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CHADBOURNE & PARKE LLP, Petitioner v. Samuel TROICE et al. Willis of Colorado Incorporated, et al., Petitioners v. Samuel Troice et al. Proskauer Rose LLP, Petitioner v. Samuel Troice et al.

Chadbourne & Parke LLP v. Troice

2014-02-26

Nos. 12–79; 12–86; 12–88.

377

414

571 U.S. 377

571

United States Reports

Supreme Court of the United States

United States

2021-09-08T21:16:17.237805+00:00

Fastcase

CHADBOURNE & PARKE LLP, Petitioner v. Samuel TROICE et al.

CHADBOURNE & PARKE LLP, Petitioner v. Samuel TROICE et al. Willis of Colorado Incorporated, et al., Petitioners v. Samuel Troice et al. Proskauer Rose LLP, Petitioner v. Samuel Troice et al. Nos. 12-79 12-86 12-88. Supreme Court of the United States Argued Oct. 7, 2013. Decided Feb. 26, 2014. Paul D. Clement, Washington, DC, for Petitioners. Elaine J. Goldenberg, for the United States, as amicus curiae, by special leave of the Court, supporting the Petitioners. Thomas C. Goldstein, Washington, DC, for Respondents. Daniel J. Beller, Daniel J. Leffell, William B. Michael, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, Walter Dellinger, Jonathan D. Hacker, O'Melveny & Myers LLP, Washington, DC, Anton Metlitsky, Leah Godesky, O'Melveny & Myers LLP, New York, NY, for Petitioner. Thomas C. Goldstein, Counsel of Record, Tejinder Singh, Goldstein & Russell, P.C., Washington, DC, Phillip W. Preis, Charles M. Gordon, Jr., Preis Gordon, APLC, Baton Rouge, LA, Edward F. Valdespino, Judith R. Blakeway, Strasburger & Price, LLP, Edward C. Snyder, Jesse R. Castillo, Castillo Snyder, P.C., San Antonio, TX, P. Michael Jung, David N. Kitner, Strasburger & Price, LLP, Douglas J. Buncher, Patrick J. Neligan, Jr., Nicholas A. Foley, Neligan Foley, LLP, Dallas, TX, for Respondents. Adam L. Rosman, Willis Group, New York, NY, Robert M. Lapinsky, Willis North America Inc., Nashville, TN, Paul D. Clement, Counsel of Record, Jeffrey M. Harris, Bancroft PLLC, Washington, DC, Jonathan D. Polkes, Weil, Gotshal & Manges LLP, New York, NY, J. Gordon Cooney, Jr., Morgan, Lewis & Bockius LLP, Philadelphia, PA, Allyson N. Ho, Morgan, Lewis & Bockius LLP, Houston, TX, Bradley W. Foster, Andrews Kurth LLP, Dallas, TX, for Petitioners. James P. Rouhandeh, Counsel of Record, Daniel J. Schwartz, Jonathan K. Chang, Richard A. Cooper, Davis Polk & Wardwell LLP, New York, NY, for Petitioner. Together with No. 12-86, Willis of Colorado Inc. et al. v. Troice et al., and No. 12-88, Proskauer Rose LLP v. Troice et al., also on certiorari to the same court.

11530

71831

Justice BREYER delivered the opinion of the Court. The Securities Litigation Uniform Standards Act of 1998 (which we shall refer to as the "Litigation Act") forbids the bringing of large securities class actions based upon violations of state law. It says that plaintiffs may not maintain a class action "based upon the statutory or common law of any State" in which the plaintiffs allege "a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security ." 15 U.S.C. § 78bb(f)(1) (emphasis added). The Act defines "class actions" as those involving more than 50 members. See § 78bb(f)(5). It defines "covered security" narrowly to include only securities traded on a national exchange (or, here irrelevant, those issued by investment companies). § 78bb(f)(5)(E), 77r(b)(1)-(2). The question before us is whether the Litigation Act encompasses a class action in which the plaintiffs allege (1) that they "purchase[d]" uncovered securities (certificates of deposit that are not traded on any national exchange), but (2) that the defendants falsely told the victims that the uncovered securities were backed by covered securities. We note that the plaintiffs do not allege that the defendants' misrepresentations led anyone to buy or to sell (or to maintain positions in) covered securities. Under these circumstances, we conclude the Act does not apply. In light of the dissent's characterization of our holding, post, at 1077 - 1078 (opinion of KENNEDY, j.)-which we believe is incorrect-we specify at the outset that this holding does not limit the Federal Government's authority to prosecute "frauds like the one here." Post, at 1077 - 1078. The Federal Government has in fact brought successful prosecutions against the fraudsters at the heart of this litigation, see infra, at 1074 - 1075, and we fail to understand the dissent's repeated suggestions to the contrary, post, at 1073, 1073 - 1074, 1077 - 1078, 1078, 1081. Rather, as we shall explain, we believe the basic consequence of our holding is that, without limiting the Federal Government's prosecution power in any significant way, it will permit victims of this (and similar) frauds to recover damages under state law. See infra, at 1079 - 1081. Under the dissent's approach, they would have no such ability. I A The relevant statutory framework has four parts: (1) Section 10(b) of the underlying regulatory statute, the Securities Exchange Act of 1934. 48 Stat. 891, as amended, 15 U.S.C. § 78j (2012 ed.). This well-known statutory provision forbids the "use" or "employ[ment]" of "any manipulative or deceptive device or contrivance" "in connection with the purchase or sale of any security." § 78j(b). Securities and Exchange Commission Rule 10b-5 similarly forbids the use of any "device, scheme, or artifice to defraud" (including the making of "any untrue statement of a material fact" or any similar "omi[ssion]") "in connection with the purchase or sale of any security." 17 C.F.R. § 240.10b-5 (2013). For purposes of these provisions, the Securities Exchange Act defines "security" broadly to include not just things traded on national exchanges, but also "any note, stock, treasury stock, security future, security-based swap, bond, debenture . [or] certificate of deposit for a security." 15 U.S.C. § 78c(a)(10). See also § 77b(a)(1), 80a-2(a)(36), 80b-2(a)(18) (providing virtually identical definitions of "security" for the Securities Act of 1933, the Investment Company Act of 1940, and the Investment Advisers Act of 1940). (2) A statute-based private right of action. The Court has read § 10(b) and Rule 10b-5 as providing injured persons with a private right of action to sue for damages suffered through those provisions' violation. See, e.g., Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 730, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975). The scope of the private right of action is more limited than the scope of the statutes upon which it is based. See Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 153, 155, 166, 128 S.Ct. 761, 169 L.Ed.2d 627 (2008) (private right does not cover suits against "secondary actors" who had no "role in preparing or disseminating" a stock issuer's fraudulent "financial statements"); Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N. A., 511 U.S. 164, 179, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994) (private right does not extend to actions against "aiders and abettors" of securities fraud); Blue Chip Stamps, supra, at 737, 95 S.Ct. 1917 (private right extends only to purchasers and sellers, not to holders, of securities). (3) The Private Securities Litigation Reform Act of 1995 (PSLRA). 109 Stat. 737, 15 U.S.C. § 77z-1, 78u-4. This law imposes procedural and substantive limitations upon the scope of the private right of action available under § 10(b) and Rule 10b-5. It requires plaintiffs to meet heightened pleading standards. It permits defendants to obtain automatic stays of discovery. It limits recoverable damages and attorney's fees. And it creates a new "safe harbor" for forward-looking statements. See § 78u-4, 78u-5. (4) The Securities Litigation Uniform Standards Act. 112 Stat. 3227, 15 U.S.C. § 78bb(f)(1)(A). As we said at the outset, this 1998 law forbids any "covered class action based upon the statutory or common law of any State . by any private party alleging-"(A) a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security; or "(B) that the defendant used or employed any manipulative or deceptive device or contrivance in connection with the purchase or sale of a covered security." § 78bb(f)(1)(A)-(B). The law defines "covered security" narrowly. It is a security that "satisfies the standards for a covered security specified in paragraph (1) or (2) of section 18(b) of the Securities Act of 1933." § 78bb(f)(5)(E). And the relevant paragraphs of § 18(b) of the 1933 Act define a "covered security" as "[a security] listed, or authorized for listing, on a national securities exchange," § 77r(b)(1) (or, though not relevant here, as a security issued by an "investment company," § 77r(b)(2) ). The Litigation Act also specifies that a "covered security" must be listed or authorized for listing on a national exchange "at the time during which it is alleged that the misrepresentation, omission, or manipulative or deceptive conduct occurred." § 78bb(f)(5)(E). The Litigation Act sets forth exceptions. It does not apply to class actions with fewer than 51 "persons or prospective class members." § 78bb(f)(5)(B). It does not apply to actions brought on behalf of a State itself. § 78bb(f)(3)(B)(i). It does not apply to class actions based on the law "of the State in which the issuer is incorporated." § 78bb(f)(3)(A)(i). And it reserves the authority of state securities commissions "to investigate and bring enforcement actions." § 78bb(f)(4). We are here primarily interested in the Litigation Act's phrase "misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security." § 78bb(f)(1)(A). Unless this phrase applies to the class actions before us, the plaintiffs may maintain their state-law-based class actions, and they may do so either in federal or state court. Otherwise, their class actions are precluded altogether. See § 78bb(f)(2) (providing for the removal from state to federal court of class actions that meet the specifications of paragraph 1, and for the dismissal of such suits by the district court). B 1 The plaintiffs in these actions (respondents here) say that Allen Stanford and several of his companies ran a multibillion dollar Ponzi scheme. Essentially, Stanford and his companies sold the plaintiffs certificates of deposit in Stanford International Bank. Those certificates "were debt assets that promised a fixed rate of return." Roland v. Green, 675 F.3d 503, 522 (C.A.5 2012). The plaintiffs expected that Stanford International Bank would use the money it received to buy highly lucrative assets. But instead, Stanford and his associates used the money provided by new investors to repay old investors, to finance an elaborate lifestyle, and to finance speculative real estate ventures. The Department of Justice brought related criminal charges against Allen Stanford. A jury convicted Stanford of mail fraud, wire fraud, conspiracy to commit money laundering, and obstruction of a Securities and Exchange Commission investigation. Stanford was sentenced to prison and required to forfeit $6 billion. The SEC, noting that the Bank certificates of deposit fell within the 1934 Securities Exchange Act's broad definition of " security," filed a § 10(b) civil case against Allen Stanford, the Stanford International Bank, and related Stanford companies and associates. The SEC won the civil action, and the court imposed a civil penalty of $6 billion. 2 The plaintiffs in each of the four civil class actions are private investors who bought the Bank's certificates of deposit. Two groups of plaintiffs filed their actions in Louisiana state court against firms and individuals who helped sell the Bank's certificates by working as "investment advisers" affiliated with Stanford, or who provided Stanford-related companies with trust, insurance, accounting, or reporting services. (The defendants included a respondent here, SEI Investments Company.) The plaintiffs claimed that the defendants helped the Bank perpetrate the fraud, thereby violating Louisiana state law. Two other groups of plaintiffs filed their actions in federal court for the Northern District of Texas. One group sued Willis of Colorado (and related Willis companies) and Bowen, Miclette & Britt, two insurance brokers; the other group sued Proskauer Rose and Chadbourne & Parke, two law firms. Both groups claimed that the defendants helped the Bank (and Allen Stanford) perpetrate the fraud or conceal it from regulators, thereby violating Texas securities law. The Louisiana state-court defendants removed their cases to federal court, and the Judicial Panel on Multi-District Litigation moved the Louisiana cases to the Northern District of Texas. A single federal judge heard all four class actions. The defendants in each of the cases moved to dismiss the complaints. The District Court concluded that the Litigation Act required dismissal. The court recognized that the certificates of deposit themselves were not "covered securities" under the Litigation Act, for they were not " 'traded nationally [or] listed on a regulated national exchange.' " App. to Pet. for Cert. in No. 12-86, p. 62. But each complaint in one way or another alleged that the fraud included misrepresentations that the Bank maintained significant holdings in " 'highly marketable securities issued by stable governments [and] strong multinational companies,' " and that the Bank's ownership of these "covered" securities made investments in the uncovered certificates more secure. Id., at 66. The court concluded that this circumstance provided the requisite statutory "connection" between (1) the plaintiffs' state-law fraud claims, and (2) "transactions in covered securities." Id., at 64, 66-67. Hence, the court dismissed the class actions under the Litigation Act. Id., at 75. See also 675 F.3d, at 511. All four sets of plaintiffs appealed. The Fifth Circuit reversed. It agreed with the District Court that the complaints described misrepresentations about the Bank's investments in nationally traded securities. Still, the "heart, crux, and gravamen of" the "allegedly fraudulent scheme was representing . that the [uncovered] CDs were a 'safe and secure' investment that was preferable to other investments for many reasons." Id. , at 522. The court held that the falsehoods about the Bank's holdings in covered securities were too " 'tangentially related' " to the "crux" of the fraud to trigger the Litigation Act. Id. , at 520, 522 (quoting Madden v. Cowen & Co., 576 F.3d 957, 965-966 (C.A.9 2009) ). "That the CDs were marketed with some vague references to [the Bank's] portfolio containing instruments that might be [covered by the Litigation Act] seems tangential to the schemes," to the point where the complaints fall outside the scope of that Act. 675 F.3d, at 522. Defendants in the four class actions sought certiorari. We granted their petitions. II The question before us concerns the scope of the Litigation Act's phrase "misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security." § 78bb(f)(1)(A). How broad is that scope? Does it extend further than misrepresentations that are material to the purchase or sale of a covered security? In our view, the scope of this language does not extend further. To put the matter more specifically: A fraudulent misrepresentation or omission is not made "in connection with" such a "purchase or sale of a covered security" unless it is material to a decision by one or more individuals (other than the fraudster) to buy or to sell a "covered security." We add that in Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 126 S.Ct. 1503, 164 L.Ed.2d 179 (2006), we held that the Litigation Act precluded a suit where the plaintiffs alleged a "fraudulent manipulation of stock prices" that was material to and " 'coincide[d]' with" third-party securities transactions, while also inducing the plaintiffs to "hold their stocks long beyond the point when, had the truth been known, they would have sold." Id., at 75, 85, 89, 126 S.Ct. 1503 (citing United States v. O'Hagan, 521 U.S. 642, 651, 117 S.Ct. 2199, 138 L.Ed.2d 724 (1997) ). We do not here modify Dabit . A We reach this interpretation of the Litigation Act for several reasons. First, the Act focuses upon transactions in covered securities, not upon transactions in uncovered securities. An interpretation that insists upon a material connection with a transaction in a covered security is consistent with the Act's basic focus. Second, a natural reading of the Act's language supports our interpretation. The language requires the dismissal of a state-law-based class action where a private party alleges a "misrepresentation or omission of a material fact" (or engages in other forms of deception, not relevant here) "in connection with the purchase or sale of a covered security." § 78bb(f)(1). The phrase "material fact in connection with the purchase or sale" suggests a connection that matters. And for present purposes, a connection matters where the misrepresentation makes a significant difference to someone's decision to purchase or to sell a covered security, not to purchase or to sell an uncovered security, something about which the Act expresses no concern. See generally Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. -, -, 131 S.Ct. 1309, 1317-1319, 179 L.Ed.2d 398 (2011) (a misrepresentation or omission is "material" if a reasonable investor would have considered the information significant when contemplating a statutorily relevant investment decision). Further, the "someone" making that decision to purchase or sell must be a party other than the fraudster. If the only party who decides to buy or sell a covered security as a result of a lie is the liar, that is not a " connection" that matters. Third, prior case law supports our interpretation. As far as we are aware, every securities case in which this Court has found a fraud to be "in connection with" a purchase or sale of a security has involved victims who took, who tried to take, who divested themselves of, who tried to divest themselves of, or who maintained an ownership interest in financial instruments that fall within the relevant statutory definition. See, e.g., Dabit, supra, at 77, 126 S.Ct. 1503 (Litigation Act: victims were "holders" of covered securities that the defendant's fraud caused to become overvalued); SEC v. Zandford, 535 U.S. 813, 822, 122 S.Ct. 1899, 153 L.Ed.2d 1 (2002) (§ 10(b): victims were "duped into believing" that the defendant would " 'invest' their assets in the stock market"); Wharf (Holdings) Ltd. v. United Int'l Holdings, Inc., 532 U.S. 588, 592, 121 S.Ct. 1776, 149 L.Ed.2d 845 (2001) (§ 10(b): victim purchased an oral option to buy 10% of a company's stock); O'Hagan,supra, at 655-656, 117 S.Ct. 2199 (§ 10(b): victims were "members of the investing public" harmed by the defendant's "gain[ing of an] advantageous market position" through insider trading); Superintendent of Ins. of N.Y. v. Bankers Life & Casualty Co., 404 U.S. 6, 10, 92 S.Ct. 165, 30 L.Ed.2d 128 (1971) (§ 10(b): victim was "injured as an investor" when the fraud deprived it of "compensation for the sale of its valuable block of securities"). We have found no Court case involving a fraud "in connection with" the purchase or sale of a statutorily defined security in which the victims did not fit one of these descriptions. And the dissent apparently has not either. Although the dissent characterizes our approach as "new," post, at 1073, and tries to describe several of our prior cases, such as Zandford or Dabit, in a different way, post, at 1079 - 1080, it cannot escape the fact that every case it cites involved a victim who took, tried to take, or maintained an ownership position in the statutorily relevant securities through "purchases" or "sales" induced by the fraud. E.g., Zandford, supra, at 815, 820, 122 S.Ct. 1899 (fraudster told customers he would " 'conservatively invest' their money" in the stock market and made sales of "his customer's securities," but pocketed the proceeds (emphasis added)); Dabit, supra, at 76, 85, 89, 126 S.Ct. 1503 (the " misrepresentations and manipulative tactics caused [the plaintiffs] to hold onto overvalued securities" while also inducing third parties to trade them); In re Orlando Joseph Jett, 82 S.E.C. Docket 1211, 1236-1237 (2004) (trader's scheme "greatly inflated the reporting trading profits" that his firm "used to determine . the amount of capital he was permitted to commit on the firm's behalf " (emphasis added)). Fourth, we read the Litigation Act in light of and consistent with the underlying regulatory statutes, the Securities Exchange Act of 1934 and the Securities Act of 1933. The regulatory statutes refer to persons engaged in securities transactions that lead to the taking or dissolving of ownership positions. And they make it illegal to deceive a person when he or she is doing so. Section 5 of the 1933 Act, for example, makes it unlawful to "offer to sell or offer to buy . any security, unless a registration statement has been filed as to such security." 15 U.S.C. § 77e(c). Section 17 of the 1933 Act makes it unlawful "in the offer or sale of any securities . to employ any device, scheme, or artifice to defraud, or to obtain money or property by means of any untrue statement of a material fact." § 77q(a)(1)-(2). And § 10(b) of the 1934 Act makes it unlawful to "use or employ, in connection with the purchase or sale of any security . any manipulative or deceptive device or contrivance." § 78j(b). Not only language but also purpose suggests a statutory focus upon transactions involving the statutorily relevant securities. The basic purpose of the 1934 and 1933 regulatory statutes is "to insure honest securities markets and thereby promote investor confidence." See O'Hagan, supra, at 658, 117 S.Ct. 2199. Nothing in the regulatory statutes suggests their object is to protect persons whose connection with the statutorily defined securities is more remote than words such as "buy," "sell," and the like, indicate. Nor does anything in the Litigation Act provide us with reasons for interpreting its similar language more broadly. The dissent correctly points out that the federal securities laws have another purpose, beyond protecting investors. Namely, they also seek to protect securities issuers, as well as the investment advisers, accountants, and brokers who help them sell financial products, from abusive class-action lawsuits. Post, at 1074 - 1075. Both the PSLRA and the Litigation Act were enacted in service of that goal. By imposing heightened pleading standards, limiting damages, and pre-empting state-law suits where the claims pertained to covered securities, Congress sought to reduce frivolous suits and mitigate legal costs for firms and investment professionals that participate in the market for nationally traded securities. We fail to see, however, how our decision today undermines that objective. The dissent worries our approach will "subject many persons and entities whose profession it is to give advice, counsel, and assistance in investing in the securities markets to complex and costly state-law litigation." Post, at 1074. To the contrary, the only issuers, investment advisers, or accountants that today's decision will continue to subject to state-law liability are those who do not sell or participate in selling securities traded on U.S. national exchanges. We concede that this means a bank, chartered in Antigua and whose sole product is a fixed-rate debt instrument not traded on a U.S. exchange, will not be able to claim the benefit of preclusion under the Litigation Act. But it is difficult to see why the federal securities laws would be-or should be-concerned with shielding such entities from lawsuits. Fifth, to interpret the necessary statutory "connection" more broadly than we do here would interfere with state efforts to provide remedies for victims of ordinary state-law frauds. A broader interpretation would allow the Litigation Act to cover, and thereby to prohibit, a lawsuit brought by creditors of a small business that falsely represented it was creditworthy, in part because it owns or intends to own exchange-traded stock. It could prohibit a lawsuit brought by homeowners against a mortgage broker for lying about the interest rates on their mortgages-if, say, the broker (not the homeowners) later sold the mortgages to a bank which then securitized them in a pool and sold off pieces as "covered securities." Brief for Sixteen Law Professors as Amici Curiae 24. The dissent all but admits this. Its proposed rule is that whenever "the purchase or sale of the securities [including by the fraudster] is what enables the fraud," the Litigation Act pre-empts the suit. Post, at 1078. In other words, any time one person convinces another to loan him money, by pretending he owns nationally traded securities or will acquire them for himself in the future, the action constitutes federal securities fraud, is subject to federal enforcement, and is also precluded by the Litigation Act if it qualifies as a "covered class action" under § 78bb(f)(5)(B) (e.g., involves more than 50 members). Leaving aside whether this would work a significant expansion of the scope of liability under the federal securities laws, it unquestionably would limit the scope of protection under state laws that seek to provide remedies to victims of garden-variety fraud. The text of the Litigation Act reflects congressional care to avoid such results. Under numerous provisions, it purposefully maintains state legal authority, especially over matters that are primarily of state concern. See § 78bb(f)(1)(A)-(B) (limiting preclusion to lawsuits involving "covered," i.e., nationally traded, securities); § 78bb(f) (4) (providing that the "securities commission . of any State shall retain jurisdiction under the laws of such State to investigate and bring enforcement actions"); § 78bb(f)(3)(B) (preserving States' authority to bring suits of the kind forbidden to private class-action plaintiffs). See also 112 Stat. 3227 ("Congress finds that . it is appropriate to enact national standards for securities class action lawsuits involving nationally traded securities, while preserving the appropriate enforcement powers of State securities regulators"). A broad interpretation of the Litigation Act works at cross-purposes with this state-oriented concern. Cf. Zandford, 535 U.S., at 820, 122 S.Ct. 1899 (warning against "constru[ing]" the phrase "in connection with" "so broadly as to convert any common-law fraud that happens to involve securities into a violation of § 10(b)"); Wharf (Holdings) Ltd., 532 U.S., at 596, 121 S.Ct. 1776 (recognizing that "ordinary state breach-of-contract claims" are "actions that lie outside the [Securities Exchange] Act's basic objectives"). B Respondents and the Government make two important counterarguments. Respondents point to statements we have made suggesting we should give the phrase "in connection with" a broad interpretation. In Dabit, for example, we said that the Court has consistently "espoused a broad interpretation" of "in connection with" in the context of § 10(b) and Rule 10b-5, and we added that the Litigation Act language similarly warranted a "broad construction." 547 U.S., at 85-86, 126 S.Ct. 1503. In Bankers Life, we said that, if a deceptive practice "touch[es]" a securities transaction, it meets § 10(b)'s "in connection with" requirement, 404 U.S., at 12, 92 S.Ct. 165, and in O'Hagan, we said the fraud and the purchase or sale of a security must simply "coincide." 521 U.S., at 656, 117 S.Ct. 2199. The idea, we explained in Zandford, is that the phrase "should be 'construed not technically and restrictively, but flexibly to effectuate its remedial purposes.' " 535 U.S., at 819, 122 S.Ct. 1899 (quoting Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 151, 92 S.Ct. 1456, 31 L.Ed.2d 741 (1972) ). Every one of these cases, however, concerned a false statement (or the like) that was "material" to another individual's decision to "purchase or s[ell]" a statutorily defined "security" or "covered security." Dabit,supra, at 75-77, 126 S.Ct. 1503; Zandford, supra, at 822, 122 S.Ct. 1899; Wharf (Holdings) Ltd.,supra, at 590-592, 121 S.Ct. 1776; O'Hagan, supra, at 655-657, 117 S.Ct. 2199; Bankers Life, supra, at 10, 92 S.Ct. 165. And the relevant statements or omissions were material to a transaction in the relevant securities by or on behalf of someone other than the fraudster. Second, the Government points out that § 10(b) of the Securities Exchange Act also uses the phrase "in connection with the purchase or sale of any security." 15 U.S.C. § 78j(b). And the Government warns that a narrow interpretation of "in connection with" here threatens a similarly narrow interpretation there, which could limit the SEC's enforcement capabilities. See Brief for United States as Amicus Curiae 28. We do not understand, however, how our interpretation could significantly curtail the SEC's enforcement powers. As far as the Government has explained the matter, our interpretation seems perfectly consistent with past SEC practice. For one thing, we have cast no doubt on the SEC's ability to bring enforcement actions against Stanford and Stanford International Bank. The SEC has already done so successfully. As we have repeatedly pointed out, the term "security" under § 10(b) covers a wide range of financial products beyond those traded on national exchanges, apparently including the Bank's certificates of deposit at issue in these cases. No one here denies that, for § 10(b) purposes, the "material" misrepresentations by Stanford and his associates were made "in connection with" the "purchases" of those certificates. We find it surprising that the dissent worries that our decision will "narro [w] and constric[t] essential protection for our national securities market,"post, at 1073, and put "frauds like the one here . not within the reach of federal regulation," post, at 1077 - 1078. That would be news to Allen Stanford, who was sentenced to 110 years in federal prison after a successful federal prosecution, and to Stanford International Bank, which was ordered to pay billions in federal fines, after the same. Frauds like the one here-including this fraud itself -will continue to be within the reach of federal regulation because the authority of the SEC and Department of Justice extends to all "securities," not just to those traded on national exchanges. 15 U.S.C. § 78c(a)(10) ; accord, § 77b(a)(1), § 80a-2(a)(36), § 80b-2(a)(18). When the fraudster peddles an uncovered security like the CDs here, the Federal Government will have the full scope of its usual powers to act. The only difference between our approach and that of the dissent, is that we also preserve the ability for investors to obtain relief under state laws when the fraud bears so remote a connection to the national securities market that no person actually believed he was taking an ownership position in that market. Thus, despite the Government's and the dissent's hand wringing, neither has been able to point to an example of any prior SEC enforcement action brought during the past 80 years that our holding today would have prevented the SEC from bringing. At oral argument, the Government referred to an administrative proceeding, In re Richard Line, 62 S.E.C. Docket 2879 (1996), as its best example. Our examination of the report of that case, however, indicates that the defendant was a fraudster to whom the fraud's victims had loaned money, expecting that he would purchase securities on their behalf. Id., at 2880 ("Line represented to investors that he would invest their non-admitted assets in various securities, including U.S. Treasury notes, mutual fund shares, and collateralized debt obligations"); ibid. ("[He] fabricated account statements which falsely recited that securities had been purchased on behalf of certain investors"). The Government's brief refers to two other proceedings as demonstrating the SEC's broad § 10(b) enforcement powers. Each, however, involved defrauded investors who had tried to take an ownership interest in the relevant securities. Jett, 82 S.E.C. Docket, at 1251 (involving a § 10(b) action where a defrauded trading firm's "decision to purchase or 'invest' in strips or bonds . stemmed directly from the activity that constituted the fraud"); In re D.S. Waddy & Co., 30 S.E.C. 367, 368 (1949) (involving a § 10(b) action where a broker "appropriated to his own use money paid to him by customers for securities purchases"). We have examined SEC records without finding any further examples. For these reasons, the dissent's warning that our decision will "inhibit" "litigants from using federal law to police frauds" and will "undermine the primacy of federal law in policing abuses in the securities markets" rings hollow. Post, at 1073 - 1074, 1074 - 1075. The dissent cannot point to one example of a federal securities action-public or private-that would have been permissible in the past but that our approach will disallow in the future. And the irony of the dissent's position is that federal law would have precluded private recovery in these very suits, because § 10(b) does not create a private right of action for investors vis-à-vis "secondary actors" or "aiders and abettors" of securities fraud. Stoneridge Investment Partners, 552 U.S., at 152, 155, 128 S.Ct. 761; Central Bank of Denver, 511 U.S., at 180, 114 S.Ct. 1439; accord, Brief for Petitioners in No. 12-86, p. 46 ("Any federal securities action against Petitioners would clearly run afoul of Central Bank and Stoneridge "); Brief for Respondents 48 (same); Brief for United States as Amicus Curiae 28 (same). III Respondents' complaints specify that their claims rest upon their purchases of uncovered, not of covered, securities. Our search for allegations that might bring their allegations within the scope of the Litigation Act reveals the following: (1) The first set of Texas plaintiffs alleged that they bought certificates of deposit from Stanford International Bank because they were told "the CDs issued by SIB were safer even than U.S. bank-issued CDs" and "could be redeemed at any time," given that the Bank "only invested the money [i.e., the Bank's money obtained from its certificate sale proceeds] in safe, secure, and liquid assets." App. 433. They claimed Stanford "touted the high quality of SIB's investment portfolio," and such falsehoods were material to their decision to purchase the uncovered certificates. Id., at 444. (2) The second set of Texas plaintiffs contended that they, too, purchased the Bank's certificates on the belief "that their money was being invested in safe, liquid investments." Id., at 715. They alleged that the Bank's marketing materials stated it devoted "the greater part of its assets" to "first grade investment bonds (AAA, AA+, AA) and shares of stock (of great reputation, liquidity, and credibility)." Id., at 744 (emphasis deleted). (3) Both groups of Louisiana plaintiffs alleged that they were induced to purchase the certificates based on misrepresentations that the Bank's assets were " 'invested in a well-diversified portfolio of highly marketable securities issued by stable governments, strong multinational companies and major international banks.' " Id., at 253, 345. And they claimed the " 'liquidity/marketability of SIB's invested assets' " was "the most important factor to provide security to SIB clients." Id., at 254. These statements do not allege, for Litigation Act purposes, misrepresentations or omissions of material fact "in connection with" the "purchase or sale of a covered security." At most, the complaints allege misrepresentations about the Bank's ownership of covered securities-fraudulent assurances that the Bank owned, would own, or would use the victims' money to buy for itself shares of covered securities. But the Bank is an entity that made the misrepresentations. The Bank is the fraudster, not the fraudster's victim. Nor is the Bank some other person transacting (or refraining from transacting, see Dabit, 547 U.S., at 75-77, 126 S.Ct. 1503) in covered securities. And consequently, there is not the necessary " connection" between the materiality of the misstatements and the statutorily required "purchase or sale of a covered security." See supra, at 1076. A final point: The District Court found that one of the plaintiffs acquired Bank certificates "with the proceeds of selling" covered securities contained in his IRA portfolio. App. to Pet. for Cert. in No. 12-86, p. 70. The plaintiffs, however, did not allege that the sale of these covered securities (which were used to finance the purchase of the certificates) constituted any part of the fraudulent scheme. Nor did the complaints allege that Stanford or his associates were at all interested in how the plaintiffs obtained the funds they needed to purchase the certificates. Thus, we agree with the Court of Appeals that "[u]nlike Bankers Life and Zandford, where the entirety of the fraud depended upon the tortfeasor convincing the victims of those fraudulent schemes to sell their covered securities in order for the fraud to be accomplished, the allegations here are not so tied with the sale of covered securities." 675 F.3d, at 523. In our view, like that of the Court of Appeals, these sales constituted no relevant part of the fraud but were rather incidental to it. For these reasons the Court of Appeals' judgment is affirmed. It is so ordered.

12451210

Steven D. Simon, Petitioner v. City of Atlanta, Georgia, et al.

Simon v. City of Atlanta

2011-08-15

No. 10-9153

926

926

180 L. Ed. 2d 926

180

United States Supreme Court Reports, Lawyers' Edition

Supreme Court of the United States

United States

2021-08-10T20:00:53.824783+00:00

CAP

Steven D. Simon, Petitioner v. City of Atlanta, Georgia, et al.

No. 10-9153. Steven D. Simon, Petitioner v. City of Atlanta, Georgia, et al. 564 U.S. 1059, 132 S. Ct. 58, 180 L. Ed. 2d 926, 2011 U.S. LEXIS 5108. August 15, 2011.

54

285

Petition for rehearing denied. Former decision, 563 U.S. 964, 131 S. Ct. 2157, 179 L. Ed. 2d 941, 2011 U.S. LEXIS 3301.

6303111

Carter et al. v. United States

Carter v. United States

1960-11-07

No. 350

880

880

364 U.S. 880

364

United States Reports

Supreme Court of the United States

United States

2021-08-10T21:58:20.270574+00:00

CAP

Carter et al. v. United States.

No. 350. Carter et al. v. United States. Curtis P. Mitchell for petitioners. Solicitor General Rankin, Assistant Attorney General Wilkey, Beatrice Rosenberg and Julia P. Cooper for the United States.

43

288

United States Court of Appeals for the District of Columbia Circuit. Certiorari denied.

6593141

Hensel, Bruckmann & Lorbacher, Inc., et al. v. United States

Hensel, Bruckmann & Lorbacher, Inc. v. United States

1962-10-23

No. 67138; protests 60/20739, etc. (New York)

270

270

49 Cust. Ct. 270

49

United States Customs Court Reports

United States Customs Court

United States

2021-08-10T20:35:02.307894+00:00

CAP

Hensel, Bruckmann & Lorbacher, Inc., et al. v. United States,

Before the First Division, October 23, 1962 No. 67138. protests 60/20739, etc. (New York). Hensel, Bruckmann & Lorbacher, Inc., et al. v. United States,

70

449

Opinion by Wilson, J. In accordance with stipulation of counsel that the merchandise consists of wall ornaments similar in all material respects to those the subject of Hensel, Bruckmann & Lorbacher, Inc. v. United States (47 Cust. Ct. 112, C.D. 2289), the claim of the plaintiffs was sustained.

6075663

The Empire District Electric Company, Petitioner, v. Commissioner of Internal Revenue, Respondent

Empire District Electric Co. v. Commissioner

1945-03-02

Docket No. 3247

925

930

4 T.C. 925

4

Reports of the Tax Court of the United States

United States Tax Court

United States

2021-08-11T02:47:19.051598+00:00

CAP

The Empire District Electric Company, Petitioner, v. Commissioner of Internal Revenue, Respondent.

The Empire District Electric Company, Petitioner, v. Commissioner of Internal Revenue, Respondent. Docket No. 3247. Promulgated March 2, 1945. Theodore N. Johnson, Esq., for the petitioner. W. F. Evans, Esq., for the respondent.

817

4903

OPINION. Harron, Judge: Respondent agrees that petitioner has sustained a loss of $330,147.35, the expenditures for preparations for the Table Rock project. The question is whethei the loss was sustained in the year 1935, as respondent has determined, or in the year 1936. The issue arises under section 23 (f) of the Internal Revenue Act of 1936, which allows a corporation a deduction for a loss sustained in the taxable year not compensated for by insurance or otherwise. Under this section of the statute, the taxpayer may take the deduction only in the year in which the loss is sustained. The difference between the parties arises out of their divergent views on when the loss was sustained. Petitioner contends that the loss was sustained by virtue of the decision of the directors to abandon the project. The evidence shows that such decision was not made until 1936. Respondent contends that the administrative action of the Federal Power Commission in terminating petitioner's license to construct the project determined the loss. A practical, not a legal, test is to be applied in determining whether a loss has been sustained in a taxable year. Lucas v. American Code Co., 280 U. S. 445. Under the circumstances and facts in this proceeding, evidence of the abandonment of the project must be given great weight. The loss for which petitioner is seeking a deduction is represented by moneys expended for surveys, core drilling, and preliminary engineering work. These preparations were of value only if the project was actually constructed. Petitioner could recover nothing out of the expenditures for preparations if the construction of the project was abandoned. In W. W. Hoffmam,, 40 B. T. A. 459; affd., 117 Fed. (2d) 987, we pointed out the variety of situations in which a taxpayer is entitled to a deduction for a loss, and that aban donment may be evidence of a loss, citing several cases where it was held that a loss was sustained upon the abandonment of property or of an interest in property. The cancellation of the license by the Power Commission in 1935 was not a bar to prevent petitioner's proceeding with the project at a later time. A. new application for a new license could be made. The development of the project by the petitioner was not solely dependent upon the first license which had been granted. The cancellation of the license in 1935 represented only a cause for the suspension of activities. A loss does not result from a mere suspension of operations. There may be a suspension of operations in one year and an honest intention to resume operations later. A taxpayer may suspend operations in one year, with an intent to resume them, but if he later abandons the venture, he then sustains a loss. See Reuben H. Donnelley Corporation, 26 B. T. A. 107. When the license was canceled in 1935, petitioner intended only to postpone the work to be done, and it could hold the plan in suspension because there was little likelihood that a private competitor could or would obtain a license to build a plant at Table Rock in competition with petitioner's Ozark Beach plant. While petitioner could integrate the facilities of a new plant into one system with its Ozark plant profitably, there was no real possibility that another cohcern would enter the area. However, the construction of a flood-control project at Table Rock by the Government was another matter. Prior to 1936 that eventuality had not developed. When, in 1936, there were substantial indications that the Government would construct a project at Table Rock, at some time not too far in the future, the belief of petitioner's directors that petitioner's chances of obtaining a new license were doubtful, was, in our opinion a reasonable belief. The decision, in 1936, of petitioner's directors to abandon the entire project was reasonable. Effect should be given to that business judgment. See Rhodes v. Commissioner, 100 Fed. (2d) 966; United States v. Hardy, 74 Fed. (2d) 841. When it was decided to abandon the project, the potential value of the preparations was destroyed. It has been found that the loss was sustained in 1936. It appears that respondent's argument carries an implication that petitioner's officers had really decided to give up the plan in 1935, or before, so that the cancellation of the license in 1935 was the fact which determined the loss when considered together with some such decision. The evidence does not support such theory. There is no evidence that there was an abandonment at any time prior to the date when the resolution was adopted in December 1936. Respondent's determination is revefsed. Decision will be entered under Rule 50.

6144917

George D. Hile, a Taxpayer, v. City of Cleveland

Hile v. City of Cleveland

1924-10-27

No. 84

582

583

266 U.S. 582

266

United States Reports

Supreme Court of the United States

United States

2021-08-11T02:08:18.621781+00:00

CAP

George D. Hile, a Taxpayer, v. City of Cleveland.

No. 84. George D. Hile, a Taxpayer, v. City of Cleveland. Error to the Supreme Court of the State of Ohio. Argued October 16, 1924. Decided October 27, 1924.

115

591

Per Curiam. Dismissed for the want of jurisdiction, upon authority of McCain v. Des Moines, 174 U. S. 168; Western Union Tel. Co. v. Ann Arbor R. R. Co., 178 U. S. 239; Spencer v. Duplan Silk Co., 191 U. S. 526; Shulthis v. McDougal, 225 U. S. 561; Hull v. Burr, 234 U. S. 712; Norton v. Whiteside, 239 U. S. 144. Mr. George D. Hile pro se. Mr. Carl F. Shuler, Mr. Alfred Clum and Mr. H. H. McKeehan appeared for defendant in error.

6239493

Giddins et al. v. United States

Giddins v. United States

1960-05-02

No. 803

711

711

362 U.S. 971

362

United States Reports

Supreme Court of the United States

United States

2021-08-10T20:04:48.032533+00:00

CAP

Giddins et al. v. United States.

No. 803. Giddins et al. v. United States. Solomon A. Klein and Louis Bender for petitioners. Solicitor General Rankin, Assistant Attorney General Wilkey, Beatrice Rosenberg and Theodore George Gilinsky for the United States.

39

258

C. A. 2d Cir. Certiorari denied.

6236670

Lee v. United States; and Nance v. United States

Lee v. United States

1982-04-05

No. 81-6321; No. 81-6328

918

918

456 U.S. 918

456

United States Reports

Supreme Court of the United States

United States

2021-08-11T02:39:45.860386+00:00

CAP

Lee v. United States; and Nance v. United States.

No. 81-6321. No. 81-6328. Lee v. United States; and Nance v. United States.

25

141

C. A. 9th Cir. Certiorari denied. Reported below: 666 F. 2d 353.

11952320

Davis v. Wilkerson et al.

Davis v. Wilkerson

1992-10-05

No. 91-8720

857

857

506 U.S. 857

506

United States Reports

Supreme Court of the United States

United States

2021-08-10T20:32:10.158323+00:00

CAP

Davis v. Wilkerson et al.

No. 91-8720. Davis v. Wilkerson et al.

13

73

C. A. 5th Cir. Certiorari denied.

327333

Woods v. Runyon, Postmaster General

Woods v. Runyon

1996-01-08

No. 95-6750

1060

1060

516 U.S. 1060

516

United States Reports

Supreme Court of the United States

United States

2021-08-10T22:13:30.779835+00:00

CAP

Woods v. Runyon, Postmaster General.

No. 95-6750. Woods v. Runyon, Postmaster General.

13

84

C. A. 6th Cir. Certiorari denied.

11110891

Dowty v. United States

Dowty v. United States

1998-10-05

No. 98-306

879

879

525 U.S. 879

525

United States Reports

Supreme Court of the United States

United States

2021-08-10T17:32:46.315718+00:00

CAP

Dowty v. United States.

No. 98-306. Dowty v. United States.

12

75

C. A. Armed Forces. Certiorari denied.

12438244

Helodoro Velasquez-Torrez, Petitioner v. United States

Velasquez-Torrez v. United States

2010-10-18

No. 10-6557

339

339

178 L. Ed. 2d 339

178

United States Supreme Court Reports, Lawyers' Edition

Supreme Court of the United States

United States

2021-08-11T02:36:12.882006+00:00

CAP

Helodoro Velasquez-Torrez, Petitioner v. United States.

No. 10-6557. Helodoro Velasquez-Torrez, Petitioner v. United States. 562 U.S. 990, 131 S. Ct. 438, 178 L. Ed. 2d 339, 2010 U.S. LEXIS 8223. October 18, 2010.

50

289

Petition for writ of certiorari to the United States Court of Appeals for the Fifth Circuit denied. Same case below, 609 F.3d 743.

12220374

Outram v. United States

Outram v. United States

2012-05-21

No. 11-8446

1011

1011

566 U.S. 1011

566

United States Reports

Supreme Court of the United States

United States

2021-08-11T02:20:50.812744+00:00

CAP

Outram v. United States.

No. 11-8446. Outram v. United States.

12

72

C. A. 3d Cir. Cer-tiorari denied.

336720

HELVERING, COMMISSIONER OF INTERNAL REVENUE, v. MIDLAND MUTUAL LIFE INSURANCE CO.

Helvering v. Midland Mutual Life Insurance

1937-02-15

No. 257

216

227

300 U.S. 216

300

United States Reports

Supreme Court of the United States

United States

2021-09-21T20:02:18.861595+00:00

Harvard

HELVERING, COMMISSIONER OF INTERNAL REVENUE, v. MIDLAND MUTUAL LIFE INSURANCE CO.

HELVERING, COMMISSIONER OF INTERNAL REVENUE, v. MIDLAND MUTUAL LIFE INSURANCE CO. No. 257. Argued January 7, 1937. Decided February 15, 1937. Mr. David E. Hudson, with whom Solicitor General Reed, Assistant Attorney General Jackson, and Messrs. Sewall Key and Maurice J. Mahoney were on the brief, for petitioner. Mr. Wm. Marshall Bullitt, with whom Mr. F. J. Wright was on the brief, for respondent.

2620

15015

Mr. Justice Brandéis delivered the opinion of the Court. Since 1921, the Revenue Acts have made this provision for taxing the income of life insurance companies. The gross income is limited to that "received during the taxable year from interest, dividends, and rents." Upon the net income, ascertained by making prescribed deductions, the tax under the Act here applicable is 12 per cent. The general provisions of the Revenue Acts concerning capital "gains and losses" and "bad debts" are not applicable to life insurance companies. In 1930, the Midland Mutual Life Insurance Company of Ohio caused to be foreclosed several mortgages on real estate given to secure loans which were in default. It was the only bidder; its bid was accepted; the property was conveyed to it; and in no case was there redemption. At each foreclosure sale the company had bid an amount which included interest as well as the principal. The interest so bid, aggregating on the foreclosed mortgages $5,456.99, was not included in the company's income tax return. The Commissioner of Internal Revenue decided that this interest was taxable and, accordingly, determined a deficiency in the company's income tax for 1930. His determination was approved by the Board of Tax Appeals. The Circuit Court of Appeals reversed the decision of the Board, 83 F. (2d) 629. We granted certiorari because of conflict with Helvering v. Missouri State Life Ins. Co., 78 F. (2d) 778, and National Life Ins. Co. v. United States, 4 F. Supp. 1000. The following additional facts stipulated were adopted by the Board of Tax Appeals as its findings: The Company kept its books on a "calendar year" "cash receipts and disbursements" basis, entering only payments of interest actually made to it during the year. Upon its acquiring title to the foreclosed properties, the investments were transferred on its books from the mortgage loan account to the real estate account and were carried thereon as assets at amounts which were equal to the principal of the loans secured by the mortgages plus any disbursements made for taxes, court costs, attorneys fees or insurance premiums. The amount of interest included in the bids on foreclosure was-not carried on the books as part of the cost of the properties or as an asset. Nor was it entered on the books or likewise treated as income. All of the properties here involved were located in States where a period of redemption from foreclosure is allowed. The company issued to its representatives having charge of foreclosures in those States general instructions to bid on its behalf such sums as would enable the company to realize no loss on account of its investment in case of redemption. The bids here involved were made pursuant to those instructions, without regard to the then actual value of the mortgage property. The company introduced evidence that the fair market value of the properties was, at the dates of foreclosure and of acquiring title, less than the amount of the principal due on the mortgages. This evidence was deemed by the Board immaterial; and it accordingly made no finding as to fair market value. First. The company contends that it did not "receive" the $5,456.99 (or any part thereof) either in cash or in property; and, hence, that it was not "gross income." Confessedly no interest was received in cash. The company insists that none was received in property. It argues that its bid may not be taken as conclusive evidence of the value of the property, invoking Ballentyne v. Smith, 205 U. S. 285; that the Board's refusal to consider the evidence as to value requires us to hold that the real estate acquired on foreclosure was of a fair value less than the amount of the principal of the mortgage debt; that the proceeds of a mortgage sale must be applied first to the satisfaction of the principal before income may be held received, citing Doyle v. Mitchell Bros. Co., 247 U. S. 179, 185; and that since the value did not equal the principal, there were no proceeds of the sales applicable to the interest, hence, no taxable income. In support of this argument, the company points to the fact that it did not, on its books, treat the delinquent interest as income; did not, directly or indirectly, carry the interest as part of the cost of the properties or as an asset; and did not include the interest as an asset in its annual statement or in its reports to insurance departments. The arguments rest upon a misconception. The terms "interest," "dividends," and "rents," employed in the statute simply and without qualification or elaboration, were plainly used by Congress in their generic meanings, as broadly descriptive of certain kinds of "income." Compare Lynch v. Hornby, 247 U. S. 339, 344; Helvering v. Stockholms Enskilda Bank, 293 U. S. 84, 86. We cannot say that Congress did not intend to include in its definition a case like the present merely because the taxpayer received a credit rather than money or other tangible property. Compare Raybestos-Manhattan, Inc. v. United States, 296 U. S. 60, 62, 64. A receipt of interest is taxable as income whether paid in cash or by a credit. Compare Old Colony Trust Co. v. Commissioner, 279 U. S. 716; United States v. Boston & Maine R. R., id., 732. This credit, it is true, was not entered on the taxpayer's books as interest or as an asset. But book-keeping entries, though in some circumstances of evidential value, are not determinative of tax liability. Compare Doyle v. Mitchell Bros. Co., 247 U. S. 179, 187. The intent to use the full extent of power being clearly evident, we must not confine the legislation within narrower forms than the statutory language would indicate. Compare Irwin v. Gavit, 268 U. S. 161, 166; Helvering v. Stockholms Enskilda Bank, supra, 89. Second. The company argues that uncontradicted evidence shows the fair market value of the mortgaged properties to have been less than the principal of the debts and that therefore the interest paid was not income within the meaning of the Act. A mortgagee who, at foreclosure sale, acquires the property pursuant to a bid of the principal and accrued interest is, as purchaser and grantee, in a position no different from that of a stranger who acquires the property on a bid of like amount. It is true that the latter would be obliged to pay in cash the amount of his bid, while the formality of payment in cash is ordinarily dispensed with when the mortgagee acquires the property on his own bid. But the rights acquired qua purchaser are the same in either case; and, likewise, the legal effect upon the mortgage debt is the same. In each case the debt, including the interest accrued, is paid. Where the stranger makes the purchase, the debt is discharged by a payment in cash; where the mortgagee purchases the property, the debt is discharged by means of a credit. The amount so credited to the mortgagor as interest paid would be available to him as a deduction in making his own income tax returns. It would be strange if the sum deductible by the mortgagor debtor were not chargeable to the mortgage creditor as income received. Where the legal effect of a transaction fits the plain letter of the statute, the tax is held payable, unless there is clearly revealed in the Act itself or in its history a definite intention to exclude such transactions from the operation of its applicable language. See Central National Bank v. United States, 137 U. S. 355, 364; Treat v. White, 181 U. S. 264, 268; Provost v. United States, 269 U. S. 443, 456, 457, 458; Old Colony R. Co. v. Commissioner, 284 U. S. 552, 560, 561. Respondent here makes no such showing. Third. The company argues that taxation is a practical matter; that we should be governed by realities; that the reality is, that all the company got was the property; and that the property was worth less than the principal of the debt. The "reality" of the deal here involved would seem to be that respondent valued the protection of the higher redemption price as worth the discharge of the interest debt for which it might have obtained a judgment. Moreover, the company's argument ignores the needs of an efficient system of taxation. The administration of the income tax law would be seriously burdened if it were held that when a mortgagee bids in the property for a sum including unpaid interest, he may not be taxed on the interest received except upon an inquiry into the probable fair market value of the property. "At best, evidence of value is largely a matter of opinion, especially as to real estate." Montana Railway Co. v. Warren, 137 U. S. 348, 353. There is nothing unfamiliar in taxing on the basis of the legal effect of a transaction. Income may be realized upon a change in the nature of legal rights held, though the particular taxpayer has enjoyed no addition to his economic worth. Compare Lynch v. Hornby, 247 U. S. 339, 344, 346; United States v. Phellis, 257 U. S. 156, 170, 171; Marr v. United States, 268 U. S. 536, 540; Burnet v. Commonwealth Improvement Co., 287 U. S. 415, 419, 420. "The income tax laws do not profess to embody perfect economic theory. They ignore some things that either a theorist or a business man would take into account in determining the pecuniary condition of the taxpayer." Weiss v. Wiener, 279 U. S. 333, 335. Compare Nicol v. Ames, 173 U. S. 509, 516; Tyler v. United States, 281 U. S. 497, 503. Fourth. The company contends that to tax the mortgagee as upon interest received is inconsistent with the rule declared in Louisville Joint Stock Land Bank v. Radford, 296 U. S. 556, 594, that the mortgagee is entitled to have "the mortgaged property devoted primarily to the satisfaction of the debt, either through receipt of the proceeds of a fair competitive sale or by taking the property itself." The charge of inconsistency is unfounded. The company exercised its right to have a sale. At the sale, it was free either to bid or to refrain from bidding. If it bid, it was free to bid such sum as it pleased. It chose to bid the full amount of principal and interest. Thus it obtained, in legal contemplation, full payment of the interest as well as the principal. ' To tax the company upon the full amount of interest received as a result of its own bid in no way impairs its rights as mortgagee. Compare Texas & Pacific Ry. Co. v. United States, 286 U. S. 285, 289. If the bid had been insufficient to yield full payment of the mortgage debt, principal and interest, the company would have been entitled to a judgment for the deficiency. If the company had refrained from bidding, and a stranger had bid more than the principal, the company would obviously have been taxable upon the excess up to the amount of the interest due. Perhaps it was the company's custom of bidding the full amount of principal and interest which deterred bidding by others. Reversed. See National Life Insurance Co. v. United States, 277 U. S. 508, 522. Revenue Act of 1928, § 201 (b) (1), 45 Stat. 791, 842. Compare § 244 (a), 245 (a), of the Revenue Acts of 1921, 42 Stat. 227, 261; 1924, 43 Stat. 253, 289; 1926, 44 Stat. 9, 47; § 202 (a), 203 (a), of the Revenue Acts of 1928, 45 Stat. 791, 842; 1932, 47 Stat. 169, 224; 1934, 48 Stat. 680, 731, 732; 1936, 49 Stat. 1648, 1710. See Helvering v. Independent Life Insurance Co., 292 U. S. 371, 377, 379; U. S. Treas, Reg. 74, Art. 951. A large majority of the properties were located in Michigan. By Michigan law, it is said, the mortgagor is allowed one year from the date of the foreclosure sale within which he may redeem the property by paying to the purchaser the amount bid for the property plus interest from the time of the sale at the rate borne by the mortgage, even though the amount of such bid be less than the total amount of the mortgagee's investment in the property. See Comp. Laws 1929, g. 266, § 14435, 14436; compare Vosburgh v. Lay, 45 Mich. 455; 8 N. W. 91. The purchaser cannot, under the local law, acquire title until after the expiration of the redemption period. See Comp. Laws 1929, c, 266, § 14434. The mortgagee may, "fairly and in good faith," bid the property in, {id., § 14432), and he enjoys the same rights as purchaser' as would a third party. See Ledyard v. Phillips, 47 Mich. 305, 308; 11 N. W. 170. The order of the Court of Appeals, which reversed the decision pi the Board, remanded the cause for further proceedings. We are told by counsel for the company that thereafter the Board found, on the evidence above referred to, that the values of the several properties were less than the principal of the loans. This finding, made after the filing of the petition for certiorari, though apparently before its allowance, was not made part of the record. It is, therefore, disregarded. See Revenue Act of 1928, § 23 (b), 45 Stat. 791, 799. See also Kentucky Improvement Co. v. Slack, 100 U. S. 648, 658, 659; Bailey v. Railroad Co., 106 U. S. 109, 115, 116; compare Cary v. Savings Union, 22 Wall. 38, 41. Compare Bell's Gap R. Co. v. Pennsylvania, 134 U. S. 232, 236; Hatch v. Reardon, 204 U. S. 152, 159; Paddell v. New York, 211 U. S. 446, 449, 450; New York v. Latrobe, 279 U. S. 421, 427. Taxability has frequently been determined without reference to factors which the accountant, economist or business man might deem relevant to the computation of net gain. Compare Brushaber v. Union Pacific R. Co., 240 U. S. 1; Tyee Realty Co. v. Anderson, 240 U. S. 115; Weiss v. Wiener, 279 U. S. 333; Helvering v. Independent Life Insurance Co., 292 U. S. 371. The exigencies of a tax determined on an annual basis may lead to the inclusion as income of items which might be shown to involve no gain if the transactions were viewed as a whole over several years. Compare Burnet v. Sanford & Brooks Co., 282 U. S. 359, 364, 365; Brown v. Helvering, 291 U. S. 193, 199; Spring City Foundry Co. v. Commissioner, 292 U. S. 182, 189, 190.

6069845

New Castle Leather Company, Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent

New Castle Leather Co. v. Commissioner

1932-06-07

Docket No. 53437

282

286

26 B.T.A. 282

26

Reports of the United States Board of Tax Appeals

United States Board of Tax Appeals

United States

2021-08-10T17:21:15.897495+00:00

CAP

New Castle Leather Company, Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent.

New Castle Leather Company, Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent. Docket No. 53437. Promulgated June 7, 1932. Joseph J. Klein, Esq., Myron A. Finke, Esq., and George W. New-gass, Esq., for the petitioner. ' John D. Kiley, Esq., for the respondent.

991

5676

OPINION. Trammell : The petitioner and its subsidiary were affiliated during the year 1927, in which year each sustained a net loss, and they were also affiliated during the taxable year 1928, in which year the petitioner had net income and the subsidiary again sustained a net loss. In determining the deficiency the respondent allowed as a deduction, in computing the consolidated net income for the taxable year, the amount of the net loss sustained by the petitioner in 1927, and disallowed the net loss sustained in that year by the subsidiary. The correctness of the respondent's action in this regard is the basis of the sole issue of law raised by the pleadings herein. The question presented is governed by the following provisions of the Revenue Act of 1928, viz: Sec. 23. deductions from GROSS income. In computing net income there shall be allowed as deductions: (i) Wet losses. — The special deduction for net losses of prior years, to the extent provided in section 117. # • Sec. 117. net losses. (а) Definition of "Wet loss." — -As used in this section the term "net loss" means the excess of the deductions allowed by this title over the gross income, with the following exceptions and limitations: * (б) Net loss not to produce net loss. — In computing the net loss for any taxable year a net loss for a prior year shall not be allowed as a deduction. (5) Wet loss as a deduction. — If, for any taxable year, it appears upon the production of evidence satisfactory to the Commissioner that any taxpayer has sustained a net loss, the amount thereof shall be allowed as a deduction in computing the net income of the taxpayer for the succeeding taxable year (hereinafter in this section called "second year"), and if such net loss is in excess of such net income (computed without such deduction), the amount of such excess shall be allowed as a deduction in computing the net Income for the next succeeding taxable year (hereinafter in this section called " third year ") ; * (e) Net loss for 1926 or 1927). — If for the taxable year 1926 or 1927 a taxpayer sustained a net loss within the provisions of the Revenue Act of 1926, the amount of such net loss shall be allowed as a deduction in computing net income for the two succeeding taxable years to the same extent and in the same manner as a net loss sustained for one taxable year is, under this Act, allowed as a deduction for the two succeeding taxable years. Our decision of the issue here must be controlled, we think, by the principles stated in the opinion of the Supreme Court of the United States in Woolford Realty Co. v. Rose, 288 U. S. 319, and in Planter's Cotton Oil Co. v. Hopkins, 286 U. S. 332. In the Woolf'orcl Realty Go. case, the court said: Under that section of the statute [Sec. 206 (b) of the Revenue Act of 1926], the losses suffered by the Piedmont Company in 1925 might have been deducted from its net income in 1926, and might thereafter if not extinguished, have been deducted to the extent of the excess from its net income in 1927, the year in which its shares were acquired by the petitioner. But the Piedmont Company did not have any net income in 1927. Its operations for that year resulted in a loss. There was therefore nothing from which earlier losses could be deducted, for the net income without any such deductions was still a minus quantity. The tax for the year was nothing, and) the losses of other years could not serve to make it less. The petitioner would have us hold that the minus quantities for all the years should be added together, and the total turned over by the company suffering the loss as an allowance to be made to the company realizing the gain. the statute has given notice to the taxpayer that the aggregate of minus quantities is not to be turned over as a credit to an affiliated company, but is to be used in another way. If the loss for the first year is more than the income for the second, the excess is to be carried over to a third year, and deducted from the net income, if any, returnable for that year, at which time the process of carrying over is to end. Obviously, the direction to apply the excess against the income of a later year is inconsistent with a purpose to allow it to an affiliated company as an immediate deduction from' income of the current year. Adherence to the one practice excludes adherence to the other. The petitioner in this case contends that because the first net loss of the subsidiary was sustained during the period of affiliation, the aggregate of its net losses for both years should be allowed as a deduction from the petitioner's income in computing the consolidated net income for the second or taxable year. However, if the net loss of a subsidiary corporation is allowable as a deduction only from the income of the subsidiary for the subsequent years and may not be added to a net loss of the same corporation for the second year and allowed as a deduction from the income of another affiliated corporation, then, under the decisions of the Supreme Court above cited, and under the provisions of the Revenue Act of 1928, above quoted, it is unimportant whether the first net loss of the subsidiary was suffered prior to the beginning of or during the period of affiliation, and the petitioner's contention can not be sustained. Judgment will be entered for the respondent.

6772208

ANNA JACQUES HOSPITAL, et al., Appellants v. Sylvia Mathews BURWELL, Appellee

Anna Jacques Hospital v. Burwell

2015-08-14

No. 14-5125

291

309

418 U.S. App. D.C. 291

418

United States Court of Appeals for the District of Columbia Circuit

United States Court of Appeals for the District of Columbia Circuit

United States

2021-08-10T22:33:52.188643+00:00

CAP

Before: KAVANAUGH, MILLETT and WILKINS, Circuit Judges.

ANNA JACQUES HOSPITAL, et al., Appellants v. Sylvia Mathews BURWELL, Appellee.

797 F.3d 1155 ANNA JACQUES HOSPITAL, et al., Appellants v. Sylvia Mathews BURWELL, Appellee. No. 14-5125. United States Court of Appeals, District of Columbia Circuit. Aug. 14, 2015. Keith D. Barber argued the cause for appellants. With him on the briefs were N. Kent Smith and Amy L. Brown. Katherine T. Allen, Attorney, U.S. Department of Justice, argued the cause for appellee. On the brief were Ronald C. Machen, Jr., U.S. Attorney at the time the brief was filed, and Michael S. Raab, Attorney. Samantha L. Chaifetz, Attorney, and R. Craig Lawrence, Assistant U.S. Attorney, entered appearances. Before: KAVANAUGH, MILLETT and WILKINS, Circuit Judges.

8859

58089

Opinion for the Court filed by Circuit Judge MILLETT. MILLETT, Circuit Judge: The Medicare Act, 42 U.S.C. § 1395 et seq., established a nationwide, federally funded health insurance program for the elderly and individuals with disabilities. Unsurprisingly, reimbursing hospitals for Medicare services provided to patients across the entire United States is a complicated business. One reason is that the cost of providing such care can vary significantly depending on where a hospital is located. An influential factor in that variation is the wages paid to hospital employ ees, which fluctuate based on the cost of living in different geographic areas. To help compensate for those disparities, the Medicare Act charges the Secretary of Health and Human Services with computing annually a "wage index" that compares hospital wages within defined geographic areas to a national average, and adjusts Medicare reimbursements accordingly. This case arises from the Secretary's decision in 2005 to change the boundaries of the geographic areas used to compute those regional wage indices. The new lines fell in a way that left three multi-campus hospitals straddling different geographic areas. One is the Southcoast Hospital Group, which found itself with campuses in both the Boston-Quincy, Massachusetts region and in the neighboring Providence-New Bedford-Fall River ("Providence") region. Consistent with longstanding agency regulations, the Secretary factored all of Southcoast's wages into the Boston-Quincy index because that is where its principal campus with the group's Medicare provider and reporting number was situated. Concerned that the inclusion of wages from the Providence-area campuses lowered their wage index and thus their Medicare reimbursements, a group of hospitals challenged the Secretary's decision to include wage data from Southcoast campuses outside the Boston-Quincy area in calculating the index for that area for fiscal years 2006 and 2007. We uphold the Secretary's decision. The Secretary's treatment of Southcoast hewed to the existing administrative treatment of such multi-campus hospital groups. And reasonably so — there were substantial informational and operational obstacles to implementing a different computational method quickly in 2006 or retroactively now. Moreover, appellants admit that the temporary effect of Southcoast's multi-campus data on the wage index was a "one-off' occurrence arising from "unusual circumstances" that apparently did not affect any other multi-campus hospital group's treatment. Oral Arg. Tr. 52-53. Nothing in the Medicare Act or established principles of administrative review mandate that the Secretary individually tailor one hospital's reporting treatment to fit plaintiffs' preferred computational outcome. I Statutory and Regulatory Framework As has oft been noted, Medicare is a "complex and highly technical regulatory program." Thomas Jefferson University v. Shalala, 512 U.S. 504, 512, 114 S.Ct. 2381, 129 L.Ed.2d 405 (1994) (citation omitted). The Medicare program is administered by the Centers for Medicare and Medicaid Services ("Centers"), a division of the Department of Health and Human Services, under the executive management of the Secretary of Health and Human Services. St. Elizabeth's Medical Center of Boston, Inc. v. Thompson, 396 F.3d 1228, 1230 (D.C.Cir.2005). As part of the program, health care providers are reimbursed for certain costs that they incur in treating Medicare beneficiaries. Methodist Hospital of Sacramento v. Shalala, 38 F.3d 1225, 1227 (D.C.Cir.1994). Originally, health care providers were reimbursed for the "reasonable costs" of services furnished to Medicare patients. Methodist Hospital, 38 F.3d at 1227. In 1983, Congress substantially revised that payment regime and created the Prospective Payment System. See Social Security Amendments of 1983, Pub.L. No. 98-21, § 601, 97 Stat. 65, 149; see also Methodist Hospital, 38 F.3d at 1227. The Prospec tive Payment System reimburses hospitals for medical care requiring at least one night's stay on the basis of a preestab-lished formula, regardless of the actual costs incurred by the hospital. 42 U.S.C. § 1395ww(d); see generally Anna Jaques Hospital v. Sebelius, 583 F.3d 1, 2 (D.C.Cir.2009). The payment rates are tied to the national average cost of treating a patient's particular ailment. See 42 U.S.C. § 1395ww(d). Congress intended for those rates to "reform the financial incentives hospitals face [and] promot[e] efficiency in the provision of services[.]" Methodist Hospital, 38 F.3d at 1227 (quoting H.R.Rep. No. 25, 98th Cong., 1st Sess. 132 (1983)). In calculating those standard payments, the Secretary is required to adjust the "proportion" of the payment attributable to "wages and wage-related costs" for "area differences in hospital wage levels[.]" 42 U.S.C. § 1395ww(d)(3)(E)(i). To ensure uniformity in the adjustment process, the statute requires the Secretary to compute a "factor" that "reflect[s] the relative hospital wage level in the geographic area of the hospital compared to the national average[.]" Id. That "factor" is commonly referred to as "the wage index." Southeast Alabama Medical Center v. Sebelius, 572 F.3d 912, 914-915 (D.C.Cir.2009); see also Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2006 Rates ("Final 2006 Rules"), 70 Fed.Reg. 47,278, 47,281 (Aug. 12, 2005) ("The base payment rate is comprised of a standardized amount that is divided into a labor-related share and a nonlabor-related share. The labor-related share is adjusted by the wage index applicable to the area where the hospital is located[.]"). The wage index must be updated each year "on the basis of a survey" of the wage-related costs for hospitals in the United States. 42 U.S.C. § 1395ww(d)(3)(E)(i). The Secretary collects annual cost reports from each hospital, see Anna Jaques, 583 F.3d at 3; 42 C.F.R. § 413.20(b), and she publishes a manual to guide hospitals through the reporting process, see Centers for Medicare & Medicaid Services, Medicare Provider Reimbursement Manual ("Reimbursement Manual"), Part 2, Chapter 1 § 100 et seq. Generally, each hospital or facility that has been assigned its own Medicare provider number must file its own report. Id. § 112 ("Each provider in a chain organization or other group of providers, except as noted below, must file a separate, individual cost report."). A different rule applies, however, for multi-campus hospitals. A multi-campus hospital is an organization with multiple facilities that operates as a single institution with integrated finances, administration, and organization. See Centers for Medicare & Medicaid Services, Medicare State Operations Manual ("Operations Manual"), Chapter 2 § 2024, 2779F; 42 C.F.R. § 413.65(d)-(e). A multi-campus hospital may submit only one cost report each year under its "principal provider" number. See Reimbursement Manual, Part 2, Chapter 1 § 112 ("Institutions which have multiple facilities but only one provider number are required to submit one cost report under that principal provider number[.]"). Multi-campus hospitals often form as the result of a hospital merger or joint venture. After such a change, the relevant state agency and the Centers regional office ascertain whether the hospitals have the extensive legal, financial, organizational, and administrative integration that is required to be certified to operate as a single institution. See 42 C.F.R. § 413.65(d)-(e) (listing criteria to qualify as a single institution); Operations Manual, Chapter 2 § 2024 ("When two or more hospitals merge," the agency must decide "whether to continue to certify the hospitals separately or certify them as a single hospital (i.e., hospital with a main campus and an additional location)."). If any of the integration criteria is not met, the campuses are treated as "[f]ree-standing facilities]," see 42 C.F.R. § 413.65(a)(2), and each must operate under its own Medicare provider number and submit, inter alia, its own cost reports, see Reimbursement Manual, Part 2, Chapter 1 § 112. If certified as a single institution, the hospital must designate a "main campus," and that campus's Medicare provider number is adopted by the hospital for common use by all of its facilities. See generally Operations Manual, Chapter 2 § 2779F. The provider numbers that correspond to the other campuses, if any, are retired. See id. § 2779F. Multi-campus hospitals also operate under a single provider agreement with Medicare, id., through which they may bill for services provided to Medicare beneficiaries as long as they comply with all program requirements, 42 C.F.R. § 489.3. Multi-campus hospitals' subordinate campuses have "provider-based" status that entitles them to operate under the multi-campus hospital's number and agreement. Id. § 413.65(a)(2). After collecting cost reports from each hospital or hospital group, the Secretary removes data that fails to meet set criteria for reasonableness, including data that is "incomplete!,] inaccurate , or otherwise aberrant!.]" Anna Jaques, 583 F.3d at 3 (quoting Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2005 Rates ("Final 2005 Rules"), 69 Fed.Reg. 48,916, 49,049-49,050 (Aug. 11, 2004)). Because of the extensive amount of time required to verify, scrub, and process the data, the Secretary calculates each year's wage index using data from cost reports collected three years earlier. See Final 2005 Rules, 69 Fed.Reg. at 49,049. In calculating a proposed wage index, the Secretary first determines the regional average hourly wage rate for hospitals in the defined geographic area, then calculates the national average hourly wage rate, and finally divides the former by the latter. See Final 2006 Rules, 70 Fed.Reg. at 47,373-47,374. The closer the wage index for an area is to 1.0, the closer that area's wage costs are to the national average. The Secretary publishes the proposed wage indices and solicits comments from the public. 42 C.F.R. § 412.8. The Secretary then promulgates the final wage indi-ces as part of the Inpatient Prospective Payment System rules and policies for that year. 42 U.S.C. § 1395ww(d)(6). The index for each geographic area will be used for one year to adjust the wage portion of the prospective reimbursement payment for treatment provided in that area. See Southeast Alabama Medical Center, 572 F.3d at 915. Of course, before any relevant wage data can be collected or indices calculated, the Secretary must assign Medicare hospitals to appropriate geographic regions. For the first two decades of the Prospective Payment System, the Secretary utilized the Office of Management and Budget's Metropolitan Statistical Areas to delineate the geographic areas for each wage index. See Prospective Payments for Medicare Inpatient Hospital Services, 48 Fed.Reg. 39,752, 39,766 (Sept. 1, 1983). In December 2000, the Office of Management and Budget announced that it would adopt a new standard for demarcating metropolitan areas, known as Core-Based Statistical Areas. See Final 2005 Rules, 69 Fed.Reg. at 49,027 (citing Standards for Defining Metropolitan and Mi-cropolitan Statistical Areas, 65 Fed.Reg. 82,228, 82,238 (Dec. 27, 2000)). After years of study, the Secretary determined that, beginning in fiscal year 2005, she would use those new Core-Based Statistical Areas to calculate the wage indices. Final 2005 Rules, 69 Fed.Reg. at 49,027. The Secretary recognized that this change would have considerable impact on hospitals. Id. at 49,026-49,034. To mitigate those effects, the Secretary implemented various transitional provisions that, among other things, allowed affected hospitals to be temporarily reimbursed on the basis of other areas' wage indices. See id. The Secretary later learned that, in three instances, the new geographic lines ran through multi-campus hospital groups, leaving them straddling the borders of more than one Core-Based Statistical Area. Final 2006 Rules, 70 Fed.Reg. at 47,444; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2008 Rates ("Final 2008 Rules"), 72 Fed.Reg. 47,130, 47,318 (Aug. 22, 2007) (noting that only three hospitals were affected). That posed a unique problem for the Secretary: Although Medicare deemed those multi-campus hospitals to be "merged facilities operating] as a single institution," and thus applied their combined wage data to the wage index for the main provider's geographic area, reimbursement for Medicare services would be based on the wage index of the area in which the patient was discharged. See Final 2006 Rules, 70 Fed.Reg. at 47,444; 42 C.F.R. § 412.64(b)(5). That meant that services provided at certain campuses might be reimbursed at a lower rate than services provided at others within the same institution. Normally, the Secretary can rectify such unfairness in the reimbursement process through reclassification, a process by which hospitals and hospital facilities can be certified to receive payments based on the wage index of a different geographic area when their cost reports reflect comparable wage costs and proximity to that area. See 42 C.F.R. § 412.230. Such reclassification was not an option for the campuses of multi-campus hospitals, however, because they submitted "a single cost report [which did] not differentiate between merged facilities in a single wage index area or in multiple wage index areas." Final 2006 Rules, 70 Fed.Reg. at 47,444; see also Final 2008 Rules, 72 Fed. Reg. at 47,317 ("[T]he Medicare cost report, in its current form, does not enable [] multicampus hospitals] to separately report [their] costs by location" because they are "integrated institution^] with one accounting structure."). In response, the Secretary proposed that individual campuses manually report campus-specific wage data through a supplemental form. Final 2006 Rules, 70 Fed. Reg. at 47,444. That would allow the Secretary to determine whether that specific campus's wage costs better approximated those of its physical situs or of the main provider's reporting area. Id. Although the Secretary was focused on the patient-reimbursement-rate problem, one commenter suggested that, if the Secretary obtained this supplemental campus-based data, she should also use it to calculate the average hourly wage of the geographic area in which a campus was located, rather than the geographic area of the main campus. Final 2006 Rules, 70 Fed. Reg. at 47,445 (Secretary should "modify [her] policy and include only salaries and hours of the workforce attributable to the campus or campuses in the area in order to calculate an area wage index."). Put simply, the commenter suggested that a wage index should be based on data solely from campuses within the geographic area, and not from campuses situated in another Core-Based Statistical Area. After studying the issue and the public comments, however, the Secretary rejected the collection of such supplemental campus-based data at that time as infeasible. Final 2006 Rules, 70 Fed.Reg. at 47,445-47,446. Based on her analysis, she concluded that any benefit that would arise from requiring supplemental data — whether for calculating the wage index or for Medicare-reimbursement reclassification applications — had not yet been shown to justify the substantial administrative burden it would impose on hospitals, fiscal intermediaries, and the Secretary. Id. As the Secretary explained, calculating the wage index based on the geography of individual campuses rather than that of main providers "presents certain logistical challenges that [she] would like to consider in the context of possible permanent cost report changes to accommodate the electronic reporting of separate wage data by individual campus," and she anticipated "having a full discussion of these issues as part of a future rulemaking." Final 2006 Rules, 70 Fed.Reg. at 47,446. Many of the Secretary's concerns overlapped with the problems of requiring supplemental data generally. Multi-campus hospitals might not have readily available campus-specific information because of their complete financial and operational integration, as well as the fact that employees commonly worked at multiple campuses. See Final 2008 Rules, 72 Fed.Reg. at 47,318-47,319. Furthermore, whatever information could be collected would have to be audited, a process that normally takes three years — far too long to permit timely remediation of the problem for 2006 and 2007. And even if reliable calculations could be timely made and timely audited, the Secretary determined that supplemental campus-based data would be of limited value. Because those groups that qualify as mul-ti-campus hospitals, by definition, have integrated finances, the average hourly wage for each campus would be expected to approximate or be nearly identical to the average wage of the entire institution. Final 2006 Rules, 70 Fed.Reg. at 47,445. The Secretary, in short, "reasonably be-lievefd] that the added precision" that might come from collecting the data on a campus-specific basis "would not justify the added complication." ParkView Medical Associates, LP v. Shalala, 158 F.3d 146, 149 (D.C.Cir.1998); accord Atrium Medical Center v. Department of Health and Human Services, 766 F.3d 560, 570 (6th Cir.2014) ("[T]he Medicare Act allows the Secretary to sacrifice complete accuracy for 'administrative simplicity.'") (citation omitted); Adventist GlenOaks Hospital v. Sebelius, 663 F.3d 939, 945 (7th Cir.2011); see also Final 2006 Rules, 70 Fed.Reg. at 47,446; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2007 Rates ("Final 2007 Rules"), 71 Fed.Reg. 47,870, 48,067 (Aug. 18, 2006). The Secretary, however, encouraged additional input on how the issue should be handled going forward. Final 2006 Rules, 70 Fed.Reg. at 47,446. In August 2007, that continued study bore fruit, and the Secretary partially revised her view. Specifically, she concluded that "allocation of a multicampus hospital's wages and hours across different labor markets" could increase the precision of the wage index. Final 2008 Rules, 72 Fed.Reg. 47,130, 47,317. She accordingly proposed to change course in calculating the wage indices starting in fiscal year 2008. Id. The Secretary, however, still considered the collection of campus-specific wage data from multi-campus hospitals to be logistically impracticable, so she sought an alternative means of reliably attributing wage costs to individual campuses. Final 2008 Rules, 72 Fed.Reg. at 47,317-47,318. The Secretary considered three potential proxies for wage data: (i) the number of beds in each campus, (ii) the number of discharged patients in each campus, or (in) the number of full-time staff in each campus. Id. Each approach had problems. Neither the number of beds nor the number of discharges bore any logical correlation to wage costs. Final 2008 Rules, 72 Fed.Reg. at 47,317-47,318. And commenters explained that providing information about the full-time employees at each campus would be extremely burdensome because of the fully integrated structure of multi-campus hospitals. Id. In particular, one multi-campus hospital noted that "over half of the organization's employees have responsibilities at two and three of its campuses[,] some types of employees spend time at all three campuses[,] and nurses move from facility to facility depending on need." Id. The least problematic approach, the Secretary determined, would be to use the number of full-time employees to allocate the hospital's wage-cost data to individual campuses. Final 2008 Rules, 72 Fed.Reg. at 47,319. If that information were not available due to difficulties in accurately assigning employees to campuses, Medicare discharge data would be used. Id. Once she had allocated cost report data by campus, the Secretary would use that data to calculate the average hourly wage for the geographic area in which the campus was located. Id. at 47,317-47,319. Factual and Procedural Background In 1996, three hospitals in southeastern Massachusetts — Tobey Hospital, St. Luke's Hospital, and Charlton Memorial Hospital — merged to form Southcoast Hospital Group. Southcoast chose Tobey Hospital as its main campus for Medicare purposes, and Southcoast operates as a unified hospital under a single Medicare provider agreement and provider number. From 1996 until 2005, all of Southcoast's campuses were in the Boston-Quincy geographic area. However, when the Secretary switched to Core-Based Statistical Areas in fiscal year 2005, Tobey Hospital remained in the Boston-Quincy area, but St. Luke's and Charlton Memorial fell within the Providence area. Because To-bey Hospital is Southcoast's main campus and holds the Medicare provider number under which Southcoast operates, South-coast continued to provide its multi-cam-pus wage data in a single report, which the Secretary then applied to the wage index calculation for the Boston-Quincy area. When, in 2008, the Secretary switched to using Southcoast's Medicare discharge data to allocate the previously submitted and audited wage costs to individual campuses, the Boston-Quincy wage index increased by .0147. See Final 2008 Rule, 72 Fed.Reg. at 47318. Forty-one other Medicare provider hospitals from Massachusetts, Rhode Island, and Vermont ("Providers"), which are located in or were reclassified into the Boston-Quincy area, filed a complaint with the Centers' Provider Reimbursement Review Board challenging the Secretary's inclusion of Southcoast's wage data in the wage index for fiscal years 2006 and 2007. The Board concluded that it did not have the authority to decide the validity of the Secretary's rules, and permitted the Providers to proceed directly to judicial review. 42 U.S.C. § 1395oo(f)(1); 42 C.F.R. § 405.1842(f) (1) (ii). The Providers then filed suit in the United States District Court for the District of Columbia. See 42 U.S.C. § 1395oo(f). They argued that the Secretary's inclusion of Southcoast's unified wage data in calculating the Boston-Quincy wage index for fiscal years 2006 and 2007 violated the statutory requirement that the wage index "reflect[ ] the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level," 42 U.S.C. § 1395ww(d)(3)(E)(i), and was arbitrary and capricious. The district court granted summary judgment for the Secretary. Anna Jaques Hospital v. Sebelius, 33 F.Supp.3d 47 (D.D.C.2014). The court held that the statutory text, 42 U.S.C. § 1395ww(d)(3)(E)(i), "expressly leaves the wage index calculation to the agency," and that index "is not required to reflect the exact wage differences among geographic areas; it is only required to approximate those differences." 33 F.Supp.3d at 54. The court further held that the Secretary reasonably determined that Southcoast was a single hospital, and reasonably continued to treat Southcoast as a single hospital in the Boston-Quincy area, where its main Medicare provider was located. Id. at 55-57. II Analysis We review the district court's grant of summary judgment de novo, applying the familiar standards of the Administrative Procedure Act, which require us to set aside an agency's decision only if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. § 706(2); see also St. Luke's Hospital v. Thompson, 355 F.3d 690, 693-694 (D.C.Cir.2004). We review the lawfulness of the Secretary's transitional method of calculating the wage index under the Chevron two-step framework, Chevron, U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). See also Anna Jaques, 583 F.3d at 5; Southeast Alabama Medical Center, 572 F.3d at 916. When "Congress has directly spoken to the precise question at issue[,] that is the end of the matter[.]" Chevron, 467 U.S. at 842-843, 104 S.Ct. 2778. If the statute is "silent or ambiguous with respect to the specific issue," we will uphold the Secretary's interpretation if it is "based on a permissible construction of the statute." Id. at 843, 104 S.Ct. 2778. Chevron Step One It bears noting, at the outset, that the Providers do not challenge the Secretary's adoption of the Core-Based Statistical Areas. Nor do they dispute the propriety of the Secretary's decade-long treatment of Southcoast as a unified hospital with its wages from all three campuses submitted in a single, consolidated cost report within the Boston-Quincy area. The question at Chevron step one, then, is whether the Medicare Act forbade the Secretary, when calculating the Boston-Quincy wage index for 2006 and 2007, from continuing for a two-year transitional period to rely upon Southcoast's consolidated cost report, filed under the unified hospital's single, Boston-Quincy-area Medicare provider number. We see nothing in the statutory text that mandated the selective deconsolidation of Southcoast's wage data while other Medicare reporting and operations remained consolidated under the main provider and Medicare reporting number. Quite the opposite, the statutory text expressly affords the Secretary flexibility and discretion in compiling data and calculating the wage index. The text of the Medicare Act largely leaves the process of defining geographic boundaries and computing the wage index to the Secretary's reasoned judgment. The Act requires the Secretary to adjust the standard prospective payment rate by "a factor (established by the Secretary)" that "reflects]" the relative wage level "in the geographic area of the hospital compared to the national average hospital wage level." 42 U.S.C. § 1395ww(d)(3)(E)(i). The statute provides some general guidance as to how the Secretary must calculate the wage "factor," by requiring that the wage index be updated at least annually "on the basis of a survey conducted by the Secretary (and updated as appropriate) of the wages and wage-related costs of [participating] hospitals in the United States." Id. In addition, any adjustment "shall be made in a manner that assures that the aggregate payments are not greater or less than those that would have been made in the year without the adjustment." Id. That is it. On all other aspects of the wage-index calculation, the statute is silent. It says nothing about the treatment of unified hospitals with multiple campuses working under a single Medicare provider agreement and number. Nor does the statute say how the geographic lines should be drawn or how to transition changes in those boundaries. "[T]he statute leaves considerable ambiguity as to the term 'geographic area,' which, based only on the literal language of the provision, could be as large as a several-state region or as small as a city block." Bellevue Hospital Center v. Leavitt, 443 F.3d 163, 175 (2d Cir.2006). The statute "merely requires the Secretary to develop a mechanism to remove the effects of local wage differences"; it "does not specify how the Secretary should construct the index" and, in fact, "Congress through its silence delegated these decisions to the Secretary." Methodist Hospital, 38 F.3d at 1230. That is the antithesis of a Chevron step one statutory directive. The Providers argue that the Secretary violated the text of the statute by creating a wage index for Boston-Quincy that "reflected]" the wage level of hospitals from outside of the Boston-Quincy area. But that argument overlooks that, for purposes of the Medicare program, Southcoast is a single "hospital" with a single Medicare agreement and single Medicare provider number tied to Tobey Hospital, which sits squarely in the Boston-Quincy area. Notably, the Medicare statute defines "hospital" as an "institution" that provides a number of medical services. 42 U.S.C. § 1395x(e). Other provisions of the statute, which refer to individual campuses of a hospital, make clear that a "hospital" can encompass institutions with multiple campuses and facilities. See, e.g., 42 U.S.C. § 1395nn(h)(7)(B) (referring to "the facilities on the main campus of the hospital") (emphasis added); 42 U.S.C. § 1395nn(i)(3)(D) ("Any increase in the number of operating rooms may only occur in facilities on the main campus of the applicable hospital.") (emphasis added); see also Community Hospital of Chandler, Inc. v. Sullivan, 963 F.2d 1206, 1212 (9th Cir.1992). For statutory purposes, then, Southcoast with all of its campuses is one hospital situated in Wareham, Massachusetts (Tobey Hospital's location), which is within the Boston-Quincy area. The Secretary's use of Southcoast's wages to calculate the Boston-Quincy wage index thus fully comported with the statutory requirement that the wage index reflect wage costs "in the geographic area of the hospital," 42 U.S.C. § 1395ww(d)(3)(E)(i). Beyond that, the question of how to deal with the fact that new boundaries placed campuses in a different geographic area than their main campus is precisely the type of interstitial question of implementation that the statute leaves in the Secretary's administrative hands. See Methodist Hospital, 38 F.3d at 1230 (the statute "does not specify how the Secretary should construct the index [so] Congress through its silence delegated these decisions to the Sec-retar/'); Bellevue, 443 F.3d at 175; cf. Adirondack Medical Center v. Burwell, 782 F.3d 707, 710 (D.C.Cir.2015) (rejecting challenge to "the precise methodology used by the Secretary" in calculating budget neutrality adjustments to reimbursement rates, noting "the wide discretion afforded the Secretary to implement the Medicare reimbursement formula"); Zuni Pub. Sch. Dist. No. 89 v. Department of Educ., 550 U.S. 81, 90, 127 S.Ct. 1534, 167 L.Ed.2d 449 (2007) (statutory "calculation method is the kind of highly technical, specialized interstitial matter that Congress often does not decide itself, but delegates to specialized agencies to decide"). Requiring that the wage index "reflect ]" the wage rate in the relevant geographic area, 42 U.S.C. § 1395ww(d)(3)(E)(i), indicates that the Secretary is not required to calculate the wage index with scientific "exactitude," Atrium Medical Center, 766 F.3d at 569. We, in fact, have held that the Secretary can make "reasonable approximations" based on the "most rehable data available" at the time of publication. Methodist Hospital, 38 F.3d at 1230; see also Atrium Medical Center, 766 F.3d at 569 ("[T]he Secretary need only 'estimate[]' the proportion of labor costs and the resulting wage index need only 'reflect' the relative area wage levels."). In sum, the Providers do not challenge the Secretary's decision to treat South-coast as a single hospital for other Medicare purposes; they just want a carve-out for wage calculation. Nothing in the statute compels that. Chevron Step Two Even though the statute does not dictate the Providers' desired solution to Southeoast's wage data for 2006 and 2007, the Providers nevertheless contend that the Secretary's decision does not qualify for deference under Chevron step two at all because the decision to treat Southcoast as a single wage-reporting hospital is embodied in the Provider Reimbursement Manual, an informal guidance document. Providers' Br. 15. We disagree because the wage index was promulgated through notice-and-comment proceedings, and the treatment of Southcoast as a unified hospital for Medicare reporting is the product of published regulations. Administrative interpretations of statutory provisions qualify for Chevron deference when "it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority." United States v. Mead Corp., 583 U.S. 218, 226-227, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001). Congress has expressly delegated to the Secretary the authority and discretion to create the wage index, 42 U.S.C. § 1395ww(d)(3)(E)(i), and the Providers do not argue otherwise. In addition, the Secretary's calculation of the wage indices for 2006 and 2007 went through notice-and-comment rulemaking, a procedure ensuring the kind of deliberation that typically triggers Chevron deference. See Mead, 533 U.S. at 226, 121 S.Ct. 2164. On top of that, Southcoast's status as a single hospital for Medicare reporting purposes — the administrative basis for the Secretary's decision to collect a single cost report — is also the product of numerous formal regulations. 42 C.F.R. § 413.65(d) (requiring integrated finances, administration, and operational control); id. § 413.65(e) (requiring common ownership, supervision, and physical proximity). The Reimbursement Manual's explanation that single-reporting status under Medicare does not evaporate for cost reports simply clarifies a status already accorded by formal regulations. Therefore, we afford the Secretary's decision the same Chevron deference that we and other courts have repeatedly given her calculation of the wage index in the past. See, e.g., Atrium Medical Center, 766 F.3d at 573 (noting the "exceptional breadth of Congress's delegation to the Secretary to establish and administer the wage index"); Anna Jaques, 583 F.3d at 5; Southeast Alabama Medical Center, 572 F.3d at 916; Bellevue Hospital Center, 443 F.3d at 175 (Secretary has the discretion to interpret the term "geographic area"); Methodist Hospital, 38 F.3d at 1230. Looking through the lens of Chevron deference, the question is whether the Secretary acted reasonably in using South-coast's unified wage data to calculate the hourly wage in the geographic area of its main campus and its administrative site for Medicare reporting purposes. See Illinois Public Telecommunications Ass'n v. FCC, 752 F.3d 1018, 1023 (D.C.Cir.2014) ("[O]ne of the first principles of administrative law is that 'if the statute is silent or ambiguous with respect to the specific issue,' the only question for the court is whether the agency's interpretation of that statute is reasonable.") (citation omitted). In making that determination, the Secretary effectively made two decisions: (1) for 2006 to 2007, she was not yet prepared to calculate the wage index on the basis of campus-specific data, and given that, (2) she would treat Southcoast as if it were located "in" the geographic area of its main provider. Both of those actions fell within the range of reasonableness afforded the Secretary in calculating the wage index. (1) Campus-specific data In first addressing how to handle the three multi-campus hospitals that were split by the transition to Core-Based Statistical Areas, the Secretary decided that, for 2006 and 2007, she would maintain the status quo of single-hospital reporting and not calculate the wage index based on campus-specific data. That judgment was reasonable. To begin with, the Secretary reasonably concluded that the regulatory requirements of operating as a single hospital and the realities of employee fluidity between campuses ensured that the wages of each campus of a multi-campus hospital would be sufficiently similar to "reflect" the wage rate in the main provider's (and thus the entire institution's) geographic area. Final 2006 Rules, 70 Fed.Reg. at 47,445 ("[W]e believe there may not be a wide range of salaries for the same occupational categories within the same institution."). That judgment was grounded in experience. Multi-campus hospitals have existed from "the beginning of the Medicare program" and have long been treated as single institutions with completely integrated organizational structure, finances, and administrative control. Medicare Program; Prospective Payment System for Hospital Outpatient Services, 63 Fed.Reg. 47,552, 47,587 (Sept. 8, 1998) ("[F]rom the beginning of the Medicare program, some providers, which are referred to in this section as 'main providers,' have owned and operated other facilities that were administered financially and clinically by the main provider[,]" and "[i]n order to accommodate the financial integration of the two facilities without creating an administrative burden, we have permitted the subordinate facility to be considered provider-based."); see also Office of Inspector General; Medicare Program; Prospective Payment System for Hospital Outpatient Services, 65 Fed.Reg. 18,434, 18,504 (April 7, 2000); Final 2006 Rules, 70 Fed.Reg. at 47,445-47,446; Final 2008 Rules, 72 Fed. Reg. at 47,318. Moreover, to qualify for single-hospital status, the hospital group must meet a litany of integration requirements, such as ensuring that: • the facility operates under the same license as the main provider; • clinical services are integrated, as evidenced by: • professional staff that have clinical privileges at the main provider; • monitoring and oversight of the facility by the main provider; • a reporting relationship between the medical director of the facility and the chief medical officer of the main provider; • integrated medical records in a unified retrieval system (or cross reference) of the main provider; and • integrated inpatient and outpatient services such that patients treated at the facility have full access to the services of the main provider; • financial operations are fully integrated within the main provider's system, as evidenced by shared income and expenses between the main provider and facility, with all costs reported in the cost center of the main provider; and • the facility is held out to the public and other payers as part of the main provider, and patients, upon entering the facility, are aware that they are entering the main provider and are billed accordingly. 42 C.F.R. § 413.65(d)(1)-(4). For the facility that is not located on the campus of the main provider, as is the case with two of Southcoast's three campuses, additional requirements must be met: • The facility must operate under the ownership and control of the main provider, as evidenced by: • the main provider's 100% ownership of the business enterprise that constitutes the facility; • a shared governing body with the main provider; • the same organizational documents as the main provider; and • the main provider's exercise of final responsibility for administrative decisions, final approval for contracts with outside parties, final approval and responsibility for personnel actions and policies, and final approval for medical staff appointments in the facility. • The main provider must directly supervise the facilities in the same manner that it would monitor an existing department, as evidenced by: • monitoring and oversight of the facility by the main provider, including a reporting and accountability relationship between the facility director and a manager at the main provider; and • integrated administrative functions, including billing services, records, human resources, payroll, employee benefit package, salary structure, and purchasing services. • The facility must be proximately located to the main provider. 42 C.F.R. § 413.06(e)(1)-(3). The Secretary reasonably determined that the effect of that extensive operational, organizational, and financial integration is that multi-campus hospitals tend to have similar wages across campuses. In addition, such multi-campus institutions commonly have employees — such as doctors, nurses, technicians, and administrators— that routinely migrate between campuses. Indeed, they are required by regulation to have privileges at each campus. 42 C.F.R. § 413.65(d)(2)(i). Accordingly, the Secretary reasonably concluded "that the average hourly wages for an individual campus and the whole hospital are similar because the two (or more) campuses are operating as a single entity under one Medicare provider number, are under common ownership and control, and are clinically and financially integrated." Final 2006 Rule, 70 Fed.Reg. at 47,445. Furthermore, calculating the wage index on the basis of campus-specific data in 2006 and 2007, in the immediate wake of the geographical transition, would have imposed a substantial burden on the Secretary, fiscal intermediaries, and multi-cam-pus hospitals. See Final 2006 Rules, 70 Fed.Reg. at 47,445. In fiscal years 2006 and 2007, the Secretary did not yet have separate wage data for individual campuses of multi-campus hospitals. See id. at 47,444 ("[Bjecause a multicampus hospital is required to report data for the entire entity on a single cost report, there is no wage survey data for the individual hospital campus[.]"). Multi-campus hospitals have only ever submitted one cost report to the Secretary. Understandably so. The hospitals are required, by the Secretary's regulations, to integrate their finances, 42 C.F.R. § 413.65(d)(3), and therefore would not have separate cost data to report, Final 2006 Rules, 70 Fed. Reg. at 47,445-47,446. Nor was that information readily obtainable in 2006 and 2007. The wage index is calculated based on cost reports from three years before the rule's promulgation. Final 2005 Rules, 69 Fed.Reg. at 49,049. To calculate the wage index for 2006 and 2007 on a campus-specific basis, the hospitals would have to have submitted three-year-old data, and the Secretary would have to have audited it in an extremely expedited maimer before the wage index's promulgation — within one month for 2006 and one year for 2007. That was impracticable given that "the submission of manual [supplemental] cost report data would require a lengthy and tedious manual audit process for fiscal intermediaries[.]" Final 2006 Rules, 70 Fed.Reg. at 47,445. In addition, because multi-campus hospitals' staff members are required to have privileges across campuses, and indeed often work on multiple campuses, 42 C.F.R. § 413.65(d)(2)(i); Oral Arg. Tr. 54, requiring hospitals to go back in time to assign an individual employee's wage costs to a particular campus, rather than to the hospital as a whole, could have resulted in an artificial and unreliable measure of area wages. See Final 2008 Rules, 72 Fed.Reg. at 47,318. Readjusting the data after the fact, as the Providers now seek, would have run into additional difficulties. The wage index must be a budget-neutral determination. See 42 U.S.C. § 1395ww(d)(3)(E)(i) (any adjustment made "shall be made in a manner that assures that the aggregate payments are not greater or less than those that would have been made in the year without such adjustment"). But any retroactive payments could not be offset now, almost a decade after the fact, against other payments made in other areas to other providers without profoundly unsettling the system and the reliance interests of countless hospitals nationwide, a problem that counsel for the Providers acknowledged at oral argument. Oral Arg. Tr. 15. In addition, the Secretary's policy, upheld by this court, is that retroactive corrections to the wage index undermine the statutory purpose to base Medicare reimbursement rates on predetermined rates. Methodist Hospital, 38 F.3d at 1228-1229. In other words, fully aware of the campuses' comprehensive integration and the obstacles it posed to collecting campus-specific wage data, the Secretary reasonably concluded that the tremendous burden of completely revamping the wage index calculation (and its application) would far outweigh any marginal impact it might have. That careful balancing of considerations reflects a fair and reasonable exercise of the Secretary's discretionary judgment in addressing this transitional issue. Furthermore, the Secretary's decision simply maintained the wage-reporting status quo for a two-year transitional period while she continued to study the problem, sensibly concluding that "the interests in finality and administrative efficiency outweighed the value of increased accuracy." Methodist Hospital, 38 F.3d at 1235. We commonly "defer to the agency's judgment about how best to achieve a smooth transition[.]" Sorenson Communications, Inc. v. FCC, 765 F.3d 37, 52 (D.C.Cir.2014); see MCI Telecommunications Corp. v. FCC, 750 F.2d 135, 141 (D.C.Cir.1984) ("Substantial deference must be accorded an agency when it acts to maintain the status quo so that the objectives of a pending rulemaking proceeding will not be frustrated."). "While [the Secretary's] choice was not the only one permissible under the statute, the court has no occasion to second guess" the Secretary's judgment in that respect. Methodist Hospital, 38 F.3d at 1235. The Providers present four objections that, in their view, establish that the Secretary's decision not to calculate the wage index on the basis of campus-specific data for the interim period of 2006-2007 was arbitrary and capricious. While they are thoughtfully presented, ultimately none succeeds. First, the Providers contend that the Secretary provided "no rational explana tion" for including wage data from outside the Boston-Quincy geographic area in calculating that area's wage index. Providers' Br. 19. That simply recycles the already-rejected argument that the Secretary improperly gave effect to Southcoast's recognized status as a unitary hospital for cost reporting, with an address in the Boston-Quincy area. While the Providers wish the Secretary had made a different choice, it was entirely rational to treat Southcoast as a single institution with respect to wage data, just as it is treated for numerous other Medicare purposes. See Final 2006 Rules, 70 Fed.Reg. at 47,446 ("[T]he use of the wage data for the entire multicam-pus hospital is consistent with [the Centers'] treatment of multicampus hospitals for calculating area wage index values, GME [Graduate Medical Education], DSH [Disproportionate Share Hospital], and provider-based purposes, under which multicampus hospitals operating under a single Medicare provider number are treated as a single hospital for payment purposes."). Beyond that, the Secretary offered three quite reasonable explanations for her transitional treatment of multi-campus hospitals that straddled two Core-Based Statistical Areas. She discussed (i) the lack of available data from providers at that time on which to allocate wage data by campus, (ii) the practical and administrative obstacles to obtaining that data in a timely manner, and (iii) the stark imbalance between the logistical hurdles of collecting and using campus-specific data and the marginal anticipated impact of that data on the wage index calculation. Given those considerations, the Secretary's decision to treat Southcoast as in the same geographic area as its main provider's address, as the Secretary does for other Medicare purposes, falls within the range of reasonable judgment. See Barnhart v. Thomas, 540 U.S. 20, 29, 124 S.Ct. 376, 157 L.Ed.2d 333 (2003); Adventist GlenOaks Hospital, 663 F.3d at 945 (in calculating the wage index, Secretary may adopt "a bright-line rule that is comparatively easy to administer"). Second, the Providers argue that the Secretary's altered approach in 2008 shows that her decision in 2006 and 2007 was unreasonable. Providers' Br. 20. Not so. Courts have long recognized that "[a]n initial agency interpretation is not instantly carved in stone," and that, to engage in informed rulemaking, the agency may "consider varying interpretations and the wisdom of its policy on a continuing basis." Chevron, 467 U.S. at 863-864, 104 S.Ct. 2778; accord National Cable & Telecommunications Ass'n v. Brand X Internet Services, 545 U.S. 967, 983, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005). There can, after all, be more than one reasonable solution to a problem. The agency just must offer a reasoned explanation for changing course. See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 514, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009); Anna Jaques, 583 F.3d at 6. The Secretary provided that reasoned explanation here. Unlike in 2006 and 2007, when the consequences of the geographic reconfiguration first flared on the scene, by 2008, the Secretary had had three years to study the multi-campus hospital problem and to evaluate alternative ways of accurately and practicably collecting wage data. "Nothing prohibits federal agencies from moving in an incremental manner," Fox Television, 556 U.S. at 522, 129 S.Ct. 1800, even when that includes revisiting prior judgments, Brand X, 545 U.S. at 1002, 125 S.Ct. 2688. Notably, even in 2008, the Secretary continued to have serious qualms about the campus-by-eampus calculation methodologies suggested by commenters. The Sec retary explained that the number of discharges was an "unstable data source to use in allocating a hospital's wages," and the number of beds "does not correlate well with how a hospital incurs its wage costs." Final 2008 Rules, 72 Fed.Reg. at 47,318. Furthermore, many multi-campus hospitals — including Southcoast — did not have full-time employment data for specific campuses because their employees often work at multiple campuses, rotating through them — sometimes on a daily basis — depending on need. Id. The Secretary, in short, only altered her approach in 2008 because she became persuaded that "the benefit of having more accuracy in the wage index calculations should outweigh concerns over which alternative methods to use," Final 2008 Rules, 72 Fed.Reg. at 47,318-47,319, and not because she found the alternative wage-calculation methods to be obviously superior or her prior view to be unreasonable. Nothing in that decision evidences that her declination to leap immediately to that same conclusion in 2006 was arbitrary and capricious. Instead, both approaches were reasonable under their different circumstances. Third, the Providers contend that the Secretary acted unreasonably because, while she used Southcoast's unified wage data to calculate the Boston-Quincy wage index, she paid Medicare reimbursements to Southcoast's New Bedford and Fall River campuses on the basis of the Providence wage index. Providers' Br. 19-20. That may appear odd at first blush, but nothing in the Medicare Act requires that hospitals be treated the same for reimbursement and wage-index measurement purposes. For example, the statute "allow[s] a hospital to seek reclassification from its geographically-based wage area to a nearby wage area for payment purposes if it meets certain criteria." Robert Wood Johnson Univ. Hosp. v. Thompson, 297 F.3d 273, 276 (3d Cir.2002); see 42 U.S.C. § 1395ww(d)(10); 42 C.F.R. § 412.230(a)(1)(ii). Moreover, Medicare reimbursements to such reclassified hospitals are governed by an entirely different statutory provision, 42 U.S.C. § 1395ww(d)(8)(B)(i), than the creation of the wage index, 42 U.S.C. § 1395ww(d)(3)(E)(1). And the wage data of reclassified hospitals may or may not be included in their new area's wage index calculations, depending on the circumstances. See 42 U.S.C. § 1395ww(d)(8)(C)(i)(II) (requiring the Secretary to exclude reclassified hospitals' wage data from calculating the wage index under certain conditions); Final 2006 Rules, 70 Fed.Reg. at 47,378. In short, the statute does not categorically dictate that hospitals be reimbursed in accordance with a wage index that incorporates their own wage data, and, in some scenarios, even prescribes otherwise. It also bears noting that reimbursement for patient services on a campus-specific basis is significantly more administrable because it turns on the readily ascertainable location of the patient. Reconfiguring the wage index, by contrast, requires finding a reasonable way to unscramble an institution's merged financial and operational practices and to attribute centralized costs to individual campuses, even when employees routinely migrate between campuses. Fourth, the Providers argue that, by not separating out campus-specific data, the Secretary failed to provide a uniformly measured wage index. Providers' Br. 20-23. As the Providers see it, the Secretary failed to apply geographic lines consistently across the Country. That is not correct. Uniformly and nationwide, the Secretary collected one cost report from each hospital participating in the Prospective Payment System, and used the wage data from that cost report to calculate the average hourly wage for the geographic area associated with the hospital's provider number. She utilized that rule consistently and evenhandedly for all hospitals, whether or not multi-campus. At bottom, the Providers' central objection is that they believe there was a better method of calculating the wage index for their area. Maybe so. But all that the law requires, and all that we can evaluate on review, is whether the Secretary's approach was reasonable. See American Forest and Paper Ass'n v. FERC, 550 F.3d 1179, 1183 (D.C.Cir.2008) ("Step two of Chevron does not require the best interpretation, only a reasonable one."). And that it was. (2) Geographic Designation of South-coast The Secretary also acted reasonably in recognizing Tobey Hospital, located in the Boston-Quincy area, as Southcoast's main campus fpr purposes of the Medicare program and, on that basis, treating all of Southcoast's employees (or more accurately, their wage data) as located in that same geographic area. See Final 2006 Rules, 70 Fed.Reg. at 47,445-47,446. Tobey Hospital had performed that function within the Medicare program for nearly a decade, and Southcoast met all of the statutory and regulatory criteria for reporting in that manner, which the Providers do not dispute. Furthermore, Tobey Hospital provided the Medicare reporting number for the unified hospital, through which other Medicare reporting and all Medicare billings and certification took place. In addition, the complications inherent in retroactively redetermining where a multi-campus hospital is located are identical to those the Secretary was attempting to avoid by declining to allocate the multi-campus hospitals' wage data by campus. The Providers' argument that "90%" or "the vast bulk of the multicampus hospital was located" in the Providence area proves that point. Reply Br. 6; Oral Arg. Tr. 48-49, 52-54. That "90%" number is based on the number of beds in Southcoast's campuses, which "does not correlate well with how a hospital incurs its wage costs." Final 2008 Rules, 72 Fed.Reg. at 47,318. Nor would Medicare discharges be a reliable basis on which to determine where the bulk of Southcoast's personnel and operations were located because the number "can fluctuate from year to year and may be an unstable data source." Id. at 47,-317-47,318. More importantly, the Secretary did not have the substitute data that the Providers prefer in 2006 or 2007. Final 2008 Rules, 72 Fed.Reg. at 47,318 ("Furthermore, neither of these numbers [the number of beds or discharges] is available on a campus-specific basis in Medicare's data systems."). Indeed, the Secretary's ultimate adjustment in 2008 had to rely on South-coast's discharges because Southcoast did not have reliable full-time and campus-specific employment data since its employees routinely worked on multiple campuses. See id. at 47,319. It thus was neither arbitrary nor capricious for the Secretary, when first confronting the problem in 2006, to eschew an approach that depended on unreliable data not in the Secretary's possession. Ill Conclusion We hold that the Secretary's calculation of the wage index for fiscal years 2006 and 2007 was reasonable, non-arbitrary, and supported by substantial evidence. The judgment below is affirmed. So ordered. . Providence is in Rhode Island; New Bed-ford and Fall River are in Massachusetts. . Available at http://www.cms.gov/ Regulations-and-Guidance/Guidance/ Manuals/Paper-Based-Manuals-Items/CMS 021935.html (last visited Aug. 11, 2015). . Each entity that has been certified to participate in the Medicare program is assigned a unique numerical identifier for use in the full range of Medicare filings and transactions. See generally HIPAA Administrative Simplification: Standard Unique Health Identifier for Health Care Providers, 69 Fed.Reg. 3434 (Jan. 23, 2004). .Available at http://www.cms.gov/ Regulations-and-Guidance/Gui dance/ Manuals/Downloads/soml07c02.pdf (last visited Aug. 11, 2015). . The district court's decision refers to the lead plaintiff in this case as "Anna Jaques Hospital," see Anna Jaques Hospital v. Sebelius, 33 F.Supp.3d 47 (D.D.C.2014), as did we in an earlier litigation, Anna Jaques Hospital v. Sebelius, 583 F.3d 1 (D.C.Cir.2009). However, the original complaint and all of the parties' submissions to this court, including the notice of appeal, spell the name as "Anna Jacques Hospital." We will follow the Appellants' chosen spelling. . To qualify as proximately located, the facility must be in the same State or an adjacent State as the main provider, 42 C.F.R. § 413.65(e)(3)(vii), and must either be within 35 miles of the main provider, 42 C.F.R. § 413.65(e)(3)(i), or meet other specified location requirements designed to ensure that the campuses serve the same patient populations, 42 C.F.R. § 413.65(e)(3)(ii)-(vi). . Some of petitioners themselves have been reclassified into the Boston-Quincy area for patient reimbursement purposes. See Administrative Record at 100, Anna Jaques Hospital v. Sebelius, No. 1:13-cv-00053-ABJ (D.D.C. filed May 17, 2013), ECF No. 14.

11967895

Board of Education of the Memphis City Schools et al. v. Northcross et al.

Board of Education of the Memphis City Schools v. Northcross

1973-02-20

No. 72-677

926

926

410 U.S. 926

410

United States Reports

Supreme Court of the United States

United States

2021-08-10T18:54:48.790417+00:00

CAP

Board of Education of the Memphis City Schools et al. v. Northcross et al.

No. 72-677. Board of Education of the Memphis City Schools et al. v. Northcross et al.

22

121

C. A. 6th Cir. Certiorari denied.

6643836

Yee Sing Co. et al. v. United States

Yee Sing Co. v. United States

1950-03-28

No. 54149; protests 958375-G, etc. (Los Angeles and San Francisco)

405

405

24 Cust. Ct. 405

24

United States Customs Court Reports

United States Customs Court

United States

2021-08-11T01:44:45.018749+00:00

CAP

Yee Sing Co. et al. v. United States,

No. 54149. Yee Sing Co. et al. v. United States, protests 958375-G, etc. (Los Angeles and San Francisco).

34

211

Opinion by Cline, J. Following the authorities cited in Abstract 15400 the court dismissed the protests.

5864559

McGee v. Mote, Warden

McGee v. Mote

2004-06-14

No. 03-9836

908

908

542 U.S. 908

542

United States Reports

Supreme Court of the United States

United States

2021-08-10T22:24:30.200475+00:00

CAP

McGee v. Mote, Warden.

No. 03-9836. McGee v. Mote, Warden.

12

71

C. A. 7th Cir. Cer-tiorari denied.

11201023

Booher v. Tennessee

Booher v. Tennessee

1998-06-15

No. 97-8839

931

931

524 U.S. 931

524

United States Reports

Supreme Court of the United States

United States

2021-08-10T20:21:06.263028+00:00

CAP

Booher v. Tennessee.

No. 97-8839. Booher v. Tennessee.

11

74

Ct. Crim. App. Term. Certiorari denied.

6328955

Sexton v. Maynard, Warden

Sexton v. Maynard

1981-10-05

No. 80-6824

851

851

454 U.S. 851

454

United States Reports

Supreme Court of the United States

United States

2021-08-10T23:00:03.101431+00:00

CAP

Sexton v. Maynard, Warden.

No. 80-6824. Sexton v. Maynard, Warden.

12

75

C. A. 10th Cir. Certiorari denied.

3559604

SECRETARY OF LABOR, Petitioner v. TWENTYMILE COAL COMPANY and Federal Mine Safety and Health Review Commission, Respondents

Secretary of Labor v. Twentymile Coal Co.

2006-07-07

No. 05-1124

1

11

373 U.S. App. D.C. 1

373

United States Court of Appeals for the District of Columbia Circuit

United States Court of Appeals for the District of Columbia Circuit

District of Columbia

2021-08-10T19:03:34.566461+00:00

CAP

Before: RANDOLPH and GARLAND, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

SECRETARY OF LABOR, Petitioner v. TWENTYMILE COAL COMPANY and Federal Mine Safety and Health Review Commission, Respondents.

456 F.3d 151 SECRETARY OF LABOR, Petitioner v. TWENTYMILE COAL COMPANY and Federal Mine Safety and Health Review Commission, Respondents. No. 05-1124. United States Court of Appeals, District of Columbia Circuit. Argued Feb. 14, 2006. Decided July 7, 2006. Jack Powasnik, Attorney, U.S. Department of Labor, argued the cause for petitioner. With him on the briefs was W. Christian Schumann. Ralph Henry Moore II argued the cause for respondent Twentymile Coal Company. With him on the brief was Karen L. Johnston. Before: RANDOLPH and GARLAND, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

5775

36851

Opinion for the Court filed by Circuit Judge GARLAND. GARLAND, Circuit Judge. This case represents the first time in more than twenty years that the Federal Mine Safety and Health Review Commis sion has overturned a decision by the Secretary of Labor to cite the owner-operator of a mine, as well as its independent contractor, for safety violations committed by the contractor. This court has long recognized the Secretary's discretionary authority to cite the owner-operator, the independent contractor, or both for contractor violations. Because the Mine Act provides no meaningful standards against which to judge the Secretary's decisions regarding which party to cite, the Commission is generally without authority to review such decisions. We therefore grant the Secretary's petition for review and vacate the Commission's ruling. I The Mine Act requires the Secretary of Labor, acting through the Mine Safety and Health Administration (MSHA), to promulgate mandatory safety and health standards for the mining industry and to conduct regular mine inspections. 30 U.S.C. § 811, 813(a). If a MSHA inspector discovers conditions that violate safety or health standards, § 104 of the Act directs the Secretary to issue a citation or an order to the mine's "operator." 30 U.S.C. § 814(a). The Act defines an "operator" as "any owner, lessee, or other person who operates, controls, or supervises a . mine or any independent contractor performing services or construction at such mine." 30 U.S.C. § 802(d) (emphasis added). (The entities listed before the italicized "or" are also known as "production-operators." ) The Federal Mine Safety and Health Review Commission (FMSRHC) is an independent agency charged with adjudicating disputes under the Mine Act, including disputes over whether safety standards have been violated. See 30 U.S.C. § 815, 823. The Commission appoints administrative law judges (ALJs) to conduct trial-type proceedings to hear such disputes. See 30 U.S.C. § 823(d)(1). Any person aggrieved by a decision of an ALJ may request discretionary review by the Commission, see 30 U.S.C. § 823(d)(2)(A)(i), and any person aggrieved by an order of the Commission may obtain review in this court, see 30 U.S.C. § 816(a)(1). Twentymile owns and operates the Foidel Creek Mine, an underground coal mine in Routt County, Colorado. In its capacity as owner-operator, Twentymile often uses independent contractors to undertake various projects at the mine. On August 14, 2001, Twentymile hired Precision Excavating, Inc., an independent contractor, to perform work on a refuse pile. On August 30, 2001, MSHA Inspector Michael Havrilla conducted an inspection of the surface areas of the Foidel Creek Mine. During the course of his inspection, Havrilla observed that the equipment used by Precision's employees violated six safety standards. Among the violations were a leaking diesel fuel tank on a pan scraper, and a ten-by-ten-inch opening on a service truck's air compressor that permitted contact with the drive belts and pulley. When Havrilla discussed the violations with a Precision employee, he learned that Twentymile had not examined the contractor's equipment prior to its use at the mine. See Secretary of Labor v. Twentymile Co., 25 F.M.S.H.R.C. 352, 356 (2003) (hereinafter ALJ Decision). Fearing that Precision's violations might augur an increase in contractor violations, Havrilla decided that issuing citations to both Precision and Twentymile was the best way to guarantee mine safety. See id. at 356-57. Precision, the independent contractor, did not contest the citations and paid the $352 penalty assessed against it by MSHA. Twentymile, however, contested the citations and the attendant $900 penalty. In a hearing before an ALJ, Twentymile stipulated that the conditions described in the citations constituted violations of the Mine Act, but argued that it was improper for the Secretary to cite it for violations committed by Precision. See id. at 353. On July 7, 2003, the ALJ ruled in the Secretary's favor. Citing Commission precedent, the ALJ held that, "in instances of multiple operators, the Secretary has wide enforcement discretion and 'may, in general, proceed against an owner-operator, his contractor, or both.' " ALJ Decision, 25 F.M.S.H.R.C. at 358 (quoting Secretary of Labor v. Mingo Logan Coal Co., 19 F.M.S.H.R.C. 246, 249 (1997)). The ALJ found no abuse of discretion with respect to the Secretary's decision to cite Twentymile as well as Precision. See id. at 359. Although he recognized the nonbinding nature of enforcement guidelines issued by the Secretary to identify when to charge an owner-operator, the ALJ found that "the citations easily fit within" the guidelines. Id. at 359; see id. at 359 n. 1 (referring to Enforcement Policy and Guidelines for Independent Contractors, App. A to Independent Contractors, 45 Fed.Reg. 44494, 44497 (July 1,1980) (hereinafter Enforcement Guidelines ). In particular, the ALJ found that "Twentymile's failure to inspect the equipment or ensure that the contractor inspected the equipment was an omission that contributed to the violations," and that "Twentymile exercised sufficient control over the scraper and service truck" to warrant a citation. ALJ Decision, 25 F.M.S.H.R.C. at 360. The ALJ also credited the MSHA inspector's statement that "he was concerned that safety hazards on contractors' equipment were not being adequately addressed" because the "cited conditions were rather obvious," and that "by issuing citations to Twentymile, the safety violations would get more immediate attention than if he only cited the contractor." Id. at 359. Twentymile appealed the ALJ's decision to the Commission. See Secretary of Labor v. Twentymile Coal Co., 27 F.M.S.H.R.C. 260 (2005) (hereinafter Commission Decision). The company asserted that, under the Mine Act, an owner-operator is liable only for its own violations, and that the Secretary was therefore without authority to cite it for the violations of its independent contractor. See id. at 263. The Secretary responded that court and Commission precedents were directly to the contrary. See id. She further argued that her decision to cite Twentymile for Precision's violations was not reviewable by the Commission because there was no meaningful standard against which to review her exercise of charging discretion. See id. at 265. In the event that the Commission deemed her enforcement decision reviewable, the Secretary argued in the alternative that the citation was not an abuse of discretion. See id. at 266. The Commission reversed the ALJ's decision and vacated the citations issued to Twentymile. See Commission Decision, 27 F.M.S.H.R.C. at 277. Its opinion began by agreeing with the Secretary's (and the ALJ's) view that "the Secretary generally may proceed against an owner-operator, an independent contractor, or both, for violations by the independent contractor." Id. at 263-64. Nonetheless, the Commission rejected the Secretary's contention that her exercise of enforcement discretion was unreviewable. See id. at 265. And a majority of the Commission concluded that the Secretary had abused her discretion by citing Twentymile. See id. at 268. According to the majority, the Secretary's decision to cite the owner-operator was an abuse of discretion because it was not made for reasons "consistent with the purpose and policies of the Mine Act." Id. at 268 (internal quotation marks omitted). This was so, the Commission said, because: (1) "[t]he record show[ed] that the independent contractor was in the 'best' position to prevent the violations in question," id. at 268; (2) "Twentymile did not have a significant, continuing involvement in the work specifically being performed at the refuse pile," id. at 270; (3) Twentymile did not contribute to the violations "directly" or through a "significant" omission, id. at .270-71; and (4) none of the criteria listed in the Secretary's Enforcement Guidelines was satisfied at "a significant threshold" level, id. at 273. The Secretary of Labor now petitions this court for review of the Commission's decision to vacate the citations filed against Twentymile. She contends that the Commission erred in holding that her decision to cite Twentymile for violations committed by Precision was reviewable; should we hold otherwise, the Secretary contends that her decision was not an abuse of discretion. Twentymile disputes both contentions, and it further challenges what it describes as the premise of the Secretary's nonreviewability argument: that she has authority to cite an owner-operator for safety violations committed by its independent contractor. Because the Secretary's authority is indeed the premise of her argument, we consider that issue first and then proceed to examine the issue of reviewability. II We can make relatively short work of the question of the Secretary's authority to cite owner-operators for violations committed by their contractors because it is a question that this circuit has already answered. Indeed, Twentymile concedes that "decisions from this Court grant the Secretary the discretion to cite both the production-operator and the independent contractor for the violation of the independent contractor." Respondents' Br. 26. Although Twentymile urges us to rule to the contrary, such a disposition is plainly beyond the power of a panel of this court. See, e.g., Ranger Cellular v. FCC, 348 F.3d 1044, 1049-50 (D.C.Cir.2003). This circuit's seminal opinion regarding the authority of the Secretary is Brock v. Cathedral Bluffs Shale Oil Co., 796 F.2d 533 (D.C.Cir.1986) (Scalia, J.). There, the court observed: "The Mine Act declares that 'the operators' of the nation's mines have primary responsibility for preventing the existence of unsafe and unhealthful conditions, 30 U.S.C. § 801(e), and throughout the Act the entity charged with compliance is referred to simply as the 'operator.' " Id. at 535 (citing 30 U.S.C. § 814(a), 815(a), 820(a) & (i)). To determine the meaning of the term "operator," the court reviewed the legislative history of the Mine Act, first noting that the Federal Coal Mine Health and Safety Act of 1969 — the Mine Act's precursor — defined " 'operator' " as " 'any owner, lessee or other person who operates, controls, or supervises a coal mine.' " Id. (quoting 30 U.S.C. § 802(d)(1976)). The court next pointed out that, in Bituminous Coal Operators Ass'n v. Secretary of Interior ("BCOA "), 547 F.2d 240 (4th Cir.1977), the Fourth Circuit "interpreted that definition of 'operator' to include independent contractors performing services at the production-operator's mine, and held that the Secretary had the power to cite the independent contractor, the operator, or both for independent contractor violations." 796 F.2d at 535. The court then noted that, when Congress enacted the Mine Act, it amended the definition of "operator" by adding (inter alia) the italicized phrase: "[OJperator" means any owner, lessee, or other person who operates, controls, or supervises a coal or other mine or any independent contractor performing services or construction at such mine [.] 30 U.S.C. § 802(d) (emphasis added); see Cathedral Bluffs, 796 F.2d at 535. Finally, Cathedral Bluffs explained: "The Senate Report accompanying the bill that became the Mine Act stated that the purpose of this amendment was to give statutory expression to the doctrine of BCOA." 796 F.2d at 535 (citing S. Rep. No. 181, at 14,U.S.Code Cong. & Admin.News 1977, pp. 3401, 3414 (1977)). Two years after Cathedral Bluffs, in International Union, United Mine Workers of America v. FMSHRC ("UMWA "), we observed that "all of the courts that have had occasion to address the question have held that multiple operators are jointly liable under the Act[,][o]r, put differently, the owner of a mine is liable without regard to its own fault for violations committed or dangers created by its independent contractor." 840 F.2d 77, 83 (D.C.Cir.1988) (citing Cyprus Indus. Minerals Co. v. FMSHRC, 664 F.2d 1116, 1119 (9th Cir.1981); Harman Mining Corp. v. FMSHRC, 671 F.2d 794, 797 n. 2 (4th Cir.1981); BCOA, 547 F.2d at 246). We found this holding to be in accord with both the legislative history (as reviewed in Cathedral Bluffs) and the statutory language as explained in BCOA: "Without exemption or exclusion, § 819 makes the operator of a coal mine in which a violation occurs subject to a civil penalty----Th[is] section[ ], when read with the definition of operator, impose[s] liability on the owner or lessee of a mine regardless of who violated the Act . " Id. at 83 (quoting BCOA, 547 F.2d at 246). We therefore "agree[d]" with those other courts, holding that the Mine Act "assesses liability without regard to the individual operator's fault." Id. at 83-84. Moreover, "[sjince liability under the Mine Act is without regard to fault," we declared that "the argument that only an operator directly responsible for the violation . can be liable . must be rejected." Id. at 84. And for the same reason, we must reject Twentymile's contention that it cannot be liable for the safety violations committed by Precision. Ill Having concluded that the Secretary of Labor has authority to cite an owner-oper ator for safety violations committed by its contractor, we next consider whether Twentymile may contest the Secretary's discretionary decision to do so. Because the reviewability of the Secretary's charging decision is a legal question, we decide the issue de novo. See Secretary of Labor v. Keystone Coal Mining Corp., 151 F.3d 1096, 1099 (D.C.Cir.1998). A Although there is a strong presumption that agency action is reviewable, see Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971); Abbott Labs. v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), the Administrative Procedure Act (APA) codifies the traditional exception that agency action is not reviewable when it is "committed to agency discretion by law." 5 U.S.C. § 701(a); see Heckler v. Chaney, 470 U.S. 821, 828, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985). In Overton Park, the Supreme Court declared that this exception to the presumption of reviewability applies "in those rare instances where statutes are drawn in such broad terms that in a given case there is no law to apply." 401 U.S. at 410, 91 S.Ct. 814 (internal quotation marks and citations omitted). As the Court subsequently explained in Heckler v. Chaney, "review is not to be had if the statute is drawn so that a court would have no meaningful standard against which to judge the agency's exercise of discretion." 470 U.S. at 830, 105 S.Ct. 1649. "In such circumstances, the courts have no legal norms pursuant to which to evaluate the challenged action, and thus no concrete limitations to impose on the agency's exercise of discretion." Drake v. FAA, 291 F.3d 59, 70 (D.C.Cir.2002). In determining "whether a matter has been committed solely to agency discretion, we consider both the nature of the administrative action at issue and the language and structure of the statute that supplies the applicable legal standards for reviewing that action." Drake, 291 F.3d at 70. Both the Supreme Court and this court have held that certain categories of administrative decisions are unreviewable. See, e.g., Lincoln v. Vigil, 508 U.S. 182, 192, 113 S.Ct. 2024, 124 L.Ed.2d 101 (1993); Chaney, 470 U.S. at 831, 105 S.Ct. 1649; Drake, 291 F.3d at 70. In Chaney, for example, the Court held that agency decisions not to institute enforcement proceedings are presumptively unreviewable. See 470 U.S. at 831, 105 S.Ct. 1649. Contrary to Twentymile's view, however, refusals to act are not the only kinds of administrative determinations that evade review. Indeed, with respect to criminal charging decisions, the Supreme Court has made clear that the government's decision "as to whom to prosecute" is generally unreviewable. Wayte v. United States, 470 U.S. 598, 607, 105 S.Ct. 1524, 84 L.Ed.2d 547 (1985). "'[S]o long as the prosecutor has probable cause to believe that the accused committed an offense defined by statute, the decision whether or not to prosecute, and what charge to file or bring before a grand jury, generally rests entirely in his discretion.' " Id. (quoting Bordenkircher v. Hayes, 434 U.S. 357, 364, 98 S.Ct. 663, 54 L.Ed.2d 604 (1978)); see United States v. Armstrong, 517 U.S. 456, 464, 116 S.Ct. 1480, 134 L.Ed.2d 687 (1996) (same); In re Sealed Case, 131 F.3d 208, 214 (D.C.Cir.1997) ("In the ordinary case, the exercise of prosecutorial discretion, at the very core of the executive function, has long been held presumptively unreviewable."). The Court explained the considerations behind this view in Wayte: This broad discretion rests largely on the recognition that the decision to prosecute is particularly ill-suited to judicial review. Such factors as the strength of the case, the prosecution's general deterrence value, the Government's enforcement priorities, and the case's relationship to the Government's overall enforcement plan are not readily susceptible to the kind of analysis the courts are competent to undertake. 470 U.S. at 607, 105 S.Ct. 1524. These considerations apply as well to the administrative charging decisions of the Secretary of Labor. And we have previously found the traditional nonreviewability of prosecutorial charging decisions applicable to administrative cases. See Drake, 291 F.3d at 71 (holding that the "FAA's action in this case was . analogous to an exercise of 'prosecutorial discretion,' " and noting that "when prosecutorial discretion is at issue, the matter is presumptively committed to agency discretion by law"); Beverly Health & Rehab. Servs., Inc. v. Feinstein, 103 F.3d 151, 153 (D.C.Cir.1996) (holding that the NLRB General Counsel's decision to issue an unfair labor practice complaint is unreviewable because, inter alia, review would "invade the realm of prosecutorial discretion"). Of course, if the Mine Act provided a "meaningful standard against which to judge the agency's exercise of discretion," the situation would be different. Chaney, 470 U.S. 821, 830, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985). If the Act provided such a standard, "whether this case involves a presumption of nonreviewability under Chaney or, instead, a presumption of reviewability under Overton Park," would not be dispositive. Drake, 291 F.3d at 72. That is because "Chaney's presumption against judicial review may be rebutted where the relevant statute supplies meaningful standards to cabin the agency's otherwise plenary discretion," while Overton Park's "presumption of reviewability is lost" where it does not. Id. at 71; see Lincoln, 508 U.S. at 190, 113 S.Ct. 2024; Chaney, 470 U.S. at 832, 105 S.Ct. 1649. But the Mine Act does not provide a meaningful standard. Under the Act, the Secretary's charging discretion is as uncabined as that of a United States Attorney under the Criminal Code. Section 104(a) simply provides that "[i]f, upon inspection or investigation, the Secretary or his authorized representative believes that an operator of a coal or other mine subject to this chapter has violated this chapter, . he shall, with reasonable promptness, issue a citation to the operator." 30 U.S.C. § 814(a). As we have noted, the Act defines "operator" as "any owner, lessee, or other person who operates, controls, or supervises a . mine or any independent contractor performing services . at such mine." 30 U.S.C. § 802(d) (emphasis added). Nothing in this language instructs the Secretary of Labor which of several jointly-liable operators to charge, any more than the Criminal Code tells a U.S. Attorney which of several co-conspirators to prosecute. Rather, the statute is "utterly silent on the manner in which the [agency] is to proceed against a particular transgressor." Baltimore Gas & Elec. Co. v. FERC, 252 F.3d 456, 461 (D.C.Cir.2001). And, because of that silence, the Secretary's charging decisions are unreviewable. The Commission, however, hears sounds in the silence. In support of its conclusion that the Secretary's charging decisions are reviewable, the Commission purported to discern the following standard: The Secretary's decision to cite an owner-operator, the Commission said, must be "made for reasons consistent with the purpose and policies of the Mine Act." Commission Decision, 27 F.M.S.H.R.C. at 266 (internal quotation marks omitted). That phrase is nowhere to be found in the Act itself, nor does it offer a particularly meaningful standard. Indeed, were we to regard it as one, we would have to hold all agency decisions under all statutes reviewable, as all legislation has "purpose[s] and policies." Cf. Baltimore Gas, 252 F.3d at 461 (holding that a requirement that an agency should protect "consumer interests" is merely a "boilerplate truism" and not a "discretion-restricting guideline"); Steenholdt v. FAA, 314 F.3d 633, 639 (D.C.Cir.2003) (rejecting an argument that the Federal Aviation Act's "substantial evidence" provision provides a standard for reviewing the FAA's refusal to renew an examiner's authority because, if it did, "there would be 'law to apply' in every agency action" since the APA's substantial evidence standard "applies generally to all agency action"). But the most pernicious aspect of employing this purported standard as a check on charging decisions is that it invites the reviewing body to substitute its views of enforcement policy for those of the Secretary, a power that — as we discuss in Part III.B — the Commission does not possess. In fact, that is precisely what the Commission did in this case. It found that the Secretary's decision to cite the owner-operator was not "consistent with the purpose and policies of the Mine Act" because: (1) "the independent contractor was in the 'best' position to prevent the violations in question," Commission Decision, 27 F.M.S.H.R.C. at 268; (2) "Twentymile did not have a significant, continuing involvement in the work specifically being performed at the refuse pile," id. at 270; (3) Twentymile did not contribute to the violations "directly" or through a "significant" omission, id. at 270-71; and (4) none of the criteria listed in the Secretary's enforcement guidelines was satisfied at "a significant threshold" level, id. at 273. Yet, because the Mine Act subjects an owner-operator to strict liability for its contractor's violations, see supra Part II, nothing in the statute bars the Secretary from charging an owner-operator even if it was not in the "best" position to prevent a violation, did not have a "significant, continuing involvement" in the contractor's work, and did not contribute "directly" or "significantly]" to the violation. And there is certainly nothing in the Mine Act that requires the Secretary to impose a "significant threshold" test on her own enforcement guidelines. To be sure, "[t]his Court has noted that judicially manageable standards may be found in formal and informal policy state ments and regulations as well as in statutes." Steenholdt, 814 F.3d at 638 (internal quotation marks and citation omitted). The Commission regarded the Secretary's Enforcement Guidelines as such a policy statement. See Commission Decision, 27 F.M.S.H.R.C. at 272-75 & n. 19. But "[i]n determining whether agency statements create such a standard," the operative question is "whether the statements create binding norms." Steenholdt, 314 F.3d at 638. And in Cathedral Bluffs, this court expressly held that the Enforcement Guidelines do "not establish a binding norm, but merely announce!] [the Secretary's] tentative intentions for the future, leaving himself free to exercise his informed discretion." 796 F.2d at 538 (internal quotation marks and citation omitted). In Cathedral Bluffs, the court — as we do here — reversed the Commission's dismissal of a citation issued by the Secretary to an owner-operator for a safety violation committed by its independent contractor. See id. at 534. As is the case in part here, the Commission's dismissal was based on its view that the Secretary's decision to cite was inconsistent with the Enforcement Guidelines. See id. In finding the Guidelines nonbinding, then-Judge Scalia's opinion for the court stressed that the "question pertains to an agency's exercise of its enforcement discretion — an area in which the courts have traditionally been most reluctant to interfere." Id. at 538 (citing Chaney, 470 U.S. 821, 105 S.Ct. 1649, 84 L.Ed.2d 714). "[T]he policies underlying that restraint," he declared, "extend as well to interference by a quasi-judicial agency that has no enforcement responsibilities, such as the Federal Mine Safety and Health Review Commission." Id. Those policies are as pertinent here as they were in Cathedral Bluffs. B The Commission held, and Twentymile asserts, that the case law regarding nonreviewability does not apply to this matter because of two specific provisions of the Mine Act. See Commission Decision, 27 F.M.S.H.R.C. at 265-66. First, the Commission noted that cases such as Chaney and its progeny "involve preclusion of review under section 701(a)(2) of the Administrative Procedure Act," and that "section 507 of the Mine Act expressly provides that section 701 of the APA does not apply to Commission proceedings." Id. at 265 (internal citation omitted). Section 507 does indeed state that, "[ejxcept as otherwise provided in this chapter, the provisions of . sections 701-706 of Title 5 shall not apply to the making of any order, notice, or decision made pursuant to this chapter, or to any proceeding for the review thereof." 30 U.S.C. § 956. Contrary to the view of the Commission, however, the fact that § 701(a)(2) itself is inapplicable does not mean that the principles underlying it are also inapplicable. Rather, as the Supreme Court has explained, "the Administrative Procedure Act . codifies the nature and attributes of judicial review, including the traditional principle of its unavailability 'to the extent that . agency action is committed to agency discretion by law.' " ICC v. Brotherhood of Locomotive Eng'rs, 482 U.S. 270, 282, 107 S.Ct. 2360, 96 L.Ed.2d 222 (1987) (quoting 5 U.S.C. § 701(a)(2)) (emphasis added). "In Chaney," the Court said, "we found that the type of agency decision in question has traditionally been committed to agency discretion, and . that the Congress enacting the APA did not intend to alter that tradition." Id. (internal quotation marks omitted). Indeed, this court has rejected the claim that the "conclusive language of section 701 applies only to bar review under the APA." Steenholdt, 314 F.3d at 639. Accordingly, the traditional principles of nonreviewability discussed in Part III.A are applicable here, notwithstanding § 507 of the Mine Act. Second, the Commission contended that the Mine Act gives it express authority to review the Secretary's discretionary enforcement decisions and to formulate mine safety policy. See Commission Decision, 27 F.M.S.H.R.C. at 266. The Commission based this holding on Mine Act § 113, which provides that any person aggrieved by a decision of an ALJ may file a petition for Commission review on the ground that "a substantial question of law, policy or discretion is involved." 30 U.S.C. § 823(d) (2)(A)(ii) (IV). This circuit, however, has already rejected the contention that § 113 gives the Commission authority to determine policy issues. See Energy West Mining Co. v. FMSHRC, 40 F.3d 457, 463 (D.C.Cir.1994). In Energy West, we found that § 113 "merely states" the grounds upon which a "petitioner may call upon the Commission's power of discretionary review over a decision of an administrative law judge." Id. at 464. And we found nothing in the section to "offer[ ] a convincing argument that Congress intended to deprive the Secretary of the deference which we [have] previously afforded its interpretations of the Act." Id. In Secretary of Labor v. Mutual Mining, Inc., the Fourth Circuit agreed: "[T]o say that the Commission reviews cases involving questions of policy is not to say that it is the final arbiter of such policies. Nor is it to say that the Commission's interpretation of the statute trumps a reasonable interpretation put forth by the Secretary." 80 F.3d 110, 114 n. 3 (4th Cir.1996) (citing Energy West, 40 F.3d at 463-64). Both Energy West and Mutual Mining are part of a line of cases that anticipated, and then followed, the Supreme Court's decision in Martin v. Occupational Safety & Health Review Commission, 499 U.S. 144, 111 S.Ct. 1171, 113 L.Ed.2d 117 (1991). Martin involved review under the Occupational Safety and Health Act ("OSH Act"), in which, like the Mine Act, "Congress separated enforcement and rulemaking powers from adjudicative powers, assigning these respective functions to two different administrative authorities." Id. at 151, 111 S.Ct. 1171. Under the OSH Act, the former functions are assigned to the Secretary of Labor and the latter to the Occupational Safety and Health Review Commission (OSHRC); under the Mine Act, the former are again assigned to the Secretary of Labor and the latter to the Federal Mine Safety and Health Review Commission (FMSHRC). Under this "split enforcement" structure, the Court held, "enforcement of the Act is the sole responsibility of the Secretary." Id. at 151-52, 111 S.Ct. 1171 (internal quotation marks omitted). Moreover, since "Congress did not invest the Commission with the power to make law or policy by other means, we cannot infer that Congress expected the Commission to use its adjudicatory power to play a policymaking role." Id. at 154, 111 S.Ct. 1171. We have previously, and repeatedly, applied Martin's analysis to the Mine Act. We do so here as well. As is true under the OSH Act, "enforcement of the [Mine] Act is the sole responsibility of the Secretary," 499 U.S. at 152, 111 S.Ct. 1171 (internal quotation marks omitted), and the Commission has no "policymaking role," id. at 154, 111 S.Ct. 1171. Instead, "Congress intended to delegate to the Commission the type of nonpolicymaking adjudicatory powers typically exercised by a court in the agency-review context." Id. "Under this conception of adjudication, the Commission is authorized to review the Secretary's interpretations only for consistency with the regulatory language and for reasonableness." Id. at 154-55, 111 S.Ct. 1171. And, like a court, the Commission is not as a general matter authorized to review the Secretary's exercise of prosecutorial discretion. IV We conclude that the Commission is generally without authority to review the Secretary's discretionary decisions regarding whether to cite owner-operators, their independent contractors, or both for safety violations committed by the independent contractors. Such decisions are not, of course, wholly immune from review. The Secretary's discretion, like that of a prosecutor, remains "subject to constitutional constraints," including those "imposed by the equal protection component of the Due Process Clause of the Fifth Amendment." Armstrong, 517 U.S. at 464, 116 S.Ct. 1480. Moreover, the Commission retains authority to adjudicate — subject to the appropriate standard of review — whether safety violations have in fact occurred. See 30 U.S.C. § 815(d), 823(d). In this case, however, Twentymile has stipulated that the conditions cited by the Secretary constitute violations of safety standards. See ALJ Decision, 25 F.M.S.H.R.C. at 353. We therefore grant the Secretary's petition for review. The decision of the Commission, which reversed the decision of the ALJ and vacated the citations issued to Twentymile, is itself vacated and the citations are reinstated. So ordered. . See Secretary of Labor v. Twentymile Coal Co., 27 F.M.S.H.R.C. 260, 278 (2005) (Jordan, Comm'r, concurring and dissenting). . See Independent Contractors, 45 Fed.Reg. 44494, 44494 (July 1, 1980). . The Enforcement Guidelines state: [A]s a general rule, a production-operator may be properly cited for a violation involving an independent contractor: (1) when the production-operator has contributed by either an act or an omission to the occurrence of a violation in the course of an independent contractor's work, or (2) when the production-operator has contributed by either an act or omission to the continued existence of a violation committed by an independent contractor, or (3) when the production-operator's miners are exposed to the hazard, or (4) when the production-operator has control over the condition that needs abatement. 45 Fed.Reg. at 44497. . The Commission relied on the final point notwithstanding its acknowledgment that "the Enforcement Guidelines are not binding on the Secretary." Commission Decision, 27 F.M.S.H.R.C. at 273 n. 19. . Section 110 of the Mine Act, which under the Coal Act was 30 U.S.C. § 819 (1976), states: The operator of a coal or other mine in which a violation occurs of a mandatory health or safety standard . shall be assessed a civil penalty by the Secretary.... 30 U.S.C. § 820(a) (emphasis added). . See, e.g., Lincoln, 508 U.S. at 192, 113 S.Ct. 2024 (holding that an agency's "allocation of funds from a lump-sum appropriation is another administrative decision traditionally regarded as committed to agency discretion"); Steenholdt v. FAA, 314 F.3d 633, 634 (D.C.Cir. 2003) (holding that the FAA's decision not to renew an aircraft examiner's authority is non-reviewable); Baltimore Gas & Elec. Co. v. FERC, 252 F.3d 456, 459-60 (D.C.Cir.2001) (holding that an agency's decision to reach a settlement is nonreviewable); In re Sealed Case, 131 F.3d 208, 216 (D.C.Cir.1997) (holding that a federal prosecutor's certification that there is a substantial federal interest in a case, required to proceed against a juvenile in federal court, "implicates core prosecutorial judgment and discretion" and thus is normally "not subject to judicial review"). . See Lincoln, 508 U.S. at 193-94, 113 S.Ct. 2024 (holding unreviewable an agency's decision to discontinue funding a program where the statute did "not so much as mention" the program); Swift v. United States, 318 F.3d 250, 253 (D.C.Cir.2003) (finding nonreviewability where the statute did nothing to "circumscribe!] the government's power to discriminate among issues or cases it will pursue" (internal quotation marks omitted)). . As discussed above, see supra note 4, the Commission applied the Enforcement Guidelines to the Secretary's decision to charge Twentymile notwithstanding its acknowledgment that "the Enforcement Guidelines are not binding on the Secretary." Commission Decision, 27 F.M.S.H.R.C. at 273 n. 19. . See Lincoln, 508 U.S. at 191, 113 S.Ct. 2024 ("[W]e have read § 701(a)(2) to preclude judicial review of certain categories of administrative decisions that courts traditionally have regarded as committed to agency discretion." (internal quotation marks omitted)). . See Sierra Club v. Whitman, 268 F.3d 898, 902 (9th Cir.2001) (holding that the "presumption of agency discretion recognized in Chaney has a long history and, contrary to the [plaintiff's] assertion, is not limited to cases brought under the APA"). .See Cathedral Bluffs, 796 F.2d at 537 n. 2; Secretary of Labor v. Cannelton Indus., Inc., 867 F.2d 1432, 1435 (D.C.Cir.1989); RAG Cumberland Res. LP v. FMSHRC, 272 F.3d 590, 595-96 (D.C.Cir.2001); Secretary of Labor v. Excel Mining, LLC, 334 F.3d 1, 5-6 (D.C.Cir.2003); see also Mutual Mining, 80 F.3d at 114-15 & n. 3. . See, e.g., Secretary of Labor v. Twentymile Coal Co., 411 F.3d 256, 261-62 & n. 1 (D.C.Cir.2005); Excel Mining, 334 F.3d at 6-8; RAG Cumberland, 272 F.3d at 595 — 96; Akzo Nobel Salt, Inc. v. EMSHRC, 212 F.3d 1301, 1303 (D.C.Cir.2000). . As we have explained: "Under the statutory scheme, the Commission is required to accord deference to the Secretary's interpretations of the law and regulations. And while it may reverse a decision by an ALJ for legal error, the Commission must uphold an ALJ's factual determinations if they are supported by substantial evidence." RAG Cumberland, 272 F.3d at 595 (internal quotation marks and citations omitted).

11735945

Drumm v. California; Mooney v. New York; Womack v. Oregon; In re Jacobs; In re Diaz; and In re Turner

Drumm v. California

1963-06-03

947

947

373 U.S. 947

373

United States Reports

Supreme Court of the United States

United States

2021-08-10T17:57:58.130816+00:00

CAP

Drumm v. California; Mooney v. New York; Womack v. Oregon; In re Jacobs; In re Diaz; and In re Turner.

June 3, 1963. No.-. No.-. No.-. No.- — . No.-. No.- — -. Drumm v. California; Mooney v. New York; Womack v. Oregon; In re Jacobs; In re Diaz; and In re Turner.

38

215

The motions for the appointment of counsel are denied.

6358906

Queen et al. v. Tennessee Valley Authority et al.

Queen v. Tennessee Valley Authority

1983-04-18

No. 82-1148

1082

1082

460 U.S. 1082

460

United States Reports

Supreme Court of the United States

United States

2021-08-11T02:37:46.966581+00:00

CAP

Queen et al. v. Tennessee Valley Authority et al.

No. 82-1148. Queen et al. v. Tennessee Valley Authority et al.

17

97

C. A. 6th Cir. Certiorari denied.

12415887

Davis v. Indiana

Davis v. Indiana

2012-10-01

No. 12-5428

912

912

568 U.S. 912

568

United States Reports

Supreme Court of the United States

United States

2021-08-11T02:20:14.465461+00:00

CAP

Davis v. Indiana.

No. 12-5428. Davis v. Indiana.

10

64

Ct. App. Ind. Certiorari denied.

11416993

Gladney v. Review Committee

Gladney v. Review Committee

1968-01-15

No. 734

1036

1036

389 U.S. 1036

389

United States Reports

Supreme Court of the United States

United States

2021-08-10T17:42:45.738436+00:00

CAP

Gladney v. Review Committee.

No. 734. Gladney v. Review Committee. Paul K. Kirkpatrick, Jr., for petitioner. Solicitor General Griswold for respondent.

23

157

C. A. 5th Cir. Certiorari denied.

413803

Gregory v. United States

Gregory v. United States

1946-02-11

No. 112

814

814

327 U.S. 814

327

United States Reports

Supreme Court of the United States

United States

2021-08-10T17:06:18.306364+00:00

CAP

Mr. Justice Burton took no part in the consideration or decision of this application. \

Gregory v. United States.

No. 112. Gregory v. United States. February 11, 1946. 326 U. S. 811.

32

195

Second petition for rehearing denied. Mr. Justice Burton took no part in the consideration or decision of this application. \

1585377

THE SCHOONER ATLANTIC. WILLIAM WOODBRIDGE, Administrator, v. THE UNITED STATES; HERBERT ALMY, Administrator v. THE SAME; THE NEWPORT INSURANCE COMPANY v. THE SAME

Woodbridge v. United States

1901-12-02

4446, 4447, 4449

17

23

37 Ct. Cl. 17

37

United States Court of Claims Reports

United States Court of Claims

United States

2021-08-10T19:04:30.665402+00:00

CAP

THE SCHOONER ATLANTIC. WILLIAM WOODBRIDGE, Administrator, v. THE UNITED STATES. HERBERT ALMY, Administrator v. THE SAME. THE NEWPORT INSURANCE COMPANY v. THE SAME.

THE SCHOONER ATLANTIC. WILLIAM WOODBRIDGE, Administrator, v. THE UNITED STATES. HERBERT ALMY, Administrator v. THE SAME. THE NEWPORT INSURANCE COMPANY v. THE SAME. [French Spoliations, 4446, 4447, 4449. Decided December 2, 1901.] On- the Proofs. The vessel and cargo are condemned in May, 1799, on the ground that “a part of the cargo mis horses which by the terms of the ktvj are objects of contraband.” The treaty with France 1778 declared horses to be contraband, Imt Congress abrogated it by the Act 7th July, 1798. The French Government declared that it should continue to govern the international obligations of France and the United States. L After the abrogation of the Treaty with France, 6th February, 1778 (8 Stat. L., art. 24) by the Act 7th July, 1708 (1 Stat. L., 578), the international obligations of France must lie determined by the law of nations. II. By the law of nations at the close of the eighteenth century the act of carrying to a belligerent articles which were material of war was regarded as a wrong for which vessel and cargo were liable to condemnation. But as to articles applicable to use in peace or war, it was a matter of controversy whether they should always be deemed contraband, or whether the intended use might be inquired into and determined by the circumstances. III. The preponderance of authority at the end of the eighteenth century was that horses were presumptively contraband and that a shipment to the port of a belligerent was presumptively for military purposes. IV. The mere presence of a contraband article on board without proof or indication that the owners knew the vessel was carrying contraband would justify only seizure of the article. But if a substantial part of the cargo (e.r </r., 38 horses) was contraband the presumption was that the cargo was to aid a belligerent. The Reporters' statement of the case: The following are the facts of the case as found by the court: I. The schooner Atlantic, George Howe, master, sailed on a commercial voyage from Stonington, Conn., on the 26th day of April, 1799, bound for Tobago. While pursuing said voyage she was captured on the high seas by the French privateer La Resolute, Captain Hubert. On the 25th day of May, 1799, the Atlantic and her cargo were condemned by the tribunal of commerce and of prizes sitting at Basse-Terre, Guadeloupe. The grounds of condemnation set forth in the decree are as follows: First. That a part of the cargo was horses, which bj' the terms of the law are ob]ccts of contraband. Second. That the sea letter or passport was not regular. Third. That the captain did not have a róle d’équipage. II. The Atlantic was a drily1" registered vessel of the United States, of 85-J-f tons burthen, was built at Stonington, Conn., in the year 1791, and was owned bjT Thomas Butler and George Howe, both citizens of the United States. No claim has been filed on behalf of said Howe. III. The cargo of the Atlantic consisted of provisions and 38 horses, and was owned Thomas Butler, George Howe, and the firm of Stiles Phelps & Co., consisting of Stiles and Charles Phelps, all citizens of the United States. It appears that 6 of said horses were lost overboard prior to the capture and condemnation of said vessel and cargo. IV. The losses by reason of the capture and condemnation of the Atlantic were as follows: The value of the vessel. §3,000.00 The value of the cargo condemned. 4,385.23 The freight earnings for the voyage. 31,416. 66 The premiums of insurance paid. 1,210.00 Amounting in all to. 10,011.89 Y. The Newport Insurance Company, a corporation duly organized and existing under the laws of the State of Rhode Island, by policy No. 27, dated April 24,1799, insured Thomas Butler and George Howe, on said vessel, in the sum of $1,500, at a premium cost of $375. Thereafter, on the 20th day of September, 1799, said insurance company paid to said Thomas Butler, on behalf of himself and George Howe, the sum of $1,500 as and for a total loss. Said insurance company, b}" said policy No. 27, dated April 24, 1799, insured the owners of said cargo in the sum of $3,800, at a premium cost to them of $835. Thereafter, on the 20th day of September, 1799, said insurance company paid to said owners of the cargo the sum of $3,800 as and for a total loss. A portion of the premium of insurance on the cargo and of the sum of money paid the owners of the cargo by said company ivas upon the 6 horses lost overboard, as will hereinafter more fully appear. YI. Case No. 4447. Thomas Butler was the owner of one-half the vessel and one-third the cargo. His losses were as follows: One-half value of vessel. 31,500. 00 One-half freight earnings for the voyage. 708. 33 One-third value of cargo. 1, 621.11 One-half premium of insurance on vessel... 187.50 One-third premium of insurance on cargo. 278.33 Amounting in all to... 4,295.27 Less insurance received on vessel. §750.00 Less insurance received on cargo. 1,266. 66 Less one-third value of 6 horses lost overboard, at S79 per head. 158.0Ó Less one-third premium of insurance on said 6 horses, insured at the rate of §60 per head, premium 20 percent . 24.00 -2,198.66 Leaving a net loss of.:. 2,096.61 VIL Caso No. 444:6. Stiles and Chax-les Phelps, who composed the partnership of Stiles Phelps & Co., were the owners of one-third of the cargo. Stiles Phelps was the surviving member of said firm. Their losses were as follows: One-third value of the cargo. §1, 621.11 One-third premium of insurance on cargo. 278. 33 Amounting in all to. 1, 899.44 Less one-third value of 6 horses lost overboard, at §79 per head.- §168.00 Less insurance received on cargo. 1,266.66 Less one-third premium of insurance on 6 horses, insured at the rate of $60 per head, premium 20 per cent. 24. 00 - 1,448.66 Leaving a net loss of. 450. 78 VIII. Case No. 4:449. The Newport Insurance Company, a corporation duly organized and existing under the laws of Rhode Island, insured the owners of the vessel and cargo as set forth in finding numbered V. Its losses were as follows: Insurance paid on vessel. §1,500. 00 Insurance paid on cargo. 3, 800. 00 Amounting in all to. 5,300.00 Less the value of 6 horses, insured at the rate of 860 per head, lost overboard. 360.00 Leaving a net loss of. 4,940.00 IX. The claimants herein have produced letters of administration upon the estates of the parties for whom they appear, and have otherwise proved to the satisfaction of the court that the persons for whose estates they have filed claims are in fact the same persons who suffered loss by the seizure and condemnation of the schooner Atlantic, as set forth in the preceding findings. Mr. Edward lander and Mr. Charles W. Clagett for the claimants. Mr. Charles W. Bussell and Mr. J. W. Trainer (with whom was Mr. Assistant Attorney-General Eradt) for the defendants.

2295

13410

Howry, J., delivered the opinion of the court: The vessel and cargo were captured and condemned in May, 1799. The ground of the condemnation material to be considered appears from the decree to have been that a part of the cargo consisted of horses " which by the terms of the law are objects of contraband." The treat}'- with France of February 6, 1778 (8 Stat. L., art. 24), declared horses to be contraband. But that treaty was abrogated by the act of Congress of July 7, 1798, in the face of the French decree of 11 Nivose, year 3, repealing the order of May 9,1793, declaring that the treaty should govern France notwithstanding the conduct of England. So the matter in issue here, though intended to be settled by that treaty, became open to determination according to the usage of nations and the rules of international law. According^, the question is presented for the first time in the history of this litigation whether horses were contraband' per se under the law of nations at the time of the seizure, and if so, to what extent knowledge on the part of the shipowner of the presence on board of contraband articles involved the other part of the cargo and the ship. Writers on international law are agreed that the act of carrying to an enemy articles directly useful in war is a wrong for which the injured party may punish the neutral taken in the act. But difficulties arise in defining what articles are contraband. Text writers' answer the inquiry variously. But it would appear to be the almost unanimous opinion of elementary writers and the declarations of prize ordinances that articles or material which by their nature are fit to be used in war come within the classification. The difficulty commences in attempting to reconcile the conflicting authorities respecting those articles equally applicable to use in time of peace as well as in time of war, and the consequences arising from the circumstances of transportation and capture growing out of the fluctuating usages of nations and texts of various conventions designed to give to those usages the fixed form of positive law. The principal point in dispute is as to articles deemed to be of ambiguous or uncertain use when in the enemy's country and in time of war. One class of writers contends for an absolute rule that all articles are of such description. Another class contends that as to such articles, inquiry may be made into the circumstances of their presence for the purpose of determining- their probable use in the particular instance. The latter rule was unquestionably the British doctrine, recognized in her treaties, stated by her text writers, accepted by her statesmen, and enforced by her prize courts. Thus, provisions mig'ht become contraband according to the circumstances of their destination and intended use. (Halleck's Int. L., 587.) Parsons defines contraband, as settled by the practice of maritime nations, as "a trade with a belligerent, intended to provide him with military supplies, equipments, instruments, or arms." Great maritime powers, when engaged in war, have enlarged the list, and nations generally neutral have contracted it. Grotius divides all articles of trade into three classes, to wit: Implements and material which, by their nature, are suitable to be used in war; articles of taste and luxury, useful only for civil purposes; articles which are of indiscriminate use in peace and war. Articles of the first class have always been considered contraband; those of the second class never; while those of the third class contraband according to the particular circumstances of war. Little objection has been made, says Halleck, to the foregoing classification, but it leaves the entire difficulty unsettled, as the question immediately arises with respect to what articles are to be assigned to each class and under what particular circumstances articles of the third class become subject to capture as contraband. (Halleck's Laws of War, 577.) An ancient ordinance of marine, dating as far back as 1681, provided that— "Arms, powder, bullets, and other munitions of war, also horses and their furniture, which shall be transported for the use of the army, shall be confiscated on whatever vessel found and to whatever person they belong, whether subjects or aliens." (Art. 2 of title 9, book 3, Ord. of Mar.) Out of the mass of learning gathered b3r the commentators and rules announced from the bench from time to time, the weight of authority preponderates for the proposition that at the time of the seizure of the Atlantic, horses were presumptively considered contraband according to the usage of most nations. Certainly, according to the understanding between this country and France, as far as it may be said any understanding existed between the two countries on the subject at that time, they were so considered. The schooner was a vessel of only So tons burden, and there were 38 horses on board. They constituted a large part of the cargo. Tobago wras one of the West Indies group of islands. Whether it was a port of naval or military equipment is not clear; but it was a part of the United Kingdom, then at war with France. Aside from any absolute rule, the presumption must be, in the absence of proof, that such a shipment was destined for the military use of the belligerent adversary. The mere presence of a contraband article on board ship as an incident of the voyage, without proof or circumstances sufficient to justify the belief that the shipowners or their agents knew they were carrying contraband in violation of the laws of neutrality, will justify seizure and withdrawal of the contraband article alone. If a substantial part of the cargo consists of contraband articles or materials, such articles or materials are not only liable to seizure, but the presumption arises that the voyage was undertaken in violation of the duty of a neutral and with intent to aid the belligerent adversary. The great weight of authority is that knowledge on the part of the shipowner of the presence on board of contraband articles, or conduct on the part of officers of the ship showing that they knew of the presence of such articles, involves the whole ship. (Desty's Ship and Adm., sec. 425; Kent's Com., Vol. I, 143; Halleck on Int. L., 572; Hall's Int. L., 693; Walker's Int. L., 512; Am. and Eng. Encl. of Law, Vol. II, 476.) France being justified in seizing the Atlantic and condemning the cargo and the vessel, a claim did not arise against that Kepublic. It is ordered that the conclusions of the court be reported to Congress.

81188

SOUTHERN RAILWAY COMPANY v. KENTUCKY; DAVIS, DIRECTOR GENERAL, v. KENTUCKY

Southern Railway Co. v. Kentucky

1927-04-11

Nos. 33, 34

76

92

274 U.S. 76

274

United States Reports

Supreme Court of the United States

United States

2021-08-11T01:02:04.597915+00:00

CAP

SOUTHERN RAILWAY COMPANY v. KENTUCKY. DAVIS, DIRECTOR GENERAL, v. KENTUCKY.

SOUTHERN RAILWAY COMPANY v. KENTUCKY. DAVIS, DIRECTOR GENERAL, v. KENTUCKY. Nos. 33, 34. Argued March 15, 16, 1926. Decided April 11, 1927. Mr. Edward P. Humphrey, with whom Messrs. L. E. Jefferies, Alex P. Humphrey, and Charles W. Milner were on the brief, for plaintiffs in error. Mr. J. P. Hobson, with whom Messrs. L. W. Morris, D. L. Hazelrigg, and Frank Daugherty, Attorney General of Kentucky, were on the brief j for defendant in error. The reason urged by the Southern in support of the second contention was, as the second opinion recites, that the Kentucky lines “ had neither physical nor operative connection with lines outside of the state . . . and that to apply the notion of organic unity to all its.lines under such circumstances is vihlative of the Fourteenth Amendment of the Constitution of the United States, in that it brings into Kentucky for taxation purposes values wholly outside of the state. Whether or not this is true is the sole question presented for decision upon these appeals,” The Court of Appeals decided the second contention in favor of the Southern for the years 1914, 1915 and 1916, because it concluded “ that there was in fact no physical connection between the Northern branch and the Southern branch of the defendant’s lines, and that despite the defendant’s ownership and control of both of these separate branches, they cannot, under the many decisions of the Supreme Court of the United States, be considered as parts of a single system for the purpose of ascertaining the value of defendant’s franchise employed in Kentucky without violating the Fourteenth Amendment of the federal Constitution.” It held the Southern taxable for the years 1917 and 1918 because in 1917 the “ defendant acquired the C. N. O. & T. P. Ry. Co., and thus unified all of its holdings into a single unit of use and management.” In considering the situation for the earlier years it stated: "The question for decision then finally narrows to whether for the purpose of valuing defendant’s franchise employed in Kentucky, the line from Dan-ville, Kentucky, to St, Louis, Mo., is to be considered as a separate unit or as a part of a system including also defendant’s eastern and southern lines.”

4879

28278

Mr. Justice Butler delivered the opinion of the Court. A judgment against plaintiffs in error for franchise taxes imposed under the laws of Kentucky in respect of certain lines of railway was affirmed by the highest court of that State. 204 Ky. 388. And see 193 Ky. 474. Reversal is sought on the ground that as applied these laws contravene the due process clause of the Fourteenth Amendment. The statutes (§§4077-4081) provide that every foreign or domestic railway company, in addition to other taxes imposed by law, shall pay an annual tax on its franchise. The provisions apply whether the privilege is exercised by the corporation in its own name or in the name of another which it .adopts. A company's railway system is deemed to include lines operated, leased or controlled whether technically owned or not. The tax is on intangible property. Where the railroad is partly within and partly without the State, the value of the intangible property so to be taxed may be determined substantially as follows: capitalize the net railway operating income of the entire system for the accounting year last ended; assign to Kentucky its mileage proportion of that amount; deduct the assessed value of the tangible property otherwise taxed; and the remainder is the value taken as the basis' for the franchise taxes; When the railroad is wholly within the State, the capitalized net, less the assessed value of tangible property on which other taxes are paid, is taken to be the value of intangible property. Greene v. Louis. & Interurban R. R. Co., 244 U. S. 499, 510, and cases cited; Louis. & Nash. R. R. Co. v. Greene, 244 U. S. 522, 539. Plaintiff in error, the Southern Railway Company, is a Virginia corporation. The lines of its system of railroads, exclusive of the Kentucky- mileage in question, exceed 9500 miles apd extend from Washington, D. C., into Virginia, the Carolinas, Tennessee, Georgia, Florida, Alabama and Mississippi. The company also has a line from New Albany, Indiana, to East Saint Louis, Illinois. It does not own any railroad in Kentucky. The " Southern Railway Company in Kentucky " owns 127.63 miles, all of which are in that State. Its branches connect with the line of the Cincinnati, New Orleans and Texas Pacific Railway Company which extends from Cincinnati to Chattanooga and connects it with the system. Its stock is owned- by the Virginia company. The same persons are officers of both. The lines of the Kentucky company are reported to public authorities and are advertised as a part of the system. The Mobile and Ohio Railroad Company, the Cumberland Railroad Company, and the Cumberland Railway Company.own, in all, about 53.3 miles of railroad in Kentucky, but their lines are not connected with the lines of the Southern Railway Company in Kentucky. The Virginia company through stock ownership controls these companies; but they and the Southern Railway in Kentucky, in their own names and as owners, made reports and paid in full all taxes assessed under Kentucky laws on their tangible and intangible properties. The Commonwealth brought this suit against the Virginia company and the Director General to recover additional franchise or intangible property taxes for 1918 and 1919 in respect of the Kentucky mileage of these companies. The Court of Appeals held that there was no such connection or unity of use between the system of the Virginia company and the lines of the Mobile and Ohio, the Cumberland Railroad, and the Cumberland Railway as would justify recovery of any franchise taxes in respect of their Kentucky mileage. Stipulated facts tended to show that the Virginia company controlled the Cincinnati, New Orleans and Texas Pacific; and the court held that by means of its lines the railroad of the Southern Railway in Kentucky was so connected with the lines of the Virginia company as to be a part of the system. The value of intangible property adjudged to have been omitted, and on which the additional franchise taxes were calculated, for 1918 was $1,730,090.02 and for 1919 was $3,028,592.62. These. amounts were arrived at as follows: the net railway operating income for the entire system was capitalized at seven per cent.; there was deducted an amount to cover the value of shops, terminals and double tracks outside Kentucky in excess of corresponding tangible property connected with the lines in that State; there was allocated to Kentucky such proportion of the remainder as 424.61 miles, which were attributed to Kentucky, bore to the total mileage of the system; that amount was equalized for taxation at 75 per cent, for 1918 and at 85 per cent, for 1919; and from the result there was deducted the values of tangible and intangible property (including the Kentucky mileage of the Cincinnati, New Orleans and Texas Pacific) on which taxes had been paid. But the average value per mile so deducted was less than the system average per mile. The amounts so arrived at were assigned to the 127.63 miles of the Southern Railway Company in Kentucky and the 197.5 miles in Kentucky of the lines of the Cincinnati, New Orleans and Texas Pacific. The increase per mile for 1918 was $5,334.55 and for 1919 was $9,338.34. The Court of Appeals, rightly declared that a State may tax property permanently within its jurisdiction belongs ing to one domiciled elsewhere and used to carry on commerce among the States; that, where property is a part of a system and has its actual use only in connection with other parts of the system, that fact may be considered even though other parts of the system are outside the State; that the State may not tax property outside its jurisdiction belonging to one domiciled elsewhere, and that the mileage basis of apportionment cannot be adopted in the taxation of railroad franchises where the result is shown to be arbitrarily excessive. These propositions are derived from the decisions of this Court. Fargo v. Hart, 193 U. S. 490, 499; Pittsburgh, &c. Railway Co. v. Backus, 154 U. S. 421, 427-431; Union Tank Line Co. v. Wright, 249 U. S. 275, 282; Wallace v. Hines, 253 U. S. 66, 69. The question is whether the State made valid application of the governing principles. The value of tangible property is not involved in this case. The demand of the Commonwealth against the plaintiffs in error was for taxes on intangible properties over and above the amounts that had been paid by the owning companies. And the entire amount added as a basis for additional taxes is attributable only to the lines of the Southern Railway Company in Kentucky. There was no claim for any taxes in respect of the lines of the Cincinnati, New Orleans and Texas Pacific. That company had also reported its earnings and paid taxes on its tangible and intangible properties in Kentucky. These taxes were based on values per mile in excess of the average values per mile for the system arrived at by capitalization of net railway operating income in accordance with the rule applied by the State. No part of the amounts adjudged to have been omitted could properly be assigned thereto. The Mobile and Ohio, the Cumberland Railroad, and the Cumberland Railway were held not to be a part of the system. Plaintiffs in error insist that the enforcement of the taxes on these amounts, as measuring the additional values of intangible properties inhering in the lines of the Southern Railway Company in Kentucky, operates to tax the property of the Virginia company located beyond the borders of Kentucky and that such amounts are arbitrarily excessive. The value of the physical elements of a railroad— whether that value be deemed actual cost, cost of reproduction new, cost of reproduction less depreciation or some other figure — is not the sole measure of or guide to its value in operation. Smyth v. Ames, 169 U. S. 466, 547. Much weight is to be given to present and prospective earning capacity at rates that are reasonable, having regard to traffic available and competitive and other conditions prevailing in the territory served. No intangible element of substantial amount over and above the value of its physical parts inheres in a railroad that cannot earn a reasonable rate of return on its bare-bones — as the mere tangible elements properly may be called. See Omaha v. Omaha Water Co., 218 U. S. 180, 202. The amount adjudged to have been omitted equals an increase on the lines of the Southern Railway Company in Kentucky of $13,555 per mile for 1918 and of $23,730 for 1919. The 1917 average net operating income per mile for the system was the basis for determining the Kentucky franchise taxes for 1918, and the average for 1918 controlled the amount of the 1919 taxes. The average for the system was $3,642 per mile for 1917 and was $3,623 for 1918. The corresponding net income per mile of the Southern Railway Company in Kentucky for 1917 was $878. There was a loss of $4,741 per mile in 1918. The record also shows a loss in each of the years 1914, 1915 and 1916. The average for the five years was a loss of $1,230 per mile per year. If considered alone, the railroad of the Southern Railway Company in Kentucky would be a losing venture. Its operating loss was more than $157,000 per year for the average of the five years reported in the record. But, assuming it a part of the system, it is right to take into consideration the parts outside the State that are operated in connection with it. The mileage used as an integral part of a railroad system may have elements of value that it otherwise would not possess, and the State properly may have regard to the whole in order to ascertain the value of the part that is within its borders. Fargo v. Hart, supra, 499. But, if the method pursued in valuing prop erty within the State is arbitrary and the resulting valuation is grossly excessive, the tax must be condemned as in contravention of the due process clause of the Fourteenth Amendment. Union Tank Line Co. v. Wright, supra, 282, and cases cited. It is not permissible for the State to take into account any of the outside property " unless it can be seen in some plain and fairly intelligible way that it adds to the value of the road and the rights exercised in the State." Wallace v. Hines, supra, 69. The operating results of the system compared with those of the Southern Railway Company in Kentucky show that, on the basis of valuation adopted by the State, the average value per mile of the lines of that company is very much less than the average .value per mile of the system. If taken separately it is clear that, because of -lack of net earnings, no substantial intangible elements of value could reasonably be attributed to the railroad of that company. In order to justify the increases made, there would have to be attributed to these lines large amounts from system earnings. To sustain the addition for 1919, it is necessary to take enough to overcome the deficit of 14,741 per mile plus a fair return on the value of the physical property and on the 123,730 per mile fixed as a basis for additional taxes. The draft on earnings from other parts of the system to sustain the increase for 1918 would not be so heavy. But it is equally obvious that there is no foundation for the finding that there existed in these lines intangible values of 11,730,090 or any other substantial amount in excess of the value fairly to be attributed to the physical elements of the railroad. If intangible elements were attributed to the system' at the same rate per mile as results from the distribution of * the added amount to the mileage of the Southern Railway in Kentucky, their value would be more than 1200,000,000 for 1919 and more than 1120',000,000 for-1918. Clearly there is no foundation for any such results. The mere statement of the figures is sufficient to show that the amount added as a basis for franchise taxes is.so excessive and unreasonable that it cannot be sustained; and such an application of the system earnings amounts to an attempt to tax property outside the State. And as the direct earnings per mile of the lines of that company are so much less than the average for the system, it is plain that the amount adjudged to have been omitted was arbitrarily excessive and included values of system property beyond the limits of Kentucky. Moreover, the percentages used to make the apportionment to Kentucky were too high. Reference to the figures for 1919 will be sufficient. There was taken 4.273 per cent, of $432,326,444.12, the system value to be apportioned. The system mileage was 9939.1, and that used for the apportionment was 424.61. The Southern Railway Company in Kentucky had 127.63 miles, the Cin.cinnati, New Orleans and Texas Pacific, 197.5, the Mobile and Ohio, 38.693, the Cumberland Railroad, 12.9, and the Cumberland Railway, 1.74. As the court held that the lines of the three companies last mentioned were not so connected with the system that plaintiffs-in error were liable in respect of them, their mileage was erroneously included in the factor used for apportionment to the lines taxed. And for the reasons stated the mileage of the Cincinnati, New Orleans and Texas Pacific should not have been included.' The mileage used to make the apportionment was more than three times that of the Southern Railway in Kentucky, and was more than thirty per cent, in excess of the combined mileage of that company and the Cincinnati, New Orleans and Texas Pacific. Obviously deduction of the lesser values of the Kentucky mileage on which the owners had paid taxes did not eliminate the error. The enforcement of the franchise taxes so assessed would violate the due process clause of the Fourteenth Amendment. The Commonwealth asserts that in the Kentucky courts the company did not make " the objection which is made here that this was a tax on property outside the State." But the record shows the contrary. The petition alleged that a portion of the Kentucky franchise had been omitted from assessment and prayed that such portion be assessed and taxed. The answer of plaintiffs in error not only denied liability and alleged that to hold the company liable and to attempt to add to that assessment would be a violation of the Fourteenth Amendment, but it also stated: " Defendants say that the effort made herein is simply' for the purpose of endeavoring to bring into the State of Kentucky for purposes of taxation, property not in Kentucky, and values appertaining to property not in Kentucky, and earnings derived from property not in Kentucky; that to do this would be in violation of . . . the Constitution of the United States, particularly the Fourteenth Amendment thereof." In its first decision (193 Ky. 474), the Court of Appeals said (p. 488): "It is our conclusion, therefore, that the court should have assessed against defendant [Southern Railway Company of Virginia] Kentucky's portion of the intangible property assessed by the proportion of the mileage that the lines nominally operated by the ' Southern Railway Company in Kentucky ' bear to the. entire mileage of defendant's system estimated according to the method provided by the statute. But it is insisted that this would result in taxing in Kentucky property having no situs here. . . ." Then follows the court's answer to that contention. This shows that the court distinctly recognized and passed upon the contention that the imposition of the additional franchise taxes would be to tax property out; side Kentucky. That decision, according to the local rule, not only bound the lower court, but controlled the disposition of the case on the second appeal. Hopkins v. Adam Roth Grocery Co., 105 Ky. 357, 358. The objec tions were reiterated in an amended answer filed after the first decision. And the Court of Appeals in its second decision declared that the additional assessments "were made in accordance with and are concluded by the former opinion herein." Clearly, the objections made in the state courts were sufficient. They went to the point that, as proposed to be applied.and enforced, the state statutes would operate to tax property outside and beyond the jurisdiction of Kentucky in contravention of the Fourteenth Amendment. And, notwithstanding these objections^ the Court of Appeals in its first decision directed the making of these additional assessments; and, in its second decision, declared that they had been made as directed and affirmed, the judgment of the Circuit Court by which they were determined. A petition for certiorari was filed, but, as the case is properly here on writ of error, the petition will be denied. Judgment reversed on writ of error. Petition for certiorari denied. The provisions are printed in the margin of Louis. & Nash. R. R. Co. v. Greene, 244 U. S. 522, at page 533.

6164954

McAllister v. City of Riesel

McAllister v. City of Riesel

1945-05-21

No. 1131

860

860

325 U.S. 860

325

United States Reports

Supreme Court of the United States

United States

2021-08-10T23:32:25.650874+00:00

CAP

McAllister v. City of Riesel.

No. 1131. McAllister v. City of Riesel. May 21, 1945. Mr. Will A. Morriss for petitioner.

32

184

Petition for writ of certiorari to the Circuit Court of Appeals for the Fifth Circuit denied.

362120

Eckert-Fair Construction Co. v. Capitol Steel & Iron Co.

Eckert-Fair Construction Co. v. Capitol Steel & Iron Co.

1950-04-03

No. 603

928

928

339 U.S. 928

339

United States Reports

Supreme Court of the United States

United States

2021-08-10T21:17:04.354674+00:00

CAP

Eckert-Fair Construction Co. v. Capitol Steel & Iron Co.

No. 603. Eckert-Fair Construction Co. v. Capitol Steel & Iron Co. C. A. 5th Cir. J. N. Townsend, Jr. for petitioner.

22

136

Certiorari denied.

230430

Swindall v. United States

Swindall v. United States

1994-01-10

No. 93-389

1040

1040

510 U.S. 1040

510

United States Reports

Supreme Court of the United States

United States

2021-08-10T19:08:00.974266+00:00

CAP

Swindall v. United States.

No. 93-389. Swindall v. United States.

12

74

C. A. 11th Cir. Certiorari denied.

6578931

American Pepco Corp. v. United States

American Pepco Corp. v. United States

1963-01-23

No. 67367; protests 58/20605-9820, etc. (Chicago)

183

183

50 Cust. Ct. 183

50

United States Customs Court Reports

United States Customs Court

United States

2021-08-10T19:31:53.158602+00:00

CAP

American Pepco Corp. v. United States,

Before the Second Division, January 23, 1963 No. 67367. American Pepco Corp. v. United States, protests 58/20605-9820, etc. (Chicago).

67

430

Opinion by Lawrence, J. In accordance with stipulation of counsel that the merchandise consists of form supports similar in all material respects to those the subject of Universal Builders Supply Co., Inc. v. United States (48 Cust. Ct. 99, C.D. 2319), the claim of the plaintiff was sustained.

8297026

Julian Castillo Slaughter et al., Appellants, v. Cecile R. Loeb, Executrix, etc.

Slaughter v. Loeb

1906-10-29

No. 348

600

600

203 U.S. 600

203

United States Reports

Supreme Court of the United States

United States

2021-08-10T23:22:01.404284+00:00

CAP

Julian Castillo Slaughter et al., Appellants, v. Cecile R. Loeb, Executrix, etc.

No. 348. Julian Castillo Slaughter et al., Appellants, v. Cecile R. Loeb, Executrix, etc. October 29, 1906. Mr. Wilton J. Lambert for appellants. No appearance for appellee.

55

335

Appeal from the Court of Appeals of the District of Columbia. Dismissed with costs, on motion of Mr. Charles L. Frailey in behalf of counsel for the appellants.

3566507

KING & KING, CHARTERED, Appellant v. HARBERT INTERNATIONAL, INC., et al., Appellees

King & King, Chartered v. Harbert International, Inc.

2007-10-12

No. 06-7119

254

259

378 U.S. App. D.C. 254

378

United States Court of Appeals for the District of Columbia Circuit

United States Court of Appeals for the District of Columbia Circuit

District of Columbia

2021-08-10T17:14:28.330853+00:00

CAP

Before: HENDERSON, RANDOLPH, and BROWN, Circuit Judges.

KING & KING, CHARTERED, Appellant v. HARBERT INTERNATIONAL, INC., et al., Appellees.

503 F.3d 153 KING & KING, CHARTERED, Appellant v. HARBERT INTERNATIONAL, INC., et al., Appellees. No. 06-7119. United States Court of Appeals, District of Columbia Circuit. Argued Sept. 10, 2007. Decided Oct. 12, 2007. Rehearing En Banc Denied Dec. 12, 2007. Christopher M. McNulty argued the cause and filed the briefs for the appellant. Michael J. McManus argued the cause for the appellees. With him on the brief for appellees Harbert International, Inc., and Raymond J. Harbert were Jeffrey J. Lopez and Justin 0. Kay. Laurence Schor and Dennis Ehlers were on the brief for appellees Bilhar International Establishment, Bill Harbert International Construction, Inc., and Bill L. Harbert. Before: HENDERSON, RANDOLPH, and BROWN, Circuit Judges.

2134

13520

Opinion for the Court filed by Circuit Judge BROWN. BROWN, Circuit Judge: Appellant King & King, Chartered, appeals from the district court's dismissal of a claim for quantum meruit and a claim of tortious interference with contractual relations. We affirm the district court's decision as to both claims. I King & King, Chartered, a law firm with offices in Washington, D.C., represented one or more of the appellees in a dispute with the United States over construction contracts. In confusing circumstances, the clients elected not to pursue the case, and King & King thus lost the chance to earn its contingent fee. Although the clients had already paid a deposit of $150 per billed hour, the firm demanded more, filing the instant action in Superior Court in the District of Columbia, asking for the full $4.8 million it would have earned for a complete recovery. Alternatively, the firm sought quantum meruit compensation for work performed. In addition, King & King sought damages for tortious interference, alleging two of the appellees caused the clients to withdraw the case. After removing the case to district court, appellees successfully moved to dismiss the entire complaint for failure to state a claim. King & King, Chartered v. Harbert Int'l, Inc., 436 F.Supp.2d 3 (D.D.C.2006). King & King appeals the dismissal of the quantum meruit and tortious interference claims. Appellees include Bill Harbert, his nephew Raymond Harbert, corporations they control, named Bill Harbert International Construction (BHIC) and Harbert International (HII) respectively, and a corporation of which each originally controlled 50%, named Bilhar International Establishment (Bilhar). Between 1987 and 1989, HII received fifteen contracts for construction work on Kwajalein Atoll related to the Strategic Defense Initiative. Appellant, who had provided legal services to HII since the early 1980's, represented the corporation in various disputes with the U.S. Government over the performance of the Kwajalein contracts. Eventually, the disputes became so substantial that the appellees filed a claim at the Armed Services Board of Contract Appeals (ASBCA) requesting a $12.8 million adjustment to the contract price. King & King prepared this claim in 1992 and 1993 and filed the claim in 1994. King & King continued to prosecute the claim over the succeeding years. At first, HII apparently paid the firm on an hourly basis, but in 1995 they agreed to a contingent fee. Under the agreement, King & King was to receive 20% of the first $2 million recovered in the case and 25% of any greater recovery. In the meantime, King & King was to bill $150 per hour, and these payments would be deducted from the eventual contingent recovery. According to the complaint, Bill Harbert signed the 1995 fee agreement on behalf of BHIC and HII. He controlled the former corporation, and he had been the President of the latter until 1990 and Vice Chairman until 1992. On June 18, 2002, Bill Harbert sent King & King a letter promising personally to pay debts owed by HII for the firm's services. Meanwhile, Bill and Raymond Harbert had adjusted their business structures. In 1990 Raymond succeeded Bill as President of HII, and the two agreed to transfer HII's international construction business to Bilhar. On December 9, 1991, HII assigned all its pending and future claims under the Kwajalein contracts to Bilhar, while Bill Harbert bought HII's interest in Bilhar. King & King did not learn about the assignment until 1997, when HII revealed it in response to a government discovery request in the ASBCA case. In 1998, the ASBCA suspended the proceedings, at the request of the Department of Justice, which had begun a criminal investigation into the Harberts' dealings. After the Department requested a further stay, the ASBCA finally dismissed the proceedings on September 28, 1998. The dismissal was without prejudice as long as HII reinstated its claim before September 29, 2001. During the intervening three years, the criminal investigation focused on Bill Harbert's corporations, which the government accused of fraud and bid rigging in relation to some construction contracts in Egypt. These contracts had already given rise to a federal qui tam lawsuit, which the United States joined in February 2001. The government followed with a criminal indictment of Bill Harbert's corporations in July 2001. As the 2001 deadline for refiling at the ASBCA approached, King & King tried to contact Bill Harbert. By September 28, he had not replied, but the firm refiled the case anyway. The ASBCA immediately suspended all proceedings until the criminal trial ended on February 12, 2002. When the ASBCA proceeding reconvened, the Government demanded proof that King & King had authority to refile the case. The firm drafted a letter of authorization for Raymond Harbert, the President of HII, to send to the ASBCA. He responded through his criminal attorney, demanding, among other things, that King & King move to substitute Bilhar for HII as the claimant at the ASBCA. In depositions and in filings at the ASBCA, Raymond Harbert refused either to disavow the proceeding or to ratify it unequivocally. Eventually, on December 20, 2002, the ASBCA issued a show cause order demanding that HII ratify the refiling. Since the company did not respond, the ASBCA dismissed the case with prejudice. King & King complains that appellees' effective abandonment of the ASBCA case spoiled the firm's chance to follow through on work already done and win the case. In addition, Raymond Harbert and HII, by not ratifying the refiling, interfered with the film's representation of Bilhar, preventing recovery of the contingent fee. II This Court reviews the dismissal of a complaint de novo. Am. Fed'n of Gov't Employees v. Rumsfeld, 321 F.3d 139, 142 (D.C.Cir.2003). A A client has the ultimate authority to control his affairs; thus, he may settle a claim, regardless of his attorney's efforts to prosecute it. Barnes v. Quigley, 49 A.2d 467, 468 (D.C.1946). A client may also, in good faith, choose to withdraw a claim despite having expressly promised his attorney otherwise. Id. In addition, a client may discharge his attorney, with or without cause, and such a discharge will not constitute a breach of any agreement between them. Skeens v. Miller, 331 Md. 331, 628 A.2d 185, 187 (1993). This rule is admittedly harsh to attorneys, especially to those who provide services under contingent-fee agreements, for they bear a substantial risk. An attorney's fees under such an agreement depend not only on the merits of the case, but also on the client's continued zeal for the cause and his willingness to continue retaining the attorney. The District of Columbia, like other jurisdictions, wants clients to "compensate attorneys reasonably," as a matter of "fundamental fairness." Connelly v. Swick & Shapiro, P.C., 749 A.2d 1264, 1267-68 (D.C.2000). Therefore, a contingent-fee attorney may seek reasonable compensation when his client terminates the representation without cause. Universal Acupuncture Pain Servs. P.C. v. Quadrino & Schwartz, P.C., 370 F.3d 259, 263 (2d Cir.2004) (unless a contingent-fee attorney was discharged for cause, he is entitled to reasonable compensation); Skeens, 628 A.2d at 188. If the attorney substantially performed his tasks, before being terminated, he may receive the agreed proportion of the client's eventual recovery. Kaushiva v. Hutter, 454 A.2d 1373, 1375 (D.C.1983). Even if he performed negligible services, of little actual benefit to the client, he is entitled to quan turn meruit compensation. In re Waller, 524 A.2d 748, 750 (D.C.1987). Conversely, an attorney terminated for good cause cannot recover a contingent fee. Greenberg v. Sher, 567 A.2d 882, 884 (D.C.1989). A similar rule should preclude quantum meruit compensation when the client chooses to discontinue a case because of his reasonable assessment that there is "no chance of recovery." Universal Acupuncture, 370 F.3d at 265 n. 7. Otherwise, a contingent-fee client, convinced he had no chance of success, would have to continue his case just to avoid quantum meruit liability. Such a policy would encourage litigants to take unwarranted risks and prolong litigation simply to avoid paying attorney fees—a predicament that mocks the ideal of client control. The facts here exemplify the dilemma. By 2002, appellees had disputed the Kwajalein contracts with the Government for eleven years without success, and their overall legal position had deteriorated disastrously. Their original claim for $12.8 million had grown, with the addition of interest, to $20.1 million, while the Government had continued to oppose them vigorously. In 2002, the Government was trying to get the appellees' claims dismissed on the ground that HII's 1991 assignment of the Kwajalein contracts to Bilhar was made without government consent and was therefore illegal. HII apparently doubted its ability to oppose dismissal, since during this phase of the ASBCA proceeding, it made factual representations that King & King asserts "would have resulted in the forfeiture of the appeals." [Compl. ¶ 26, JA 16] Meanwhile, Bill Harbert and his companies were busy defending civil and criminal fraud cases arising from the Egypt contracts. Federal criminal indictments came in July 2001, and a criminal trial took place in February 2002. The civil case, a qui tarn lawsuit, began in 1995, but the Government had just intervened in February 2001. In the middle of these fraud cases, in September 2001, King & King, of its own volition, filed to reinstate the ASBCA case. Given their situation, it would be eminently reasonable for the appellees to believe they had no chance to prevail at the ASBCA; to concentrate their efforts on defending the more dangerous fraud cases; and even to abandon the ASBCA case as part of a compromise with the Government. These are the kinds of difficult decisions a client must have the autonomy to make. The appellees tried to free their hands by putting the ASBCA case on a contingent-fee basis; in such extremely adverse circumstances, the law will not handcuff them by requiring quantum meruit compensation. B Appellant's claim for tortious interference with contractual relations fails because no third party who interfered with the contingent-fee agreement has been identified. A person cannot be liable for interfering with his own contract. Sorrells v. Garfinckel's, Brooks Bros., Miller & Rhoads, Inc., 565 A.2d 285, 289 (D.C.1989). King & King argues Raymond Harbert and HII were not parties to the contingent-fee contract. On this theory, when Raymond Harbert failed to ratify the reinstated ASBCA case, he interfered with the contingent-fee agreement Bill Harbert executed. However, the Complaint itself refutes this argument. King & King alleged Bill Harbert executed the agreement on behalf of "HII and BHIC," and that he later promised to honor "the commitments he had made on behalf of HII to pay for plaintiffs legal services." [Compl. ¶ 34, JA 20-21] The firm then demanded that HII pay $4.8 million as its contingent fee. [Compl. ¶ 36, JA 21] It alleged that by not paying, HII "breached the fee agreement . entered into by defendant, Bill Harbert on its behalf." [Compl. ¶ 38, JA 38] Although the firm also suggested, in the alternative, that Bill Harbert acted only on his own behalf, [Compl. ¶ 37, JA 21] this allegation is insufficient, because the tortious interference claim would be illogical. HII was the named party in the ASBCA case. If there was any contingent-fee agreement to interfere with, HII must have been a party to that agreement. As a party to the contingent-fee agreement, HII cannot have interfered with it. Therefore, King & King has no claim for tortious interference with contractual relations. Ill The district court's order dismissing King & King's complaint as to all claims is Affirmed. . Needless to say, a client's general authority to control his affairs includes the responsibility to represent the facts accurately. . The district court ruled that appellant had no claim because a client's decision to terminate an attorney is not a breach of a contingent-fee agreement. 436 F.Supp.2d at 16-17. We suspect that the District of Columbia would follow Maryland in allowing tortious interference claims when a third party induces a client to terminate an attorney. See Sharrow v. State Farm Mut. Auto. Ins. Co., 306 Md. 754, 511 A.2d 492, 497-98 (1986). . Because Raymond Harbert acted in his capacity as President of HII, he cannot be liable for tortiously interfering with its contracts. See Press v. Howard Univ., 540 A.2d 733, 736 (D.C.1988) (officers of a corporation cannot tortiously interfere with its contracts).

11619121

Erickson v. Gordon et al.

Erickson v. Gordon

1996-10-07

No. 95-9144

840

840

519 U.S. 840

519

United States Reports

Supreme Court of the United States

United States

2021-08-10T21:18:09.710801+00:00

CAP

Erickson v. Gordon et al.

No. 95-9144. Erickson v. Gordon et al.

13

74

C. A. 11th Cir. Certiorari denied.

12459943

Joe Teague, Petitioner v. North Carolina Department of Transportation

Teague v. North Carolina Department of Transportation

2011-05-16

No. 10-9439 (10A933)

1236

1236

179 L. Ed. 2d 1236

179

United States Supreme Court Reports, Lawyers' Edition

Supreme Court of the United States

United States

2021-08-11T02:31:11.354633+00:00

CAP

Joe Teague, Petitioner v. North Carolina Department of Transportation.

No. 10-9439 (10A933). Joe Teague, Petitioner v. North Carolina Department of Transportation. 563 U.S. 1002, 131 S. Ct. 2454, 179 L. Ed. 2d 1236, 2011 U.S. LEXIS 3577, May 16, 2011.

68

404

Application for stay, addressed to Justice Alito and referred to the Court, denied. Petition for writ of certio-rari to the United States Court of Appeals for the Fourth Circuit denied. Same case below, 403 Fed. Appx. 872.

6601338

Dreyfus Ashby & Co., Inc. v. United States

Dreyfus Ashby & Co. v. United States

1960-03-08

No. 63929; protest 58/18828 (New York)

378

378

44 Cust. Ct. 378

44

United States Customs Court Reports

United States Customs Court

United States

2021-08-11T02:44:56.340338+00:00

CAP

Dreyfus Ashby & Co., Inc. v. United States,

Before the Third Division, March 8, 1960 No. 63929. protest 58/18828 (New York). Dreyfus Ashby & Co., Inc. v. United States,

124

735

Opinion by Johnson, J. It was stipulated that the facts and issues herein are similar in all material respects to those involved in United States v. Browne Vintners Co., Inc. (34 C.C.P.A. 112, C.A.D. 351) and that the one carton of liquor reported by the inspector as manifested, not found, was not in fact received by the importer. In accordance with stipulation of counsel and following the decision cited, it was held that duty and internal revenue tax are not assessable upon the one carton of liquor, which was reported by the inspector as manifested, not found. The protest was sustained to this extent.

6616531

Albert Bonnier Publishing House, Inc., et al. v. United States

Albert Bonnier Publishing House, Inc. v. United States

1951-09-05

No. 55851; protests 165275-K, etc. (New York)

310

310

27 Cust. Ct. 310

27

United States Customs Court Reports

United States Customs Court

United States

2021-08-11T00:58:18.434319+00:00

CAP

Albert Bonnier Publishing House, Inc., et al. v. United States,

No. 55851. protests 165275-K, etc. (New York). Albert Bonnier Publishing House, Inc., et al. v. United States,

25

159

Opinion by Rao, J. The protests were dismissed.

3588867

Gilbert C. WAITE, Appellant, v. Louis JACOBS

Waite v. Jacobs

1973-03-08

No. 24183

281

290

154 U.S. App. D.C. 281

154

United States Court of Appeals for the District of Columbia Circuit

United States Court of Appeals for the District of Columbia Circuit

District of Columbia

2021-08-11T01:00:49.597749+00:00

CAP

Before BAZELON, Chief Judge, and McGOWAN and WILKEY, Circuit Judges.

Gilbert C. WAITE, Appellant, v. Louis JACOBS.

475 F.2d 392 Gilbert C. WAITE, Appellant, v. Louis JACOBS. No. 24183. United States Court of Appeals, District of Columbia Circuit. Argued Nov. 1, 1971. Decided March 8, 1973. Milton A. Kallis, Washington, D. C., for appellant. Charles H. Roistacher, Asst. U. S. Atty., with whom Thomas A. Flannery, U. S. Atty. at the time the brief was filed, John A. Terry and John T. Kotelly, Asst. U. S. Attys., were on the brief, for appellee. Before BAZELON, Chief Judge, and McGOWAN and WILKEY, Circuit Judges.

4844

30390

McGOWAN, Circuit Judge: Appellant was civilly committed to Saint Elizabeths Hospital, an institution for the mentally ill, in 1952. He eloped in 1953, and, according to the Government's brief, was thereafter "discharged from the rolls" of the hospital. In September, 1958, however, appellant was again committed to Saint Elizabeths, having been found incompetent to stand trial on a charge of assault with a dangerous weapon. He was subsequently certified to be competent and, in February of 1961, was tried by the court without a jury and found not guilty by reason of insanity. Under the procedures in force at that time, his insanity acquittal resulted in automatic commitment to Saint Elizabeths; and he has been confined there ever since. This appeal concerns his petition for habeas corpus, which was instituted in October, 1969, and denied in March, 1970, by the District Court, which found that "petitioner has not carried, his burden of proof and that he continues to have a mental illness and that if released he would be a danger to himself and others." (Emphasis added.) Appellant advances numerous arguments on this appeal, some of which have become moot, and others with which we do not agree. He does, however, raise the question of which side should bear the burden of proof in cases of this nature, contending that the Government should be made to justify his continued confinement, rather than his being made to prove eligibility for release. Although we find no occasion to question the long-standing rule that the burden of proof is on the petitioner in habeas corpus proceedings, see Bolton v. Harris, 130 U.S.App.D.C. 1, 395 F.2d 642, 653 (1968), we conclude that, in the special circumstances of this ease, appellant's claim may have merit; and we remand so that the District Court may consider the problem. Two facts are central to this result. First, appellant's 1961 trial occurred prior to our decision in Bolton v. Harris, which held that persons acquitted by reason of insanity (hereinafter "acquitees") must, prior to indeterminate commitment, be given a judicial hearing "substantially similar" to the one afforded persons who are civilly committed (hereinafter "commitees"). Since Bolton was applied only prospectively, we must assume that appellant was subject to pre-Bolton procedures, whereby acquitees were automatically confined for an indefinite term, i. e., until they could obtain a court order for their release, based on either the certification of the hospital superintendent that they no longer required treatment or on a successful habeas petition. Second, the maximum sentence which might have been imposed had appellant been convicted was ten years. 22 D.C.Code § 502. Thus, as of the date of the hearing on his habeas petition, appellant had been confined for over nine of the ten years for which he might have been sentenced criminally, and his maximum sentence period had ended long before this appeal was taken under submission. In addition to these two facts, our view that the Government may perhaps be required to bear the burden of justifying appellant's continued commitment rests on the assumption that the sole legal basis for his confinement over the past twelve years has been his 1961 insanity acquittal. It is possible, however, that the 1952 civil commitment order retains vitality, and could support appellant's confinement even in the absence of the insanity acquittal. Given the statement in the Government's brief that appellant was "discharged from the rolls" of Saint Elizabeths after his 1953 escape, that possibility seems remote in the light of Gillis v. Cameron, 116 U.S.App.D.C. 387, 324 F.2d 419 (1963); and the discussion below therefore assumes that the 1952 order has no present effect, that is to say, appellant is no different from other pr e-Bolton acquitees. We do not, however, preclude the possibility that there are facts which would render Gillis distinguishable; and upon remand the Government is free to develop them, or to otherwise argue that appellant's 1952 civil commitment removes his case from the scope of the rule of law which may be found to be operative. I On these facts and assumptions, we are faced with a man who has been deprived of his liberty for well over a decade by virtue of the fact that a court, sitting without a jury in 1961, had a reasonable doubt about his sanity at the time in 1958 when he committed an act prohibited by the criminal law. At no time since has the Government had to bear the burden of proving, even by a preponderance of the evidence, that he is mentally ill and dangerous. It is true that appellant has had the opportunity, in hearings on habeas petitions, to affirmatively prove that he is neither. But, especially in cases concerning psychiatric testimony, which is "often unclear, sometimes woefully muddled," United States v. Leazer, 148 U.S.App.D.C. 356, 460 F.2d 864, 866 (1972), the allocation of the burden of proof can be outcome determinative. Our concern, however, is not with any procedural defect which might be found when a pr e-Bolton acquitee's commitment is viewed in isolation. The crucial fact is that other persons confined in mental hospitals — namely, commitees — have been given the benefit of more stringent procedural safeguards. This difference in the treatment of two classes of mental patients has led us to scrutinize appellant's claim under the Equal Protection Clause, as interpreted in several recent Supreme Court decisions. It seems to us that, after the expiration of the period for which an acquitee might have been incarcerated had he been convicted, it may be irrational, within the meaning of equal protection doctrine, to distinguish between an acquitee and a commitee. Acquitees who have been confined for that period, therefore, may be entitled to treatment no different from that afforded commitees. Such a constitutional entitlement would necessitate that appellant be given a hearing at which the Government, in order to justify his continued confinement, would have to bear the burden of proof on the issues of mental illness and dangerousness. II There are two differences between acquitees and commitees, both relating to the fact that the former have committed the physical elements of a crime, which might be thought to justify treating them differently for purposes of initial commitment. Neither distinction, however, would seem to have force after the expiration of the maximum sentence period. First, as Judge Leventhal noted in his concurrence in Dixon v. Jacobs, 138 U.S.App.D.C. 319, 427 F.2d 589, 603-604 (1970), a person who is acquitted by reason of insanity may "have meaningful elements of responsibility for the offense, even though there is enough doubt to obviate a verdict of guilty." Such an acquittal means only that there was a reasonable doubt concerning the defendant's sanity at the time he committed a prohibited act. It is possible' that he was sufficiently sane to have criminal responsibility; indeed, under the applicable standard, it may be more likely than not. Moreover, "meaningful elements of responsibility" may exist even in those cases in which the jury is certain that the defendant was not "sufficiently responsible." The insanity defense is not a matter of black and white — there is not a precise psychological line separating absolute free will from absolute uncontrollability. Rather, the defense is based on a balance between mental disease and self-control, the law having determined that a person should not be found guilty when the former is such that the latter becomes, not non-existent, but merely "substantially impaired." McDonald v. United States, 114 U.S.App.D.C. 120, 312 F.2d 847, 851 (1962). Even those defendants who are "legally insane" to a "certainty," in other words, may have some control over their behavior, and therefore may possess some "meaningful elements of responsibility for the offense." While that possibility might have relevance for purposes of initial commitment procedures, it would seem to have none after the maximum sentence period. See Dixon, supra, at 604 (Leventhal, J., concurring). After confinement for that term, and in most cases much earlier, even a person who was fully accountable for a crime is free to rejoin the community. It follows, therefore, that the acquitee's substantially lesser responsibility should have no bearing on his continued confinement after the maximum sentence period. That is not to say that the acquitee must be released even if he is mentally ill and dangerous, but rather that his continued confinement, and the procedures governing it, cannot be justified by reference to his partial responsibility for a prohibited act. The second difference between acquitees and commitees, which might be thought to justify different treatment of the two classes, is that the former have "already unhappily manifested the reality of anti-social conduct," Dixon, supra at 604, and might therefore be considered demonstrably more dangerous than the latter. See Overholser v. O'Beirne, 112 U.S.App.D.C. 267, 302 F.2d 852, 859 (1962). An analysis of several recent Supreme Court opinions, however, suggests that that difference may not justify discrimination against an acquitee who has been confined for the maximum sentence period. The first in this line of cases is Baxstrom v. Herold, 383 U.S. 107, 86 S.Ct. 760, 15 L.Ed.2d 620 (1966), which concerned a New York statute providing that a state prisoner could, at the end of his sentence, be civilly committed without the jury trial afforded all other commitees, and could thereafter be sent to a special hospital for the dangerously insane without the hearing normally prerequisite to such confinement. The state argued "that it is reasonable to classify persons in Baxstrom's class together with those found to be dangerously insane since such persons are not only insane but have proven criminal tendencies as shown by their past criminal records." Id. at 114, 86 S.Ct. at 764. The Supreme Court found that contention to be "untenable," id., noting: Classification of mentally ill persons as either insane or dangerously insane of course may be a reasonable distinction for purposes of determining the type of custodial or medical care to be given, but it has no relevance whatever in the context of the opportunity to show whether a person is mentally ill at all. For purposes of granting judicial review before a jury of the question whether a person is mentally ill and in need of institutionalization, there is no conceivable basis for distinguishing the commitment of a person who is nearing the end of a penal term from all other civil commitments. Id. at 111-112, 86 S.Ct. at 763. (Emphasis in original.) In light of this language, this court has read Baxstrom as turning, not on the fact that Baxstrom was nearing the end of his sentence, but on the assumption that "dangerousness is not relevant to the procedures for determining whether a 'person is mentally ill at all.' Baxstrom thus might be said to require the conclusion that, while prior criminal conduct is relevant to the determination whether a person is mentally ill and dangerous, it cannot justify denial of procedural safeguards for that determination." Cameron v. Mullen, 128 U.S.App.D.C. 235, 387 F.2d 193, 201 (1967). (Emphasis in original.) Read in this manner, Baxstrom would seem to indicate that no procedural discrimination against acquitees can be justified on the ground that they have "already unhappily manifested the reality of antisocial conduct." A second Supreme Court ease, decided as recently as the 1972 Term, appears to point in the same direction. Humphrey v. Cady, 405 U.S. 504, 92 S.Ct. 1048, 31 L.Ed.2d 394 (1972). Humphrey had been convicted in a Wisconsin state court of contributing to the delinquency of a minor, a misdemeanor entailing a one-year maximum sentence. In lieu of sentence, he was committed to a "sex deviate facility" in the state prison, pursuant to the Wisconsin Sex Crimes Act. Wis.Stat.Ann. § 959.15 (1958), as amended, Wis.Stat.Ann. § 975 (1971). Under that statute, commitment to the sex deviate facility can be authorized for an initial term equal to the maximum sentence which might be imposed for the defendant's crime. After the maximum sentence period, the state can obtain five-year renewals, on the basis of a showing of dangerousness, made before a judge sitting without a jury. Humphrey challenged such a renewal order, obtained at the expiration of his one-year maximum sentence period. In remanding the case for the evidentiary hearing which had been denied by the District Court, the Supreme Court noted (at pp. 510-511, 92 S.Ct. at p. 1052, footnotes omitted) that "[cjommitment for compulsory treatment under the Wisconsin Sex Crimes Act appears to require precisely the same kind of determination" as compulsory civil commitment under the state's Mental Health Act (which provides for a jury determination of the conditions for commit ment), and "inquire[d] what justification exists for depriving persons committed under the Sex Crimes Act of the jury determination afforded to persons committed under the Mental Health Act." Citing Baxstrom, the Court indicated that Humphrey's dangerous conduct could not justify such procedural discrimination after the maximum sentence period had expired: [The State] seeks to justify the discrimination on the ground that commitment under the Sex Crimes Act is triggered by a criminal conviction; that such commitment is merely an alternative to penal sentencing; and consequently that it does not require the same procedural safeguards afforded in a civil commitment proceeding. That argument arguably has force with respect to an initial commitment under the Sex Crimes Act, which is imposed in lieu of sentence, and is limited in duration to the maximum permissible sentence. The argument can carry little weight, however, with respect to the subsequent renewal proceedings, which result in five-year commitment orders based on new findings of fact, and are in no way limited by the nature of the defendant's crime or the maximum sentence authorized for that crime. Humphrey clearly indicates that Baxstrom, which concerned a prisoner, applies fully to the situation of an acquitee who has been confined for the maximum sentence period. Insofar as the initial commitment is concerned, we can perceive little difference between Humphrey and an acquitee. Humphrey was found to have performed an anti-social act and was given compulsory treatment in lieu of sentence, after a determination apparently identical in nature with that required under a civil commitment statute. An acquitee, similarly, has been found to have performed an anti-social act and is given compulsory treatment after a proceeding ' substantially similar" (Bolton) to the one afforded commitees. The circumstance that Humphrey was committed in lieu of sentence, while an acquitee is committed "in lieu of conviction," does not detract from the essential similarity of the two commitments. Thus, Humphrey may well be viewed as embracing the proposition that procedural discrimination against acquitees because of their demonstrated dangerous propensities is prohibited in re-commitment proceedings. See also Matthews v. Hardy, 137 U.S.App.D.C. 39, 420 F.2d 607 (1969), cert. denied, 397 U.S. 1010, 90 S.Ct. 1231, 25 L.Ed.2d 423 (1970). Appellant, however,' is not the subject of re-commitment proceedings as such. His 1961 commitment, unlike Baxstrom's and Humphrey's, was for an indefinite term. A question arises, therefore, as to the reach of Baxstrom and Humphrey to the situation of continued, as opposed to renewed, confinement. It might be argued, initially, that Humphrey is directly applicable to the issue of indefinite commitment itself, and that it requires that the initial confinement be limited to the maximum sentence period. Thus, it might seem that the result in that case would have been no different if the Wisconsin statute, instead of authorizing a fixed initial term with renewals, had provided that the initial commitment be indefinite. Renewal proceedings with inadequate safeguards are surely better than no renewal proceedings at all; and, since the Court found constitutional fault in the former, a similar holding as to the latter may be implicit. Such a conclusion is not ineluctable, however, as the Court has occasionally invalidated discriminations operative in a procedural context without reaching the question of whether the procedure itself is constitutionally required. We therefore intimate no view on the constitutionality per se of an acquitee's indeterminate commitment, either under Humphrey or under traditional due process concepts. Whether or not Humphrey is directly applicable to the issue of indefinite commitment of acquitees, however, a subsequent Supreme Court decision, Jackson v. Indiana, 406 U.S. 715, 92 S.Ct. 1845, 32 L.Ed.2d 435 (1972), suggests that the Baxstrom rationale applies to appellant, even though his case concerns continued, rather than renewed, commitment. Jackson, a mentally defective deaf mute, was committed to a mental hospital as incompetent to stand trial on a charge of robbery. Noting that "[t]here is nothing in the record that even points to any possibility that Jackson's present condition can be remedied at any future time," the Court concluded that Jackson's commitment was "permanent in practical effect." Although the procedural safeguards at Jackson's commitment hearing were "substantially similar" to those available under state statutes providing for indeterminate civil commitment, the Court found a violation of equal protection in the fact that, under the terms of Jackson's commitment, he could obtain release only by meeting a standard more stringent than those applicable to persons not charged with criminal offenses: Baxstrom did not deal with the standard for release, but its rationale is applicable here. The harm to the individual is just as great if the State, without reasonable justification, can apply standards making his commitment a permanent one when standards generally applicable to all others afford him a substantial opportunity for early release. 406 U.S. at 729, 92 S.Ct. at 1853. Thus, Jackson expressly holds that Baxstrom is applicable to the problem of release from indefinite confinement, even though re-commitment proceedings are not contemplated by statute. Read together, then, Humphrey and Jackson indicate that, once the maximum sentence period has expired, it is unconstitutional to discriminate against an acquitee, as compared with a commitee, for purposes of release from indefinite commitment. From that moment on, acquitees and commitees appear, in the Court's contemplation, to be on the same footing. Assuming the correctness of this analysis, the issue is whether appellant, in seeking release from confinement, is on an equal footing with a commitee. It is not dispositive to point to the fact that the relevant statutory provisions, as judicially construed, provide that both acquitees and commitees can obtain release through petitions for habeas corpus, and that the burden of proof on the issues of mental illness and dangerousness is, in either case, on the petitioner. The reason that equal protection may be violated despite such apparent similarity of treatment is that placement of the burden of proof on the habeas petitioner, while rationally justifiable in the case of a commitee, may be irrational with respect to appellant for the reason that just as it is unconstitutional to place a burden on only one of two similarly situated persons, so also may it be irrational to place similar burdens on persons situated differently. The rational justification for placing the burden of proof on a commitee is that his mental illness and dangerousness have previously been convincingly established. In light of those established facts, the law gives effect to a presumption of continuity of status. It comports with normal perceptions of reality — and hence is rational — to assume that, once a given status is proven to exist, it continues to do so in the absence of evidence showing the contrary to be more likely than not. The presumption of continuity of status, however, cannot operate with respect to a pr e-Bolton acquitee, because he has not been proven to be mentally ill and dangerous. He and a commitee are, in that respect, differently situated; and it would seem to offend equal protection to place upon him a burden which can justifiably be placed on a commitee only by reference to the differentiating characteristic. Ill If appellant is constitutionally entitled to be put on an equal footing with commitees, as the foregoing considerations suggest, then it would seem that he has a right to a hearing, with all the procedural safeguards available in civil commitment proceedings, at which the Government must bear the burden of proof on the issues of his mental illness and dangerousness. The fact that appellant committed the physical elements of a crime in 1958 would, of course, be relevant evidence admissible at the hearing. The time seems past, however, when that act can be accorded more than evidentiary significance. While it appears that strong constitutional arguments can be made in support of the granting of the above-mentioned relief to appellant, we do not now so hold. Since the arguments were not made in appellant's brief or at oral argument (indeed, both Humphrey and Jackson were decided subsequent to oral argument), the Government has had no opportunity to respond to them. Therefore, we limit ourselves to the suggestion that, for the reasons developed above, appellant may be entitled to have the Government bear the burden of proof on the issues of mental illness and dangerousness; and we remand for a full consideration of the problem, including, if necessary, additional evidentiary inquiries. The District Court should initially resolve the question of the continued vitality of appellant's 1952 civil commitment order. If it determines that the answer is as we have assumed it to be, it should then address the constitutional issues posed above, allowing counsel for both parties to address themselves to them. The case is remanded to the District Court for further proceedings in the light of this opinion. It is so ordered. . Appellant eloped from the hospital and was absent for several days in 1962. At oral argument, counsel informed us that appellant now spends much time away from the hospital grounds under a conditional release. Appellant remains on the rolls of Saint Elizabeths, however, and, according to the Assistant United States Attorney who appeared before us, returns to John Howard Pavilion each night to sleep. The issue of the validity of appellant's continued confinement, therefore, has not been mooted. . Appellant's conditional release, see note 1, supra, has mooted his claim that he was improperly confined in the hospital's maximum security facility, as well as his contention that he was receiving inadequate treatment. . Appellant attacks the Government's psychiatric testimony on a variety of grounds. He asserts that much of it was based on unverified reports from nurses and ward attendants, or on hospital records which were unauthenticated, inadmissible, and incomplete. Reliance by a doctor on reports from his staff was, however, approved by this court in Brown v. United States, 126 U.S.App.D.C. 134, 375 F.2d 310, 318 (1967); and the admissibility of hospital records is settled in this jurisdiction by Covington v. Harris, 136 U.S.App.D.C. 35, 419 F.2d 617, 626 (1969). As for the alleged incompleteness of those records, that is something which we cannot consider without being able to examine the records themselves. Although he could have done so under Covington v. Harris, supra at 626, appellant's counsel chose not to introduce those documents into evidence, reasoning, as he explained at oral argument, that the trial court should not be burdened with "a lot of anonymous hearsay." The hospital documents are therefore not part of the record on appeal; and, while we reiterate the importance of detailed record-keeping, id. at 627, we hold that the issue of their completeness is not properly before us. Appellant also urges that the Government's psychiatric testimony was conclusory, and that it was based on inadequate diagnoses and examinations. We have found nothing in the record, however, which would require reversal on either of those grounds. . As noted above, appellant's arrest in 1958 occurred while he was at large subsequent to his 1953 elopement. . The Government does not argue that the 1952 order retains vitality; and the District Court clearly assumed that the insanity acquittal was the basis for appellant's commitment. . The recent amendment to the D.C.Code which purports to require that insanity be established by a preponderance of the evidence, 24 D.C.Code § 301 (j) (1967 ed., Supp. Y, 1972), is not applicable to this case; and we express no views with respect to it. . Of course, post-Bolton acquitees have also been given the benefit of more stringent procedural safeguards; but the discrimination between pre- and post-Bolton acquitees is sanctioned by the prospectivity holding of Bolton itself. . In alluding to these possible distinctions, we are not called upon in this case to express any opinion as to what, if any, discriminations in the initial commitment decision, between commitees and acquitees, are permitted or required by the Constitution. On the record before us we deal only with a pre-Bolton acquitee whose commitment to a mental institution has now lasted longer than the maximum sentence which could have been imposed had he been found guilty. Compare United States v. Brown 155 U.S.App.D.C. -, 478 F.2d 606 (1973). . The Second Circuit, quoting from Cameron, rendered a similar interpretation of Baxstrom in United States ex rel. Schuster v. Herold, 410 F.2d 1071 (2d Cir. 1969). . It should be noted, moreover, that the Court, in discussing the state's asserted justification in the passage excerpted above, granted its "arguable force" only "with respect to an initial commitment . limited in duration to the maximum permissible sentence." . See, e. g., Griffin v. Illinois, 351 U.S. 12, 76 S.Ct. 585, 100 L.Ed. 891 (1956). . See Ragsdale v. Overholser, 108 U.S.App.D.C. 308, 281 F.2d 943, 950 (1960) (Fahy, J., concurring). In McNeil v. Director, Patuxent Institution, 407 U.S. 245, 92 S.Ct. 2083, 32 L.Ed.2d 719 (1972), the Supreme Court noted that "lesser [procedural] safeguards may be appropriate" when commitment is for "a limited purpose"; but indicated that "by the same token, the duration of the confinement must be strictly limited [by reference to the purpose]." Id. at 249-250, 92 S.Ct. at 2087. . 24 D.C.Code § 301, as construed in Bolton v. Harris, supra, at p. 653 of 395 F.2d. . The practical importance of this concept can perhaps be illustrated by assuming the cases of two persons about whom the evidence as to mental illness is, always lias been, and always will be, inconclusive — it cannot be said with reasonable certainty that either is, or is not, mentally ill. Person number one is a pr e-Bolton acquitee. Because there was reasonable doubt about his sanity, he was acquitted of a criminal charge and automatically committed for an indefinite term. Because he cannot establish his sanity, he will never obtain his release under the present rule. Person number two is walking the streets. The Government once attempted to commit him civilly; because the evidence was inconclusive, however, that attempt failed. Clearly, Baxstrom, Humphrey, and Jackson mean that both persons must be treated equally after the expiration of number one's maximum sentence period. Under present procedures, however, that will not be the case: Number two will never see the inside of a mental hospital, and number one will never see the outside. . This would leave undisturbed the traditional rule that the burden of proof is on the petitioner in habeas corpus proceedings, and the application of that rule by Bolton, supra, at 653, to habeas petitions brought by commitees and post-Bolton acquitees. So long as the status of mental illness has previously been proven to exist, the presumption of its continuity can, as noted above, rationally justify the traditional rule. Thus, once .an acquitee is proven to possess the prerequisites for commitment, the burden of proof will be on him in any subsequent habeas proceedings. . To the extent that statements in Ragsdale v. Overholser, 108 U.S.App.D.C. 308, 281 F.2d 943 (1960), and Overholser v. O'Beirne, 112 U.S.App.D.C. 267, 302 F.2d 852 (1961), are inconsistent with this theory, we must again recognize, as we did in Bolton, supra, at 653 of 395 F.2d, that modification of those decisions may be required by supervening Supreme Court authority. . We have couched our discussion largely in terms of the allocation of the burden of proof for the reason that that is the issue raised by appellant on this appeal. On remand it will be open to him to make sucli contentions as he sees fit with respect to the precise scope of the procedural rights, including the availability of jury trial, which he may believe to be required. If a jury trial is mandated by the Constitution, the habeas procedure should be adaptable enough to be conformed to that need. Our so-called Bolton hearing, for example, fits no exact statutory or common law pattern, and demonstrates that, in this field at any rate, the forms of action are flexible. . Since appellant is a pre-Bolton acquitee, the District Court will not be faced with the question of whether the considerations we have adverted to apply to post-Bolton acquitees whose maximum sentence periods have expired.

6644882

UNITED STATES, Appellee v. RAYMOND G. BROY, Corporal, U. S. Marine Corps, Appellant

United States v. Broy

1964-03-13

No. 17,173

419

428

14 C.M.A. 419

14

Decisions of the United States Court of Military Appeals

United States Court of Military Appeals

United States

2021-08-11T01:44:38.739149+00:00

CAP

Judges FERGUSON and Kilday concur.

UNITED STATES, Appellee v RAYMOND G. BROY, Corporal, U. S. Marine Corps, Appellant

UNITED STATES, Appellee v RAYMOND G. BROY, Corporal, U. S. Marine Corps, Appellant 14 USCMA 419, 34 CMR 199 No. 17,173 March 13, 1964 Fred W. Shields, Esquire, argued the cause for Appellant, Accused. With him on the brief were Lieutenant Colonel Charles B. Sevier, USMC, and Lieutenant John Thomas Montag, USNR. Commander C. J. Mackres, USNR, argued the cause for Appellee, United States. With him on the brief were Captain G. M. Fisher, USN, Commander F. L. Forshee, USN, and Lieutenant A. D. Christian, USNR.

5025

30304

Opinion of the Court Quinn, Chief'Judge: The primary question on this appeal is whether the accused was, as the Government contends, a "gold brieker" trying to avoid ordinary brig routine, or whether, as he contends, he was subjected to gross mistreatment and abuse by brig personnel as part of a calculated effort that deprived him of a speedy trial. On November 9, 1962, the Criminal Investigation Section at the Marine Corps Air Station, El Toro, California, received a complaint about bad checks issued by the accused. An investigation was begun. While the investigation was still pending, the accused absented himself without authority. On his return, on November 26, he was confined in the station brig. In January, he was formally charged with thirteen specifications of issuing bad checks, in violation of Article 123a of the Uniform Code of Military Justice, 10 USC § 923a. After investigation under the provisions of Article 32 of the Uniform Code, 10 USC § 832, the charges were referred to trial by general court-martial. The case came on to be heard on March 5, 1963. At trial, the accused appeared with his left leg in a cast. In an out-of-court hearing before the accused entered his plea, civilian defense counsel indicated the cast resulted from mistreatment of the accused while in confinement. The representations were made in the course of some preliminary comments on a motion to dismiss the charges on the ground the accused had been deprived of a speedy trial. Counsel's remarks did not clearly indicate whether the alleged abusive treatment of the accused constituted a separate reason for dismissal, or whether it was advanced as part of the claim of denial of a speedy trial by "oppressive delay." See United States v Brown, 10 USCMA 498, 504, 28 CMR 64. Following an enumeration by trial counsel of the steps taken to bring the charges to trial, the law officer suggested to defense counsel that accused's treatment in the brig was a matter "separate and distinct from" the speedy trial issue. Thereupon, defense counsel remarked that, if it was "the desire of the law officer," he would frame the application to dismiss in the form of "two motions," one based upon the more than three months' delay between accused's confinement and the trial, and the other predicated upon the "cruel and unusual punishment inflicted" upon the accused. From that point on, the hearing proceeded as if there were two mutually exclusive motions to dismiss. Both motions were denied. On this appeal, appellate defense counsel, none of whom represented the accused at trial, contend the law officer misapprehended the nature of the defense position. They maintain that all circumstances surrounding a delay in trial are relevant in determining whether the delay is "oppressive." From that premise, they conclude the law officer erred by giving no consideration to the evidence of accused's mistreatment in deciding the motion to dismiss for "oppressive delay." Government counsel argue that the kind of treatment the accused received at the hands of the Government before trial is wholly immaterial, because only those circumstances which tend to explain the lapse of time are relevant. "Every case," say Government counsel, which they have examined, "is concerned with time." Most cases do indeed deal with the factors explaining the delay between charge and trial. But, there are other matters that may tend to make a delay in prosecution oppressive. One of the most frequently cited eases on the right to speedy trial is Petition of Provoo, 17 FRD 183, 195, 203, affirmed, 350 US 857, 100 L ed 761, 76 S Ct 101 (1956). There, the defendant was held in close confinement by military authorities for a certain time. In September 1949, he was given an undesirable discharge. However, he was immediately taken into custody by the Federal Bureau of Investigation on a charge of treason. He was held without bail until trial, in October 1952. Some months before trial, he had been examined by a medical doctor of the United States Public Health Service. In the doctor's opinion, the defendant's emotional stability had " 'suffered severely under the pressure of long confinement.' " Considering a motion to dismiss for lack of speedy trial, District Judge Thomsen found that the long period of defendant's confinement had "seriously impaired his ability to defend himself." He held the defendant had been denied a speedy trial, and granted the motion to dismiss. The ruling was affirmed by the United States Supreme Court. If, as Judge Thomsen held, the effects of the mere fact of confinement can be considered in determining whether the delay in trial is oppressive, certainly the nature and the effect of the treatment accorded the defendant while in confinement are similarly relevant circumstances. It would also seem that cruel and unusual punishment inflicted upon the accused before trial by Government agents as part of a "willful, purposeful, vexatious," scheme to impede the accused in preparation of his defense is a relevant consideration on a motion to dismiss for denial of a speedy trial. See United States v Brown, 13 USCMA 11, 14, 32 CMR 11. Accepting the legal principle of the defense argument, however, would not necessarily bring us to the result advanced by the accused. A number of preliminary questions are presented. It is uncertain, for example, whether defense counsel intended to include the accused's treatment in confinement as part of the speedy trial motion. There is also the possibility of waiver of the point in issue by defense counsel's affirmative acceptance of the suggestion that the confinement treatment be considered a "separate and distinct" ground for relief. See United States v Ayers, 14 USCMA 336, 34 CMR 116. All these matters aside, and, assuming for purposes of this appeal, that the law officer erred by disregarding the accused's treatment in confinement as a circumstance bearing upon the speedy trial motion, we are still constrained to affirm his ruling. Substantial evidence of the accused's pretrial treatment was introduced. The accused testified on the issue; the brig officer was examined; and the accused's medical record was introduced in evidence. So far as the record shows, and it is not contended otherwise on this appeal, the defense introduced all the evidence it had, or wanted to present, in support of the claim of cruel and unusual punishment. The full compass of the defense allegation is, therefore, before us, and we can properly evaluate its merit. See United States v Walbert, 14 USCMA 34, 33 CMR 246; United States v Brown, 13 USCMA 11, 32 CMR 11. What appears from the evidence may be a dismal, even disquieting, picture of insensate treatment, but there is no intimation whatever that the treatment was part of a deliberate plan to impede the accused in the preparation of his defense, or that it had that effect. As noted earlier, the accused was confined in the station brig on November 26, 1962. Persons in confinement were grouped in one of three custody classifications: minimum, medium, and maximum. The latter class was composed of those considered to be incapable of following orders, or who might be inclined to attempt escape. The accused was in the maximum custody class. Since he was a non-commissioned officer, he was "treated somewhat differently" from nonrated prisoners in that he was not allowed to go out on work parties with persons of lesser rank. Besides work details, brig discipline included a "daily activity schedule." All prisoners, sentenced and unsentenced alike, except those over forty years of age and those with a "medical chit," were subject to the schedule. The accused was twenty-eight years of age. The schedule was not completely spelled out in the record, but it apparently included "marching," and what the brig officer described as a "strenuous physical fitness program," consisting of push-ups, stepups, squats, deep knee bends, other body, leg, arm and neck exercises, and running. A prisoner who did not perform an exercise "properly," that is, in "accordance with the standard established by the Marine Corps," was required to repeat it. Reveille v/as at 4:30 a.m. Prisoners were allowed three minutes to dress and "get out on the red line . . . [for] chow." Unless excused by the medical officer, they marched to one of two dining halls for their meals. One of the messes was about one quarter of a mile from the brig; the other was a mile away. If a prisoner did not march to the mess, his meal was carried back to the brig in a "standard mess hall' tray covered with another tray." In transit, hot foods "cooled off considerably." Immediately on return from breakfast, prisoners performed physical training exercises for about an hour; work parties were then formed for those on detail. Prisoners remaining at the brig apparently would march or, as the accused put it, "troop and stomp," or engage in "close order drill." The same general routine was followed after lunch, and sometimes was enforced after the evening meal. As a result of brig activities, prisoners were on their feet "all the time, except when . at chow." The accused entered the Marine Corps in 1954. Before then he had had some trouble with his knees from playing football. When he "was down to San Diego" (apparently in boot camp), he had experienced "a little trouble" with them and had informed "the Captain." However, he had not had any trouble "at all lately." It may be inferred that on incarceration, he was at first able to participate fully in the brig activities. As admitted by the brig officer, soon thereafter, he "mention [ed]" his legs "were hurting as well as the lower extremities of his body." The accused characterized the report as a "complaint," but the brig officer testified he regarded it merely as an indication that the accused "was haying trouble getting adjusted" to the physical exercise program and that he had some "soreness." Nevertheless, he informed the accused he could go see the medical officer the next day. The accused testified he also suffered from, and made complaints about, "ulcers." At this point, the chronology is very sketchy. Apparently, the accused had no medical attention until December 27. He testified that at that time he complained about stomach trouble and a backache, and asked to be hospitalized. However, he remained in the brig, and was compelled to continue with the regular routine. The accused's medical record shows he had medical attention on January 17, 1963. The diagnosis was "Strained muscle in back." There is no indication the accused was relieved in any way from full participation in the established program. His testimony supports an inference that he was not excused from any activity. According to the accused he was compelled, every day, to do from three to four hundred stepups; from two hundred to two hundred and fifty pushups; "all the other different types of exercises" from "mountain climb" to "squat jumps"; and from four to four and one-half hours of close order drill. He said that at "different interval [s]" he complained to the brig officer about the effects of these exercises. On January 25, he again saw the medical officer. The record entry is, "Previous knee trouble in past (played football) — X-ray both knees was negative." Nothing appears in the medical record to show that as a result of this complaint, the accused was excused from full participation in the physical training program. One of the brig guards allegedly gave the accused special difficulty. The accused testified this guard was "sadistic" in his attitude, and went "overboard" on the accused by trying to "push" him "over . . . [his] limit." Although the accused did not say how often he was subject to this man's authority, it may be inferred he was regularly supervised by him. It also appears that during this period the accused did more exercises than other prisoners, The brig officer admitted he had "some minor problems" with the accused, and " [occasionally" the accused "might have been given more physical exercise"' because he did not perform according to the Marine Corps standard. He recalled one occasion when he personally instructed the accused he "was not performing properly." On January 27, 1963, Pro-Banthine (a commercial drug used in the treatment of ulcers) and Darvon (a drug used to offset the effects of pain) were prescribed for the accused. See Physician's Desk Reference to Pharmaceutical Specialties and Biologi-cals, 13th Edition, 1959, at pages 699 and 792. The reason for the prescription does not appear in the accused's medical record, but the testimony indicates it was probably predicated on accused's complaint of pain. Still, the accused was not excused from any exercises. His testimony, and the other evidence, indicate he was sometimes required to repeat a series of exercises because he did not, in the judgment of the brig attendant, meet the regular achievement standard. This situation continued until February 13, 1963. That day the accused was again examined by a medical officer. The medical record entry of the examination is as follows: "Effusion & pain knees — Bilat. Please eval J. F. Canatti no evidence of effusion. Bilateral minimal laxiety [sic] of collateral ligaments no 'squat type' exercises, ace wrap." For the first time since his initial complaint about pain in the knees, the accused received a medical excuse from participating in part of the brig regimen. But it appears the excuse was not immediately communicated to the brig authorities, or, if communicated, was not acted upon by them. The brig officer admitted that no memorandum was isued to brig personnel until February 15th. That was a day after the accused again went to the medical officer. The medical record shows nothing of the clinical findings of the visit of February 14, but it repeats the prescription of February 13, namely, "no 'squat type' exercises." Since the excuse was limited to squat-type exercises, the accused was corn-pelled to perform push-ups, stepups, close order drill, running, marching, and the other activities. The accused received another examination on February 16. The entry on the medical record is "Swelling & pain in knees increasing." The accused was directed to report to the surgery clinic for "re-evaluation." On February 18, he was examined by Dr. Eberstein. The doctor listed his findings as "Small effusion" in one knee yielding "10 ce bloody fluid." He administered an injection and told the accused to return in two days. He also issued a medical chit. On the same day, the brig officer issued a memorandum in compliance with the chit which prohibited "exercises or marching" for forty-eight hours. However, according to the accused, he was still required by the guard to do stepups and push-ups. It may be inferred that he also continued to march to the mess hall for his meals. At the end of the forty-eight-hour period of excuse, the accused was examined by Dr. Eberstein. After the accused had a "whirlpool" bath of the affected area, the doctor applied a "cylinder east for a few weeks as therapeutic trial." Apparently he did not issue an excuse chit. It may be he assumed the cast would itself serve as a medical excuse. It did not, however, have that effect. Since the excuse of February 18 expired by its terms, and no new chit had been issued, the accused was required to follow the regular brig routine to the full extent it was physically possible. The accused testified that "since . . . [he] had . . . [the] cast on," he could not do the stepups, which entailed stepping as high as two feet, but he was forced to do push-ups. He also continued to march to chow. On February 21, Dr. Eberstein examined, and approved the cast. According to the accused, Dr. Eber-stein told him the condition of his knees was a recurrence "due to exercise" of his old difficulty. He testified the doctor indicated that an operation on both knees was necessary. After his leg was placed in the cast, the accused discussed with the "people" at the brig the "condition of . . . [his] leg." They "kept prolonging" a decision "to see what would happen in the court-martial ; whether . . . [he] got sentenced, or what would happen." In the meantime, he participated to a limited extent in the routine activities. He could not "walk to chow" so his food was brought to him "cold." On February 28, a memorandum was published to advise brig personnel that the accused would do "no marching, [and] may not go to show [sic] until further notice." The brig officer was not asked, and he did not say, nor is there any evidence to show, why this memorandum was promulgated. In view of the brig officer's testimony that such notices were "always based upon the excuse slip or the advice of a medical doctor," it may be inferred the accused visited the doctor between February 21 and February 28, and that the doctor expressly excused the accused from marching. The cast, as we observed earlier, was still on the accused's leg at the time of trial, March 5, 1963. Some of the accused's complaint of cruel treatment is not supported by the evidence. For example, there is no apparent connection between the brig routine and the accused's stomach trouble. Also, there is no evidence of any deliberate attempt to deprive the accused of medical attention when he requested it. However, the evidence does establish that the brig program aggravated a latent weakness in the accused's knees and the resultant condition gave him considerable pain. The condition required that he be relieved from participation in all phases of the brig program, including marching to the mess hall for his meals. If we credit the accused's testimony, the condition of his knees was so bad that an operation would be necessary to correct it. Whatever may be said about this lamentable deterioration of the accused's physical condition, and about that we shall have something more- to say presently, it had no effect upon accused's ability to defend against the charges. It did not dull his memory about the past, or his awareness of the present. See People v Prosser, 309 NY 353, 130 NE 2d 891 (1955). Whatever fault may be assessed for the accused's present plight, there is no discernible nexus between the conditions of his confinement and his preparation for trial. Consequently, had this evidence been fully taken into account by the law officer, it could hardly have influenced his decision. Cf. United States v Vaughan, 3 USCMA 121, 11 CMR 121. The other evidence, which we need not set out at length, shows the Government acted diligently to complete the preliminary proceedings and bring the accused to trial. We conclude, therefore, that if the law officer erred in the matter, the error did not prejudice the accused. United States v Walbert, supra. Turning to his plea of guilty, the accused contends it was improvidently entered. The meaning and effect of the plea of guilty was explained by the law officer in a preliminary out-of-court hearing. The accused told the law officer he had "discussed" the elements of the offense with his counsel, and he knew what the Government was required to prove. Yet, during the sentence proceedings, the accused said in an unsworn statement that he "didn't have any intentions of depriving anybody in any way when . . . [he] wrote these checks." At the end of accused's statement, the law officer held a second out-of-court hearing. He directed defense counsel's attention to the apparent disclaimer by the accused of any intention to defraud. He also observed such a disclaimer was inconsistent with the plea of guilty in that it denied the existence of one of the elements of the offense charged. His explanation was accepted by defense counsel as "quite correct." Counsel then moved to strike the accused's statement about his intentions. The accused stated his personal agreement with the motion. The law office recommended, however, that the accused talk privately with his lawyers about the matter. The hearing was recessed. Almost a quarter of an hour later, it was resumed; it continued as follows: "IDC : May it please the law-officer, the accused wishes at this time to withdraw all prior statements re garding the intent at the time of the issuing of the checks involved. "LO: Is this your intent, Broy? "ACCUSED: Yes, sir. "LO: Is this satisfactory with trial counsel? Do you have any objections? "TC: This is satisfactory provided that it is stipulated that it will be withdrawn in front of the court, and the court instructed by the law officer that they are to disregard the portion which has been stricken. "LO: I think it should be done in open court." When the court-martial reconvened, defense counsel repeated the defense motion to strike from accused's statement that part relating to his intention. Again, the accused personally stated his agreement with the motion. The law officer thereupon instructed the court members to disregard the un-sworn statement of intention. In closing argument, defense counsel made the following remarks about the accused's state of mind: ". . . However, if the guy intended to make it good with cash after he wrote the checks, and he didn't have any account, and there's no doubt about it that he did intend to pay it off in cash, and if he hadn't been locked up for being over the hill, perhaps they would have been paid off in cash. I don't know, I can't figure his mind." Accused's personal participation in the proceedings leaves no room to doubt that he understood the intent element of the offense charged. With that understanding he, and his counsel, twice admitted there was no purpose or desire to detract from the judicial confession that the accused possessed the intent charged at the time he negotiated the checks, which was implicit in the plea of guilty. Cf. United States v Henn, 13 USCMA 124, 32 CMR 124. Appellate defense counsel contend, however, that defense counsel's remarks in closing argument show there was actually no intent to defraud. These remarks, they say, support the present contention that the plea of guilty was improvident. A careful reading of defense counsel's sentence argument suggests he intended to convey only the idea that after the checks were negotiated the accused decided to make restitution. Assuming, however, the argument can be construed as a qualified denial of the intent required for the offense, in light of the earlier discussion with the law officer of the specific point in issue, it constituted merely "advocate's oratory, not a statement of fact or reasonable belief." United States v Hinton, 8 USCMA 39, 42, 23 CMR 263; cf. United States v Fernengel, 11 USCMA 535, 29 CMR 351. Despite the weight of the record evidence against the present claim of improvidence of plea, the accused filed with his appeal an affidavit in which he details several efforts to obtain money for the apparent purpose of covering the bad checks. He maintains, among other things, that he attempted to obtain the cash surrender value of an insurance policy, and to deposit the money in his "account." Also, he alleges that as to the check of October 22, which was issued in California but drawn on a bank in Nebraska, he "figured" it would take about "10-14 days before it reached the bank"; he "intended to make a deposit from my pay on payday." The latter representations apparently refer to a Nebraska bank account, which had been closed two years earlier. Apart from material differences between the accused's present assertions and the pretrial evidence available to the Government and on which the accused probably based his decision to plead guilty, significantly, the accused says nothing about the six checks he drew on a California bank in which he had no account. Nowhere in his affidavit does the accused say directly and simply that at the time of the issuance of the cheeks he did not intend to defraud the respective payees. The same studious avoidance of a direct and unequivocal denial of an intent to defraud appears in a pretrial statement by him. which is part of .the Article 32 investigation record. In the light most favorable to him, the affidavit shows nothing more than what his counsel argued at trial, namely, that after the offenses, the accused desired to make restitution. That purpose is not inconsistent with guilt. See United States v Clay, 11 USCMA 422, 29 CMR 238; United States v Sellers, 12 USCMA 262, 275, 276, 30 CMR 262. We agree with the board of review, which also considered the matter, that all the evidence shows the plea of guilty was provident. The last issue within our grant of review deals with the delicate and difficult question of the adequacy of accused's representation at trial as to the sentence. The accused's affidavit, and some letters in the appellate papers, go beyond the issue and imply that both civilian counsel and appointed military counsel grossly misunderstood the legal significance of the evidence available to them regarding the accused's intention to make certain deposits to his "account." See United States v Henn, supra. We examined this evidence in connection with the claim of improvidence of plea. We found it wanting in that regard. It is similarly unpersuasive as a challenge to the professional judgment and competency of defense counsel in connection with the findings of guilty. Defense counsel's trial responsibility to the accused does not end with the findings. His obligation to provide effective assistance continues through the imposition of sentence. That obligation is not satisfied by obtaining before trial the agreement of the convening authority to disapprove so much of the sentence as exceeds a specified maximum. In United States v Allen, 8 USCMA 504, 508, 25 CMR 8, we observed : ". . . Whatever practical comforts he may have drawn from the preliminary agreement with the convening authority, defense counsel did not provide the court-martial with anything from which it could determine a just sentence. Neither did he provide anything from which a board of review could reach an informed judgment as to the appropriateness of the sentence affirmed by the convening authority. In reviewing the sentence, the board of review 'can be compassionate; it can be lenient; it can be forbearing,' but it can act only on the basis of what it finds in the record. United States v Lanford, 6 USCMA 371, 378, 20 CMR 87. If there is nothing of substance in the record, there is little that the board of review can do to carry out its sponsibility." Government counsel point to the examination of the accused conducted by civilian counsel as evidence of his professional skill. The examination sharply contrasted the accused's unhappy civilian background with his military achievements. It amply demonstrates that counsel's representation was not a mere "ridiculous and empty gesture." United States v Hunter, 2 USCMA 37, 41, 6 CMR 37. That, however, is not the measure of counsel's responsibility. The fact that counsel's effort rises above the level of the "ridiculous" does not necessarily mean the accused was accorded such effective assistance as assured him a fair trial. It is also incumbent upon counsel to "present such evidence as is known and is available to him, which would manifestly and materially affect the outcome of the case." United States v Rosenblatt, 13 USCMA 28, 29, 32 CMR 28; United States v Hamilton, 14 USCMA 117, 33 CMR 329. None of the evidence of the brig program and its effect upon the accused, which had been elicited in the out-of-court hearing on the motion to dismiss, was presented to the court-martial. Government counsel maintain the evidence reveals the accused as a "gold bricker"; consequently, keeping the evidence from the court-martial "benefited" the accused. Our earlier discussion of this evidence requires rejection of that approach. There is no blinking the fact that participation in the brig program activated and aggravated a latent knee condition to the point where it caused the accused substantial pain, and necessitated an operation. There is no blinking the fact that for two weeks the accused was compelled to eat cold food because he could not march to the mess hall, and the brig officials gave every indication of allowing this situation to continue as long as the accused remained physically incapacitated. Defense counsel described the accused's treatment as "cruel and unusual punishment." Yet, he did not introduce any of the evidence to the court-martial; nor did he say a word about it. It may be counsel's description was overdrawn, but indisputably the accused suffered physically and mentally as the direct result of the skepticism with which the brig personnel treated his complaints of pain. They were extraordinarily insensitive to his plight. There may indeed be little room for culinary niceties in a brig, but the degree of official indifference to accused's physical inability to march to the mess hall for his meals borders on the malevolent. The "cold meal" routine and the intransigent insistence on the letter of the medical excuses received by the accused, tend to indicate that these were means of punishing the accused for not being well enough to participate fully and satisfactorily in the "strenuous" brig program. In our opinion, there is a fair chance that had this evidence been presented to the court-martial it would materially have influenced its deliberations on the kind and amount of punishment to impose upon the accused. See United States v Huff, 11 USCMA 397, 29 CMR 213; cf United States v Schalck, 14 USCMA 371, 34 CMR 151. The decision of the board of review as to the sentence is reversed. A rehearing thereon may be ordered. Judges FERGUSON and Kilday concur.

6309057

Smith v. Lockhart, Director, Arkansas Department of Corrections

Smith v. Lockhart

1983-10-03

No. 82-6592

832

832

464 U.S. 832

464

United States Reports

Supreme Court of the United States

United States

2021-08-11T00:57:08.638301+00:00

CAP

Smith v. Lockhart, Director, Arkansas Department of Corrections.

No. 82-6592. Smith v. Lockhart, Director, Arkansas Department of Corrections.

16

112

C. A. 8th Cir. Certiorari denied.

11343938

Parker v. Johnson, Warden, et al.

Parker v. Johnson

1991-03-18

No. 90-6857

926

926

499 U.S. 926

499

United States Reports

Supreme Court of the United States

United States

2021-08-10T20:45:14.503256+00:00

CAP

Parker v. Johnson, Warden, et al.

No. 90-6857. Parker v. Johnson, Warden, et al.

14

82

C. A. 11th Cir. Certiorari denied.

5715660

R. Edward BATES, Petitioner, v. R. James NICHOLSON, Secretary of Veterans Affairs, Respondent

Bates v. Nicholson

2006-07-18

No. 03-1903(E)

185

193

20 Vet. App. 185

20

West's Veterans Appeals Reporter

United States Court of Appeals for Veterans Claims

United States

2021-08-10T19:59:00.776676+00:00

CAP

Before HAGEL, MOORMAN, and SCHOELEN, Judges.

R. Edward BATES, Petitioner, v. R. James NICHOLSON, Secretary of Veterans Affairs, Respondent.

R. Edward BATES, Petitioner, v. R. James NICHOLSON, Secretary of Veterans Affairs, Respondent. No. 03-1903(E). United States Court of Appeals for Veterans Claims. July 18, 2006. Kenneth M. Carpenter, of Topeka, Kansas, was on the pleading for the petitioner. Tim S. McClain, General Counsel; R. Randall Campbell, Assistant General Counsel; Mary Ann Flynn, Principal Deputy Assistant General Counsel; and David L. Quinn, all of Washington, D.C., were on the pleading for the respondent. Before HAGEL, MOORMAN, and SCHOELEN, Judges.

4516

28162

SCHOELEN, Judge: This case is before the Court on the petitioner's September 21, 2005, application, filed, through counsel, for reasonable attorney fees and expenses under the Equal Access to Justice Act, 28 U.S.C. § 2412(d) (EAJA), and his January 9, 2006, amended application. For the reasons set forth below, the Court will deny the original and amended applications. I. Background Petitioner R. Edward Bates is an attorney at law admitted to practice before this Court. Prior to July 2003, he was accredited to represent claimants before the Department of Veterans Affairs (VA) pursuant to 38 U.S.C. § 5901 and 5904(a). In December 2000, a VA regional counsel notified Mr. Bates of the Secretary's intent to cancel his accreditation to represent claimants before VA. After a hearing on the matter, the petitioner was informed by a July 28, 2003, letter from the VA General Counsel (GC) that, pursuant to section 5904(a) and 38 C.F.R. § 14.633 (2002), the Secretary had cancelled his accreditation. On August 6, 2003, the petitioner, through counsel, filed with a VA regional office (RO) a Notice of Disagreement (NOD) as to the Secretary's decision and requested a stay of the cancellation pending administrative and judicial appellate review. The RO did not respond to the petitioner's request, but instead referred the matter to the Office of the GC. On October 20, 2003, the petitioner, through counsel, filed in this Court a petition for extraordinary relief in the nature of a writ of mandamus requesting that the Court order the Secretary or his delegates to provide a Statement of the Case (SOC) in connection with the petitioner's NOD. On October 28, 2003, the petitioner filed a supplemental verified petition confirming that the Secretary had refused to issue an SOC. On October 31, 2003, the Court ordered the Secretary to file an answer to the petition. The Secretary filed his answer on December 1, 2003. The Secretary asserted that the Court's authority under the All Writs Act, 28 U.S.C. § 1651(a), did not extend to the matter raised in the petition because such a matter could never result in a decision by the Board of Veterans' Appeals (Board). Accordingly, the Secretary urged the Court to dismiss the petition for lack of jurisdiction. In an order dated February 19, 2004, the Court dismissed the petition for lack of jurisdiction. Bates v. Principi, 17 Vet.App. 443 (2004) (per curiam order). The Court concluded that section 5904(b) was not a law that "affects the provision of benefits by the Secretary to veterans," 38 U.S.C. § 511(a), and that, therefore, the issue of the petitioner's challenge to the termination of his accreditation was not a matter justiciable by the Board under 38 U.S.C. § 7104(a). Because the power to issue a writ extends only to the Court's potential jurisdiction, the Court concluded that it was without authority to issue the writ of mandamus. Bates, 17 Vet.App. at 445-47. The petitioner subsequently appealed the matter to the United States Court of Appeals for the Federal Circuit (Federal Circuit). On February 28, 2005, the Federal Circuit concluded that this Court had erred in holding that section 5904(b) was not a "law that affects the provision of benefits to veterans" under section 511(a), and re versed our February 2004 decision in Bates. Bates v. Nicholson, 398 F.3d 1355 (Fed.Cir.2005). In reaching that conclusion, the Federal Circuit reasoned that, although subsection 5904(b) is not itself "a law that affects the provision of benefits," this Court erred when it construed the term "law" in section 511(a) to indicate a particular statutory subsection (such as section 5904(b)). The Federal Circuit held that, for the purposes of section 511(a), "the relevant 'law1 is the public law that originally enacted section 5904, the Veterans Act of 1936, ch. 867, 49 Stat.2031." Bates, 398 F.3d at 1362. Under that definition, a "law" would encompass every statutory section and subsection enacted by the public law (including section 5904(b)). Id. at 1355. Therefore, both the Board and this Court have jurisdiction to review a VA accreditation-cancellation decision pursuant to section 5904(b). Id. In light of that determination, the Federal Circuit remanded the matter with instructions to issue the requested writ of mandamus. Bates, 398 F.3d at 1365-66. In accordance with the mandate of the Federal Circuit, on June 17, 2005, this Court granted the petitioner's petition for a writ of mandamus and ordered the Secretary to issue an SOC. Bates v. Nicholson, 19 Vet.App. 197 (2005) (per curiam order). The Secretary provided the petitioner with an SOC on July 6, 2005. On September 21, 2005, the petitioner filed, through counsel, an EAJA application for attorney fees incurred in connection with the mandamus action. In that application (as amended on January 9, 2006), he requests $8,778.58 in attorney fees and $1,738.80 in costs and expenses, for a total of $10,517.38. II. Contentions of the Parties The petitioner asserts that he is entitled to an award of attorney fees under the EAJA because he is a prevailing party and because the Secretary's position at the administrative stage was not substantially justified. Application (Appl.) at 1. He contends that, contrary to the Secretary's assertion, the issue in this case was not one of first impression. Appl. Response (Resp.) at 2-3. He asserts that the Federal Circuit's decisions in Cox v. West, 149 F.3d 1360 (Fed.Cir.1998), Hanlin v.United States, 214 F.3d 1319 (Fed.Cir.2000), and Scates v. Principi 282 F.3d 1362 (Fed.Cir.2002), are controlling precedents that address the question of whether attorney disaccreditation under section 5904(b) is subject to administrative appellate review pursuant to 38 U.S.C. § 7105. Id. at 3-4. He argues that, in light of those precedents, the Secretary was not substantially justified in believing that the statutory and regulatory scheme did not enable the claimants' representatives to appeal to the Board matters relating to accreditation. Id. at 4. He further points out that the Secretary's substantial justification argument is "the same argument rejected by the Federal Circuit" in its reversal of Bates. Id. at 3. The Secretary contends that the Court should deny the petitioner's EAJA application. He asserts that (1) VA's position was substantially justified at both the administrative and litigation stages of the proceedings, and (2) in this case, special circumstances exist that would make an award unjust. Secretary's (Sec'y) Resp. at 5, 13. The Secretary contends that the Court should find VA's position to be substantially justified because "[t]he issue involved in this case was one of first impression," and points to the fact that "there is nothing in section 5904(b) which, on its face, would suggest that the Board would have jurisdiction over the accreditation of representatives." Id. at 8, 11. As to "special circumstances," the Secretary contends that the underlying facts of this case show that the petitioner "repeatedly violated federal law," and that it would be unjust to order the Government to "pay the legal costs associated with the defense of his misconduct." Id. at 13, 15. The Secretary does not contest whether the petitioner was a "prevailing party," but notes that controlling legal precedent "requires a party to have achieved some success on the merits (Akers v. Nicholson, 409 F.3d 1356 (Fed.Cir.2005)) before achieving such status," and that the Court's authority under the All Writs Act "extends only to the 'administrative process,' not to the 'merits' of a claim." Sec'y Resp. at 2 n. 1 (citing to Heath v. West, 11 Vet.App. 400, 402-03 (1998)). III. Analysis This Court has jurisdiction to award reasonable attorney fees and expenses pursuant to 28 U.S.C. § 2412(d)(2)(F). Here, the petitioner's September 21, 2005, EAJA application was filed within the 30-day EAJA application period set forth in 28 U.S.C. § 2412(d)(1)(B). It also satisfies the requisite EAJA "application-content specifications," because it contains the following: (1) An allegation that the petitioner is a prevailing party; (2) a showing that he is a party eligible for an EAJA award because his net worth does not exceed $2,000,000; (3) an allegation that the position of the Secretary was not substantially justified; and (4) an itemized fee statement. See 28 U.S.C. § 2412(d)(1)(A), (1)(B), and (2)(B); Scarborough v. Principle 541 U.S. 401, 124 S.Ct. 1856, 158 L.Ed.2d 674 (2004); Scarborough v. Nicholson, 19 Vet.App. 253, 257 (2005). A. Prevailing-Party Status The first question that must be resolved is whether the petitioner is a "prevailing party." Comm'r v. Jean, 496 U.S. 154, 160, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990) (holding that, "[i]n EAJA cases, the Court first must determine if the applicant is a 'prevailing party' by evaluating the degree of success obtained. If the Government then asserts an exception for substantial justification or for circumstances that render an award unjust, the court must make a second finding regarding these additional threshold conditions."). Although the Secretary does not contest the prevailing-party question, the Court will address it here because we have never addressed whether the grant of a petition for extraordinary relief in the nature of a writ of mandamus renders a petitioner a "prevailing party" for the purposes of the EAJA. For the reasons stated below, the Court holds that the petitioner is a prevailing party. The Supreme Court set forth the requirements necessary for a plaintiff to be deemed a "prevailing party" for the purpose of attorney fee awards under the Fair Housing and Amendments Act of 1988 and the Americans with Disabilities Act in Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 610, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001). See also Brickwood Contractors, Inc. v. United States, 288 F.3d 1371 (Fed.Cir.2002) (applying Buckhannon to EAJA applications). According to Buck-hannon, a plaintiff must meet two criteria to qualify as a prevailing party. First, the plaintiff must be able to point to a resolution of the dispute that causes a "material alteration in the legal relationship of the parties." Buckhannon, 532 U.S. at 604, 121 S.Ct. 1835 (quoting Tex. State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989)). Second, that change in legal status must be "judicially sanctioned." Id. In other words, prevailing-party status requires that a party "must have received a judicial imprimatur tantamount to a judgment in favor of that party on the merits of the original claim." Akers, 409 F.3d at 1359. In applying Buckhannon, this Court has determined that to prevail, a party must have achieved "the ultimate receipt of a benefit that was sought in bringing the litigation, i.e., the award of a benefit, or, at a minimum, a court remand predicated upon administrative error." Sumner v. Principi, 15 Vet.App. 256, 264 (2001) (en banc), aff'd sub nom. Vaughn v. Principi, 336 F.3d 1351 (2003) (appeal consolidated with appeal in Sumner v. Principi). The Court reached that conclusion because both of those alternatives "entail resolutions that materially alter the legal relationship of the parties," which the Court recognized as "the touchstone of the prevailing party inquiry." Id. (quoting Tex. State Teachers Ass'n, supra). However, it is also well established that certain interlocutory rulings often fail to provide the "threshold level of relief' required to establish prevailing-party status. As examples of relief that fall below that threshold, the Supreme Court in Buckhan-non cited to the relief at issue in Hanrahan v. Hampton, 446 U.S. 754, 100 S.Ct. 1987, 64 L.Ed.2d 670 (1980), and Hewitt v. Helms, 482 U.S. 755, 107 S.Ct. 2672, 96 L.Ed.2d 654 (1987). In Hanrahan, an appellate court reversed the district court's directed verdict against the respondents and remanded the case for a new trial. In subsequent litigation for attorney fees, the Supreme Court rejected the respondents' assertion of prevailing-party status, noting: The respondents have of course not prevailed on the merits of any of their claims. The Court of Appeals held only that the respondents were entitled to a trial of their cause.... As is true of other procedural or evidentiary rulings, these determinations may affect the disposition on the merits, but were themselves not matters on which a party could "prevail" for purposes of shifting his counsel fees to the opposing party under § 1988. 446 U.S. at 758-59, 100 S.Ct. 1987 (footnote omitted). Similarly, in Hewitt, the Supreme Court held that a prisoner who had filed suit for damages and injunctive relief (but received neither) was not a prevailing party, in spite of the appellate court's ruling that the prisoner's constitutional rights had been violated. In reaching this result, the Court held that a party must "receive at least some relief on the merits of his claim before he can be said to prevail.... The most that [the claimant] obtained was an interlocutory ruling that his complaint should not have been dismissed for failure to state a constitutional claim. That is not the stuff of which legal victories are made." Hewitt, 482 U.S. at 760, 107 S.Ct. 2672. What primarily distinguishes this case from Hanrahan and Hewitt is that in this case, the Court's issuance of the writ caused an undebatable change in the "legal relationship of the parties" by both establishing the petitioner's right to appeal his case through VA's administrative review process and finding error in the Secretary's interpretation of law. Although the plaintiffs in Hanrahan were awarded the right to a "trial of their cause," 446 U.S. at 758-59, 100 S.Ct. 1987, that award did not change the legal relationship of the parties; at most, that award changed the legal relationship between the plaintiffs and the district court. Unlike the claimant in Hewitt, the petitioner here received more than a favorable statement of law. Here, the petitioner's securing of the previously unrecognized right to VA administrative review did indeed change the legal relationship between the parties because it is the Secretary who is now compelled, by the Court's "judicially sanctioned" writ of mandamus, to provide that review. What further distinguishes this case from Hanrahan and Hewitt is that in those cases, the plaintiffs sought substantive relief, and, receiving only procedural benefits, sought EAJA fees for those. In this case, Mr. Bates' only purpose before the Court was to seek a writ compelling the Secretary to issue an SOC, thereby allowing his appeal to proceed to the Board. Although the mandamus relief granted is procedural and, in some sense, interlocutory, it is also precisely the relief that he requested. See Me. Sch. Admin. Dist. No. 35 v. Mr. R., 321 F.3d 9, 15-16 (1st Cir.2003) (holding that "a defendant who prevails on the only claim that justifies the presence of the case in a federal court" is a prevailing party); Watson v. County of Riverside, 300 F.3d 1092, 1096 (9th Cir.2002) (holding that a plaintiff who succeeded in winning a preliminary injunction preventing the use of an arrest report at an administrative hearing was a prevailing party because the plaintiff "obtained significant, court-ordered relief that accomplished one of the main purposes of his lawsuit"). Further, that relief was granted on the basis he sought, not because of the fortuitous passage of controlling legislation or for the consideration of new evidence. Cf. Akers, 409 F.3d at 1359 (concluding that remands based solely on the passage of a statute or intervening caselaw did not confer prevailing-party status). Moreover, the mandamus petition in this case cannot be viewed as truly "interlocutory." The petitioner's underlying claim is, at this point, an entirely separate matter that may never be reviewed in this Court (and, hence, may never be the subject of a claim for attorney fees under the EAJA). In Cox v. West, this Court's concern over piecemeal litigation prompted us to dismiss as premature a similar EAJA application for fees in connection with the mandamus petition filed in that case. Cox v. West, 13 Vet.App. 364 (2000), revoked in part, 13 Vet.App. 461 (2000). However, Cox was unique because in that case, the Court, instead of addressing the EAJA application, took note of the protracted delays in the case and reinstated the mandamus petition, with orders that the Secretary file status reports regarding the Board's timetable for adjudication of the case. Id. at 366-67. Hence, because the mandamus petition was still pending before the Court and no longer the subject of a final decision, the Court dismissed as premature the petitioner's EAJA application "without prejudice to a future filing under the EAJA after the Court acts on the petition." Id. In this case, our June 17, 2005, order granting the writ is a final decision and the Court retains no jurisdiction over the matter. See Former Employees of Motorola Ceramic Prods. v. United States, 336 F.3d 1360, 1366 (Fed.Cir.2003) (holding that remand predicated on agency error and requiring further agency proceedings confers prevailing-party status "without regard to outcome of agency decision" if the court does not retain jurisdiction); Zuberi v. Nicholson, 19 Vet.App. 541, 547 (2006) (citing Motorola, supra, and concluding that appellant was a prevailing party "because he secured a remand based on an agency concession of error, and the Court ordered further agency action without retaining jurisdiction"). As such, the petitioner's EAJA application in this case is not premature; on the contrary, the petitioner would be barred from seeking EAJA fees if he had neglected to file that application within 30 days of the Court's final decision. See 28 U.S.C. § 2412; see also Melkonyan v. Sullivan, 501 U.S. 89, 96-97, 111 S.Ct. 2157, 115 L.Ed.2d 78 (1991). B. Substantial Justification Once an EAJA applicant alleges that the Secretary's position lacked substantial justification, the burden shifts to the Secretary to show that the Government's position was substantially justified at both the administrative and litigation stages of the matter in order to avoid paying EAJA fees. See Locher v. Brown, 9 Vet.App. 535, 537 (1996). To meet this burden, the Secretary must demonstrate that, based on "the totality of the circumstances, including merits, conduct, reasons given, and consistency with judicial precedent," his position at the administrative and litigation stages of the proceeding had "a reasonable basis in law and fact." Stillwell v. Brown, 6 Vet.App. 291, 302 (1994) (quoting Pierce v. Underwood, 487 U.S. 552, 566 n. 2, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988)). The Secretary's failure to prevail on the merits of the case does not raise a presumption that his position was not substantially justified. Kali v. Bowen, 854 F.2d 329, 332 (9th Cir.1988). As the Supreme Court noted in Pierce v. Underwood, "a position can be justified even though it is not correct," and should be considered substantially justified if "if a reasonable person could think it correct." Underwood, 487 U.S. at 566 n. 2, 108 S.Ct. 2541. Although the fact that "one other court agreed or disagreed with the Government does not establish whether its position was substantially justified," the observations of other courts are often considered relevant to that determination. Underwood, 487 U.S. at 568, 108 S.Ct. 2541. Frequently, eases before this Court present matters of first impression "involving good faith arguments of the government that are eventually rejected." Stillwell, 6 Vet.App. at 303. Arguments presented in a case of first impression are more likely to be considered substantially justified than those where the Court determines that the Secretary ignored existing law. See Johnson (Leamon) v. Prin-cipi 17 Vet.App. 436 (2004) (holding that Secretary's position at the administrative level in promulgating and applying a regulation was substantially justified); Ozer v. Principi, 16 Vet.App. 475, 479 (2002) (holding that the Secretary's position in promulgating the regulation was substantially justified, despite later invalidation of the regulation, because "there was no pri- or disapproval of or challenge to the regulation"); Carpenter v. West, 12 Vet.App. 316 (1999) (holding that it was not unreasonable for the Secretary not to have foreseen Court's expansion of 38 U.S.C. § 1318 caselaw). Cf. Moore v. Gober, 10 Vet.App. 436, 440-41 (1997) (concluding that Secretary's administrative position was not substantially justified where Board failed to comply with well-established statutory duty to assist). Even in a case of first impression, however, the Court must determine whether the Secretary's position was justified given the totality of the circumstances. We must determine whether the issue presented "close" questions, and whether the Secretary sought an unreasonable interpretation or resolution of the matter. See Felton v. Brown, 7 Vet.App. 276, 282 (1994) (citing Marcus v. Shalala, 17 F.3d 1033, 1038 (7th Cir.1994) (finding that Government's contention that the questions involved were "close" was controverted by the U.S. Supreme Court's statements that the Government policies were "manifestly contrary to statute" and "made little sense" and by the "strong disapproval" of relevant regulations by several circuits of the U.S. courts of appeals)). Other factors to be considered include whether "the statutory scheme to be considered is complex, or . the analysis required, even for a straightforward statute, is 'exceptional.' " Golliday v. Brown, 7 Vet.App. 249, 255 (1994) (citing Stillwell, 6 Vet.App. at 303); see also Pott- gieser v. Kizer, 906 F.2d 1319, 1324 (9th Cir.1990) (same). In this matter, we hold that the Secretary's position on section 5904(b) was substantially justified at both the administrative and litigation levels. Although the Federal Circuit ultimately rejected the Secretary's argument and ordered issuance of the writ, we find, for the reasons set forth below, that the Secretary's position had "a reasonable basis in law and fact." Underwood, 487 U.S. at 566 n. 2, 108 S.Ct. 2541. First, although the petitioner contends otherwise, the question presented in this case was indeed a matter of first impression. While it is true that the Federal Circuit determined previously that actions based on subsections 5904(e) and (d), (see Scates, Hanlin, and Cox, all supra), were "subject to the specialized review process" set forth in section 7105, the analysis contained in those cases is not as illuminating as the petitioner suggests. Each of those cases involved the interpretation of an individual statutory subsection that on its face was readily recognized as a law that affects "the provision of benefits by the Secretary to veterans." 38 U.S.C. § 511(a). Hence, in resolving those cases, neither this Court nor the Federal Circuit was pressed to determine whether an analysis beyond a facial interpretation of the section 5904 provisions was appropriate. In Mr. Bates' case, however, the Federal Circuit majority agreed that "[t]he argument that [section] 5904(b) is itself a 'law that affects the provision of benefits' is unpersuasive." Bates, 398 F.3d at 1360. Unlike sections 5904(c) and (d), section 5904(b) is not, on its face, "a law that affects the provision of benefits by the Secretary to veterans" under section 511(a). It was not until this case arose that the Federal Circuit decided that an analysis beyond explaining the "plain meaning" of that provision was necessary to resolve the issue. Moreover, the route by which the Federal Circuit concluded that section 5904(b) was "a law that affects the provision of benefits" could not have been easily divined from existing caselaw and arguably may be described as "exceptional." See Golliday, supra. Specifically, the Federal Circuit had given no previous indication that the relevant inquiry for the application of section 511(a) was not limited to whether the statutory provision at issue "affects the provision of benefits" to veterans, but could include whether that provision was originally enacted in a public law that affected the provision of such benefits. In light of that fact, and because both this Court and the Federal Circuit have previously addressed section 5904 by individual subsection as opposed to a single public law, the Secretary's implicit choice to interpret the term "law" as an individual statutory subsection was reasonable. As Judge Bryson noted in his concurrence: [I]t is commonplace to refer to single statutory sections and subsections as "laws," and not to reserve that designation exclusively for whole public laws. This is not to say that a statutory section or subsection is the only meaning of the term "law," but simply that it cannot reasonably be claimed that the "plain meaning" of the term "law" is restricted to public laws. 398 F.3d at 1368 n. 2 (Bryson, J., concurring) (citations omitted). Furthermore, although VA is required by policy and statute to provide veterans a "strongly and uniquely pro-claimant" administrative review process, Hodge v. West, 155 F.3d 1356, 1362 (Fed.Cir.1998), it could not be assumed that attorneys or veterans' representatives would be entitled to, or in need of, such a process (or that such a process would be available when no benefits claimant is involved in the case) for purposes of the termination of accreditation. In sum, the Court finds that, based on the totality of the circumstances, a "reasonable person" could find the Secretary's interpretation of the statutory scheme to be reasonably grounded in law and fact. Accordingly, the Court holds that the Secretary's position with respect to the jurisdiction of the Board and the Court and sections 511(a) and 5904(b) was substantially justified. C. Special Circumstances Pursuant to 28 U.S.C. § 2412(d)(1)(A), a court may not make an EAJA award to a party if it "finds . that special circumstances make an award unjust." The Government bears the burden of raising this affirmative defense and must demonstrate that such special circumstances militate against an EAJA award. See Perry v. West, 11 Vet.App. 319, 325 (1998); Doria v. Brown, 8 Vet.App. 157, 163 (1995). In Doria, the Court noted two types of special circumstances: "[Situations where the government proffers novel but credible extensions and interpretations of the law; and . situations 'where equitable considerations dictate an award should not be made.' " Id. at 162. In Perry, the Court adopted a definition of the equitable-considerations prong of " 'special circumstances' that predominantly relies upon 'unclean hands.' " Perry, supra; see also Locher, 9 Vet.App. at 540; Oguachuba v. INS, 706 F.2d 93 (2d Cir.1983). In the instant matter, the Secretary contends that the petitioner has "unclean hands," alleging that the petitioner "repeatedly violated federal law and unlawfully charged . over $100,000 [ ] of VA disability compensation bendfits to which he was not legally entitled." Resp. at 13. However, as the petitioner notes, the Secretary's allegations are presently the subject of a direct appeal to the Board, and this Court may ultimately review the Board decision in that appeal. Hence, considering the Secretary's allegations in the present context would be "both premature and inappropriate," and we will refrain from doing so. IV. Conclusion On the basis of the foregoing analysis, the petitioner's application for attorney fees and expenses is DENIED.

12454874

David L. Akers, Petitioner v. United States

Akers v. United States

2010-06-07

No. 08-10318

300

300

177 L. Ed. 2d 300

177

United States Supreme Court Reports, Lawyers' Edition

Supreme Court of the United States

United States

2021-08-10T17:52:46.411191+00:00

CAP

David L. Akers, Petitioner v. United States.

No. 08-10318. David L. Akers, Petitioner v. United States. 560 U.S. 950, 130 S. Ct. 3384, 177 L. Ed. 2d 300, 2010 U.S. LEXIS 4601. June 7, 2010.

101

565

On petition for writ of certiorari to the United States Court of Appeals for the Seventh Circuit. Motion of petitioner for leave to proceed in forma pauperis and petition for writ of certiorari granted. Judgment vacated, and case remanded to the United States Court of Appeals for the Seventh Circuit for further consideration in light of Carr v. United States, 561 U.S. 438, 130 S. Ct. 2229, 176 L. Ed. 2d 1152 (2010).

916122

Sheehan v. Daily Racing Form, Inc.

Sheehan v. Daily Racing Form, Inc.

1997-06-23

No. 96-1668

1104

1104

521 U.S. 1104

521

United States Reports

Supreme Court of the United States

United States

2021-08-11T00:26:19.189839+00:00

CAP

Sheehan v. Daily Racing Form, Inc.

No. 96-1668. Sheehan v. Daily Racing Form, Inc.

14

82

C. A. 7th Cir. Certiorari denied.

3324821

The United States, Appellants, v. Domingo Acosta, Appellee

United States v. Acosta

1843-01

24

27

1 How. 24

42

United States Reports

Supreme Court of the United States

United States

2021-09-21T20:02:18.861595+00:00

Harvard

The United States, Appellants, v. Domingo Acosta, Appellee.

The United States, Appellants, v. Domingo Acosta, Appellee. The certificate of the secretary of the’ Spanish governor of Florida is prima fade evidence of the existence of a grant of land. The Spanish governor had authority to issue such a grant. . In the case of a grant made before the 24th of January, 1818, it is valid, although the survey was not tnadé until after that day, provided'the’survey was made before the exchange of flags. It is not a good objection to such a-grant that the metes and bounds were not • set forth. The facts in this case are fully set forth in the opinion of the court. It was submitted by Mr. Legaré, the attorney ¡-general, without argument, on the usual obiections assigned, pro forma, for error.

1515

8739

Mr. Justice Catron delivered the opinión of the court.. This is an appeal from the decree of the Superior Court of East Florida, confirming eight thousand acres of land to Domingo Acosta, under the acts of Congress for the adjustment of land-claims in Florida. The claim is founded on an alleged petition of Acosta, dated May 2,1816, and a decree of Governor Coppinger thereon, dated the 20th day of the same month and year. The petition (record 8) sets forth: That by the. certificates which he presented, signed by the commandants of Fernandina, who had governed it successively since 1808, his excellency would be informed that he had been a permanent resident of the said town, engaged all the while in commerce, and had served (in all that had offered itself) the wishes of the government for the good of the province ; and that he had been particularly prompt with his person, his funds, and his irlfluerice, for the defence,'the support, and the advancement of the'town; and that ¡he .hád at no time had any stipend, recompense, or remuneration, of his experises, supplies, and losses, and' had refrained from importuning the government with, solicitations. He therefore prayed for a grant in property, of eight thousand acres; but as he was ignorant of the lands that were vacant, and desirous to avoid interference and dissensions with any person, he further prayed his excellency would be pleased to grant them at the places where the surveyor-general might survey them as vacant lands! The decree (record 8) states, that " in virtue of the certificates which this party presents, and it being the will of the sovereign that the merits of his subjects should be rewarded, the lands solicited in this instance are granted, with special charge to the surveyor-general to survey them to him without injury to third persons." The originals of the petition and decree were not produced in evidence, neither are they to be found in the archives at St. Augustine. A certified copy, dated' 24th June, 1816, under the hand of Thomas de Aguilar, secretary of the government, stated to be faithfully drawn from the original in his office, was alone offered, and was objected to on the part of the appellants. The appellee also offered the following plats and certificates of survey, purporting to be made;by George J. F. Clarke, surveyor-general of the province: No. 1. Dated 12th January, 1818, for one thousand acres of land, on Bowlegs' old plantation, and situated northwardly and contiguous to the same Bowlegs' prairie, westward of Payneston. No. 2. Dated 15th January, 1818, for one thousand five hundred acres of land, in the hammock called Jobbin's hammock, southwestwardly of the road called Ray's trail, leading from the natural bridge of - the Santa. Fe, to the point of Alachua called Hogtown. No. 3. .Dated 14th February, 1818, for one thousand five hundred acres of land, northward of Dunn's creek, running from Dunn's lake to the river St. John. No. 4. Dated 20th January; 1S20, for four thousand acres of land, on the west side of Indian river, and at a place called Flounder creek. After hearing testimony as to the manner in which muniments of title were kept in the archives at St. Augustine, the court made a decree confirming.the four several tracts of land to the claimant, from which decree the present appeal is taken. On the part of the United States, it was contended that the said decree ought to he reversed, on the following grounds: 1. That there is not sufficient evidence to show that Governor Coppinger ever made the alleged concession or grant. 2. That if Governor Coppinger made such a grant, it was . made without authority. 3. That there is no description whatever in the said pretended grant, of the' lands alleged to be granted, and no valid survey could be made so as to sever any lands from the public domain. 4. That there is no evidence of the surveys. The' foregoing statement, offered on part of the United States, -presents the facts of the case; and the objections to the decree below. In answer to the first, that there is not sufficient evidence the grant was made, we refer to the case of Wiggins, (14 Peters,) which determines that the official certificates of the secretary Aguilar was prima facie proof of the existence of the original grant at the date when the copy was made; and of its contents. • In this case, Alveraz proves the certificate of the secretary genuine, and that he was in' office at the date of the certificate. It was' in proof that no' original could be found in the proper office where it should be on file. This was sufficient to let in a •copy; and there being no. proof to contradict, or impair the force of Aguilar's certificate, the court below properly held, that the grant had' been made by Governor Coppinger. , To the second objection, it is sufficient to say — that the governor, as.the king's deputy, was the sole judge of the merits on which the claim is founded, and had undoubted power to reward the merits of the grantee'; so this court has held in ihany cases. 3. Although there is no description of any place where the land granted shall be located, in the governor's decree; still it was binding so far as it went. The surveyor-general' was' ordered to survey the lands solicited, on places' vacant, and without injury to third persons.. The acts of this-subordinate officer came in.aid of the decree; he had the authority conferred to séver the land granted from the public domain: had he done so before the 24th of January, ISIS, then there could be no doubt the grantee took title to the particular lands; because, up to .this date, all grants made by the King of Spain, in whatever form, are recognised as valid by the article of the treaty. The difficulty in this case is, that two of the surveys weré made after the 24th of January, 1.818: and, did the grant take effect from the date of the surveys, then, by the stipulations of the 8th article. it would-be void. This .question was first presented in Sibbald's case,.10 Peters, 321. It was thought by this court, that the 8th article of the treaty operated on grants made by the governor after the 24th of January, 1818, but not on the subordinate acts of the surveyor in giving effect to the grant; and that .surveys could be made. at. ány.time before the change of' flags between this-government and that of Spain. Still, Had that officer failed to make the surveys, the grant would not be binding .on this govern-ment. We followed the case of Sibbald in .that of Clarke v. Atkinson, at the last term, 16 Peters, 231. This construction was given to the 8th article of the treaty, in a spirit of liberality to this description of claimants, who.'could not be held justly responsible ' for the delays of the surveyor-general; and because the incipient claim, by the governor's decree, was not cut off by the treaty. The surveyor-general having executed the governor's decree, we are of opinion that the surveys made after the 24th of January, 1818, as well as those made before that date, are valid. That there are several surveys is no objection to their validity; the decree in this case obviously so contemplated. 4. It is objected, that no sufficient evidence is. furnished by the record that the surveys were made. The cause was first submitted to the court below, in 1834; then the two surveys last made were objected to and admitted by the court. The judge continued the cause on his own motion for further, proofs, and it stood over on continuances until 1840, when the four surveys were, read without objection. We think the proofs afithorized the decree, and order that it be affirmed. ORDER. This cause came on to be heard on the transcript of the record from.the Superior Court for the District of East Florida, and was argued by counsel.. On consideration whereof, it is now here ordered, adjudged, and decreed, by.this court, that the decree of the said Superior Court in this cause be and the same is hereby affirmed, in all respects.

230511

Madsen et al. v. Women's Health Center, Inc., et al.

Madsen v. Women's Health Center, Inc.

1994-03-21

No. 93-880

1189

1189

510 U.S. 1189

510

United States Reports

Supreme Court of the United States

United States

2021-08-10T19:08:00.974266+00:00

CAP

Madsen et al. v. Women’s Health Center, Inc., et al.

No. 93-880. Madsen et al. v. Women’s Health Center, Inc., et al.

41

248

Sup. Ct. Fla. [Certiorari granted, ante, p. 1084.] Motion of American Federation of Labor and Congress of Industrial Organizations for leave to file a brief as amicus curiae granted.

324529

Pratt v. United States

Pratt v. United States

1995-10-02

No. 95-5174

881

881

516 U.S. 881

516

United States Reports

Supreme Court of the United States

United States

2021-08-10T22:13:30.779835+00:00

CAP

Pratt v. United States.

No. 95-5174. Pratt v. United States.

12

72

C. A. 7th Cir. Cer-tiorari denied.

10815228

S. S. SILBERBLATT, INC. v. THE UNITED STATES

S. S. Silberblatt, Inc. v. United States

1970-11-13

No. 132-61

269

319

193 Ct. Cl. 269

193

United States Court of Claims Reports

United States Court of Claims

United States

2021-08-10T22:45:07.845920+00:00

CAP

■Before CoweN, Chief Judge, Laramore, Durpee, Davis, ColliNS, SkbltoN and Nichols, Judges.

S. S. SILBERBLATT, INC. v. THE UNITED STATES

433 F. 2d 1314 S. S. SILBERBLATT, INC. v. THE UNITED STATES [No. 132-61. Decided November 13, 1970] Jerome Reiss, for plaintiff. Max E. Greenberg, attorney of record. Max E. Greenberg, Trayman, Earns, Cantor, Reiss & Blashy, of counsel. Frances L. Nwnn, with, whom was Assistant Attorney General William D. RucJeelshaus, for defendant. ■Before CoweN, Chief Judge, Laramore, Durpee, Davis, ColliNS, SkbltoN and Nichols, Judges.

16908

104593

Per Curiam: Tbis case was referred to Trial Commissioner George Willi with directions to make findings of fact and recommendation for conclusions of law under the order of reference and Rule 134(h). The commissioner has done so in an opinion and report filed on October 14,1969. Exceptions to the commissioner's opinion, findings and recommended conclusion of law were filed by plaintiff. Defendant has requested the court to adopt the commissioner's opinion, findings and conclusion. The case has been submitted to the court on oral argument of counsel and the briefs of the parties. 'Since the court agrees with the commissioner's opinion, findings and recommended conclusion of law, as hereinafter set forth, it hereby adopts the same as the basis for its judgment in this case. Therefore, plaintiff is entitled to recover $29,300 and judgment is entered for plaintiff in that sum. OPINION OP COMMISSIONER Willi, Commissioner: Plaintiff, a general contractor operating as a New York corporation, was the successful bidder on a $27,578,000 contract for a 1685-unit Capehart Housing Project for military personnel stationed at the Plattsburgh Air Force Base, Plattsburgh, New York. The single controversy remaining in the case at this point relates to the defendant's refusal to accept a portion of the lumber that plaintiff proposed to use on the project. The other major claim originally in suit, relating to the topography of the site as depicted by the contract plans and specifications, was settled by agreement of the parties reached in the course of trial. The defendant's current acknowledgment on brief that it erred in taking a $29,300 change order credit for allegedly defective lumber in certain of the buildings that had already been enclosed when the impasse over lumber quality arose, has removed that aspect of the lumber claim from dispute. What remains is plaintiff's contention that the contracting officer acted improperly when, about half-way through the job, he refused to permit construction to continue until the lumber in plaintiff's job inventory and that which had been used in framing uncompleted units (and was still exposed) was inspected for quality by a disinterested official grading agency. After that was done, and the rejected lumber replaced, the job was satisfactorily completed within the contract's authorized performance period. In accordance with the Disputes clause of the contract, plaintiff timely appealed the contracting officer's rejection of its claim for an equitable adjustment on the lumber inspection issue. No action having ever been taken on that appeal, suit was filed in this court and the question fully tried on the merits. (Findings 5, 39 infra.) Contending that inspection of the lumber mid-way through performance of the job was improper under the contract as a matter of law and that, in any event, the problem of substandard lumber should have been corrected by an adjustment in the contract price, rather than enforced replacement, plaintiff seeks damages for the cost of the inspection, for the cost of replacing lumber, and for the cost of delay to the job as a whole that resulted from the time consumed by the inspection and subsequent replacement operations. For the reasons that follow, plaintiff's claim is without merit. Though the parties compiled a voluminous trial record in support of their respective positions, reflected in the detailed findings of fact accompanying this opinion, the determinative facts are 'both relatively few and uncomplicated. The quality requirements for the 9y2 million board feet of dimensional lumber needed for the contract were detailed in Section 5-02 of the specifications. (Finding 5.) The applicable quality standard was expressed in terms of the official grades promulgated by the West Coast Lumber Inspection Bureau (WCLIB), with the endorsement of the American Lumber Standards Committee. The latter body is appointed by the Secretary of Commerce and has the responsibility for formulating and maintaining lumber quality standards that are used on an industry-wide basis. (Finding 6.) After receiving the housing contract plaintiff contracted in writing with the Baldwin Lumber Company (hereinafter referred to as "Baldwin") to supply all of the dimensional lumber needed for the job. Plaintiff's purchase terms with Baldwin expressly included all of the lumber quality requirements contained in the specifications of its contract with the Government, including appropriate grademarking of each piece by either WCLIB or its counterpart PLIB (Pacific Lumber Inspection Bureau). (Finding 7.) Baldwin was in the millwork business and had never sold lumber in the volume involved in its transaction with plaintiff. To meet its supply commitment Baldwin entered into a subcontract with First Lumber Corporation, a dealer that purchased lumber from mills and brokers for resale. (Finding 8.) Under this tripartite arrangement plaintiff periodically notified Baldwin of its current lumber needs; Baldwin, in turn, advised First Lumber; and the latter then purchased the lumber from mills or brokers and had it shipped directly to Plattsburgh. (Finding 8.) After securing its subcontract from Baldwin, First Lumber purchased the Quality Forest Products Corporation of Albeit Lea, Minnesota. First Lumber operated its acquisition primarily as a so-called "cut-up" mill, a mill that instead of using logs as raw material, buys undergrade lumber from other mills and by reducing its dimensions attempts to eliminate the flaws that caused it to be undergrade. After the reprocessing is done, the lumber is graded and sold on the market. As essentially scavenger operations, "cut-up" mills do not enjoy a good reputation in the lumber industry and a prudent builder would not knowingly purchase lumber for housing construction from a "cut-up" mill. (Finding 14.) In the instant case, neither plaintiff nor Baldwin knew where the lumber in any particular shipment would be coming from. First Lumber made its purchases from many different sources, including Quality Forest Products, various brokers, and lumber mills. In some instances the lumber was in easterly rail transit, in an unconsigned status, when First Lumber bought it. (Finding 10.) Paragraph 6 of the General Provisions of plaintiff's contract with the Government provided as follows: 6. Inspection. (a) Except as otherwise provided herein, all material and workmanship, if not otherwise designated by the Specifications, shall be subject to inspection, examination, and test by the Contracting Officer at any and all times during manufacture and/or construction and at any and all places where such manufacture and/or construction are carried on. The Department and the mortgagor-builder, or either of them, shall have the right to reject defective material and workmanship or reqiure its correction. Rejected workmanship shall be satisfactorily corrected, and rejected material shall foe satisfactorily replaced with proper material, without charge therefor, and the eligible builder shall promptly segregate and remove the rejected material from the premises. If the eligible builder fails to proceed at once with the replacement of rejected material and/or the correction of defective workmanship, such failure may be treated as a default. (b) The eligible builder shall furnish promptly, without additional charge, all reasonable facilities, labor and materials necessary for the safe and convenient inspection and tests that may be required by the Contracting Officer. All inspection and tests by the Department shall be performed in such manner as not unnecessarily to delay the work. Special, full size, and performance tests shall be as described in the Specifications. The eligible builder shall be charged with any additional cost of inspection when material and workmanship are not ready at the time inspection is requested by the eligible builder. (c) Inspection of material and finished articles to be incorporated in the work at the site shall be made at the place of production, manufacture, or shipment, whenever the quantity justifies it, unless otherwise stated in the Specifications; and such inspection and written or other formal acceptance, unless otherwise stated in the Specifications, shall be final, except for latent defects, departures from specific requirements of this Housing Contract, damage or loss in transit, fraud, or such gross mistakes as amount to fraud. Subject to requirements contained in the preceding sentence, the inspection of material and workmanship for final acceptance as a whole or in part shall be made at the site. Nothing contained in this paragraph shall in any way restrict the rights of the mortgagor-builder and the Department, or either of them, under any warranty or guaranty of material and workmanship. Plaintiff contends that subparagraph (c) of the above provision obliged the Government to inspect the lumber at its source; that having failed to do so it cannot thereafter reject it for reasons of sub-specification quality or, in any event, cannot halt the contract work while an inspection is made. Research discloses two cases in this court involving the construction of similar contract language. In both the question was the Government's right to ultimately reject certain fabricated materials even though it had inspected and approved them at the point of fabrication. Southwest Welding & Mfg. Co. v. United States, 188 Ct. Cl. 925, 413 F. 2d 1167 (1969), disapproved a subsequent rejection whereas Merritt-Chapman & Scott Corp. v. United States, 178 Ct.Cl. 883, cert. denied, 389 U.S. 851 (1967), held that a preliminary acceptance based on source inspection did not bar later rejection. Significantly differing factual contexts accounted for the divergence in results. Since source inspections were actually made in those cases, the emphasis on the contract language here involved concerned the finality that it imparted to an acceptance following a source inspection rather than on the creation of an affirmative Government duty to make inspections at the source. Nonetheless, those cases do confirm the common sense proposition that when source inspections are made it is with the advance knowledge and understanding of the Government and its contractoi' and pursuant to prearrangement between them. The same premise is especially evident from the Board's opinion in Gordon H. Ball, Inc., 1963 BCA ¶ 3925, a case cited by plaintiff to illustrate the application of the language present here but again involving the effect on the Government's subsequent rejection rights of its earlier acceptance pursuant to an inspection of the goods at the source. Plaintiff mistakenly urges that United States v. John A. Johnson & Sons, 65 F. Supp. 514 (D.C. Md. 1945), aff'd. 153 F. 2d 534 (4th Cir. 1946), squarely supports its thesis that the contract language present here requires the Government to make a source inspection of building materials, in that case brick used in a Government contract for public housing, under pain of forfeiture of its right to later reject the material as defective. Though the prime contract with Johnson contained a source inspection clause like that here involved, all comments directed to it were strictly dictum. As the Court of Appeals observed, the question of the Government's liability to its contractor, Johnson, was not involved in the litigation. 153 F. 2d 534, 542. The cited authority actually involved two consolidated Miller Act suits; a suit by a brick manufacturer against the masonry subcontractor, who had refused to pay for the brick rejected by the Government, and a suit by the subcontractor against Johnson, who had refused to pay for the corrective work necessitated by the Government's rejection. Judgment was for the plaintiff in each instance. Central to both liability determinations were the factual conclusions (1) that, unlike the lumber involved in this case, the disputed brick met the contract specifications and (2) that any deficiency in its performance as an exterior surfacing material was attributable to the fact that the specifications did not call for a sufficiently high quality of brick to do the job intended. Considered in the light of these factual essentials, the trial court's gratuitous observations concerning the Government's obligations and risk exposure under the source inspection clause become almost totally abstract. 65 F. Supp. 514, 522. The undisputed facts of the instant case impel the conclusion that the dimensional lumber that plaintiff purchased from Baldwin was not within the scope of the source inspection clause of paragraph Q of the General Provisions, supra, whatever the legal effect of that clause in situations where it applies. The direct evidence points singularly to the fact that neither the Government, plaintiff, Baldwin, nor Baldwin's sole subcontractor, First Lumber, had any idea or expectation at the time that the lumber was procured that it was to be inspected at its point of origin. (Finding 10.) Not until after the dispute over lumber quality had matured into an enforced work stoppage did plaintiff first suggest that the Government had a contractual obligation to inspect the lumber at its source. By then, all of the lumber for the job had long since been delivered to Plattsburgh. In the absence of compelling indications to the contrary, not present here, the construction that the parties have themselves placed on a contractual provision ante litem motam should not be disturbed when, at a later date, the meaning of the provision is called into question by one of them. Chahroudi v. United States, 124 Ct. Cl. 792, 797-798 (1953), and authority cited therein. First Lumber filled the Baldwin order by purchasing from a great many different mill and broker sources, frequently not even knowing itself where the lumber involved actually originated; some of it being in actual rail transit when purchased. Accordingly, it simply would not have been feasible for the Government to have undertaken a source inspection even if it had wanted to. Finally, it is to be noted that the clause in question envisions an inspection at source " whenever the quantity justifies it With the possible exception of the lumber that came from Quality Forest Products, First Limber's subsidiary "cut-up" mill in Minnesota, there is no evidence that in any instance there was sufficient quantity involved to justify the expense of a source inspection. In any event, neither the plaintiff nor anyone acting on its behalf ever notified the Government of the source and quantity of any portion of the lumber purchased for use in performance of the contract. The nature of the Quality Forest Products operation being what it was, the failure of plaintiff and its contract suppliers to cause a Government inspection there is understandable. For the above reasons, plaintiff's contention that the Government was obliged by contract to inspect the lumber at its source is untenable. Because of the size of the overall housing contract plaintiff was required to deal in very large quantities of materials. Delivery of the dimensional lumber alone required over 400 rail cars. To handle this logistical problem plaintiff rented an 8-acre tract, called the Day Farm, that had a private rail siding and was located 3-4 miles from the construction site. Plaintiff used this property as its receiving and storage yard for the job. Belying on a 10-day reinspection provision of the WOLIB's grading rules as evidence of an established trade practice, plaintiff suggests that the Government should have inspected the lumber for compliance with the quality specifications of the contract upon its arrival at the Day Farm. However valid the trade rule that a buyer of lumber graded by WCLIB has only 10 days after delivery to him within which to challenge the grade and call for a reinspection, the rule has no application to the Government in this case since it was not a buyer of lumber. Thus, while this trade practice may have application to plaintiff, Baldwin, or First Lumber, it imposes no inspection obligation or peril of waiver on the Government. Plaintiff does not contend that its own contract with the Government created any duty on the latter to inspect the lumber on arrival at the storage yard. Aside from the absence of any legal obligation to do so, it would not have been reasonable for the Government to have undertaken an inspection of the lumber on arrival at Plattsburgh. As stated, the lumber arrived in rail box cars. It was not ]oose in the cars but bound into large bundles by steel strap ping. Plaintiff verified quantity by tallying tibe shipments as they were unloaded. The bundles were immediately stacked, 3 to 4 high, for storage in the yard pending later transportation to the building site. At this point, the lumber could not have been inspected without dismantling the bundles and that procedure, including reassembly and restrapping for storage and final truck delivery to the job, would have been so cumbersome and time-consuming as to have been unreasonable in the circumstances. (Finding 9.) The notice to proceed under the contract in suit was issued May 23,1957. Lumber deliveries to the yard at the Day Farm began in November 1957, and framing of the buildings started in March 1958. Plaintiff's planned production rate called for framing 20 dwelling units per day and this pace was achieved by the summer of 1958. To meet this production schedule lumber, still in the baled form in which it was received by rail, was loaded on trucks at the Day Farm by fork lift, delivered to the building where it was to be used, and dumped on the ground. The lumber was ordinarily used in framing that was begun 24 to 48 hours thereafter. The overall size of the job and the limited time that the lumber was at the actual building site prior to use created a situation in which the first reasonable opportunity afforded the Air Force inspectors to adequately examine the dimensional lumber for compliance with quality specifications was after the framing had been erected and before it was enclosed with interior and exterior covering. (Finding 9.) In fact, this was the inspection procedure that was employed. At first the architect-engineer required the Air Force inspectors to issue tickets, in triplicate, on which deficiencies requiring correction were noted. One copy was for the individual who had done the deficient work; one copy for the plaintiff's administrative officer on the job; and the third for the contracting officer. The deficiency ticket system was abandoned in mid-summer 1958 at plaintiff's request and was replaced by an arrangement wherein a card bearing a description of each of the several phases of work involved in the construction of a building was tacked on the outside of each building in a conspicuous place. Under this plan the foreman overseeing the phase of work in question would signify its readiness for inspection by initialing the appropriate work description appearing on the card. Thus notified, an Air Force inspector would check the indicated work and if he found it acceptable would place his initials on the card, signifying that plaintiff could proceed with the next phase in the work sequence. (Finding 11.) Insofar as inspection of the framing lumber was concerned, the card plan proved no more satisfactory than the deficiency ticket system that it displaced. This was true primarily because of the manner in which plaintiff elected to supervise its framing operations. Instead of the carpentry superintendent being held responsible for inspecting the completed framing, and making corrections and replacements where necessary, plaintiff delegated this responsibility to its wallboard subcontractor. Naturally that subcontractor's primary interest was in beginning and completing his own phase of the work as quickly as possible. As might be expected, his sole criterion for suitability of framing was whether wallboard or sheetrock could be fastened to it. The subcontractor's anxiety to get on with his phase of the work inevitably led to wallboard operations being begun before the Air Force inspectors had examined the framing and signified approval by initialing the card on the building. (Finding 12.) Despite the above difficulties encountered in lumber inspection procedures, it was not until September 1958 that serious problems arose. At that point the Air Force's chief inspector noted a large proportion of bad lumber arriving at the building site; lumber containing oversize knots, splits and dry rot. He also observed that most 'of this bad lumber bore the grade-marks of the Hickox Inspection Service and the A. E. Green Inspection Service, the two grading agencies that operated at First Lumber's cut-up mill in Minnesota, previously described. After going to the storage yard at the Day Farm and failing to obtain any satisfactory explanation from the foreman there as to the reason for the sudden influx of bad lumber, the inspector called the problem to the attention of plaintiff's administrative officer and assistant project superin tendent, both of whom acknowledged that the lumber in the yard was excessively knotty, rotten, and crooked, and gave assurances that such material would not be sent to the job site. The inspector also informed plaintiff's president of the problem. (Finding 13.) Notwithstanding the apparent recognition by all concerned of the largely inferior quality of the lumber remaining in plaintiff's yard inventory and its assurances that such material would not be used on the job, the problem did not diminish; in fact it became more acute. By mid-September the proportion of bad lumber being used in the framing grew so large that it became physically impossible for the Air Force inspectors to examine and reject it on an individual piece basis. Moreover, such rejections as they did make were frequently met with disagreement and argument from plaintiff's representatives as to whether replacement was actually necessary. (Finding 15.) The recalcitrance of plaintiff's supervisory personnel coupled with the wallboard subcontractor's determination to proceed with his work as quickly as possible compounded the difficulties occasioned by the bad lumber. Having received reports from the architect-engineer depicting the situation outlined above, the contracting officer visited the buildings where framing was in progress and confirmed the accuracy of those reports. In addition to observing the pervasive use of obviously bad lumber, which typically bore the stamp of the Hickox and A. E. Green inspection services, he discovered instances where the Air Force inspectors' initials had been forged on the building inspection cards erroneously indicating that the framing had been approved. On September 16, following his inspection at the buildings, the contracting officer went to the yard at the Day Farm. He selected a bale of lumber at random and broke it open. While the outside pieces bore the WCLIB gradestamp, none of the interior members bore any stamp at all. (Finding 16.) In the face of his findings at both the construction áte and the storage yard, including the indications of fraud, the contracting officer became thoroughly alarmed. He telephoned the Army's Lumber Control Office at Saint Louis to report his problem and request that one of the Office's graders be sent to Plattsburgh to examine the lumber. He was told, that all of the Army graders were tied up on other work at the time. The Control Office, whose function is the procurement of all lumber purchased by the Army, suggested that the contracting officer contact WCLIB or PLIB and attempt to secure grading assistance there. After first advising plaintiff's administrative officer of what he planned to do, the contracting-officer telephoned WCLIB on the West Coast and was referred to one of their supervisor-inspectors, Charles McNew, who was then in New York City. McNew agreed to come to Plattsburgh and undertake a preliminary inspection to determine whether the lumber that plaintiff was using and proposing to use was really as far wide of the lumber quality specifications as the Government representatives, none of whom were qualified lumber graders, believed it to be. McNew, with over 30 years' experience in lumber grading and 17 years' employment by WCLIB as a grade supervisor, arrived at Plattsburgh on September 19. That morning he was given a copy of the contract specifications covering lumber quality and was accompanied by a representative of the architect-engineer and the chief inspector on the job for the Air Force to the Day Farm where he graded random samples of the lumber in storage there. For the most part, he found the lumber that he examined to be substantially below the grade requirements of the contract. Though in most instances such lumber bore no grade markings at all, there were some pieces of decidedly inferior quality that were nonetheless grademarked by the A. E. Green or Hickox services as being of a quality equal to or above the requirements of the contract. (Finding 18.) In the afternoon the contracting officer and plaintiff's administrative officer joined the group. They returned to the Day Farm where the morning's experience was generally repeated. They then went to some of the buildings where the framing was still exposed. McNew found approximately 30 percent of the ceiling joists and 90 percent of the studs (species other than redwood) to be below the contract specifications. After the inspection tour the parties returned to the architect-engineer's office where McNew's findings of substantial grade deficiencies and large amounts of unmarked lumber were discussed, with, particular emphasis on how the problem might be remedied. As a practical solution, the contracting officer suggested that in view of the very large quantity of material involved, plaintiff could call in a qualified and disinterested grading agency and have the lumber in the exposed framing and at the Day Farm graded in the manner contemplated by the specifications. The administrative officer agreed that this was a sound proposal but indicated that he would have to secure the approval of plaintiff's president. Following that discussion the contracting officer issued plaintiff the following written directive (finding 20): You are hereby directed to remove and replace all lumber that is not grade marked or certified in accordance with Section 5-05, Part A of contract specifications. You are further directed that all lumber not in accordance with the above specification be removed from the housing site. Being promptly advised of the foregoing developments by his administrative officer, plaintiff's president shortly came to the job site to personally look into the matter. Once there the contracting officer toured the project with him and pointed out examples of the inferior lumber that had caused the issuance of the September 19 directive. The proposition that a large portion of the lumber was in fact defective having been established, the two then discussed the question of resolving the problem and the contracting officer reiterated the suggestion that he had earlier made to plaintiff's administrative officer following the McNew inspection. Plaintiff's president agreed that calling in a disinterested agency to grade the exposed lumber in the buildings and the lumber in storage at the Day Farm would be a proper procedure and further agreed that he would contact either WCLXB or PLIB, the two grading agencies specified in plaintiff's contract with the Government, for that purpose. (Finding 21.)' Following his meeting with the contracting officer, plaintiff's president did not contact either of the West Coast grading services as he had agreed. Instead, he telephoned Baldwin Lumber, his supplier, and demanded that it send an inspection agency to Plattsburgh, to grade tbe lumber. Baldwin, in turn, contacted its supplier, First Lumber, who sent a grader employed by the Hickox Inspection Service to the site. The grader arrived September 22 and proceeded to grade and stamp some of the exposed lumber in the buildings. On September 25 the contracting officer first became aware that someone was grading lumber in the buildings. Upon inquiry of plaintiff's president, he learned that the grader was a representative of the Hickox Inspection Service. Since it had already been established that some of the patently defective lumber on the job had been misgraded by that agency, the contracting officer objected to the idea of having its personnel do the grading that had been agreed to by plaintiff. Faced with this objection, which was clearly reasonable in the circumstances, plaintiff's president stated that he had no fixed preference as to who did the grading and thereupon telephoned the Portland headquarters of "VYCLIB and requested that grading services be supplied at Plattsburgh. (Findings 22,28.) Later the same day the contracting officer issued a written directive to plaintiff incorporating the substance of the agreement that he had reached with its president concerning grading of the lumber as a necessary preliminary to enclosure of the buildings that had .already been framed. (Finding 22.) By letters of September 26 and October 1, plaintiff formally advised Baldwin of the defective quality of the framing-lumber, of the agreed procedure for grading and replacement of substandard material, and of the fact that all costs of these operations would be charged to Baldwin. (Findings 24,25.) In late September, while the parties were in the process of concluding the arrangements that led to the retainer of WCLIB by plaintiff, a representative of the Chemical Corn Exchange Bank, plaintiff's mortgagee for this project, arrived at Plattsburgh. This individual, Mr. Norman, was employed by an engineering consulting firm that the bank had insisted be retained by plaintiff in order to resolve various pending problems and expedite satisfactory completion of the job. Norman had extensive experience as a construction superintendent and was well qualified to act as a trouble shooter. (Finding 26.) Upon his arrival at the site Norman examined the exposed lumber in the buildings and the storage inventory at the Day Farm. As others had concluded, he found it to be extensively defective. His findings prompted him to recommend that plaintiff's carpentry superintendent be dismissed, which was done, and that outside lumber graders be called in; the procedure ultimately agreed to by plaintiff's president and the contracting officer. (Findings 26, 27.) Pursuant to plaintiff's letter request of September 25, three WCLIB graders arrived at Plattsburgh on September 28. They met with plaintiff's job supervisors and then began to inspect the exposed lumber in the buildings. The grading force was augmented by four additional WCLIB men and the grading job in the buildings and at the Day Farm was completed in an efficient and expeditious manner by October 23. (Findings 28, 32.) In fact, on that date plaintiff's administrative officer wrote WCLIB a commendatory letter. (Finding 35.) Inspection in the buildings revealed that a large number of the studs were redwood, a species not included among those designated for use as studding in the contract specifications (finding 5) and one that the WCLIB was not officially authorized to grade. The parties overcame this technical difficulty by agreeing that they would accept the informal judgment of the WCLIB graders. (Finding 21.) Evaluated under this arrangement, the redwood was found to be of generally good quality. On October 7, 1958, approximately 10 days after the WCLIB graders had begun their work, plaintiff's president, in a letter to the contracting officer, for the first time took exception to the grading operation then under way; asserting that substantially all of the lumber met the contract specifications and that in any event the Government had the duty of inspecting it at its source. Despite receiving this protest, the contracting officer permitted the WCLIB men to continue their work. (Finding 31.) The findings as to grade were generally consistent among the several WCLIB representatives and as between the exposed framing in the buildings and the lumber in storage at the Day Farm. Aside from the redwood, which was found to be adequate, approximately 80 percent of the installed studs and 30 percent of the ceiling joists were of a quality significantly below that called for in the contract specifications. There was no redwood at the Day Farm and some 80 percent of the fir and hemlock was well below the required grade. In the course of their work, the WCLIB graders, who collectively pronounced this to be the worst lot of lumber that they had ever been called upon to grade, noticed that invariably the defective lumber that was stamped as being up to quality bore the legend of Quality Forest Products Corp. and the grademark of either the A. E. Green or Hickox Inspection Services. (Findings 33, 34.) At the trial of this case plaintiff adduced no credible evidence rebutting the findings and conclusions of the WCLIB personnel. Those findings of substantial and extensive deficiencies in the quality of the lumber that plaintiff was using and proposing to use clearly demonstrate that the contracting officer was well within his rights, and indeed his obligations, in refusing to approve further construction in the absence of the grading arrangement to which plaintiff's president agreed in advance. Having made that agreement with the certain awareness that it represented the only possible solution to the dilemma in which its lumber suppliers had placed it, plaintiff cannot now disavow it by pointing to general contract language indicating that all inspections were to be made by the Government, rather than the contractor. Finally, after essentially finessing the merits of the issue of lumber quality as a matter of proof, plaintiff contends at length that the Government erred in dealing with the problem of defects in the lumber as it did. Instead of requiring compliance with the contract specifications, the argument goes, tbe Government should have permitted plaintiff to proceed according to its own dictates and then settled the matter by a downward adjustment in the contract price; this in the spirit of conformity with alleged trade practice. 'Assuming both the existence of such a practice and its amenity to situations involving technical or marginal shortcomings under contract specifications, it has no proper place in the context of the significant and pervasive lumber deficiencies present on the basically unchallenged facts of this case. Moreover, this court has recently held that trade practice in the building industry cannot override an unambiguous contract provision. WRB Corp. v. United States, 183 Ct.Cl. 409, 436 (1968). The specifications involved here were both clear and reasonable. The Government did no more than insist on compliance with them.H.L.C. & Associates Constr. Co. v. United States, 176 Ct.Cl. 285, 306-307, 367 F. 2d 586, 598 (1966); Maxwell Dynamometer Co. v. United States, 181 Ct.Cl. 607, 628, 386 F. 2d 855, 868 (1967). The suggestion that the Government's action, manifestly reasonable in the circumstances, was motivated by the contracting officer's animosity towards plaintiff's president is completely unsupported by the evidence as a whole. (Finding 38.) As noted at the outset, after completion of the contract and over the objection of the contracting officer, the Air Force authorities issued a change order to the contract under which they withheld $29,300 alleged to represent a guantmn meruit-type deduction for defective lumber presumed to have been already enclosed in the buildings at the time that the WCLIB graders arrived on the scene. Np evidence was adduced to support the proposition that any of such lumber was in fact defective and, as noted, the Government now concedes that the deduction was improper. (Finding 37.) Plaintiff's various contentions, aside from the uncontested deduction item, being without merit, judgment should be entered for it in the amount of $29,300. FINDINGS OK Fact 1. Plaintiff is a New York corporation engaged in the general contracting business with its principal office in New York City. 2. On May 6, 1957, plaintiff entered into a contract with the United States, acting through the Department of the Air Force, known as Contract No. AF 30(636)-136, for the construction of a 1685-unit housing project for military personnel at Plattsburgh Air Force Base in the State of New York. The 1685 individual units were contained in almost 400 separate buildings. The contract was awarded to the plaintiff after competitive bidding for the price of $27,578,000, some $1,600,000 below the next lowest bid, and provided that the work was to- commence on or before May 23, 1957, and be completed to the satisfaction of the contracting officer and the mortgagor-builders within 730 calendar days thereafter, or May 23, 1959. 3. The family housing called for by the contract was constructed under the authority of the Capehart Act, as amended, 12 U.S.C. § 1748-1748a — g (1958 ed.); 42 U.S.C. § 1594-1594f (1958 ed.), which had its inception in Title IY of the Housing Amendments of 1955, 69 Stat. 646. The purpose of the Act is to provide housing for armed services personnel without resorting to the procedure of direct annual appropriations. To accomplish this objective, the Act provides for construction of housing projects on Government-owned property pursuant to competitive bidding by private builders. The successful bidder (eligible builder) forms a corporation (mortgagor-builder) which leases the land from the Government for a nominal sum and arranges with a financial institution to finance the project by a 100 percent mortgage which is insured by the Federal Housing Administration. The eligible builder causes the project to be constructed and is paid therefor entirely out of mortgage proceeds. As construction progresses, individual houses are placed under the control of the military department. Determination as to completion of the project is made by the FHA which then issues a final endorsement of the mortgage note for mortgage insurance. Upon completion of the project and after payment of the loan proceeds to the eligible builder, the capital stock of the mortgagor-builder is transferred to the United States and the loan is amortized through moneys appropriated to pay the housing allowances of personnel who are assigned quarters in the project. 4. In this action plaintiff seeks to recover damages for the cost of replacing lumber (and consequent delay) which the contracting officer found did not conform with the specifications of the contract. The issue, then, is whether the lumber which the plaintiff installed, and was about to install, in the buildings of the project met the specifications, and as a corollary, whether the contracting officer took the proper steps pursuant to the authority granted him by the contract to insure that the lumber conformed with the contractual requirements. 5. The subject contract and specifications contained the following provisions which are pertinent to the claim. Article XIV (22) of the HotjsiNG Contract relating to "Control of Housing Units," provided as follows : The respective mortgagor-builder and the eligible builder shall place each housing unit under the control of the Department, without charge or cost to the Department, upon the determination by the Contracting Officer and Commissioner that such unit is available for occupancy, and neither the mortgagor-builder nor the eligible builder shall, except with the written consent of the Department, permit or condone the occupancy of any housing unit prior to such determination; provided, however, that such determination shall be considered as final acceptance of such housing unit except for such defects as may be specified in writing by the Contracting Officer. Article XVIII (32) of the Housing Contract relating to "Inspection," provided as follows: The Department will make all inspection necessary to determine compliance with the terms of this Housing Contract. Paragraph 6 of the General Provisions-Housing Contract, relating to "Inspection," provided as follows: (a) Except as otherwise provided herein, all material and workmanship, if not otherwise designated by the Specifications, shall be subj ect to inspection, examination, a.nri test by the Contracting Officer at any and all times during manufacture and/or construction and at any and all places where such manufacture and/or construction are carried on. The Department and the mortgagor-builder, or either of them, shall have the right to reject defective material and workmanship or require its correction. Rejected workmanship shall be satisfactorily corrected, and rejected material shall be satisfactorily replaced with proper material, without charge therefor, and the eligible builder shall promptly segregate and remove the rejected material from the premises. If the eligible builder fails to proceed at once with the replacement of rejected material and/or the correction of defective workmanship, such failure may be treated as a default. (b) The eligible builder shall furnish promptly, without additional charge, all reasonable facilities, labor and materials necessary for the safe and convenient inspection and tests that may be required by the Contracting-Officer. All inspection and tests by the Department shall be performed in such manner as not unnecessarily to delay the work. Special, full size, and performance tests shall be as described in the Specifications. The eligiblo builder shall be charged with any additional cost of inspection when material and workmanship are not ready at the time inspection is requested by the eligible builder. (c) Inspection of material and finished articles to be incorporated in the work at the site shall be made at the place of production, manufacture, or shipment, whenever the quantity justifies it, unless otherwise stated in the Specifications; and such inspection and written or other formal acceptance, unless otherwise stated in the Specifications, shall be final, except for latent defects, departures from specific requirements of this Housing Contract, damage or loss in transit, fraud, or such gross mistakes as amount to fraud. Subject to requirements contained in the preceding sentence, the inspection of material and workmanship for final acceptance as a whole or in part shall be made at the site. Nothing contained in this paragraph shall in any way restrict the rights of the mortgagor-builder and the Department, or either of them, under any warranty or guaranty of material and workmanship. Paragraph 8 of the General Provisions-Housing Contract relating to "Disuptes" provided as follows: Except as otherwise provided in this Housing Contract, any dispute concerning a question of fact arising under this Housing Contract which is not finally decided by the Commissioner, which may be adjusted between the eligible builder and the Contracting Officer and which is not in fact disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the eligible builder. Within 30 days from the date of receipt of such copy, the eligible builder may appeal by mailing or otherwise furnishing to the Contracting Officer a written appeal addressed to the head of the Department, and the decision of the head of the Department or his duly authorized representative for the hearing of such appeals shall, unless determined by a court of competent jurisdiction to have been fraudulent or capricious or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence, be final and conclusive; provided that, if no such appeal is taken, the decision of the Contracting Officer shall be final and conclusive; and provided further, that in no event shall the Contracting Officer, the head of the Department or his duly authorized representative have authority under this clause to make any decision which shall cause the total amount payable to the eligible builder under this Housing Contract to exceed the maximum amount payable from mortgage proceeds. In connection with any appeal proceeding under this clause, the eligible builder shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the eligible bunder shall proceed diligently with the performance of this Housing Contract and in accordance with the decision of the Contracting Officer. Paragraph 9 (a), (b), (c), of the GeNeeal Provisions-Hotjsing CoNtraot, relating to "Changes and Changed Conditions," provided as follows: (a) The Contracting Officer may, at any time, by a Construction Change Eequest, Form FHA 2437, and without notice to sureties, propose changes in the Drawings and/or Specifications of this Housing Contract and within the general scope thereof. Each such proposed construction change will be submitted to the eligible builder for his estimate of the increase or decrease in cost and time of performance, if any. After such action by the eligible buñder, the proposed construction change will be returned to the Contracting Officer. Likewise, the eligible builder may, without notice to sureties, propose changes within the same scope, all such proposed changes to be in writing and to contain the eligible builder's estimate of the increase in cost and time of performance, if any, and to be submitted to the Contracting Officer. In all cases, the eligible builder will sign proposed construction changes for himself and as agent for the mortgagor-builder. (b) All proposed construction changes, including those resulting m no increase or decrease of cost, will be submitted by the Contracting Officer to the Commissioner, with copy to the mortgagee. The determination of the Commissioner as to the increase or decrease in cost and time of performance shall be final with respect to all such changes to be paid or deducted from mortgage proceeds. If any such change is approved by the mortgagee and the Commissioner to be paid or deducted from mortgage proceeds, the amount of the maximum insurable mortgage as herein defined and this Housing Contract will be considered as modified by such approved change order, and the eligible builder shall proceed diligently to execute such approved change. (c) No change of any character shall be made unless in pursuance of a written order approved as required in tiie preceding paragraphs, and no claim for adjustment of the contract sum shall be recognized unless the eligible builder, prior to the making of such claim for adjustment is in receipt of an approved written order. Paragraph 10 of the GeNeral ProvisioNS-HousiNG CoNtract, relating to "Deductions for Uncorrected Work," provided as follows: If the Contracting Officer and the Commissioner deem it inexpedient to correct work not performed in accordance with this Housing Contract, an equitable deduction of the contract price shall be made therefor pursuant to the construction change procedure herein provided. Paragraph 13 of the GeNeral PeovisioNs-HousiNG CoN-tRAgt, relating to "Termination for Default of Eligible Builder," provided as follows: (a) If the eligible builder should neglect to prosecute the work properly or fail to perform any provision of this Housing Contract, the Contracting Officer shall give ten days' notice in writing to the eligible builder and to his sureties, and the Contracting Officer shall report such neglect or failure to the mortgagee and the Commissioner; whereupon, without further notice to the eligible builder or his sureties or the mortgagor-builder, the mortgagee may treat such neglect or failure as a default of the mortgagor-builder under the Building-Loan Agreement herein elsewhere identified, entitling the mortgagee under his power of attorney from the mortgagor-builder to make good such deficiencies and to deduct the cost thereof from the payment then or thereafter due the mortgagor-builder; provided, however, that the Contracting Officer and the Commissioner shall approve such action and the amount charged therefor. (b) If the eligible builder should be adjudged a bankrupt, or if he should make a general assignment for the benefit of Ms creditors, or if a receiver should be appointed on account of his insolvency, or if he should persistently or repeatedly refuse or should fail, except in cases in which an extension of time for performance is provided, to supply enough skilled workmen or proper material, or if he should fail to make prompt payment to subcontractors or for material or labor, or persistently disregard the instructions of the Contracting Officer, or otherwise be guilty of a substantial violation of any provision of this Housing Contract, then the Contracting Officer may, without prejudice to any other right or remedy and after giving ten (10) days' notice in writing to the eligible builder and to his sureties, report such facts to the mortgagee and the Commssioner; whereupon, without further notice to the eligible builder or his sureties or to the mortgagor-builder, the mortgagee may treat such deficiencies, or any of them, as a default of the mortgagor-builder under the Building Loan Agreement, with right among others therein provided to terminate the Building Loan Agreement with the mortgagor-builder. Section 5 of tbe Specifications related to Carpentry and provided as follows: 5-01 SCOPE: The work consists in furnishing all plant, labor, equipment, appliances, and materials, and in performing all operations in connection with the in-stafiation of carpentry, complete, in strict accordance with this section of the specifications and the applicable drawings. 5-02 MATERIALS, LUMBER AND WOODWORK : At the Contractor's option, lumber for the various uses shall be one of the species listed for the purpose and of the grade indicated. A certificate of conformance will be accepted in lieu of inspection requirements. The Contractor may use lumber other than that specified above providing it meets the requirements for which it is to be used and providing that approval is obtained in writing prior to delivery of the material to the site. (a) Framing and structural lumber: Use Grade Species (1) Rafters Trussed Rafters Headers Stair Stringers Stair Carriages Eloor joists 1,100 f, 860 o Any stress-graded species 1,1400,000E (unless otherwise indicated on the drawings) (2) Studs Plates Caps Sills No. 1 No. 2 Eir, white, Spruce, Sitka Douglas fir, coast and inland Eir, white Hemlock, eastern and west coast Larch Pine, northern white, Norway, ponderosa, and southern Spruce, eastern, Engelmann, and Sltka¡ (3) Ribbon Boards Ridge Boards Bracing Eurring Grounds Catwalks No. 2 Douglas fir, coast Hemlock, west coast Pine, southern Spruce, Sitka No.3 Douglas fir, inland Eir, white Hemlock, eastern Larch No. 2 Construction Pine, Idaho white, lodgepole, northern white, Norway, pon-derosa, and sugar Spruce, eastern and Engelmann Poplar, yellow 5-05 LUMBER: (a) Grade Marking: Each piece of yard and structural lumber shall bear the official grade mark of the appropriate inspection bureau or association; or in lieu thereof, each shipment shall be accompanied by a certifi cate of inspection issued by the appropriate inspection bureau or association, or other agency approved as competent by the Contracting Officer. * 6. The grades for the lumber specified in Section 5-02 of the specifications, above, refer to the grading standards for certain species of West Coast lumber issued by the West Coast Lumber Inspection Bureau (hereinafter referred to as "WCLIB"), as certified and approved by the American Lumber Standards Committee (hereinafter referred to as "ALSO"). ALSO is appointed by the Secretary of Commerce and its function is to set the standards for the grading of lumber as to quality and to approve any grading rules published by a competent and reliable agency having adequate facilities for mill inspection and reinspection. WCLIB is a nonprofit organization, an independent branch of the West Coast Lumbermen's Association, which provides a wide variety of lumber grading services, including the supervision of grading at the mill, as well as direct inspection and grading under special contract. A lumber grader at the mill level is required to pass a series of efficiency tests under the supervision of a WCLIB supervisor-grader before he is permitted to use the WCLIB grading stamps. WCLIB supervisors are required to take a training program for about a year and a half before they are considered to be qualified for their duties. WCLIB was also authorized by ALSC to draw up and issue the "Standard Grading and Dressing Buies" which became the official standards for grading Douglas fir, Sitka spruce, West Coast hemlock, and Western red cedar. The rules set out the various factors which determine the quality of the lumber, such as the size and position of knots, the extent of splits or shakes (a form of split), and the amount of warp or decay. Grading is performed by visual inspection ; the inspector looks at all sides of the piece of lumber and stamps on it the grade, together with the mark of the inspecting agency, the purpose of which is to identify to the consumer the quality of lumber received. In the Number 14 edition of the WCLIB rules, dated August 1, 1947, which were in effect when the specifications in this case were issued, the lumber grades for joists and studs required by the specifications were denominated as No. 1 and No. 2. In the Number 15 edition, which became effective March 15, 1956, the nomenclature was changed to "Construction" and "Standard," respectively. Lower grades in Number 15 were listed as "Utility" and "Economy." There were also some changes made in the standards for determining the grades, but these were so slight as to effect no appreciable difference in the grading results, and it was the standard industry practice, after Eule Number 15 came into effect, to grade under that rule lumber which had been purchased under contracts when Eule Number 14 was in effect, since the results of the grading would be expected to be the same. Finally, the WCLIB rules contained a provision under which a buyer of lumber graded by that agency had only 10 days after delivery within which to challenge the correctness of the grades that had been affixed by WCLIB. After that period or after the lumber had been used, whichever occurred earlier, the rule provided that the buyer forfeited his right to challenge quality. 7. The Plattsburgh project required about 9million board feet of dimensional lumber and approximately 7 million square feet of plywood, none of the latter being involved in the present dispute. Over 400 freight cars were required to transport the lumber to the construction site. On November 20,1957, and on December 4,1957, plaintiff entered into contracts with Baldwin Lumber-Junction Milling, Inc., subsequently known as Baldwin Lumber Company (hereinafter referred to as "Baldwin") for the delivery of the required lumber. The November contract contained the following provisions: All the material will conform with the applicable provisions of the specifications for Stress Grade Lumber, and also with the Federal Specifications 1100F, 850 C and l,14O,00OE. _ _ The above material is to be No. 1 (Construction Grade) West Coast Hemlock and/or Douglas Fir with a maximum of 20% #2 (Standard) NO UTILITY Grade. Each piece of lumber is to be grade marked with stamp of "WCLIB" or "PLIB". Furthermore all lumber must be anti-stain treated. The moisture content is not to exceed 19% (3% leeway) Min dried or air dried. All material must be straight and dry as specified above. The December contract contained the following provisions: All the above material will conform to the applicable provision of Specifications for Furring, Bracing, etc. Material is to be #2 and better Douglas Fir, West Coast Hemlock, Southern Pine or Sitka Spruce. (No Utility Grade.) All the material included in tMs contract is to be grade marked with Stamp of WCLIB or PLIB. The moisture content is not to exceed 19% (3% leeway), Min dried or air dried. All material must be straight and dry as specified above. We reserve the right to reject any part that does not conform with all the mentioned requirements. "WCLIB" and "PLIB" meant West Coast Lumber Inspection Bureau and Pacific Lumber Inspection Bureau. In its purchase negotiations and agreements with Baldwin plaintiff gave no indication that it expected the lumber supplied by Baldwin to be inspected by the defendant prior to delivery at Plattsburgh. 8. Baldwin was in the naillwork business and the Silber-blatt contract was the first large volume contract that it ever had for lumber. It did not purchase the lumber directly but entered into a subcontract with the First Lumber Corporation, a dealer that procured the lumber from various mills and brokers for delivery directly to Plattsburgh as ordered by S'ilberblatt through Baldwin. 9. The Air Force made available to plaintiff for storage of lumber an area called the Day Farm which was about 3 or 4 miles from the construction site and had private rail sidings to accommodate railroad cars. Although there were some loose pieces, the lumber generally came in bales banded with steel bands about three-fourths of an inch wide. Cas Krulik, plaintiff's administrative officer on the job, and plaintiff's field superintendent checked in the lumber for quantity purposes but it was not practical to break open the bales. Thus, only the outside pieces could be seen. The lumber, therefore, could not reasonably be inspected for grademarks or quality at the rail siding. After being checked in, the lumber was trucked to the Day Farm where it was stacked, three or four bales to the stack, 12 to 16 feet high. Here, too, it was altogether impracticable to break open the bales to inspect the lumber. When the lumber was to be installed, the bales were loaded on trucks by fork lift and dumped at the building site. The lumber was incorporated into the housing structures within 24 to 48 hours thereafter. In view of the fact that at peak production plaintiff was framing about 20 housing units a day scattered oyer several hundred acres, it is evident that the first reasonable opportunity that the Air Force inspectors had to inspect the lumber was after it had been installed in the framing. 10. The evidence shows that it was not feasible for the Air Force to inspect the dimensional lumber at the point of production or shipment. There is no indication that the parties ever intended that the lumber be inspected in that manner. Neither plaintiff nor its supplier Baldwin, who subcontracted the lumber contract to First Lumber Corporation, knew where the lumber was coming from. Frank Malina, the president of First Lumber Corporation, did not purchase all of the lumber required for the Plattsburgh job from any one source, but in comparatively small quantities as and when ordered by Baldwin from a large number of suppliers, brokers, and wholesalers as well as mills located throughout the West Coast and Canada. When he placed an order with a broker, the latter made his own contract with the mill which shipped the lumber directly to Platts-burgh. In such an event, Malina would not even know from which mill the lumber was shipped. Furthermore, much of the lumber shipped to Plattsburgh was purchased in transit. This is a common practice in the lumber business. Many mills load their lumber on freight cars headed for the eastern part of the country without specifying any particular destination until they receive an order, whereupon the cars are rerouted to the location of the buyer. Lumber purchased in transit can be inspected only at the destination. Invoices from at least 23 different suppliers, including brokers and wholesalers, showing purchase of lumber for Plattsburgh were received in evidence and these invoices did not cover all dimensional lumber purchases. It was necessary for First Lumber Corporation to have as wide a selection of suppliers as possible so as to get the best price available. Malina testified that the price of his subcontract with Baldwin and the conditions under which he was compelled to purchase the lumber, that is in small quantities from many outlets, from brokers and in transit, would have made inspection at the source by the Air Force impossible and the subcontract was not entered into with any intention of such inspection. There is no evidence that at any time during the process of procuring the lumber involved in this dispute plaintiff either advised the defendant of the point or points of origin of any of the lumber or suggested that any inspection of it be made prior to arrival at Plattsburgh. 11. Lumber deliveries to the yard at the Day'Farm began in November 1957. Framing of the buildings began in March 1958. The original inspection system devised by the supervisor of inspectors assigned to the job by Kelly & Gruzen, the architect-engineers, required the inspectors, when they found some deficiency in materials or workmanship, to prepare a ticket in triplicate setting out the matter which had to be corrected; one copy for the person doing the work involved, one for Krulik, and one for Captain William C. McAfee, the contracting officer. During the summer of 1958, Krulik complained to Captain McAfee that the inspectors were being too hasty and were handing out tickets before the various operations were completed and the contractor's own inspectors had had a chance to review the work. It was accordingly agreed to abandon the deficiency ticket system. Instead, a card was to be placed in a window or other conspicuous place on the structure and as each work phase was completed, the car'd was to be initialed by the contractor's foreman as notification to the Air Force that particular work had been completed and was ready for inspection. After the work had been inspected and approved by the Air Force inspector, lie initialed the card to indicate that the next operation could be begun. 12. This system did not work efficiently with respect to the framing because of the unusual relationship between the carpentry subcontractor and the sheetrock subcontractor. It is customary practice in the construction trade for the carpentry superintendent to inspect the framing and make any corrections which are needed before it is covered up by sheet-rock or wallboard. In this case, however, plaintiff's subcontract for the installation of the wallboard contained a provision cautioning the subcontractor "to erect wallboard only on framing suitable for the proper application," and plaintiff interpreted this provision as imposing on the wallboard subcontractor the primary responsibility for the inspection of the framing and the correction of any improper work including the replacement of studs or joists where necessary. The wallboard subcontractor considered it unfair to have to bear this responsibilty and strenuously but unsuccessfully protested the arrangement. The carpentry superintendent, John Johnson, at first even refused to provide the wallboard subcontractor the carpenters required to rectify improper work in the framing. Eventually the subcontractor succeeded in obtaining the required personnel but he was still required to make the decision as to whether a correction was to be made. The subcontractor did not wait for the framing to be inspected by the Air Force inspectors before beginning to install the wallboard; he began his work whenever in his judgment the framing was ready for it. He had never dealt in lumber and knew nothing about lumber grades. In making his inspection of the framing, his only concern was whether it could hold the wallboard. It was only if, in nailing the wallboard, the members were so bad that a stud would break or a joist bow out so as to cause a lump in the ceiling, that he ordered them replaced. 13. The lack of proper supervision by the plaintiff's carpentry superintendent of the quality of lumber going into the framing did not appreciably affect the job until after the end of August of 1958. Although at the beginning there were a few shipments of lumber with excessive moisture, the lum ber which, was incorporated in the framing of the houses generally complied with the specification requirements of the contract. At the beginning of September, however, there was a sudden influx of bad lumber at the building site which was materially below the grades called for in Section 5-02 of the specifications (No. 2 or better). The lumber contained knots of excessive size, splits, and showed dry rot. Robert E. Woodward, the Air Force's chief inspector on the job, noticed that most of the bad lumber bore the grading marks of the Hickox Inspection Service and the A. E. Green Inspection Service. Mr. Woodward became worried and went to the Day Farm to try to find out where all this bad lumber was coming from. He spoke to the foreman in charge of the yard about the deficient material he was sending to the job, but could get no explanation from him. Woodward complained to Mr. Krulik and Mr. Ker amidas, plaintiff's assistant project superintendent, both of whom acknowledged that the lumber in the yard was excessively knotty, rotten, and crooked. Ker amidas accompanied Woodward to the lumber yard and told the foreman not to send this type of material to the building site, but it continued to come to the site, at an ever-increasing rate. Woodward also spoke to plaintiff's president, Mr. Shepard S. Silberblatt, and the carpentry foreman, Albert Anderson, about the problem. Anderson said that the project was so large and there were so many men working at the framing that he could not watch them all, and they could not care less what they put into the buildings. 14. Woodward did not further pursue the question of the source of the undergrade lumber which was coming on the job, but it was subsequently revealed that a large part of it came from a mill known as the Quality Forest Products Corporation located in Albert Lea, Minnesota. Subsequent to the time that First Lumber Corporation obtained the subcontract from Baldwin Lumber Corporation for the supplying of the lumber for the Plattsburgh job, First Lumber purchased the Quality Forest Products Corporation and operated it as a re-manufacturing mill, or, as it is customarily called in the lumber business, a "cut-up" mill. A cut-up mill purchases low-grade lumber and by reprocessing it attempts to bring it up to a higher grade. The Quality Forest Products Corporation purchased rough lumber from small mills, called "gypo mills," resurfaced and trimmed it to eliminate defects such as knots and decay, and cut it to desired size. The reprocessed boards were then supposed to be inspected and stamped with the appropriate grade. Cut-up mills do not have a good reputation in the lumber business. A prudent builder would not knowingly purchase from a cut-up mill lumber for housing. 15. By mid-September the amount of bad lumber had become so extensive that it became impossible for the Air Force inspectors to inspect and reject the undergrade studs and joists on an individual basis. Although they got reasonable cooperation in the replacement of members that were so obviously bad that they could not hold the wallboard, there were constant quarrels between the Air Force inspectors and Krulik and Keramidas as to whether the lumber met the requirements of the specifications. At the rate the undergrade lumber was coming to the building site, Mr. Woodward did not believe the Air Force could hire enough inspectors to stop it. Mr. Woodward had been reporting the situation to Mr. Belcher of Kelly & Gruzen, the architect-engineer firm, who brought the matter to the attention of the contracting officer, Captain McAfee. 16. Captain McAfee inspected the buildings then being framed and found that a very large amount of lumber which appeared to him to be obviously undergrade, containing oversize knots, cracks, and splits, was being incorporated in the framing. He noted that most of the bad lumber bore the grademarks of Hickox and A. E. Green grading agencies. It became apparent that the amount of the undergrade lumber was so extensive that the Air Force inspectors were unable to cope with the situation. McAfee held a conference on the matter with Mr. Post, the project superintendent, and Mr. Krulik, and also conferred with the assistant carpentry superintendent, Carl Johnson, and his foreman, Albert Anderson. They asked for an opportunity to replace the bad lumber but Captain McAfee found that the wallboard contractor was covering up the framing so rapidly that corrections could not be made. In some instances the Air Force inspectors' initials on the inspection card indicating the framing had been approved were forged. On September 16, Captain McAfee went to the Day Farm where the lumber was stored and selected a bale at random and broke it open. The outside members bore a WCLIB stamp, but the interior pieces bore no grading stamp at all. 17. At this point the contracting officer became thoroughly alarmed. The buildings were being framed rapidly, at the rate of about 20 units a day, and the wallboard contractor was proceeding to cover up the framing without waiting for the Air Force inspectors to complete their inspections. The amount of bad lumber going into the buildings was so large that no ordinary team of inspectors could reasonably be expected to keep up with it. Moreover, it appeared that the lumber which bore the Hickox and Green grading stamps had been improperly graded, and the bale that had been broken open at the Day Farm indicated possible fraud on the part of the lumber suppliers. Since the ordinary Government construction inspector does not have the expertise to grade lumber, the contracting officer felt that he needed expert assistance. He called the Army Lumber Control Office at St. Louis, Missouri, which purchases large quantities of lumber, and asked whether they could send him one of their lumber graders. The Control Office informed Captain McAfee that they were in their busy season and could not spare any of their personnel but advised him to get in touch with the West Coast Lumber Inspection Bureau or the Pacific Lumber Inspection Bureau on the West Coast who might be of assistance to him. Captain McAfee advised Mr. Krulik of what he was going to do, and called Mr. Howard Brown, the General Superintendent of WCLIB in Portland, Oregon. Mr. Brown referred him to one of their supervisor-inspectors, Charles McNew, who was stationed in New York City. Captain McAfee called McNew and requested 'him to come to Platts-burgh to look at the lumber on the project. 18. Charles McNew was a man of wide experience in lumber grading. He had been grading lumber since 1924 and had been with WCLIB for 17 years as a grade supervisor in the New York area where he would visit and spot-check mills authorized to use the WCLIB grading stamp in order to determine whether the resident graders were performing-in accordance with the official grading standards. He arrived at Plattsburgh on September 19, 1958, and was taken to Mr. Belcher's office. Captain McAfee was not present. Bel-cher and Woodward told him that they had doubts as to whether they were getting the grades of lumber required in the specifications. They gave him a copy of the specifications which called for gradestamped material No. 1 and No. 2, or, as commonly expressed, "No. 2 and better." All McNew was supposed to do was to look at the lumber and give his opinion as to whether it met the specification of No. 2 or better. They went to the Day Farm where McNew examined several loads of 2 x 4 lumber. One load was banded and had never been opened. The top layer of boards was gradestamped "Construction" with the stamp of the A. E. Green Inspection Agency. ("Construction" grade is equivalent to No. 1; "Standard" is equivalent to No. 2.) Upon breaking the band, it was found that, with the exception of a few pieces which bore the grademark of the Hickox Inspection Service and which were graded Construction, the pieces had no grade-mark. They were all below No. 2 grade, including the ones marked with the Hickox stamp. McNew also examined a load of 100 pieces which was part of a stock that had been broken open and placed on carrier blocks for shipment to the building site. There were no gradestamps and all the pieces were below No. 2 grade; they were all "utility" (equivalent to No. 3) or "economy" (below No. 3). A third load which was stamped with the Hickox stamp contained 150 pieces all below the No. 2 grade. The defects in the lumber were, in the main, oversized knots, excessive rot, and decay and shake, which is a separation of the wood fibers. 19. After lunch, the party was joined by Captain McAfee and Cas Krulik and they again went to the Day Farm. The first load (2x8 studs) was gradestamped and was on grade. The yard man said that this particular stack had been there for 2 years. Another load of 2 x 8 studs was not banded and McNew examined each piece. They all had the Hickox grade- stamp but were all below the No. 2 grade and appeared to be rejects from a mill. At this point Captain McAfee suggested that they look at the buildings. McNew examined the framing in several buildings. He found that about 30 percent of the ceiling joists were below the No. 2 grade. The studs in two of the buildings were redwood and since redwood was not included in the WCLIB grading rules, McNew declined to give an opinion on them. The studs of the other two buildings were Douglas fir and hemlock. Some of the studs were not grademarked; most of those which were bore the stamp of the Hickox Inspection Service. McNew found that 90 percent of the studs were so far below the No.. 2 grade as to be instantly recognizable as such by any carpenter or construction foreman. They had the usual defects of oversized knots, excessive rot and decay, as well as shake. 20. Captain McAfee, Krulik, McNew, and Belcher then went back to Belcher's office where McNew reported to Captain McAfee that the lumber was definitely of inferior grade and much of it even worse than utility lumber. Captain McAfee told Krulik that he had a right to reject lumber which did not come up to the quality of the specifications and, in view of the great quantity involved in the project, he suggested that Krulik obtain the services of a lumber gxader to grade and stamp the lumber. Krulik agreed that this should be done but said that he would have to discuss-the matter with Mr. Shepard Silberblatt. Captain McAfee asked Mr. McNew whether he could do the job and McNew replied that any such arrangement would have to be made with the Portland office of the WCLIB. On the same day, September 19, 1958, Captain McAfee wrote the following letter to the plaintiff: You are hereby directed to remove and replace all lumber that is. not grade marked or certified in accordance with Section 5-05, Part A of contract specifications. You are further directed that all lumber not in accordance with the above specification be removed from the housing site. At this point, 854 dwelling units had been fully covered with wallboard and insulation. The framing in those units could therefore not be inspected. There were 334 units that had been completely framed and 266 units that had been framed on the exterior only. 21. Cas Krulik informed Mr. Silberblatt by telephone what had occurred and shortly thereafter Silberblatt discussed the matter personally with the contracting officer. Silberblatt said that he had purchased the finest lumber obtainable, whereupon Captain McAfee showed Silberblatt about the project and pointed out the defects that the inspectors had complained about and again suggested, as he had earlier to Krulik, that the only practical way of meeting the problem was to call in an unbiased grading agency to inspect and grade the lumber. Silberblatt asked whether he had any suggestions as to how this could best be done and Captain McAfee told him of the agencies on the West Coast, the West Coast Lumber Inspection Bureau and the Pacific Lumber Inspection Bureau. Silberblatt agreed to call in one of these agencies. Notably, these were the two grading agencies specified by plaintiff in its contract of purchase with Baldwin. 22. Mr. Silberblatt did not at that time get in touch with these West Coast agencies. Instead, he called his contract supplier, the Baldwin Lumber Company, and told them, "You get an unbiased inspection agency up there and inspect that lumber." Baldwin apparently relayed this direction to its subcontractor, First Lumber Corporation, because on September 22, First Lumber sent Paul Campbell, one of its supervisor-graders, to Plattsburgh. Campbell was employed by the Hickox Inspection Service and was stationed at First Lumber's subsidiary, the Quality Forest Products Corporation of Albert Lea, Minnesota, to supervise the graders at that mill who were using the Hickox inspection stamps. Campbell spent 4 days, from September 22nd to September 25th, inspecting and gradestamping the framing in the buildings. On September 25, Captain McAfee first learned that an inspector was gradestamping in the buildings and he asked Shepard Silber-blatt who he was. When Mr. Silberblatt told him that Campbell was a Hickox Service inspector, Captain McAfee protested that a Hickox representative could not be the unbiased person they bad agreed upon since it was tbe lumber bearing tbe Hickox stamp that was being questioned as having been improperly or perhaps fraudulently graded. He again suggested that tbe regrading should be performed by either WCLIB or PLIB. Mr. Silberblatt expressed no preference as to who did the grading, whether WCLIB, PLIB, or Paid Campbell; he said that if Captain McAfee would be satisfied with inspectors of WCLIB, he would call them in to do the regrading. While Mr. Silberblatt was understandably distraught that the job had been largely shut down, the evidence shows that at this point he had personally gained sufficient knowledge of the situation to realize that in fact a large percentage of the dimensional lumber in the exposed framing and in storage at the Hay Farm was seriously defective and not nearly within the specific requirements of the contract specifications, those being the identical requirements that he had used in buying the lumber from Baldwin. Accordingly, except for the directive to stop framing operations, which directive the contracting officer rescinded one day later at plaintiff's request, the following letter of September 25,1958, from the contracting officer to the plaintiff accurately reflects the agreement reached between the contracting officer and Mr. Shepard Silberblatt as to future procedures to be employed with the lumber: You are hereby directed to comply with the requirements of Paragraph 5-05 of the specifications entitled "Grade Marking." Becent inspection of lumber in buildings and on storage areas revealed that the lumber was not of the quality required. In accordance with Paragraph 5-05 of the specifications, you are directed to obtain the services of a lumber grader, satisfactory to the Contracting Officer and perform a grade stamping inspection on all lumber in the yard and installed in the buildings. Further, you are hereby directed to suspend all operation on framing, insulation and wall board until the buildings have been inspected and corrective action taken has been approved by my inspectors. Kecords will be kept indicating amount of lumber inspected, approved and the amount rejected. 23. On the same day, September 25, Mr. Silberbatt spoke to the Portland office of WCLIB by telephone, and the next day wrote WCLIB the following letter: We write to confirm onr telephone conversation of Thursday, September 25th, 1958, to the following, effect. Yon are to send to the above project three experienced, practical and properly qualified Inspectors of your association, equipped with all the necessary credentials. They are to inspect each piece of two inch lumber now built into approximately four hundred dwelling units, and exposed to view, and to stamp with the proper grading stamp all those pieces meeting the specification standard; and to clearly mark with paint or crayon all those pieces which are not in accord with the specified standards, so that we may replace with proper material. The grades required under our contract with the United States Air Force are: 1. Standard or better for Joists. Stress graded material is called for. 2. Standard (the old #2) for Studs. This material is not required to be stress graded. The specifications are on file at our Plattsburgh Construction Office and should be consulted by your men as to allowable species and other pertinent data. Your association is to be paid at the rate of $50.00 per day per man, plus hotel and food bills. In addition we are to pay travel expenses for one round trip from New York to Plattsburgh and return. Daily slips are to be presented for the signature of our Field representative. The men are to start work on Monday September 29th, or within a few days of that date, and to proceed with the utmost despatch, to enable us to immediately make replacements and enclose with wall board before inclement weather sets in. Speed is of the utmost urgency. Your men will be given every cooperation by our Field Administrator, Mr. Cas Krulik, and by our Superintendent, Mr. Post, with whom they are to consult before starting work. In accordance with your request we are enclosing our deposit in the amount of $500.00 (five hundred dollars) to be applied to the charges as cited above. We trust that you will handle this matter with the greatest expedition and understanding of the problem that confronts us. 24. On September 26,1958, Cas Krulik wrote to tbe Baldwin Lumber Company as follows: On Friday September 19th we were informed by the Contracting Officer that an extraordinary amount of the lumber supplied by you for this project, particularly studs, and to a lesser extent the stress graded material such as the joists was in his opinion below the standards specified, and further, was to a large extent improperly stamped, to indicate that the material was of higher grade than it actually was. His opinion was fortified by an inspection made at the Contracting Officer's invitation by Mr. Chas. McNew, Supervisor of the West Coast Lumber Inspection Bureau. This finding was confirmed 'by Mr. Campbell, Supervisor for the Hickox Inspection Bureau who studied typical buildings for four days, September 22nd to and including September 25th. The Contracting Officer consented to accept buildings that were not already covered by wallboard only on the condition that each and every piece of two inch material be reinspected as built into the buildings and stamped approved by the W.O.L.A. and all substandard material replaced with lumber meeting contract's requirements. Accordingly you are notified that we have arranged for W.C.L.A. inspections, and that such lumber provided by you, and not in accordance with the specifications win be replaced by us in accordance with recommendations to be made by W.C.L.A., and all resulting costs will be charged to you. 25. On October 1,1958, Theodore Silberblatt, the secretary and controller of the plaintiff, wrote to the Baldwin Lumber Company as follows: The matter of the quality of lumber delivered through you to this project referred to in ours of September 26th, and yours of September 29th, is affected by the following considerations: We at no time, either by our contract with you or otherwise, limited the time at which rejections could be made. We bought lumber of grades equal to and superior to those specified by the Air Force, and this we expected to receive. Rejections by the Air Force have come about because the lumber was allegedly improperly graded and stamped. That this finding was. correct was borne out not only by Mr. McNew, Supervisor for the West Coast Lumbermen's Association, but also by Mr. Campbell of Hickox. Such malfeasance on the part of the various inspection services whose stamps improperly appear on lumber of lower grade may open them to most serious charges bordering on the criminal, particularly when the improper grading applied to so large a percentage (between 30 to 40%) of the studs visible in the unenclosed buildings. Our contract with you calls for lumber to be inspected either by West Coast Lumbermen's Association or Pacific Lumbermen's Inspection Bureaus. The material delivered carries the gradings not only of these, but of others unauthorized, such as Hickox, and Greene, and in other cases only the stamps of the producing mills themselves. As to "Mill-10" stamp, if First Lumber did not supply them we cannot imagine who could possibly, since of 520,000 studs furnished, you handled 500,000, and Rhodes 20,000. Rhodes denies that they shipped from "Mill-10", and denies knowledge of such a producer. Moreover, the ratio of 500,000 to 20,000 is overwhelming. To keep the records straight, we bought replacement of 42,000 studs from Pawnee Lumber Company, but these were set aside for use in the future, and are not involved in the rejected material. Further, all of Pawnee's stock carries the grading of the West Coast Lumbermen's Association. At the present writing there are now at Plattsburgh three Inspectors of the W.C.L.A. at the behest of the Contracting Officer, and they are in the process of re-stamping and culling lumber standing in framed buildings or stacked in the yard. 26. On August 18, 1958, plaintiff submitted the first 48 units of the project for final acceptance. The units were formally inspected on August 19, 1958, by several Air Force inspectors from various parts of the country brought to Plattsburgh for this purpose. The units were found to have many discrepancies, some substantial, some insubstantial, and many that had previously been called to plaintiff's attention but not corrected. By a letter of August 20, 1958, the contracting officer notified plaintiff of the results of the inspection and directed that the defects be corrected within 10 days, adding- that if such correction was not accomplished within the prescribed period the mortgagee would be notified of the situation. On August 25, plaintiff submitted various payment requisitions covering these same units. By a letter of August 29, 1958, the contracting officer notified plaintiff that the requisitions would not be paid until all deficiencies in the work covered by them were corrected. In addition, the letter advised plaintiff that if. the deficiencies of which it had been previously notified were not corrected or in the process of correction within 30 days, consideration would be given to terminating the contract for default. A marked copy of this letter was routed to the Chemical Corn Exchange Bank, plaintiff's mortgagee for the project. Beceipt of this letter caused the mortgagee bank to retain the firm of Merritt & Harris, architect-engineers, to represent the bank and keep it informed as to the progress of construction. Merritt & Harris performed a like function for a number of banks throughout the country that had mortgages on property in the course of construction and required reliable information on construction progress as a basis for making periodic payments of mortgage proceeds. The Chemical Corn Exchange Bank arranged with the plaintiff to have Merritt & Harris send one of its employees, John J. Norman, to the site at Plattsburgh. Norman was a thoroughly experienced construction superintendent and had had considerable experience with housing and wood framing. Norman's instructions were to observe and report on the course of construction, to act as liaison between the contracting officer and representatives of the contractor, and to make recommendations to the bank. Norman arrived at Plattsburgh in late September. After presenting his credentials to Captain Mc-Afee and Mr. Belcher, Norman inspected the framework of the houses which were under construction and also visited the Day Farm where the lumber for the project was being stored. He found that the lumber which was being installed in the framing did not comply with the specifications of the contract. He noted particularly characteristic defects such as oversized knots, mold, rot, and splits. At the Day Farm he opened some bundles which were grademarked on the top and found that inside the stacks the boards were not grade-marked and were clearly utility grade and under. 27. As a result of the inspection, Norman conferred with Cas Krulik and Ed Post about the lumber situation and told them that it was his opinion that John Johnson, the carpentry superintendent, should be dismissed. He said that he could not understand how a man of Johnson's experience could permit so much inferior lumber to be installed in the buildings. Krulik and Post agreed to his recommendation and Johnson, the carpentry superintendent, was shortly afterward dismissed. As a result of his survey, Norman concluded that the procedure adopted by Captain McAfee and Mr. Silberblatt, to call in a qualified lumber inspection bureau to inspect and grade the lumber, was the only feasible way to meet the situation. He noted that the contractor's inspection procedures were inadequate, that the Air Force inspectors' signatures on the inspectors' cards were being forged, and that there was friction between Captain McAfee and Mr. Silberblatt. In Ms recommendations to the bank he suggested that John Johnson, the carpentry superintendent, be removed and that the contractor appoint a manager at the site with full administrative authority. By a letter of September 26, 1958, Cas Krulik, plaintiff's administrative officer, advised the contracting officer that correction of all defects found on August 19 was well under way. The defects were in fact corrected in due time and the Air Force accepted the units. 28. MeanwHle, in response to Mr. Silberblatt's letter of September 25, to WCLIB, requesting three inspectors to gradestamp the lumber, WCLIB sent to Plattsburgh three of their supervisory graders, Ed Thompson, Charles McNew, and Victor Brewer. They arrived at Plattsburgh on September 28. They got in touch with Captain McAfee and Mr. Belcher, who took them to see Mr. Krulik and Mr. Post. It was Krulik and Post who gave them their instructions as to the procedure to be used in the inspection and pointed out what houses they were to work in. The inspectors never met John Johnson or anyone from the Silberblatt organization who had anything to do with carpentry work or framing. In view of the extent of the work to be done and the fact that McNew and Brewer would have to leave after a few days because of previous commitments in New York, Krulik and Post decided that more inspectors would be needed and asked Mr. Thompson to arrange with the Portland office of WCLIB for additional personnel. On October 2, Krulik wrote WCLIB requesting four more inspectors. These four, Chester Cowan, George Hawley, Robert Wright, and Ed Davis, arrived at Plattsburgh on October 5. Charles McNew and Vic Brewer left after 3 days' work. Davis worked for 5 days, after which he left for New York to relieve McNew who had become ill. Ed Thompson left after 2 weeks; Cowan remained in charge of the inspection crew. The others continued with the work until its completion on October 23 or 24. 29. There was a considerable amount of redwood studs in the buildings; in some of the buildings about 50 percent of the studs were redwood. Redwood is a species not included in the Standard Grading and Dressing Rules of WCLIB, although it so closely resembles WCLIB red cedar that the redwood industry frequently used the WCLIB rules to grade redwood. However, the WCLIB inspectors at that time were not officially authorized to affix the WCLIB stamp on redwood lumber (although they received such authority shortly thereafter), and they accordingly did not grade the redwood studs. During the course of the work, however, Mr. Cowan had a meeting with Captain McAfee and Cas Krulik in which he explained that although the inspectors could not officially grade redwood, they were authorized to give their personal unofficial judgment and were willing to set up this procedure if it was satisfactory to the parties. Both Captain McAfee and Cas Krulik immediately consented to this procedure. To confirm this arrangement, Krulik, on October 17, 1958, wrote the following letter to the Portland office of the WCLIB: We have employed your Bureau for the purpose of inspecting and grading two inch lumber now built in dwelling units and stored at the Day property, for use on the above named project. You have told us that it is your practice to confine official inspection and grading to certain species of lumber, but in the case of this project your inspectors will be permitted to express their personal unofficial judgment as to the grade of other species. This is to advise you we are willing to accept such personal unofficial judgment of your inspectors with regard to grading of species other than those in the category to which your services are confined, and will make no claim against you, or your inspectors, for errors in judgment 'by them. On October 23, 1958, Krulik also formally confirmed this arrangement with the contracting officer, writing to him as follows: Since the 29th September we have had in our employ a number of accredited lumber graders of the West Coast Lumber Inspection Bureau for the purpose of grading two inch lumber built in and exposed in dwelling units, and the lumber stored at the Day property. These representatives of the West Coast Lumber Inspection Bureau told us that it is their practice to confine official inspection and grading to certain, species of lumber, but in the case of this project inspectors would be permitted to express their personal unofficial judgment as to the grade of other species, the use of which is permitted by specifications. This matter was discussed with you on October 17th and with your concurrence the grading of other species was adopted in the manner indicated above. May we request your confirmation and the acceptance of the lumber so graded. We attach a copy of our letter dated October 17th to the West Coast Lumber Inspection Bureau accepting such method. 30. During the first few days that the inspectors were at work, plaintiff continued to frame new buildings in accordance with the contracting officer's order permitting this operation provided the framing remained exposed to permit grading and marking. However, inferior lumber from the yard was still being installed, before the graders had an opportunity to inspect it, and on October 2, Captain McAfee ordered that no lumber be used prior to inspection unless it bore the grademarks of WCLIB or PLIB. Krulik thereupon informed Captain McAfee that plaintiff did not have on hand sufficient lumber bearing the grademarks of WCLIB or PLIB which had already been graded by the WCLIB inspectors and hence was compelled to shut down framing operations. Plaintiff's contract with the Baldwin Lumber Company required all lumber to hear the gxadestamps of WCLIB or PLIB, and in view of the inspectors' subsequent finding that most of the lumber stored at the Day Farm bore the gradestamps of the Hickox and Green Inspection Services, it appears that virtually all of the lumber in the yard at this time came from the First Lumber Company's reprocessing plant in Albert Lea, Minnesota. 31. On October 7, 10 days after the WCLIB inspectors began their work, Shepard S. Silberblatt wrote to the contracting officer stating that all the lumber, with an occasional exception, was properly grademarked and complied with the contract specifications, that the lumber should have been inspected at the source, that plaintiff had the right to rely on the grademarks, and that the contracting officer had no right to insist on the grading by WCLIB or PLIB in preference to the Hickox Inspection Service. However, defendant did not withdraw the WCLIB inspectors but permitted them to go on with their work until its completion. This was the first time that plaintiff had made any protest or objection to the grading operation. 32. The WCLIB inspectors began their work of inspecting and grading the lumber at Plattsburgh on September 29-, 1958. The inspection procedure used by the inspectors, as agreed upon in their discussions with Krulik and Post, was as follows: In the buildings, the inspectors examined each stud and joist. If a piece met the specification of "Standard or better, " it was so stamped. If it did not meet the specifications, it was marked with red paint by an Air Force man who accompanied the inspectors. The undergrade lumber was not replaced; in order to save time and expense it was decided to "double up," that is, to place a good stud or joist beside the one found to be undergrade. In the case of redwood, as indicated above, the studs that met specifications were not actually stamped. At the Day Farm the WCLIB inspectors did not themselves select the lumber to be graded; it was brought to them by plaintiff's yard men. As in the buildings, each board was examined and if it met the grade of Standard or better, it was appropriately identified and segregated from the rest. During the entire period of the inspection and grading, no one from the plaintiff's organization who had any knowledge of lumber quality, such as a carpentry superintendent or foreman, was assigned by plaintiff to accompany the inspectors and to observe their work; in fact, the inspectors never met John Johnson or any of the carpentry foremen. No representative of the plaintiff ever took exception to their grading or criticized their work in any way. 33. The results obtained by the inspectors were fairly uniform. The redwood studs were found to be adequate. With respect to the other species, however, hemlock and Douglas fir, about 80 to 85 percent of the studs and about 30 percent of the ceiling joists in the buildings were found to be markedly below the grade of Standard. In the yard, at the Day Farm, the inspectors encountered no l'edwood. The quality of the stored lumber was about the same as the fir and hemlock in the buildings; approximately 80 percent was under the grade of Standard. The inspectors agreed that with respect to the margin of failure to make the grade of Standard or better, the lumber they encountered in the buildings (other than the redwood) and in the yard was the worst lot of lumber they had ever seen. Characteristic defects were oversize knots, rot, splits, and decay. The inspectors graded liberally and did not reject borderline cases; however, most of the lumber was so far undergrade, ranging from a poor utility grade to useless "culls," that there could be no question of its failure to meet the requirements of Standard. 34. Virtually all of the undergrade lumber which had been gradestamped as Standard bore the gradestamps of the A. E. Green Inspection Service, or of the Hickox Inspection Service together with the legend "Quality Forest Products Corp." The prevalence of the combination of the Hickox and Quality Forest Products stamps attracted the attention of the inspectors since it seemed incredible that so much misgrading was the result of accident or mistake. (Thompson reported one instance of a piece which was stamped "Standard" right across a 7-inch knot.) Mr. Cowan reported these facts to the Portland office of the WCLIB and was instructed to see what he could find out about the Quality Forest Products Corporation. A check at the railroad station showed that it was located at Albert Lea, Minnesota. There were no regular mills in the Middle West handling West Coast lumber; if there was one it would most probably be a reprocessing mill. It was noted, however, that new lumber coming into the Day Farm during the course of the inspection had gradestamps of WCLIB or PLIB and was fully up to grade. 35. The WCLIB inspectors completed their work on October 23. On that date Cas Krulik wrote to WCLIB at Portland, Oregon, as follows: Since September 29th we have had the services of accredited graders from your bureau, employed by us on the basis of our letters of September 26th and October 2nd. It is expected that their work will be fully accomplished at the closing of to-day's business. We take this opportunity to report we have been very well pleased with the splendid cooperation of your supervisors and inspectors, and with the expeditious manner in which these services were rendered. They did an excellent job. The plaintiff resumed framing as soon as the inspectors completed their work and was back in full operation by the early part of November. 36. In view of the large amounts of inferior and under-grade lumber in the yard at the Day Farm and the rapid rate at which it was being incorporated in the buildings immediately prior to the contracting officer's issuance of his stop-order, the procedure agreed upon by the parties to retain the services of an independent grading agency like WCLIB to inspect and grade the lumber in order to determine its conformity with the specifications, was the most expeditious way of eliminating undergrade lumber and giving assurance that only lumber meeting the requirements of the specifications would go into the framing. 37. At the conclusion of the contract, a change order (No. 4) was issued by the defendant, in which (over the protests of both the contracting officer and the plaintiff) a credit was taken by the defendant in the sum of $29,300 for under-grade lumber which purportedly had been installed in the structures and covered up by wallboard at the time that the WCLIB inspectors came to the job. In view of the fact that the framing of these buildings was not exposed, it could not be inspected. Apparently, officials of the Air Force, disturbed by the results of the WCLIB inspections of the framing in progress, assumed that undergrade lumber had also been incorporated in the buildings that had been covered up with wallboard. However, there is no evidence that any substantial amounts of undergrade lumber had been incorporated in the framing prior to the time in early September 1958 when the chief inspector noticed the influx of inferior lumber which apparently was coming from the reprocessing mill in Albert Lea, Minnesota. 38. While the record in this case indicates that there was a personality conflict between plaintiff's president, Shepard Silberblatt, and the contracting officer, there is no credible evidence that the lack of personal harmony between them motivated any of the actions taken by the Government in respect to the issue of lumber quality. 39. By a letter dated October 7, 1958, plaintiff duly appealed the contracting officer's directives of September 19 and 25, 1958, concerning lumber inspection and suspension of work. (Findings 20, 22, supra.) At the time of trial in this court no action had been taken on plaintiff's protest by or on behalf of the Secretary of the Air Force. CONCLUSION OE LAW Upon the foregoing findings of fact and opinion, which are adopted by the court and made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover of and from the United States and judgment is therefore entered for the plaintiff in the amount of twenty-nine thousand three hundred dollars ($29,300). In plaintiff's Johnson case, supra, on the other hand, the trial court expressly found that the quantity of brick involved justified inspection at the source. 65 F. Supp. at 522.

10813676

McGrew Bros. Sawmill, Inc.

McGrew Bros. Sawmill

1980-07-18

No. 43-78

740

752

224 Ct. Cl. 740

224

United States Court of Claims Reports

United States Court of Claims

United States

2021-08-10T17:25:20.982437+00:00

CAP

Before Kashiwa, Judge, Presiding, Kunzig and Bennett, Judges.

McGrew Bros. Sawmill, Inc.

No. 43-78. July 18, 1980 McGrew Bros. Sawmill, Inc. Alan I. Saltman, attorney of record, for plaintiff. Sandra P. Spooner, with whom was Assistant Attorney General Alice Daniel, for defendant.

4415

27318

Contracts; amendment of petition changing character of claim; summary judgment; disputed issues of material fact; timber cutting contract; estimated quantities; disclaimer; industry practice. — On July 18, 1980 the court entered the following order: Before Kashiwa, Judge, Presiding, Kunzig and Bennett, Judges. This suit involves a contract, No. 018583, for the sale of standing timber by defendant acting through the United States Forest Service, Department of Agriculture. We have before us the parties' cross-motions for summary judgment under Ct. Cl. Rule 101 and plaintiffs motion to amend the petition and defendant's opposition thereto. The motion to amend the petition is allowed. However, we hold that there are disputed material issues of fact and so remand the case to the trial division. On September 26, 1975, plaintiff was awarded a contract to cut and remove certain standing timber in the Umpqua National Forest in the Tiller Ranger District, State of Oregon. This was known as the Goolaway sale. Logging is to be completed by December 31, 1980. The contract provides for a price per thousand board feet of merchantable timber removed from contract designated areas rather than a lump sum price for all designated timber whatever its volume or grade. The contract also requires that all disturbed timber, whether or not merchantable, must be removed by helicopter. All unutilized material harvested on the sale has to be piled at designated locations. Before award of the contract, bidders were given a prospectus describing the sale. The introduction to the prospectus states: This prospectus is to furnish sufficient information in addition to that contained in the published advertisement to enable prospective bidders to decide whether further investigation of the sale is warranted, information GIVEN HERE OR OTHERWISE PROVIDED IS NOT A PART OF THE CONTRACT UNLESS STATED THEREIN. DETAILED CONDITIONS OF SALE ARE CONTAINED IN THE SAMPLE TIMBER SALE CONTRACT. IN THE EVENT A CONTRADICTION EXISTS BETWEEN THIS PROSPECTUS AND THE SAMPLE CONTRACT, THE contract governs. Timber Sale Contract, Form 2400-6, will be used. Sale area and sample contract should be inspected before submitting a bid. The appraisal, and other information on the timber, conditions of sale and bidding may be obtained at Forest Service offices named in the attached advertisement. [Capitals in original.] The prospectus also contained estimates of the quantity of timber available. Along with the estimates there was the following language: The quality, size, and age class of the timber are estimates based on detailed cruise information on file and available for inspection at the Forest Service offices listed in the advertisement, information listed herein is MADE AVAILABLE WITH THE UNDERSTANDING THAT VALUES SHOWN ARE NOT ESTIMATES OF A PURCHASER'S OWN RECOVERY AND ARE NOT A PART OF THE TIMBER SALE contract. For these reasons bidders are urged to examine the timber sale area and make their own recovery estimates. [Capitals in original.] Nevertheless, the estimates of the timber quantities were made a part of the contract in section A2. The contract also contains a standard provision in clause B2.4, which says, "the estimated volumes stated in A2 are not to be construed as guarantees or limitations of the timber volumes to be designated for cutting under the terms of this contract." Plaintiff claims that it has logged part of the areas under the contract and made its own estimates of the amount of merchantable timber remaining unlogged. Plaintiff now alleges that the Forest Service grossly overestimated the amount of timber available. It did this, plaintiff claims, primarily for two reasons: (1) the Forest Service overestimated the acreage involved, and (2) it underestimated the defect rate. The defect rate here assailed was an assessment of the timber in terms of how much defective material and how much merchantable timber would be yielded by logging. The higher the defect rate, the lower the amount of merchantable timber. Defect rates before logging are by their nature estimates since the actual defect rate can only be known after the timber is logged. If the Forest Service did underestimate the defect rate, then plaintiff would recover less merchantable timber and would incur higher costs in collecting and piling defective material than it might have anticipated. Plaintiff claims that it will be unable to recover even its operating costs on this contract and so brings this suit. We consider first plaintiffs motion to amend its petition. As the petition now stands, it asserts a count for breach of an implied warranty as to the amount of merchantable timber and a count for negligent misrepresentation of the amount of merchantable timber. The motion to amend would change the negligent misrepresentation count to a claim for reformation based on mutual mistake as to the amount of timber available. Since essentially the same circumstances are involved, and given the liberality of the amendment rules, the motion to amend should be granted. Ct. Cl. Rule 39(a). Defendant's objection is largely that the motion to amend comes so late that defendant is prejudiced in its motion for summary judgment. However, the parties did brief the mutual mistake issue in support of their summary judgment motions and since we feel the case should be remanded to the trial division in any event, we do not find there is such prejudice to defendant, if any, as to warrant denying the motion. Turning to the summary judgment motions, it is defendant's position that any warranty regarding estimated timber quantities was fully disclaimed by the above-quoted language in the contract and prospectus. Defendant also contends that such disclaimers have the effect of shifting the risk of any mistake in the estimates to plaintiff so there cannot be any recovery on a mutual mistake theory either. Plaintiff takes the position that the disclaimers are effective only to indicate that the quantity estimates are not 100-percent accurate. However, plaintiff argues, the existence of quantity estimates in the contract constitutes an implied warranty that such estimates are accurate within a reasonable degree of error, and the parties contracted on the assumption that the quantity estimates were reasonably accurate. Thus, both counts ultimately turn on the proper interpretation of the contract terms, particularly provision A2, which contains the quantity estimates, and B2.4, which contains the above-quoted disclaimer of the estimates. On the papers before us, both parties' interpretations of the contract are plausible and an ambiguity exists. Extrinsic evidence should therefore be considered to determine precisely the basis of the bargain between the parties. 4 WILLISTON § 600A (3d ed. 1961). As the parties dispute most of the extrinsic facts the motions for summary judgment must be denied and the case remanded to the trial division. Ct. Cl. Rule 101(d). However, since it may be helpful to the parties and the trial judge, we will discuss a few of the problems we have with the parties' present positions. Plaintiffs motion for summary judgment must be denied because even if we adopted its interpretation of the contract, a disputed issue of fact would remain as to whether the Forest Service's estimates were reasonably accurate or not. However, we are not prepared to adopt plaintiffs interpretation at this point in any event, largely because the disclaimer language in the prospectus and contract weighs heavily against it. We also note that plaintiff has tried to impress us with the harsh result of defendant's intrepretation that occurs to buyers in those instances where the Forest Service grossly overestimates the amount of merchantable timber available. However, the court must bear in mind in any interpretation of the disclaimer in the standard B2.4 clause that in the next case the Forest Service may grossly underestimate the amount of timber available. In that case, the interpretation defendant now urges may be a great boon to buyers since the contract would in no way limit the amount of timber the buyers could take. Defendant's motion must be denied because we are not willing to say, given what information we have presently before us, that defendant's interpretation of the contract is correct as a matter of law. Defendant's position is that any warranty as to the quantity estimates is fully disclaimed and therefore they are essentially meaningless surplusage. There are a number of difficulties with defendant's position at present, some of which are discussed below. First, there is the court's recent decision in Timber Investors, Inc. v. United States, 218 Ct. Cl. 408, 587 F.2d 472 (1978). That case also involved a timber sale by the Forest Service. The contract and related documents also contained estimates of certain road construction work and disclaimers of the estimates. Under the circumstances of that case, the court held that the disclaimers, standing alone, were insufficient to insulate the Government from liability if its estimates were "so grossly erroneous as to indicate a failure to exercise reasonable care and diligence in arriving at said estimates." 218 Ct. Cl. at 415 n.4, 587 F.2d at 475-76 n.4. Once the facts are resolved in this case, they may show that the instant contract is governed by the principles of the Timber Investors case. Second, plaintiff cites a provision of the Forest Service Manual which states: "determination of timber volumes to be cut from the sale area will be carefully made, since a prospective purchaser should reasonably expect to base his operating plans and cost estimates on such figures." Forest Service Manual § 2431.23. This might be taken as an indication of the Forest Service's intent with regard to the inclusion of quantity estimates in the contract. This indication would seem to contradict defendant's present position that the estimates are entirely meaningless surplusage. We also find difficult to accept in itself the view that quantity estimates which are incorporated in a contract are totally meaningless. That contravenes the established canon of construction that, preferably, contracts are to be contrued in a way so as to give meaning to all their provisions. Monroe M. Tapper & Assoc. v. United States, 221 Ct. Cl. 27, 34, 602 F.2d 311, 315 (1979); Thanet Corp. v. United States, 219 Ct. Cl. 75, 82, 591 F.2d 629, 633 (1979); Bradley v. United States, 213 Ct. Cl. 745, 746-47 (1977); ITT Arctic Services, Inc. v. United States, 207 Ct. Cl. 743, 751-52, 524 F.2d 680, 684 (1975); Hol-Gar Mfg. Corp. v. United States, 169 Ct. Cl. 384, 395, 351 F.2d 972, 979 (1965); 4 Williston § 620 (3d ed. 1961); Restatement of Contracts § 236(a) (1932). Defendant argues that the estimates were supplied only "for what they were worth," and to avoid a possible charge that the Government concealed superior knowledge of the subject matter. If that is so, we can well understand why the quantity estimates were supplied to bidders in the pre-award documents, but there would seem to be no reason to then incorporate the figures in the contract. We also have some difficulties with defendant's arguments based on the various disclaimers. First, the language defendant relies on most heavily is in the prospectus and is not even a part of the contract. Second, the disclaimer that is in the contract, which says that the estimated volumes are not "guarantees or limitations," is in small print at the end of a paragraph dealing with instances where there are post-award designations of timber to be cut in an attempt to match the estimated volumes by species or species group stated in A2. We doubt, though need not now decide, that such language, standing alone, would be sufficient to bind buyers to quantity estimate terms which are grossly erroneous. Furthermore, plaintiff claims that bidders were not given enough time to make detailed reliable estimates of the available timber on their own. While this is a disputed issue of fact, if plaintiff is correct, it may be that plaintiff can show it had a right to rely on the Government's estimates. See Schutt Constr. Co. v. United States, 173 Ct. Cl. 836, 353 F.2d 1018 (1965) (Congressional Reference case). The answer to this argument may be simply that if plaintiff felt it did not have enough time to make reliable estimates on its own, it should not have bid. However, the lack of time may also be an indication that the Forest Service's intent was that bidders were to rely on the quantity estimates, at least to some extent. In any event, it is premature to decide if plaintiff had enough time for a site inspection or effectively used the time it did have. Since these are disputed fact issues, summary judgment on the present record is inappropriate now. It is important to note that it is possible for the Forest Service to contract in such a way that its quantity estimates are entirely meaningless and the risk of even gross negligence on the Forest Service's part in preparing the estimates is shifted to the buyers. See Rixon Electronics, Inc. v. United States, 210 Ct. Cl. 309, 536 F.2d 1345 (1976). However, that seems rather unusual and runs counter to the normal rule that contracts should be given fair and equitable interpretations. ITT Arctic Services, Inc. v. United States, supra; 4 Williston § 620 (3d ed. 1961); Restatement Of Contracts § 236 (1932). Hence, we would require very strong and clear language in the contract before we would be willing to conclude, based on contract language standing alone, that the parties have included quantity estimates in the contract when they intend those quantities to be meaningless, as defendant urges in its caveat emptor approach to this case. Perhaps what troubles us most about deciding the question of contract interpretation at this point is our ignorance of industry practice, if indeed there is any such practice. Our view of the proper interpretation of this contract with its quantity estimates and disclaimers thereof would be considerably affected were we to know either that industry practice is to rely on Forest Service or seller estimates within a reasonable degree of error, or if, on the contrary, industry practice was that the existence of disclaimers such as were used here made it incumbent on buyers to rely only on estimates they themselves make. See Alfred A. Altimont, Inc. v. United States, 217 Ct. Cl. 628, 632-33, 579 F.2d 622, 625 (1978); Gholson, Byars & Holmes Constr. Co. v. United States, 173 Ct. Cl. 374, 395, 351 F.2d 987, 999 (1965). We also acknowledge, however, that it may be that an entire industry engages in unreasonable practices. See 5 Williston § 659 (3d ed. 1961). We reiterate that the above discussion does not cover all the arguments that can be or have been made on this contract interpretation issue and we in no way mean to limit the arguments the parties may make on remand. The parties may renew all their arguments after appropriate proceedings have been completed in the trial division. We do not pass on either interpretation argued for by the parties nor even whether the above-mentioned interpretations are the only ones possible. We deny the cross-motions for summary judgment because of disputed material facts. On remand, the trier may need to consider, inter alia, such issues as the following: (1) Is there an industry practice regarding the interpretation of quantity estimates and disclaimers thereof? Is it a reasonable practice? (2) Is there an industry practice with regard to purchasers making their own estimates? (3) Was there enough time for plaintiff to make its own estimates of the available timber or to detect error in the Forest Service's estimates and would it have been commercially feasible for plaintiff to do so? (4) To what extent did plaintiff in fact rely on defendant's estimates? (5) Did plaintiff seek information from Forest Service offices as invited to do by the prospectus? (6) If plaintiffs interpretation is upheld, were the Forest Service's estimates reasonably accurate and made with reasonable care and diligence, considering industry standards? Of course, other issues may arise depending on the resolution of the contract interpretation question, and we do not mean to restrict the scope of the proceedings below. it is therefore ordered that the motion to amend the petition is granted. it is further ordered that the parties' motions for summary judgment are denied without prejudice and the case is remanded to the trial division for trial or other appropriate disposition in conformance with this order.

12090419

Wigley v. Alfred Hughes Unit et al.

Wigley v. Alfred Hughes Unit

1993-01-11

No. 92-6387

1058

1058

506 U.S. 1058

506

United States Reports

Supreme Court of the United States

United States

2021-08-10T20:32:10.158323+00:00

CAP

Wigley v. Alfred Hughes Unit et al.

No. 92-6387. Wigley v. Alfred Hughes Unit et al.

15

83

C. A. 5th Cir. Certiorari denied.

1175051

UNITED STATES v. HOME TITLE INSURANCE CO.

United States v. Home Title Insurance

1932-03-14

No. 356

191

195

285 U.S. 191

285

United States Reports

Supreme Court of the United States

United States

2021-09-21T20:02:18.861595+00:00

Harvard

UNITED STATES v. HOME TITLE INSURANCE CO.

UNITED STATES v. HOME TITLE INSURANCE CO. No. 356. Argued January 19, 1932. Decided March 14, 1932. Mr. Claude R. Branch, with whom Solicitor General Thacher, Assistant Attorney General Young quist, and Messrs. J. Louis Monarch, J. P. Jackson, Francis H. Horan, Clarence M. Charest, E. H. Horton, and Walter W. Mahon were on the brief, for the United States. Mr. Hugh Satterlee, with whom Mr. I. Herman Sher was on the brief, for respondent.

1134

6852

Mr. Justice Butler delivered the opinion of the Court. Respondent filed returns in respect of capital stock taxes for the years ending June 30 in 1923, 1924 and 1925 under § 1-000 of the Revenue'Act. of 1921 and § 700 of the Revenue Act of 1924. The first two reported taxes due. In the other, respondent claimed to be an insurance company taxable under § 246, and consequently exempt from the capital stock tax. It made returns and paid income taxes for the calendar years 1921 to 1925 inclusive. In February, 1926, respondent paid under protest the capital stock taxes. It made application for refund and, that being denied, brought this action in the district court for eastern New York to recover the amounts so exacted. The parties submitted the case on an agreed statement of facts. The court gave judgment for the United States. 41 F. (2d) 793. The Circuit Court of Appeals reversed. 50 F. (2d) 107. The question is whether during the periods for which the capital stock taxes were paid, respondent was an insurance company taxable only under § 246. Respondent was organized in 1906 under Article V of the New York Insurance Law. It was formed to examine and guarantee title to real estate, to lend money on real estate mortgages and to guarantee such mortgages as to payment of principal and interest and to do the work generally of a title insurance company. It is under the supervision of the state superintendent of insurance, subject to the laws applicable to title and credit guaranty corporations, and maintains the required guaranty fund. Its business has always consisted of issuing two kinds, of contracts: (1) those in which it iherely guarantees title and (2) those in which it. guarantees (a) title to real estate covered by a mortgage and (b) payment of principal and interest of the debt. Preliminary to the issue of title insurance policies first mentioned, respondent prepared abstracts and made examination of the title. Its charges were based upon a scale dependent upon the amounts of the policies, and included fees for examina tions, searches and other service incident to the transaction. Policies guaranteeing both title and payment of such mortgage debts were issued substantially as follows: When respondent received an application for a loan, it made an appraisal of the property and an examination of the title. Upon its approval of the application, it received from the borrower his bond and. mortgage and paid him the amount of the bond, less charges for services incidental to title insurance and also for inspection and appraisal of the property. The fee covering title insurance was made a condition of every loan.. Respondent did not charge any lending fee. . It sold the loans at face value and delivered to the purchaser of each a mortgage guaranty or, in case of the sale of part of a loan, a participation certificate. By every such guaranty or certificate, the purchaser appointed respondent his agent to collect principal and interest of the loan, and the latter guaranteed (1) the mortgage to be a valid first lien upon a good and marketable title in fee, (2) payment of principal when collected and in any event within 12 months after maturity and (3) payment of interest at a rate usually one-half of one per cent, less than that specified in the bond. The difference was called premium. Generally, about two months elapsed between the making of loans and their sale. The interest for that period was retained by respondent and constituted a part of its gross income. It never held nor sold mortgages that were not acquired and guaranteed as above stated and never guaranteed other than those controlled by it. Its expenses were not assigned to its different classes of business, and its assets were used indiscriminately in connection with all its activities. Corporations organized under New York banking laws and subject to the supervision of the banking department are authorized to make mortgage loans and sell1 them with guaranties such as those given by respondent, and from 1921 to 1925 at least two companies' thus organized and supervised were engaged in that business. Respondent's policies merely guaranteeing title amounted to more than six times its mortgage guaranties. A tabular statement in the margin makes the comparison. Its title insurance, not' connected with mortgage guaranties, outstanding in each of the five years amounted to more than $100,000,000. Another table3 states its gross income from sources other than interest, rents, dividends and profits on sale of bonds, and classifies such income so as to show: (1) the difference between interest received and that guaranteed by respondent; (2) fees and charges attributable to mortgage guaranties; (3) fees and charges attributable to title insurance where respondent did not make nor guarantee mortgages dr loans; (4) compensation for guaranteeing mortgages to be first liens upon titles in fee; (5) income from mortgage renewals; etc. The guaranty of payment of the principal and interest of mortgage loans constitutes insurance. Bowers v. Lawyers Mortgage Co., ante, p. 182. The amounts received as compensation for insuring title, for guaranteeing that mortgages are first liens and for guaranteeing payment constitute the larger part of respondent's income. And, when there are added the fees and charges for examination of title, appraisals, and other services incident to its insurance business, the' total properly assignable to that business amounts to more than 75 per cent, of all respondent's income. Undeniably insurance is its principal business. Indeed, it does not appear that any substantial part of its transactions was not connected with or the outgrowth of insurance. The admitted facts clearly show that in the-tax years above mentioned respondent was an " insurance, company " within the meaning of that phrase- as commonly understood and as used in the Revenue Acts of 1921 and 1924. It was taxable under § 246 and therefore, exempt from capital stock taxes. Judgment affirmed. Section 1000 of the Act of 192Í is the same as § 700 of the Act of 1924- Section 246 is the same in both Acts. Pertinent provisions of both are printed in the margin of our opinion in Bowers v. Lawyers Mortgage Co., ante, p. 182, and need not be repeated here. Column 1 shows the amount of policies merely guaranteeing titles and column 2 shows the amount of mortgage guaranties.

6069453

Barry H. Newborn and Michele Newborn, Petitioners v. Commissioner of Internal Revenue, Respondent

Newborn v. Commissioner

1990-04-19

Docket No. 21581-84

610

637

94 T.C. 610

94

Reports of the Tax Court of the United States

United States Tax Court

United States

2021-08-10T18:40:15.920471+00:00

CAP

Barry H. Newborn and Michele Newborn, Petitioners v. Commissioner of Internal Revenue, Respondent

Barry H. Newborn and Michele Newborn, Petitioners v. Commissioner of Internal Revenue, Respondent Docket No. 21581-84. Filed April 19, 1990. Louis A. Prosperi, for the petitioners. Frank A. Falvo, for the respondent.

10909

67614

CHABOT, Judge: Respondent determined a deficiency in Federal individual income tax against petitioners for 1980 in the amount of $4,000. The issue for decision is whether petitioners are entitled to a residential energy credit under section 44C for their purchase and installation of certain energy-saving equipment in connection with their new home. FINDINGS OF FACT Some of the facts have been stipulated; the stipulations and the stipulated exhibits are incorporated herein by this reference. When the petition was filed in the instant case, petitioners, husband and wife, resided in Hollidaysburg, Pennsylvania. Petitioners had a house built in Hollidaysburg and began living in it in October 1980. They used the house as their principal residence in 1980 and later. Petitioners bought and had installed in the house in 1980 a Solargy Energy Conservation Module (hereinafter sometimes referred to as the Solargy System) that was acquired from Solargy Systems of Wescorp. The installation of the Solargy System was completed in October 1980. Petitioners paid $15,500 for the Solargy System in 1980. This includes the cost of the Solargy System as well as the costs of on-site preparation, assembly, and original installation of the Solargy System. The vendor who sold and the contractor who installed the Solargy System told petitioners that the Solargy System would qualify for the residential energy credit under section 44C. However, respondent did not certify to the Solargy System manufacturer thát the Solargy System qualified for this credit. On their 1980 Federal income tax return, petitioners claimed a $4,000 energy credit under section 44C for qualified renewable energy source expenditures for the Solargy System. Petitioners reported their Solargy System expenditure on Form 5695 as an expenditure for geothermal renewable energy property. The Federal income tax imposed on petitioners for 1980 is sufficient to permit the allowance of a $4,000 energy credit under section 44C, to the extent this credit is otherwise allowable. How The Solargy System Works To heat a house, the Solargy System extracts heat energy from underground water (hereinafter sometimes referred to as groundwater) and converts it to high-temperature heat. The groundwater is drawn from a well that accumulates water from natural openings in beds of sedimentary rock beneath the surface of the earth. The groundwater is stored in two concrete underground storage tanks, both of which are about 5 feet deep and 10 feet long. The tops of the tanks are buried below the frost line, at about 3 feet below the earth's surface. The earth acts as insulation to aid the groundwater (including that stored in the underground storage tanks) in retaining its heat energy. Water has very high specific heat (the amount of energy required to raise the temperature of a unit weight of any substance one degree on a temperature scale), compared to the specific heat of air, and can store great amounts of energy. Relatively little energy is needed to extract heat from water because of its high specific heat. The Solargy System works generally as follows to heat a house: (1) Groundwater is drawn and stored in the underground concrete tanks; (2) the groundwater flows from the tanks into a water heat exchanger, where the water flows around a refrigerant tube in the exchanger; (3) in the exchanger the liquid refrigerant absorbs heat from the groundwater, boils, and changes into a gas (this process occurs because heat is always transferred from a warmer substance to a cooler substance); (4) the gas is squeezed by a compressor and the temperature of the gas is raised as a result; (5) this high-temperature, high-pressure gas then moves to the air heat exchanger, where it surrenders heat as a fan blows air across the heat exchanger coils containing the gas; (6) as it loses heat, the gas changes back into a hot liquid; (7) the hot liquid passes through an expansion valve that reduces pressure, and thus reduces temperature; (8) the low-temperature, low-pressure liquid returns to the water heat exchanger and the process begins again; and (9) the groundwater which originally entered the water heat exchanger is returned during this process from the water heat exchanger to the ground. Upon discharge, the groundwater is as pure as when it entered the Solargy System. The heat extracted from the groundwater is continually replaced by the heat in the earth. There is no adverse environmental impact from the use of the Solargy System. To cool the house, this process is reversed. The Solargy System sends the liquid refrigerant through the expansion valve where it becomes a cool vapor. The vapor travels directly to the air heat exchanger, where it cools circulating air in the house by absorbing heat from the air. The warm refrigerant then goes to the compressor and to the water heat exchanger, where the heat in the refrigerant is absorbed by the groundwater and the cycle is repeated. The groundwater for the Solargy System used by petitioners is supplied from a well that petitioners drilled. The well was drilled to a depth of 412 feet but groundwater enters the well from various points. The groundwater is then pumped to the concrete underground storage tanks described above, where it is stored for use in the Solargy System. The groundwater in the well on petitioners' property maintains a constant, year-round temperature, regardless of seasonal changes in air temperature. This groundwater temperature is about 13-14° Centigrade (about 55-57° Fahrenheit). The Solargy System is a water-to-air heat pump. Circulating water provides the heating or cooling energy. The difference in temperature between the refrigerant and the groundwater is the primary source of energy transfer to heat or cool the building. Petitioners' use of the Solargy System saves a substantial amount of energy compared with the energy that would be used by an electrical, gas, or oil-burning heating system. The Solargy System and other systems that use groundwater are about three to five times more efficient in the use of energy than gas, oil burning, or electrical heat systems, and about twice as efficient as air-to-air heat pumps. The Solargy System is different in efficiency from air-to-air heat pumps because of the poor efficiency of air-to-air heat pumps at low temperatures. As temperatures fall, the air loses the heat contained therein and can no longer be used as a practical heat source. Air-to-air heat pumps in most of the United States require that a backup conventional system be operated when the air-to-air heat pump is turned off at lower temperatures because of declining efficiency. In contrast, the Solargy System requires little or no use of a backup conventional system; it remains highly efficient at all outside temperatures because the temperature of the groundwater used by the Solargy System varies little with the seasons and facilitates relatively constant output from the Solargy System. There is no physical or chemical change in solar energy that may be absorbed by the groundwater used by the Solargy System. On the other hand, a physical or chemical change in the solar energy occurs in the production of fossil fuel, such as coal or wood. The energy in coal and wood is derived indirectly from solar energy, and is stored in the form of chemical energy. Petitioners' expert witness concludes that the heat energy in the groundwater is derived from the sun. He states that the "solar input which would govern the temperature of the incoming rainfall (which becomes groundwater) and the temperature of the soil on which the rain impinges and ultimately infiltrates" provides "roughly 20,000 times that of all the other sources combined". He states that "The heat extracted from the groundwater used by the Solargy System is replenished by the continuous input of heat energy from the sun." Respondent's expert witness concludes that the heat energy in the groundwater is derived from "the earth's internal heat flow. Heat produced by solar radiation does not penetrate deeply into soil or rock, it remains in a thin surface layer ca. [about] 4 to 5 inches thick. The only way in which groundwater could be considered a form of solar energy would be if it flowed underground so rapidly as to not lose any of its stored solar energy [that had been absorbed during precipitation]. This occurrence could not possibly occur in the soils and rocks which crop out in" the area where petitioners live. OPINION Section 44C provides, in part, for a residential energy credit for qualified renewable energy source expenditures. Under section 44C(c)(5), this includes expenditures for property which, when installed in connection with a dwelling, transmits or uses (a) solar energy or (b) energy derived from geothermal deposits, for the purpose of heating or cooling the dwelling or providing hot water or electricity for use within the dwelling. The parties' dispute focusses on whether the Solargy System qualifies under section 44C(c)(5)(A)(i) as property which transmits or uses solar energy or which transmits or uses energy derived from geothermal deposits. Petitioners contend that the Solargy System qualifies for the residential energy tax credit, under the statute and the regulations, because the Solargy System uses direct solar energy derived through heat stored in groundwater. Petitioners maintain that, if this Court were to conclude that the Solargy System uses indirect solar energy, then we should also hold that section 1.44C-2(f)(l), Income Tax Regs, (now section 1.23-2(f)(l), Income Tax Regs.), is invalid in that it incorrectly restricts the residential energy credit to applications of direct solar energy. Petitioners maintain that, if this Court were to decide that the Solargy System's energy source is geothermal rather than solar in nature, then we should also hold that section 1.44C-2(h), Income Tax Regs, (now section 1.23-2(h), Income Tax Regs.), is invalid in that it improperly imposes a 50° Centigrade (122° Fahrenheit) requirement on the temperature of groundwater. Petitioners contend that sections 1.44C-2(f)(l) and 1.44C-2(h), Income Tax Regs., are interpretative rather than legislative. Thus, petitioners argue, the regulations are not entitled to the greater deference accorded to legislative regulations, and should be invalidated because they improperly add requirements to a statute which is unambiguous on its face. Also, to the extent we upheld section 1.44C-2(h), Income Tax Regs., in Peach v. Commissioner, 84 T.C. 1312 (1985), affd. without published opinion 805 F.2d 393 (4th Cir. 1986), petitioners contend that Peach was decided erroneously. Respondent asserts that the Solargy System does not use solar energy, but rather that in using groundwater drawn from a deep well, the Solargy System's energy is derived from heat generated within the earth. Respondent asserts that, if this Court were to determine that the source of the heat in the underground water is derived from solar energy, then we should also hold that petitioners fail to meet the requirement under the regulations that solar energy property use fuel or energy which is directly derived from sunlight. Respondent argues that the Solargy System does not qualify as geothermal property under section 1.44C-2(h), Income Tax Regs., because it does not use water which has a temperature of more than 50° Centigrade at the wellhead. Respondent asserts that the regulations are legislative, and thus must be upheld because they are reasonable and not plainly inconsistent with the statute. We agree with respondent's conclusion that petitioners are not entitled to the credit. Under section 44C(c)(5)(A)(i), the Solargy System can qualify as "renewable energy source property" only if it transmits or uses (1) "solar energy" or (2) "energy derived from geothermal deposits (as defined in section 613(e)(3))". The statutory terms "solar energy" (in sec. 44C(c)(5)(A)(i)) and "natural heat" (in sec. 613(e)(3)) are vague; they have no "plain meaning", as applied to the context of the instant case. Accordingly it is appropriate to delve into legislative history to determine if the choices made by the regulations are permissible. Our examination of the legislative histories of the solar energy and geothermal deposits provisions convince us that in each instance the choice made by the regulations not only is permissible but appears to be the choice to which the legislative histories point. I. Solar Energy We consider first whether the Solargy System qualifies as property which transmits or uses solar energy. a. Statute The statute does not define the term "solar energy". The term appears in the investment credit provisions (secs. 46(b)(2)(A)(II), 48(l)(2)(A)(ii), and 48(1)(4)), but is not defined there. Except for minute forms of energy that come to us from other sources (e.g., distant stars in our galaxy, other galaxies, or interstellar bodies), in a sense all our energy may be said to have come from the sun or from the molten interior or radioactive elements of the earth. Thus, the heat we derive from burning oil and natural gas supposedly came from the bodies of dinosaurs and other animals that derived their warmth from the sun and their sustenance from plants (or from other animals that derived their sustenance from plants) that in turn depended on energy that came from the sun. Without getting into an extended analysis, we are satisfied that the "plain meaning" of the term "solar energy" can arguably be so broad as to include almost all energy, with the result that oil furnaces and natural gas furnaces would qualify as renewable energy source property under that interpretation. That result is sufficiently absurd in light of the purposes of the legislation as to persuade us that recourse must be had to legislative history and regulations for a more limiting definition of the term "solar energy". Thus, we disagree with petitioners' contention that the Solargy System is renewable energy source property because it uses solar energy "Under the Plain Language of Section 44C(c)(5)(A)(i)". b. Regulations — Meaning Section 1.44C-2(f)(l), Income Tax Regs., defines "solar energy" as "energy derived directly from sunlight (solar radiation)." Fuel or energy which is indirectly derived from sunlight does not qualify. The regulation gives the following as examples of fuel or energy indirectly derived from sunlight: "fossil fuel or wood or heat in underground water". In the supplementary information that accompanied the publication of T.D. 7717, originally promulgating this regulation (45 Fed. Reg. 57713, 1980-2 C.B. 8), the Treasury Department describes comments regarding proposed regulations, and the Department's response, as follows: DEFINITIONS OF QUALIFIED ITEMS A number of comments requested that the definitions of various items qualifying for the credit be expanded, e.g., that the definition of insulation be expanded to include awnings and shades; that the definition of a storm or thermal window be revised to include window films; and that the definition of solar energy property be made to include woodbum-ing stoves[ ] or heat pumps. The regulations have not been expanded to include these items because we believe that Congress did not intend their inclusion. [Emphasis added.] The policy distinction between direct and indirect sunlight is not explained in the regulation or in the supplementary information. (Presumably, it is related to the concept that a line has to be drawn somewhere.) The supplementary information states that "we believe that Congress did not intend their [e.g., heat pumps] inclusion", but does not favor us with a clue as to what in the legislative history of the statute caused the Treasury Department to arrive at its stated belief as to the Congress' intent. Also, the golden thread that ties "fossil fuel", "wood", and "heat in underground water" together as indirect solar energy is not immediately apparent. Nevertheless, the treatment of "heat in underground water", and the statement that heat pumps do not qualify as solar energy property, make it appear that the Solargy System does not qualify as solar energy property under the regulation. Petitioners contend that the regulation's statement, that heat in underground water is energy derived indirectly from sunlight, is a factual conclusion and is erroneous. We disagree. In the context in which it appears, this statement is part of the definition and not merely a factual conclusion from the definition. "Direct" and "indirect" are not self-defining terms. Their meanings take shape from the words used to define or otherwise describe them. In the regulation, the Treasury Department has chosen to use examples to indicate the location of the line separating direct from indirect. One example the Treasury Department has chosen to use is that heat in underground water is at best indirect solar energy. We conclude that the Solargy System does not qualify as solar energy property under section 1.44C-2(f)(l), Income Tax Regs. c. Regulations— Validity The parties argue as to whether the regulation is "legislative" or "interpretative". (We give less weight to interpretative regulations. E.g., Estate of Boeshore v. Commissioner, 78 T.C. 523, 527 n. 5 (1982).) The parties argue as to the rationale and internal consistency of the regulation. Because we conclude that the legislative history is consistent with the conclusion that the regulation appears to reach — that the Solargy System does not qualify as solar energy property — it is immaterial that there is some logic to petitioners' arguments as to what policy the Congress ought to have adopted or how the regulations ought to have been drafted (Fulman v. United States, 434 U.S. 528, 534, 536 (1978); CSX Corp. v. Commissioner, 89 T.C. 134, 153 (1987)), or even petitioners' arguments as to whether the regulation is legislative or interpretative. We proceed to consider the legislative history of section 44C. On July 13, 1977, the House Ways and Means Committee reported H.R. 6831 (title II). In H. Rept. 95-496, part III, p. 41 (H. Rept. 95-543, vol. II, p. 157), 1978-3 C.B. (Vol. 2) 67, 71, 103, the committee describes its "Residential Solar and Wind Energy Equipment Credit". The report states that the reasons for providing such a credit include encouraging the purchase and installation of solar and wind energy equipment, thus potentially resulting in oil and natural gas savings; spurring the purchase and installation of such equipment and the development of solar and wind energy technology; and encouraging the use of hot water heating, then the most practical and inexpensive use of solar energy. Under the subtitle, "Qualifying property," the report (H. Rept. 95-496, part III, pp. 43-44 (H- Rept. 95-543, vol. II, pp. 159-160), 1978-3 C.B. (Vol. 2) 105-106) states as follows: The credit for solar energy property applies to solar equipment (and parts solely related to the functioning of such equipment) which, when installed in connection with a dwelling, uses solar energy to heat or cool the dwelling or to provide hot water for use within the dwelling. Generally, a solar energy equipment system involves the transformation of sunlight into heat or electricity through the use of such components as collectors (to absorb sunlight and create hot air), rockbeds (to store hot air), thermostats (to activate fans which circulate the hot air) and heat exchangers (to utilize the hot air to create hot water). Solar and wind energy property does not include conventional heating or cooling systems which serve to supplement ("back up") the solar or wind energy equipment in heating or cooling the residence. On August 5, 1977, the House of Representatives passed H.R. 8444. The Staff of the Joint Committee on Taxation prepared a series of pamphlets for the use of the Senate Finance Committee in its consideration of energy tax legislation. The second of these pamphlets (Residential Tax Credits, JCS 50-77 (Sept. 15, 1977), hereinafter the Jt. Comm. Staff Pamphlet No. 2) presents a "Background" section with separate descriptions of "Solar energy equipment" (pp. 21-22), "Heat pumps" (pp. 22-25), and "Wind energy" (p. 26). The heat pump discussion deals only with heat pumps that extract heat from outside air to warm houses and exhaust heat to outside air (the air conditioner mode) to cool houses. The Jt. Comm. Staff Pamphlet No. 2 describes the House-passed bill (pp. 26-28) without referring to heat pumps. The Jt. Comm. Staff Pamphlet No. 2 then discusses Senate Action in the 94th Congress, the Congress immediately preceding the one that enacted the Energy Tax Act of 1978, Pub. L. 95-618, 92 Stat. 3174. The Jt. Comm. Staff Pamphlet No. 2 (p. 29) points out that the Senate Finance Committee's 94th Congress bill included a credit "for qualifying heat pump expenditures. This credit was half the amount of the credit for solar or geothermal equipment expenditures." Then, in discussing other proposals, the Jt. Comm. Staff Pamphlet No. 2 (p. 30) notes proposals to add to the House-passed bill various categories of qualifying property, including "(c) heat pumps". The Jt. Comm. Staff Pamphlet No. 2 (p. 31) concluded as follows: H. Areas for Committee Consideration The House bill and the history of the energy tax provisions in the 94th Congress indicate that the basic decisions to be made with regard to a tax incentive for residential solar and wind energy equipment include the following: (1) the amount of the credit; (2) the period during which the credit is to be available; (3) whether the types of equipment specified in the House bill should qualify for the credit; (4) whether any types of equipment not specified in the House bill (such as heat pumps and geothermal energy equipment) should qualify for the credit; [Emphasis added.] (5) whether the credit should be confined to installations on principal residences (owned and rented); and (6) whether the credit should be refundable or nonrefundable. In the Senate Finance Committee's hearings, a representative of General Electric recommended tax credits for purchases of heat pumps. (Staff of Jt. Comm, on Taxation, Pamphlet 7A, Summary of Public Testimony on the Energy Proposals, JCS 55A-77 (Sept. 19, 1977).) Also, written statements by representatives of (1) the Air-Conditioning and Refrigeration Institute and (2) Borg-Warner, recommended tax credits for purchase of heat pumps. The Institute's written statement urged that both air-source and water-source heat pumps be added to H.R. 8444's list of other energy-conserving components. (Staff of Jt. Comm, on Taxation, Pamphlet 7B, Summary of Written Statements on the Energy Proposals, JCS 55B-77 (Sept. 22, 1977).) The Senate Finance Committee, on October 21, 1977, reported the Energy Production and Conservation Tax Incentive Act, H.R. 5263. The Senate Finance Committee added "geothermal deposits (as defined in section 613(e)) which provide geothermal energy" to the categories of energy sources which may be used by "renewable energy source property". The Senate Finance Committee did not add any reference to heat pumps as renewable energy source property. However, the Senate Finance Committee did add "(viii) a heat pump which replaces an electric resistance heating system" (under proposed new section 44C(c)(4)(A)) to the categories included in the term "other energy-conserving component", for which a credit was to be available as an "energy conservation expenditure". The Senate Finance Committee report (S. Rept. 95-529, p. 36, 1978-3 C.B. (Vol. 2) 199, 228), begins by stating the same reasons for change as contained in the House Ways and Means Committee report on H.R. 6831, supra (except for adding a reference to geothermal energy). The Finance Committee report contains the same language as the Ways and Means Committee report regarding the transformation of sunlight into heat or electricity through collectors, rockbeds, thermostats, and heat exchangers, as well as that concerning backup conventional systems. S. Rept. 95-529, pp. 39-49, 1978-3 C.B. (Vol. 2) 231-232. However, the Finance Committee report goes on to state as follows: The credit for solar energy property applies to "passive solar systems" as well as "active solar systems," or any combination of both these systems. An "active solar system" is based on the use of mechanically forced energy transfer, such as the use of fans to circulate solar generated energy. "Passive solar systems" are based on the use of conductive, convective, or radiant energy transfer, such as the use of portions of a residential structure which serve as solar furnaces so as to add heat to the residence. However, expenditures for materials and components which will serve a significant structural function in the dwelling (e.g., extra-thick walls) would not be eligible for the credit. On October 31, 1977, the full Senate passed H.R. 5263. The bill as passed by the Senate was identical to the relevant parts of the bill as reported by the Finance Committee, except that: (1) The heat pump language appeared in paragraph (5)(A)(viii) of new Code section 44C(c) in the Senate-passed bill (instead of par. (4)(A)(viii) in the Finance Committee bill); and (2) use in the production of electricity was added to heating, cooling, and providing hot water, in the permissible uses of solar energy in paragraph (6)(A)(i) of new Code section 44C(c) of the Senate-passed bill (heating, cooling, and hot water were in par. (5)(A)(i) in the Finance Committee bill). Accordingly, the Finance Committee report properly reflects the relevant portions of the Senate-passed bill and not merely the Finance Committee biU. About a year later, on October 12, 1978, the Conference Committee reported H.R. 5263 as the Energy Tax Act of 1978, and submitted a Conference report. H. Rept. 95-1773 and S. Rept. 951324, 1978-3 C.B. (Vol. 2) 309. As to the energy conservation credit, the conferees generally followed the House bill; in particular, heat pumps were not included in the categories of qualifying property. H. Rept. 95-1773, S. Rept. 95-1324, pp. 42-43, 1978-3 C.B. (Vol. 2) 314-315. As to the renewable energy source credit, the conferees generally followed the Senate amendment; however, the credit for solar energy equipment used in the production of electricity was deleted. H. Rept. 95-1773, S. Rept. 95-1324, p. 44, 1978-3 C.B. (Vol. 2) 316. On October 15, 1978, the Conference Committee's version was agreed to by the House and the Senate. The bill was signed by President Carter on November 9, 1978, and section 44C became law, applicable to taxable years ending on or after April 20, 1977. From the foregoing, we reach the following conclusions: Firstly, in enacting the Energy Tax Act of 1978, the Congress intentionally dealt with the treatment of heat pumps. One witness before, and two correspondents to, the Finance Committee urged the Committee to provide credits for expenditures for heat pumps. The Joint Committee on Taxation staff brought the proposals to the attention of the Finance Committee, reminded the Finance Committee of how it had dealt with heat pumps in the immediately preceding Congress, and listed treatment of heat pumps among the matters for the Committee to deal with. The Committee's bill includes a special provision for heat pumps, quite different from the provision in the immediately preceding Congress. The matter was focused on in the Conference Committee, which decided to remove the heat pump clause, while leaving intact most of the subparagraph in which the heat pump language had appeared. Secondly, the Congress did not intend that heat pumps qualify as renewable energy source property by virtue of their use of solar energy. Air-to-air heat pumps use outside air as the heat reservoir; this air's heat energy appears to come directly from sunlight shining upon it, or from the ground which has been directly heated by sunlight. Water-to-air heat pumps, such as the Solargy System, use stored water as the heat reservoir; petitioners' expert witness testified that this water's heat energy comes directly from sunlight shining upon the water as it falls in the form of rain. If that were all that it took to qualify for the credit, then virtually all heat pumps would so qualify as renewable energy source property. But that analysis would make meaningless the Finance Committee's decision to allow heat pumps to qualify for the same credit under the "energy-conserving component" rubric. That analysis would make especially inexplicable the Finance Committee's restriction that a heat pump could qualify as an energy-conserving component only if the heat pump were to replace an existing electrical resistance heating system. Because the Finance Committee's decisions are inconsistent with an interpretation that ambient air and rainwater include solar energy, within the meaning of section 44C, it appears to follow that the latter interpretation is not a proper interpretation of the statute. Accordingly, we conclude that, even if the groundwater used in operating the Solargy System was heated by sunshine when the water fell as rain, the statute is not intended to be read as including that heating as solar energy. It follows that regulations which do not include that heating as solar energy, and thus lead to the same result, are not "unreasonable and plainly inconsistent with the revenue statutes." Commissioner v. South Texas Lumber Co., 333 U.S. 496, 501 (1948); Bingler v. Johnson, 394 U.S. 741, 749-751 (1969); Fulman v. United States, 434 U.S. at 533. Under these circumstances, it is not for us to judge whether water-to-air heat pumps in general, or the Solargy System in particular, "deserve" to be treated as renewable energy source property because of their efficiency or because (as petitioners put it) "The Solargy System is also identical in function to the active solar system described in Treas. Reg. Sec. 1.44C-2(f)(2)." The statutory language is unclear. The legislative history is inconsistent with petitioners' claim for a credit. Insofar as the challenged regulation also excludes petitioners' Solargy System from the claimed credit, the regulation is valid. In summary: (1) The statutory concept of "solar energy" is unclear and it is appropriate to elaborate the concept in Treasury Regulations; (2) the legislative history suggests that "solar energy" in section 44C is not intended to include the energy used by petitioners' Solargy System; (3) the regulations are not invalid insofar as they reach the same result as that to which the legislative history points. We hold for respondent on this issue. II. Energy From Geothermal Deposits We consider next whether the Solargy System qualifies as property which transmits or uses energy derived from geothermal deposits. a. Statute Unlike the situation with regard to solar energy, the statute does define "geothermal deposit". However, the definition is not to be found in section 44C. Rather, section 44C(c)(5)(A)(i) defines "geothermal deposits" by ordering us to section 613(e)(3), which provides that a geothermal deposit is "a geothermal reservoir consisting of natural heat which is stored in rocks or an aqueous liquid or vapor". The language of the statute leaves us with uncertainty similar to that which we encountered regarding solar energy. In applying the statute in the instant case we must interpret the statutory term "heat". In a sense, anything which is warmer than absolute zero (about -273° Centigrade) has heat, even though it is not hot. Did the Congress mean the statutory term "heat" in a sense that physicists might use, or does the term connote what might commonly be understood as "hot"? Section 613(e)(3) was enacted in 1978, as part (sec. 403(a)(1), 92 Stat. 3203) of the Energy Tax Act of 1978, the same act that provided the residential energy tax credit under section 44C. The Secretary has not issued any regulations under section 613(e)(3), that might have provided guidance. We look to the legislative history behind the statute for assistance. On July 13, 1977, the House Ways and Means Committee reported out H.R. 6831 (Title II). In H. Rept. 95-496, part III, pp. 129-132 (H. Rept. 95-543, Vol. II, pp. 245-248), 1978-3 C.B. (Vol. 2) 71, 191-194, the Ways and Means Committee describes its provision (in sec. 2073 of the bill) of a 10-percent percentage depletion allowance for all geothermal resources regardless of whether the geothermal resource would qualify for depletion under the law at that time, and regardless of whether the resource in fact is renewable. The Ways and Means Committee's bill also provides (in section 2072 of the bill) a deduction for intangible drilling and development costs related to the exploration for, and the development of, geothermal deposits. Under the heading "Reasons for Change", the report states as follows: To encourage the exploration for, and the drilling and development of, geothermal wells and to accord geothermal resources uniform tax treatment, the committee decided to provide for all geothermal resources incentives similar to those provided for in the case of oil and gas. The House bill's definition of "geothermal deposit" (in proposed section 613(e)(2)) is the same as the first sentence of what was enacted as section 613(e)(3). On October 21, 1977, the Senate Finance Committee reported H.R. 5263. In S. Rept. 95-529, pp. 89-93, 1978-3 C.B. (Vol. 2) 199, 281-285, the Finance Committee explains that the bill provides a percentage depletion allowance for geothermal deposits, as well as a deduction for intangible drilling and development costs related to the exploration for, and development of, such deposits. The report, in describing the percentage depletion allowance, states as follows: The committee bill provides an allowance for percentage depletion for all geothermal deposits regardless of whether or not the geothermal resource would qualify for depletion under present law and regardless of whether or not the resource in fact is renewable, so long as the deposit is located within the U.S. or its possessions. The percentage is 22 percent for production in the years 1978 through 1980, 20 percent for the year 1981, 18 percent for the year 1982, 16 percent for the year 1983, and 15 percent for the years 1984 and thereafter. For purposes of these rules, a geothermal deposit means a geothermal reservoir of natural heat which is stored in rocks or in an aqueous liquid or vapor (whether or not under pressure). in order to encourage this relatively undeveloped resource, the committee bill exempts geothermal deposits from the limitations and the restrictions in section 613A. Therefore, percentage depletion for geothermal deposits is available to all producers, including major producers who are not eligible for percentage depletion with respect to their oil and gas production. Also, percentage depletion is allowable for all of the taxpayer's geothermal deposits. (It is not limited to a certain number of barrels per day, or the Btu equivalent in the form of geothermal energy.) Further, the 65 percent of taxable income limitation, imposed on percentage depletion in the case of oil and natural gas, does not apply to percentage depletion for geothermal deposits. However, the usual rules (under sec. 613) for determining the taxpayer's gross income from the property are to apply, including those for allocating the income among resources where different resources are recovered. Under "Reasons for Change", the report states as follows: To encourage the exploration for, and the drilling and development of geothermal wells and to accord geothermal resources uniform tax treatment, the Committee decided to provide for all geothermal resources incentives similar to those provided for oil and gas. The Finance Committee's bill (in sec. 1042(b)(2) of the bill) provides a definition of "geothermal deposit" which was adopted unchanged by the Senate and is essentially the same as what was enacted. On October 12, 1978, the Conference Committee reported H.R. 5263 as the Energy Tax Act of 1978, and submitted a Conference report. H. Rept. 95-1773 and S. Rept. 95-1324, 1978-3 C.B. (Vol. 2) 309. The conference agreement followed the Senate version of the bill as to depletion for geothermal deposits, applicable to taxable years ending on or after October 1, 1978. H. Rept. 95-1773, S. Rept. 95-1324, p. 71, 1978-3 C.B. (Vol. 2) 343. Both the Ways and Means Committee report and the Finance Committee report discuss Reich v. Commissioner, 454 F.2d 1157 (9th Cir. 1972), affg. 52 T.C. 700 (1969), which held that the production of geothermal steam entitled the taxpayers to both the percentage depletion allowance under section 613 (to the extent that the allowance was available for gas wells), and the intangible drilling cost deduction under section 263(c), as those provisions were in effect for 1959 through 1964. The Tax Court held that the taxpayers were entitled to the percentage depletion allowance for their product because (1) their product was steam, not inexhaustible earth heat, (2) the particular geothermal wells in question were exhaustible, (3) steam is a gas, and (4) the exclusion from the right to depletion of "water" in section 613(b)(7) does not exclude steam from the depletion allowance. The Court of Appeals for the Ninth Circuit "affirmed on the basis of the Tax Court's opinion: Reich v. Commissioner, 52 T.C. 700 (1969)." Both committee reports explain that although the Tax Reduction Act of 1975 had generally eliminated the depletion allowance for oil and gas, it had not affected the depletion allowance for geothermal resources. Thus, although the Internal Revenue Service had not acquiesced in the outcome of Reich in cases arising outside the Ninth Circuit, other courts might agree with the Ninth Circuit and decide that the percentage depletion allowance was available for similar geothermal gas wells. S. Rept. 95-529, p. 89, 1978-3 C.B. (Vol. 2) 281; H. Rept. 95-496, part III, p. 129 (H. Rept. 95-543, Vol. II, p. 245), 1978-3 C.B. (Vol. 2) 191. Clearly, the Congress wanted to provide an incentive for the infant geothermal energy industry. The question comes down to whether the Congress, in enacting section 613(e)(3), intended to limit the depletion allowance to geothermal deposits above a certain temperature. The geothermal deposit that was dealt with in Reich was steam. Steam ordinarily is about 100° Centigrade (212 °F). The Tax Court found that, in many of the wells in the field that were being developed, the steam was "superheated", and that "This indicates that the reservoir contains no significant quantities of liquid." 52 T.C. at 706. The Court went on to find (52 T.C. at 707) that— The application of a general heat, material, and volumetric balance formula indicates there can be neither significant water present in the steam reservoir, nor liquid recharge, and that the reservoir is essentially a closed volume of steam. It is a volumetric reservoir. The presence of water in a few of the wells does not affect this determination and is due to condensation, leakage from the surface, and injection during drilling. In a communication to the Senate Finance Subcommittee on Energy and Foundations, Paul W. Eggers, President of Geothermal Kinetics, Inc., stated as follows: it should be remembered that geothermal resources are available not only in the form of super heated steam but also in the form of hot water with lower temperatures. A temperature of 350 is hot enough to be used for the production of electricity, but as the temperature decreases, the costs rise. Enactment of similar incentives to those provided for coal will make it possible to produce electricity from marginal and intermediate geothermal areas which otherwise will remain undeveloped for decades. Only areas like the Geysers where super heated steam is available close to the surface, will be developed in the absence of tax incentives. All that is needed to make geothermal energy an immediate, readily available, partial answer to our increasing energy crisis is clarification of the tax laws to accord with the decision of the Court of Appeals for the 9th Circuit in Reich et al. v. Commissioner of Internal Revenue, 454 F2d 1157 (9 Cir. 1972), affirming 52 T.C. 700 (1969). In that case the Court held that geothermal steam is a depletable resource and entitled to intangible drilling costs and depletion. Unfortunately, the Commissioner of Internal Revenue has not accepted the holding of that Court. [Hearings on Incentives for Developing New Energy Sources, before the Subcommittee on Energy and Foundations of the Committee on Finance, United States Senate, 95th Cong., 1st Sess., at 234-235 (1977); Hearings on Title II of H.R. 8444, The Energy Tax Act of 1977, before the Committee on Finance, United States Senate, 95th Cong., 1st Sess., pt. 5 at 168Ó-1681 (1977).] Robert Rex, President of Republic Geothermal, Inc., testified that geothermal resources in the United States provide a large recoverable energy base. The problem, he pointed out, is that the geothermal resource— is a very diffused, low-grade resource. It first was developed in the higher energy density as dry steam. The next resource about to be developed in this country is hot water. The third, and a ramification of hot water research, which is hot, dry rock which is a national resource, for every State from Texas to Maine and from Washington and Alaska, throughout the midcontinent to Wisconsin, are certainly major States with this type of potential. What is happening in practice as we look at the economics and look at the marketplace, and our company has practical experience in understanding what it takes to get projects financed, is that we find that hot water resource is developed at the marginal threshold of economic potential. [Hearings on Title II of H.R. 8444, The Energy Tax Act of 1977, before the Committee on Finance, United States Senate, 95th Cong., 1st Sess., pt. 3, at 1015 (Sept. 12, 1977).] There ensued the following colloquy at the Finance Committee hearing (id. at 1020): Senator Dole. I guess what you are suggesting, you would be on a par with any incentives for the nuclear field? Mr. Rex. That is correct. Senator Dole. Are we talking about an inexhaustible supply of geothermal? Mr. Rex. It is just the opposite. In any particular reservoir, you are talking about a very short life for that portion of the reservoir. For example, we are looking at hot water resources in the Imperial Valley. Let me take a specific case, the East Mesa field, a Federal lease. The average reservoir life of a given reservoir zone that is being developed is 12 years, then it will be exhausted for its heat content, and even that will take recycling of water. So you have to develop multiple reservoir zones, maintain a series of wells to be drilled over the life of the powerplant. So we are talking about a very rapid exhaustion. The reason it is viable is the resource is large, so you leave undeveloped locations to drill later and develop later. Senator Dole. If it is short term, is it worth the cost? Mr. Rex. The answer is a marginal competitive energy resource. The point is, it can be substituted for imported oil at a price that is less than the cost of imported oil. In other words, we are talking about competing in the $8 to $9 to $10 a barrel cost range for the hot water resource. We are talking about powerplants whose cost is half the cost of a nuclear powerplant. The Staff of the Joint Committee on Taxation prepared a pamphlet for the use of the Senate Finance Committee, entitled Miscellaneous Provisions of H.R. 8444; Energy Incentives and Oil Imports, JCS 54-77 (Sept. 23, 1977) (hereinafter sometimes referred to as the Jt. Comm. Staff Pamphlet No. 6). In a section describing geothermal deposits, the pamphlet states as follows (pp. 4-6): Geothermal energy is the natural heat contained in the crust of the earth. Although present everywhere throughout the crust, only in a few areas is it sufficiently concentrated and near to the surface to make its recovery presently economically viable. Types of geothermal energy The various classes of geothermal resources in the order of their relative ease of recovery and economic utilization are: Vapor-dominated. —Vapor-dominated geothermal resources contain saturated or superheated steam. To date, only six major vapor-dominated reservoirs háve been located in the world. In the United States, the only commercially producing geothermal field is located at the Geysers, California, a dry steam field about 80 miles north of San Francisco. It has a production capacity of over 500 megawatts (MW). Liquid-dominated.— Liquid-dominated geothermal resources have naturally occurring liquid water, or a naturally occurring two-phase mixture of liquid water and steam, at an elevated temperature and pressure. The high-temperature hydrothermal convection systems (that is, systems of liquid above 150° C., which circulate because of variations in their density and the action of gravity) with a potential for generating electricity are predominantly in the Western United States, including Alaska and Hawaii. The intermediate-temperature hydrothermal convection systems (90° C.) are potential providers of direct thermal energy for home and industrial heating, thereby releasing oil and gas for other uses. If this heat were to be supplied by electrical energy, the [U.S. Geological] Survey estimates that the equivalent of about 90,750 megawatts would be available annually for 30 years. Geopressured.— Geopressured geothermal resources are extensive, deep (1 to 4 miles) zones of pressurized water with widely varying salinity in which the pressure exceeds the corresponding pressure of the water at that depth. This overpressure is caused by the weight of the geological formation (overlying the trapped fluid), which is greater than the weight of an equal volume of fluids. Geopressured systems contain water at temperatures measured at approximately 60° to 180° C. and pressures from about 3,000 to 14,000 psi together with potentially exploitable dissolved methane. Areas for potential development are located in the Gulf Coast states. * Hot dry rock.— Hot dry rock geological formations are those having an abnormally high heat content, but not containing sufficient water or sufficient rock permeability to permit withdrawal of hot water as a heat transport medium. Magma, —Magma formations comprise molten rocks at approximately 500° to 1500° C. Very deep drilling, 20 miles or more, will be required to reach magma in most regions of the United States. Magma is reachable at drillable depths in some active volcanic areas, such as in Hawaii. In discussing areas for Finance Committee consideration, the pamphlet states as follows (p. 11): 3. Residential systems.— The Committee also may want to allow a tax credit, similar to the credits contained in the House-passed bill for the installation of insulation and solar equipment, for the installation of a residential geothermal steam distribution system. Such a credit is contained in the House-passed bill for business installation of geothermal steam distribution systems. Thus, as evidenced by the hearings record and the Joint Committee Staff Pamphlet No. 6, when the Finance Committee's attention was drawn to geothermal energy in the context of what became section 613(e), it was generally with regard to steam, hot water, or hot rock. The coolest hot water described in any of these materials is at 60° Centigrade (140 °F). The proposed uses generally were (1) use of steam pressure to move turbines to generate electricity, (2) use of heat to boil a liquid to generate steam, and so on, to produce electricity, and (3) use of hot fluids directly to heat buildings. Heat pumps do not appear to have been discussed as a method of using heat from geothermal deposits. The statutory language directing us to section 613(e)(3), and the legislative history of section 613(e)(3), provide support for the provision in section 1.44C-2(h), Income Tax Regs, (see note 14, infra), imposing a minimum temperature requirement of 50° Centigrade for geothermal deposits. b. Legislative History We turn to an examination of the legislative history that underpins section 44C. The House bill does not provide for a residential energy tax credit for geothermal property. As we have noted in our description of the legislative history of the solar energy provisions, the Senate Finance Committee added "geothermal deposits (as defined in section 613(e)) .which provide geothermal energy" to the categories of energy sources which may be used by "renewable energy source property". The bill as passed by the Senate was identical to the relevant part of the bill as reported by the Finance Committee. The Senate Finance Committee report (S. Rept. 95-529, pp. 39, 40, 1978-3 C.B. (Vol. 2) 199, 231-232) states as follows: The credit for geothermal energy property applies to geothermal equipment (and parts solely related to the functioning of such equipment) which uses geothermal energy to heat or cool a building or to provide hot water for it. The geothermal equipment must be equipment which is necessary to distribute or use geothermal steam and associated geothermal resources (as defined in sec. 2(c) of the Geothermal Steam Act of 1970 — 30 U.S.C. 1001(c)). Generally, geothermal energy is derived from geothermal deposits from geothermal reservoirs consisting of natural heat stored in rocks or in an aqueous liquid or vapor (whether or not under pressure). This includes hot brine, dry heat (that may be produced with the use of such a substance as freon) and hot water (such as that which may be used directly to heat a building equipped with a heating unit employing hot water heating). [Fn. ref. omitted.] The Finance Committee report does not explain why it departs from the reported statutory language, "geothermal deposits (as defined in section 613(e))", by directing the reader to "sec. 2(c) of the Geothermal Steam Act of 1970— 30 U.S.C. 1001(c)". Thus, the Finance Committee report language appears to be inconsistent with the statutory language that the report was explaining. However, as we read the Finance Committee report, it does not help petitioners. The language of that report also suggests that the Finance Committee contemplated that geothermal deposits would be "hot", and thus water at 13° Centigrade (about 56 °F) would not qualify. The Conference Committee follows the Senate amendment on this point. H. Rept. 95-1773, S. Rept. 95-1324, p. 44, 1978-3 C.B. (Vol. 2) 316. Although the Conference Committee's statutory language is somewhat different from the Senate amendment, the Conference Committee (and the statute) kept the language defining geothermal deposits by reference to section 613(e). c. Regulations — Validity Section 1.44C-2(h), Income Tax Regs., expands on the definition of "geothermal deposits" as provided in section 613(e)(3) by further requiring that the heat be from an underground source, and that it have a temperature exceeding 50° Celsius (Centigrade) as measured at the wellhead. The Court's role in a case of this sort, even assuming that the regulation is interpretative and issued under the authority of section 7805(a), "begins and ends with assuring that the Commissioner's regulations fall within his authority to implement the congressional mandate in some reasonable manner." United States v. Correll, 389 U.S. 299, 307 (1967). If we find that the regulation furthers the intent of the Congress, consistent with the statute, then we uphold the regulation. The Congress failed to provide clear or specific guidance on what was meant by the term "heat", in the statutory definition of "geothermal deposit". After examining the legislative history, we believe that the Congress intended to include within the meaning of geothermal deposit only those substances that are generally perceived of as hot, and that the Congress meant to exclude substances that are lukewarm or at room temperature. Thus, the groundwater used by petitioners in operating the Solargy System does not come within the definition of "geothermal deposit" as intended by the Congress. We conclude that the Treasury Department's decision to restrict the credit to groundwater which is considerably hotter than 13° Centigrade, in light of the meager guidance provided by the Congress, was not unreasonable. It follows that petitioners' Solargy System does not qualify for the residential energy credit as geothermal energy property. We hold for respondent on this issue. It appears that the Solargy System provides, at least in theory, energy saving through the use of renewable energy sources, and thus serves the purposes that the Congess had in enacting Pub. L. 95-618, the Energy Tax Act of 1978. However, the Congress provided only the two pigeonholes of solar energy or geothermal deposits, and the Solargy System fails to fit into either pigeonhole. Perhaps the Congress should have added more categories, but it did not. The Congress authorized the Secretary of the Treasury to add more categories ("or any other form of renewable energy which the Secretary specifies by regulations"— section 44C(c)(5)(A)(i)). Perhaps the Secretary of the Treasury should have exercised his authority, but he did not. Thus, present law does not authorize us to grant the claimed credit to petitioners. Decision will be entered for the respondent. Sec. 44C was subsequently redesignated sec. 23. See bracketed material at end of note 2, infra. Unless indicated otherwise, all section and chapter references are to sections and chapters of the Internal Revenue Code of 1954 as in effect for the year in issue. Sec. 44C provides, in pertinent part, as follows: SEC. 44C. RESIDENTIAL ENERGY CREDIT. (a) General Rule. — In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter [i.e., chapter 1, relating to normal taxes and surtaxes] for the taxable year an amount equal to the sum of— (1) the qualified energy conservation expenditures, plus (2) the qualified renewable energy source expenditures. *.***** (c) Definitions and Special Rules. — For purposes of this section— 3f( (2) Renewable energy source expenditure.— (A) In general. — The term "renewable energy source expenditure" means an expenditure made on or after April 20, 1977, by the taxpayer for renewable energy source property installed in connection with a dwelling unit— (i) which is located in the United States, and (ii) which is used by the taxpayer as his principal residence. (5) Renewable energy source property. — The term "renewable energy source property" means property— (A) which, when installed in connection with a dwelling, transmits or uses— (i) solar energy, energy derived from the geothermal deposits (as defined in section 613(e)(3)), or any other form of renewable energy which the Secretary specifies by regulations, for the purpose of heating or cooling such dwelling or providing hot water or electricity for use within such dwelling, or (ii) wind energy for nonbusiness residential purposes, (B) the original use of which begins with the taxpayer, (C) which can reasonably be expected to remain in operation for at least 5 years, and (D) which meets the performance and quality standards (if any) which— (i) have been prescribed by the Secretary by regulations, and (ii) are in effect at the time of the acquisition of the property. (6) Regulations.— (A) Criteria; certification procedures. — The Secretary shall by regulations— (i) establish the criteria which are to be used in (I) prescribing performance and quality standards under paragraphs (3), (4), and (5), or (II) specifying any item under paragraph (4)(A)(viii) or any form of renewable energy under paragraph (5)(A)(i), and (ii) establish a procedure under which a manufacturer of an item may request the Secretary to certify that the item will be treated, for purposes of this section, as insulation, an energy conserving component, or renewable energy source property. (B) Consultation. — Performance and quality standards regulations and other regulations shall be prescribed by the Secretary under paragraphs (3), (4), and (5) and under this paragraph only after consultation with the Secretary of Energy, the Secretary of Housing and Urban Development, and other appropriate Federal officers. [Sec. 44C was redesignated sec. 23 by sec. 471(c)(1) of the Deficit Reduction Act of 1984, Pub. L. 98-369, 98 Stat. 494, 826. That redesignation and other amendments do not affect the instant case.] The parties have stipulated that all the other relevant requirements of sec. 44C have been met. 0n Form 5695 of petitioners' 1980 Federal income tax return, they list their expenditure for installing the Solargy System as a geothermal renewable energy source item. Respondent does not contend that this is an evidentiary admission that the Solargy System is not property that uses solar energy, or that petitioners are estopped from arguing that the Solargy System is a solar-powered system rather than a geothermal-powered one. The statute provides a third alternative — property which transmits or uses "any other form of renewable energy which the Secretary specifies by regulations". Petitioners do not contend that the Solargy System qualifies under this third alternative. Sec. 1.4402(f)(1), Income Tax Regs., provides as follows: SEC. 1.44C-2 Definitions. For purposes of section 44C and the regulations thereunder— ‡ * ‡ * ‡ (f) Solar energy property — (1) In general The term "solar energy property" means equipment and materials of a solar energy system as defined in this paragraph (and parts solely related to the functioning of such equipment) which, when installed in connection with a dwelling, transmits or uses solar energy to heat or cool the dwelling or to provide hot water or (in the case of expenditures made after December 31, 1979) electricity for use within the dwelling. For this purpose, solar energy is energy derived directly from sunlight (solar radiation). Property which uses, as an energy source, fuel or energy which is indirectly derived from sunlight (solar radiation), such as fossil fuel or wood or heat in underground water, is not considered solar energy property. Materials and components of "passive solar systems" as well as "active solar systems", or a combination of both types of systems may qualify as solar energy property. [This text embodies amendments by T.D. 8146, 52 Fed. Reg. 26667, 1987-2 C.B. 7, 12, promulgated June 11, 1987, but applicable to expenditures made after Dec. 31, 1979. 1987-2 C.B. at 8. The 1987 amendments are (in the first sentence) the reference to electricity and (in the third sentence) the substitution of "heat in underground water," for "heated underground water". For taxable years beginning after Dec. 31, 1983, the regulation is redesignated sec. 1.23-2(f)(l). 1987-2 C.B. 7-8.] T.D. 8146 indicates that the reference to electricity is a substantive change from T.D. 7717, but does not explain the changed language in the third sentence (see bracketed material at the end of note 6, supra) or otherwise indicate any change in the meaning of par. (f)(1) of the regulation. In Olson v. Commissioner, 81 T.C. 318 (1983), we held that a woodbuming stove does not qualify as renewable energy source property, and so disallowed the residential energy credit there claimed. Sec. 44C was enacted by sec. 101(a) of the Energy Tax Act of 1978 (Pub. L. 95-618, 92 Stat. 3174, 3175). The bill that the Congress enacted was H.R. 5263. As passed by the House of Representatives, H.R. 5263 was a 2'/2-page bill which merely modified the tariffs on certain kinds of imported bicycle parts. On July 13, 1977, the House Ways and Means Committee reported title II of H.R. 6831 (H. Rept. 95-496, part III, 1978-3 C.B. (Vol. 2) 71). On July 27, 1977, the House Ad Hoc Committee on Energy reported H.R. 8444 (H. Rept. 95-543). Title II of H.R. 8444 is title II of H.R. 6831; Volume II of H. Rept. 95-543 includes, as part D, the Ways and Means Committee report ón H.R. 6831. (See H. Rept. 95-541 (Vol. I) 3, (Vol. II) 113.) The Senate used H.R. 5263 as its vehicle for considering energy tax policy. The Senate Finance Committee's report is S. Rept. 95-529, 1978-3 C.B. (Vol. 2) 199. When the Senate was concluding its action on H.R. 5263, "In order to bring the House energy tax provisions into conference, the Senate added a title II [to H.R. 5263] which is the text of H.R. 8444 (the National Energy Act) as passed by the House." H. Rept. 95-1773, S. Rept. 95-1324 (Conference Rept.) 41, 1978-3 C.B. (Vol. 2) 313. The Senate amendment is 323 pages long, the last 150 pages of which consist of the tax portions of H.R. 8444. Accordingly, the House of Representatives' portion of the legislative history of the Energy Tax Act of 1978 includes reports and activities with regard to H.R. 6831 and H.R. 8444, as well as the House's activities with regard to the Conference Report on H.R. 5263. In its work on the Tax Reform Act of 1976 (Pub. L. 94-456, 90 Stat. 1520), the Senate Finance Committee added title XX, Energy Related Provisions, to the bill (H.R. 10612, as reported June 10, 1976). In proposed new Code sec. 44B, the bill provided a credit for "qualified heat pump expenditures" at half the rate provided for "qualified solar energy equipment expenditures plus qualified geothermal energy expenditures" (proposed new Code sec. 44B(a) (final flush). The bill defined "heat pump equipment" as follows (proposed new Code sec. 44B(c)(6)): (6) Heat pump equipment. — The term "heat pump equipment" means equipment— (A) which, when installed in or on, or when connected to, a building uses a compressible refrigerant system which is reversible to move heat into and out of a building by rejecting or absorbing heat from water, the ground, or the air; (B) the original use of which commences with the taxpayer; and (C) which has a useful life of at least 3 years. The Senate Finance Committee's 1976 report on the solar and geothermal energy credits focusses on the use of energy sources that replace the need to use fossil fuels (S. Rept. 94-938, p. 552, 1976-3 C.B. (Vol. 3) 49, 590). The report on the heat pump credit, on the other hand, focusses on "the lesser amount of electrical energy needed to power the heat pump as compared with the electricity required by traditional electric heating equipment" rather than the heat pump as a user of energy sources that substitute for fossil fuels. In effect, the heat pump was viewed as conservation equipment and not energy source equipment (S. Rept. 94-938, p. 555, 1976-3 C.B. (Vol. 3) 593). The 1976 report points out that solar and geothermal energy credits were provided in the House-passed energy tax bill, but that no "tax credit, or any tax incentive, for installation of a heat pump" was provided in the House-passed energy tax bill (S. Rept. 94-938, pp. 554, 557, 1976-3 C.B. (Vol. 3) 592, 595). The Conference Report on the Tax Reform Act of 1976 omitted the energy-related provisions in entirety. H. Rept. 94-1515, S. Rept. 94-1236, pp. 519-520, 1976-3 C.B. (Vol. 3) 807, 923-924. In light of our analysis of the statutory language and the legislative history, it is not necessary to determine whether subparagraph (1) of sec. 1.44C-2(f), Income Tax Regs., constitutes a "legislative" regulation. SEC. 613. PERCENTAGE DEPLETION. (e) Percentage Depletion for Geothermal Deposits.— (3) Geothermal deposit defined. — For purposes of paragraph (1), the term "geothermal deposit" means a geothermal reservoir consisting of natural heat which is stored in rocks or in an aqueous liquid or vapor (whether or not under pressure). Such a deposit shall in no case be treated as a gas well for purposes of this section or section 613A, and this section shall not apply to a geothermal deposit which is located outside the United States or its possessions. Regulations proposed under sec. 613A (sec. 1.613A-7(e)) provide as follows: Sec. 1.613A-7 Definitions. For purposes of section 613A and the regulations thereunder— (e) Geothermal deposit. The term "geothermal deposit" means a geothermal reservoir consisting of heat, largely stored in rocks, and, to a lesser extent, in aqueous fluid in the form of liquid or vapor. This regulation, proposed on May 13, 1977, 42 Fed. Reg. 24264, has not been adopted. Sec. 1.44C-2. Definitions. — (h) Geothermal energy property. The term "geothermal energy property" means equipment (and parts solely related to the functioning of such equipment) necessary to transmit or use energy from a geothermal deposit to heat or cool a dwelling or provide hot water for use within the dwelling. With respect to expenditures made after December 31, 1979, the term "geothermal energy property" also means equipment (and parts solely related to the functioning of such equipment) necessary to transmit or use energy from a geothermal deposit to produce electricity for use" within the dwelling. Equipment such as a pipe that serves both a geothermal function (by transmitting hot geothermal water within a dwelling) and a non-geothermal function (by transmitting hot water from a water heater within a dwelling) does not qualify as geothermal property. A geothermal deposit is a geothermal reservoir consisting of natural heat which is from an underground source and is stored in rocks or in an aqueous liquid or vapor (whether or not under pressure), having a temperature exceeding 50 degrees Celsius as measured at the wellhead or, in the case of a natural hot spring (where no well is drilled), at the intake to the distribution system. [This text embodies amendments by T.D. 8146, 52 Fed. Reg. 26667, 1987-2 C.B. 7, 12, promulgated June 11, 1987, but applicable to expenditures made after December 81, 1979. 1987-2 C.B. at 8. The 1987 amendments are (in the first sentence) the substitution of the word "means" for the word "includes" and the addition of a second sentence to include expenditures made after December 31, 1979. For taxable years beginning after December 31, 1983, the regulation is redesignated section 1.23-2(h), 1987-2 C.B. 7-8.] In Peach v. Commissioner, 84 T.C. 1312 (1985), affd. 805 F.2d 393 (4th Cir. 1986), this Court held that the 50° Centigrade requirement of see. 1.44C-2(h), Income Tax Regs., was a reasonable interpretation of the statute. In so holding we stated that this "regulation was promulgated pursuant to a specific statutory authority. Such regulations are legislative in nature and should be sustained unless clearly inconsistent with the statute they implement." 84 T.C. at 1317. Petitioners have challenged Peach, averring that section 1.44C-2(h), Income Tax Regs., is interpretative rather than legislative. Because we conclude that the regulation's disallowance of the credit in the instant case is supported by the legislative history (although it might be argued that this definitional regulation belongs in section 1.613, rather than 1.44C), we do not consider whether the regulation is legislative or interpretative.

6009456

Lone Star Bakery, Inc. v. United States

Lone Star Bakery, Inc. v. United States

2010-10-04

No. 09-1472

835

835

562 U.S. 835

562

United States Reports

Supreme Court of the United States

United States

2021-08-11T00:42:36.793692+00:00

CAP

Lone Star Bakery, Inc. v. United States.

No. 09-1472. Lone Star Bakery, Inc. v. United States.

15

88

C. A. 5th Cir. Certiorari denied.

6678157

Protests 938390-G, etc., of Kwong Yuen & Co., Inc.

Protests 938390-G of Kwong Yuen & Co.

1940-03-07

No. 43364

419

419

4 Cust. Ct. 419

4

United States Customs Court Reports

United States Customs Court

United States

2021-08-11T02:43:52.062453+00:00

CAP

Protests 938390-G, etc., of Kwong Yuen & Co., Inc.

No. 43364. Protests 938390-G, etc., of Kwong Yuen & Co., Inc.

18

126

Abstract 43067. Application by Government for rehearing denied.

11855372

Pharr v. Israel, Warden

Pharr v. Israel

1981-01-12

No. 80-5666

1088

1088

449 U.S. 1088

449

United States Reports

Supreme Court of the United States

United States

2021-08-10T21:59:00.276185+00:00

CAP

Pharr v. Israel, Warden.

No. 80-5666. Pharr v. Israel, Warden.

12

72

C. A. 7th Cir. Certiorari denied.

6938955

Gamble v. Daniel, Receiver

Gamble v. Daniel

1930-10-13

No. 198

848

848

282 U.S. 848

282

United States Reports

Supreme Court of the United States

United States

2021-08-10T18:00:09.037279+00:00

CAP

Gamble v. Daniel, Receiver.

No. 198. Gamble v. Daniel, Receiver. October 13, 1930. Messrs. Francis A. Brogan, Edgar Mr Mors man, Jr., and C. A. Sorensen for petitioner. Messrs. Arthur F. Mullen and Paul L. Martin for respondent.

50

296

Petition for writ of certiorari to thé Circuit Court of Appeals for the Eighth Circuit denied.

6671628

Carson Pirie Scott & Co. v. United States

Carson Pirie Scott & Co. v. United States

1947-02-20

No. 6901; Entry No. 5659/1, etc.

401

401

18 Cust. Ct. 401

18

United States Customs Court Reports

United States Customs Court

United States

2021-08-10T22:57:30.107432+00:00

CAP

Carson Pirie Scott & Co. v. United States

Carson Pirie Scott & Co. v. United States No. 6901. Entry No. 5659/1, etc. Invoices dated London, England, March 1, 1941, etc. Certified March 31, 1941, etc. Entered at Chicago, Ill., June 5, 1941, etc. (Decided February 20, 1947) Wallace & Schwartz (Joseph Schwartz of counsel) for the plaintiff. Paul P. Bao, Assistant Attorney General, for the defendant.

162

996

Oliver, Presiding Judge: The appeals for reappraisement listed in schedule A, hereto attached and made a part hereof, have been submitted for decision upon the following stipulation of counsel for the parties hereto: (Stipulation omitted.) On the agreed facts I find the export value, as that value is defined in section 402 (d) of the Tariff Act of 1930, to be the proper basis for the determination of the value of the merchandise here involved, and that such values are the appraised values, less the additions made by the importer on entry because of advances by the appraiser in similar cases. Judgment will be rendered accordingly.

5916083

Mauer v. Minnesota

Mauer v. Minnesota

2011-03-28

No. 10-1025

904

904

563 U.S. 904

563

United States Reports

Supreme Court of the United States

United States

2021-08-11T02:19:20.617866+00:00

CAP

Mauer v. Minnesota.

No. 10-1025. Mauer v. Minnesota.

11

67

C. A. 8th Cir. Certiorari denied.

5894332

Edwards v. Virginia International Terminals, Inc., et al.

Edwards v. Virginia International Terminals, Inc.

2005-10-17

No. 05-61

960

960

546 U.S. 960

546

United States Reports

Supreme Court of the United States

United States

2021-08-10T19:46:18.183652+00:00

CAP

Edwards v. Virginia International Terminals, Inc., et al.

No. 05-61. Edwards v. Virginia International Terminals, Inc., et al.

16

103

C. A. 4th Cir. Certiorari denied.

3831331

Edward G. WRIGHT, Petitioner, Appellant, v. John J. MARSHALL, Respondent, Appellee

Wright v. Marshall

2011-09-01

No. 09-2665

102

112

656 F.3d 102

656

Federal Reporter 3d Series

United States Court of Appeals for the First Circuit

United States

2021-08-10T20:21:54.026121+00:00

CAP

10. Criminal Law @»339.6

Edward G. WRIGHT, Petitioner, Appellant, v. John J. MARSHALL, Respondent, Appellee.

Edward G. WRIGHT, Petitioner, Appellant, v. John J. MARSHALL, Respondent, Appellee. No. 09-2665. United States Court of Appeals, First Circuit. Heard May 5, 2011. Decided Sept. 1, 2011. 10. Criminal Law @»339.6 Identification evidence, including voice identifications, must be received with caution and scrutinized with care, but these concerns are lessened substantially when the identification is based on a witness’s pre-existing relationship with a defendant. 11. Criminal Law &wkey;822(l) Jury instructions must be viewed as a whole, not as individual provisions in isolation. Matthew A. Kamholtz, with whom Feinberg & Kamholtz was on brief, for appellant. Annette C. Benedetto, Assistant Attorney General, with whom Martha Coakley, Attorney General, was on brief, for appellee. Before HOWARD, SELYA, and THOMPSON, Circuit Judges.

4595

28452

THOMPSON, Circuit Judge. In the early morning hours of May 14, 1984, Penny Anderson was murdered at her Springfield, Massachusetts apartment. In 1985, a Superior Court jury convicted the petitioner, Edward Wright, of the crime. Although Wright admitted that he had spent time with Anderson the night before her death, he claimed to have left her apartment before she was killed. After a lengthy foray through the Massachusetts state courts unsuccessfully challenging his conviction, Wright filed a habeas corpus petition in federal court. The district court initially denied relief but later granted a motion for reconsideration and held an evidentiary hearing to permit Wright to introduce new evidence. This new evidence showed that according to a witness, another man, Allen Smalls, had made self-incriminating statements about Anderson's murder. After considering the new evidence, the district court denied habeas relief. Wright filed a timely appeal, arguing that his trial counsel was ineffective because he failed to make two specific arguments when objecting to the admission at trial of the prior grand jury testimony of a key witness, Arthur Turner, and because he failed to request that the jury be instructed to take into account the possibility of mistaken identification in determining whether the commonwealth had proven guilt beyond a reasonable doubt. Because Wright has failed to demonstrate ineffective assistance of counsel, we affirm the denial of his habeas petition. BACKGROUND We begin with the facts, reviewed as described by the Massachusetts Supreme Judicial Court (SJC) in Commonwealth v. Wright, 411 Mass. 678, 678-80, 584 N.E.2d 621, 623 (1992), "supplemented with other record facts consistent with the SJC's findings." Shuman v. Spencer, 636 F.3d 24, 27 (1st Cir.2011) (quoting Yeboah-Sefah v. Ficco, 556 F.3d 53, 62 (1st Cir.2009)) (internal quotation marks omitted). The Crime Wright and Anderson left a nightclub together on May 13, hours before Anderson was murdered. After stopping to pick up her infant son and run some errands, they had sex in the car and then went to Anderson's apartment, arriving around midnight. Wright was driving a car borrowed from a friend. According to Wright, he and Anderson talked for about an hour and she let him out of the apartment at about 1:30 a.m. He said he then went to a friend's house but because he did not want to wake the friend, Wright slept in the car. At about 8 a.m. on May 14, Wright left for a previously planned visit to his sister's house in Delaware. Sometime in the early morning hours of May 14, Anderson died from multiple stab wounds. A neighbor heard a woman screaming shortly before 4 a.m., and then heard a car drive away. The medical examiner estimated Anderson's time of death to be between 12:15 a.m. and 6:15 a.m. Anderson's body was discovered that afternoon, after her family contacted the building maintenance supervisor and gained access to her apartment. Investigation of the crime scene yielded evidence including a bloody imprint made by a shoe on the tiled kitchen floor of the victim's apartment. Phone Call and Turner's Testimony Perhaps the key testimony at trial came from Arthur Turner, the son of Wright's on-and-off-again girlfriend, Thelma. Wright and Turner had known each other for several years prior to the crime, living in the same house in Delaware for part of that time. On the night of the murder, Turner got into a car accident while returning from a trip. He arrived home in Springfield at around 1 p.m. on May 14, tired from having been up all night dealing with the accident. At about 4:30 in the afternoon, he received a phone call from someone who identified himself as "Ed." The caller said he had killed someone, provided Anderson's address, and described the victim as a "white bitch" who was "on TIC." He provided additional details about the murder weapon and added that Turner should watch the news or go get the newspaper and then he would know who the victim was. Turner learned of Anderson's murder through media reports and told his sister about the phone call, which he attributed to Wright. His sister told their brother, who notified the police. Turner provided information consistent with what he had told his sister to the police and he signed a police statement on May 16. During grand jury proceedings on June 4, Turner's police statement was read into the record, and Turner reaffirmed the truth of everything in it. Some six months later, after Turner's mother and Wright had reconciled, Turner changed his story. He still said he had received a telephone call from a person who identified himself as "Ed" and that the caller provided information about the murder, but he said he was no longer positive that the caller was in fact Wright. Still, Wright's first name is Edward, and Wright was the only person Turner knew named "Ed." Phone records confirmed that a 36-minute phone call was made from Wright's sister's home in Delaware to Turner's number in Springfield at 4:41 p.m. on May 14. Wright's sister testified that she made all phone calls in question that day, but the commonwealth rebutted with testimony from Turner's aunt, who said that Wright called her that day and asked for Turner's telephone number. Given Turner's partial recantation, the commonwealth moved in limine to admit Turner's prior inconsistent grand jury testimony for its truth under Commonwealth v. Daye, 393 Mass. 55, 469 N.E.2d 483 (1984). Wright's counsel filed a written opposition arguing that Turner's grand jury testimony was inadmissible, citing Daye and requesting a voir dire. The trial judge conducted a voir dire and concluded that Turner's prior inconsistent grand jury testimony was admissible for its truth under Daye. Other Evidence Following Turner's disclosure of information to the Springfield police, Wright was arrested in Delaware on May 16. During interrogation he told a Delaware police detective that he was with Anderson on the night in question and described her as a "whore" who was "on TIC." Traces of blood were found inside the ear Wright drove the night of Anderson's murder. However, the commonwealth called the owner of the car, Vernal Archie, as a witness, and he testified that a few weeks before the murder, Wright had been stabbed and Archie had driven him to the hospital in the same car. Additionally, a bloody shoe print found at the murder scene could have been made by Wright's sneakers, which police confiscated on May 16. But the sneakers were a popular style and no traces of blood were detected on them. How We Got to This Point Wright was convicted of murder by a jury on April 10, 1985, and sentenced to life in prison. Wright filed two separate motions for a new trial, both based in part on allegations of newly discovered evidence (primarily, an affidavit by Lee Britt, mother of Smalls, implicating Smalls in the murder). After holding an evidentiary hearing, the trial court denied both motions. The SJC consolidated Wright's appeal from the denial of his motions with his direct appeal of the conviction, and affirmed everything. Wright, 411 Mass, at 679, 584 N.E.2d at 623. The SJC specifically noted that the trial judge did not abuse his discretion in denying Wright's first motion for a new trial based on a finding that the newly discovered evidence "lacked probative value." In September of 1992, Wright sought relief in federal court, filing a petition for a writ of habeas corpus in the District of Massachusetts pursuant to 28 U.S.C. § 2254. In 1993, Wright moved for voluntary dismissal of his first federal habeas petition and returned to state court. Wright filed a third motion for a new trial, in which he first raised the ineffective assistance of counsel claims at issue in this appeal. The motion was denied by the trial court in March of 1996. The SJC denied leave to appeal, holding that all of the claims asserted were procedurally defaulted because they had already been addressed or could have been addressed during trial or on direct review. Commonwealth v. Wright, No. SJ-96-0262, slip op. at 2 (Mass. Aug. 12, 1997). In 1998, Wright filed a second petition for a writ of habeas corpus in federal district court, the case from which this appeal has arisen. The district court denied the petition in 1999, rejecting Wright's invitation to reach the merits of his procedurally defaulted claims based on new evidence of actual innocence. The evidence included Britt's testimony during the state court hearing on Wright's first motion for a new trial, in which she claimed that Smalls had admitted the murder to his girlfriend (who then relayed the statement to Britt), and Britt's claim that on the day of the murder, Smalls had tried to sell a knife possibly similar to the murder weapon. The district court stated that "[i]f properly corroborated, this informa tion would provide troubling new evidence of actual innocence." But because the Massachusetts trial court had rejected the new evidence as either hearsay or not credible, the district court accorded its finding a presumption of correctness. Wright sought reconsideration and an evidentiary hearing, bolstering his contentions with additional evidence including an affidavit from Smalls' former girlfriend, Maria Rivera Ramos, reciting that he had threatened to kill her "like I did [Anderson]." The district court appointed counsel for Wright and held a hearing on his motion for reconsideration. In 2001, at the parties' request, the district court stayed federal proceedings without prejudice so Wright could present the new affidavit to the state court and seek forensic testing of the knife sold by Smalls, which was in the possession of the state court clerk's office. Forensic testing of the knife was inconclusive. In 2003, Wright filed a fourth motion for new trial in state court, arguing that trial counsel was ineffective for failing to locate Ramos earlier. The state trial court denied the motion and the SJC declined to allow an appeal. Wright returned once more to federal court in 2006, to resume the proceedings which had been stayed five years earlier. After conducting an evidentiary hearing, the district court in 2008 allowed Wright's motion for reconsideration based on evidence of actual innocence and permitted him to proceed on the merits of his procedurally defaulted claims. See House v. Bell, 547 U.S. 518, 126 S.Ct. 2064, 165 L.Ed.2d 1 (2006). Both parties briefed and argued the merits of those claims and, in an order dated November 9, 2009, the district court denied Wright's petition, finding that he had failed to demonstrate that his trial was tainted by constitutional error. With respect to the ineffective assistance of counsel claims, the district court found that Wright failed to show a reasonable probability that the result of his trial would have been different if trial counsel had launched a more focused attack on the admissibility of Turner's grand jury testimony. Similarly, the district court found that Wright had not been prejudiced by trial counsel's failure to request a misidentification instruction. The district court granted a certificate of appealability limited to two claims of ineffective assistance of counsel based on trial counsel's failure to object to the admission of Turner's grand jury testimony pursuant to Do,ye and failure to request a jury instruction on misidentification. On appeal, Wright argues that trial counsel's performance was deficient because he failed to argue specifically that Turner's grand jury testimony was a mere confirmation of a statement by an interrogator (which would make it inadmissible under the third prong of Do,ye) and that the commonwealth failed to introduce sufficient corroborating evidence (which would make it inadmissible under the fourth prong of Do,ye). Wright asserts a second claim of ineffective assistance based on trial counsel's failure to request a jury instruction on misidentification. DISCUSSION We review a district court's denial of a habeas petition de novo. Shuman, 636 F.3d at 30. When we conduct such a review, the Antiterrorism and Effective Death Penalty Act of 1996, 28 U.S.C. § 2254(d), requires that we assume a highly deferential posture toward a state court decision rejecting a federal claim on the merits. See Clements v. Clarke, 592 F.3d 45, 52 (1st Cir.2010). Here, however, the district court determined that Wright's claims were not adjudicated on the merits in state court and consequently evaluated them de novo. See Fortini v. Murphy, 257 F.3d 39, 47 (1st Cir.2001) ("[W]e can hardly defer to the state court on an issue that the state court did not address."). The parties do not challenge that determination on appeal, and we therefore also proceed to review Wright's ineffective assistance claims de novo. We can grant habeas relief only if we identify an error which had a "substantial and injurious effect or influence in determining the jury's verdict." Fry v. Pliler, 551 U.S. 112, 116, 127 S.Ct. 2321, 168 L.Ed.2d 16 (2007) (quoting Brecht v. Abrahamson, 507 U.S. 619, 631, 113 S.Ct. 1710, 123 L.Ed.2d 353 (1993)) (internal quotation marks omitted); Foxworth v. St. Amand, 570 F.3d 414, 425 (1st Cir.2009). To prevail on a claim of ineffective assistance of counsel, Wright must show both that counsel's performance was deficient and that it resulted in prejudice. See Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984); Shuman, 636 F.3d at 31. If he falls short on either requirement, his claim fails. See Strickland, 466 U.S. at 697, 104 S.Ct. 2052. Deficient performance means that trial counsel's representation failed to meet "an objective standard of reasonableness." Tevlin v. Spencer, 621 F.3d 59, 66 (1st Cir.2010) (quoting Strickland, 466 U.S. at 688, 104 S.Ct. 2052) (internal quotation marks omitted). Counsel's performance is deficient only if no competent attorney would have acted as he did. Id. "[Cjounsel is strongly presumed to have rendered adequate assistance and made all significant decisions in the exercise of reasonable professional judgment." Strickland, 466 U.S. at 690, 104 S.Ct. 2052; see also Harrington v. Richter, — U.S. -, 131 S.Ct. 770, 788, 178 L.Ed.2d 624 (2011). Wright also must demonstrate prejudice to show ineffective assistance of counsel. He must show a "reasonable probability" that if counsel had acted differently, his trial would have had a more favorable outcome. Tevlin, 621 F.3d at 66 (quoting Porter v. McCollum, — U.S. -, 130 S.Ct. 447, 453, 175 L.Ed.2d 398 (2009) (per curiam)) (internal quotation marks omitted). I. Admission of Turner's Grand Jury Testimony Wright's first ineffective assistance claim is based on trial counsel's failure to advance certain specific arguments when arguing that Turner's grand jury testimony was inadmissible. We elaborate. At the time of Wright's trial, whether a prior inconsistent statement made before a grand jury could be admitted for its probative value was governed by Daye, 393 Mass, at 75, 469 N.E.2d at 495-96. Daye spells out a four-point test: a prior inconsistent statement made before a grand jury is admissible for its truth when (1) the statement was made under oath before a grand jury; (2) the witness could be effectively cross-examined as to its accuracy; (3) it was not coerced and was more than a mere confirmation or denial of an allegation by the interrogator; and (4) other evidence was presented which tended to prove the issue. Id. Wright hones in on Daye's third and fourth requirements. He contends that counsel erred by failing to argue the inadmissibility of Turner's testimony because it fell short on the third Daye factor (ie., because it was a mere confirmation of an allegation made by an interrogator — the prosecutor who questioned Turner in front of the grand jury — rather than Turner's own statement) and the fourth Daye factor (i.e., the commonwealth failed to introduce sufficient corroborative evidence). To be clear, this is not a case in which trial counsel failed to object at all. Wright's attorney repeatedly objected to the admission of Turner's grand jury testimony. In fact, he filed a five-page opposition to the commonwealth's motion in limine which sought to introduce the grand jury testimony. The opposition began with a summary of Daye, recited the four Daye factors, and repeatedly cited to Daye. Although the opposition chiefly focused on state constitutional grounds, it cited to Daye in support of a request that the court conduct a voir dire before admitting Turner's testimony into evidence, a request which the trial judge granted. After the voir dire, when the trial court ruled that it would admit Turner's grand jury testimony, trial counsel again cited Daye in his objection. So Wright's argument is not that counsel failed to object, but that his objection was not properly focused on the third and fourth Daye factors. We examine each in turn. Turner's Testimony Was More Than a Confírmation The third Daye factor precludes the admission of a prior inconsistent statement made to a grand jury if it is the statement of the interrogator rather than the statement of the witness. Daye, 393 Mass. at 75, 469 N.E.2d at 496. "[A] judge should exercise discretion in admitting a witness's 'yes' or 'no' answer to a leading, fact-filled question posed at the grand jury proceeding as probative evidence regarding the facts alluded to in the question." Id. at 74, 469 N.E.2d at 495. Wright claims that his trial counsel's performance was deficient because he did not specifically argue that Turner's testimony was a mere confirmation of a statement made by the Assistant District Attorney (ADA). Turner's grand jury testimony began with the ADA eliciting from Turner his name, address, that he had known Wright for several years, and that he had spoken with Wright on the phone on May 14, the day of the murder. The ADA then showed Turner his police statement, had him identify it by his signature, and then read it into the record. The ADA asked no leading or fact-filled questions. Before and after she read Turner's statement into the record, she told Turner that he could "change, add, correct or delete" anything. Turner did not change anything. Instead, he affirmed the truth of the statement. We have no trouble concluding on these facts that Turner's grand jury testimony was his own statement and not a mere confirmation of a statement made by the ADA. Trial counsel's failure to argue against the admission of Turner's testimony based specifically on the third Daye factor was thus not deficient performance under Strickland. See Tevlin, 621 F.3d at 66. Corroborating Evidence The remainder of Wright's Daye argument fares no better. He claims that trial counsel erred by not arguing specifically that Turner's grand jury testimony was inadmissible under the fourth Daye factor because it was not supported by corroborating evidence. Wright contends that the commonwealth was required to introduce evidence corroborating that he was the caller who confessed to Turner. On the other hand, the commonwealth claims Daye obligates it to introduce evidence corroborating Wright's commission of the crime. We need not resolve this issue, because the commonwealth introduced evidence (which we detail below) which sufficiently corroborated both propositions. The evidence showed that Wright was seen entering Anderson's apartment with her in the early morning on the day she was murdered, that traces of blood were found in the car he was driving that night, that he owned shoes of a type consistent with the bloody shoe print found at the scene of the crime, and that in his statement to the Delaware police he described the victim in similar terms as did the person who called Turner. Additionally, the commonwealth introduced phone records showing that a call was made from Wright's sister's home in Delaware (where Wright was staying) to Turner's home on the afternoon in question. Although Wright and his sister claimed that Wright did not make the call, Turner's aunt testified that he called her that day and asked for Turner's phone number. To perform effectively, trial counsel is not required to make every possible objection to the admission of evidence, and the decision not to make this particular argument was within the range of decisions a competent attorney could make under these circumstances. See Tevlin, 621 F.3d at 66. Because Wright has failed to show deficient performance under Strickland, his ineffective assistance claim fails to the extent it relies on trial counsel's failure to address Daye adequately. See Tevlin, 621 F.3d at 66. II. Failure to Request a Misidentification Instruction Wright next complains of his trial counsel's failure to request a jury instruction on misidentification. He contends that such an instruction was necessary for the jury to understand that the caller who confessed to the murder might not have been Wright. Clearly Turner's testimony about the phone confession was a crucial piece of evidence in the case. Wright claims that Turner may have misidentified the caller because of pressure from the police to name Wright and because Turner was exhausted-he had been in a car accident and slept very little the night before he signed the police statement. Therefore, Wright argues that trial counsel's failure to request a jury instruction on misidentification amounted to deficient performance that affected the outcome of his trial. Wright cites to United States v. Kavanagh, 572 F.2d 9 (1st Cir.1978), and to cases from other circuits to support his argument that a misidentification instruction was necessary. See United States v. Greene, 591 F.2d 471, 476-77 (8th Cir.1979); United States v. Hodges, 515 F.2d 650, 653 (7th Cir.1975); United States v. Holley, 502 F.2d 273, 275 (4th Cir.1974); United States v. Telfaire, 469 F.2d 552, 555 (D.C.Cir.1972). These decisions note the importance of charging the jury on the possibility of misidentification "in cases where the evidence suggests a possible misidentification." See Kavanagh, 572 F.2d at 10. However, these cases are easily distinguished on the facts, because they all involve identification of a stranger rather than identification of a person with whom the witness was well-acquainted. See Greene, 591 F.2d at 473; Kavanagh, 572 F.2d at 10-11; Hodges, 515 F.2d at 651; Holley, 502 F.2d at 274; Telfaire, 469 F.2d at 554-56. Identification evidence,' including voice identifications, must be "received with caution and scrutinized with care." United States v. Angiulo, 897 F.2d 1169, 1204-05 (1st Cir.1990) (quoting proposed jury instruction, which the court found to be substantively correct). These concerns are lessened substantially, however, when the identification is based on a witness's pre-existing relationship with a defendant. See United States v. Gilbert, 181 F.3d 152, 163 (1st Cir.1999) (analyzing admissibility of voice identification by witnesses familiar with the defendant's voice); see also Commonwealth v. Pressley, 390 Mass. 617, 618, 457 N.E.2d 1119, 1120 (1983). At the time Turner identified Wright as the caller, they had known each other for more than three years, living in the same household for part of that time. Although Wright stresses that their relationship was hostile, that they had never spoken over the phone, that Turner was exhausted when he received the phone call, and that Turner eventually expressed doubt about his identification of Wright as the caller, none of these change the fact that Turner knew Wright well enough to identify his voice as he had heard Wright's voice in person many times. Although by the time of trial Turner equivocated as to whether he recognized the voice of the caller, there was enough in the record about his prior contacts with Wright from which the jury reasonably could infer that Turner recognized the caller's voice as Wright's. But in any event, Turner testified that he identified the caller as Wright because the caller said he was "Ed," and Turner did not know anyone else with that name. Jury instructions also must be viewed as a whole, not as individual provisions in isolation. Estelle v. McGuire, 502 U.S. 62, 72, 112 S.Ct. 475, 116 L.Ed.2d 385 (1991). We have upheld the refusal to give a misidentification instruction in a voice identification case when the issue was substantially covered in the more general jury instructions. Angiulo, 897 F.2d at 1205-06. As was true in Angiulo, the charge in this case included general instructions on witness credibility and the commonwealth's burden of proof which emphasized the requirement that the jury scrutinize all of the witnesses' testimony carefully. Ultimately we need not decide whether trial counsel's failure to request a misidentification -instruction was deficient performance because Wright has failed to show a reasonable probability that it affected the outcome of his trial. See Tevlin, 621 F.3d at 66. If trial counsel had requested a misidentification instruction, the trial judge would not have been required to give it because Turner's identification was based on the caller's self-identification and on Turner's prior relationship with Wright. And even if the trial court had given such an instruction, Wright has failed to show a reasonable probability that the jury would not have convicted him. If the jury had been specifically instructed to scrutinize identification testimony, most likely he would still have been convicted based on the strength of the other evidence against him, including evidence that he had been seen entering Anderson's apartment with her on the night she was killed, that traces of blood were found in the car he drove that night, that a bloody shoe print at the scene could have been made by his sneakers, that phone records showed that a call had been made from Wright's sister's house to Turner's house that afternoon, and the similarity between Wright's description of the victim when he was arrested and the caller's description of the victim. Accordingly, he has failed to show prejudice under the Strickland standard, and that failure dooms his second ineffective assistance claim. CONCLUSION We affirm, the district court judgment denying Wright's habeas corpus petition. . As discussed infra, Wright contends that his trial counsel should have argued that the testimony failed to satisfy the third and fourth prongs of the test for admissibility set forth in Commonwealth v. Daye, 393 Mass. 55, 469 N.E.2d 483 (1984), overruled on other grounds by Commonwealth v. Le, 444 Mass. 431, 828 N.E.2d 501 (2005). . "TIC" is apparently a street term for illegal drugs. . Wright originally asserted thirteen grounds for relief, only two of which he pursues on appeal. . Neither party challenged the district court's finding that Wright's claims had been procedurally defaulted. . Although the SJC later reformulated the requirements for admission of prior inconsistent statements made to a grand jury, see Commonwealth v. Clements, 436 Mass. 190, 192-93, 763 N.E.2d 55, 57-58 (2002), we review counsel's performance using the law as it existed at the time of trial. See Strickland, 466 U.S. at 689-90, 104 S.Ct. 2052. . Wright also complains that Turner's grand jury testimony is flawed because it is based on his police statement, which Turner signed while exhausted and only after the police told him they already knew that Wright committed the murder. These were proper areas of inquiry during Turner's testimony at trial, but they did not make the grand jury testimony inadmissible under Daye.

12036606

Corch v. Director, Office of Workers' Compensation Programs, United States Department of Labor

Corch v. Director, Office of Workers' Compensation Programs

1989-02-21

No. 88-5853

1008

1008

489 U.S. 1008

489

United States Reports

Supreme Court of the United States

United States

2021-08-10T20:16:12.050559+00:00

CAP

Corch v. Director, Office of Workers’ Compensation Programs, United States Department of Labor.

No. 88-5853. Corch v. Director, Office of Workers’ Compensation Programs, United States Department of Labor.

105

619

C. A. 3d Cir. Motion of petitioner for leave to proceed informa pauperis denied. Petitioner is allowed until March 14, 1989, within which to pay the docketing fee required by Rule 45(a) and to submit a petition in compliance with Rule 33 of the Rules of this Court.

6584635

Rover, Inc. v. United States

Rover, Inc. v. United States

1964-03-19

No. 68358; protest 63/17689 (San Juan)

287

288

52 Cust. Ct. 287

52

United States Customs Court Reports

United States Customs Court

United States

2021-08-10T23:53:05.448324+00:00

CAP

Rover, Inc. v. United States,

No. 68358. protest 63/17689 (San Juan). Rover, Inc. v. United States,

48

284

Opinion by Lawrence, J. The official papers disclosing that the protest was filed more than 60 days after liquidation, it was dismissed as untimely, by virtue of section 514, Tariff Act of 1930 (19 U.S.C. § 1514).

1782933

Doss v. North Carolina

Doss v. North Carolina

1972-06-29

No. 71-6001

939

939

408 U.S. 939

408

United States Reports

Supreme Court of the United States

United States

2021-08-10T21:28:47.452019+00:00

CAP

Doss v. North Carolina.

No. 71-6001. Doss v. North Carolina.

10

52

Sup. Ct. N. C.

368091

Wyoming v. Yellowstone Park Co.

Wyoming v. Yellowstone Park Co.

1942-05-25

No. 1159

689

689

316 U.S. 689

316

United States Reports

Supreme Court of the United States

United States

2021-08-10T20:39:09.378260+00:00

CAP

Wyoming v. Yellowstone Park Co.

No. 1159. Wyoming v. Yellowstone Park Co. May 25, 1942. Mr. Ewing T. Kerr, Attorney General of Wyoming, for petitioner. Mr. Taylor B. Weir for respondent.

38

227

Petition for writ of Certiorari to the Supreme Court of Wyoming denied.

379425

Wolfe v. Nash, Warden

Wolfe v. Nash

1964-02-24

No. 901, Misc.

933

933

376 U.S. 933

376

United States Reports

Supreme Court of the United States

United States

2021-08-11T00:21:05.668207+00:00

CAP

Wolfe v. Nash, Warden.

No. 901, Misc. Wolfe v. Nash, Warden.

13

72

C. A. 8th Cir. Certiorari denied.

11448153

Mines v. United States

Mines v. United States

1989-12-04

No. 89-5911

997

997

493 U.S. 997

493

United States Reports

Supreme Court of the United States

United States

2021-08-10T23:20:16.304242+00:00

CAP

Mines v. United States.

No. 89-5911. Mines v. United States.

12

71

C. A. 9th Cir. Certiorari denied.

3383203

Railroad Company v. Jones

Railroad Co. v. Jones

1877-10

439

443

95 U.S. 439

95

United States Reports

Supreme Court of the United States

United States

2021-09-21T20:02:18.861595+00:00

Harvard

Railroad Company v. Jones.

Railroad Company v. Jones. 1. Negligence may consist in either failing to do what, under the circumstances, a reasonable and prudent man would ordinarily have done, or in doing what he would not have done. 2. A. was one of a party Of men employed by a railroad company in constructing • and repairing its roadway. They were usually conveyed by the company to and from the place where their services were required, and a box-car was assigned to their use. Althoúgh on several occasions' forbidden to do so, and warned of'the danger, A., on returning from work one evening, rode on the pilot or bumper of the locomotive, when the train, in passing through a tunnel, collided with cars standing on the track, and he was injured. There ■was ample room for him_in the box-car. All in.it were unhurt. Held, 1. That, as A. would not have been injured had he used ordinary care and caution,' he is not entitled to -recover against the company. 2. That the knowledge, assent, or direction of the agents of the company as to wliathe did at the time in question is immaterial. The company, although,bound to a high degree of care, did not insure his safety.- Error to the Supreme Court of the district of Columbia. • This was an action by Jones against the Baltimore and Potomac Railroad Company, to recover damages for an injury re-, ceived on the road of. the company. Judgment was rendered in his favor, and the company brought the case here. • The facts are fully stated in. the opinion of the court. Mr. Enoch Totten for the plaintiff in error. Mr. Edward C. Carrington and Mr. Campbell Carrington, contra.

1907

10772

Mr. Justice Swayne delivered the opinion of the, court.. The defendant in error was-the plaintiff in the court below. Upon the trial there, he gave . evidence to the following effect; For several 'months prior to the 12th of November, 1872, he was in the service of the company as a day-laborer. He was oné of. a party of men employed in constructing and -keeping in repair the roadway of the defendant. It was usual for the defendant to convey them to and from their place of work. Sometimes a car was used for this purpose; at others, only a locomotive and tender were provided. It was common, whether a' car was provided or not, for some of the men to' ride on the pilot or bumper in front of the locomotive. This was done with; the approval of Van Ness, who was in charge of the laborers when at work, and the conductor of the train which carried them both ways. The plaintiff had no connection with the train. • On the'12th of November before mentioned, the party of laborers, including the plaintiff, under the direction of Van Ness, were employed oil the west side of the eastern branch of the Potomac, near where the defendant's road crosses that stream, in filling flat cars with' dirt and unloading them at an' adjacent point. The' train that evening consisted of a locomotive, tender,' and box-car. When the party was about- to leave on their return that evening, the plaintiff was told by Van Ness to jump.on anywhere;.that théy were behind time, and must hurry. The plaintiff was riding on the pilot of the locomotive, and while there the train ran into certain cars belonging to the defendant and loaded with ties. These cars had become detached from another train of cars, and were standing on the track in the Virginia. avenue tunnel. The accident was the result of negligence on the part of the defendant.' Thereby one.of the plaintiff's legs was severed from his body, and the other one severely injured.- Nobody else was hurt, except two other persons, one riding on the pilot with the plaintiff, and the other one on the cars standing in the tunnel. The defendant then gave evidence tending to prove as follow's : About six weeks or two months before the accident, a box-car had been assigned to the construction train with which the plaintiff was employed. The car was .used thereafter every day.. About the time it was first used, and on several occasions before the accidént, Van' Ness notified-the laborers that théy must ride in the car and not on the engine; and the plaintiff in particular, on several occasions not long before tbe disaster, was forbidden to, ride on the pilot, both by Van Ness and the engineer in charge of the locomotive. The plaintiff was on the pilot at the time- of the accident, without the knowledge of any agent of the defendant. There was plenty of room for the plaintiff in the box-car, which was open. If he had been anywhere but on the pilot, he would not have been injured. The collision was not brought about by any negligence of the defendant's agents;, but was unavoidable. The defendant's agents in charge of the two- trains, arid the watchman in the tunnel, were competent men. The plaintiff, in rebuttal, gave evidence tending to show that sometimes the box-car was locked when there was no other car attached .to the train, and that the men were allowed by tbe conductor and engineer to ride on the engine, and that on, the evening of the accident the engineer in charge of the locomotive knew that the plaintiff was on the pilot... The evidence being closed, the defendant's counsel- asked the court to instruct the jury as follows: " If the jury find from the evidence that the plaintiff- knew the box-car was the proper -place for him, and if he knew his position on the pilot of the engine was a dangerous one, then they, will render' a verdict for the defendant, whether they find that its agents allowed the plaintiff to ride on the pilot or not." This instruction was refused, and the defendant's counsel excepted. Three questions arise upon the record; — 1. -The exception touching the adrifission of evidence. 2. As to the application of the rule relative to injuries received by one servant by reason of the negligence of another servant, both being at the time engaged in the sarrie service, of a common superior. ' 3. As to contributory negligence on the part of the'plaintiff. We pass by the first two without remark. We -have not .found it necessary to consider them. In our view, the point 'presented by-the third is sufficient to dispose of the case. Negligence is the failure to do what a reasonable and pru dent person would ordinarily have done under the circumstances of the situation,. or doing what such a person under the existing circumstances would not have done. The essence of the fault may lie in omission or .commission. The duty is chctated.and measured by the exigencies of the. occasion. See Wharton on Negligence, sect. l, .and notes. One who by his negligence. has brought an injury upon himself cannot recover damages for it. Such is the rule of the civil and of the common law. A plaintiff. in such cases is entitled to no relief. ¡Bwt wheré the defendant has been guilty of. negligence also, in the same connection, the result depends upon the facts. The question in such cases is : 1. Whether the damage was occasioned entirely by the negligence or improper' conduct of the defendant; or, 2. Whether the plaintiff himself ¡so far cóntjibuted .to the misfortune by his own negligence or ¡want.of ordinary care and .caution, that but for such negligence or want óf care and caution on his .pari .the misfortune would not have happened. In the former case, the plaintiff is entitled to recover. In the latter, he is not. Tuff v. Warman, 5 C. B. n. s. 573; Butterfield v. Forrester, 11 East, 58; Bridge v. Grand Junction Railroad Co., 3 M. & W. 244; Davis v. Mann, 10 id. 546; Clayards v. Dethick, 12 Q. B. 439; Van Lien v. Scoville Manufacturing Co., 14 Abb. (N. Y.) Pr. n. s. 74; Ince v. East Boston Ferry Co., 106 Mass. 149. It remains to apply these test's to the case before us. The .facts with respect to the car's left in the tunnel are' not fully disclosed in the record. It is' not shown when they were left there, how long they .had been there, when it was intended to remove them, nor why they had - not been removed before. It does'appear-that there was a watchman at the tunnel, .and that he and the .conductor of the train from which they were left, and the conductor of the train which carried the plaintiff, were all well selected, and competent for their places. Fonthe purposes of this case, we assume'that the defendant was guilty, of negligence.. The plaintiff had been warned against riding on the pilot, and forbidden to do so. It was next to the cow-catcher, and .obviously a place of peril, especially in case of collision'., There was room for him in the box-car.. He should have -taken his place there. \He could have gone'into the box-car in as little, if not less, time than it took to climb to the pilot. The knowl-t edge, assent, or-.direction of the company's agents as to what he did is immaterial. If told to get on-anywhere, that the train was late, and that he must hurry, this was no justification ior taking such a risk. .As well might he have obeyed a suggestion to ride on the cow-catcher, or put himself on the track before the advancing wheels of the locomotive. Th.e company, though bound to a high degree of care, did not insure his .safety. He was not an infant nor non compos. The liability of . the company was conditioned upon the exercise of reasonable and proper care and caution on his part. - Without the latter, the former could not arise. He and another who rode beside him were the only persons hurt upon the train. All those in the box-car^where he should have been, were uninjured. He would have escaped also if he had been there; His injury was .due- to his own recklessness and folly. He was, himself the author of his misfortune. This is shown with as near an approach to a demonstration as> any thing short of mathematics will permit; The case is thus'clearly brought within the second of the predicates, of mutual negligence, we have laid down. Hickey v. Boston & Lowell Railroad Co., 14 Allen (Mass.), 429; Todd v. Old Colony Railroad Co., 3 id. 18; s. c. 7 id. 207; Gavett v. M. & L. Railroad Co., 16 Gray (Mass.), 501; Lucas v. N. B. & T. Railroad Co., 6 id. 64; Ward v. Railroad Company, 2 Abb. (N. Y.) Pr. n. s. 411; Galena & Chicago Union Railroad Co. v. Yarwood, 15 Ill. 468; Dogget v. Illinois Central Railroad Co., 34 Iowa, 284. The plaintiff was not entitled to recover.. It follows that .the court erred in refusing the instruction asked upon this subject. If the company had prayed the court to direct the jury to return a verdict for the defendant, it would have been the -duty of the court to give such direction, and error to refuse. Gavett v. M. & L. Railroad. Co., supra; Merchants' Bank v. State Bank, 10 Wall. 604; Pleasants v. Fant, 22 id. 121. Judgment reversed, and.-the cause remanded with directions to isstie a venire de -novo, and to- proceed in conformity with this opinion.

6285260

Cahoon v. Alton Packaging Corp. et al.

Cahoon v. Alton Packaging Corp.

1987-06-15

No. 86-1728

922

922

482 U.S. 922

482

United States Reports

Supreme Court of the United States

United States

2021-08-11T02:37:54.446468+00:00

CAP

Cahoon v. Alton Packaging Corp. et al.

No. 86-1728. Cahoon v. Alton Packaging Corp. et al.

39

250

Appeal from App. Ct. Ill., 5th Dist., dismissed for want of properly presented federal question. Justice Brennan and Justice Stevens would note probable jurisdiction and set case for oral argument.

6273221

Henry Van Hummell, Inc. v. Commissioner of Internal Revenue

Henry Van Hummell, Inc. v. Commissioner

1967-03-13

No. 839

956

956

386 U.S. 956

386

United States Reports

Supreme Court of the United States

United States

2021-08-10T22:16:01.990832+00:00

CAP

Henry Van Hummell, Inc. v. Commissioner of Internal Revenue.

No. 839. Henry Van Hummell, Inc. v. Commissioner of Internal Revenue. Morrison Shafroth for petitioner. Solicitor General Marshall, Assistant Attorney General Rogovin and Meyer Rothwacks for respondent.

33

238

C. A. 10th Cir. Certiorari denied.

11162256

Headspeth v. Mercedes-Benz Credit Corp. et al.

Headspeth v. Mercedes-Benz Credit Corp.

1998-11-30

No. 98-6261

1024

1024

525 U.S. 1024

525

United States Reports

Supreme Court of the United States

United States

2021-08-10T17:32:46.315718+00:00

CAP

Headspeth v. Mercedes-Benz Credit Corp. et al.

No. 98-6261. Headspeth v. Mercedes-Benz Credit Corp. et al.

15

94

Ct. App. D. C. Certiorari denied.

6230113

In re Campbell; and In re Weser

In re Campbell

1982-06-14

No. 81-6715; No. 81-6760

1116

1116

457 U.S. 1116

457

United States Reports

Supreme Court of the United States

United States

2021-08-10T19:20:07.253009+00:00

CAP

In re Campbell; and In re Weser.

No. 81-6715. No. 81-6760. In re Campbell; and In re Weser.

18

105

Petitions for writs of ha-beas corpus denied.

8975326

Smith v. Reid, Warden, et al.

Smith v. Reid

2003-10-14

No. 03-6084

959

959

540 U.S. 959

540

United States Reports

Supreme Court of the United States

United States

2021-08-10T23:00:48.596763+00:00

CAP

Smith v. Reid, Warden, et al.

No. 03-6084. Smith v. Reid, Warden, et al.

14

78

C. A. 10th Cir. Certiorari denied.

3503800

Anup SHRESTHA, Petitioner, v. Eric H. HOLDER, Jr., Attorney General, Respondent

Shrestha v. Holder

2010-01-05

No. 08-74751

1034

1049

590 F.3d 1034

590

Federal Reporter 3d Series

United States Court of Appeals for the Ninth Circuit

United States

2021-09-21T20:02:18.861595+00:00

Harvard

Before: RONALD M. GOULD and RICHARD C. TALLMAN, Circuit Judges, and ROGER T. BENITEZ, District Judge.

Anup SHRESTHA, Petitioner, v. Eric H. HOLDER, Jr., Attorney General, Respondent.

Anup SHRESTHA, Petitioner, v. Eric H. HOLDER, Jr., Attorney General, Respondent. No. 08-74751. United States Court of Appeals, Ninth Circuit. Submitted Dec. 10, 2009. Filed Jan. 5, 2010. Patrick Cantor, Buttar & Cantor LLP, Tukwila, WA, for petitioner Anup Shrestha. Tony West, Assistant Attorney General, Civil Division, Anthony C. Payne, Senior Litigation Counsel, Office of Immigration Litigation, and Colette J. Winston, Attorney, Office of Immigration Litigation, for respondent Eric H. Holder, Jr. Before: RONALD M. GOULD and RICHARD C. TALLMAN, Circuit Judges, and ROGER T. BENITEZ, District Judge. The panel unanimously finds this case suitable for decision without oral argument. See Fed. R.App. P. 34(a)(2). The Honorable Roger T. Benitez, United States District Judge for the Southern District of California, sitting by designation.

7037

44511

GOULD, Circuit Judge: OPINION Petitioner Anup Shrestha petitions for review of the Board of Immigration Appeals' ("BIA") order dismissing his appeal of an immigration judge's ("IJ") denial of his application for asylum, withholding of removal, and protection under the United Nations Convention Against Torture ("CAT"). We dismiss the petition for review as to Shrestha's asylum claim for lack of jurisdiction. As to Shrestha's remaining claims, we have jurisdiction under 8 U.S.C. § 1252, and we deny the petition for review. I Shrestha is a native and citizen of Nepal who was admitted to the United States as a nonimmigrant student on a temporary basis in November 1998. Shrestha attended community college until December 2001, after which he stopped going to school. An immigration enforcement agent served Shrestha in April 2007 with a notice to appear and at a hearing, Shrestha, through counsel, conceded removability- In July 2007, Shrestha applied for asylum, withholding of removal, and protection under the CAT. Shrestha explained in his asylum application that, at his family home in Nepal, he "was beaten by the Maoist[s] with a rod and bamboos" after "[tjhey came to [his] house to recruit[him]," and that he is "afraid that the Maoist[s] may again attaek[him] and force [him] to join them." Shrestha later filed a declaration in support of his application for asylum, withholding of removal, and CAT relief, describing his confrontation with the Maoists and subsequent events in more detail. Shrestha declared as follows: In October 1998, five individuals that identified themselves as Maoists came to his family's home in Nepal with rods and bamboo. The Maoists tried to recruit him to join their cause of insurgency against the Nepalese government. When Shrestha refused, an individual grabbed Shrestha by the arms. Shrestha panicked, tried to escape, but was caught and beaten. Shrestha lost consciousness and awoke in a hospital. When Shrestha was released from the hospital a week later, Shrestha's parents asked him to stay with his uncle, which Shrestha did until he came to the United States one month later in November 1998. After coming to the United States, Shrestha attended a community college. When Shrestha lost his job in 2001, he quit school because he could no longer afford the tuition, and consequently he lost his student visa status. Shrestha's parents asked him not to come back to Nepal because the Maoist revolution was at its peak and "Maoists ha[d] been inquiring about [his] whereabouts frequently." At a hearing before the IJ, Shrestha described the confrontation he had with the Maoists at his family home. Shrestha explained that he did not ask his parents for a statement in support of his application for relief because they are illiterate and, in any event, Shrestha concluded that his parents would not be able to help because they too feared the Maoists. Shrestha said that the Maoists had not confronted him except the single time, that none of his other family members had experienced problems with the Maoists, and that he was aware of only two instances when the Maoists had inquired about him since the confrontation, the most recent of which was in 2001. In October 2007, the IJ denied all relief that Shrestha sought. The IJ concluded that Shrestha's asylum claim was time barred. The IJ denied Shrestha's claims for asylum and for withholding of removal on three alternative substantive grounds. First, the IJ found Shrestha not credible because, in response to questions concerning his problems with the Maoists, Shrestha was at times unresponsive, and his testimony was undetailed, inconsistent, and uncorroborated by a supportive statement from Shrestha's parents, with whom Shrestha had regular communication. Without credible testimony, Shrestha could not show that he was a refugee eligible for asylum and withholding of removal. Second, the IJ denied relief on the basis of materially changed country conditions in light of recent political developments in Nepal including a peace accord between the Maoists and the Nepalese government. Third, the IJ denied relief because Shrestha could be expected to relocate elsewhere in Nepal given that Shrestha had no problems with the Maoists during the time he was living with his uncle. As to Shrestha's CAT claim, the IJ concluded that Shrestha had not shown that there was a "clear probability of the risk of torture" if Shrestha returned to Nepal. In October 2008, the BIA affirmed the IJ's decision and dismissed Shrestha's appeal in a two-page order. The BIA agreed with the IJ that Shrestha's asylum application was time barred. The BIA found no clear error in the IJ's adverse credibility finding and concluded that a supportive statement from Shrestha's parents was reasonably expected. On the basis of the IJ's adverse credibility finding and Shrestha's failure to provide a corroborative affi davit from his parents, the BIA concluded that Shrestha had not met his burden of proof for asylum, and therefore Shrestha could not meet the higher burden of proof for withholding of removal. The BIA did not address the IJ's alternative conclusions that denial of asylum and withholding of removal relief was also warranted on the basis of changed country conditions and the possibility of relocation. The BIA agreed with the IJ that Shrestha was not entitled to CAT protection because Shrestha did not show that he would be subjected to torture on return to Nepal. Shrestha timely petitioned for review. He has conceded on appeal that his asylum claim was time barred. Therefore, we lack jurisdiction to review Shrestha's petition as to his asylum claim and we dismiss that part of Shrestha's petition for review. See Ramadan v. Gonzales, 479 F.3d 646, 649-50 (9th Cir.2007). We next address Shrestha's claims for withholding of removal and for CAT relief, over which we do have jurisdiction. II When the BIA conducts its own review of the evidence and law rather than adopting the IJ's decision, our review "is limited to the BIA's decision, except to the extent that the IJ's opinion is expressly adopted." Hosseini v. Gonzales, 471 F.3d 953, 957 (9th Cir.2006) (quoting Cordon-Garcia v. INS, 204 F.3d 985, 990 (9th Cir.2000)). But when, as here, the BIA's "phrasing seems in part to suggest that it did conduct an independent review of the record," but the BIA's analysis on the relevant issues is confined to a "simple statement of a conclusion," we "also look to the IJ's oral decision as a guide to what lay behind the BIA's conclusion." Avetova-Elisseva v. INS, 213 F.3d 1192, 1197 (9th Cir.2000). Ill We review for substantial evidence the BIA's determination that Shrestha is not eligible for withholding of removal. Ahmed v. Keisler, 504 F.3d 1183, 1191 (9th Cir.2007). The BIA affirmed the IJ's denial of Shrestha's withholding of removal claim on the basis of the IJ's adverse credibility determination, and we review adverse credibility determinations under the substantial evidence standard. Soto-Olarte v. Holder, 555 F.3d 1089, 1091 (9th Cir.2009). To qualify for withholding of removal, a petitioner must establish a "clear probability" that his "life or freedom would be threatened" if he returned to his homeland on account of "race, religion, nationality, membership in a particular social group, or political opinion." Ahmed, 504 F.3d at 1199 (citations omitted). Eligibility for withholding of removal can be established by demonstrating past persecution, see id., or by "demonstratfing] . a subjective fear of persecution in the future . that . is objectively reasonable," Wakkary v. Holder, 558 F.3d 1049, 1060 (9th Cir.2009). A For applications for asylum, withholding of removal, and CAT relief made on or after May 11, 2005, like Shrestha's, the REAL ID Act created the following new standards governing adverse credibility determinations: Considering the totality of the circumstances, and all relevant factors, a trier of fact may base a credibility determination on the demeanor, candor, or responsiveness of the applicant or witness, the inherent plausibility of the applicant's or witness's account, the consistency between the applicant's or witness's written and oral statements ., the internal consistency of each such statement, the consistency of such statements with other evidence of record ., and any inaccuracies or falsehoods in such statements, without regard to whether an inconsistency, inaccuracy, or falsehood goes to the heart of the applicant's claim, or any other relevant factor. Pub.L. No. 109-13, Div. B, § 101(a)(3), 101(c), 101(d), 119 Stat. 231, 303 (2005) (codified at 8 U.S.C. § 1158(b)(l)(B)(iii) (asylum); 1231(b)(3)(C) (adopting the standard in 8 U.S.C. § 1158(b)(1)(B) for withholding of removal); 1229a(e)(4)(C) (all other relief)). The Ninth Circuit has only recently begun to apply the new provisions to adverse credibility determinations. See, e.g., Malkandi v. Holder, 576 F.3d 906 (9th Cir. 2009). It is plain from the REAL ID Act's terms that an adverse credibility determination must be made after considering "the totality of circumstances, and all relevant factors." It is also plain that relevant factors will include demeanor, candor, responsiveness of the applicant or witness, the inherent plausibility of the applicant or witness's account, consistency between the applicant or witness's written and oral statements, internal consistency of each statement, and consistency of statements with other evidence. The above list is not exhaustive because the trier of fact may also consider "any other relevant factor." While the above describes the statutory factors relevant to deciding credibility based on total circumstances, the statute does not provide further guidance on the weight to be given such factors. In light of the sparsity of Ninth Circuit precedent construing the REAL ID Act in this context, we conclude that it will be helpful to engage in a detailed analysis of how the REAL ID Act guides our review of adverse credibility determinations. As stated above, the REAL ID Act requires that credibility determinations be made on the basis of the "totality of the circumstances, and all relevant factors." 8 U.S.C. § 1158(b)(l)(B)(iii). The Act lists specified factors that may be considered such as "demeanor," "candor," "responsiveness," "plausibility," "inconsistency," "inaccuracy," and "falsehood," but this list is not exhaustive. IJs may look beyond the listed factors to any "relevant factor" in assessing credibility under the "totality of the circumstances." Id. For example, even though lack of detail is not expressly listed as a factor that may be considered, the pre-REAL ID Act practice of looking to the level of detail of the claimant's testimony to assess credibility, see Singhr-Kaur v. INS, 183 F.3d 1147, 1153 (9th Cir.1999), remains viable under the REAL ID Act as it is a "relevant factor." 8 U.S.C. § 1158(b)(l)(B)(iii). The same logic holds as to other relevant factors not listed under the REAL ID Act but previously considered in assessing credibility. While the REAL ID Act's "totality of the circumstances" standard is permissive as to the breadth of factors that may form the basis of an adverse credibility determination, the totality of the circumstances approach also imposes the requirement that an IJ not cherry pick solely facts favoring an adverse credibility determination while ignoring facts that undermine that result. The Seventh Circuit, applying the REAL ID Act, cautioned that an "IJ cannot selectively examine evidence in determining credibility, but must present a reasoned analysis of the evidence as a whole." Hanaj v. Gonzales, 446 F.3d 694, 700 (7th Cir.2006). The Third Circuit similarly cautioned as follows: Although we don't expect an Immigration Judge to search for ways to sustain an alien's testimony, neither do we expect the judge to search for ways to undermine and belittle it. Nor do we expect a judge to selectively consider evidence, ignoring that evidence that corroborates an alien's claims and calls into question the conclusion the judge is attempting to reach. Shah v. Att'y Gen. of U.S., 446 F.3d 429, 437 (3d Cir.2006) (internal quotation marks and citation omitted). Credibility determinations under the REAL ID Act must therefore "be 'reasonable' and 'take into consideration the individual circumstances' of the applicant." Lin v. Mukasey, 521 F.3d 22, 28 n. 3 (1st Cir.2008) (quoting H.R.Rep. No. 109-72, at 167 (2005), reprinted in 2005 U.S.C.C.A.N. 240, 292); see also Hanaj, 446 F.3d at 700 (stating that an IJ "must present a reasoned analysis of the evidence as a whole") (emphasis added). Thus the REAL ID Act imports a "rule of reason" into the assessment of the standard governing an IJ's credibility determination. Doubtless the REAL ID Act requires a healthy measure of deference to agency credibility determinations. In Jibril v. Gonzales, 423 F.3d 1129, 1138 n. 1 (9th Cir.2005), we stated that the REAL ID Act is "a welcome corrective" and "in the future only the most extraordinary circumstances will justify overturning an adverse credibility determination." In Kaur v. Gonzales, 418 F.3d 1061, 1064 n. 1 (9th Cir.2005), we stated that after passage of the REAL ID Act, "our review of an IJ's adverse credibility finding is significantly restricted." The deference that the REAL ID Act requires makes sense because IJs are in the best position to assess demeanor and other credibility cues that we cannot readily access on review. See H.R.Rep. No. 109-72, at 167 ("[A]n immigration judge alone is in a position to observe an alien's tone and demeanor, to explore inconsistencies in testimony, and to apply workable and consistent standards in the evaluation of testimonial evidence. He [or she] is, by virtue of his [or her] acquired skill, uniquely qualified to decide whether an alien's testimony has about it the ring of truth." (quoting Sarvia-Quintanilla v. INS, 767 F.2d 1387, 1395 (9th Cir.1985))). We have highlighted the pragmatic reasons for deference to agency credibility determinations in the context of the similarly situated administrative law judge as follows: Weight is given [to] the administrative law judge's determinations of credibility for the obvious reason that he or she sees the witnesses and hears them testify, while the Board and the reviewing court look only at cold records. All aspects of the witness's demeanor — including the expression of his countenance, how he sits or stands, whether he is inordinately nervous, his coloration during critical examination, the modulation or pace of his speech and other non-verbal communication — may convince the observing trial judge that the witness is testifying truthfully or falsely. These same very important factors, however, are entirely unavailable to a reader of the transcript, such as the Board or the Court of Appeals. Mendoza Manimbao v. Ashcroft, 329 F.3d 655, 662 (9th Cir.2003) (alteration in original) (internal quotation marks and citations omitted). Despite our recognition that agency credibility determinations deserve substantial deference, the REAL ID Act does not give a blank check to the IJ enabling him or her to insulate an adverse credibility determination from our review of the reasonableness of that determination. For example, an IJ normally may not rely on nothing more than a vague reference to the "totality of the circumstances" or recitation of naked conclusions that a petitioner's testimony was inconsistent or implausible, that the petitioner was unresponsive, or that the petitioner's demeanor undermined the petitioner's credibility. We have consistently required that the IJ state explicitly the factors supporting his or her adverse credibility determination. See Gui v. INS, 280 F.3d 1217, 1225 (9th Cir.2002) ("Although the substantial evidence standard is deferential, the IJ must provide a specific cogent reason for the adverse credibility finding." (citation and internal quotation marks omitted)). This rule is not altered by the REAL ID Act and is warranted: "Boilerplate opinions, which set out general legal standards yet are devoid of statements that evidence an individualized review of the petitioner's contentions and circumstances, neither afford the petitioner the . review to which he or she is entitled, nor do they provide an adequate basis for this court to conduct its review." Castillo v. INS, 951 F.2d 1117, 1121 (9th Cir.1991). As a corollary principle, we have concluded that the better practice is for the agency to provide specific instances in the record that form the basis of the agency's adverse credibility determination. Thus, for example, "[t]o support an adverse credibility determination based on unresponsiveness, the BIA must identify particular instances in the record where the petitioner refused to answer questions asked of him." Singh v. Ashcroft, 301 F.3d 1109, 1114 (9th Cir.2002) (citation omitted). Similarly, we will reverse adverse credibility determinations based on boilerplate demeanor findings, see Paramasamy v. Ashcroft, 295 F.3d 1047, 1048-50 (9th Cir.2002), because the IJ's demean- or findings should specifically point out the noncredible aspects of the petitioner's demeanor, Arulampalam v. Ashcroft, 353 F.3d 679, 685-87 (9th Cir.2003). The REAL ID Act did not strip us of our ability to rely on the institutional tools that we have developed, such as the requirement that an agency provide specific and cogent reasons supporting an adverse credibility determination, to aid our review. In our first opinion applying the REAL ID Act to credibility determinations, we stated that the IJ must still "provide 'specific and cogent reasons' in support of an adverse credibility determination." Malkandi, 576 F.3d at 917 (quoting He v. Ashcroft, 328 F.3d 593, 595 (9th Cir.2003)). At least one other circuit has reached the same conclusion. See Chen v. U.S. Att'y Gen., 463 F.3d 1228, 1231 (11th Cir.2006) (per curiam) (applying the REAL ID Act and stating that "the IJ must offer specific, cogent reasons for the [adverse credibility] finding"). Requiring specificity on the part of the IJ is also consistent with the legislative history expressing the intent of Congress that IJs will describe the factors forming the basis of their credibility findings. H.R.Rep. No. 109-72, at 167 ("Congress expects that the trier of fact will describe those factors that form the basis of the trier's opinion. This is true even where the trier of fact bases a credibility determination in part or in whole on the demeanor of the applicant."). The REAL ID Act implemented an important substantive change concerning the kinds of inconsistencies that may give rise to an adverse credibility determination. Inconsistencies no longer need to "go to the heart" of the petitioner's claim to form the basis of an adverse credibility determination. 8 U.S.C. § 1158(b)(l)(B)(iii). As a threshold matter, an IJ may consider any inconsistency. As one commentator has suggested, "That immigration judges have the power to consider any inconsistency, however, is quite distinct from the issue of whether the inconsistencies cited support an adverse credibility determination." Scott Rempell, Credibility Assessments and the REAL ID Act's Amendments to Immigration Law, 44 Tex. Int'l L.J. 185, 206 (2008). There is a measure of truth in that observation. To support an adverse credibility determination, inconsistencies must be considered in light of the "totality of the circumstances, and all relevant factors." 8 U.S.C. § 1158(b)(l)(B)(iii); see Kadia v. Gonzales, 501 F.3d 817, 822 (7th Cir.2007) ("[Under the REAL ID Act, t]he immigration judge may consider inaccuracies or falsehoods that do not go to the heart of the asylum applicant's claim, but he can do so only as part of his consideration of 'the totality of the circumstances, and all relevant factors.' "). The REAL ID Act's charge that inconsistencies be considered in the context of the total circumstances carries with it important implications. First, an utterly trivial inconsistency, such as a typographical error, will not by itself form a sufficient basis for an adverse credibility determination. See Hassan v. Holder, 571 F.3d 631, 637 (7th Cir.2009) ("Although the REAL ID Act requires a highly deferential review of credibility findings, Immigration Judges may not rely on inconsistencies that are completely trivial . " (citation omitted)); Kadia, 501 F.3d at 822 (stating in dicta that the IJ "cannot discredit otherwise persuasive testimony because of a misspelling in the asylum application"). Mindful of the legitimate impact that even minor inconsistencies may have on credibility, we conclude only that trivial inconsistencies that under the total circumstances have no bearing on a petitioner's veracity should not form the basis of an adverse credibility determination. Second, in evaluating inconsistencies, the relevant circumstances that an IJ should consider include the petitioner's explanation for a perceived inconsistency, see Soto-Olarte, 555 F.3d at 1091, and other record evidence that sheds light on whether there is in fact an inconsistency at all. To ignore a petitioner's explanation for a perceived inconsistency and relevant record evidence would be to make a credibility determination on less than the total circumstances in contravention of the REAL ID Act's text. In summary, we conclude that under the REAL ID Act, IJs must "provide specific and cogent reasons in support of an adverse credibility determination." Malkandi, 576 F.3d at 917 (internal quotation marks omitted). In assessing the "totality of the circumstances," an IJ should discuss which statutory factors, including but not limited to "demeanor," "candor," "responsiveness," "plausibility," "inconsistency," "inaccuracy," and "falsehood," form the basis of the adverse credibility determination. 8 U.S.C. § 1158(b)(l)(B)(iii). An IJ may also rely on any other relevant factor. For each factor forming the basis of an adverse credibility determination, the IJ should refer to specific instances in the record that support a conclusion that the factor undermines credibility. See, e.g., Singh, 301 F.3d at 1114 (unresponsiveness); Arulampalam, 353 F.3d at 685-87 (demeanor). When an inconsistency is cited as a factor supporting an adverse credibility determination, that inconsistency should not be a mere trivial error such as a misspelling, Hassan, 571 F.3d at 637, and the petitioner's explanation for the inconsistency, if any, should be considered in weighing credibility, Soto-Olarte, 555 F.3d at 1091. Because an adverse credibility determination under the REAL ID Act must be based on the "totality of the circumstances," the IJ also should consider and address, as necessary or otherwise appropriate, relevant evidence that tends to contravene a conclusion that a given factor undermines credibility. Hanaj, 446 F.3d at 700. On review of agency credibility determinations, the broad permissible standards that may warrant an adverse credibility determination must be assessed under a rule of reason. See Lin, 521 F.3d at 28 n. 3; Hanaj, 446 F.3d at 700. This rule-of-reason analysis should give ample deference to the responsible agency, which has specialized expertise and the opportunity to observe the testimony. But the analysis on review must also take into account the totality of circumstances, and should recognize that the normal limits of human understanding and memory may make some inconsistencies or lack of recall present in any witness's case. B Having discussed how the REAL ID Act guides our credibility inquiry, we turn to application of the standard to the facts of this case. 1. Unresponsiveness The IJ concluded that Shrestha "had no response" to questions concerning the Maoists' continued interest in him. The BIA similarly concluded that Shrestha was "at times, nonresponsive." The REAL ID Act expressly permits the agency to base a credibility determination on the "responsiveness of the applicant or witness." 8 U.S.C. § 1158(b)(l)(B)(iii). As discussed above, the REAL ID Act did not alter the requirement that the IJ must identify specific instances, supported by the record, where the petitioner did not respond. Singh, 301 F.3d at 1114. Shrestha argues that neither the BIA nor the IJ identified particular instances in the record where Shrestha was unresponsive. We disagree. The agency is not required to provide a pinpoint citation to the record, but rather to "identify particular instances in the record" where the petitioner was unresponsive. Id. (emphasis added). The IJ did just that. The IJ did not simply state that Shrestha was unresponsive, but that Shrestha was unresponsive to questions concerning "whether anyone may have been looking for him since he was last in Nepal in November of 1998." The IJ, after noting a "long pause" in Shrestha's previous answer, asked whether Shrestha "ha[d] any idea when anybody was supposedly looking for you?" The IJ, unable to elicit a comprehensible answer, asked again: "If you have an idea when anybody was looking for you, tell me when.... You've given ambiguous responses here. I don't understand what you're saying." The IJ stated, "The record will reflect that there's a long pause. The Respondent's not saying anything." Shrestha never responded to these queries, and finally the IJ abandoned that line of questioning. The IJ's specificity in pointing to this instance of unresponsiveness went well beyond the type of "general statement that the petitioner was unresponsive" that Singh was concerned with. Id. (internal quotation marks omitted). This instance of blatant and unexplained unresponsiveness supports the IJ's adverse credibility determination. But there is more. The record also reflects that Shrestha was unresponsive in other instances, though these instances were not specifically identified by the IJ or BIA in their decisions. When asked why he did not list his uncle's address as his most recent address before coming to the United States, Shrestha started to answer, "But I was just...." The IJ, apparently not satisfied that an answer was forthcoming, asked, "Is there an answer?" Later, when Shrestha's counsel asked him whether there was "anything else which [they] did not cover" or that Shrestha "want[ed] to . tell the Judge," Shrestha gave no reply, and the IJ stated, "The record will reflect silence." When the IJ asked why Shrestha did not "follow the instructions by [providing specific dates, places and descriptions] in the application [for relief]," Shrestha again gave no reply, and the IJ added, "Let the record reflect that there is no response." While neither the IJ nor the BIA specifically referred to these instances of unresponsiveness in rendering their decisions, the record's demonstration that Shrestha's unresponsiveness was a pattern throughout the hearing is one of the circumstances that the REAL ID Act entitles the agency to consider in assessing Shrestha's credibility. 2. Lack of detail The BIA concluded that Shrestha's "undetailed . testimony," among other reasons, supported the IJ's adverse credibility finding. The IJ noted that Shrestha had provided "no particular details" concerning the Maoists' continued interest in him. Shrestha supplied only vague assertions that Maoists had been inquiring about him and gave few details. The most detailed testimony Shrestha provided at the hearing was that "[t]he first [time the Maoists inquired about me] was like a week after I came back [to the United States] again [in 1998]," and "[t]he second time [the Maoists inquired about me] . was once when I went out of status, like in December of 2001, when I quit school." But Shrestha did not identify the names of any of the Maoists or describe them in any way. Nor did he state how many were inquiring about him, why they were looking for him, what they wanted, why he thought then-interest in him persisted given that they had not inquired about him since 2001, or why he continued to fear the Maoists in light of their apparent loss of interest in him. The IJ gave Shrestha an opportunity to supplement his responses to provide more detail concerning any "fear [he has] of anything bad happening to [him] or has happened to[him]," but Shrestha declined to do so. 3. Inconsistencies Both the BIA and IJ noted that Shrestha had provided inconsistent testimony and equivocated. The IJ concluded that Shrestha claimed alternatively, and inconsistently, to have lived most recently before coming to the United States with both his parents and his uncle. The IJ also concluded that Shrestha's hearing testimony that Maoists had inquired about him on two occasions in 1998 and 2001 was inconsistent with his declaration testimony that "Maoists have been inquiring about [his] whereabouts frequently." Shrestha cites Chebchoub v. INS, 257 F.3d 1038, 1043 (9th Cir.2001), for the proposition that any inconsistencies that form the basis of an adverse credibility determination must go to the heart of the petitioner's claim and Vilorio-Lopez v. INS, 852 F.2d 1137, 1142 (9th Cir.1988), for the proposition that minor inconsistencies that reveal nothing about a petitioner's fear for his or her safety are insufficient. Shrestha is mistaken to rely on these cases as they are both pre-REAL ID Act cases. "[U]nder the REAL ID Act credibility findings no longer need to go 'to the heart of the applicant's claim.' " Malkandi, 576 F.3d at 918 (quoting 8 U.S.C. § 1158(b)(l)(B)(iii)). The explicit statutory language and purpose behind the statutory change totally demolish Shrestha's argument that inconsistencies must go to the heart of his claim. When the IJ asked Shrestha about his inconsistent response regarding with whom he had stayed before coming to the United States, Shrestha explained that his stay with his uncle was only temporary and for one month. For this reason, he said that he gave his parents' address, not his uncle's, in his application for relief. The IJ and BIA did not consider Shrestha's explanation. Even if there is some slight inconsistency between Shrestha providing his parents' address as his most recent address and stating that he had stayed with his uncle temporarily, it is too trivial, under the total circumstances, alone to form the basis of the adverse credibility determination. On the other hand, the IJ's inconsistency determination regarding Shrestha's accounts of the frequency with which the Maoists had inquired about him is supported by substantial evidence. This inconsistency is not merely trivial. Al though inconsistencies no longer need to go to the heart of the petitioner's claim, when an inconsistency is at the heart of the claim it doubtless is of great weight. Shrestha's asserted fear of the Maoists formed the crux of his application for relief. Despite having the opportunity to do so, Shrestha provided no explanation for the inconsistency in his testimony about the Maoists' inquiries as to his whereabouts. In light of the total circumstances, Shrestha's inability to consistently describe the underlying events that gave rise to his fear was an important factor that could be relied upon by the IJ in making an adverse credibility determination. 4. Corroboration Under the REAL ID Act, we may not reverse the IJ's and BIA's conclusion that Shrestha should have been able to obtain a supportive affidavit from his parents to corroborate his claims concerning the Maoists unless "a reasonable trier of fact is compelled to conclude that such corroborating evidence is unavailable." 8 U.S.C. § 1252(b)(4). The REAL ID Act expressly permits the agency to require an applicant to "provide evidence that corroborates otherwise credible testimony ., unless the applicant does not have the evidence and cannot reasonably obtain the evidence." 8 U.S.C. § 1158(b)(l)(B)(ii). This differs from our pre-REAL ID Act rale that the agency may not require corroborating evidence in the absence of an explicit adverse credibility determination. See Aden v. Holder, 589 F.3d 1040, 1043-44, 2009 WL 4877951, at * 2-3, (9th Cir. 2009) (concluding that "Congress abrogated" prior precedent "that corroboration cannot be required from an applicant who testified credibly"). Shrestha cites Sidhu v. INS, 220 F.3d 1085 (9th Cir.2000), for the proposition that "it is inappropriate to base an adverse credibility determination on an applicant's inability to obtain corroborating affidavits from relatives or acquaintances living outside of the United States" because "such corroboration is almost never easily available." Id. at 1091-92. We reject Shrestha's reliance on Sidhu. First, Sidhu states a general rule that admits exceptions. Id. (stating that affidavits from those outside the United States are "almost never easily available" (emphasis added)); see also Kaur v. Ashcroft, 379 F.3d 876, 890 (9th Cir.2004) ("It is generally inappropriate . 'to base an adverse credibility determination on an applicant's inability to obtain corroborating affidavits from relatives or acquaintances living outside of the United States — such corroboration is almost never easily available.' " (emphasis added) (quoting Sidhu, 220 F.3d at 1091-92)). Second, and more importantly, Sidhu applied the pre-REAL ID Act standard. The REAL ID Act changed the standard governing when a trier of fact may require corroborating evidence from where the evidence is "easily available" to where the evidence is "reasonably obtainable," see 8 U.S.C. § 1158(b)(l)(B)(ii), and imposed a heightened standard of review requiring that we reverse an agency's determination concerning the availability of corroborative evidence only if a reasonable trier of fact would be compelled to conclude that such corroborating evidence is unavailable, 8 U.S.C. § 1252(b)(4). It was within Congress's power to make such changes in the standards governing corroborating evidence. Here, the BIA concluded that corroborating evidence was reasonably obtainable (the BIA used the phrase "reasonably expected"), and a reasonable trier of fact would not be compelled to conclude that corroborating evidence was unavailable. See 8 U.S.C. § 1252(b)(4). Shrestha's parents were not unreachable. They were not, for example, living in a remote village accessible only by dirt roads. To the contrary, Shrestha's parents were living in the capital city of Kathmandu and Shrestha was in regular contact with them. While Shrestha may have explained some difficulties in obtaining an affidavit, including his parents' illiteracy and their fear of the Maoists, that is not sufficient for us to conclude that a reasonable trier of fact would be compelled to conclude that evidence corroborating the situation with the Maoists in Nepal was unavailable, as is now required by the REAL ID Act. In sum, the BIA's conclusion that the IJ properly denied Shrestha withholding of removal is supported by substantial evidence. The adverse credibility determination by the IJ relied on factors explicitly permitted by the REAL ID Act including unresponsive and undetailed testimony, and inconsistent testimony for which there was no explanation or corroboration. In the totality of circumstances it was a reasonable adverse credibility determination, grounded in the record and based on real problems with Shrestha's testimony, not mere trivialities. Absent Shrestha's discredited testimony, there is no objective evidence that establishes a "clear probability" that upon return to Nepal Shrestha will be subject to persecution based on a protected ground. See Ahmed, 504 F.3d at 1199 (citation omitted). IV We review for substantial evidence the BIA's determination that Shrestha is not eligible for protection under CAT. See Silaya v. Mukasey, 524 F.3d 1066, 1070 (9th Cir.2008) (citation omitted). We review the BIA's interpretation of purely legal questions de novo. See Zheng v. Ashcroft, 332 F.3d 1186, 1193 (9th Cir. 2003). The IJ denied Shrestha's CAT claim because Shrestha "ha[d] not shown any 'clear probability' of the risk of 'torture' if he had to return to Nepal." The BIA similarly concluded that Shrestha "failed to demonstrate that he would be subjected to torture by or with the acquiescence of any government ofiicial if returned to Nepal." To receive CAT protection, a petitioner must prove that it is "more likely than not" that he or she would be tortured if removed. 8 C.F.R. § 1208.16(c)(2); Kamalthas v. INS, 251 F.3d 1279, 1283 (9th Cir.2001). An adverse credibility determination is not necessarily a death knell to CAT protection. See Kamalthas, 251 F.3d at 1284 ("[W]e are not comfortable with allowing a negative credibility determination in the asylum context to wash over the torture claim . " (quoting Mansour v. INS, 230 F.3d 902, 909 (7th Cir.2000))). But when the petitioner's "testimony [is] found not credible, to reverse the BIA's decision [denying CAT protection,] we would have to find that the reports alone compelled the conclusion that [the petitioner] is more likely than not to be tortured." Almaghzar v. Gonzales, 457 F.3d 915, 922-23 (9th Cir.2006). When Shrestha's CAT claim is denuded of his discredited testimony, all that remains is the background material he provided concerning conditions in Nepal. The background materials establish the presence of violent Maoists in Nepal. For example, in early 2006, "Maoist forces abducted civilians and committed unlawful killings and torture." But the materials also establish, and Shrestha acknowledged, that as of May 2006 there was a peace accord in place between the Maoists and the Nepalese Government. Furthermore, the materials include a conclusion by the Asylum and Immigration Tribunal that "it would only be in very limited cases that a person would be able to show he or she faces a risk in his or her home area at the hands of the Maoists." Shrestha has not demonstrated that his experience falls within one of those limited cases and the information contained in the background materials does not compel the conclusion that Shrestha is more likely than not to be tortured if he returns to Nepal. Therefore, the BIA's determination that Shrestha is not entitled to CAT protection is supported by substantial evidence. V We DISMISS Shrestha's petition for review as to his asylum claim, and we DENY Shrestha's petition for review of the agency's rejection of his withholding of removal and CAT claims. . Shrestha conceded on appeal that his asylum claim was time barred. . In so doing, the REAL ID Act is like many other statutes. We mention a few examples. In the antitrust context, interpreting § 1 of the Sherman Act, we stated as follows: "The rule of reason weighs legitimate justifications for a restraint against any anticompetitive effects. We review all the facts, including the precise harms alleged to the competitive markets, and the legitimate justifications provided for the challenged practice, and we determine whether the anticompetitive aspects of the challenged practice outweigh its procompetilive effects." Paladin Assocs., Inc. v. Mont. Power Co., 328 F.3d 1145, 1156 (9th Cir.2003) (footnote omitted); see also Bd. of Trade of Chi. v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 62 L.Ed. 683 (1918). Also, in the environmental law context, when evaluating compliance with NEPA, "[w]e apply a 'rule of reason' standard to review the adequacy of an agency's EIS, asking whether an EIS contains a reasonably thorough discussion of the significant aspects of the probable environmental consequences." Friends of Yosemite Valley v. Kempthome, 520 F.3d 1024, 1032-33 (9th Cir.2008) (citation omitted) (alteration in original). We have applied a rule of reason in review of agency action more generally as well. See In re Cal. Power Exch. Corp., 245 F.3d 1110, 1124-25 (9th Cir.2001) (stating that "whether an agency's delay in issuing a final order . warrants] mandamus" under 5 U.S.C. § 706(1) of the Administrative Procedure Act ("APA") requires applying, among other things, "a rule of reason" to "the time agencies take to make decisions"); see also FCC v. Fox Television Stations, Inc., -U.S. -, 129 S.Ct. 1800, 1830, 173 L.Ed.2d 738 (2009) (stating that under the APA, courts have recognized that "agency discretion is not unbounded," and "[i]n so holding, . courts have followed a venerable legal tradition, stretching back at least to the days of Sir Edward Coke" that "discretion" be "limited and bound with the rule of reason and law" (internal citations and quotation marks omitted)). . Rather, concerning credibility, the REAL ID Act's "principal purpose was to eliminate a limitation, elaborated by the Ninth Circuit, on the type of inconsistencies upon which an IJ could rely in assessing credibility." Rivas-Mira v. Holder, 556 F.3d 1, 5 (1st Cir.2009). "The net effect of the neoteric provision was to scrap the 'heart of the matter' rule." Id.; see also Lin, 521 F.3d at 28 n. 3. Thus, the REAL ID Act now permits an IJ to base an adverse credibility determination on any inconsistency "without regard to whether an inconsistency . goes to the heart of the applicant's claim." 8 U.S.C. § 1158(b)(l)(B)(iii). . We do not intend to suggest that under the totality of the circumstances each inconsistency must be material in the sense of important to the petitioner's well-founded fear of persecution; such a requirement would contradict the REAL ID Act's plain text. See Xiu Xia Lin v. Mukasey, 534 F.3d 162, 165 (2d Cir.2008). Indeed, under the REAL ID Act, even minor inconsistencies, in proper circumstances, will support an adverse credibility determination. By persuasive analogy, in the context of administrative proceedings before the Federal Communications Commission, the Supreme Court explained how minor inconsistencies may prove probative of an individual's veracity The fact of concealment may be more significant than the facts concealed. The willingness to deceive a regulatory body may be disclosed by immaterial and useless deceptions as well as by material and persuasive ones. We do not think it is an answer to say that the deception was unnecessary and served no purpose. FCC v. WOKO, Inc., 329 U.S. 223, 227, 67 S.Ct. 213, 91 L.Ed. 204 (1946). Similarly, even a petitioner's minor inconsistencies, when aggregated or when viewed in light of the total circumstances, may undermine credibility. Cf. United States v. Arvizu, 534 U.S. 266, 274-75, 122 S.Ct. 744, 151 L.Ed.2d 740 (2002) (concluding that in the "totality of the circumstances" analysis required for a reasonable-suspicion determination in the Terry context, inferences may be drawn from the cumulative impact of activities that appear innocent when viewed individually). . Nor is the flexibility of Sidhu s rule a mere theoretical possibility: we concluded in Ghebchoub that obtaining an affidavit from a "close relative" living overseas — there, Western Europe — would be "a relatively uncomplicated task" and would "not pose the type of particularized evidentiary burden that would excuse corroboration." 257 F.3d at 1044-45 (citation omitted) (concluding that such corroborating evidence would be easily available and upholding the BIA's conclusion that Chebcoub was not credible because he did not produce it). . Because concluding that the adverse credibility determination is based on substantial evidence is sufficient to deny Shrestha's petition as to withholding of removal, we do not reach the IJ's alternative conclusions (which the BIA did not address) that relief is not warranted due to changed country conditions and the possibility that Shrestha could relocate.

5864115

Heredia Naranjo v. Yarborough, Warden

Naranjo v. Yarborough

2004-06-21

No. 03-9875

922

922

542 U.S. 922

542

United States Reports

Supreme Court of the United States

United States

2021-08-10T22:24:30.200475+00:00

CAP

Heredia Naranjo v. Yarborough, Warden.

No. 03-9875. Heredia Naranjo v. Yarborough, Warden.

13

86

C. A. 9th Cir. Certiorari denied.

12449327

Michael McNeill, Petitioner v. Lanesboro Correctional Administration Staff

McNeill v. Lanesboro Correctional Administration Staff

2010-05-17

No. 09-9619

1194

1194

176 L. Ed. 2d 1194

176

United States Supreme Court Reports, Lawyers' Edition

Supreme Court of the United States

United States

2021-08-11T01:41:11.214267+00:00

CAP

Michael McNeill, Petitioner v. Lanesboro Correctional Administration Staff.

No. 09-9619. Michael McNeill, Petitioner v. Lanesboro Correctional Administration Staff. 560 U.S. 910, 130 S. Ct. 3288, 176 L. Ed. 2d 1194, 2010 U.S. LEXIS 4071. May 17, 2010.

46

278

Petition for writ of cer-tiorari to the United States Court of Appeals for the Fourth Circuit denied.

326103

Roberts v. Kings County Hospital et al., Eckert et al. v. Estate of Eckert, Pirkle et al. v. Ogontz Controls Co. et al.

Roberts v. Kings County Hospital

1995-10-30

No. 94-1465; No. 94-8354; No. 95-45

960

960

516 U.S. 960

516

United States Reports

Supreme Court of the United States

United States

2021-08-10T22:13:30.779835+00:00

CAP

Roberts v. Kings County Hospital et al., Eckert et al. v. Estate of Eckert, Pirkle et al v. Ogontz Controls Co. et al.,

No. 94-1465. No. 94-8354. No. 95-45. Roberts v. Kings County Hospital et al., Eckert et al. v. Estate of Eckert, Pirkle et al v. Ogontz Controls Co. et al.,

45

239

514 U. S. 1083; 514 U. S. 1099; and ante, p. 863. Petitions for rehearing denied.

12266

Martinez v. United States

Martinez v. United States

1993-06-07

No. 92-8560

966

966

508 U.S. 966

508

United States Reports

Supreme Court of the United States

United States

2021-08-10T19:39:38.651661+00:00

CAP

Martinez v. United States.

No. 92-8560. Martinez v. United States.

12

73

C. A. 3d Cir. Certiorari denied.

5930138

Hamilton v. United States

Hamilton v. United States

2011-04-25

No. 10-9735

967

967

563 U.S. 967

563

United States Reports

Supreme Court of the United States

United States

2021-08-11T02:19:20.617866+00:00

CAP

Hamilton v. United States.

No. 10-9735. Hamilton v. United States.

12

74

Ct. App. D. C. Certiorari denied.

6687340

Parfums Corday, Inc., et al. v. United States

Parfums Corday, Inc. v. United States

1941-10-16

No. 5468; Entry No. 31854, etc.

554

555

7 Cust. Ct. 554

7

United States Customs Court Reports

United States Customs Court

United States

2021-08-10T19:16:31.218493+00:00

CAP

Parfums Corday, Inc., et al. v. United States

Parfums Corday, Inc., et al. v. United States No. 5468. Invoices dated Paris, France, May 23, 1939, etc. Certified May 24, 1939, etc. Entered at New York June 1, 1939, etc. Entry No. 31854, etc. (Decided October 16, 1941) Siegel & Mandell (Sidney Mandell of counsel) for the plaintiffs. Charles D. Lawrence, Acting Assistant Attorney General (Daniel I. Auster, special attorney), for the defendant.

565

3431

Oliver, Presiding Judge: The appeals to reappraisement listed in schedule A, hereto attached and made a part hereof, have been submitted for decision upon the following stipulation of counsel for the parties hereto: It is stipulated and agreed, by and between counsel for the respective parties hereto, subject to the approval of the Court, that the merchandise covered by the reappraisements enumerated in Schedule "A", hereto attached and made a part hereof, consists of bottles and jars similar in all material respects to the merchandise that was the subject of United States v. Guerlain, Inc., C. A. D. 146. It is further stipulated and agreed that the said merchandise was appraised upon the cost of production under Section 402 (f) of the Tariff Act of 1930. It is further stipulated and agreed that the issue with respect to said merchandise covered by the reappraisements enumerated in Schedule "A", hereto attached and made a part hereof, is the same as the issue involved in the case of United States v. Guerlain, Inc., supra. It is further stipulated and agreed that the appraised values, less any additions under duress by the importer to meet previous advances made by the Appraiser in similar case's are equal to the cost of materials, fabrication, manipulation, or other process employed in • manufacturing or producing such merchandise plus the usual general expenses in the case of such or similar merchandise (not less than 10 per centum of the costs of materials, fabrication, manipulation or other process employed in manufacturing and producing said merchandise) plus the cost of all containers and coverings of whatever nature, and all other costs, charges, and expenses incident to placing the merchandise in packed condition ready for shipment to the United States, and plus an addition for profit (not less than 8 per centum) equal to the profit.which ordinarily is added to the cost of merchandise of the same general character by manufacturers of producers in the country of manufacture of merchandise of the same class or kind. It is further stipulated and agreed, between the parties hereto, that the record in C. A. D. 146 be incorporated and made a part of the record in the reappraisement eases enumerated on Schedule "A", hereto attached and made a part hereof, and that the reappraisement cases be deemed submitted on this stipulation; the appeals for reappraisement being waived as to all merchandise except bottles and jars. On the agreed facts I find the cost of production, as that value is defined in section 402 (f) of the Tariff Act of 1930, to be the proper basis for the determination of the value of the merchandise here involved, and that as to the bottles and jars such values are the appraised values, less any additions under duress by the importer to meet previous advances made by the appraiser in similar cases. The appeals having been waived insofar as they relate to all other merchandise, to that extent the appeals are hereby dismissed. Judgment will be rendered accordingly.

11369575

Fioravanti v. Yeager, Principal Keeper

Fioravanti v. Yeager

1969-10-13

No. 227

860

860

396 U.S. 860

396

United States Reports

Supreme Court of the United States

United States

2021-08-10T22:53:05.305087+00:00

CAP

Fioravanti v. Yeager, Principal Keeper.

No. 227, Misc. Fioravanti v. Yeager, Principal Keeper.

14

88

C. A. 3d Cir. Certiorari denied.

9303919

Illinois v. Carlson

Illinois v. Carlson

2001-03-05

No. 00-1091

905

905

532 U.S. 905

532

United States Reports

Supreme Court of the United States

United States

2021-08-10T20:38:22.700208+00:00

CAP

Illinois v. Carlson.

No. 00-1091. Illinois v. Carlson.

12

78

App. Ct. Ill., 1st Dist. Certiorari denied.

6657564

Protest 928610-G of D. H. Armaghanian

Protest 928610-G of Armaghanian

1939-01-06

No. 40361

530

530

2 Cust. Ct. 530

2

United States Customs Court Reports

United States Customs Court

United States

2021-08-11T02:43:58.596958+00:00

CAP

Protest 928610-G of D. H. Armaghanian.

January 6, 1939 No. 40361. Protest 928610-G of D. H. Armaghanian.

19

130

Abstract 39919. Application by Government for rehearing denied.

3546354

HUNT CONSTRUCTION GROUP, INC., Appellant v. NATIONAL WRECKING CORPORATION, et al., Appellees

Hunt Construction Group, Inc. v. National Wrecking Corp.

2009-11-27

No. 08-7059

361

364

388 U.S. App. D.C. 361

388

United States Court of Appeals for the District of Columbia Circuit

United States Court of Appeals for the District of Columbia Circuit

District of Columbia

2021-08-10T21:24:49.781224+00:00

CAP

Before: TATEL and BROWN, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

HUNT CONSTRUCTION GROUP, INC., Appellant v. NATIONAL WRECKING CORPORATION, et al., Appellees.

587 F.3d 1119 HUNT CONSTRUCTION GROUP, INC., Appellant v. NATIONAL WRECKING CORPORATION, et al., Appellees. No. 08-7059. United States Court of Appeals, District of Columbia Circuit. Argued Sept. 15, 2009. Decided Nov. 27, 2009. David T. Dekker argued the cause for appellant. On the briefs were Michael S. McNamara and Laura R. Thomson. Michael C. Zisa argued the cause for appellees. With him on the brief were Stephen M. Seeger and Leonard A. Sacks. Edward G. Gallagher filed the brief for amicus curiae in support of appellees and urging affirmance. Before: TATEL and BROWN, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

1771

11051

Opinion for the Court filed by Senior Circuit Judge WILLIAMS. WILLIAMS, Senior Circuit Judge: Hunt Construction Group sought relief in a diversity action against a defaulting subcontractor and against two sureties on the subcontractor's performance bond. The sureties' defenses included the ground that Hunt had failed to give timely notice of default, thereby depriving them of any realistic opportunity to exercise their rights under the bond to cure the subcontractor's defective performance. The district court agreed, granted summary judgment in their favor, and issued an order under Rule 54(b) of the Federal Rules of Civil Procedure, enabling Hunt to file an interlocutory appeal on the issue. Hunt Constr. Group, Inc. v. Nat'l Wrecking Corp., 542 F.Supp.2d 87 (D.D.C.2008). Hunt now appeals, claiming that the bond does not make such notice a condition of the sureties' liability. We affirm. Hunt subcontracted excavation work for the construction of an Embassy Suites Hotel in Washington, D.C., to the National Wrecking Corporation, which agreed to complete the work by February 12, 2004. Around the time the performance was due to be completed, Hunt learned that the work would be delayed. Hunt complained to National Wrecking and incurred additional expenses for expediting the work of other subcontractors to make up for National Wrecking's delays and meet the overall project deadline. National Wrecking finally completed its work on April 6, 2004. Suing National Wrecking for breach of contract, Hunt in its second amended complaint added as defendants the two sureties on a performance bond for National Wrecking — XL Reinsurance America, Inc., and the United States Surety Company. Although Hunt admits that it knew by early February 2004 that National Wrecking's excavation work would be delayed, it did not then — or for five months thereafter — give the sureties notice of its position that the delays constituted a default under the subcontract, opting instead, without consulting the sureties, to use the other subcontractors to make up for National Wrecking's performance. Hunt formally notified the sureties of its potential claim when it declared National Wrecking to be in default on July 13, 2004, more than three months after National Wrecking's work had been completed. The performance bond form at issue in this case — which Hunt selected — provides as follows: [A] National Wrecking Corporation . as Principal . and United States Surety Company & XL Reinsurance ., as co-sureties . are held and firmly bound unto Hunt Construction Group, Inc . as Obligee . in the amount of . $1,960,496.... [B] NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION is such that, if Principal shall promptly and faithfully perform said subcontract, then this obligation shall be null and void; otherwise it shall remain in full force and effect. [C] Whenever Principal shall be, and be declared by Obligee to be in default under the subcontract, the Obligee having performed Obligee's obligations thereunder: (1) Surety may promptly remedy the default subject to the provisions of paragraph 3 herein, or; (2) Obligee after reasonable notice to Surety may, or Surety upon demand of Obligee, may arrange for the performance of Principal's obligation under the subcontract subject to the provisions of paragraph 3 herein; (3) The balance of the subcontract price, as defined below, shall be credited against the reasonable cost of completing performance of the subcontract . J.A. at 130 (bracketed letters added for clarity of reference). The bond incorporates the language of the American Institute of Architects ("ALA") Document A311. The parties agree that the issue is governed by District of Columbia law. Hunt urges us to conclude that, if directly presented with the issue, the District's courts would adopt the reasoning of Colorado Structures, Inc. v. Insurance Co. of the West, 161 Wash.2d 577, 167 P.3d 1125 (2007), which held that the AIA Document A311 bond at issue there did not require notice as a condition precedent to recovery. But the provisions of paragraph C are nonsensical without an understanding that the surety's duties depend on the obligee's declaring the principal to be in default and giving notice of the declaration to the principal and the surety. Under Himt's contrary reading, paragraph C's explicit grant to the surety of a right to remedy the default itself would be operative only if the obligee chose to give it notice. Such a view would render that right nearly meaningless. Thus, construing the A311 bond, the Second Circuit explained in Elm Haven Construction Ltd. Partnership v. Neri Construction LLC, 376 F.3d 96 (2d Cir.2004): In order to trigger [the suretyjs liability under the Performance Bond, two conditions had to be met. First, [the principal] had to be "in default" under the subcontract agreement, and second, [the obligee] had to "declare[ ] [the principal] to be in default under the" subcontract agreement. Such a declaration of default had to be made to [the surety] in precise terms. Id. at 100; see also L &A Contracting Co. v. S. Concrete Sens., Inc., 17 F.3d 106, 111 (5th Cir.1994) ("A declaration of default sufficient to invoke the surety's obligations under the [A311] bond must be made in clear, direct, and unequivocal language. The declaration must inform the surety that the principal has committed a material breach or series of material breaches of the subcontract, that the obligee regards the subcontract as terminated, and that the surety must immediately commence performing under the terms of its bond."). Even if Hunt had declared a default in a timely fashion, the bond makes clear that the obligee may arrange to complete unfinished work only "after reasonable notice to Surety." J.A. at 130 (emphasis added). In other words, even after declaring a default, Hunt could proceed to remedy the default on its own only after it gave "reasonable notice" to the sureties that it intended to do so. It gave no such notice. Colorado Structures, on which Hunt primarily stakes its claim, reads the default and notice requirements out of the A311 bond form by reasoning that paragraph A, by itself, creates the surety's liability to the obligee and that paragraph B subjects that liability to "one — and only one — express condition subsequent," namely, that the principal has not fully and faithfully performed the contract. 167 P.3d at 1131— 32. Colorado Structures read paragraph C as merely providing that certain remedies would be available when the conditions contained in that paragraph (that the principal has defaulted, the obligee has declared the default, and the obligee has performed its obligations) were met. Otherwise, the common law would provide for remedies and the measure of damages. Id. at 1132. Contrary to the Colorado Structures court, we do not attach talismanic significance to the fact that paragraph B "us[ed] the word 'condition' in its singular form," id., even in the singular preceded by the word "the." In reading contract provisions we take the contract's entirety into account, seeking to give all its provisions effect. Steele Founds., Inc. v. Clark Constr. Group, Inc., 937 A.2d 148, 154 (D.C.2007). Hunt points us to no case in the District of Columbia suggesting that a contract's labeling a particular provision as a "condition," in the singular, gives rise to an inference that no other provisions of the contract can also be conditions precedent. And in the context of the bond form before us, such an inference would gut rights specifically afforded the surety. Citing International Fidelity Insurance Co. v. County of Rockland, 98 F.Supp.2d 400, 435 (S.D.N.Y.2000), and Walter Concrete Construction Corp. v. Lederle Laboratories, 99 N.Y.2d 603, 758 N.Y.S.2d 260, 788 N.E.2d 609, 610 (2003), Hunt also argues that because the contract could have imposed a condition precedent in clearer language than it did, we should construe the bond not to include such a condition. With the benefit of hindsight, of course, the parties in nearly every case of contract interpretation could have made their contract more clear, at least in a way suited to the problem which in fact arose— though possibly making it less clear with reference to other problems. The relevant question is not whether the contract uses the most precise language a court can imagine ex post but how best to read the contract as actually mitten. See Mamo v. Skvirsky, 960 A.2d 595, 599 (D.C.2008). Finally, Hunt contends that even if the bond form requires notice of some kind, the requirement is merely an independent promise for which the sureties may recover damages, not a condition precedent to their liability under the bond. See generally 13 Williston on Contracts § 38:5, at 382 (4th ed.2005). But "[i]n the District of Columbia, '[njotice provisions in insurance contracts are of the essence of the contract.' " Travelers Indem. Co. v. United Food & Commercial Workers Int'l Union, 770 A.2d 978, 991 (D.C.2001) (quoting Graycoat Hanover F St. Ltd. P'ship v. Liberty Mut. Ins. Co., 657 A.2d 764, 768 (D.C.1995)); see also U.S. Shipping Bd. Merchant Fleet Corp. v. Aetna Cas. & Sur. Co., 98 F.2d 238, 242 (D.C.Cir.1938) ("By almost universal custom fidelity bonds as now written require notice of default within a limited period of time, and that provision the courts enforce according to its strict terms. And in such a case it is immaterial whether the surety is able to show it was prejudiced by failure to receive notice.... "). In context, the requirements listed in the first clause of paragraph C are properly read as time conditions precedent, in the absence of which the surety has no liability on the bond. Sureties who require notice of default so that they can themselves take remedial action presumably are unwilling to submit to the vagaries of litigation a calculation of the exact impact of being denied notice. Hunt primarily invokes Conesco Industries, Ltd. v. Conforti & Eisele, Inc., 627 F.2d 312, 316 (D.C.Cir.1980), for the proposition that proof of prejudice is required, but we so stated only after finding that the particular bond before the court did not make notice "a condition precedent to liability under the bond." In light of our contrary interpretation of the bond form here, Conesco's view does not apply. The judgment of the district court is therefore Affirmed.

12239087

Harden v. Wicomico County, Maryland, et al.

Harden v. Wicomico County

2012-01-09

No. 11-470

1112

1112

565 U.S. 1112

565

United States Reports

Supreme Court of the United States

United States

2021-08-11T01:41:07.174262+00:00

CAP

Harden v. Wicomico County, Maryland, et al.

No. 11-470. Harden v. Wicomico County, Maryland, et al.

15

90

C. A. 4th Cir. Certiorari denied.

6658612

Protests 108058-K, etc., of C. J. Tower & Sons (Buffalo)

Protests 108058-K of C. J. Tower & Sons

1945-11-15

No. 50665

319

319

15 Cust. Ct. 319

15

United States Customs Court Reports

United States Customs Court

United States

2021-08-11T02:44:41.101421+00:00

CAP

Protests 108058-K, etc., of C. J. Tower & Sons (Buffalo).

No. 50665. Protests 108058-K, etc., of C. J. Tower & Sons (Buffalo).

58

333

Opinion by Keefe, J. It was stipulated that the boron carbide in question is the same in all material respects as that the subject of Tower & Sons v. United States (14 Cust. Ct. 84, C. D. 917). In accordance therewith the merchandise was held dutiable as claimed.

3675998

JOHN R. SAND & GRAVEL CO. v. UNITED STATES

John R. Sand & Gravel Co. v. United States

2008-01-08

No. 06-1164

130

147

552 U.S. 130

552

United States Reports

Supreme Court of the United States

United States

2021-09-21T20:02:18.861595+00:00

Harvard

JOHN R. SAND & GRAVEL CO. v. UNITED STATES

JOHN R. SAND & GRAVEL CO. v. UNITED STATES CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT No. 06-1164. Argued November 6, 2007 Decided January 8, 2008 Jeffrey K. Haynes argued the cause for petitioner. With him on the briefs were Keith C. Jablonski and Gregory C. Sisk. Malcolm L. Stewart argued the cause for the United States. With him on the brief were Solicitor General Clement, Acting Assistant Attorney General Tenpas, Deputy Solicitor General Kneedler, and Aaron P. Avila Briefs of amici curiae urging reversal were filed for the National Association of Home Builders by Duane J. Desiderio and Thomas J. Ward; and for the Pacific Legal Foundation by Diana M. Kirchheim and James S. Burling. Thomas C. Goldstein, Patricia A. Millett, Robert Huffman, and Steven C. Nadeau filed a brief for the Metamora Group as amicus curiae urging affirmance.

5177

31684

Justice Breyer delivered the opinion of the Court. The question presented is whether a court must raise on its own the timeliness of a lawsuit filed in the Court of Federal Claims, despite the Government's waiver of the issue. We hold that the special statute of limitations governing the Court of Federal Claims requires that sua sponte consideration. I Petitioner John R. Sand & Gravel Company filed an action in the Court of Federal Claims in May 2002. The complaint explained that petitioner held a 50-year mining lease on certain land. And it asserted that various Environmental Protection Agency activities on that land (involving, e. g., the building and moving of various fences) amounted to an unconstitutional taking of its leasehold rights. The Government initially asserted that petitioner's several claims were all untimely in light of the statute providing that "[e]very claim of which the United States Court of Federal Claims has jurisdiction shall be barred unless the petition thereon is filed within six years after such claim first accrues." 28 U. S. C. §2501. Later, however, the Government effectively conceded that certain claims were timely. See App. 37a-39a (Government's pretrial brief). The Government subsequently won on the merits. See 62 Fed. Cl. 556, 589 (2004). Petitioner appealed the adverse judgment to the Court of Appeals for the Federal Circuit. See 457 F. 3d 1345, 1346 (2006). The Government's brief said nothing about the statute of limitations, but an amicus brief called the issue to the court's attention. See id., at 1352. The court considered itself obliged to address the limitations issue, and it held that the action was untimely. Id., at 1353-1360. We subsequently agreed to consider whether the Court of Appeals was right to ignore the Government's waiver and to decide the timeliness question. 550 U. S. 968 (2007). II Most statutes of limitations seek primarily to protect defendants against stale or unduly delayed claims. See, e. g., United States v. Kubrick, 444 U. S. 111, 117 (1979). Thus, the law typically treats a limitations defense as an affirmative defense that the defendant must raise at the pleadings stage and that is subject to rules of forfeiture and waiver. See Fed. Rules Civ. Proc. 8(c)(1), 12(b), 15(a); Dag v. McDonough, 547 U. S. 198, 202 (2006); Zipes v. Trans World Airlines, Inc., 455 U. S. 385, 393 (1982). Such statutes also typically permit courts to toll the limitations period in light of special equitable considerations. See, e. g., Rotella v. Wood, 528 U. S. 549, 560-561 (2000); Zipes, supra, at 393; see also Cada v. Baxter Healthcare Corp., 920 F. 2d 446, 450-453 (CA7 1990). Some statutes of limitations, however, seek not so much to protect a defendant's case-specific interest in timeliness as to achieve a broader system-related goal, such as facilitating the administration of claims, see, e. g., United States v. Brockamp, 519 U. S. 347, 352-353 (1997), limiting the scope of a governmental waiver of sovereign immunity, see, e. g., United States v. Dalm, 494 U. S. 596, 609-610 (1990), or promoting judicial efficiency, see, e. g., Bowles v. Russell, 551 U. S. 205, 210-213 (2007). The Court has often read the time limits of these statutes as more absolute, say, as requir ing a court to decide a timeliness question despite a waiver, or as forbidding a court to consider whether certain equitable considerations warrant extending a limitations period. See, e. g., id., at 212-213; see also Arbaugh v. Y & H Corp., 546 U. S. 500, 514 (2006). As convenient shorthand, the Court has sometimes referred to the time limits in such statutes as "jurisdictional." See, e. g., Bowles, supra, at 210. This Court has long interpreted the court of claims limitations statute as setting forth this second, more absolute, kind of limitations period. A In Kendall v. United States, 107 U. S. 123 (1883), the Court applied a predecessor of the current 6-year bar to a claim that had first accrued in 1865 but that the plaintiff did not bring until 1872. Id., at 124; see also Act of Mar. 3, 1863, § 10, 12 Stat. 767 (Rev. Stat. § 1069). The plaintiff, a former Confederate States employee, had asked for equitable tolling on the ground that he had not been able to bring the suit until Congress, in 1868, lifted a previously imposed legal disability. See 107 U. S., at 124-125. But the Court denied the request. Id., at 125-126. It did so not because it thought the equities ran against the plaintiff, but because the statute (with certain listed exceptions) did not permit tolling. Justice Harlan, writing for the Court, said the statute was "jurisdictionjal]," that it was not susceptible to judicial "en-grafting] " of unlisted disabilities such as "sickness, surprise, or inevitable accident," and that "it [was] the duty of the court to raise the [timeliness] question whether it [was] done by plea or not." Ibid, (emphasis added). Four years later, in Finn v. United States, 123 U. S. 227 (1887), the Court found untimely a claim that had originally been filed with a Government agency, but which that agency had then voluntarily referred by statute to the Court of Claims. Id., at 229-230 (citing Act of June 25, 1868, § 7, 15 Stat. 76); see also Rev. Stat. §1063-1065. That Government reference, it might have been argued, amounted to a waiver by the Government of any limitations-based defense. Cf. United States v. Lippitt, 100 U. S. 663, 669 (1880) (reserving the question of the time bar's application in such circumstances). The Court nonetheless held that the long (over 10-year) delay between the time the claim accrued and the plaintiff's filing of the claim before the agency made the suit untimely. Finn, 123 U. S., at 232. And as to any argument of Government waiver or abandonment of the time-bar defense, Justice Harlan, again writing for the Court, said that the ordinary legal principle that "limitation . is a defence [that a defendant] must plead . has no application to suits in the Court of Claims against the United States." Id., at 232-233 (emphasis added). Over the years, the Court has reiterated in various contexts this or similar views about the more absolute nature of the court of claims limitations statute. See Soriano v. United States, 352 U. S. 270, 273-274 (1957); United States v. Greathouse, 166 U. S. 601, 602 (1897); United States v. New York, 160 U. S. 598, 616-619 (1896); De Arnaud v. United States, 151 U. S. 483, 495-496 (1894). B The statute's language has changed slightly since Kendall was decided in 1883, but we do not see how any changes in language make a difference here. The only arguably pertinent linguistic change took place during the 1948 recodification of Title 28. See § 2501, 62 Stat. 976. Prior to 1948, the statute said that "[e]very claim . . . cognizable by the Court of Claims, shall be forever barred" unless filed within six years of the time it first accrues. Rev. Stat. § 1069 (emphasis added); see also Act of Mar. 3, 1911, § 156, 36 Stat. 1139 (reenacting the statute without any significant changes). Now, it says that "[e]very claim of which" the Court of Federal Claims "has jurisdiction shall be barred" unless filed within six years of the time it first accrues. 28 U. S. C. § 2501 (emphasis added). This Court does not "presume" that the 1948 revision "worked a change in the underlying substantive law 'unless an intent to make such a change is clearly expressed.'" Keene Corp. v. United States, 508 U. S. 200, 209 (1993) (quoting Fourco Glass Co. v. Transmirra Products Corp., 353 U. S. 222, 227 (1957); alterations omitted); see also H. R. Rep. No. 308, 80th Cong., 1st Sess., 1-8 (1947) (hereinafter Rep. No. 308) (revision sought to codify, not substantively modify, existing law); Barron, The Judicial Code: 1948 Revision, 8 F. R. D. 439 (1948) (same). We can find no such expression of intent here. The two linguistic forms ("cognizable by"; "has jurisdiction") mean about the same thing. See Black's Law Dictionary 991 (4th ed. 1951) (defining "jurisdiction" as "the authority by which courts and judicial officers take cognizance of and decide cases" (emphasis added)); see also Black's Law Dictionary 1038 (3d ed. 1933) (similarly using the term "cognizance" to define "jurisdiction"). Nor have we found any suggestion in the Reviser's Notes or anywhere else that Congress intended to change the prior meaning. See Rep. No. 308, at A192 (Reviser's Note); Barron, supra, at 446 (Reviser's Notes specify where change was intended). Thus, it is not surprising that nearly a decade after the revision, the Court, citing Kendall, again repeated that the statute's limitations period was "jurisdictionfal]" and not susceptible -to equitable tolling. See Soriano, supra, at 273-274, 277. III In consequence, petitioner can succeed only by convincing us that this Court has overturned, or that it should now overturn, its earlier precedent. A We cannot agree with petitioner that the Court already has overturned the earlier precedent. It is true, as petitioner points out, that in Irwin v. Department of Veterans Affairs, 498 U. S. 89 (1990), we adopted "a more general rule" to replace our prior ad hoc approach for determining whether a Government-related statute of limitations is subject to equitable tolling — namely, "that the same rebuttable presumption of equitable tolling applicable to suits against private defendants should also apply to suits against the United States." Id., at 95-96. It is also true that Irwin, using that presumption, found equitable tolling applicable to a statute of limitations governing employment discrimination claims against the Government. See id., at 96; see also 42 U. S. C. § 2000e-16(c) (1988 ed.). And the Court noted that this civil rights statute was linguistically similar to the court of claims statute at issue here. See Irwin, supra, at 94-95. But these few swallows cannot make petitioner's summer. That is because Irwin dealt with a different limitations statute. That statute, while similar to the present statute in language, is unlike the present statute in the key respect that the Court had not previously provided a definitive interpretation. Moreover, the Court, while mentioning a case that reflects the particular interpretive history of the court of claims statute, namely, Soriano, supra, says nothing at all about overturning that or any other case in that line. See 498 U. S., at 94-95. Courts do not normally overturn a long line of earlier cases without mentioning the matter. Indeed, Irwin recognized that it was announcing a general prospective rule, see id., at 95, which does not imply revisiting past precedents. Finally, Irwin adopted a "rebuttable presumption" of equitable tolling. Ibid, (emphasis added). That presumption seeks to produce a set of statutory interpretations that will more accurately reflect Congress' likely meaning in the mine run of instances where it enacted a Government-related statute of limitations. But the word "rebuttable" means that the presumption is not conclusive. Specific statutory lan guage, for example, could rebut the presumption by demonstrating Congress' intent to the contrary. And if so, a definitive earlier interpretation of the statute, finding a similar congressional intent, should offer a similarly sufficient rebuttal. Petitioner adds that in Franconia Associates v. United States, 536 U. S. 129 (2002), we explicitly considered the court of claims limitations statute, we described the statute as "unexceptional," and we cited Irwin for the proposition "that limitations principles should generally apply to the Government in the same way that they apply to private parties." 536 U. S., at 145 (internal quotation marks omitted). But we did all of this in the context of rejecting an argument by the Government that the court of claims statute embodies a special, earlier-than-normal, rule as to when a claim first accrues. Id., at 144-145. The quoted language thus refers only to the statute's claims-accrual rule and adds little or nothing to petitioner's contention that Irwin overruled our earlier cases — a contention that we have just rejected. B Petitioner's argument must therefore come down to an invitation now to reject or to overturn Kendall, Finn, Soriano, and related cases. In support, petitioner can claim that Irwin and Franconia represent a turn in the course of the law and can argue essentially as follows: The law now requires courts, when they interpret statutes setting forth limitations periods in respect to actions against the Government, to place greater weight upon the equitable importance of treating the Government like other litigants and less weight upon the special governmental interest in protecting public funds. Cf. Irwin, supra, at 95-96. The older interpretations treated these interests differently. Those older cases have consequently become anomalous. The Government is unlikely to have relied significantly upon those earlier cases. Hence the Court should now overrule them. Basic principles of stare decisis, however, require us to reject this argument. Any anomaly the old cases and Irwin together create is not critical; at most, it reflects a different judicial assumption about the comparative weight Congress would likely have attached to competing legitimate interests. Moreover, the earlier cases lead, at worst, to different interpretations of different, but similarly worded, statutes; they do not produce "unworkable" law. See United States v. International Business Machines Corp., 517 U. S. 843, 856 (1996) (internal quotation marks omitted); California v. FERC, 495 U. S. 490, 499 (1990). Further, stare decisis in respect to statutory interpretation has "special force," for "Congress remains free to alter what we have done." Patterson v. McLean Credit Union, 491 U. S. 164, 172-173 (1989); see also Watson v. United States, ante, at 82-83. Additionally, Congress has long acquiesced in the interpretation we have given. See ibid.; Shepard v. United States, 544 U. S. 13, 23 (2005). Finally, even if the Government cannot show detrimental reliance on our earlier cases, our reexamination of well-settled precedent could nevertheless prove harmful. Justice Brandéis once observed that "in most matters it is more important that the applicable rule of law be settled than that it be settled right." Burnet v. Coronado Oil & Gas Co., 285 U. S. 393, 406 (1932) (dissenting opinion). To overturn a decision settling one such matter simply because we might believe that decision is no longer "right" would inevitably reflect a willingness to reconsider others. And that willingness could itself threaten to substitute disruption, confusion, and uncertainty for necessary legal stability. We have not found here any factors that might overcome these considerations. IV The judgment of the Court of Appeals is affirmed. It is so ordered.

11522259

Higgins v. Mississippi et al.

Higgins v. Mississippi

1998-03-30

No. 97-7660

1050

1050

523 U.S. 1050

523

United States Reports

Supreme Court of the United States

United States

2021-08-10T22:35:18.854789+00:00

CAP

Higgins v. Mississippi et al.

No. 97-7660. Higgins v. Mississippi et al.

13

77

C. A. 5th Cir. Certiorari denied.

12201818

Lesher v. Trent et al.

Lesher v. Trent

2012-04-02

No. 11-8744

927

927

566 U.S. 927

566

United States Reports

Supreme Court of the United States

United States

2021-08-11T02:20:50.812744+00:00

CAP

Lesher v. Trent et al.

No. 11-8744. Lesher v. Trent et al.

14

80

App. Ct. Ill., 5th Dist. Certiorari denied.

12111967

Hamilton F. Kean, Petitioner, v. Commissioner of Internal Revenue, Respondent

Kean v. Commissioner

1928-01-21

Docket No. 10745

97

102

10 B.T.A. 97

10

Reports of the United States Board of Tax Appeals

United States Board of Tax Appeals

United States

2021-08-10T20:29:24.818830+00:00

CAP

Hamilton F. Kean, Petitioner, v. Commissioner of Internal Revenue, Respondent.

Hamilton F. Kean, Petitioner, v. Commissioner of Internal Revenue, Respondent. Docket No. 10745. Promulgated January 21, 1928. W. W. Spalding, Esq., for the petitioner. Frank S. Easby-Smith, Esq., for the respondent.

777

4396

OPINION. Trammell: The only issue involved in this proceeding is the deductibility of the $19,127.03 representing the amount by which the expenditures made in connection with the operation of the Green Lane Farm exceeded the receipts therefrom. This depends upon whether the farm was operated as a business. It was denied by the respondent that it was so operated. The petitioner acquired the Green Lane Farm in 1916 to produce poultry and dairy products for his own personal use and after making several improvements he decided in 1919 to operate it as a poultry and dairy farm, planning to meet the ordinary operating expenses out of the proceeds from the sale of vegetables, eggs and milk and derive a profit from the sale of high-grade poultry and registered cattle which he expected to raise. In accordance with this decision he employed a farm superintendent experienced in the management and operation of farms of the type contemplated, and proceeded to stock the farm with a good quality of chickens and registered cattle. Pursuant to his plan of increasing the number of his herd the petitioner in 1921 purchased a cow which was guaranteed to be free from disease. This cow was examined by state veterinaries who decided that she was free from disease. It later developed that she had a contagious disease which was communicated to about one-half of the petitioner's herd. This disease retarded the increase of the herd and resulted in a smaller amount of income being realized. It reduced the sale price of cattle so affected from the normal market price of about $7,000 to the price of beef cattle, about $40 to $75 per head. In addition it was necessary for the petitioner to incur very great expenses in attempting to free the herd from the disease. In addition to employing a veterinary to treat the cattle, he has tests made by Cornell University. He has consulted with the Bureau of Animal Industry of the United States Department of Agriculture, the State Department of Agriculture, the State College of New Jersey and with others whom he thought would be able to assist him in the matter. Having been advised that the cows would develop an immunity to the disease in about two years, he followed out that theory and found it to be erroneous. Now as a last resort, he is eliminating from' the herd all cows that show any symptoms of the disease. The petitioner spent one day and part of another each week in managing and directing the operations of the farm. Detailed records were kept of all income and expenses in connection with the farm and the petitioner paid the same price as others for the products he received therefrom. There is nothing in the record to warrant a conclusion that the petitioner operates the farm as a place of recreation or amusement or as a show place. The petitioner testified that 65 years ago he was born on the farm on which he now lives, and which adjoins the Green Lane Farm; that he has always lived on the farm and is familiar with farming operations. He has owned farms for a great many years and for a number of years has owned a one-half interest in Blooming Dale Farm, which is situated in a different county from that in which the Green Lane Farm is located. The petitioner testified that when he began the operation of the Green Lane Farm as a poultry and dairy farm in 1919, it was with a view of making a profit therefrom, and that as soon as he can eliminate the disease from his herd of cattle, the operation of the farm will show a profit. From a consideration of all the evidence we are of the opinion that during the year 1923, the petitioner in operating the farm in question was engaged in farming as a business. The mere fact that he sustained losses from year to year and had other business interests does not prove that the farm was not operated as a business venture. See Moses Taylor, 7 B. T. A. 59; Samuel Riker, Jr., Executor, 6 B. T. A. 890; Thomas F. Sheridan, 4 B. T. A. 1299. Inasmuch as the petitioner was engaged in -farming as a business, the loss sustained by him in the operation of the farm was a proper deduction from gross income. Judgment will ~be entered on 15 days' notice, under Rule 50.