author: JAMES HUNTER, III, Circuit Judge:

text:
    DOCTORS, INC., a/k/a Doctors Hospital, Appellant, v. BLUE CROSS OF GREATER PHILADELPHIA, a/k/a Associated Hospital Service of Philadelphia and Hospital Survey Committee, Inc.
    No. 73-1539.
    United States Court of Appeals, Third Circuit.
    Argued Nov. 8, 1973.
    Decided Dec. 28, 1973.

      John Francis Gough, Michael H. Mal-in, White & Williams, Philadelphia, Pa., for appellant.
    Henry T. Reath, Duane, Morris & Heckscher, Philadelphia, Pa., for appel-lee Hospital Survey Committee, Inc.
    Miles W. Kirkpatrick, Richard P. Brown, Jr., Stephen W. Armstrong, Raymond T. Cullen, Jr., Morgan, Lewis & Bockius, Philadelphia, Pa., for appellee Blue Cross of Greater Philadelphia.
    Before VAN DUSEN, HUNTER and GARTH, Circuit Judges.
   OPINION OF THE COURT

JAMES HUNTER, III, Circuit Judge:

This is an antitrust action brought by Doctors, Inc. (“Doctors”), a non-profit hospital located in Philadelphia. The defendant-appellees are Blue Cross of Greater Philadelphia (“Blue Cross”) and Hospital Survey Committee, Inc. (“HSC”), a private, non-profit corporation which serves as an advisory planning agency with respect to the coordination and planning of hospital and health services in Greater Philadelphia.

According to the complaint, Blue Cross dominates the third party hospital services payer market in Greater Philadelphia, purchasing more than fifty percent of all the hospital services sold in this area. It is alleged that the effect of this dominance is to make it financially impossible for an area hospital to survive unless it is a Blue Cross member hospital since only these hospitals can be reimbursed for services provided to Blue Cross subscribers.

In 1972 Blue Cross sought to terminate the plaintiff’s membership status. The complaint claims that this act was illegal, since it was taken pursuant to a scheme which is intended to control the area’s hospital services market. It is alleged that this scheme violates Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1970), in the following ways: 1) because the two defendants have used the market power of Blue Cross to determine which hospital services will be provided in the area and which hospitals will provide them; 2) because they have entered into an illegal contract, combination and conspiracy, with others, to eliminate competition in the area’s hospital services market; 3) because in furtherance of the overall scheme, Blue Cross (with HSC’s cooperation) has illegally refused to deal with Doctors; and 4) because both defendants have induced an illegal boycott of the plaintiff hospital.

Each defendant responded to the complaint by filing a motion to dismiss for lack of subject matter jurisdiction. Their contention is that the complaint only alleges restraints upon intra-state trade or commerce and that the effects of these restraints upon interstate commerce are too remote to confer jurisdiction. Defendant HSC later filed an alternate motion under F.R.Civ.P. 12(b) (6) to dismiss the complaint for failure to state a claim upon which relief can be granted. The thrust of this motion is that HSC could not have been a co-conspirator with Blue Cross since it is entirely independent of that organization and performs purely advisory services for it. It also argues that HSC’s activities are not “trade or commerce” as those terms are used in Sections 1 and 2 of the Sherman Act.

The district court decision dealt solely with the motions to dismiss for lack of subject matter jurisdiction. It found that the interstate commerce allegations of the complaint were insufficient to confer jurisdiction and dismissed the action. This ruling is the primary question on appeal. In addition, defendant HSC argues that if we find for the appellant on this issue, we should still affirm the dismissal of the complaint with regard to it on the basis of their alternate motion to dismiss. We have concluded that the interstate commerce allegations of the complaint are sufficient ■ to confer subject matter jurisdiction. In addition, we have decided that we cannot affirm on the alternative basis put forward by HSC. As a result, we reverse the dismissal of the complaint as to both defendants.

I

In order for the interstate commerce allegations of a Sherman Act complaint to be jurisdictionally sound, they must allege either 1) activities that are in the flow of interstate commerce, or 2) activities which though occurring purely on a local level substantially affect interstate commerce. See, e. g., Rasmussen v. American Dairy Ass’n, 472 F.2d 517, 522 (9th Cir. 1972); Las Vegas Merchant v. Plumbers Ass’n v. United States, 210 F.2d 732, 739 n. 3 (9th Cir. 1954); ABA Antitrust Section, Antitrust Developments 1955-1968, at 39 (1968). In this case, the complaint and supporting affidavit have alleged numerous facts, which, it is claimed, established that the activities involved here meet both criteria, that is, they are in interstate commerce and substantially affect it as well. Naturally, when considering the motions to dismiss which are in issue here, these factual allegations are assumed to be true, since the motions were interposed prior to the filing of responsive pleadings by the defendants. United States v. New Wrinkle, 342 U.S. 371, 373, 376, 72 S.Ct. 350, 96 L.Ed. 417 (1952); see Walker v. Food Machinery, 382 U.S. 172, 174-175, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965)

We have made no attempt to judge the adequacy of every one of the plaintiff’s allegations on the interstate commerce issue since jurisdiction is established if any one of them satisfies either of the criteria for interstate commerce. We believe that under the existing precedents, plaintiff’s factual allegations with regard to the effect upon the flow of out-of-state supplies, to Doctors and to other hospitals in the Greater Philadelphia area, are sufficient to establish that the alleged activities of Blue Cross and HSC substantially affect interstate commerce and therefore to establish jurisdiction.

The defendants are accused of using various illegal means to regulate and limit competition in hospital servicés in the Greater Philadelphia area. The necessary effect of these activities, according to the complaint, will be to close down Doctors Hospital and to close down or limit the operations of other area hospitals as well. As a result, it appears evident that the volume of supplies which are allegedly purchased by Doctors from companies located outside Pennsylvania each year ($233,430 in 1972) will be affected by the alleged activities. Moreover, the complaint alleges that Doctors activities are typical of those hospitals supplying hospital and health services throughout the United States. As a result, we must assume that like volume of out-of-state supplies are purchased by the approximately 100 other hospitals located in the Greater Philadelphia area. Since the overall scheme alleged in this complaint is directed at them also, this interstate commerce will be affected as well.

The key question in the case then is whether these clear “effects” on interstate commerce, caused by the activities alleged, are “substantial” enough to confer jurisdiction. Because this is an issue which involves many variables, no single, satisfactory test emerges from the precedent. When courts do speak in terms of a test, the formulations used are, of necessity, so broad and generalized that instead of providing a guide to the solution of the problem they do no more than restate the issue. In reality, they are not tests at all. We believe that a more accurate appraisal of the question is made by courts which concede that the issue requires “a practical, case-by-case economic judgment, not a conclusion derived from application of abstract or mechanistic forumlae.” Rasmussen v. American Dairy Ass’n, 472 F.2d 517, 523 (9th Cir. 1972); see Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 232-233, 68 S.Ct. 996, 92 L.Ed. 1328 (1948). That is, the issue is one of degree which defies precise tests and which necessarily yields somewhat imprecise resolutions.

As a result, the precedent in this area is unlikely to dictate the outcome in any given case. Instead, it is more likely to communicate a general sense as to how much of an impact local activities must have upon interstate commerce before they confer jurisdiction. With this in mind, we turn to the precedent.

Initially, we must deal with a series of .cases which the appellees claim are controlling. In Spears Free Clinic and Hospital v. Cleere, 197 F.2d 125 (10th Cir. 1952), the complaint alleged a conspiracy in violation of Sections 1 and 2 of the Sherman Act which was intended to prevent operation of plaintiff’s chiropractic hospital and to monopolize the “practice of the healing arts” in Colorado. The court affirmed a dismissal of the action because these alleged activities by the defendant did not have the necessary effect upon interstate commerce. This holding was followed in Elizabeth Hospital, Inc. v. Richardson, 269 F.2d 167 (8th Cir. 1959), a case which the court indicated was “on almost all fours” with Spears. Id. at 171. More recently, two district courts have reached the same conclusion in factually similar cases, relying primarily on these two earlier decisions.

There is no question about the factual similarity between Spears and its progeny, and the present case. If that ease were persuasive authority we could undoubtedly rely on it to affirm the dismissal of the complaint in this action. However, the reasoning of Spears is defective in two major respects.

First, the opinion even when it was written placed primary reliance on a series of cases that were no longer valid. These cases looked to the intent of the conspiracy alleged in order to determine whether the purported effects on interstate commerce conferred jurisdiction. If the aim of the conspiracy was to obstruct interstate commerce, it was said to have a “direct” effect and jurisdiction was present. If the goal was otherwise, the effect was termed “indirect” and there was no jurisdiction. This “direct-indirect” test had been abandoned by the Supreme Court in the early 1940’s. As a result, the reasoning of the opinion rested on flawed grounds even when it was issued in 1952.

Our second objection to the Spears case is that it is not in accord with the major relevant decisions which have been handed down since it was written. Since Spears, the Supreme Court has dealt with two cases which, like the present case, alleged a conspiracy that was directed toward controlling a purely intrastate market for goods or services. In each of these cases it had no difficulty finding that there was a sufficient effect on the flow of out-of-state supplies to these local competitors to confer interstate commerce jurisdiction. Burke v. Ford, 389 U.S. 320, 88 S.Ct. 443, 19 L.Ed.2d 554 (1967) (per curiam) (a division, of markets by liquor wholesalers operating wholly within Oklahoma); United States v. Employing Plasterers Ass’n, 347 U.S. 186, 74 S.Ct. 452, 456, 98 L.Ed. 618 (1954) (control of competition in Chicago’s plastering business).

It is true that Burke can conceivably be distinguished on the basis that the interstate goods the supply of which is affected are the same goods that are sold in the intrastate market that is allegedly controlled. In contrast, the hospitals that comprise the market allegedly controlled in the present case provide a “product” that includes not only the out-of-state goods allegedly affected, but other services as well. Likewise, it could be argued that Employing Plasterers can be distinguished since out-of-state plasterers, as well as in-state plasterers were allegedly excluded from the local market. These arguable “distinctions” become insignificant, however, when one looks at the central thrust of the Supreme Court’s approach in each of these cases. There is no discussion of “directness” or of the specific relationship between the interstate goods affected and the local market controlled. Nor is there even a concern with the specific magnitude of the impact on interstate commerce caused by the alleged conspiracy. Instead, the Court in each case ends its inquiry when it has satisfied itself that the logical and therefore probable effect of the alleged act is to reduce the flow of goods in interstate commerce.

Given this kind of analysis by the Supreme Court, we feel that the allegations in this case are more sensibly viewed as sufficient to confer jurisdiction since the present complaint closely parallels the essential facts and the reasoning of the Burke and Employing Plasterers cases. With regard to the facts, we note first that in all three cases an illegal course of conduct is alleged which purportedly seeks overall control of a local competitive market (here the market for hospital services). Second, it is claimed that the effect of the conspiracy is to limit competition and to eliminate some competitors (such as Doctors). Third, the complaint here, as in the earlier cases, alleges that a significant amount of traffic in out-of-state goods will be affected by the alleged acts. In Burke it was the flow into Oklahoma of out-of-state liquor sold by. the wholesalers, and in Employing Plasterers it was the flow of supplies used by local plasterers. Here, it is the flow of out-of-state supplies which are used by Doctors and the other area hospitals in providing their normal services.

On these facts, the Supreme Court concluded in both Burke and Employing Plasterers that the likely impact on the interstate flow of goods involved was sufficiently substantial to confer jurisdiction. The similarity between the facts in those cases and the facts of the present case are great. In all three cases the alleged conspiracy is aimed at an entire market so that if it does exist, it plainly limits overall competition. In addition, in each case it is quite likely that the flow of supplies allegedly affected will, in fact, decline if overall activity in the market declines. Given these similarities, we feel compelled to reach the same conclusion that the Supreme Court reached in the two earlier cases: the allegations with respect to the effect of the alleged activities upon interstate commerce are substantial enough to confer jurisdiction.

One final point with regard to this issue should be mentioned. Our most serious concern in following the logic of. Burke and Employing Plasterers was the feeling that the effect is to read the interstate commerce clause out of the Sherman Act since it is virtually impossible to restrain commerce of any kind without in some way affecting the flow of out-of-state supplies. A review of some of the more recent decisions by the various Courts of Appeal, however, has removed this concern. We are convinced that the “interstate commerce” requirement continues to act as a limitation on Sherman Act complaints since many situations remain in which the flow of supplies into the state will not be substantial enough to confer jurisdiction.

In Lieberthal v. North Country Lanes, Inc., 332 F.2d 269 (2d Cir. 1964), for example, the complaint alleged that the defendants had conspired to prevent the opening of a competitive bowling alley. In this case, the court held that though the flow of out-of-state supplies would be diminished, this did not confer jurisdiction. Since the conspiracy was only aimed at a single bowling alley and since the outfitting of that bowling alley was a one time event, the alleged effect was held to be too insubstantial. Similarly, in Page v. Work, 290 F.2d 323 (9th Cir. 1961), the complaint alleged that a conspiracy to control the specialized field of legal advertising in Los Angeles substantially affected the flow of national display advertising, news dissemination, and newsprint. Here, once again, the court held that this jurisdictional claim was insufficient. Since virtually the entire demand for these materials came from businesses which did not rely on the publication of legal notices for revenue, the effect of the conspiracy on the flow of these supplies could not be “substantial.” We feel that both of these cases remain good law and that they exemplify the kinds of cases which remain beyond the reach of interstate commerce jurisdiction.

II

The final issue in the case is whether we should still affirm the judgment dismissing the complaint with respect to HSC on the basis of its alternate motion to dismiss for failure to state a claim upon which relief can be granted. The appellant contends that we cannot affirm on this basis, since the alternate motion was filed only after the court had issued an order staying all proceedings pending a decision on the motions to dismiss for lack of subject matter jurisdiction. As a result, this second motion could not have been considered by the district court.

We feel that this procedural claim has merit. It has been the consistent policy of this court not to consider, “arguments on issues of fact not raised or presented to the district court.” Andrews v. Chemical Carriers, Inc., 457 F.2d 636, 640 (3d Cir. 1972). This principle has clear application here since the factual averments contained in the alternate motion to dismiss and the Helme affidavit which supports it were only presented to the district court after it had stayed all proceedings.

Moreover, even if the stay had never been issued, we still could not find a proper presentation of these factual questions since the alternate motion was^ filed with the district court just one day prior to oral argument. Because of this, there was no realistic opportunity for the appellant to respond, even if a response was technically permissible. Clearly, issues of fact are not properly “raised or presented” before a court if the opposing party has had no opportunity to answer them.

As a result, the issues raised in HSC’s alternate motion to dismiss cannot be considered by this court and cannot affect the outcome of the present appeal. However, this in no way suggests that they may not ultimately prove to be meritorious. We emphasize that the district court on remand, and at the appropriate time, must consider the issues raised by this motion, such as whether HSC’s activities constitute “trade and commerce” as those terms are used in Sections 1 and 2 of the Sherman Act. See Marjorie Webster Jr. Col. v. Middle States Ass’n of Colleges and Secondary Schools, 139 U.S.App.D.C. 217, 432 F.2d 650, 654 (1970), cert, denied 400 U.S. 965, 90 S.Ct. 367, 27 L.Ed.2d 384 (1970).

The order of the district court will be reversed and the case remanded.

      . The area in question is Philadelphia and its surrounding suburbs. This includes five Pennsylvania and three New Jersey counties.

      . The memorandum of Blue Cross in support of this motion also suggested that the court should grant the motion because their activities are exempt from the Sherman Act by reason of the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1015 (1970). That statute exempts the insurance industry from antitrust liability to the extent it is regulated by state law.
      While this claim might later prove to be meritorious, we express no opinion on it now, since it is not properly before us. The motions to dismiss were filed before either defendant submitted an answer. As a result, the essential facts necessary to support this claim of immunity have not as yet been pleaded. In addition, the applicability of the McCarran-Ferguson Act was not considered by the district court and was not briefed by either defendant in the present appeal.

      . Among these factual allegations are the following:
      1) that the plaintiff hospital purchases services and supplies in interstate commerce of almost $2,000,000 annually and that in 1972, $233,430 of its supplies came from companies located outside Pennsylvania;
      2) that 9.6% of its patients came from outside Pennsylvania in 1972 ;
      3) that Blue Cross distributed $208,635,550 in reimbursements to member hospitals located in both Pennsylvania and New Jersey;
      4) that Blue Cross serves 2,380,000 subscribers who live in New Jersey as well as Pennsylvania;
      5) that Blue Cross invests funds held for reimbursements to member hospitals in firms doing business in interstate commerce.

      . We also note that at oral argument, ap-pellee Blue Cross conceded the truth of these factual allegations for purposes of its motion to dismiss.

      . See, e. g., Page v. Work, 290 F.2d 323, 332 (9th Cir. 1961) (“the effect must be direct and substantial, and not merely inconsequential, remote or fortuitous”) ; Spears Free Clinic and Hospital v. Cleere, 197 F.2d 125 (10th Cir. 1952) (“whether the effect ... is direct and substantial or only incidental, indirect and remote”).

      . Nankin Hospital v. Michigan Hospital Service, 361 F.Supp. 1199 at 1210 (E.D.Mich. 1973) ; Hospital Building Co. v. Trustees of Rex Hospital, 1973 Trade Cas. ¶ 74,428 (E.D.N.C.1973).

      . See, e. g., Levering & G. Co. v. Morrin, 289 U.S. 103, 53 S.Ct. 549, 77 L.Ed. 1062 (1933) ; United Leather Workers Int’l Union v. Herkert & Meisel Trunk Co., 265 U.S. 457, 44 S.Ct. 623, 68 L.Ed. 1104 (1924), both of which are quoted at length in the Spears opinion.

      . Wickard v. Filburn, 317 U.S. 111, 120, 63 S.Ct. 82, 87 L.Ed. 122 (1942) ; Note, The Commerce Requirement of the Robinson Patman Act, 22 Hastings L.J. 1245, 1250 (1971).

      . A willingness to find interstate commerce jurisdiction where there is a likely effect upon the interstate flow of supplies is reflected in more recent Courts of Appeal decisions as well. Ochsner Clinic v. N.L.R.B., 474 F.2d 206 (5th Cir. 1973) (NLRB jurisdiction over labor activities at a hospital with a gross volume of $250,000 and purchases of $50,000 worth of materials and supplies in a six-month period) ; Glen Man- or Home for the Jewish Aged v. N.L.R.B., 474 F.2d 1145 (6th Cir. 1973) (NLRB jurisdiction over labor activities at a nursing home automatically established since its annual gross volume is greater than $100,000) ; Rasmussen v. American Dairy Association, 472 F.2d 517 (9th Cir. 1972) (jurisdiction over alleged conspiracy to monopolize an intrastate market in milk products, where plaintiff purchased the ingredients for his “filled milk” out-of-state).

      . We should note, however, that in Employing Plasterers, like the present case, the fact that the product sold in the controlled local market was a mixture of the effected interstate goods and other services as well was not considered significant.

      . ' Here, we should note, however, that in Burke, as in the present case, all of the competitors regulated by the purported conspiracy operated wholly within Oklahoma.

      . The lack of concern with this factor is made explicit in Rasmussen v. American Dairy Ass’n, 472 F.2d 517 (9th Cir. 1972) :
      “The quantitative effect on the interstate flow of . . . ingredients is not alleged. But it is the nature of the effect that is important: to whatever extent, it is certain that the flow of ingredients into Arizona will be diminished . . . ” Id. at 525 (emphasis in original).

      . In fact, a per curiam opinion was handed down in Burke, despite the fact that the evidence indicated that sales of out-of-state liquor to Oklahoma wholesalers had actually increased since the alleged division of markets had begun. The Court was content to conclude that given the nature of the alleged restraint and a rise in personal income substantially greater than the rise in liquor sales, an even greater increase in the sale of out-of-state liquor probably would have occurred absent the conspiracy.

      . We note that the alternate motion seeks dismissal on a number of grounds. Most are based upon factual allegations which are first raised in the Helme affidavit and which according to the motion are contradictory to the complaint. However, several seem to raise purely legal grounds for dismissal. As a result, it can be argued that these latter contentions are outside the rule in Andrews since that ease only bars our consideration of arguments on issues of faot not raised. Under this theory, we would still be free to consider these purely legal arguments as an alternative basis for affirming the dismissal as to HSC.
      Despite the technical logic of this argument, we do not feel we should consider these issues. The rule applied in Andrews is designed to further sound principles of judicial administration. ' 457 F.2d at 640. To further this goal, we must reject an approach which requires this court to examine the appellant’s motion in detail in order to decide which arguments have a factual dimension and which are purely legal before it can tell which issues are properly before it. Such an approach involves a needless expenditure of judicial energies. Since the motion is primarily based upon arguments that rely on questions of fact not raised before the district court, we feel the entire motion should be returned to that court for initial consideration.
      We naturally express no opinion on the further question as to whether purely legal isues not raised in the district court can be considered by this court de novo.


source: Caselaw Access Project

author: ADAMS, Circuit Judge. HASTIE, Circuit Judge

license: Public Domain

text:
    Earl R. FOSTER, Appellant, v. DRAVO CORPORATION, Appellee.
    No. 73-1083.
    United States Court of Appeals, Third Circuit.
    Argued Oct. 11, 1973.
    Decided Dec. 26, 1973.

      Harlington Wood, Jr., Asst. Atty. Gen.,. Richard L. Thornburgh, U. S. Atty., Jean A. Staudt, Robert E. Kopp, Appellate Section, Civil Div. Dept, of Justice, Washington, D. C., for appellant.
    Charles R. Volk, Robert H. Shoop, Jr., Thorp, Reed & Armstrong, Pittsburgh, Pa., for appellee.
    Before HASTIE, VAN DUSEN and ADAMS, Circuit Judges.
   OPINION OF THE COURT

ADAMS, Circuit Judge.

The issue in this case is whether under the Selective Service Act of 1967 an employee is entitled to full vacation benefits for the years he entered and returned from military service, under the terms of a collective bargaining agreement that conditioned the award of such benefits on the receipt of earnings during 25 weeks of the previous year.

Earl R. Foster, an employee of the Dravo Corporation since August 5, 1965, received a military leave of absence beginning on March 6, 1967. Shortly after completing his military obligation, he returned to the employ of Dravo on October 7, 1968. Foster thus worked for Dravo a total of nine weeks in 1967 and thirteen weeks in 1968.

The collective bargaining agreement between Dravo and Foster’s bargaining representative, Industrial Union of Marine and Ship Building Workers of America, Local 61, requires that an employee, in order to qualify for full vacation benefits, “must have received earnings in at least twenty-five (25) work weeks in the twelve (12) months preceding the current December 31st.”

The language and the overall scheme and purpose of the reemployment provisions of the' Selective Service Act of 1967, 50 U.S.C. App. § 459, are determinative of the present dispute about a reemployed veteran’s claim to civilian vacation pay on account of time spent in military service.

Section 459(b) requires that a returning veteran “be restored to the position vacated for military service” or, as an acceptable alternative, “to a position of like seniority, status, and pay.” Because the parties have stipulated that appellee was restored “to the position [he had] vacated,” the mandate of § 459(b) has been satisfied and there is no need in this case to consider the allowable alternative of restoration “to a position of like seniority, status, and pay.”

Rather, the controversy here arises out of the interpretation and application of § 459(c), which reads as follows:

(c)(1) Any person who is restored to a position in accordance with the provisions of paragraph * * *
(B) of subsection (b) shall be considered as having been on furlough or leave of absence during his period of training and service in the armed forces, shall be so restored without loss of seniority, shall be entitled to participate in insurance or other benefits offered by employer pursuant to established rules and practices relating to employees on furlough or leave of absence in effect with the employer at the time such person was inducted into such forces, and shall not be discharged from such position without cause within one year after such restoration.
(2) It is declared to be the sense of the Congress that any person who is restored to a position in accordance with the provisions of paragraph * * * (B) of subsection (b) should be so restored in such manner as to give him such status in his employment as he would have enjoyed if he had continued in such employment continuously from the time of his entering the armed forces until the time of his restoration to such employment. (Emphasis added)

Subsections (c)(1) and (2) require that job seniority shall not be adversely affected by military leave, and that, for the purpose of various “other benefits” enjoyed by employees under the employer’s rules and practices, the reemployed veteran shall be treated as “having been on furlough or leave of absence” during his military service.

I.

Much in this case turns on whether a particular incident of the employment relationship is regarded as falling under the “seniority” or the “other benefits” language of subsection (e)(1).

There is general agreement as to the differing import of the “seniority” and “other benefits” language of subsection (c)(1). If it is length of service that determines the amount or kind of emolument a returning veteran is to receive, it must be considered a perquisite of “seniority” and the veteran's time spent in the military is included when computing his length of service. If, on the other hand, the particular incident of employment does not accrue simply because of length of service, it must be considered a “benefit” other than one based on seniority, and the returning veteran is entitled to the advantages claimed only if he has met the other conditions.

It is in determining whether a benefit is conditioned simply on length of service or something more that difficulty is encountered. In deciding whether the “seniority” or “other benefits” language of subsection (c)(1) governs, we are guided by the Supreme Court’s instructions in Accardi v. Pennsylvania Railroad Co. to refrain from unreflective acceptance of the “labels” used by the employer and the union in describing the types of benefits contained in the collective bargaining agreement.

II.

Accardi has spawned a group of lower court opinions that, Foster contends, counsel reliance on strictly literal interpretations of the words of the collective bargaining agreement in determining whether a particular benefit, such as vacations, is to be considered a perquisite of “seniority” or to be placed in the category of “other benefits.” In Accardi itself, which dealt with the issue whether time spent in the military should be included in computing an employee’s severance pay, the Supreme Court did point out that under the contract there “bizarre results” were possible: “an employee [could] . . . receive credit for a whole year of ‘compensated service’ by working a mere seven days.” The Court in making this illustrative statement, however, was not suggesting that so long as any conceivable, although possibly unrealistic, reading of an agreement requires only a minimal work requirement in order to be entitled to a particular benefit, such benefit must be regarded as a prerogative of seniority. The language in Accardi following the reference to the “bizarre result,” indicates that the Court, instead, reached its conclusion much in the same way an arbitrator does, by considering not only the words of the agreement but also the meaning with which those words are imbued by the general and specific industrial relations milieu:

The use of the label “compensated service”' cannot obscure the fact that the real nature of those payments was compensation for loss of jobs. And the cost to an employee of losing his job is not measured by how much more work he did in the past — no matter how calculated — but by the rights and benefits he forfeits by giving up his job. Among employees who worked at the same jobs in the same craft and class the number and value of the rights and benefits increased in proportion to the amount of seniority, and it is only natural that those with seniority should receive the highest allowance since they were giving up more rights and benefits than those with less seniority. (Emphasis added)

Undoubtedly the fact that the contract in Accardi had an express provision defining “compensated service” contributed, in some manner, to the result the Court reached. But it certainly would be ironic for the Supreme Court to direct lower courts to abandon the use of labels when deciding whether a benefit is a prerogative of seniority and at the same time direct that they replace such use with a strained and niggardly analysis of the terms of collective bargaining agreements.

Foster suggests, however, that this Court, in Hoffman v. Bethlehem Steel Corporation, has interpreted the instructions in Accardi to require courts to base their decisions in § 459 cases on unusual constructions of labor contracts. The agreements in Hoffman granted to an employee one-half of a supplemental unemployment benefit (SUB) credit unit for each week in which he had “hours of work for the company.” Thus, like the agreement in Accardi, the Hoffman contract contained an express provision that permitted a “bizarre result;” that is, an employee who worked one hour each week could accrue as much SUB credit as one who worked forty hours a week.

It is not clear that Hoffman relied solely on the possibility that the union and the employer contemplated such a “bizarre result” in concluding that this particular benefit was a prerogative of seniority. Under the agreement in Hoffman an employee would receive SUB credits if he were on. vacation, on jury duty, performing responsibilities as a union officer, or re-receive SUB credits if he were on va-related injury. An employee on a voluntary leave of absence could neither accumulate nor use such credits. Thus, the Court was confronted with a contract granting employees on leaves of absence for certain enumerated reasons the right to accumulate SUB credits, while denying such right to employees on leave for other reasons. It could not be said, therefore, that the accumulation of SUB credits was conditioned exclusively on the actual performance of work.

It would seem that the Court in Hoffman concluded that the policies of § 459, as expressed in Accardi, required it, in the specific factual setting there, to resolve in favor of the returning veteran the ambiguity in the contract as to whether the accumulation of SUB credits was a prerogative of seniority.

A close analysis of the SUB plan suggests a second possible distinction between Hoffman and the case sub jud-ice. Unlike vacation benefits, the protection which the SUB plan furnishes is part of an employee’s job security interest. The SUB plan is designed to and in fact does give the employee assurance that throughout his employment he not only earns his take home pay, but also accumulates assurance that, if exigencies of business require that he be laid off, he will have income for some period of time. The plan is a way of conferring, in diminished stature, one of the chief advantages of seniority, protection against economic loss in a period of diminishing employment. The SUB plan thus has as its purpose and effect the extension of a seniority-type protection to employees who, due to their relatively short length of service with the company, would formerly have been unprotected. Therefore, subsection 459(e), interpreted in the light of its overall purpose and applied to give effect to evolving practice in labor relations, can fairly be said to require that the returning veteran be accorded this seniority-type advantage.

III.

Foster asserts that even if the reasoning in Accardi and Hoffman do not mandate reversal here, the Supreme Court in Eagar v. Magma Copper Company has determined that vacation benefits are to be regarded as prerogatives of seniority. In Eagar the collective bargaining agreement required an employee to work 75 per cent of his available shifts within the year and to be in the service of the company at the end of his “vacation earning year” in order to receive vacation benefits for that year. Because the plaintiff had met the first prerequisite — he had worked 75 per cent of the available shifts — Eagar is not persuasive authority for the proposition that vacation benefits are under all circumstances prerogatives of seniority. Eagar does establish that should military service prevent an employee from working on a particular day — the last day of his “vacation earning year — ” he does not forfeit benefits that he has already earned and would receive but for that specific absence. To this limited extent, vacation benefits are considered dependent on length of service, or, in alternative terminology, the veteran is regarded as being “continuously [employed] from the time of his entering the armed forces until the time of his restoration to such employment.”

The Circuits, however, differ as to whether Eagar commands automatic classification of vacation benefits as seniority rights regardless of the fact that a particular collective bargaining agreement purports to condition the receipt of vacation benefits on the completion of a specified amount of work.

In Kasmeier v. Chicago, Rock Island and Pacific Railroad Company, the Tenth Circuit declined to extend 1968 vacation benefits to an employee who worked 53 days during 1967 before entering the armed services, where the labor contract required “compensated service on not less than one hundred ten (110) days during the preceding calendar year.” The court reasoned that Ea-gar did not control since the plaintiff there had met the work requirement. This Court, in Dougherty v. General Motors Corporation, a pre-Eagar case, refused to compel the payment of vacation benefits to a returning veteran in 1946, when the collective bargaining agreement required earnings in 1945, a year during which the veteran was a member of the armed services, to qualify for a vacation in 1946.

The Ninth Circuit, on the other hand, in Locaynia v. American Air Lines, seems to have held that vacation benefits are ipso facto prerogatives of seniority. It appears, however, that the collective bargaining agreement in Locaynia did not provide that a specified minimum amount of work was prerequisite to the employee’s vacation benefits. In Ewert v. Wrought Washer Manufacturing Company, the Seventh Circuit cites Locaynia and uses broad language in sustaining the veteran’s claim to vacation benefits. Again, however, the contract in Ewert did not contain the type of work requirement present and not met in Kasmeier and Dougherty Although it is possible to distinguish these cases from Kasmeier, for example, on the basis of differences in the terms of the labor contracts, it is perhaps more candid to concede that a conflict in the Circuits does exist, since it appears that Locaynia and Ewert did not give more than cursory examination to the provisions of the collective bargining agreement.

IV.

We are thus faced with a difficult choice: (1) to eschew careful analysis of the collective bargaining agreements, implicitly admitting perhaps that courts are inherently incapable of engaging in the somewhat amorphous inquiry necessary to arrive at a just and reasonable construction of the terms of such contracts ; (2) or, to venture into that unclearly marked terrain of labor contract interpretation to determine whether the vacation benefits provided by particular agreements are rewards for length of service or additional compensation for work performed. If the former course is followed, then vacation benefits, at least with respect to the returning veteran, would always be considered prerogatives of seniority.

We conclude, instead, that it is our responsibility to give close attention to the contract and other related factors in reaching a determination whether the employer and the employees, through their representatives, viewed the particular benefit as additional compensation for work performed or a prerogative of seniority. In situations where a court does not have the fortuitous alternative of referring a dispute to someone, such as an arbitrator, more experienced in dealing with the ambiguities and inconsistencies in labor contracts, we find no authority for the proposition that the court is to abdicate its responsibility to fashion a solution after searching inquiry and careful deliberation. AI-though Congress by way of § 459, has thrust upon the courts controversies necessitating resort to labor contracts for their resolution, it has not directed them to abandon their normal procedures. In Accardi, the Supreme Court seems to have rejected any suggestion that it was to adopt a novel approach in § 459 cases. In an earlier case, Aeronautical Lodge 727 v. Campbell, the Court’s language suggests the conclusion we reach here:

It is . . •. apparent that Congress was not creating a system of seniority but recognizing its operation as part of the process of collective bargaining. We must therefore look to the conventional uses of seniority . which the Selective Service Act guaranteed the veteran. Barring legislation not here involved, seniority rights derive their scope and significance from union contracts. . . .

V.

Although the language of the contract requiring the employee simply to receive earnings in at least twenty-five weeks is arguably ambiguous, it is not realistic to surmise that any employee could work for substantially less than the number of hours customarily regarded as constituting a full work week for any period of time without being discharged. Even assuming, for example, that a particular employee’s job calls for ten hours of work per week, it is questionable that an arbitrator, or a court in the absence of an arbitration provision, would award such employee full vacation benefits under this contract. It appears quite likely that if this problem were raised during negotiations, the parties’ understanding would comport with such a determination.

A more detailed examination of Foster’s claim to vacation benefits and of the terms of the collective bargaining agreement, informed by an appreciation of the background understandings shared by the parties to labor contracts, supports the conclusion that the vacation benefits are not prerogatives of seniority.

It has been stipulated that from August 5, 1965 until his 1967 induction into the armed forces, Foster was employed by Dravo “as a scaler at an hourly rate of $2.62.” Upon his release from military service he was “restored in his pre-service position ... on or about October 7, 1968, at an hourly rate of $2.92.” It also is stipulated that before and after military service Foster was recognized as enjoying “plant seniority” as of August 4, 1965, the date of his original hiring.

“Seniority,” as used in this stipulation and generally in labor relations, is a priority factor that normally serves to protect workers’ long term interest in job security by determining preference in such matters as advancement, layoffs and rehiring. Indeed, Article XIV of the labor contract that regulated Foster’s employment defined “Seniority” as “the right of preference in layoffs or rehiring, measured by length of service in a job classification. . . .” Foster’s interests of the type that are normally determined by seniority have been duly protected by measuring his seniority from the date of his original employment without interruption by reason of his military leave.

Vacation with pay, on the other hand, is normally and reasonably considered part of a worker’s current or short term return for labor. Under this view, actual work time during a year provides a fair measure of the amount of annual vacation currently earned. Accordingly, the labor contract in this case measures the amount of paid vacation that a worker has earned on a basis different from seniority.

The contract specifies that to qualify for the maximum allowable annual vacation a worker must have “received earnings” in 25 work weeks during the immediately preceding calendar year. Thus, it is reasonable to treat the vacation pay that the employer provides as deferred compensation for work recently performed. But during about nine months of each of the years in question here Foster was a soldier and the army was responsible for his pay, on leave as well as during duty. To allow him at the same time to accrue civilian vacation credit in anticipation of his return to civilian employment would be inconsistent with, or at least an anomalous exception to, the general concept of earned vacation. Accordingly, section 459(c) is fairly and reasonably construed as not obligating the civilian employer to confer that benefit upon the returning soldier unless it is the employer’s practice to accrue vacation pay credits for employees during similar periods of uncompensated leave granted for reasons other than military service. It is neither alleged nor indicated by the record that the present employer has engaged in any such practice.

This case does not present a dilemma like the one this Court faced in Hoffman —some employees on leaves of absence received SUB credits under the agreement while others did not. Hence, we need not rely on the general Congressional policies undergirding § 459 in order to resolve an ambiguity created by inconsistent treatment of situations similar to the veteran’s in the collective bargaining agreement. Further, as we have already indicated, the essential character of the respective benefits at issue in Hoffman and this ease are significantly different.

Moreover, there are not present here circumstances where the veteran has barely failed to qualify for full benefits under the language of the contract. Close adherence to the contractual language will not therefore be manifestly unjust and there is little danger that such adherance will promote disharmony between the employer and the employee.

In sum, we hold that the terms of this collective bargaining agreement require twenty-five full work weeks, and Foster’s failure substantially to comply in this case precludes his claim to full vacation benefits. This result is consistent with the general purpose of § 459 to assure that the veteran when he returns to his pre-induction employment relationship is not disadvantaged vis-a-vis fellow employees who did not enter the military service. To hold that in this case Foster is entitled to vacation benefits, we would, in effect, be granting to the returning veteran a windfall at the expense of his employer and be discriminating against employees who are required to meet the conditions of the collective bargaining agreement if they are to receive vacation benefits. This outcome would be contrary to the intent and logic of § 459.

VI.

Our determination that Foster is not entitled to full vacation benefits under the collective bargaining agreement does not prevent his asserting a claim for pro rata vacation benefits under the provision of the contract providing for such benefits. The district court did not decide whether Foster is entitled to such benefits.

Although the complaint contains a general claim for vacation benefits, there is no specific averment relating to the pro rata benefits. The distinguished district court judge, however, after Foster’s counsel adverted to the provision relating to pro rata benefits, urged the parties to reach a compromise apparently along lines suggested by the language of that provision. In light of these conflicting circumstances, revealed in the record, we believe an appropriate course is to remand for a determination whether the question of Foster’s right to pro rata benefits was properly raised in the district court and, if so, for a decision on the merits of his claim to pro rata benefits.

Accordingly, the judgment will be vacated and the case remanded for action in conformity with this opinion.

HASTIE, Circuit Judge

(concurring).

I agree and add only that, in my view, the considerations that are decisive in this ease and should be most helpful to district judges in distinguishing advantages of seniority from “other benefits” under Section 459(c), are those set out in Part V of Judge Adams’ opinion.

      . Article XIV, section 2 of the collective bargaining agreement recites the conditions an employee must fulfill in order to receive vacation benefits. The relevant part of this section reads as follows:
      In order to qualify for the foregoing vacations, an employee who has been continuously employed for two (2) or more December 31st and has seniority on the current December 31st must have received earnings in at least twenty-five (25) work weeks in the twelve (12) months immediately preceding the current December 31st.
      It is only on the basis of Foster’s failure to meet the twenty-five weeks of work requirement that Dravo challenges his eligibility for vacation benefits.

      . See, e. g., Accardi v. Pennsylvania R.R., 383 U.S. 225, 86 S.Ct. 768, 15 L.Ed.2d 717 (1966) ; Tilton v. Missouri Pac. R.R., 376 U.S. 169, 84 S.Ct. 595, 11 L.Ed.2d 590 (1964). In Fishgold v. Sullivan Drydock & Repair Corporation, 328 U.S. 275, 66 S.Ct. 1105, 90 L.Ed. 1230, the court enunciated the “escalator principle” which assures that the veteran does not suffer because of his military service in terms of his length of service vis-a-vis fellow employees who do not serve in the armed forces. “[The veteran] does not step back on the seniority escalator at the point he stepped off. He steps back on at the precise point he would have occupied had he kept his position.” Id. at 284-285, 66 S.Ct. at 1111.

      . See, e. g., Kasmeier v. Chicago, R.I. & Pac. R.R., 437 F.2d 151 (10th Cir. 1971) ; Dougherty v. General Motors Corp., 176 F. 2d 561 (3d Cir. 1949).

      . 383 U.S. 225, 86 S.Ct. 768, 15 L.Ed.2d 717 (1966).

      . See id. at 229-230, 86 S.Ct. 768.

      . 383 U.S. at 230, 86 S.Ct. at 772.

      . See Haggard, Veterans’ Reemployment Rights and the “Escalator Principle,” 51 B. U.L.Rev. 539, 571 (1971) (hereinafter cited as Haggard) ; Note, The Supreme Court, 1965 Term, 80 Harv.L.Rev. 91, 149 (1966).

      . 383 U.S. at 230, 86 S.Ct. at 772.

      . 477 F.2d 860 (3d Cir., 1973).

      . Brief for Appellant at 13-15.

      . The agreement expressly precluded the accumulation of SUB credits by an employee while serving in the armed services “except as may otherwise be required by law.” The Court apparently reasoned that this quoted language expressly contemplated that the contract would not affect the operation of § 459.

      . It would be illogical, of course, for a laid-off employee to accrue SUB credits. Such an employee uses these credits at a rate of one per week of layoff. If he could at the same time accumulate credits, one purpose of the credit formula — to limit the company’s liability for SUB’S — would be, in part, defeated.

      . See Haggard at 542 for a discussion of the resolution of some apparent inconsistencies created by the language of the statute regarding leaves of absence and furloughs.

      . 389 U.S. 323, 88 S.Ct. 503, 19 L.Ed.2d 557 (1967) (per curiam), rehearing denied 389 U.S. 1060, 88 S.Ct. 767, 19 L.Ed.2d 866 (1968) .

      . Magma Copper Co. v. Eagar, 380 F.2d 318, 319-320 (9th Cir. 1967).

      . See Hollman v. Pratt & Whitney Aircraft, 435 E.2d 983, 988 (5th Cir. 1970).

      . 50 U.S.C. App. § 439(c) (2). In Morton v. Gulf, M. & O. R.R., 405 F.2d 415 (8th Cir. 1969), the contract provided that the number of days of vacation to which an employee was entitled depended on the number of years of compensated service he had with the company. The court concluded that under this contract the amount of vacation did depend on length of service. There is no dispute as to the amount of vacation benefits for which Foster is presently eligible. Instead, Foster seeks vacation benefits for years credited to him for the purpose of computing his present benefits but for which he received no benefits.

      . 437 F.2d 151 (10th Cir. 1971).

      . Id. at 154-155.

      . 176 F.2d 561 (3d Cir. 1949).

      . See also Dugger v. Missouri Pac. R.R., 403 F.2d 719 (5th Cir. 1968) (per curiam), cert, denied, 395 U.S. 907, 89 S.Ct. 1752, 23 L.Ed.2d 222 (1969), aff’g 276 F.Supp. 496 (S.D.Tex.1967) (failure to meet requirement that employee render compensated service on at least 110 days preceding calendar year precludes the awarding of vacation benefits to employee who worked for only 85 days because of military service).
      Dravo’s counsel urged at oral argument that the reasoning and holding of Dougherty control here. We cannot, however, affirm the district court on the basis of Dougherty without giving careful attention to the impact, if any, of the intervening Supreme Court decisions in Aooardi and Eagar on the precedential value of Dougherty.

      . 457 F.2d 1253 (9th Cir.), cert, denied, 409 U.S. 982, 93 S.Ct. 317, 34 L.Ed.2d 246 (1972).

      . See Comments, Reemployment Rights : The Veteran and the Vacation Benefit, 52 B.U.L.Rev. 480 (1973).

      . 457 F.2d at 1254 n. 2.

      . 477 F.2d 128 (7th Cir. 1973).

      . The Court in Ewert stated :
      Whatever one may conclude about the correctness of Dugger and Kas-meier with respect to the contracts there considered, we have no difficulty in concluding, under Eagar’s application of Aeoardi, that the vacation rights under the contract in this case are perquisites of seniority. Accordingly it is unnecessary to decide that there are no conceivable contractual provisions under which vacation rights are so purely additional compensation for services actually rendered, and so independent of seniority that Eagar would not apply. Id. at 129.

      . Ewert v. Wrought Washer Mfg. Co., 335 F.Supp. 512, 512 n. 1 (E.D.Wis.1971).

      . In Ewert, the court, although itself disdaining significant examination of the collective bargaining agreement, expressly rejected the apparent statement of the lower court that “vacation rights are always perquisites of seniority, and that there could be no contractual provisions under which vacation rights would fall into the class of other benefits.” 477 F.2d at 128-129.

      . We are aware that the task of interpreting labor agreements is an intricate and somewhat specialized one. When the contract provides for arbitration, the Supreme Court has instructed courts to refer disputes concerning the meaning and scope of substantive provisions to the arbitrator unless there is an “express provision excluding a particular grievance from arbitration” or “forceful evidence of a purpose to exclude the claim from arbitration.” United Steelworkers of America v. Warrior & Gulf Nav. Co., 363 U.S. 574, 584-585, 80 S.Ct. 1347, 1354, 4 L.Ed.2d 1409 (1960). In reaching its decision in Warrior & Gulf, the Supreme Court noted that the collective bargaining agreement was, in a sense, sui generis:

        . . . It is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate ... It calls into being a new common law — the common law of a particular industry or of a particular plant. Id. at 578-579, 80 S.Ct. at 1351.

        The court added that the arbitrator might well introduce relevant considerations customarily ignored by courts when construing the provisions of a typical commercial contract. Id. at 581-582, 80 S.Ct. 1347. See Cox, Reflections Upon Labor Arbitration, 72 Harv.L.Rev. 1487, 1500 (1959). However, in some situations, including the § 9 case before us, courts cannot escape from interpreting collective agreements. See Boys Markets, Inc. v. Retail Clerks Local 770, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970). See generally Note, Labor Injunctions, Boys Markets, and the Presumption of Arbitrability, 85 Harv.L.Rev. 636, 644-49. Warrior & Gulf, although raising questions as to judicial competence in this area, does not suggest that courts should woodenly construe labor contracts when the alternative of arbitral decision is unavailable.

      . See pp. 58-59, supra; Haggard at 571.

      . 337 U.S. 521, 69 S.Ct. 1287, 93 L.Ed. 1513 (1949).

      . Id. at 526, 69 S.Ct. at 1290.

      . Seniority also may be consequence to the extent that a worker is allowed a shorter maximum vacation for his first or other early year of employment than for a subsequent year. It is not disputed here that the appellant is entitled to full seniority from the date of his original employment in determin-' ing how long a vacation he could earn during a particular calendar year.

      . The claim here covers vacation pay for the full calendar years during which the appellant entered and left military service.

      . Cf. Dugger v. Missouri Pac. R.R., 403 F. 2d 719 (5th Cir. 1968) (per curiam), cert, denied, 395 U.S. 907, 89 S.Ct. 1752, 23 L. Ed.2d 222 (1969), aff’g 276 F.Supp. 496 (S. D.Tex.1967).

      . See Fees v. Bethlehem Steel Corp., 335 F.Supp. 487 (D.C.W.D.Pa.1971) ; Bradley v. General Motors Corp., 283 F.Supp. 481 (E. D.Mo.1968).

      . Article XIV, section 2 of the collective bargaining agreement provides, in part, as follows:
      However, employees who are laid off during the year immediately preceding December 31 and because of such layoff do not qualify for a vacation under this section will be given a pro rata vacation to which they might otherwise be entitled on the relationship of the weeks they did work to twenty-five (25) weeks but in no case more vacation than, they would have received under this Section if they had worked (25) weeks or more.

      . Transcript at 65-79a.


author: GODBOLD, Circuit Judge:

text:
    The CHARLES STORES, INC., Plaintiff-Appellee, v. AETNA INSURANCE COMPANY, Defendant-Appellant. The CHARLES STORES, INC., Plaintiff-Appellee, v. HARTFORD FIRE INSURANCE COMPANY, Defendant-Appellant.
    No. 72-1787.
    United States Court of Appeals, Fifth Circuit.
    Feb. 20, 1974.

      Fred C. DeLong, Jr., Greenville, Miss., Thomas H. Watkins, Jackson, Miss., for defendants-appellants.
    Joseph S. Mead, Birmingham, Ala., Philip Mansour, Greenville, Miss., for plaintiff-appellee.
    Before GEWIN, BELL and GOD-BOLD, Circuit Judges.
   GODBOLD, Circuit Judge:

On the first appeal in this suit over the proceeds of fire insurance policies on a Mississippi building we reversed a jury verdict for the insurers because evidence that the insurers had waived policy defenses was erroneously excluded. 428 F.2d 989 (CA5, 1970). Following a second jury trial the court entered judgment for the insured in the amount of $199,572.82 based on the jury’s answers to special interrogatories. The insurers appealed.

I

The insurers were not entitled to a directed verdict on the ground that as a matter of law the insured had failed to comply with the protective safeguard provision of the policies:

PROTECTIVE SAFEGUARDS: It is a condition of this insurance that the Insured shall maintain so far as is within his control such protective safeguards as were stipulated in the application for this insurance or for which credit in rate has been granted. Failure to maintain such protective safeguards shall suspend this insurance only as respects the location or situation affected for the time of such discontinuance.

A credit in the rate was granted because of the existence of interconnected sprinkler and alarm systems. When firemen arrived at the fire the water valve for the sprinkler system was turned off, which also disconnected the alarm system. Additionally, a screw connection in the alarm system was found unfastened the next day. The insurers claimed that the fact that the sprinkler system was off was a breach of warranty which terminated the coverage. Accepting arguendo that a breach of the above-quoted provision would terminate coverage, there was evidence that the sprinkler system was repaired and found to be in working order two days before the fire. The jury could infer that the fire, which, without dispute, was of incendiary origin, was set by persons whose acts were not chargeable to the insured and that whoever set the fire disengaged operative safeguard devices, and that, therefore, the insured complied with its duty to maintain the system “so far as is within his control.” Neither the language of the policy nor the cases cited support an interpretation of the policy so sweeping as that urged by appellants — that the insured is a guarantor of the continuing effectiveness of safeguard devices so long as it is in control of the premises and that such guarantee is breached and coverage suspended if the cause for the inoperative condition of safeguards is the act of persons other than the insured done concurrently with the fire itself. An insured’s overall control of the premises does not give it control in the sense that it can prevent the act of an arsonist who cuts off the sprinkler system while setting a fire. To assure itself, under appellants’ construction, of the benefits of a safeguards clause the insured would have to keep a watchman on the premises. Presumably if the fire itself rendered the safeguards inoperative the insurers would not claim coverage was suspended. We perceive no difference if, as the jury could find, the safeguards were disengaged by the person who started this incendiary fire.

II

The insurers say that the trial court did not submit to the jury the protective safeguard defense, or if submitted the submission was not correct. Interrogatories Nos. 7 and 10 read as follows:

Interrogatory Number 7: Do you find from a preponderance of the evidence that the sprinkler system in the Charles Store was cut off, the electric alarm system in said store was disconnected and an incendiary device, consisting of a sun lamp attached to an electrical plug was embedded in a stack of towels, by an agent or officer of plaintiff corporation while acting within the performance of his duties as such officer or agent, in the furtherance of the business of plaintiff corporation and in its interest, and with the knowledge, authorization, consent or ratification of Charles D. Saunders ?
Answer: No.
* -X- 7- * * -x-
Interrogatory Number 10: Do you find from a preponderance of the evidence that at the time of and before the fire the sprinkler system and electric alarm device in the store were not in good working order and that such condition increased the hazard of fire in the Charles Store building? Answer “Yes” or “No”.
Answer: No.

There was no objection to either interrogatory. Nevertheless appellants say on appeal that interrogatory 10 was not a proper submission to the jury because: (a) it is undisputed that before the fire the sprinkler system was not in working order, and (b) the protective safeguard provision of the policy has no relationship to increase in hazard because the mere fact of inoperative safety devices terminates coverage without regard to hazard. The second clause of the interrogatory is, as appellants say in (b), probably not relevant to the protective safeguards clause. The linchpin of appellant’s argument is not, however, the giving of the irrelevant second clause of the interrogatory but the theory that the undisputed evidence required an affirmative answer to the first clause, and, since no one would disagree that safety devices not in working order would increase the hazard, the only permissible answer to interrogatory 10 was “Yes,” and the jury having answered “No” the answer must be set aside as unsupported by the evidence. This argument collapses because the linchpin fails. There was evidence that two days before the fire the sprinkler system was repaired and put in good working order. The jury was free to conclude that the devices were operative up to the time of the fire.

The District Judge pointed out in his order denying appellant’s post-trial motions that he considered the evidence conclusively to show that whoever set fire to the store disconnected the safety devices (and at several places in the charge he referred to this as a fact), and he considered (as do the appellants) that no one could disagree that this increased the hazard, thus what interrogatory 10 was designed to do, and did do, was submit the question of whether before the safety mechanisms were disconnected they were in. good order. The trial judge went on to say:

Defendants’ objection and criticism of the interrogatory on this ground have been raised for the first time after the verdict. It is evident that defendants’ counsel, at the trial stage, interpreted the interrogatory as does the court; otherwise counsel would have made the objection known to the court at the trial and before the case was submitted to the jury.
The court does not believe the jury was mislead [sic] by the interrogatory. The jury’s response establishes the fact that the systems were in good working order at the time of and before the fire, that is to say, before the systems were tampered with by the person or persons who caused the fire.

Interrogatory 7 established that the setting of the fire and the concurrent cutting off of the sprinkler system were not done with the knowledge, consent (etc.) of the insured. In summary, the trial judge pointed out in his statement of reasons that Interrogatory 10 established that before the fire the safeguards systems were in proper working order; that the evidence conclusively showed that at the time of the fire they were turned off by whoever set the fire; and that Interrogatory 7 established that plaintiff neither knew of nor consented to the setting of the fire and the concurrent, cutting off of the sprinkler system. We think that the absence of objections to the form of interrogatories 10 and 7 and the application of the answers by the trial court, as authorized by F.R.Civ.P. 49(a) and as explained in the post-trial order, dispose of appellants’ contention.

Ill

The appellants offered and the trial court excluded statistical data tending to show that in its fiscal year ending two months before the fire the insured’s financial position had deteriorated and, as of the end of the fiscal year, was poor. This evidence was offered on the theory that it was evidence of an increase in “moral hazard” to be considered by the jury in connection with the policy provisions saying:

THIS COMPANY SHALL NOT BE LIABLE FOR LOSS OCCURRING (a) while the hazard is increased by any means within the control or knowledge of the insured.

We cannot say that the exclusion was error. The Aetna policy was issued two days before the fire, the Hartford policy approximately six months before the fire. There is no showing to us that the financial data in question tended to establish any increase of hazard after the date of issuance of either policy. The excluded evidence consists of a certified public accountants’ report covering Charles Stores’ fiscal year beginning September 1, 1963 and ending August 31, 1964. Obviously this data relates not at all to any period subsequent to issuance of the Aetna policy on November 16, 1964. Except for gross sales figures, the data was not broken down by months or quarters but rather was computed for the entire fiscal year. Consequently the most that appellants could have demonstrated by its use would have been that the Hartford policy, issued on June 5, 1964, was issued during the last quarter of a fiscal year during which the financial picture of the insured darkened, that is, that Hartford undertook coverage of a deteriorating insured. The direction or magnitude of changes in the insured’s financial condition in the period subsequent to issuance of the Hartford policy cannot be accurately inferred from this limited data.

Additionally, no authority is cited which, in our view, indicates that Mississippi would adopt a rule that increase in hazard “by any means within the control or knowledge of the insured” includes a worsening financial condition of the insured unaccompanied by any physical change in the condition, usage, or occupancy of the premises.

A part of the incendiary means employed to set fire to the instant premises was a sun lamp. The appellants offered evidence that approximately six months earlier an abortive effort had been made to set fire to another store owned by the insured in a different city, and that the same sun lamp was claimed to have been part of the incendiary scheme that was there unsuccessfully used. This evidence was not offered as tending to prove that the insured had set both fires. Rather the insurers represented to the trial court that they did not claim arson by the insured. See footnote 4, supra. The proffer was upon the theory that the mere presence in the premises of this common electrical appliance, allegedly once used to attempt to start a fire in another store of the insured, demonstrated indifference and apathy by the insured to the possibility that the appliance might again be used for a similar unlawful purpose by someone other than the insured and thus was probative of an increase in hazard. We agree with the District Judge who excluded this evidence as too tenuous for the purpose for which it was offered.

See, as to an even less attenuated situation, 8 Couch, Encyclopedia of Insurance Law (2d), § 37:715, p. 327:

The mere possibility that an unsuccessful attempt by an unknown person to burn an insured building may be repeated, coupled with failure to take any adequate measures to prevent it, or to notify the insurer, is not an increase of hazard which will avoid the policy, under a provision that it shall be void if the hazard is increased by any means within the control or knowledge of the insured.

See also,5 Appleman, Insurance Law & Practice, § 2942, p. 17.

IV

There was evidence that in the course of a post-fire count of merchandise made for the purpose of calculating the value of inventory, items of the value of approximately $1,500 were counted twice at the direction of Virgil Thompson, an officer of the insured. The policies provided:

This entire policy shall be void if, whether before or after a. loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.

The position of insurers is that the jury’s answers to interrogatories with respect to this issue required entry of judgment for defendants. Pertinent interrogatories are numbers 3, 4 and 5. Numbers 3 and 4 are:

Interrogatory Number 3: Do you find from the preponderance of the evidence that during the taking of the physical inventory after the fire, goods were counted more than once, and such double count materially increased the aggregate inventory used to finally calculate the actual cash value of such inventory? (If answer is No do not answer # 4.)
Answer: Yes.
Interrogatory Number 4: Do you find from a preponderance of the evidence that such double count was done pursuant to the instructions given by Virgil Thompson, as Vice-President and General Manager of Charles Stores, Incorporated, with the knowledge of such double count and with the intent to defraud defendants ? Answer Yes or No.
Answer: Yes.

Interrogatory 5 related to whether Thompson in directing the double count was acting in his own behalf or on behalf of the corporation. Initially the interrogatory was inaptly worded, but after it was amended and explained at some length the jury answered unequivocally that Thompson was acting on his own behalf and not for the company.

The appellants urge, however, that they are entitled to entry of judgment because it is undisputed that the existence of the double count was known to Lucien Hill, the store manager, and that Hill’s knowledge is imputed to the insured. Accepting that as correct does not, however dispose of the question of whether the insured, knowing what Hill knew, “impliedly concealed or misrepresented” or engaged in “fraud or false swearing.” The jury found that Thompson was acting fraudulently but for his own purposes and adversely to the interest of the corporation. Whether Hill’s knowledge of Thompson’s actions, as imputed to the corporation, constituted fraud or wilful concealment or misrepresentation was not the subject of any interrogatory and was, therefore, by Rule 49(a) left to be the subject of a finding made or deemed to be made by the court. A trier of fact could conclude that, insofar as Hill (and thus the corporation via Hill) was aware, Thompson’s acts were no more than negligence, inadvertence or simply errors occurring in the mechanical task of determining in a relatively short period of time, by physical count of a great number of items, what was on hand. Additionally, on the issue of the insured’s state of mind concerning the fact of a Thompson-directed double count, the president of the insured testified that the day after the inventory, Hill told him of the double count and he (the president) told the insurance companies about it.

V

The trial court allowed interest on the judgment from April 13, 1965, a month after the proof of loss was filed, under the discretionary power recognized by the Mississippi Supreme Court in Commercial Union Insurance Company v. Byrne, 248 So.2d 777 (Miss.1971). We cannot say that the discretion was abused.

Affirmed.

      . E. g., policy with a watchman clause and no watchman is maintained by the insured. Coleman Furniture Corp. v. Home Insurance Co., 67 F.2d 347 (CA4, 1933) ; Atlas Assurance Co. v. Standard Brick and Tile Corp., 264 F.2d 440 (CA7, 1959) ; Kinchen v. Lexington Insurance Co., 292 F.2d 581 (CA5, 1961). A situation comparable to that which the jury could find existed in the present case but arising under a watchman clause would be one where there was evidence supporting findings that the watchman was on duty but was knocked unconscious by an arsonist setting the premises afire.

      . “If . . . the court omits any issue of fact raised by the pleadings or by the evidence, each party waives his right to a trial by jury of the issue so omitted unless before the jury retires he demands its submission to the jury. As to an issue omitted without such demand the court may make a finding; or, if it fails to do so, it shall be deemed to have made a finding in accordance with the judgment on the special verdict.”

      . It is doubtful that the monthly gross sales figures, standing alone, could reasonably be taken to imply anything at all about changes in the overall financial condition of the Charles Stores. In any event, the figures for June, July and August of 1964 — the only months subsequent to issuance of the Hartford policy covered by the data — show gross sales in the Greenwood store at which the fire occurred of $36,277.30, $34,836.13, and $32.841.25 respectively. By way of comparison, the figures for June, July and August of the prior fiscal year were $10,068.00, $7,-949.00, and $7,232.08 respectively, and the figures for March, April and May of 1964— the three months prior to issuance of the Hartford policy — were $18,462.20, $21,754.37, and- $36,350.30 respectively. Thus to the extent that any inference could rationally be drawn from the monthly sales data, it could only be one favorable to the insured.

      . See Western Assurance Co. v. McPike, 62 Miss. 740 (1885) (where residential premises were abandoned by insured, occupied without authority by a non-paying squatter and converted into a retail liquor house, directed verdict for insurer was required under policy stipulation that if insured premises were unoccupied for more than 30 days or were used and occupied so as to increase risk, policy would be void.) ; Frisby v. Central Mutual Ins. Co., 238 Miss. 538, 119 So.2d 382 (1960) (where policy contained provision that failure of insured mortgagee to notify insurer of any “increase in hazard” known to him would void the policy, and mortgagee knew that premises insured as a grocery store were being used as a “juke joint,” the question whether sale of liquor and related activities was an “increase in hazard” was properly submitted to the jury which found for the insurer.) ; Zepponi v. Home Ins. Co., 248 Miss. 828, 161 So.2d 524 (1964) (clause in a fire insurance contract prohibiting other insurance is a reasonable provision designed to prevent fraud or carelessness and violation of the provision avoids the policy.).
      Future Realty, Inc. v. Fireman’s Fund Ins. Co., 315 F.Supp. 1109, 1116 (S.D.Miss.1970), refers to a purported definition of moral hazard in a Mississippi case, Phoenix Ins. Co. v. Haney, 235 Miss. 60, 108 So.2d 227 (1959). The “definition” is from an instruction given by the trial court in Phoenix at the instance of the defendant-appellant, against whom the jury found. Thus its correctness was neither before the Mississippi Supreme Court for approval nor approved. Even if the definition — i. e., “any change in the insured property that increases the probability of destruction by the owners or others”— represents the Mississippi rule, in Future Realty there were such changes “in the insured property,” accompanied by adverse financial circumstances of the insured, while in the instant case' the proffer was of changes in financial circumstances unaccompanied by changes in the property.
      Compare Esbjornsson v. Buffalo Ins. Co., 252 Minn. 269, 89 N.W.2d 893 (Minn.1958) :
      “A homeowner would indeed be startled to learn that the insurance policy on his home was void because, subsequent to its issuance, he had sustained a minor or major financial loss.”
      Arguably an insurer can expect financial ups and downs by the owner or occupant of insured business premises and does not anticipate being bound only on the upswing.
      While we need not pass on his rationale, we note that the trial judge in the present case considered financial deterioration relevant only if there was a contention, supported by the evidence, that the insured itself had sought -to burn the building for its own advantage. The insurer, after asserting at the first trial arson by a corporate officer, affirmatively represented to the trial court at the second trial that it did not claim arson by the insured and expressly took the position that financial adversity of the insured was evidence of increase in moral hazard suspending coverage even if the fire were the work of a stranger.


author: PER CURIAM:

text:
    John W. BAILEY, Petitioner-Appellant, v. Allen AULT, Warden, Georgia Diagnostic Center, Jackson, Georgia, Respondent-Appellee.
    No. 73-3229
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Feb. 20, 1974.
    John W. Bailey, pro se.
    Arthur K. Bolton, Atty. Gen., Daniel I. MacIntyre, Asst. Atty. Gen., David L. G. King, Jr., Asst. U. S. Atty., Atlanta, Ga., for respondent-appellee.
    Before BELL, SIMPSON and MORGAN, Circuit Judges.

       Rule 18, 5 Cir., Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir., 1970, 431 F.2d 409, Part I.

   PER CURIAM:

This is an appeal from an order of the United States District Court for the Northern District of Georgia dismissing in part a petition for a writ of habeas corpus on grounds of appellant’s failure to exhaust state remedies on two of the contentions presented therein and denying relief on the merits as to all other grounds. We affirm in part and vacate in part, and remand the cause for further proceedings.

The appellant, a white male, represented by court-appointed counsel, was convicted upon trial by jury of murder. He was sentenced to life imprisonment on March 29, 1960. There was no direct appeal.

The appellant has apparently filed petitions for habeas corpus relief in the Georgia state courts on three different occasions, the first being in 1964. The second petition for habeas relief was filed in the Superior Court of Tattnall County on February 20, 1970. Therein appellant presented substantially all of the issues presented to the district court in the case sub judice. An evidentiary hearing was subsequently held on the merits of this petition on June 17, 1970, following which the court denied relief. This ruling was affirmed by the Georgia Supreme Court. Bailey v. Smith, 1971, 227 Ga. 291,180 S.E.2d 356.

Thereafter, appellant brought a third petition for habeas relief in the Superi- or Court of Butts County on March 13, 1972, raising therein the same or similar issues as previously presented. That petition was dismissed on the state’s motion for summary judgment. On appeal, the ruling was affirmed by the Georgia Supreme Court. Bailey v. Ault, 1972, 229 Ga. 646, 193 S.E.2d 823. Appellant then filed his petition for habeas relief in the United States District Court.

In his federal habeas petition, the appellant has contended that he was denied his constitutional rights as follows: (1) when arrested he was not advised of his rights; (2) after arrest he was denied access to counsel; (3) he was denied a preliminary hearing; (4) he was denied the effective assistance of counsel in that, inter alia, his appointed counsel refused to prosecute an appeal; (5) he was incompetent and “temporarily insane during the proceedings of trial;” (6) the jury selection was improper and resulted in a racially segregated grand and petit juries in his case; (7) hearsay testimony was allowed at his trial; and (8) the transcript of his trial was suppressed.

Because the district court was uncertain whether the appellant had received a full and fair hearing on all issues raised, the court appointed counsel so that appellant might have assistance in developing the issues. The court advised counsel that it was primarily concerned with the questions involving appellant’s right to appeal, his right to effective assistance of counsel in the matter of appeal, and appellant’s challenge to the racial composition of the juries involved.

After receiving responses from both the state and the appellant’s counsel, the district court dismissed without prejudice the appellant’s petition upon his contention (4), denial of the effective assistance of counsel in the matter of his appeal, and on contention (6), the allegations relating to the jury composition. The court’s reasoning for the dismissal was its conclusion that appellant first should present these two issues to the Georgia courts for consideration, i. e., that he had failed to exhaust his state remedies as required by 28 U.S.C. § 2254(b).

The district court denied relief on the merits appellant’s other six contentions (enumerated above), holding that “petitioner has not alleged nor has this Court disclosed anything to justify the rejection of the findings of fact and conclusion of law of the state courts.”

After careful consideration we conclude that the ruling below dismissing the appellant’s contention of denial of his right to a direct appeal with representation of counsel, for failure to exhaust state remedies, was incorrect. The record before this Court includes two of the three previous habeas petitions, which show that this issue has been presented in the Georgia state courts and decided adversely to the appellant.

The district court was of the opinion that the appellant should be required to present to the state courts the issue whether this Court’s decisions in Byrd v. Smith, 5th Cir. 1969, 407 F.2d 363, and Lumpkin v. Smith, 5th Cir. 1971, 439 F.2d 1084, announced, a “new rule” to be applied retroactively vel non. In the Lumpkin case we said, “It is well established in this Circuit, as elsewhere, that an indigent accused is denied effective assistance of counsel at a critical stage of the criminal process when his court-appointed attorney fails to advise him of his right to appeal, the procedure and time limits involved, and of his right to appointed counsel on appeal.” [Citing eases.] 439 F.2d at 1085. In Edge v. Wainwright, 5th Cir. 1965, 347 F.2d 190, we held similarly relative to a state habeas applicant who complained of a 1953 conviction.

Our decision in the Edge case shows that in the case sub judice there is no valid issue of retroactivity of the rule stated in Edge, Byrd, Lumpkin, and numerous other eases of this Court and the Supreme Court. We said as much in the Byrd case. 407 F.2d at 365, fn. 2. Shiflett v. Commonwealth, 4th Cir. 1971, 447 F.2d 50 (en banc) which denied retroactivity in such cases, on which the instant ruling partially was grounded, has never been the rule in this Circuit. See also Smith v. Crouse, 1964, 378 U.S. 584, 84 S.Ct. 1929, 12 L.Ed.2d 1039, reversing Smith v. Crouse, 1963, 192 Kan. 171, 386 P.2d 295, which had held that Douglas v. California, 1963, 372 U.S. 353, 83 S.Ct. 814, 9 L.Ed.2d 811, was not to be accorded retrospective application; McConnell v. Rhay, 1968, 393 U.S. 2, 3, 89 S.Ct. 32, 21 L.Ed.2d 2. Moreover, the opinion of the Georgia Supreme Court in Bailey v. Ault, 1972, 229 Ga. 646, 193 S.E.2d 823 makes it abundantly clear that any further efforts to exhaust state remedies on this point by the appellant would be futile.

After having reviewed the transcript of the state evidentiary hearing we are of the opinion that the material facts were not adequately developed at the state court hearing, concerning the denial of appellant’s direct appeal rights. Accordingly, we vacate that part of the district court’s order which concerns this contention and remand the cause with directions that appellant be granted an evidentiary hearing thereon. See Lumpkin v. Smith, supra; Byrd v. Smith, supra; Edge v. Wainwright, supra.

With regard to the district court’s ruling concerning the issue of jury composition, i. e., the Peters v. Kiff, 1972, 407 U.S. 493, 92 S.Ct. 2163, 33 L.Ed.2d 83, contention, this Court recently has held that Peters v. Kiff is not to be applied retroactively. Watson v. United States, 5th Cir. 1973, 484 F.2d 34. Since this contention lacks merit as a matter of law, it is not necessary that it be further litigated.

After reviewing the record concerning appellant’s other six contentions, we have concluded that the district court did not err in denying relief thereon, and accordingly the rulings on these points will be affirmed. We vacate that part of the judgment appealed from which held that there was failure to exhaust state remedies on appellant’s contentions (4) and (6), and remand the cause for an evidentiary hearing on the sole issue of whether the appellant was denied his rights to a direct appeal. The appellant’s contention concerning composition of the juries is to be dismissed with prejudice by the district court, for the reason stated hereinabove. Cf. Mosley v. Smith, 5 Cir., 1973, 470 F.2d 1320, 1322-1323.

Affirmed in part; vacated and remanded in part.

      . According to the appellate opinion affirming the latest denial of state habeas relief, Bailey v. Ault, 1972, 229 Ga. 646, 193 S.E.2d 823, appellant filed his first petition in 1964. The record before us has no documentation concerning this petition nor does it include a copy of the order denying relief.

      . The transcript of this hearing is included as one of the exhibits in this appeal.

      . The court noted that such concern was not to suggest that it rejected any of the appellant’s other contentions at that juncture.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. NEW ORLEANS BOOK MART, INC., Frederick Eno-Mayhew Lund, Michael George Thevis and Robert Mitchum, Defendants-Appellants.
    No. 71-2594.
    United States Court of Appeals, Fifth Circuit.
    Feb. 19, 1974.
    Rehearing and Rehearing En Bane Denied April 3, 1974.

      Michael Silvers, New Orleans, La., J. M. Ausburn, San Antonio, Tex., Stanley Fleishman, Hollywood, Cal., Robert Eugene Smith, Atlanta, Ga., for defendants-appellants.
    Gerald J. Gallinghouse, U. S. Atty., Michael H. Ellis, Mary Williams Cazales, Asst. U. S. Attys., New Orleans, La., for plaintiff-appellee.
    Before TUTTLE, GEWIN and RO-NEY, Circuit Judges.
   PER CURIAM:

This obscenity case, in conjunction with two others being decided today by this panel, arises from convictions obtained prior to the “Miller quintet” and our recent decisions in light thereof. The appeals were held pending the Supreme Court’s disposition of Miller. Virtually every point made on this appeal is now controlled by these recent decisions adversely to appellants. We affirm.

The New Orleans Book Mart, Frederick Lund, Michael Thevis, and Robert Mitehum were convicted of violations of 18 U.S.C.A. §§ 1465 and 2 in that they knowingly transported or caused to be transported obscene material in interstate commerce by common carrier for the purpose of sale or distribution.

(1) Expert testimony is not required by the Government to meet its burden of proving that the materials go beyond the customary limits of candor in their description of sex and nudity. Paris Adult Theatre I v. Slaton, 413 U.S. 49, 93 S.Ct. 2628, 37 L.Ed.2d 446 (1973), citing with approval United States v. Groner, 479 F.2d 577 (5th Cir. 1973); United States v. Thevis, 484 F. 2d 1149 (5th Cir. 1973).

(2) Scienter as to the exact content of the material transported, rather than a general knowledge that the material is sexually oriented, is not required to uphold a conviction under 18 U.S.C.A. § 1465. See United States v. Orito, 413 U.S. 139, 93 S.Ct. 2674, 37 L.Ed.2d 513 (1973); United States v. Thevis, 484 F. 2d 1149 (5th Cir. 1973).

(3) 18 U.S.C.A. § 1465, which utilizes the same pertinent language as 18 U.S.C.A. § 1462 (“obscene, lewd, lascivious, or filthy”), is not void for vagueness and overbreadth. See United States v. Orito, 413 U.S. 139, 93 S.Ct. 2674, 37 L.Ed.2d 513 (1973); Roth v. United States, 354 U.S. 476, 77 S.Ct. 1304, 1 L.Ed.2d 1498 (1957); United States v. Thevis, 484 F.2d 1149 (5th Cir. 1973).

At oral argument, recognizing the formidable decision array against them, defendants appropriately modified their argument and urged that their convictions must be reversed due to the timely interaction of their trial with the subsequent Supreme Court clarification and definitional readjustments incorporated in Miller. The crux of their appellate argument rests in the recognition that their conviction was under a definition of obscenity gauged by national standards. Miller declared a national standard to be unworkable, at least in a state prosecution context, and permitted local community standards as the appropriate gauge. Defendants argue that since they were tried and convicted under the “unworkable” national standard, their convictions must be reversed and a new trial granted for adjudication under the local community standard. To find them guilty under the new gauge at this juncture would be tantamount to ex post facto application of an “intimated” prospective only standard. See United States v. 12 200-Ft. Reels of Film, 413 U.S. 123, 130 n. 7, 93 S.Ct. 2665, 37 L. Ed.2d 500 (1973).

We realize defendants were convicted in what may be called a no man’s land. But we also realize that the Supreme Court did not intend by its June 21, 1973 decisions to leave the country without enforceable protection against obscene materials and their purveyors. It is this realization which led this Court in United States v. Thevis, 484 F.2d 1149 (5th Cir. 1973) to develop its dual test approach:

[W]e conclude that by indiscriminately vacating and remanding these eases, the Supreme Court declared that all obscenity cases which had not reached final adjudication should be re-examined in light of its clarification of previous standards and its declaration of new standards. We do not read this as precluding our application of the Memoirs standard to materials involved in transactions occurring in 1970. We base this conclusion on several observations. For one, we note that the Supreme Court in Miller stated specifically that Memoirs was “correctly regarded at the time of trial as limiting state prosecution under controlling case law.” 413 U.S. at 30, 93 S.Ct. at 2618, 37 L.Ed.2d at 435.
Further, at no point did the Court indicate that Miller’s clarification and modification of Memoirs was the result of Memoirs permitting unconstitutional infringement on efforts to distribute pornography. . . . We are unable to conclude from the Court’s wholesale remand of these cases, without more, that the Court, concerned as it was for strengthening the power to regulate pornography, chose gratuitously to eliminate constitutionally-valid law that would otherwise be available in prosecuting pending obscenity cases.

Following that opinion, we have examined the publications and film in the case sub judice under Memoirs v. Massachusetts, 383 U.S. 413, 86 S.Ct. 975, 16 L.Ed.2d 1 (1966), and under Miller and find them to be within the legal parameters of obscenity.

Affirmed.

      . United States v. Sulaiman, 490 F.2d 78 (5th Cir. 1974) [No. 71-3145] ; United States v. Thevis, 490 F.2d 76 (5th Cir. 1974) [No. 72-2664],

      . Miller v. California, 413 U.S. 15, 93 S.Ct. 2607, 37 L.Ed.2d 419 (1973) ; Paris Adult Theatre I v. Slaton, 413 U.S. 49, 93 S.Ct. 2628, 37 L.Ed.2d 446 (1973) ; Kaplan v. California, 413 U.S. 115, 93 S.Ct. 2680, 37 L.Ed. 2d 492 (1973) ; United States v. 12 200-Ft. Reels of Super 8mm Film, 413 U.S. 123, 93 S.Ct. 2665, 37 L.Ed.2d 500 (1973) ; United States v. Orito, 413 U.S. 139, 93 S.Ct. 2674, 37 L.Ed.2d 513 (1973) ; United States v. Millican, 487 F.2d 331 (5th Cir. 1973) ; United States v. Thevis, 484 F.2d 1149 (5th Cir. 1973)


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Michael G. THEVIS, Gary Van Gundy and Rivergate News Agency, Inc., Defendants-Appellants.
    No. 72-2664.
    United States Court of Appeals, Fifth Circuit.
    Feb. 19, 1974.
    Rehearing and Rehearing En Banc Denied April 3, 1974.
    Michael Silvers, New Orleans, La., for Thevis.
    Ronald Tanet, New Orleans, La., Robert Eugene Smith, Towson, Md., for Van Gundy and Rivergate News.
    Stanley Fleishman, Hollywood, Cal., for defendants-appellants.
    Gerald J. Gallinghouse, U. S. Atty., Michael H. Ellis, Mary Williams Cazalas, Asst. U. S. Attys., New Orleans, La., for plaintiff-appellee.
    Before TUTTLE, GEWIN and RO-NEY, Circuit Judges.
   PER CURIAM:

This obscenity case, in conjunction with two others being decided today by this panel, arises from convictions obtained prior to the “Miller quintet” and our recent decisions in light thereof. The appeals were held pending the Supreme Court’s disposition of Miller. Virtually every point made on this appeal is now controlled by these recent decisions adversely to appellants. We affirm.

Thevis, Van Gundy, and The River-gate News Agency, Inc. were convicted for using a common carrier for interstate transportation of obscene material in violation of 18 U.S.C.A. § 1462.

(1) Expert testimony is not required to uphold a determination that the transported material is obscene. Paris Adult Theatre I v. Slaton, 413 U.S. 49, 93 S.Ct. 2628, 37 L.Ed.2d 446 (1973), citing with approval United States v. Groner, 479 F.2d 577 (5th Cir. 1973); United States v. Thevis, 484 F.2d 1149 (5th Cir. 1973).

(2) Failure of the court to charge the jury specifically as to the national standard for determining the obscenity of the material was not error in view of the newly enunciated community standard test. Miller v. California, 413 U.S. 15, 93 S.Ct. 2607, 37 L.Ed.2d 419 (1973); United States v. Orito, 413 U.S. 139, 93 S.Ct. 2674, 37 L.Ed.2d 513 (1973); United States v. 12 200-Ft. Reels, 413 U.S. 123, 93 S.Ct. 2665, 37 L. Ed.2d 500 (1973); United States v. Thevis, 484 F.2d 1149 (5th Cir. 1973).

(3) Scienter by the defendants that the transported materials are legally obscene is not required for conviction under 18 U.S.C.A. § 1462. Defendants’ knowledge of the materials’ sexual orientation is sufficient. United States v. Orito, 413 U.S. 139, 93 S.Ct. 2674, 37 L. Ed.2d 513 (1973); United States v. Thevis, 484 F.2d 1149 (5th Cir. 1973).

(4) Title 18 U.S.C.A. § 1462 is neither unconstitutionally vague or over-broad. United States v. Orito, 413 U.S. 139, 93 S.Ct. 2674, 37 L.Ed.2d 513 (1973); Roth v. United States, 354 U.S. 476, 77 S.Ct. 1304, 1 L.Ed.2d 1149 (1957); United States v. Thevis, 484 F. 2d 1149 (5th Cir. 1973).

In addition to urging the non-workability of a national standard in conjunction with the ex post facto effect of applying the Miller standards to this case, an argument which we answered adversely to defendants today in United States v. New Orleans Book Mart, 490 F.2d 73 (5th Cir. 1974) [No. 71-2594], they contend it was error for the trial judge to disallow comparable evidence. If expert testimony is not required to determine obscenity, it is certainly within the trial judge’s discretion not to allow comparable evidence.

The defendants also urge that due to the inherent vagueness of a national obscenity standard, as discussed in Miller, 413 U.S. at 20, the indictment, by tracking 18 U.S.C.A. § 1462, did not sufficiently advise them of the charge against them. This contention, however, was answered adversely to them in United States v. Thevis, 484 F.2d 1149, 1152 (5th Cir. 1973).

Following Thevis, we have reviewed “L’Affair, No. 7,” and “Wild Sexual Compulsions” under both the Memoirs v. Massachusetts, 383 U.S. 413, 86 S.Ct. 975, 16 L.Ed.2d 1 (1966), and the Miller tests and find them to be within the legal parameters of obscenity.

Affirmed.

      . United States v. New Orleans Book Mart, 490 F.2d 73 (5th Cir. 1974) [No. 71-2594] ; United States v. Sulaiman, 490 F.2d 78 (5th Cir. 1974) [No. 71-3145].

      . Miller v. California, 413 U.S. 15, 93 S.Ct. 2607, 37 L.Ed.2d 419 (1973) ; Paris Adult Theatre I v. Slaton, 413 U.S. 49, 93 S.Ct. 2628, 37 L.Ed.2d 446 (1973) ; Kaplan v. California, 413 U.S. 115, 93 S.Ct. 2680, 37 L.Ed.2d 492 (1973) ; United States v. 12 200-Ft. Reels of Super 8mm Film, 413 U.S. 123, 93 S.Ct. 2665, 37 L.Ed.2d 500 (1973) ; United States v. Orito, 413 U.S. 139, 93 S.Ct. 2674, 37 L.Ed.2d 513 (1973) ; United States v. Millican, 487 F.2d 331 (5th Cir. 1973) ; United States v. Thevis, 484 F.2d 1149 (5th Cir. 1973).