In fact, prisoners appear to be the only persons who may never be able to escape the rule even though there are many other classes of individuals that are subject to compulsion similar to that experienced by prisoners but have been permitted to attempt to show a change of domicile to the place of their enforced presence. The most obvious example is the serviceman. It has long been the rule that presence at his military station, without more, cannot make the station his domicile because a serviceman is subject to the orders of his superior officer. See, e. g., Deese v. Hundley, 232 F.Supp. 848, 850 (W.D.S.C.1954); Kinsel v. Pickens, 25 F.Supp. 455 (W.D.Tex.1938); Radford v. Radford, supra; 1 J. Moore, supra, ¶ 0.74 [6.-4], at 708.-62; Anno., 21 A.L.R.2d 1163, 1168 (1952); Anno., 148 A.L.R. 1413, 1414 (1944). A corollary of this rule is that a serviceman who lives on the military base, even if his family is living on-base with him, cannot establish a domicile at the base. E. g., Deese v. Hundley, supra; Harris v. Harris, 205 Iowa 108, 215 N.W. 661 (1927); see Anno., supra, 21 A.L.R.2d at 1173-75; 1 J. Moore, supra, ¶ 0.74 [6.-4], at 708.63; Restatement (Second) of Conflict of Laws, supra, § 17 comment d. The reason usually assigned in support of this rule is that a serviceman has no free choice in the decision that he live on base: whether or not he wishes to live on-base, his commanding officer makes the decision that he will be allowed, or required, as the case may be, to reside in quarters on the base. See Harris v. Harris, supra; 1 J. Beale, supra, § 21.2. However, the serviceman is not precluded as a matter of law from showing that he has established a domicile different from the one he had before he entered military service. Although the standard of proof is variously stated, a serviceman who lives off-base will be regarded as a domiciliary of the place of his residence if the circumstances surrounding his acquisition of an off-base residence unmistakably indicate an intention on his part to abandon his former domicile and adopt a new one. E. g., Ellis v. Southeast Construction Co., 260 F.2d 280 (8th Cir. 1958); Ferrara v. Ibach, 285 F.Supp. 1017 (D.S.C.1968); Deese v. Hundley, supra; see Anno., supra, 148 A.L.R. at 1415-17; Anno., supra, 21 A.L.R.2d at 1167-79; 1 J. Moore, supra, ¶ 0.74 [6.-4], at 708.63-.64; Restatement (Second) of Conflict of Laws, supra, § 17 comment d. Illustrative indicia of intent include affidavits of intention, transfer requests, registration for driver’s licenses, opening bank accounts, addressing tax returns, motive for establishing domicile, and other physical facts evidencing that the desire to remain will not expire when the order requiring presence does. See authorities collected in Annos., supra, 148 A.L.R. 1413, 21 A.L.R.2d 1163; 1 J. Moore, supra, ¶ 0.74 [6.-4]; Restatement (Second) of Conflict of Laws, supra, § 17 comment d; Thames, Domicile of Servicemen, 34 Miss.L.J. 160 (1963); Note, Domicile of Members of Armed Forces, 26 Tenn.L.Rev. 415 (1959); see generally Note, Evidentiary Factors in the Determination of Domicile, 61 Harv.L.Rev. 1232, 1235-40 (1948). Indeed, the distinction between on-post and off-post residence, for purposes of applying a per se rule, has been criticized as an “artificial” distinction that substitutes a difference of physical fact for one of intention. Note, Domicile as Affected by Compulsion, 13 U.Pitt.L. Rev. 697, 700 (1952). It might also be observed that a serviceman who lives off-base does so only by permission of his superior officers, and thus, although the fact of his living off-base may lend substance to a claimed intention, it can hardly be distinguished in terms of the exercise of volition from the situation of the serviceman who is allowed to live on-base at the pleasure of his commander. Compare 1 J. Beale, supra, § 21.2. And, military personnel have a much greater voice in the location of their duty stations today than was true in the past. See Thames, supra, 34 Miss.L.J. at 165-72; Note, supra, 13 U.Pitt.L.Rev. at 700, 710; Recent Case, 13 Iowa L. Rev. 347, 348 (1928). This proposition has found some support in the cases. See, e. g., Volmer v. Volmer, 231 Or. 57, 371 P.2d 70 (1962); Thomas v. Thomas, 58 Wash.2d 377, 363 P.2d 107 (1961); Percy v. Percy, 188 Cal. 765, 207 P. 369 (1922). The civilian counterpart of the serviceman — the officer or employee of the federal government who must change his residence upon assuming his duties — may establish a domicile at his new residence. See District of Columbia v. Murphy, 314 U.S. 441, 62 S.Ct. 303, 86 L.Ed. 329 (1941); Anno., 129 A.L.R. 1382, 1396-1401 (1940). This is the rule generally with respect to holders of public office or public employees. See Restatement (Second) of Conflict of Laws, supra, § 17 comment h; Anno., supra, 129 A.L.R. at 1392-1404. Inmates of institutions other than prisons can show that they have become domiciled within institutional confines even if they have been compelled by circumstances beyond their control to become institutionalized. See, e. g., Sealey v. United States, 7 F.Supp. 434, 437 (E.D.Va.1934) (old-soldier’s home); Sturgeon v. Korte, 34 Ohio St. 525 (1879) (charitable hospital); Restatement (Second) of Conflict of Laws, supra, § 17 comment e (paupers); cf. Coppedge v. Clinton, 72 F.2d 531 (10th Cir. 1934) (mental incompetents). Refugees or fugitives, who leave their homes because of unhappiness with existing political conditions, fear of physical harm, or apprehension of prosecution, can establish domiciles within the jurisdictions in which they seek asylum. See Ennis v. Smith, 14 How. (55 U.S.) 399, 423-424, 14 L.Ed. 472 (1853); Restatement (Second) of Conflict of Laws, supra, § 17 comment g. Persons who are forced to leave their homes and travel to other jurisdictions for reasons of health can become domiciled at their new abodes. See Note, supra, 13 U.Pitt.L.Rev. at 704. Students or teachers who are required to live in a particular jurisdiction because of the location of the institution in which they are enrolled or employed can establish domiciles within that jurisdiction. See Johnston v. Cordell National Bank, 421 F.2d 1310 (10th Cir. 1970); Milliken v. Tri-County Electric Cooperative, Inc., 254 F.Supp. 302 (D.S.C.1966); Wehrle v. Brooks, 269 F.Supp. 785 (W.D.N.C.1966), aff’d, 379 F.2d 288 (4th Cir. 1967). In Krasnov v. Dinan, 333 F.Supp. 751 (E.D.Pa.1971), on rehearing, 339 F.Supp. 1357 (E.D.Pa.1972), the court held that defendant was a citizen of Pennsylvania for purposes of diversity of citizenship even though he was in Pennsylvania because he was a member of a semi-monastic order that assigned him to teach in that state. In so holding, the court rejected arguments that defendant had moved to the state “only because directed to do so by his superiors” and that “he did not intend to live in Pennsylvania permanently, but only until he was reassigned elsewhere.” 333 F.Supp. at 753. Many political subdivisions have ordinances requiring police officers and other municipal employees to reside within the city limits. See Detroit Police Officers Association v. City of Detroit, 385 Mich. 519, 190 N.W.2d 97 (1971), appeal dismissed, 405 U.S. 950, 92 S.Ct. 1173, 31 L.Ed.2d 227 (1972). Can it be doubted that municipal police officers may establish domiciles within the cities where they must live ? The foregoing examples warrant two observations. First, the bare fact that a person has been “compelled” to relocate within a particular jurisdiction does not ordinarily prevent him from becoming domiciled therein, although courts are justifiably concerned with substantiating declared intentions. Second, persons are “compelled” to relocate by a variety of circumstances, ranging from pursuit of employment to therapeutic dictates for illness; from the desire to attend educational or vocational institutions to the demands of the sovereign. Although these forces may differ in kind, they often equate in degree, and yet the law in this area has developed along the lines of per se rules tailored to the type of compulsion being exerted rather than in the direction of varying standards of proof directly with the strength of the constraints upon individual freedom of action. We believe that the prisoner, like the serviceman or the Cabinet official, should not be precluded from showing that he has developed the intention to be domiciled at the place to which he has been forced to remove. No good reason appears for applying a contrary per se rule to him by making the presumption that he has retained his former domicile an irrebuttable one. In addition, whatever may be the rule ordinarily applied in resolving problems of conflicts of law, we decline to adopt a per se principle in defining “citizenship” for purposes of federal jurisdiction. We ought to be hesitant to define a cognizable class of citizens out of access to the federal courts, which are, after all, the courts of the sovereign to which that class of citizens belongs. Cf. Moore & Weckstein, Diversity Jurisdiction: Past, Present, and Future, 43 Texas L.Rev. 1, 19 (1964). We ought further to hesitate to raise the spectre of unconstitutionality by approving the application of an irrebutable presumption of fact to a particular class of citizens. Cf. Carrington v. Rash, 380 U.S. 89, 85 S.Ct. 775, 13 L.Ed.2d 675 (1965); Kelm v. Carlson, 473 F.2d 1267 (6 Cir. 1973). Finally, it is interesting to observe that the facts of this case provide a rather unique twist to the reason most often given for the inclusion of diversity jurisdiction in the Constitution: the fear of local prejudice against out-of-state residents. See, e. g., Moore & Weckstein, supra, 43 Texas L.Rev. at 15-16; Warren, New Light on the History of the Federal Judiciary Act of 1789, 37 Harv.L.Rev. 49, 83 (1923); C. Wright, supra, § 23 at 73. Assuming the accuracy of this explanation, determination of the citizenship of a party for purposes of federal diversity jurisdiction should emphasize the physical facts of the party’s situation that could tend to result in local prejudice. See Currie, The Federal Courts and the American Law Institute (pt. 1), 36 U.Chi.L.Rev. 1, 11-12 (1968). Appellant, as we have pointed out, was known as a model young man in his community prior to his well-publicized conviction for the commission of a heinous crime. He has asserted that he will never return to his former community because of the scorn and obloquy to which he would be subject, and there is every reason to agree with his prediction in this respect. Should appellant not have the assurance that his suit for damages against his parents and his attorney would not .be infected by the same feeling of outrage that he anticipates will prevent him from ever assuming residence at his erstwhile home? Federal courts should be alert to vindicate this type of interest in recognition of one of the traditional justifications for their existence. II The other possible rationale for denying a federal prisoner the opportunity to establish his citizenship in the state of his incarceration for purposes of diversity jurisdiction, which the District Court did not reach, can be quickly disposed of. We cannot find any federal statute or common-law rule to the effect that conviction and imprisonment destroys a citizen’s right to invoke the diversity jurisdiction of the federal courts. In fact, whatever may be the viability of the “civil death” concept as it relates to the loss of fundamental rights by persons imprisoned for crime, see, e. g., Goosby v. Osser, 409 U.S. 512, 93 S.Ct. 854, 35 L.Ed.2d 36 (1973); Nolan v. Fitzpatrick, 451 F.2d 545 (1st Cir. 1971); cf. Carrington v. Rash, supra; the loss of the right to invoke the diversity jurisdiction of federal courts is not a collateral punishment of incarceration. See Ames v. Keuhnle, 425 F.2d 224 (5th Cir. 1970); White v. Fawcett Publications, 324 F.Supp. 403 (W.D.Mo.1970); 1 J. Moore, supra, ¶ 0.74 [6.-5], at 708.-65. We have no occasion to decide at this time whether appellant would have the capacity, under Pennsylvania law, to sue, see Fed.R.Civ.P. 17(b); Urbano v. News Syndicate Co., 358 F.2d 145 (2d Cir. 1966), cert. denied, 385 U.S. 831, 87 S.Ct. 68, 17 L.Ed.2d 66 (1966); 1 J. Moore, supra, ¶ 0.74 [6.-5], at 708.65 & n. 7; 3A id. ¶ 17.16; 3B id. ¶ 25.06 [3], at n. 1, or whether, under Ohio law, he would have an enforceable remedy. See Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832 (1947); 3A J. Moore, supra, ¶ 17.16, at 653-54; 3B id. ¶ 25.06 [3], at n. 1. We hold that a litigant will not be precluded from establishing a domicile within a state for purposes of federal diversity jurisdiction solely because his presence there initially resulted from circumstances beyond his control. We recognize the importance of considering physical or legal'compulsiori in determining whether domicile is gained or lost, but we limit the application of involuntary presence to its operation as a presumption ordinarily requiring more than unsubstantiated declarations to rebut. Accordingly, we reverse the judgment of the District Court and we remand for further proceedings. Appellant has the burden of proving Pennsylvania citizenship, and the District Court may decide the question upon affidavits or, if required, in a full evidentiary hearing, with or without a jury, in his discretion. See 1 J. Moore, supra, ¶ 0.74 [1], at 707.3-.5. In making this essentially factual determination, the court should accord weight to appellant’s declarations of intentions, but in the circumstances of this case the physical facts pertaining to appellant’s incarceration and to the conduct of his personal affairs assume perhaps a greater than usual significance because appellant’s statements of intention cannot bear on the fact of his initial relocation to Pennsylvania. The court should consider factors such as the possibility of parole for appellant, the manner in which appellant has ordered his personal and business transactions, and any other factors that are relevant to corroboration of appellant’s statements. These factors must be weighed along with the policies and purposes underlying federal diversity jurisdiction to determine whether appellant has overcome the presumption that he has maintained his former domicile. Reversed and remanded. EDWARDS, Circuit Judge (concurring). The legal problems of this case are complex, but the practical problems may prove to be even more formidable. This ease could trigger a quantity of frivolous litigation in the federal courts motivated by the natural desire of prisoners for a trip home to testify, even if the trip has to be under guard. As the opinion of the court points out, for many years courts have followed the rule that persons (including federal prisoners) removed from their state of domicile by legal orders do not thereby lose their previous domicile. Cohen v. United States, 297 F.2d 760 (9th Cir. 1962); American Surety Co. of New York v. Cosgrove, 40 Misc. 262, 81 N.Y.S. 945 (1903); Metropolitan Life Ins. Co. v. Jones, 192 Ark. 1145, 97 S.W.2d 64, 66 (1936); United States v. Gronich, 211 F. 548 (W.D.Wash.1914); Neuberger v. United States, 13 F.2d 541, 542-543 (2d Cir. 1926). In general, this rule serves to protect the legal rights of prisoners. The corollary to the rule that imprisonment in another state did not occasion a change of domicile was, however, that during a prisoner’s incarceration outside of his home state, as a matter of law he could not, even if he desired to, effect a change of domicile because his presence in the state of imprisonment was deemed coerced rather than voluntary. United States v. Stabler, 169 F.2d 995 (3d Cir. 1948); Shaffer v. Tepper, 127 F.Supp. 892 (C.D.Ky.1955); Restatement (Second) of Conflict of Laws § 17 (1971). The opinion of the court in this case rejects the application of the rule just stated above as an absolute and irrebuttable presumption, and I concur. But I also feel that the rule should properly be characterized as a strong presumption capable of being overturned only by allegation and proof of change (or changes) of material circumstances bearing on domicile. I read the court’s opinion as agreeing. The two fundamental considerations in establishing domicile for purposes of state citizenship are residence in the state and intention to remain there permanently. Napletana v. Hillsdale College, 385 F.2d 871 (6th Cir. 1967). Both of these factors are usually subject to proof by objective facts. In the case of a federal prisoner in an out-of-state prison, however, his compelled presence is certainly not identical with “residence” in its normal usage. And a declaration of intent to remain in the state concerned is greatly weakened (particularly for a person serving a life term) by the obvious lack of choice. The only proofs which come quickly to mind which a federal prisoner might substitute for the usually available objective proofs of domicile would be the establishment of an apparently permanent residence in the state of imprisonment by the prisoner’s immediate family. See Metropolitan Life Insurance Co. v. Jones, supra. Accepting (as I do) the proposition in the court’s opinion that domicile is generally a question of fact for the trial judge, the great majority of domicile questions posed by federal prisoner diversity cases should be amenable to resolution by affidavits filed on motion for summary judgment without the expense and risk of cross-country prisoner travel under guard. . The court observed that the judgment obtained by plaintiff’s father against plaintiff in the United States District Court for the Southern District of Ohio could not avail plaintiff in this proceeding because that judgment was void for lack of jurisdiction. . As with servicemen, see Carrington v. Rash, 380 U.S. 89, 85 S.Ct. 775, 13 L.Ed. 2d 675 (1965), the determination of a student’s domicile can be affected by the fundamental nature of the right being asserted, such as the right to vote. See Wilkins v. Ann Arbor City Clerk, 385 Mich. 670, 189 N.W.2d 423 (1971); see generally, Anno., 37 A.L.R. 138 (1925). . In fact, the Detroit ordinance requires that the employees be actually domiciled within the city, as contrasted with mere nominal residence. See Detroit Police Officers Ass’n v. City of Detroit, 385 Mich. 519, 525-526, 190 N.W.2d 97 (1971), appeal dismissed, 405 U.S. 950, 92 S.Ct. 1173, 31 L.Ed.2d 227 (1972). . Development of the law of “citizenship” for federal diversity purposes has proceeded largely on the assumption that domicile is a unitary concept, meaning the same thing in all contexts. Perhaps the classic statement is that of Justice Holmes: “The very meaning of domicil is the technically pre-eminent headquarters that every person is compelled to have in order that certain rights and duties that have been attached to it by the law may be determined. ... In its nature it is one, and if in any case two are recognized for different purposes, it is a doubtful anomaly.” Williamson v. Osenton, 232 U.S. 619, 625, 34 S.Ct. 442, 443, 58 L.Ed. 758 (1914). Eleven years later, Professor Walter Wheeler Cook took issue with that proposition during the debates of the American Law Institute on the adoption of the first Restatement on the conflict of laws. He argued: “There is no doubt that what you might call the core of the concept is the same in all these situations; but as you get out towards what I like to call the twilight zone of the subject, I don’t believe the scope remains exactly the same for all purposes.” 3 Proceedings of the American Law Institute 227 (1925). This position was rejected by the first Restatement (see Restatement (First) of the Conflict of Laws § 11 (1934)), and it evoked the indignant response of Professor Joseph Beale that to adopt it would ignore 150 years of legal history in which courts had been applying domicile as a single concept by citing cases from different contexts interchangeably in formulating general rules. See 1 J. Beale, The Conflict of Laws § 9.4, at 92-94 (1935). However, the argument that domicile is not a unitary concept, that its elements vary according to the nature of the rights being adjudicated, that it is applied in a flexible manner so that courts can reacli equitable results (e. g., by varying the quantum of evidence required or by drawing different inferences from identical facts) has gained scholarly support over the years since Cook’s statement. See Currie, The Federal Courts and the American Law Institute (pt. 1), 36 U.Chi.L.Rev. 1, 12 n. 61 (1968); Reese, Does Domicil Bear a Single Meaning?, 55 Colum.L.Rev. 589 (1955) ; Weintraub, An Inquiry into the Utility of “Domicile” as a Concept in Conflicts Analysis, 63 Mich.L.Rev. 961, 983-986 (1965); Note, Evidentiary Factors in the Determination of Domicile, 61 Harv.L.Rev. 1232, 1233-1234 (1948); Comment, Necessity for a Continued Residence in Acquisition of a Domicile, 37 Yale L.J. 649 (1928). But cf. McClean, The Meaning of Residence, 11 Int. & Comp.L.Q. 1153 (1962). It should be observed that this argument attempts to describe what courts do, not what courts say, because courts ordinarily will pay lip-service to standard rules even while they strain and distort the rules to reach sound results. See Comment, Domicile of Choice-Fixed Rules, 36 Yale L.J. 408, 412 (1927). Nevertheless, occasional judicial expressions of doubt about the utility of the unitary-concept theory can be found. See Williams v. North Carolina, 325 U.S. 226, 244, 65 S.Ct. 1092, 89 L.Ed. 1577 (1945) (Rutledge, J., dissenting); Ziady v. Curley, 396 F.2d 873, 876 (4th Cir. 1968); Woolridge v. McKenna, 8 F. 650, 683 (C.C.W.D.Tenn.1881); In re Estate of Jones, 192 Iowa 78, 82, 182 N.W. 227 (1921). Professor Currie is unhappy with the equation of domicile with state citizenship for purposes of diversity jurisdiction because it is difficult to determine and because “it too frequently bears no relation to the probability of bias.” Currie, supra, 36 U.Chi.L.Rev. at 10. He advocates that federal courts focus more on physical facts rather than on a probably unknown domiciliary intention, and he contends that the traditional tests of domicile, because they were not formulated with diversity jurisdiction in mind, should not be taken as determinative. Id. at 11-12 & n. 61. To an extent, this argument ignores the fact that, except when precluded by the operation of some per se rule of law, see, e. g., Seegers v. Strzempek, 149 F.Supp. 35 (E.D.Mich.1957), courts usually will examine the physical facts in an effort to ascertain domiciliary intent, and will often assign a domicile on the basis of what appears to be the choice of a home rather than accept at face value declarations of intention. See Levitt, Recent Domicil Cases, 20 Ill.L.Rev. 134, 138-140 (1925). To the extent that he is arguing that federal courts are not bound by the traditional fixed rules of conflicts of law in the context of resolving federal jurisdictional questions, and that it is unfortunate to attach a blanket equivalence to areas of the law that may intersect in only one particular — the notion of attachment to a single locale— his objections can be met by rejecting the unitary-concept rule and weighing in each case the policies underlying the question at issue and adapting the rules or evaluating the evidence in accordance with those policies. See Ziady v. Curley, supra; Woolridge v. McKenna, supra; Williams v. Williams, 328 F.Supp. 1380, 1382-1384 (D. Virgin Islands 1971); Pannill v. Roanoke Times Co., 252 F. 910, 914-915 (W.D.Va.1918); Reese, supra. . As Chief Justice Marshall put it: However true the fact may be, that the tribunals of the States will administer justice as impartially as those of the nation, to parties of every description, it is not less true, that the constitution itself either entertains apprehensions on this subject, or views with such indulgence the possible fears and apprehensions of suitors, that it has established national tribunals for the decision of controversies between aliens and a citizen, or between citizens of different States. Bank of the United States v. Deveaux, 5 Cranch (9 U.S.) 61, 87, 3 L.Ed. 38 (1809). See also Lankford v. Platte Iron Works Company, 235 U.S. 461, 478, 35 S.Ct. 173, 59 L.Ed. 316 (1915) (Pitney, J., dissenting); Scott v. Sandford, 19 How. (60 U.S.) 393, 580, 15 L. Ed. 691 (1857) (Curtis, J., dissenting); Dodge v. Woolsey, 18 How. (59 U.S.) 331, 354, 15 L.Ed. 401 (1856). . But see Friendly, The Historic Basis of Diversity Jurisdiction, 41 Harv.L.Rev. 483, 492-499 (1928). . The fact that he is serving a life sentence, of course, lends a great deal of credibility to his assertion that he will never return to Ohio. . Considerations ordinarily relevant to determination of domiciliary intent are discussed in 1 J. Beale, The Conflict of Laws §§ 41A-41D (1935); Beale, Proof of Domicile, 74 U.Pa.L.Rev. 552 (1926); Currie, The Federal Courts and the American Law Institute (pt. 1), 36 U. Chi.L.Rev. 1, 11-12 (1968); Heilman, Domicil and Specific Intent, 35 W.Va.L.Q. 262 (1929); Levitt, Recent Domicil Cases, 20 Ill.L.Rev. 134 (1925); 1 J. Moore, Federal Practice ¶ 0.74[3.-3] (2d ed. 1948); Note, Evidentiary Factors in the Determination of Domicile, 61 Harv.L.Rev. 1232 (1948); Note, Self-Serving Declarations and Acts in Determination of Domicile, 34 Geo.L.J. 220 (1946); Comment, Necessity for a Continued Residence in Acquisition of a Domicile, 37 Yale L.J. 649 (1928); Comment, Domicil of Choice —Fixed Rules, 36 Yale L.J. 408 (1927).

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SAM KANE PACKING CO. et al., Plaintiffs-Appellants, v. AMALGAMATED MEAT CUTTERS AND BUTCHER WORKMEN OF NORTH AMERICA, AFL-CIO, and its Local No. 171, Defendants- Appellees. No. 72-3026. United States Court of Appeals, Fifth Circuit. May 16, 1973. Harold Alberts, Corpus Christi, Tex., A. J. Harper, II, L. G. Clinton, Jr., Houston, Tex., for plaintiffs-appellants. L. N. D. Wells, Jr., Dallas, Tex., Frank Herrera, San Antonio, Tex., for defendants-appellees. Before RIVES, GOLDBERG and MORGAN, Circuit Judges. LEWIS R. MORGAN, Circuit Judge: This appeal raises the issue of whether or not a certain dispute between an employer and a labor union was subject to arbitration under the collective bargaining agreement between the parties. The district court for the Southern District of Texas on summary judgment held that the dispute was indeed arbitrable and went on to enforce the unilateral arbitration award which had been issued by a single, union-appointed arbitrator. The company appeals both the finding of arbitrability and the enforcement of the award. After careful consideration, we affirm in part and remand in part. I Sam Kane Packing Company employed about 200 workers, with approximately 45 engaged in operations on the “kill floor”. These workers were represented by appellee union, Amalgamated Meat Cutters and Butcher Workmen of North America and its Local No. 171. The company alleges that it had been having difficulty with its kill floor employees over a fairly lengthy period of time. The company charges that these employees were engaged in slowdowns and intentionally sloppy work. The events giving rise to the current controversy between the union and the employer occurred on July 20, 1971. Apparently the company had called a meeting of kill floor employees to discuss the above mentioned problems. Following this meeting there occurred a disruption which resulted in no more work being done by these employees that day or thereafter. The exact nature and causes of this disruption are integral parts of the underlying dispute here. For our purposes it is sufficient to say that company officials called the police and had the employees removed from the premises. The company apparently takes the position that these employees engaged in a “work stoppage” or “strike” and that their removal and subsequent discharge was lawful under the contract. For its part, the union took the position immediately that the action by the company in removing these employees from the premises constituted a lockout in violation of the contract. There was a period of correspondence, or at least attempted correspondence, between union and company officials. By letter of July 31, 1971, the union notified the company that it planned to invoke the contractual grievance procedures to resolve this dispute, suggesting that the company agree to go directly to arbitration on the matter. At that time the union also ordered the employees to return to work. The employer countered with a statement that the matter was not subject to arbitration and that the workers would not be allowed to return and had been discharged and replaced. Despite the company’s opposition to arbitration, the union went ahead with arbitration procedures. Under the contract each party was to appoint a representative to the arbitration panel and the two representatives were to select a third by mutual agreement. If either party failed to appoint a representative, the contract stated that the single representative appointed by the other party would have full power to issue a binding adjudication on the merits. The union appointed its representative and repeatedly notified the company to appoint an arbitrator so that a third could be chosen. The company consistently refused to agree that arbitration was required. The union appointed State Senator Joe Bernal as its representative. The union informed the company that it had scheduled an arbitration hearing before Senator Bernal on August 23, 1971. ■ The company, however, obtained an ex parte restraining order from the district court preventing that arbitration proceeding. After a hearing on August 28th, the court dissolved the restraining order, thus permitting the arbitration to proceed. The company was notified of the rescheduled arbitration set for August 30, but refused to participate in any way, taking the position that it could not be forced to arbitrate until a court had determined the issue of arbitrability as a final matter. It appears that the company did inform the union that while it took the position that there would be no arbitration in this case because it was not contractually agreed to, if there was to be any arbitration the company’s representative would be Mr. Harold Alberts, the company attorney. Both the union attorney, Mr. Herrera, and the union representative, Senator Bernal, were clearly informed of this position in advance of the scheduled hearing date. When the company did not appear to participate in the August 30th hearing, arbitrator Bernal' conducted a full proceeding with those present. About three weeks later Senator Bernal issued a lengthy opinion finding that the company unfairly locked out the employees and ordering reinstatement with pay and benefits. Because of the company’s refusal to participate, only union witnesses and counsel appeared before the arbitrator. The company then refused to comply with the award, taking the position that in the first instance it did not have to arbitrate at that time because a court had not decided as a final matter that it was bound to arbitrate under the contract. Secondly, the company maintained that it did not have to comply with Senator Bernal’s award because contract procedures had not been followed and, under the facts of this situation, the contract did not allow the union representative to proceed on his own. II This case must be resolved by construction of certain clauses in the collective bargaining agreement in force between these parties. Of course, these clauses cannot be evaluated out of context or unmindful of the contract and industrial setting as a whole. However, unless there is patent ambiguity, the plain meaning of the words should generally be followed. At the heart of the dispute is the interpretation of Article V entitled, “Grievance and Arbitration”: Section 1. For the purposes of this agreement, the term “grievance” means a written dispute, claim or complaint arising under and during the term of this labor contract between the Company and the Union or between the Company and any employee or employees in the bargaining unit concerning the effect, interpretation, application, claim of breach or violation of an expressed provision or provisions of this contract. Such matters shall be processed through the grievance procedure without resort to a strike or a lock-out, and if either party hereto resorts to any action violative of Article IV (No Strike, Slow-Down, Work Stoppage) of this agreement, the grievance and arbitration provisions of this article shall be null and void and of no effect and either party hereto shall have the immediate right to seek redress from the appropriate court without the necessity of exhausting the grievance and/or arbitration procedures hereunder. Article IV, referred to in the above passage, reads in pertinent part: ARTICLE IV — NO STRIKE, SLOWDOWN, WORK STOPPAGE Section 1. During the term of this agreement, the Company agrees that it will not lock out the employees covered by this agreement. Section 2. During the term of this agreement, the Union agrees that it will not sanction, call, acquiesce or engage in or cause any strike, sit-down, slow-down, picketing, sympathy strike or other work stoppage against the Company for any reason. The Union agrees also that it will not for any reason during the term of this agreement sanction, call, acquiesce or engage in any curtailment, restriction or interference with the work of the Company or of any of its agents, servants or employees, or advise that such action be taken. Any employee covered by the terms of this agreement participating in any action prohibited by this section may be disciplined by the Company either by discharge or lesser penalty. * * * * * * Section 5. The Company shall have the right to discipline up to and including discharge any employee who instigates, participates in or gives leadership to any activity prohibited by this Article. If the Company discipline in this regard is challenged through the grievance procedure and the same proceeds to arbitration, the arbitrator shall have the power to review the reasonableness of the penalties imposed, but they may order back pay only upon a finding of innocence. (Emphasis supplied). These contract provisions are the only ones which have a direct bearing on the issue of arbitrability in this case. It now becomes encumbent on this court to evaluate their meaning as they apply to this situation. III In its opinion, the district court held that the dispute in this case was arbitrable despite the employer’s objections that the exclusionary language in Article V withdrew the issue from arbitration since it involved a charge of lockout (and for that matter, a cross-charge of a strike). The district court disagreed with the employer, holding that the cross reference in Article IV was modified by the parenthetical material which alluded only to strikes, slow-downs and work stoppages. The court construed the cross reference to apply only to Section 2 of Article IV and not to Section 1, the lockout section. We agree with both the union and employer that this is a rather strange and unnatural construction of this contract. The union is apparently ready to agree that whatever the exclusionary clause means, it does not leave out lock-outs and, if it otherwise applied to this situation, the construction given it by the district court is clearly erroneous. Therefore, we turn to other possible constructions of this contract. At the outset, the court feels that one of the problems which has created so much difficulty for these parties is the terminology used. The company throughout has taken the position that it was acting lawfully under the contract because it was disciplining these workers either for the alleged slow-downs which occurred prior to July 20, 1971, and/or for the alleged refusal to return to work after the coffee break and speech on July 20th. The union, in its earliest letters, took the position that the “removal” on July 20 was a lockout in violation of the contract. The court feels that use of the term “lockout” has created much of the confusion in this case. It seems clear to the court that the company considered these employees discharged soon after the events of July 20th. When the union, while seeking arbitration, ordered its employees back to work, the company replied that they were no longer employed and had been replaced. Thu& we feel the real dispute between the union and the company here is not over direct damages dependent upon whether this was a strike or a lockout. We feel certain that the exclusion to the grievance machinery found in Article V, whatever it may mean, was not intended to prevent arbitration of the real issues in this case. Those real issues as we see it are whether or not the eompanywas justified in refusing to allow these individuals to return to their jobs and whether or not it was justified in having them removed from the premises by the police for violating the contract. In short, what the union was seeking, as shown here by the final award given by the union’s representative as sole arbitrator, was a determination of whether or not the company had any justification in the sanctions it took against these employees, be it the sanction of having them removed by the police or the ultimate sanction of discharge. We find that the parties had unquestionably agreed to arbitrate that issue by the express provisions of Article IV, Section 5. The company alleges that it was simply disciplining its employees for violation of the prohibitive sections of Article IV. That was the only alleged justification for all of its actions. It does not seem to matter by what term the union seeks to call the company’s acts. We think the company has seized on the fact that the union referred to the company’s subsequent action as a “lockout” in an attempt to avoid arbitrating its dismissal of these employees. The only relief that the union sought before the arbitrator in the proceedings held was reinstatement and back pay for the employees on the kill floor from the time that they were removed by police on instructions of the company. Any mass removal of employees or firing by the company during an alleged work stoppage could be characterized as a “lockout” in order to avoid arbitration. Yet the more specific section, Section 5 of Article IV, which lacks any of the ambiguities of Article V, seems so clearly to contemplate arbitration of such discipline that this court can reach no conclusion other than the fact that the parties had agreed to arbitrate this issue. We note that this analysis of the contract structure and facts in this case is extremely similar to that which this court enunciated in United Steelworkers v. American International Aluminum Corporation, 5 Cir. 1964, 334 F.2d 147. In that case the court stated: We can assume that the Employer is correct that neither the Employer nor Union has any right to demand arbitration of a controversy concerning whether there has been a strike, picketing, stoppage, slowdown, sitdown, stayin, or other curtailment or interference with work on the part of the employees or a lockout on the part of the employer. But if a discharge resulted from either strike or work stoppage on the union’s part or a lockout by the employer, the contract plainly recognized that this dispute was open for arbitration. And certainly, whatever arguments might be mustered for a contrary result, the purpose to exclude a grievance over discharge flowing from a work stoppage is not so clear as to permit a court, under the guise of contract construction, to invade that territory now reserved to the arbitrator. (Emphasis supplied and citations omitted). Id. at 151. Here discipline resulted from this occurrence whether or not it is characterized as a lockout or a strike. These employees have simply not been allowed to work for this company as union employees in their old jobs. That is discipline. That is within the express arbitration clause found in Section 5 of Article IV. In seeking to avoid this analysis, the employer argues that American International Aluminum is not applicable to this case because the court there assumed that the employer was right in his contention that the underlying issue of a strike or lockout could be arbitrated. As pointed out, there is no question that discipline resulted from either the strike or lockout, however it is characterized. All that American Aluminum requires is that the contract envisions arbitration for any discipline which results from a strike or lockout. The contract in this case unquestionably envisions such arbitration. As the court in American International Aluminum pointed out, the primary reason that contracting parties often except arbitration of strikes and lockouts from the grievance and arbitration proceedings is that this would eliminate in such instances the very difficult question in a suit by the employer against the union, or the union against the employer, for damages resulting from an unauthorized strike or lockout as to whether the controversy had to first be submitted to arbitration rather than going directly into court. Id. at 151, n. 7. While we do not find it necessary to construe the language in Article V in the exception clause because of the more specific language found in Article IY, Section 5, we note that the difficult problem of suits for damages being subject to prior arbitration is probably the very reason that the exclusionary clause was included in that article. In all probability the language inserted was to make unquestionably sure that neither the employer or union would be able to use as a defense to a suit for damages for contract breach the claim that the issue had to first go to arbitration and damages be determined by arbitration. This is far and away the most rational construction of that section and avoids the difficulties in any other construction which both sides have recognized throughout this proceeding. Any construction of Article V which does not find the purpose to be that set forth above or find that what in effect Article V does is give an option to the aggrieved party to go to arbitration or seek court relief would be highly strained in light of the general nature of collective bargaining relationships and would undoubtedly cause great concern to the parties. We, therefore, find that this was indeed an arbitrable dispute under the contract and that the real issue involved here, no matter how it was phrased, was what punishment, if any, could be inflicted on these employees. As noted, this was not the case when the union was seeking some sort of damages over and above reinstatement for an illegal lockout. Nor was it a case, such as would come up in a strike, where the employer was seeking damages to his business from an illegal work stoppage by the union. Rather, it was simply a case of evaluating whether there was just grounds for discipline, and whether the discipline was properly meted out. The contract expressly envisions arbitration of such an issue. There is no ambiguity. There is, as previously noted, a very strong presumption favoring arbitration of labor disputes where the contract is capable of such a construction. As this court pointed out in Communications Workers v. S. W. Bell, 5 Cir. 1969, 415 F.2d 35, 39: Interpretation of contract language restricting the scope of arbitration is governed by the rigid standards established in the Steelworkers’ cases. These require that “only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail * * ”, United Steelworkers of America v. Warrior and Gulf Navigation Company, supra, 363 U.S. [574] at 585, 80 S.Ct. [1347] at 1354 [4 L.Ed.2d 1409], and that an order prohibiting arbitration cannot be issued “unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.” United Steelworkers of America v. Warrior and Gulf Navigation Company, supra, 363 U.S. at 582-583, 80 S.Ct., at 1353. As summarized by the Second Circuit Court of Appeals in Proctor and Gamble Independent Union v. Proctor & Gamble Manufacturing Company, 298 F.2d 644, 645-646: “The nub of the matter is that under the broad and comprehensive standard labor arbitration clause every grievance is arbitrable, unless the provisions of the collective bargaining agreement concerning grievances and arbitration contain some clear and unambiguous clause of ex-elusion, or there is some other term of the agreement that indicates beyond peradventure of doubt that a grievance concerning a particular matter is not intended to be covered by the grievance and arbitration procedure set forth in the agreement. * * *” As our opinion has demonstrated, it seems clear from this contract that arbitration of this dispute was contemplated. IV The question remains in this case as to what effect, if any, should be given the arbitration award handed down by Senator Bernal, the appointed union representative to what allegedly should have been a tripartite arbitration board. The district court, having found the issue arbitrable, enforced the order of the union appointed arbitrator without any substantive discussion whatsoever in his opinion. We find it necessary, however, to turn to the arbitration procedures section of the contract to determine whether or not the arbitration proceedings were valid. The contract provides that the union and the company shall each appoint one representative to act as arbitrators. Upon the failure of one party or the other to appoint an arbitrator to represent its side, the arbitrator appointed by the single party shall promptly arbitrate and settle the grievance, with his decision binding on the parties. Our question here concerns whether or not this precise contract provision applies to this factual situation. It is clear that Mr. Harold Alberts, attorney for the company, was designated the company representative prior to arbitration. More precisely, he was designated their representative if any arbitration was going to take place. Yet Mr. Alberts, speaking for himself as arbitrator, and for the company, consistently took the position that the dispute in this case was not arbitrable under the contract. Thus, we have the situation where it appears that one of the appointed arbitrators took the position that the dispute was arbitrable, while the other did not. Even though courts decide in the first instance on arbitrability, because of the extreme presumption in favor of allowing arbitration, the arbitrator is permitted to determine whether or not, under the contract, the dispute is arbitrable. Thus, at this point in time we had two arbitrators in disagreement over this threshold issue. Of course, in this situation the preferable procedure would have been for these two men to follow the envisioned contract procedures and select a third man who would then, in fact, be the real arbitrator of this case. Apparently the company felt that even to take this step would put them in a delicate position as far as their court suit was concerned. The company probably reasoned if a neutral arbitrator was appointed and found the matter arbitrable that their court suit on arbitrability for all intents and purposes would be worthless. They would then be bound by whatever the arbitrator decided. When the company did not give further response to the union’s request for the selection of a third arbitrator, the union representative then went on to decide the issue. The company maintains that it could not be forced to arbitrate this matter until it had been conclusively decided by a court that the matter was arbitrable. This position becomes even more complicated where the employer had tried unsuccessfully, to enjoin the arbitration. We note that there was no counterclaim by the union in that suit in an attempt to force the employer to follow the contract procedures. We think under the situation presented by this case that that would have been the far preferable approach. However, since that was not done, we must dig more deeply into this matter to resolve the issue. The result must turn on whether or not this contract can be construed to allow single party arbitration where one party appoints to representative as called for by the contract but that representative refuses to proceed with the selection of a neutral. Once each side has named a representative we think the harsh penalty involved in allowing single party arbitration has fallen out of the contract. That is an extreme sanction and over-extension could create more hostility in contravention of the air of peaceful settlement of industrial disagreements through contractual arbitration. Therefore, we hold that this one clause of the contract will be construed strictly to apply only where no representative whatsoever is named to the board. The question then is what was the union to do faced with the company’s adamant refusal to cooperate. The simple answer here is that the union should have sought an order from the district court compelling the company to follow the contractually agreed to procedures. There is simply no support in the contract for the proposition that the employer had agreed to let the union representative alone decide the substantive issue. Since there was a readily available alternative (a counterclaim for compulsion to arbitration) available to the union, we do not approve the unilateral arbitration which does not fall squarely within the contract clause. We note that had there been a method whereby an admittedly “neutral” arbitrator was selected and the company merely refused to participate in the hearing we would be faced with a strong case for the award. See Meatcutters v. Penobscot Poultry, ND Me.1961, 200 F.Supp. 879; Boot & Shoe Workers v. Faith Shoe Co., MD Pa.1962, 201 F.Supp. 234; cf. Teamsters v. Braswell, 5 Cir. 1968, 392 F.2d 1. Here, however, the arbitrator who issued the award cannot be denominated a “neutral” as the parties would contemplate the term. Thus, there was no jurisdiction under the contract for this arbitration by a single union designated representative and the award will not be enforced. The contract in question here generally contemplates arbitration by a “neutral” chosen by both parties and provides a method of selection for that purpose. There is one clear exception to the above whenever one party fails to name a representative. As noted, because of the harshness of that sanction and the fact that it, to a degree, is in conflict with the concept of true arbitration, we will construe its provisions strictly. Finding no contractual grounds giving the union representative acting alone the right to issue a binding award, we refuse to enforce that award. While we feel the district court was correct in finding that the parties had agreed to arbitrate this matter, we are unwilling to say that the method of arbitration followed herein was valid. Thus, the only arbitration which should have been compelled or allowed was one in line with the provisions of the contract. In conclusion, we find that the underlying dispute in this case is arbitrable under the agreement and direct that the district court order these parties to each select a representative and go about the selection of a “neutral” third member as soon as possible. Affirmed in part and remanded in part with directions. . The contract reads as follows: Section S. Either party may request arbitration of an unsettled grievance after exhaustion of the grievance procedure hereinabove set out. The right of either party to request arbitration over an unadjusted grievance is limited to a period of ten (10) calendar days from the final action taken on such grievance under the last step in the grievance procedure above detailed. One (1) representative shall be appointed by the Company and one (1) representative shall be appointed by the Union to act as arbitrators for each grievance. Such appointments must be made by the parties within one (1) week after the written request by either party to submit the grievance to arbitration. If either the Company or the Union fails to appoint their respective arbitrator within said one (1) week period, then the arbitrator so appointed by the other party shall promptly arbitrate and settle such grievance or grievances, and his decision or decisions shall be final and binding upon the parties. After such arbitrators are so appointed, the party or parties desiring arbitration shall promptly within two (2) days present in writing to the arbitrators so appointed the question and/or questions and the matter and/or matters to be arbitrated. A copy of such questions and matters shall be delivered to the opposite party. Within one (1) week after such notification, the other party shall give in like manner similar written notice in defense of its position. It is understood that the party or parties initiating arbitration shall not introduce any additional question or matter which is not relevant to the matter to be arbitrated. If the two (2) arbitrators are so selected and appointed as above provided, then the two (2) arbitrators shall select the third (3rd) arbitrator, who shall be impartial and disinterested and not in any way connected with either the Company or the aggrieved employee or employees or the Union. In the event that the two (2) arbitrators shall fail within five (5) calendar days to select a third (3rd) arbitrator, then upon request of either party, the Federal Mediation and Coneilliation Service shall be requested to submit a list of five (5) arbitrators, each of whom shall be a impartial person qualified to act as an arbitrator. From this list the Union shall substract two (2) names, then the Company shall subtract two (2) names, and the first person’s name which remains on the list then shall be the arbitrator. The reasonable expense of the third (3rd) arbitrator together with any other arbitration costs shall be borne equally by the respective parties. The decision of a majority of the arbitration committee shall be final and binding upon the parties hereto. . The complete section or arbitration procedures is set out in footnote 1, supra. . Here there seems n strong argument that under the contract the union could have received a list of “neutrals” from the FMCS and, if the company refused to strike any names, pick any one of the five. We feel that selection by such a procedure would be a valid response to the employers recalcitrance and that the award of one so chosen would be enforceable. . AVe mean to cast no unfair light on this arbitrator’s integrity by describing him as the “union representative” or not as a “neutral”. AA’e are not basing our refusal to enforce his award because of any feeling of correctness, incorrectness or prejudice on his behalf. Rather, we are refusing to enforce the award simply because there is no basis in the contract for allowing this individual, to arbitrate this case on these facts. . AAre feel part of the legal confusion in this case results from the attempt to enjoin. Apparently only one objection to arbitration — lack of an arbitrable dispute — was raised before the district court. AA’e feel the company should have also sought prohibition of the one-sided arbitration being advanced by the union. The union, for its part, should have requested the court to order the employer to follow contract procedures and select an arbitrator. . We note that several issues raised by the parties before the district court on issues of procedure and the like are to be decided by the arbitrators, not the court.

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UNITED STATES of America v. Dennis Rex BONHAM, David Duan Fletcher. Appeal of David FLETCHER, Appellant. No. 71-2097. United States Court of Appeals, Third Circuit. Submitted En Banc Jan. 3, 1973. Decided April 2, 1973. Howard Lesnick, Professor of Law, Philadelphia, Pa., for appellant. Robert E. J. Curran, U. S. Atty., Frank J. Bove, and Richard R. Galli, Asst. U. S. Attys., Philadelphia, Pa., for appellee. Before SEITZ, Chief Judge, and HAS-TIE, VAN DUSEN, ALDISERT, ADAMS, GIBBONS, ROSENN and HUNTER, Circuit Judges. OPINION OF THE COURT HASTIE, Circuit Judge. David Fletcher has taken this appeal from a conviction of criminal acquisition of heroin in violation of subsection 4704 (a) of Title 26, United States Code. That subsection also creates a presumption of illegal acquisition or trafficing from “possession” of the specified narcotic in other than the required stamped package. Fletcher was indicted and tried along with his half brother, Dennis Bonham. At trial the government showed that police officers, executing a search warrant, entered the home of the defendants' mother where she lived together with her two accused sons, her daughter, the daughter’s husband, and Fletcher’s infant daughter. In the course of their search the officers entered a room that was the shared bedroom of Bonham and Fletcher. Both men and Fletcher’s daughter were in the room at the time. During their search of this bedroom the officers discovered a quantity of heroin, in other than lawfully stamped packages, secreted in a hidden recess above the bedroom doorway, apparently behind the door frame. No other heroin was found upon the person of either defendant or elsewhere in the room. One of the officers testified that suspicious articles other than heroin, which he called “suspected marijuana” and “suspected phenaphen tablets” were observed in plain view on a table. No proof was introduced that these articles were what the officer suspected, and they are not a subject of this prosecution. Having introduced this evidence, the prosecution rested. The defendants moved for dismissal on the ground that “possession” of the heroin, from which criminal acquisition or trafficing could be presumed, had not been proved. The court denied the motion and the defense rested. Thereupon, the court, sitting without a jury, found both defendants guilty as charged. Fletcher alone has appealed. That “possession” which, under the statute, creates a presumption of criminal traffic in certain narcotics can be established by a showing that the accused knowingly had the contraband under his “control or dominion” (a situation sometime denominated “constructive possession”) even though it was not found on his person or within his immediate reach. See United States v. Davis, 3d Cir. 1972, 461 F.2d 1026, 1035; McClure v. United States, 9th Cir. 1964, 332 F.2d 19, 23; United States v. Holland, D.C.Cir. 1971, 144 U.S.App.D.C. 225, 445 F.2d 701, 703. But where the evidence does not permit a finding beyond reasonable doubt that the accused had knowing control or dominion over the contraband the factual basis for the statutory presumption is lacking. United States v. Bethea, 143 U.S.App.D.C. 68, 1971, 442 F.2d 790; United States v. Thomas, 9th Cir. 1971, 453 F.2d 141, cert. denied 405 U.S. 1069, 92 S.Ct. 1516, 31 L.Ed.2d 801. In this view the evidence against Fletcher was fatally deficient. Where a person is the sole occupant of a room and has the right to exclude all others from it, it may logically be inferred that he has knowing dominion and control over objects so situated in his room that he is likely to be aware of their presence. United States v. Palmer, D.C.Cir. 1972, 467 F.2d 371. But the situation is different where two persons share the occupancy of a room and the right to exclude others from it. Depending upon the circumstances, either or both may have knowing dominion and control over a particular chattel, and choice between these alternatives must be based on more than speculation. Thus, in United States v. Davis, supra, we considered the situation of an apartment shared by a father and his adult daughter. Both of them were in the kitchen when arrestng officers found quantities of heroin and paraphernalia for its use in plain view on a kitchen table and on the floor nearby. We held that these circumstances warranted an inference that both occupants were exercising knowing dominion and control over the contraband. But the facts in the present case are in sharp contrast with the facts in Davis. Here the heroin was hidden. The officer who discovered it described the hiding place as above the doorway “behind the ledge that they had like a false front on it.” In these circumstances the prosecution has had to contend that when it has been established that two men shared a bedroom as their common place of abode, no more than the discovery of an article in that room on an occasion when both of them are present is necessary to warrant a finding in a criminal case that both of them had knowing dominion and control over the article. This reasoning cannot be squared, with the requirement that every essential of a crime must be established beyond reasonable doubt. And the better reasoned cases reject it. Evans v. United States, 9th Cir. 1958, 257 F.2d 121, cert. denied 358 U.S. 866, 79 S.Ct. 98, 3 L.Ed.2d 99; Guevara v. United States, 5th Cir. 1957, 242 F.2d 745; Commonwealth v. Schuloff, 1971, 218 Pa.Super. 209, 275 A.2d 835; Contra, United States v. Bridges, 8th Cir. 1969, 419 F.2d 963. As the court said in Evans v. United States, supra, “since he was not in exclusive possession of the premises, it may not be inferred that he knew of the presence of the narcotics and had control over them, unless there are other incriminating statements or circumstances tending to buttress such an inference.” Here there was nothing except the joint occupancy of the room upon which an inference of possession could be based. A fact finder could only speculate whether both of the room’s occupants or a particular one of them even knew of the cache, much less exercised control over the hidden contraband. We have not overlooked the testimony of one of the searching officers that suspicious articles other than heroin were found in plain view on a table in the bedroom. But even if the prosecution had proved that these articles were marijuana and phenaphen, as the officer said he suspected, appellant’s awareness of their presence would be no evidence of knowledge that heroin was concealed elsewhere. For these reasons, the court that tried this case without a jury should have granted Fletcher’s motion for acquittal on the ground that the evidence provided no more than an occasion to speculate whether he, or his brother, or both of them knew of the hidden heroin and exercised control over it. Finally, the substantiality of the risk of unfairness if an inference of possession is permitted in this type of case is strikingly demonstrated by circumstances disclosed by the entire record of this prosecution that has been certified to us, although the relevant evidence was not offered at trial. At a pretrial hearing on a defense motion to suppress evidence it was brought out that the search in this case had resulted from information supplied to the government by a “reliable” informant. He had stated that he had visited the home in question many times and on several occasions had visited the living quarters of Bonham and Fletcher where Bonham had shown him glassine envelopes containing white powder and had told him that the powder was heroin. There was no suggestion that Fletcher had been present on any of these occasions. In addition, it was established during the presentence procedure after conviction that Bonham was a heroin addict. These circumstances would have illuminated the critical issue of possession. Apparently, Fletcher’s former counsel, who represented both Bonham and Fletcher at the trial, was not in position to make this showing since it would have inculpated his client Bonham, though it also would have tended to exculpate his client Fletcher. We mention these circumstances, not on the issue of the propriety of the dual representation which we do not reach, but to demonstrate the potential for unfairness if courts should permit an inference of possession from the fact of joint occupancy of a bedroom in which contraband is hidden, absent anything more that tends to inculpate the accused. The judgment will be reversed and the cause remanded for the entry of a judgment of acquittal. . This section has since been repealed. P.L. 91-513, Title III, § 1101(b)(3)(A), Oct. 27, 1970, 84 Stat. 1292. Unlawful “simple possession” is now defined by and punishable under 21 U.S.C. § 844. . 257 F.2d at 128. In the Evans case the court found that there were other indicia of appellant’s dominion and control over the narcotics. United States v. Gulley, 6th Cir. 1967, 374 F.2d 55, and Eason v. United States, 9th Cir. 1960, 281 F.2d 818, upon which the prosecution relies, also presented factual indicia of possession in addition to the circumstance of joint occupancy of an automobile in which narcotics were found.

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John William SMITH, Appellant, v. Dominick SPINA, Individually and as Director of the Police Department of the City of Newark, N. J., et al. No. 72-1402. United States Court of Appeals, Third Circuit. Argued March 1, 1973. Decided April 24, 1973. Morton Stavis, Irvin L. Solondz, Newark, N. J., for appellant. William G. Scott, Donald L. Berlin, Lieb, Teich & Berlin, East Orange, N. J., for appellees. Before MARIS and ALDISERT, Circuit Judges, and GORBEY, District Judge. OPINION OF THE COURT ALDISERT, Circuit Judge. The question presented is whether appellant was prejudiced by error during the course of the trial of an action brought by him under the Civil Rights Act, 42 U.S.C. § 1983, against certain police officers and the City of Newark, “for a brutal assault and battery inflicted upon him by the Newark police officers DeSimone and Pontrelli, without cause, justification, or provocation.” We have concluded that there was no reversible trial error as to the appellant and will affirm the judgment of the district court. Appellant, a black man, was driving a taxicab in the City of Newark on the evening of July 12, 1967, when he was stopped by police officers DeSimone and Pontrelli for an alleged traffic offense. Following a verbal exchange, the policemen took appellant into custody and brought him to the precinct house. While in custody he sustained injuries. It was the plaintiff’s contention that these injuries were caused by an assault and battery committed upon him by the police. The police contended that appellant violently resisted arrest, had to be carried from the police car to the precinct house, and that “while being carried, plaintiff kicked and wiggled and thrashed about so violently that the officers carrying him were caused to fall,” and that, in turn, the plaintiff also fell and that the injuries received were due to the fall on the steps of the station house. Before treating appellant’s assignments of error, we address the jurisdictional posture of this appeal. Although federal jurisdiction was based on the general federal question statute, 28 U.S.C. § 1331, and the civil rights jurisdictional statute, 28 U.S.C. § 1343, and although the remedy exclusively relied on by appellant was the Civil Rights Act, 42 U.S.C. § 1983, appellant tried the case as a civil tort action. Indeed, at oral argument on appeal, in response to specific questions from the court, appellant’s counsel asserted that the theories of negligence, res ipsa loquitur, and intentional assault and battery, which form the major bases of this appeal, were properly brought as an integral part of the § 1983 remedy. It is, of course, fundamental that the Civil Rights Act permits recovery for only “deprivations of any rights, privileges, or immunities secured by the [federal] Constitution and [federal] laws.” We have recently said: “It becomes important to delineate that conduct which is actionable in state courts as a tort, and that which is actionable in federal courts under § 1983. The two rights of action do not always stand in pari materia. Some common law and statutory torts, although actionable in a state forum, do not rise to constitutional dimensions. The converse is equally true. Conduct may be actionable as a deprivation of constitutional rights where no force and violence has been utilized, and there exists no orthodox counterpart of state common law or statutory relief available.” Howell v. Cataldi, 464 F.2d 272, 278 (3d Cir. 1972). Thus, we have previously held “that a tort committed by a state official acting under color of state law is [not], in and of itself, sufficient to show an invasion of a person’s right under the Act [§ 1983].” Kent v. Prasse, 385 F.2d 406, 407 (3d Cir. 1967). Similarly, an averment of improper medical treatment was held insufficient to state a cause of action under the Civil Rights Act, Gittlemacker v. Prasse, 428 F.2d 1 (3d Cir. 1970); Fear v. Commonwealth of Pennsylvania, 413 F.2d 88 (3d Cir.), cert. denied, 396 U.S. 935, 90 S.Ct. 278, 24 L. Ed.2d 234 (1969); as was an averment of inferior medical treatment facilities for treatment of an ear infection, Kontos v. Prasse, 444 F.2d 166 (3d Cir. 1971) ; as was an averment of being forced to work in prison on a press which was dangerous and unfit and which had previously been condemned, Kent v. Prasse, supra, 385 F.2d at 407; as was an averment of professional malpractice against an attorney, Fletcher v. Hook, 446 F.2d 14, 16 (3d Cir. 1971). We have no hesitancy in concluding, therefore, that appellant’s counsel proceeded under fundamental misapprehensions that § 1983 subsumed these state tort causes of action. Had the ease been presented to the jury in this light by the trial judge, there would be no necessity to discuss the points raised on this appeal; we would have simply dismissed the appeal for want of federal jurisdiction of the tort claims, there being no averment of diversity between the parties, and there being no actual diversity of citizenship. Without the benefit of a proper pleading in the complaint, however, the trial court treated the tort claim as an independent state claim appended to the claim based on federal law under § 1983. The trial court obviously exercised discretion under instructions contained in United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966), that if the state and federal claims derive from a common nucleus of operative fact, and if they “are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues there is power in federal courts to hear the whole.” That there is power to hear a pendent state claim does not mean that its assumption is automatic or that the federal courts should be hospitable to such claims without proper pleadings. It is hornbook law that the jurisdiction of the federal court must appear in the plaintiff’s statement of his claim. Joy v. City of St. Louis, 201 U.S. 332, 26 S.Ct. 478, 50 L.Ed. 776 (1906). “It is incumbent upon the plaintiff properly to allege the jurisdictional facts, according to the nature of the case. ... He must allege in his pleadings the facts essential to show jurisdiction.” McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 182, 189, 56 S.Ct. 780, 782, 785, 80 L.Ed. 1135 (1936). See also, F.R.Civ.P. 8(a)(1). Procedural requirements aside, dictates of fundamental fairness require that a defendant have the opportunity to interpose any objection to the annexation of a pendent state claim to a federal question claim. In the case at bar, the defendants did not object to the unpleaded theory of the plaintiff, the reception of evidence thereunder, and the court’s charge to the jury. Having received a favorable verdict, defendants do not press this point, and properly so, for they now have the advantage of res judicata on the state claims. Our analysis of jurisdiction, although not invited by the parties, is a critical prerequisite to a consideration of appellant’s contentions, for this threshold determination directs us to the appropriate substantive law in considering claims of negligence, assault and battery, and res ipsa loquitur. Here again, appellant’s counsel was in basic error when he advised the court, at oral argument, that federal substantive law, and not state law, would govern these claims. See Erie v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Additionally, we observe that- appellant did not object to the § 1983 charge given by the trial court, and does not press any specific points on this aspect of the charge. The defendants also made no objection and, therefore, the issue is not before us. We are constrained to observe, nevertheless, that the § 1983 charge would not have withstood an objection by the defendants. Indeed, had an adverse verdict been returned against the defendants, we are persuaded that the charge would not have withstood a contention of plain error. Quoting the Fourteenth Amendment, the court told the jury that it was the theory of the plaintiff that “these men, acting under the color of the State law, wrongfully deprived him of his Constitutional Rights by exceeding their authority in using excessive force in taking him into custody.” At no time did the court define “excessive force” in terms of a constitutional deprivation or a violation of a right protected by federal law. The court also referred to “unlawful acts” of the policemen and essentially charged that if the jury found that the policemen defendants committed “unlawful acts,” they would be liable. Here, too, the court did not describe “unlawful acts” in the context of the Civil Rights Act, but stated simply that “the unlawful acts must be of such a nature or character and be permitted under such circumstances that they would not have occurred but for the fact that the person committing them was an official exercising his official powers outside the bounds of lawful authority.” Such a jury instruction was overbroad, all-encompassing, and did not relate with specificity to any deprivation under the federal constitution or federal laws. Thus, under these instructions, the jury could have found the defendants liable under § 1983 if they found that the police officers committed some “unlawful” act under the civil or criminal laws of the state. Recovery under § 1983 is strictly limited to deprivations under the federal constitution and federal law. But, as we have heretofore observed, this error militated against the defendants only, and, being the winner of the verdict, they do not complain. Still another pleading error of which appellant was the beneficiary was the inclusion of the City of Newark as a defendant in the § 1983 action. Even though Newark consented to this defendant status, a district court does not have subject matter jurisdiction under § 1983 to entertain a claim against a municipality. In Monroe v. Pape, 365 U.S. 167, 187, 191, 81 S.Ct. 473, 484, 486, 5 L.Ed.2d 492 (1961), the Court observed "that Congress did not undertake to bring municipal corporations within the ambit of § 1979. . . . The response of the Congress to the proposal to make municipalities liable for certain actions being brought within federal purview by the Act of April 20, 1871, was so antagonistic that we cannot believe that the word ‘person’ was used in this particular Act to include them.” See also United States ex rel. Gittlemacker v. County of Philadelphia, 413 F.2d 84 (3d Cir. 1969). That no objection was lodged by Newark at trial is immaterial. “[T]he District Court is vested with authority to inquire at any time whether these [jurisdictional] conditions have been met. They are conditions which must be met by the party who seeks the exercise of jurisdiction in his favor.” McNutt v. General Motors Acceptance Corp., supra, 298 U.S. at 189, 56 S.Ct. at 789. Nor does an agreement to submit to jurisdiction control, for just as it is well settled that the issue of subject matter jurisdiction is always open, so too is it settled that subject matter jurisdiction cannot be supplied by consent of the parties. See, e. g., Knee v. Chemical Leaman Tank Lines, Inc., 293 F.Supp. 1094, 1095 (E.D.Pa.1968). There is some authority, however, suggesting that the fact that the municipality could not have been a defendant under § 1983 would not preclude it from being a proper defendant under the pendent state claim, so long as the other factors conferring pendent jurisdiction under the Gibbs test are present. See Astor-Honor, Inc. v. Grossett & Dunlop, Inc., 441 F.2d 627 (2d Cir. 1971). Here, the court properly charged: “You will recall I stated to you that this case was brought on two grounds. First, against the officers for a violation of his Civil Rights, the second against the City of Newark and the Police Officers, those named and unnamed under the theory of negligence.” Appellant urges several assignments of trial error, most of which relate to the state claims of negligence and intentional tort and, hence, will be governed by state law. Others relate to the reception of evidence, and will be governed by the broad provisions of F.R.Civ.P. 43. Appellant contends that the court erred in excluding evidence that other Newark police officers from the Fourth Precinct were guilty of brutal police conduct shortly after the arrest of appellant. This was relevant only on the issue of the liability of the chief of police, and at least as to the state claim, to the issue of the city’s respondeat superi- or liability. The basis of the theory is that Chief Spina knew or should have known of the propensity of his subordinate officers to abuse blacks and, therefore, was negligent in not promulgating prophylactic regulations to prevent this. The relevancy of this evidence at best is highly suspect. After defendant Spina testified, he was dismissed as a party defendant upon motion of the appellant. With Spina out of the case, the relevancy is virtually nonexistent. And even if relevant, factors leading to admissibility could be offset by remoteness, undue prejudice, or confusion of the issues. The matter was within the discretion of the trial judge and we find that he did not abuse his discretion when he refused to admit the evidence. “When the risk of confusion is so great as to upset the balance of advantage, the evidence goes out.” Shepard v. United States, 290 U.S. 96, 104, 54 S.Ct. 22, 26, 78 L.Ed. 196 (1933). See also Rule 403, Proposed Rules of Evidence for the United States Courts and Magistrates. Next, appellant argues that the trial court erred in permitting the introduction of evidence of written police reports of appellant’s arrest. The records were introduced after the authors of the reports had testified but before their cross-examination. The court admitted the reports on the theory that they were business records. Rule 803, Proposed Rules of Evidence, supra, provides: The following are not excluded by the hearsay rule, even though the declarant is available as a witness. . . . (8) Public Records and Reports. Records, reports, statements, or data compilations, in any form, of public offices or agencies, setting forth (A) the activities of the office or agency, or (B) matters observed pursuant to duty imposed by law, or (C) in civil cases and against the government in criminal cases, factual findings resulting from an investigation made pursuant to authority granted by law, unless the sources of information or other circumstances indicate lack of trustworthiness. The Federal Public Records Act, 28 U.S.C. § 1733, by its terms is not applicable to non-federal public agencies. Thus, resort must be made to the common law business record exception to the hearsay rule. Kay v. United States, 255 F.2d 476 (4th Cir. 1958). As stated in the Advisory Committee’s note to Section 803: “Public records are a recognized hearsay exception at common law and have been the subject of statutes without number. McCormick, § 291. . Justification for the exception is the assumption that a public officer will perform his duty properly and the unlikelihood that he will remember details independently of the record. Wong Wing Foo v. McGrath, 196 F.2d 120 (9th Cir. 1952).” Accordingly, under federal practice, it was not error to admit the police record. Appellant further assigns as error the refusal to apply the law of res ipsa loquitur to the testimony adduced at trial. It is the theory of the appellant, “that he had been in perfectly good health before he was taken into police custody, that he had been badly beaten while in such custody, and that the police testimony did not provide reasonable explanation of the cause or causes of all of plaintiff’s multiple injuries.” Consideration of this charge is limited to the pendent state claim and, therefore, would be controlled by the substantive law of New Jersey. Erie v. Tompkins, supra. Defendants argue that under New Jersey law for the res ipsa doctrine to apply, there must be indications that the injury could not have resulted from plaintiff’s own conduct. Bornstein v. Metropolitan Bottling Co., 26 N.J. 263, 139 A.2d 404 (1958). Because defendants claimed that it was the plaintiff’s violent kicking and thrashing which caused his fall on the steps of the station house, we are persuaded, therefore, that the doctrine would not apply. Moreover, in Cleary v. Camden, 118 N.J.L. 215, 192 A. 29, 32, affirmed, 119 N.J.L. 387, 196 A. 455 (1937), the court declared: Of course, where all the facts and circumstances under which an accident occurs are disclosed by the proofs, and the question is whether, under the proofs as submitted, the conduct of the defendant is negligent, there is nothing left to inference, and the doctrine of res ipsa loquitur has no application. See also Kahalili v. Rosecliff Realty, 26 N.J. 595, 141 A.2d 301 (1958). The trial court charged the jury that the City of Newark could not be held liable for an intentional tort of its agents or servants. As we have heretofore observed, the liability of the city was properly an issue only on the pendent state claims and not under the § 1983 action; accordingly, New Jersey law will apply. It is apparent that this instruction contravened the rationale of McAndrew v. Mularchuk, 38 N.J. 156, 183 A.2d 74 (1962). It would appear under the doctrine of respondeat superi- or the City of Newark would be held liable for the actions of Officers DeSimone and Pontrelli, even if intentional. We have concluded, however, that this was harmless error. The finding of the jury exonerated DeSimone and Pontrelli of liability under any theory. Because the City of Newark could have been liable only on a theory of respondeat superior, the liability of its servant was a necessary prerequisite to the liability of the master. Finally, appellant argues: “The lower court erred in permitting testimony as to the plaintiff’s prior conviction in the state court — a conviction since set aside by this court — particularly when the pendency of the appeal to this court was called to the attention of the trial judge.” Prior to the reception of this evidence appellant made a timely motion to exclude evidence that he had been convicted of a state charge of assault and battery upon one of the policemen defendants arising out of this same occurrence. He argued then, as he does now, that although this conviction was affirmed by the New Jersey appellate courts, State v. Smith, 102 N.J.Super. 325, 246 A.2d 35 (1968); 55 N.J. 476, 262 A.2d 868, cert. denied, 400 U.S. 949, 91 S.Ct. 232, 27 L.Ed.2d 256 (1970), he subsequently filed a petition for a writ of habeas corpus in the federal district court, which, although denied by the district court, was the subject of an appeal in this court at that time. The trial court rejected his contention. As a matter of trial strategy, appellant put his own criminal record in evidence. Later, this court reversed the judgment of the federal habeas court and ordered that a writ issue on the basis of an improper jury selection. Smith v. Yeager, 465 F.2d 272 (3d Cir. 1972). We find no merit in appellant’s contention. Although this court has ordered that a writ of habeas corpus issue, such action is not the equivalent of a reversal of a state conviction. Only the Supreme Court has power, on direct appeal, to reverse a state judgment of conviction. Federal habeas corpus jurisdiction is based on detention simpliciter. Fay v. Noia, 372 U.S. 391, 83 S.Ct. 822, 9 L.Ed.2d 837 (1963). The jurisprudential effect of the granting of á federal writ is to release relator from custody. It does not have the force and effect of voiding a conviction. Moreover, at the time the evidence was introduced at trial, no court had granted the writ of habeas corpus. Buttressing our conclusion is the philosophy of proposed Rule 609(c), supra, stating that evidence of a conviction is not admissible under this rule if “. . . the conviction has been the subject of a pardon, annulment, or other equivalent procedure based on innocence.” Since the action of this court in reversing the denial of the writ was not based on the appellant’s innocence, it is extremely doubtful that even if the writ had been granted at the time of the trial whether the evidence of the conviction would have been excluded on the specific theory posed by appellant. Moreover, it appears to be the general rule that it is permissible to attack the credibility of a witness by showing a previous criminal conviction even though an appeal therefrom or a motion for a new trial is pending. United States v. Owens, 271 F.2d 425 (2d Cir. 1959), cert. denied, 365 U.S. 874, 81 S.Ct. 910, 5 L.Ed.2d 863 (1961); Bloch v. United States, 226 F.2d 185 (9th Cir. 1955), cert. denied, 350 U.S. 948, 76 S.Ct. 323, 100 L.Ed. 826 (1956). We have carefully considered the other contentions of the appellant and find them to be without merit. The judgment of the district court will be affirmed. . Properly styled, appellant’s § 1983 claim would track two theories: (1) A Fourteenth Amendment deprivation in that without due process of law the police punished him for his alleged traffic violation by administering a physical beating upon him instead of submitting him to trial by jury to determine his guilt or innocence and, if guilty, to be exposed to fine or imprisonment as provided by law. See United States v. Delerme, 457 F.2d 156, 161 (3d Cir. 1972). (2) An Eighth Amendment deprivation in that the police inflicted cruel and unusual punishment. . “Although, as originally drafted in 1871, § 1983’s predecessor protected rights, privileges, or immunities secured by the Constitution, the provision included by the Congress in the Revised Statutes of 1874 was enlarged to provide protection for rights, privileges, or immunities secured by federal law as well.” Mitchum v. Foster, 407 U.S. 225, 240 n. 30, 92 S.Ct. 2151, 2161, 32 L.Ed.2d 705 (1972). . See also Moor v. County of Alameda, 458 F.2d 1217 (9th Cir.), cert. granted, 409 U.S. 841, 93 S.Ct. 66, 34 L.Ed.2d 80 (1972), where the issue argued before the Supreme Court was whether a federal court has power to exercise jurisdiction over a party on a pendent state claim when the party is not involved in the related federal claim. . Rule 43 (a) reads: In all trials the testimony of witnesses shall be taken orally in open court, unless otherwise provided by these rules. All evidence shall be admitted which is admissible under the statutes of the United States, or under the rules of evidence heretofore applied in the courts of the United States on the hearing of suits in equity, or under the rules of evidence applied in the courts of general jurisdiction of the state in which the United States court is held. In any case, the statute or rule which favors the reception of the evidence governs and the evidence shall be presented according to the most convenient method prescribed in any of the statutes or rules to which reference is herein made. The competency of a witness to testify shall be determined in like manner.

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Lieutenant Junior Grade Monroe G. PILAND III, United States Navy, 746968, Petitioner-Appellant, v. Captain G. V. EIDSON, Commanding Officer, Naval Inshore Operations Training Center, Mare Island Naval Shipyard, Vallejo, California, Rear Admiral Alfred R. Matter, Commandant, 12th Naval District, Treasure Island, California, Respondents-Appellees. No. 71-2853. United States Court of Appeals, Ninth Circuit. April 18, 1973. John H. Vaisey (argued), Mark Borsuk, Somers, Kallen & Vaisey, San Francisco, Cal., for petitioner-appellant. Brewster Q. Morgan, Asst. U. S. Atty. (argued), Dwayne Keyes, U. S. Atty., San Francisco, Cal., Rear Admiral Alfred R. Matter, Commandant, Treasure Island, Cal., Capt. G. V. Eidson, Commanding Officer, for respondents-appellees. Before ELY and WALLACE, Circuit Judges, and KELLEHER, District Judge. Honorable Robert J. Kelleher, United States District Judge, Central District of California, sitting by designation. KELLEHER, District Judge: On September 15, 1971, appellant, while stationed at a Navy Facility, Mare Island, California, submitted his application for discharge from the Naval Service as a conscientious objector. Pursuant to Navy regulations administrative proceedings to determine the validity of appellant’s request were initiated. On October 14, 1971, the Chief of Naval Personnel issued orders directing appellant’s detachment from duty at Mare Island, within the Eastern District of California, and ordering him when detached to report for duty at Naval Station, Adak, Alaska. Alleging that the transfer was punitive and in violation of his constitutional rights, appellant, on October 28, 1971, filed a petition for writ of habeas corpus, mandamus and injunctive relief, seeking an order of the District Court for the Eastern District of California requiring appellees to cancel the transfer or, in the alternative, restraining appellees from removing appellant from the Eastern District of California until thirty days after completion of final administrative action on his application for discharge. This relief was denied. The District Court found that: there was no jurisdiction under 28 U.S.C. § 2241 since administrative remedies had not been exhausted; on the merits a writ of mandamus should not issue; and, appellant’s constitutional claims lacked merit. Appellant appealed, sought, and was granted by Mr. Justice Douglas a stay of deployment pending appeal. On January 31, 1972, the Department of the Navy denied appellant’s application for discharge. By this final administrative action it appears that the appeal is moot since appellant, by the stay of deployment, has received all the relief which he requested. However, in oral argument, the court was informed by Government counsel that upon determination of this appeal and the consequent expiration of the stay of deployment, appellant would be sent, forthwith, to Adak, Alaska. Government counsel further advised the court of his view that jurisdiction of the District Court for the Eastern District of California would thereby be ousted, compelling appellant to adjudicate in Alaska the propriety of the denial of his request for discharge. We have concluded that the process of this court can be invoked and should be exercised to prevent this. Appellant initiated this action to prevent a transfer that would seriously impede his efforts to establish conscientious objector status. His petition and the showing he made below appear not to be frivolous or motivated by expediency. Indeed, the trial court expressed the view that appellant was sincere in his moral convictions opposing war. But, as the court noted, that question was not properly before the trial court and hence, appellant’s entitlement to conscientious objector status was not there determined. Now that administrative action on appellant’s claim of conscientious objection has been completed it is obvious that appellant will test the legality of the denial. But, the Government has represented to this court that upon the dissolution of the stay of deployment, appellant will be prevented from judicial pursuit of his remedy except in remote Adak, Alaska. This is exactly what appellant sought to avoid as punitive and constitutionally prohibited. The appeal is not moot, for preservation of jurisdiction to pursue his remedy by appropriate proceeding is the core of the matter. We are mindful that courts are properly hesitant to intervene in military affairs. See Orloff v. Willoughby, 345 U.S. 83, 73 S.Ct. 534, 97 L.Ed. 842 (1953), rehearing denied 345 U.S. 931, 73 S.Ct. 779, 97 L.Ed. 1360 (1953). However, our concern here is not intrusion upon the miltiary but to insure that access to the courts be preserved to a military officer who seeks judicial determination of an important right. The Government, acting through the Department of the Navy, and particularly as announced by counsel in open court, appears to be without hesitation to intervene in the conduct of judicial matters. It is not for the Government, by the calculated use of military orders, to determine where jurisdiction shall lie for adjudication of disputes in which it may become involved. It is well established that a person in the armed forces may, by habeas corpus proceedings, seek judicial review of the denial of his application for discharge as a conscientious objector. Jarrett v. Resor, 426 F.2d 213, 217 n.6 (9th Cir. 1970). In Jarrett this court determined that jurisdiction under 28 U.S.C. § 2241(a) requires that a habeas corpus petitioner in the military be physically present and detained in custody within the jurisdiction in which the petition is filed. A military officer under orders transferring him from a duty station within one. judicial district to another has jurisdictional problems when he seeks to invoke the great writ. While in transit from his dispatching station to his new place of duty he has no recourse, for habeas corpus proceedings, to a judicial district through which he passes and in which he takes leave as he is not “detained in custody” in that district. Jarrett v. Resor, supra. See United States ex rel. Rudick v. Laird, 412 F.2d 16 (2d Cir. 1969), which denied jurisdiction in a similar situation on the ground that the transient petitioner was not then, and never had been detained in custody in that district. However, appellant, having received notice of orders providing for his transfer to Adak, Alaska, before he was detached, sought relief in the district in which the dispatching station is located. Orders of detachment were subsequently issued on November 1, 1971. Technically, appellant is presently assigned to Adak but appellant is also, technically, in transit between his former duty station at Mare Island and Adak. For the purposes of 28 U.S.C. § 2241, despite the detachment order of November 1, 1971, appellant is in custody within the Eastern District of California. Miller v. Chafee, 462 F.2d 335 (9th Cir. 1972); See Feliciano v. Laird, 426 F.2d 424, 427 n. 4 (2d Cir. 1970); cf. Strait v. Laird, 406 U.S. 341, 92 S.Ct. 1693, 32 L.Ed.2d 141 (1972). Since final administrative action is now complete, habeas corpus will now lie in the Eastern District of California. Appellant should be afforded an opportunity in the Eastern District of California, where all of his significant contacts with the Navy concerning his conscientious objector status have taken place, and where appellant initiated this action in an attempt to preserve jurisdiction, to test the legality of the denial of his claim. By our order we will preserve that jurisdiction. Accordingly, it is ordered that a stay of deployment of appellant’s transfer to Adak, Alaska, be issued for a period of thirty (30) days from the filing of this opinion. It is further ordered that this matter be remanded to the District Court for appellant to take such further proceedings therein as he may be advised to test the legality of the denial of his claim, either by amendment of his original petition or by initiation of a new proceeding. Remanded. WALLACE, Circuit Judge (concurring) : I concur in the result only. Piland sought to cancel or, alternatively, to restrain any transfer until thirty days after final administrative action on his discharge application. That final action occurred on January 31, 1972, and thirty days have long since elapsed without a transfer. Because he has received the relief he sought, his appeal from its denial is. moot. Normally a case such as this should be remanded to the district court for dismissal. Duke Power Co. v. Greenwood County, 299 U.S. 259, 267, 57 S.Ct. 202, 81 L.Ed. 178 (1936). However, considering the special circumstances of this ease and the liberality of Fed.R.Civ.P. 15(a), I would vacate the judgment of the district court and remand this case with leave to Piland to amend his pleadings to challenge the administrative denial of his application. Compare Diffenderfer v. Central Baptist Church, 404 U.S. 412, 92 S.Ct. 574, 30 L.Ed.2d 567 (1972); Bryan v. Austin, 354 U.S. 933, 77 S.Ct. 1396, 1 L.Ed.2d 1527 (1957). Such a disposition would achieve the desired effect of preserving the status quo without adopting the unnecessarily broad rule formulated by the majority.